    [Senate Hearing 110-840]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 110-840

                                                            Senate Hearings

                                     Before the Committee on Appropriations

    _______________________________________________________________________

                                                           Energy and Water

                                                                Development

                                                             Appropriations

                                                           Fiscal Year 2009

                                             110th CONGRESS, SECOND SESSION

                                                          H.R. 7324/S. 3258

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

     Energy and Water Development Appropriations, 2009 (H.R. 7324/S. 3258)

                                                            S. Hrg. 110-840

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2009

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                           ONE HUNDRED TENTH CONGRESS

                                 SECOND SESSION

                                       ON

                               H.R. 7324/S. 3258

     AN ACT MAKING APPROPRIATIONS FOR ENERGY AND WATER DEVELOPMENT FOR THE
         FISCAL YEAR ENDING SEPTEMBER 30, 2009, AND FOR OTHER PURPOSES

                                   __________

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

                                   __________

             Printed for the use of the Committee on Appropriations

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

                                   __________

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                          COMMITTEE ON APPROPRIATIONS

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

                        Charles Kieffer, Staff Director
                      Bruce Evans, Minority Staff Director
                                     ------

                  Subcommittee on Energy and Water Development

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

                               Professional Staff

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

                             Administrative Support

                                  Robert Rich

                                C O N T E N T S

                                  ----------

                            Wednesday, March 5, 2008

                                                                       Page

    Department of Energy:
        Office of Nuclear Energy.....................................     1
        Office of Electricity Delivery and Energy Reliability........    14
        Office of Fossil Energy......................................    18

                            Wednesday, April 2, 2008

    Department of Energy.............................................    53

                            Wednesday, April 9, 2008

    Department of Energy.............................................   123

                            Thursday, April 10, 2008

    Department of Defense--Civil: Department of the Army: Corps of
      Engineers--Civil...............................................   161
    Department of the Interior: Bureau of Reclamation................   184

                           Wednesday, April 16, 2008

    Department of Energy: National Nuclear Security Administration...   233

                           Wednesday, April 30, 2008

    Department of Energy: National Nuclear Security Administration...   331

                           Nondepartmental Witnesses

    Department of Defense--Civil: Department of the Army: Corps of
      Engineers--Civil...............................................   397
    Department of the Interior: Bureau of Reclamation................   410
    Department of Energy.............................................   416

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2009

                                  ----------

                            WEDNESDAY, MARCH 5, 2008

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:30 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Byron L. Dorgan (chairman)
    presiding.
        Present: Senators Dorgan, Domenici, Craig, Bond, and
    Allard.

                              DEPARTMENT OF ENERGY

                            Office of Nuclear Energy

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

                  opening statement of senator byron l. dorgan

        Senator Dorgan. I'm going to call the hearing to order this
    morning. I thank all of you for being here. We're here to take
    testimony from officials at the Department of Energy on three
    program offices within the Department of Energy that oversee
    aspects of the Government's Energy, Research, Development,
    Demonstration, and Deployment Programs. I have great interest
    in these issues, and I look forward to hearing from the three
    witnesses today.
        I want to mention that just this morning, starting at 8
    o'clock until 9 o'clock, I have spent an hour on the subject of
    the continued use of our coal resources in this country related
    to the issue of global warming. So I've spent a fair amount of
    time this morning on this issue of coal and global warming. One
    of the keys of that, of course, is embodied in the budget
    requests and the research and development that are done in the
    fossil energy account. I'm going to ask Mr. Slutz about that
    today.
        I do want to point out that with respect to the fossil
    energy account recommended by the President, a substantial
    portion of that increase in the fossil energy account is for
    the Strategic Petroleum Reserve. I want to make a comment about
    that in a moment.
        We've been joined by Senator Domenici. I wanted to mention
    this is the first of a series of hearings that we will do with
    respect to the programs in the Department of Energy, and I
    wanted to recognize at the start of these hearings the long
    service of Senator Domenici. I'm not doing this early because
    I'm anxious for his retirement, but the fact is this is his
    last year working on these accounts, and he's done that for a
    long, long period of time.
        He's served on the Appropriations Committee since 1983 and
    been either a chairman or ranking member of this committee for
    the past 13 years, and he has been a real champion for a lot of
    issues, including energy issues. I just wanted to say to him
    that he's been a significant contributor to all of the work of
    this committee, and I'm pleased to have him as a ranking
    member. I recognize he will retire at the end of this year, but
    I did want to make a comment about that at the front end of the
    series of hearings we will have.
        Last year and this year and in future years, we will work
    closely on these issues on both sides of the aisle. Senator
    Domenici and I worked closely last year to try to figure out
    how to put a bill together.
        I do want to mention that last year, for example, in the
    Senate, we were $1.9 billion above the administration's request
    for this subcommittee. As you know, we had to cut back some of
    that because there was a $22 billion difference between the
    Congress and the President. We had to come down nearly the
    entire $22 billion on the domestic accounts, and it wasn't easy
    to do. But we did it and still tried to preserve what we could
    of the priorities.
        I want to say that the requests for the three Department of
    Energy offices before us today are about $2.69 billion of the
    Department's $25 billion fiscal year 2009 request. The
    Department has asked for some increases for the Nuclear and the
    Fossil Energy Programs, and it has essentially asked for level
    funding for the Office of Electricity and Energy Reliability.
        Let me come back to this issue of Strategic Petroleum
    Reserve. I'm a fan of the Strategic Petroleum Reserve, but I
    think there's a time to fill it and a time to pause. A
    substantial portion of the increase in fossil energy is for the
    Strategic Petroleum Reserve. A proposition of the DOE's request
    is to expand to 1\1/2\ billion barrels of oil in the SPR.
        We are now on the current course at about 96.8-97 percent
    filled with the current goal in the Strategic Petroleum
    Reserve. I am very concerned that we are continuing to put oil
    underground when oil's trading at $103 a barrel. Taking oil
    from the Gulf of Mexico as a royalty in kind and now putting it
    underground takes oil out of the supply and puts upward
    pressure on gas prices.
        I think it's exactly the wrong thing to do, and I have
    introduced legislation to try to stop that. My legislation
    would take a pause for only 1 year--a pause unless, during that
    period, oil comes back below $75 a barrel. The pause would then
    no longer be in effect. This fossil energy account is so
    important because it's where we're going to need to do our
    research for coal, carbon capture and so on.
        In order to continue to use our coal resources, we need to
    invest a lot of money. This includes what used to be the Clean
    Coal Technology Program and other things. We need to invest a
    lot of money if we're going to continue to use our coal
    resources because the emission of carbon. We'll need to find a
    way to capture and sequester it, and I don't see enough money
    requested here, especially when we've got a third of a billion
    dollars off chasing this SPR thing right now and oil's at $100
    a barrel.
        I don't see enough money in this account being focused on
    what we should be dealing with in order to continue to use our
    coal resources. Coal contributes about half of all of the
    electricity that we use in this country. Even with the climate
    change legislation, we're going to continue to use coal. The
    question isn't whether; it's how. We're going to have to
    capture carbon, but we need to prove the technology through the
    demonstration and the commercial application of it. So, we're
    going to need more investments there, in my judgment.
        Having said that, I want to just show three charts, and
    then I'm going to call on the ranking member, Senator Domenici,
    and then also Senator Bond.
        The three charts I want to show are these. These are the
    four places we are now sticking oil underground, 60 to 70,000
    barrels a day at the moment. It's going to go to at least
    120,000 barrels a day in the second half of this year if the
    administration fills it to capacity. Those are the four
    locations. This second chart shows the 1\1/2\ billion barrel
    target.
        I don't think we should fill SPR at any cost. I think we
    ought to take a pause at the moment. The third point in the
    final chart is: Does it make sense to be putting oil
    underground when you've got tanks aboveground that need more
    supply in order to put downward pressure on price? Reducing
    supply increases price. That's just a fact, and our Federal
    Government should not be doing that.
        Senator Domenici and I were at a hearing yesterday, and the
    EIA indicated that it increases price. They estimate a nickel a
    gallon. I think it's probably more than that, but nonetheless
    this is a policy choice that we should address, and I hope to
    address it in the chairman's mark this year.
        Having said all of that, I have some questions for the
    witnesses after they have testified, but I want to call on the
    ranking member, Senator Domenici.

                 opening statement of senator pete v. domenici

        Senator Domenici. Well, first, Mr. Chairman, I want to
    thank you for your nice words, and you served with me on this
    subcommittee long enough to know how much it has been a part of
    my life, because I have used this subcommittee, as I see it, to
    foster nuclear--the development of nuclear power in the United
    States and to cause the renaissance that is occurring.
        Much of the things we did came from this subcommittee, and
    some of the various people that worked on this subcommittee are
    nuclear experts out there in America promoting nuclear power.
        Obviously I want to just generally state a few things and
    then put my statement in the record. First, the big issue
    remaining in the nuclear power itinerary is to move with as
    much dispatch as possible to get an American program started
    for reprocessing or recycling, whichever one calls it, the
    waste that comes out of our power plants. It's being done in
    Europe. The United States has let it pass us by, and let me say
    to my friend here on my left who's a proponent of getting
    things done in this area of energy it's almost incredible to me
    that we have put off recycling for such a long time.
        The Secretary in front of us there, Secretary Spurgeon, he
    came here with the notion of getting on with this job in the
    nuclear area, and I'm not sure that we have yet put the glass
    on this and said that here's how we're going to do it, because
    I'm not sure that everybody that has authority is moving in the
    same direction, and we've got to find out whether we're going
    to do that or not.
        If we're not going to move in the same direction, I've got
    other things to do this year. If we are, then I'll work my
    hands till there's nothing left to see if I can't get in place
    an American program for recycling. It is ghastly that we're
    doing what we're doing, and I know you're working on this. We
    may have different ideas as to how the Government ought to go
    about doing it, but I just want everybody to know I'm not a fan
    of waiting around for GNEP and I don't think you are either.
    That's a giant--you call it an ``umbrella.'' I don't know what
    it is, but, you know, it's too big, takes too long, it's going
    to do too many things that we can't wait for. And so under it
    or on top of it, we've got to use the authorities that came
    with the other program that we have ourselves put in the law,
    AFCI, which supersedes and takes the place of GNEP, and that we
    ought to see what AFCI, Alternative Fuel Cycle Initiative--is
    that it?
        Mr. Spurgeon. Advanced Fuel Cycle Initiative.
        Senator Domenici. Advanced Fuel. That's a very important
    concept and we funded it. We funded it--whenever we funded
    GNEP, we funded it, and we've got to see what you're doing with
    that today.
        I want to also say I don't have time for a hearing like
    this to go through the details of the President's budget, but I
    would like to know how his budget stacks up for the funding of
    the laboratories now, this year versus where we ended up this
    year. I don't know if that's any of your business, but we'll
    ask the question and see that the Department answers it so that
    we know because we have our version of what it says.
        I want to say to all of you, the three of you, you're doing
    a great job, all things considered. I want to say for everyone
    to hear that under the leadership of the current Secretary, Mr.
    Sam Bodman, this department has come into its own. It is a
    true, powerful department. It is one that I'm proud to say is
    the United States Department of Energy.
        We walk in there and we know you're in an energy
    department. You're not in a department that won't talk about
    nuclear. You're there, nuclear is on the way. It's a department
    that considers all aspects of energy and does a great job with
    it. And you, sir, Mr. Spurgeon in particular, having taken the
    job late, left a good job to take it, you're doing terrific.
    Sorry you lost Clay Sell. I'm sure everybody is, but you've got
    to get on without him and for the next year get something done
    beyond study. Get something where some of these programs turn
    into action.
        I yield now and thank the chairman very much.
        Senator Dorgan. Senator Domenici, thank you very much.
    Senator Bond?

                    statement of senator christopher s. bond

        Senator Bond. Thank you very much, Mr. Chairman, for
    holding this hearing on the Department's budget, and I join
    with you very strongly in saluting our distinguished ranking
    member for his years of farsighted leadership in the energy
    field.
        I can tell you, Senator Domenici, your colleagues are very
    proud of your work. We're going to miss you. There's going to
    be a big hole to fill, but I think that you will leave us with
    a vision that you laid out today that will inspire us for the
    future.
        Today, I'm here, Mr. Slutz, to express my profound dismay
    and disappointment over your Department's attempt to abandon
    the FutureGen Near-Zero-Emission Integrated Coal Power Plant by
    chopping up the program into three smaller projects focusing
    only on carbon capture and sequestration technology or CCS.
        Energy's action on FutureGen calls into question the
    veracity of the Department's statements to Congress, the
    Department's reliability as a partner, the Department's
    credibility as an advocate, and the Department's judgment as an
    agency.
        As we all know, President Bush announced FutureGen in 2003
    as a public-private partnership to build a first-of-its-kind
    coal-fueled near-zero-emission power plant. FutureGen would
    provide a full-scale coal gasification technology, called IGCC
    that generates power and captures nearly all air pollution,
    working together with carbon capture technology that allows for
    carbon collection and sequestration.
        This would be historic because IGCC is not yet proven
    affordable. Carbon capture and sequestration technology, called
    CCS, for power plants is not proven at all, and neither has
    been proven working together at a full-scale affordable and
    reliable facility.
        FutureGen would enable researchers and engineers to
    demonstrate affordable clean coal technology, ensuring its
    reliability, compatibility, and solve production problems that
    arise only when technologies are tested working together and at
    full scale.
        This is vital work because while we must do more with clean
    energy sources, specifically nuclear, including wind, solar,
    biomass, energy efficiency, each is expensive, some are
    controversial, and together they are overwhelmingly
    insufficient to meet our energy needs now and in the long-term
    future.
        Entire regions of the country, such as my Midwest, the
    mountain west, and south, depend upon coal to meet our current
    energy needs. Abandoning coal would place far too much demand
    on replacement energy sources, raising energy prices even
    further, and threatening the products and jobs that depend upon
    affordable energy from coal.
        FutureGen involves what many say is needed: an
    international partnership with governments, power producers,
    coal providers, and technology companies. FutureGen has that
    with 13 industrial partners doing business on six continents,
    including China. One of the best things that the administration
    has done for climate change questions is to develop the Asia-
    Pacific Partnership that will allow the transfer of our
    technology, once we demonstrate it, to India, to China, and to
    other countries.
        What are we going to transfer if we haven't demonstrated it
    and don't know whether it works?
        We all believe the Department when the Department of Energy
    said in 2004 that ``FutureGen's integration of concepts and
    components are a key to providing technical and operational
    viability. Integration issues between coal conversion systems,
    power systems, and carbon separation and sequestration systems
    can only be addressed by a large-scale integrated facility
    operation.''
        We all believed DOE when DOE issued a nearly 2,000-page
    environmental impact statement selecting DOE's preferred
    alternative to be providing financial assistance to the
    original FutureGen project. We all believed DOE when Secretary
    Bodman sent a letter this past November 30, supporting site
    selection by the end of the year. And now we all find it hard
    to believe that DOE has left FutureGen at the altar, choosing
    instead three younger cheaper women. Maybe that's not the best
    metaphor, because I support complementary efforts to develop
    CCS technology.
        The Department's suggestion would be fine, if it were in
    addition to the integrated test plan, but the Department's
    reason for restructuring ring hollow. FutureGen's costs are the
    very reason we need Government help to work out technology
    barriers and get costs down.
        The assertion that coal gasification is a proven technology
    obviating the need to fund a full power plant and its carbon
    collection system together is disproved by the Department's own
    statement I just read. It confirmed that testing the technology
    together at full scale is the only way to prove its
    affordability and reliability.
        The future is in applying carbon capture and storage to
    IGCC plants, so we need an integrated plant to prove that
    future possible and affordable technologies can be implemented.
        Mr. Chairman and ranking member, it's up to us to be strong
    leaders on clean coal technology. Others are not going to do it
    for us. Many would saddle us with massively expensive carbon
    reductions and will not care if clean coal technologies are not
    ready when those requirements kick in. We need more funding for
    clean coal technology and clean energy, and an additional few
    tens of millions of dollars here and there on these projects
    will not protect our families from the hundreds of billions,
    hundreds of billions of dollars in energy tax costs from carbon
    caps they would face under a cap-and-trade system.
        If that is implemented before this is demonstrated, there
    is going to be devastation in many areas of the country and
    significant economic harm and harm to the environment. I urge
    the administration to return to the negotiating table and work
    out a revised FutureGen agreement at Mattoon. Industry is
    waiting in good faith for a good faith negotiating partner.
        I also would urge this committee to expand its leadership
    role. We've already--you've already done wonderful work in
    support of clean energy and coal, but even greater efforts are
    needed. We must fund an expanded FutureGen and expanded clean
    coal technology. Our clean energy future depends upon it.
        Senator Dorgan. Senator Bond, thank you very much. Senator
    Bond, I will be announcing a FutureGen hearing. We are working
    on setting a date for that hearing. I'm going to ask Secretary
    Bodman to come.
        Obviously the administration has announced a decision. The
    decision, of course, is a fairly significant decision on a
    program that has been a much-heralded program, and I think it
    would be valuable for us to hear from the Secretary and from
    several other witnesses. I'll be working on setting a date for
    that. I should be able to announce that very soon in terms of
    the date, but we will have a FutureGen hearing in the very near
    future.
        Senator Craig.

                        statement of senator larry craig

        Senator Craig. Well, thank you, Mr. Chairman. I'll be
    brief. I simply cannot match the Senator from Missouri. That
    was absolute eloquence.
        Senator Bond. Thank you.
        Senator Craig. And I mean that most sincerely. I think all
    of us on this committee and certainly the authorizing committee
    recognized the critical necessity to get the technology behind
    coal and to move it. We simply must do that if we can continue
    to expect it to be what it ought to be.
        But Dennis, to you, welcome to the committee, and I want to
    say at the outset how much I've enjoyed working with you over
    the last while, and I want to congratulate you on a job well
    done in reestablishing DOE's commitment to nuclear R&D, not
    unlike some of the thoughts that Senator Domenici has had.
        The NE budget for 2009 is over $1 billion. I remember when
    a Secretary of Energy was quietly coming up to me and saying,
    I've lost my nuclear portfolio, it's down at the White House,
    and you can expect the budget to be zeroed out. And that wasn't
    long ago.
        So, there's been a dramatic turnaround. Programs like NP
    2010, to assist new reactor build, as well NGNP and, of course,
    we still clearly see the need for a global nuclear energy
    partnership with GNEP as we move this whole issue forward.
        You've heard from me, you've heard from my colleague in the
    House, Mike Simpson say that we need to invest in our Nation's
    R&D infrastructure to support these programs as outlined in the
    National Academy of Science's report last year.
        As the custodian of the INL, you know the state of the
    lab's infrastructure, and so I guess my message to you is let's
    fix it this year. I think that's tremendously important.
        A couple of suggestions: Transfer the clean-up liability on
    the lab's side to the clean-up side, freeing up infrastructure
    funding; increase the annual budget request at the INL,
    infrastructure request from about $104 to $150 million a year.
    I think all of that would go a long ways toward assuring that
    lead nuclear lab the kind of facility it will need to meet the
    requirements the DOE will place on it in the future and that
    our Nation is going to place on it.
        Mr. Kolevar, a job well done, enhancing the reliability and
    security of our Nation's electrical infrastructure and working
    with our lab in doing that. We have some excellent projects
    going on out there that, I think, because of the uniqueness of
    the lab and the way its campus is configurated and isolated,
    we've been able to offer some valuable expertise as relates to
    the grid, how we manage it against terrorist opportunity, I
    guess is one way of saying it.
        Mr. Slutz, I'll not deal with--quite with the passion that
    Senator Bond has, but I think that both the chairman and I will
    discuss SPR and the inventory. Both Senator Dorgan and I
    believe that there is another inventory that needs to be done
    besides simply filling up the salt domes, and that's a modern
    inventory of the OCS.
        America needs to know its reserves and its resources, and
    they're currently being denied by those who are simply fearful,
    even though the technology of today would suggest that at
    appropriate times those reserves might well be necessary and
    reachable in an environmentally sound way.
        Certainly in my remaining tenure here, I'm going to push
    that issue and push it very hard. I think it is wrong to deny
    our country that knowledge and we need to modernize that issue
    with the OCS.
        Mr. Chairman, thank you much.
        Senator Dorgan. Senator Craig, thank you very much.
        The subcommittee has received a statement from Senator
    Cochran which we will insert into the record.
        [The statement follows:]
                   Prepared Statement of Senator Thad Cochran
        Chairman Dorgan and Ranking Member Domenici, thank you for hosting
    this hearing today. I thank the representatives from the Department of
    Energy for being here this morning, as well.
        Energy issues continue to dominate our Nation's agenda. It is the
    responsibility of all of us here to find ways to keep up with the
    world's ever-expanding electricity demands while at the same time
    increasing energy capacity and security here at home.
        One way in which we can expand our power capacity is to expand the
    use of nuclear energy in America. I am pleased that the request for
    Nuclear Energy is increased from last year, and I hope we can fund
    these efforts at the highest level possible.
        Additionally, it is crucial that we realize the important role
    fossil energy resources continue to play in meeting America's demands
    for energy. Our abundance of coal has always been the main source of
    power in our country, and it is crucial that we find new ways to make
    coal cleaner to use.
        Finally, I would like to speak about the importance of the
    Strategic Petroleum Reserve in securing a stockpile of oil that might
    be tapped in case of emergency. I am pleased that Mississippi was
    chosen by the Department of Energy as the preferred location for
    expansion of the Reserve, and I hope that despite Chairman Dorgan's
    misgivings about filling the Reserve while oil prices are high, we
    might still fund the necessary infrastructure for expansion. As
    evidenced when fuel supplies were interrupted after Hurricane Katrina,
    the United States must have ample resources of oil should a disruption
    in supply occur again.
        I appreciate each of you being here to present your budgets, and I
    look forward to hearing your testimonies. Thank you.

        Senator Dorgan. We will now recognize our witnesses for
    statements.
        Mr. Spurgeon, we're going to call on you first, and let me
    say that I've enjoyed working with you. I agree with Senator
    Domenici. You are a very solid advocate for the programs under
    your jurisdiction, and I thank you for being here. You may
    proceed.
        Let me just say to all three of you, your complete formal
    statements are made a part of the permanent record, and we
    would ask that you summarize your remarks.

                      STATEMENT OF HON. DENNIS R. SPURGEON

        Mr. Spurgeon. Thank you, Mr. Chairman. Chairman Dorgan,
    Ranking Member Domenici, and members of the subcommittee, it is
    a pleasure to be here today to discuss the fiscal year 2009
    budget request for the Department of Energy's Office of Nuclear
    Energy.
        Our Nation's strength and prosperity is built on our
    security and the availability of reliable sources of energy. A
    cornerstone to these goals of continued economic growth and a
    sustainable energy future is nuclear power.
        The Office of Nuclear Energy's budget request supports the
    near-term expansion of safe, reliable, carbon-free nuclear
    power and the development of advanced nuclear technologies now
    and into the future.
        It is significant to note that this administration has
    increased its funding request for nuclear energy every year,
    and in total, the fiscal year 2009 request represents a 330
    percent increase in funding for nuclear energy since President
    Bush took office 7 years ago.
        We can take some pride in this increase, but from a
    historical perspective, our total budget request for 2009 is
    less in absolute dollars than the resources we were devoting to
    nuclear energy the last time I served in government, more than
    30 years ago in the Ford administration.
        In constant dollars, today's budget is about one-third of
    the budget we prepared in 1976. In fiscal year 2009, a total of
    $1.4 billion is requested for nuclear energy activities,
    including $487 million for the Mixed Oxide Fuel Fabrication
    Facility.
        I would now like to take just a moment to highlight our
    program areas and their corresponding budget requests. In
    fiscal year 2009, the President's budget requests $241.6
    million for Nuclear Power 2010, to support industry cost-shared
    near-term technology development and regulatory demonstration
    activities focused on enabling an industry decision to build a
    new nuclear power plant by 2010.
        To this end, the program will continue to support industry
    interactions with the Nuclear Regulatory Commission on new
    plant license applications as well as first-of-a-kind design
    finalization for standardized reactor designs.
        The request also supports the issuance of conditional
    agreements for standby support in fiscal 2009.
        This budget request also includes $301.5 million for the
    Advanced Fuel Cycle Initiative in support of the Global Nuclear
    Energy Partnership. In fiscal 2009, the request supports
    research and development on fuel cycle technologies that will
    support the economic and sustained production of nuclear energy
    while minimizing waste and satisfying requirements for a
    controlled, more proliferation-resistant nuclear materials
    management system.
        The request also supports ongoing international activities
    to establish a framework for ensuring a reliable international
    fuel supply and the availability of grid-appropriate reactors.
        Additionally, this budget requests $70 million for the
    Generation IV Program. This request supports critical research
    and development to achieve design goals that make the Next
    Generation nuclear plant licensable, sustainable, and economic.
    The Generation IV request also supports component and materials
    aging and degradation R&D that will provide the basis for
    supporting the extension of the current operating license
    period for existing nuclear reactors and will also enable the
    design of advanced reactor plants with longer operating
    lifespans.
        A total of $16.6 million is requested for the Nuclear
    Hydrogen Initiative to support research and development on
    enabling technologies, nuclear-based hydrogen production
    technologies, and technologies that will apply heat from
    Generation IV nuclear energy systems to produce hydrogen.
        Finally, $222 million is requested to maintain and operate
    the Department's unique nuclear facilities and infrastructure
    at Idaho National Laboratory, Los Alamos National Laboratory,
    and Oak Ridge National Laboratory. Included in the fiscal year
    2009 requests under Other Defense Activities is $487 million
    for activities associated with the continued construction of
    the Mixed Oxide Fuel Fabrication Facility and $78 million for
    sitewide safeguards and security activities at the Idaho
    National Laboratory.
        I would also like to note the fiscal year 2009 budget
    request continues our commitment to fostering the expansion of
    nuclear engineering programs at our universities. We have
    committed to designating 20 percent of funds appropriated to
    our R&D programs for work to be performed at universities at
    the level set forth in the President's budget. Twenty percent
    represents almost $77 million for this work.

                               PREPARED STATEMENT

        Mr. Chairman, this concludes my opening statement. I would
    be pleased to answer any questions.
        Thank you.
        Senator Dorgan. Secretary Spurgeon, thank you very much for
    your testimony.
        [The statement follows:]
                 Prepared Statement of Hon. Dennis R. Spurgeon
        Chairman Dorgan, Ranking Member Domenici, and members of the
    subcommittee, it is a pleasure to be here today to discuss the
    President's fiscal year 2009 budget request for the Department of
    Energy's (DOE) Office of Nuclear Energy.
        Our Nation's strength and prosperity is built on our security and
    the availability of reliable sources of energy. The President's $25
    billion fiscal year 2009 budget request for the Department aggressively
    addresses the growing demand for affordable, clean, and reliable energy
    and helps preserve our national security by working to further our
    energy security. A cornerstone to the goals of continued economic
    growth and a sustainable energy future is nuclear power. The Office of
    Nuclear Energy's budget request ambitiously supports the near-term
    expansion of safe, reliable and carbon-free nuclear power and the
    development of advanced nuclear technologies now and into the future.
    It is significant to note that this administration has increased its
    funding request for nuclear energy in every year, and in total, the
    fiscal year 2009 request represents a 330 percent increase in funding
    for nuclear energy since President Bush took office 7 years ago. In
    fiscal year 2009, a total of $1.4 billion is requested for nuclear
    energy activities including $487 million for the Mixed Oxide Fuel
    Fabrication Facility.
        The President's commitment to nuclear power stems from its role as
    the only viable near-term option for producing significant amounts of
    emissions-free, baseload electricity. The expansion of nuclear power
    will play a key role in our decisions to find viable solutions to
    address the challenges posed by greenhouse gas emissions, climate
    change, and energy security while promoting a vibrant economy.
        Today, 104 nuclear reactors generate nearly 20 percent of America's
    electricity and account for nearly 70 percent of electricity produced
    from non-emitting sources. Last month, the Nuclear Energy Institute
    reported that U.S. reactors produced 807 billion kilowatt hours of
    electricity in 2007--enough to power more than 72 million homes for a
    year. That total surpasses the previous record high of 788.5 billion
    kilowatt hours in 2004. However, for nuclear power to maintain its role
    in our energy supply, it must grow. To sustain nuclear power's current
    20 percent share, 40 to 45 new reactors must be built by 2030.
        Worldwide, 31 countries operate 439 reactors totaling 372 GWe of
    electricity capacity. Thirty-four new nuclear power plants are under
    construction worldwide, and when completed, will add an additional 28
    GWe of new electricity. This new construction is taking place or being
    considered in every major region in the world including Africa, Asia
    and the Indian subcontinent, Europe, the Middle East, South America,
    and North America.
        We have recently seen projections that anticipate 55 total
    countries will operate 630 reactors totaling approximately 630 GWe by
    2030. Potentially, a total of 86 countries could have nuclear reactors
    by 2050. Internationally, nuclear power is moving forward at a rapid
    pace with each month seemingly bringing new, significant announcements.
        Nuclear power's ongoing expansion around the world requires us to
    address the used fuel and proliferation challenges that confront the
    global use of nuclear energy. To ensure that the United States plays a
    significant role in global nuclear energy policy, we must foster a
    robust domestic nuclear research and development program that maintains
    a cutting-edge nuclear technology infrastructure, and encourage
    international actions that support reliable nuclear fuel services as a
    viable option for countries that may otherwise consider the development
    and deployment of enrichment and reprocessing technologies. To meet
    these challenges, the President initiated the Global Nuclear Energy
    Partnership (GNEP). The domestic component of GNEP promotes the
    accelerated development and deployment of advanced fuel cycle
    technologies, while the international component encourages cooperation
    among States that share the common vision of the necessity of the
    expansion of nuclear energy for peaceful purposes worldwide in a safe
    and secure manner.
        We have made marked progress in every one of our program areas, but
    much remains to be done. Our fiscal year 2009 budget request moves us
    in the right direction, allowing the Department and the Office of
    Nuclear Energy to take the lead in spurring the nuclear renaissance in
    the United States. I would now like to take the time to highlight our
    program areas and their corresponding budget requests.
                               nuclear power 2010
        A key component of our work and one of our most successful programs
    at the Department of Energy is the Nuclear Power 2010 program or NP
    2010. This program was initiated by President Bush in 2002 and has
    produced significant results toward its goal of reducing the technical,
    regulatory, and institutional barriers to the deployment of new nuclear
    power plants. DOE and the President have increased our commitment to
    cross the finish line by nearly doubling its 2009 budget, calling on
    Congress to provide $241.6 million for NP 2010 to help ensure this
    important program can complete its work.
        NP 2010 supports industry through cost-sharing near-term technology
    development and regulatory demonstration activities focused on enabling
    an industry decision to build a new nuclear plant by 2010.
        Of the six Construction and Operation License (COL) applications
    that have been submitted to the Nuclear Regulatory Commission (NRC),
    five COL applications have been officially accepted for review by the
    NRC. And of these five, two applications--TVA's application for two
    Westinghouse AP1000 reactors at the Bellefonte site in Alabama, and
    Dominion Energy's application for a General Electric-Hitachi Economic
    Simplified Boiling Water Reactor at the North Anna site in Virginia--
    were developed through the NP 2010 cost-share program. In total, the
    NRC expects to receive 20 COL applications for 31 new reactors by 17
    different utility companies. Of these 20 COL applications, 8 will
    reference either the Bellefonte or North Anna license applications.
    This simplification in the licensing process is expected to reduce the
    license application and review time these reference COLAs take by up to
    50 percent.
        Three early site permits have been approved for Exelon's Clinton
    site in Illinois, Entergy's Grand Gulf site in Mississippi, and the
    North Anna site, all a part of the NP 2010 cost share program, and a
    fourth ESP permit is pending. In addition, two new reactor design
    certifications have been approved by the NRC, the ABWR and the AP1000,
    and DOE is continuing with on-going first-of-a-kind design finalization
    activities for the standardized AP1000 and ESBWR designs, including:
    preparation of engineering analyses and calculations, design criteria
    documents, and total cost and schedule estimates necessary for an
    industry purchase of a new nuclear plant.
        The NP 2010 program will continue to develop generic application
    preparation guidance for 15 COL applications expected in 2008 to help
    resolve regulatory issues that could potentially delay or derail NRC
    approval.
                    advanced fuel cycle initiative and gnep
        President Bush announced the Global Nuclear Energy Partnership
    (GNEP) as part of his Advanced Energy Initiative in February 2006. The
    Advanced Fuel Cycle Initiative (AFCI) is the domestic technology
    development and deployment component of GNEP. The AFCI program aims to
    develop and demonstrate advanced fuel cycle technologies for recycling
    used reactor fuel to develop an integrated used fuel recycling plan,
    and support on-going research efforts with the goal of reducing the
    amount of material that needs disposal in a geologic repository and
    maximizing our use of energy resources.
        In effort to further this important work, our budget request
    includes $301.5 million in fiscal year 2009 funding for AFCI. This
    request supports research and development activities that will advance
    the economic and sustained production of nuclear energy while reducing
    waste and satisfying requirements for a controlled nuclear materials
    management system that helps strengthen the nuclear nonproliferation
    regime. The request also supports on-going international activities to
    establish a framework for ensuring reliable international fuel services
    and the availability of grid-appropriate reactors, and the continued
    utilization of industry for schedule, cost, and technology developments
    for eventual recycling facility deployment.
        Long-term goals of AFCI/GNEP include the partitioning of used fuel
    and recycling of long-lived radioactive isotopes for destruction
    through transmutation in liquid metal-cooled fast neutron spectrum
    reactors for actinide consumption and nuclear resource sustainability
        AFCI/GNEP funding also provides support for a large number of
    universities involved in fuel cycle research and development, which
    both ensures that the United States has the intellectual capital needed
    to sustain our nuclear fuel cycle for the future and provides the
    important research needed for today's fuel cycle activities. Recycling
    used nuclear fuel rather than permanently disposing of it in a
    repository would result not only in utilizing more of the energy, but
    would also reduce the amount of high-level waste that needs disposal in
    a repository, thereby greatly enhancing the potential capacity of any
    geological repository. This increased efficiency in the fuel supply
    could ensure that even with the expansion of nuclear energy, the
    potential capacity of any geological repository would be greatly
    enhanced.
                                 generation iv
        The Generation IV program is focused on very high temperature
    reactor technologies for use in a Next Generation Nuclear Power Plant
    (NGNP) to produce electricity, process heat, and hydrogen. Generation
    IV also is readying technologies that will further improve the
    economics and safety performance of existing Light-Water Reactor and
    advanced Generation IV reactor concepts.
        The fiscal year 2009 budget request includes $70 million for the
    Generation IV program. The Energy Policy Act of 2005 (EPACT) authorized
    the Department to create a two-phased NGNP Project at the Idaho
    National Laboratory (INL). The Department is presently engaged in Phase
    I of the EPACT-defined scope of work, which includes: developing a
    licensing strategy, selecting and validating the appropriate hydrogen
    production technology, conducting enabling research and development for
    the reactor system, determining whether it is appropriate to combine
    electricity generation and hydrogen production in a single prototype
    nuclear reactor and plant, and establishing key design parameters.
    Phase I will continue until 2011, at which time the Department will
    evaluate the need for continuing into the design and construction
    activities called for in Phase II.
        Additionally, this request supports component and material aging
    and degradation research and development that will provide the basis
    for extending the operating license period for existing nuclear
    reactors beyond 60 years, and will also enable the design of advanced
    reactor concept plants with longer operating life spans.
                              hydrogen initiative
        Nuclear energy has the potential to produce large quantities of
    hydrogen efficiently without producing greenhouse gases and could play
    a significant role in hydrogen production for transportation and
    industrial sectors. Considerable progress in hydrogen combustion
    engines and fuel cells is bringing hydrogen-powered transportation
    close to reality. The goal of the Nuclear Hydrogen Initiative (NHI) is
    to demonstrate hydrogen production technology at increasingly larger
    scales through the use of nuclear energy that would be technically and
    economically suited for commercial deployment in concert with a nuclear
    power plant.
        A total of $16.6 million has been requested for the NHI to continue
    hydrogen production systems operation and testing, evaluation of
    process improvements, and assessment of long-term process stability,
    operability, and component durability. Furthermore, results from the
    integrated laboratory-scale experiments will be analyzed to identify
    cost drivers with an end goal of supporting a hydrogen technology
    selection by 2011.
                               nuclear facilities
        The Department of Energy supports nuclear science and technology
    through one of the world's most comprehensive research infrastructures.
    The Office of Nuclear Energy has requested $222 million to maintain and
    operate infrastructure at Idaho National Laboratory (INL), Los Alamos
    National Laboratory (LANL), Brookhaven National Laboratory (BNL), and
    Oak Ridge National Laboratory (ORNL). A total of $104.7 million is
    dedicated to Idaho National Laboratory's facilities management. INL
    conducts science and technology research across a wide range of
    disciplines, INL's core missions include: development of advanced, next
    generation fuel cycle and reactor technologies; promotion of nuclear
    technology education, and applying technical skills to enhance our
    Nation's security.
        Additionally, $38.7 million is requested to maintain a wide range
    of nuclear and radiological facilities and their associated
    infrastructures in an operational, safe, secure, and environmentally
    compliant manner at LANL, BNL, and ORNL. This infrastructure supports
    national priorities, including the provision of radioisotope power
    systems for national security uses and space exploration.
                            other defense activities
        Included in the Office of Nuclear Energy fiscal year 2009 request,
    under Other Defensive activities, is $487 million for activities
    associated with the continued construction of the Mixed Oxide Fuel
    Fabrication Facility and $78.8 million for site-wide safeguards and
    security activities at the Idaho National Laboratory to protect the
    assets and infrastructure from theft, diversion, sabotage, espionage,
    unauthorized access, compromise, and other hostile acts that may cause
    unacceptable adverse impacts on national security, program continuity,
    or the health and safety of employees, the public, or the environment.
                               university funding
        Our fiscal year 2009 budget request continues our commitment to
    fostering the expansion of nuclear engineering programs at our
    universities and research institutions. Specifically, the budget
    request for the Office of Nuclear Energy explicitly states that we
    ``will continue to support R&D activities at universities and research
    institutions through competitive awards focused on advancing nuclear
    energy technologies,'' and we have committed to ``designate 20 percent
    of funds appropriated to its R&D programs for work to be performed at
    university and research institutions.'' These funds will support basic
    research and mission-specific applied R&D activities, as well as human
    capitol development activities, such as fellowships and infrastructure
    and equipment upgrades for university-based research reactors and
    laboratories. At the level set forth in the President's budget request
    for fiscal year 2009, 20 percent provides almost $77 million for this
    work. This commitment of 20 percent of appropriated funds will serve as
    a catalyst for success in achieving the objectives of the President's
    American Competitiveness Initiative and the America COMPETES Act.
        This concludes my prepared statement. I would be pleased to answer
    any questions you may have.

        Senator Dorgan. I want to recognize Secretary Kolevar. The
    Office of Electricity is an important office, and we appreciate
    the work you are doing. I was pleased to be the first person to
    announce your confirmation when you were in North Dakota for a
    meeting with a number of interests in August 2007, but thank
    you very much for your work, Mr. Secretary.
        Why don't you proceed?

             Office of Electricity Delivery and Energy Reliability

    STATEMENT OF HON. KEVIN M. KOLEVAR, ASSISTANT SECRETARY
                FOR ELECTRICITY DELIVERY AND ENERGY
                RELIABILITY
        Mr. Kolevar. Thank you, Mr. Chairman. Mr. Chairman and
    Ranking Member Domenici, members of the committee, thank you
    for the opportunity to testify on the President's fiscal year
    2009 Budget Request for the Office of Electricity Delivery and
    Energy Reliability.
        Our office's mission is to lead national efforts to
    modernize the electric delivery system, enhance the security
    and reliability of America's energy infrastructure, and
    facilitate recovery from disruptions to energy supply.
        These functions are vital to the Department of Energy's
    strategic goal of protecting our national and economic security
    by promoting a diverse supply and delivery of reliable,
    affordable, and environmentally responsible energy.
        The President's budget requests $134 million for OE, a 17
    percent increase from the fiscal year 2008 request. This
    includes $100.2 million for research and development
    activities, $14.1 million for operations and analysis
    activities, and $19.7 million for program direction.
        Today, the availability of and access to electricity is
    something that can be easy to take for granted. And while more
    than a few people cannot describe what it is or where it comes
    from, electricity is vital to nearly every aspect of our lives,
    from powering our electronics and heating our homes to
    supporting transportation, finance, food, and water systems.
        The Energy Information Administration has estimated that by
    the year 2030, U.S. electricity consumption will be almost 35
    percent higher than it was in 2009. This indicates a growing
    economy but it also promises a significant amount of new demand
    on the electricity infrastructure, an infrastructure that is
    already stressed and aging. This means that we need to focus
    our attention on reliability.
        Climate change is also affecting electric industry
    investments. Uncertainty in climate change legislation and
    policy is limiting investment in generation from fossil fuels,
    coal in particular, and is stimulating investment in
    renewables, such as wind. However, intermittent resources, such
    as renewables, require energy storage or other balancing
    technologies, advanced communications, and sophisticated
    modeling to maximize penetration without affecting the
    reliability and efficiency of our electric system.
        OE's fiscal year 2009 budget request reflects a commitment
    to ensuring this reliability by supporting the research of
    breakthrough technologies, such as those associated with the
    Smart Grid and energy storage. With $5 million dedicated solely
    to Smart Grid development, a $6.6 million increase in the 2009
    request for energy storage, and more than $88 million dedicated
    to other R&D work, the President's request reaffirms the effort
    to ensure increased reliability through research and
    development.
        Modernizing the grid through technical innovation, however,
    represents just one side of the effort needed to tackle
    electricity reliability problems. Building the elaborate
    network of wires and other facilities needed to deliver energy
    to consumers reliably and safely is perhaps one of our greatest
    challenges. This is especially true since renewable energy
    promises to become a substantial generation source.
        Since sources of renewable energy are often found in remote
    locations, we simply have to develop the capacity to deliver it
    to load centers. Basically, if we want to use more renewable
    energy, we need more wires.
        Accordingly, in 2009, the office will continue work to
    implement the major electricity infrastructure provisions of
    the Energy Policy Act of 2005. Consistent with the law, we will
    produce the second national transmission congestion study by
    August of next year. We will begin scoping for the designation
    of energy transport corridors in the eastern United States, and
    we will implement the Department's responsibilities to
    coordinate Federal authorizations for the siting of
    transmission facilities.
        However, energy security and reliability will not be solved
    solely through the modernization and expansion of our energy
    infrastructure. We also need to ensure energy delivery by
    keeping it secure and responding quickly when it is disrupted.
        In fiscal year 2009, we will work to identify systemwide
    vulnerabilities in power and fuels at key domestic and select
    foreign energy sector assets and develop plans to secure and
    reconstitute those assets. We will help to develop tools and
    mitigation solutions to help energy sector owners and operators
    improve resiliency and implement best and effective practices
    and provide solutions to State and local governments to address
    energy supply and infrastructure challenges and to exercise
    those plans.

                               PREPARED STATEMENT

        I believe our work in OE is vital to the Nation's energy
    health and the increase in the President's request reflects
    this. Federal investment in the research, development, and
    deployment of new technology, combined with innovative policies
    and infrastructure investment, is essential to improving grid
    performance and ensuring our energy security, economic
    competitiveness, and environmental well-being.
        This concludes my statement, Mr. Chairman. I look forward
    to answering your and the committee's questions.
        [The statement follows:]
                  Prepared Statement of Hon. Kevin M. Kolevar
        Mr. Chairman and members of the committee, thank you for this
    opportunity to testify on the President's fiscal year 2009 budget
    request for the Office of Electricity Delivery and Energy Reliability.
        The mission of the Office of Electricity Delivery and Energy
    Reliability (OE) is to lead national efforts to modernize the
    electricity delivery system, enhance the security and reliability of
    America's energy infrastructure, and facilitate recovery from
    disruptions to energy supply. These functions are vital to the
    Department of Energy's (DOE) strategic goal of protecting our national
    and economic security by promoting a diverse supply and delivery of
    reliable, affordable, and environmentally responsible energy.
        The President's fiscal year 2009 budget includes $134 million for
    OE in fiscal year 2009, which is almost a 17 percent increase from the
    fiscal year 2008 request. This includes $100.2 million for Research and
    Development activities, $14.1 million for Operations and Analysis
    activities, and $19.7 million for Program Direction. My testimony on
    the administration's fiscal year 2009 budget request reflects a
    comparison to the administration's fiscal year 2008 budget request.
        Today, the availability and access to electricity is something that
    most Americans take for granted. Most people cannot describe what it is
    or where it comes from. Yet, it is vital to nearly every aspect of our
    lives from powering our electronics and heating our homes to supporting
    transportation, finance, food and water systems, and national security.
        The Energy Information Administration has estimated that by the
    year 2030, U.S. electricity consumption will be almost 35 percent
    higher than it was in 2009. This indicates a growing economy, but it
    also promises a significant amount of new demand on the electricity
    infrastructure--an infrastructure that is already stressed and aging.
    This means that we need to focus our attention on reliability.
        Climate change is also affecting electric industry investments. The
    uncertainty in climate change legislation and policies is limiting
    investment in generation from fossil fuels and is stimulating
    investment in renewables such as wind. However intermittent resources
    such as renewables require energy storage or other balancing
    technologies, advanced communications and sophisticated modeling to
    maximize penetration without affecting the reliability and efficiency
    of our electric system.
        One of the Department's strategies for reducing our dependence on
    foreign oil is increased electrification by transitioning to electric
    vehicles also known as plug-in hybrids. Plug-in hybrids could provide a
    great opportunity if we begin now to enable smart grid features such as
    enhanced intelligence and control.
        Title 13 and section 641 of the Energy Security and Independence
    Act of 2007 highlights the need for the development of a modernized
    grid. Title 13 addresses the need for a Smart Grid, which is a
    transmission and distribution network modernized with the latest
    digital and information technologies for enhanced operational
    monitoring, control, and intelligence.
        OE's fiscal year 2009 budget request also reflects a commitment to
    ensuring reliability by supporting research of breakthrough
    technologies such as those associated with a Smart Grid and Energy
    Storage. With $5 million dedicated solely to Smart Grid development, a
    $6.6 million increase in the fiscal year 2009 request for Energy
    Storage, and more than $88 million dedicated to other R&D work, the
    President's fiscal year 2009 budget request reaffirms the effort to
    ensure increased reliability through R&D.
        Modernizing the grid through technical innovation, however,
    represents just one side of the effort needed to tackle electricity
    reliability problems. Building the elaborate network of wires and other
    facilities needed to deliver energy to consumers reliably and safely is
    perhaps one of our greatest challenges today. This is especially true
    since renewable energy promises to become a substantial generation
    source. Since sources of renewable energy are often found in remote
    locations, we simply have to develop the capability to deliver it to
    load centers. Basically, if we want to use more renewable energy, we
    need more wires.
        However, energy security and reliability will not be solved by
    focusing solely on expanding our modernization and expansion of our
    energy infrastructure. We also need to ensure energy delivery by
    keeping it secure and responding quickly when it is disrupted. DOE is
    the lead agency when Federal response is required for temporary
    disruptions in energy supply to ensure a reliable and secure
    electricity infrastructure for every American. We will use fiscal year
    2009 funds to apply technical expertise to ensure the security,
    resiliency and survivability of key energy assets and critical energy
    infrastructure at home and abroad.
        The reliability and energy security effort is both multifaceted and
    necessary, and the President's request reflects this.
                            research and development
        Our High Temperature Superconductivity activities continue to
    support second generation wire development as well as research on
    dielectrics, cryogenics, and cable systems. This activity is being
    refocused to address a near-term critical need within the electric
    system to not only increase current carrying capacity, but also to
    relieve overburdened cables elsewhere in the local grid. The
    superconductivity industry in the United States is now at the critical
    stage of moving from small business development to becoming a part of
    our manufacturing base.
        Enhanced security for control systems is critical to the
    development of a reliable and resilient modern grid. The Visualization
    and Controls Research & Development activity focuses on improving our
    ability to measure and address the vulnerabilities of controls systems,
    detect cyber intrusion, implement protective measures and response
    strategies, and sustain cyber security improvements over time.
        This activity is also developing the next generation system control
    and data acquisition (SCADA) system that features GPS-synchronized grid
    monitoring, secure data communications, custom visualization and
    operator cueing, and advanced control algorithms. Advanced
    visualization and control systems will allow operators to detect
    disturbances and take corrective action before problems cascade into
    widespread outages. The need to improve electric power control systems
    security is well-recognized by both the private and public sectors.
        The Energy Storage and Power Electronics activities propose an
    increase of $6.6 million in fiscal year 2009. This will support the
    development of new and improved energy storage devices and systems at
    utility scale, which will be incorporated in DOE's Basic Energy Science
    basic research results. We will also work to achieve substantial
    improvements in seeking lifetime, reliability, energy density, and cost
    of energy storage devices. Through this, highly leveraged prototype
    testing and utility demonstration projects will be expanded with State
    energy office participation focusing on areas of greatest utility need.
    The increase will also serve to focus on enhanced research in Power
    Electronics to improve material and device properties needed for
    transmission-level applications.
        Large scale, megawatt-level electricity storage systems, or
    multiple, smaller distributed storage systems, could significantly
    reduce transmission system congestion, manage peak loads, make
    renewable electricity sources more dispatchable, and increase the
    reliability of the overall electric grid.
        The Renewable and Distributed Systems Integration activities will
    allocate $5 million in fiscal year 2009 to develop and demonstrate
    Smart Grid technologies for an integrated and intelligent electric
    transmission and distribution network. $28.3 million will be used to
    demonstrate distributed energy systems as a resource to decrease peak
    electric load demand, increase asset utilization, and defer electric
    system upgrades. These funds will also be used to develop renewable
    energy grid integration technologies to facilitate increased deployment
    of renewables and other clean energy sources.
                        permitting, siting, and analysis
        With hopes of creating a more robust transmission system, our
    fiscal year 2009 budget request asks for $6.5 million for the
    Permitting, Siting and Analysis office. This is an $804,000 increase
    from the fiscal year 2008 budget request, and it will help to implement
    major electricity infrastructure provisions such as section 368 of
    EPACT and section 216(h) of the Federal Power Act. Further, work will
    be done to provide technical assistance to State electricity regulatory
    agencies and to electric utilities as they implement their energy
    efficiency initiatives.
        In fiscal year 2009, we will also be working to issue the second
    national transmission congestion study. In this process, we will be
    consulting with States and other interested parties on congestion
    metrics and data, and analyzing current historical congestion by
    region. Before the study is released, we will present draft conclusions
    of data analysis for public review and input.
        The implementation of section 368 of EPACT requires the designation
    of rights-of-way corridors for the transport of oil, natural gas,
    hydrogen, and electricity on Federal lands in the 11 contiguous western
    States. An interagency team, with DOE as the lead agency, conducted
    public scoping meetings concerning the designation of corridors in each
    of the 11 contiguous western States. We have published a draft
    Programmatic Environmental Impact Statement for the designation of the
    energy transport corridors, solicited public comments, and conducted 15
    public meetings, and the final PEIS is expected to be published in
    fiscal year 2008. We are preparing to begin scoping for the designation
    of energy transport corridors in the eastern States, Alaska, and
    Hawaii. The EIS for the remaining designations is expected before the
    end of fiscal year 2009.
        DOE is preparing regulations to implement its responsibilities
    under the new section 216(h) of the Federal Power Act to coordinate
    with eight other Federal agencies to prepare initial calendars, with
    milestones and deadlines for the Federal authorizations and related
    reviews required for the siting of transmission facilities. DOE will
    maintain a public website that will contain a complete record of
    Federal authorizations and related environmental reviews and will work
    closely with the lead Federal NEPA agency to encourage complete and
    expedited Federal reviews.
                 infrastructure security and energy restoration
        The President has designated the Department of Energy as the Lead
    Sector Specific Agency responsible for facilitating the protection of
    the Nation's critical energy infrastructure. The Office of
    Infrastructure Security and Energy Restoration (ISER) in the operations
    and analysis subprogram is responsible for coordinating and carrying
    out the Department's obligations to support the Department of Homeland
    Security in this important national initiative. The fiscal year 2009
    request is for $7.6 million in funding for Infrastructure Security and
    Energy Restoration within the operations and analysis subprogram, which
    is a $1.8 million increase from the fiscal year 2008 request.
        In fiscal year 2009, ISER will work to identify system-wide
    vulnerabilities in power, fuels and other key energy sector assets and
    develop plans to secure and reconstitute those assets. We will help to
    develop tools and mitigation solutions to help energy sector owners and
    operators improve resiliency and implement best and effective
    practices, and provide solutions to State and local governments to
    address energy supply and infrastructure challenges. Further, we will
    continue to conduct vulnerability assessments of key domestic and
    selected foreign energy facilities in close collaboration with
    appropriate interagency and industry partners. And through the
    initialization of selected pilot projects, we will work to exercise the
    integration of regional, State and local energy resiliency and
    emergency response preparedness.
        We help to facilitate energy restoration efforts at the State and
    local level through cooperation and partnerships with local utility
    providers in support of the National Response Framework. In fiscal year
    2009, we will work to create detailed Concept of Operations Plans for
    energy response utilizing an Integrated Planning System.
                                   conclusion
        As you have heard, our work in OE is vital to our Nation's energy
    health and the increase in the President's request reflects this.
    Through our research and development of technologies such as power
    electronics, high temperature superconductivity, and energy storage, we
    will work to lower costs, increase efficiency, and also directly
    enhance the viability of clean energy resources by addressing issues
    such as intermittency, controllability, and environmental impact.
        Federal investment in the research, development, and deployment of
    new technology combined with innovative policies and infrastructure
    investment, is essential to improving grid performance and ensuring our
    energy security, economic competitiveness, and environmental well-
    being.
        This concludes my statement, Mr. Chairman. I look forward to
    answering any questions you and your colleagues may have.

        Senator Dorgan. Secretary Kolevar, I thank you very much.
        Mr. Slutz, you are the Acting Assistant Secretary, I
    believe, and we appreciate very much your being here today to
    describe your programs, and as I indicated in my opening
    statement, I'm going to ask a number of questions about the
    fossil energy accounts, but why don't you proceed? We will then
    have the panel ask questions of the three witnesses.

                            Office of Fossil Energy

    STATEMENT OF JAMES SLUTZ, ACTING PRINCIPAL DEPUTY
                ASSISTANT SECRETARY FOR FOSSIL ENERGY
        Mr. Slutz. Mr. Chairman, members of the committee, it's a
    pleasure for me to appear before you today to present the
    Office of Fossil Energy's proposed fiscal year 2009 budget.
        Fossil Energy's budget request of $1.127 billion for fiscal
    year 2009 is one of the largest Fossil Energy requests made by
    this administration. These funds will allow FE to fulfill its
    mission to create public benefits to supply enhancing U.S.
    economic, environmental, and energy security.
        Achieving this mission means developing technological
    capabilities that can dramatically reduce carbon emissions to
    achieve near-zero atmospheric emission power production,
    thereby meeting the President's priority of expanding our
    climate change options with higher efficiency power plants to
    reduce carbon dioxide emissions, the near-zero emissions power
    plants, known as FutureGen, that link high efficiency with
    carbon sequestration.
        Fossil Energy is also responsible for the management and
    operation of the Nation's petroleum reserves, most notably the
    Strategic Petroleum Reserve, which provides strategic and
    economic security against disruptions in oil supplies with an
    emergency stockpile of crude oil.
        More specifically, the proposed fiscal year 2009 coal
    budget request of $648 million focuses on technology for
    allowing the United States to maintain its technological lead
    in coal use in a way that will not raise climate concerns. This
    is the largest budget request for coal research and development
    and demonstration in over 25 years.
        The budget focuses on advancing the technology aimed at
    reducing costs and enhancing the efficiency of power plants
    with carbon capture. It also focuses on the science and
    technology to assure the safe and effective long-term geologic
    storage of carbon dioxide.
        The budget includes $406 million for coal R&D, including
    in-house research and development, $85 million for the Clean
    Coal Power Initiative, and $156 million for the New Approach to
    the FutureGen Program. The fiscal year 2009 request
    demonstrates the administration's continuing commitment to
    domestically produced energy from coal.
        The $344 million in the fiscal year 2009 budget request for
    the Strategic Petroleum Reserve, an 84 percent increase over
    fiscal year 2008, will allow for expansion of facilities at two
    existing storage sites and begin the development of a new site
    in fiscal year 2009. This expansion is in accordance with the
    provision in EPACT for an expansion of reserve capacity from
    750 million to 1 billion barrels of oil and, with the
    President's recommendation and pending legislation, to further
    increase the reserve's capacity to 1.5 billion barrels of oil.
        Fossil Energy research and development is directed at
    electric power generation from coal----
        Senator Dorgan. Secretary Slutz, could you hold a moment?
        Senator Domenici. You mentioned how much was being spent on
    coal R&D and you talked about how it was a good program.
        Where do we do most of the research that we're talking
    about and who's the head of the research to try to make the
    change to coal so it's more usable?
        Mr. Slutz. We have a coal program here that's headed by Dr.
    Victor Der at headquarters, but then that program is
    implemented through the National Energy Technology Laboratory
    and Carl Bauer is the director of the National Energy
    Technology Laboratory.
        Senator Domenici. And where is that laboratory?
        Mr. Slutz. That laboratory is located in Pittsburgh and
    Morgantown, co-located with other facilities in Tulsa and
    Albany, Oregon.
        Senator Domenici. Mr. Chairman, thank you, sir.
        Senator Dorgan. You may proceed.
        Mr. Slutz. Fossil Energy research and development is
    directed at electric power generation from coal, our most
    abundant and lowest cost domestic fossil fuel.
        This research supports many presidential initiatives and
    priorities, including the Coal Research Initiative, Hydrogen
    Fuel Initiative, Climate Change Technology Program, and
    FutureGen.
        I'll highlight a few of the R&D program components,
    beginning with FutureGen. FutureGen promotes advanced full-
    scale integration of integrated gasification compliance cycle
    and carbon capture and storage technology to produce electric
    power from coal with near-zero atmospheric emissions.
        FutureGen is being restructured in a way that accelerates
    the commercial use of near-zero emissions technology. The new
    approach proposes multiple commercial-scale demonstration power
    plants in place of the original plan's single R&D facilities.
    Each plant would produce electricity and sequester an estimated
    annual 1 million metric tons of carbon dioxide.
        FutureGen receives almost $82 million funding increase over
    last year in the 2009 budget proposal.
        The Clean Coal Power Initiative, or CCPI, is a cooperative
    cost-share program between the government and industry to
    demonstrate advanced coal-based power generation technologies.
    The budget request of $85 million for CCPI in fiscal year 2009
    will complete the third round of the project solicitations,
    proposed evaluations, and project selections of advanced
    technology systems that capture carbon dioxide for
    sequestration for beneficial reuse.
        The fiscal year 2009 budget request of $149 million for
    carbon sequestration, one of the key components of our program,
    is a significant increase over the fiscal year 2008.
        Senator Domenici. Would you say that again? I missed the
    last portion of that.
        Mr. Slutz. Our 2009 budget request just for carbon
    sequestration, the carbon storage component, is $149 million.
    That's an increase of $30 million over the $119 million
    provided in fiscal year 2008.
        Senator Domenici. Okay.
        Mr. Slutz. The increase should help develop economical ways
    to separate and permanently sequester greenhouse gas emissions
    from the combustion of fossil fuels.
        Consistent with recent budget requests, the petroleum,
    which is oil technology and natural gas technologies research
    and development programs are being proposed for termination in
    2009.
        The fiscal year 2009 budget request of $344 million for the
    Strategic Petroleum Reserve would continue preparations for
    doubling the current 727-million-barrel capacity and increasing
    the drawdown capability from 4.4 million barrels per day to
    more than 6 million barrels per day. Increasing the capacity
    required--requires expanding two existing sites and adding one
    new site.
        That concludes a brief overview of Fossil Energy's wide-
    ranging R&D and petroleum reserve management responsibilities.

                               PREPARED STATEMENT

        I'd like to emphasize, by reevaluating, refining and
    refocusing our programs and funding the most cost-effective and
    beneficial projects, the fiscal year 2009 budget submission
    meets the Nation's critical needs for energy, environment, and
    national security.
        Mr. Chairman, that concludes my prepared statement, and I'm
    happy to answer any questions.
        [The statement follows:]
                       Prepared Statement of James Slutz
        Mr. Chairman, members of the committee, it is a pleasure for me to
    appear before you today to present the Office of Fossil Energy's (FE)
    proposed budget for fiscal year 2009.
        FE's budget request of $1.127 billion for fiscal year 2009 is one
    of the largest FE requests made by this administration. These funds
    will allow FE to fulfill its mission: to create public benefits by
    enhancing U.S. economic, environmental, and energy security.
        Achieving this mission means developing technological capabilities
    that can dramatically reduce carbon emissions to achieve near-zero
    atmospheric emissions power production, thereby meeting the President's
    priority of expanding our climate change options with higher-efficiency
    power plants to reduce carbon dioxide and other emissions, including
    through FutureGen demonstration plants.
        FE is also responsible for the management and operation of the
    Nation's petroleum reserves, most notably the Strategic Petroleum
    Reserve, which provides strategic and economic security against
    disruptions in oil supplies with an emergency stockpile of crude oil.
        More specifically, the proposed fiscal year 2009 coal budget
    request of $648 million focuses on technology allowing the United
    States to maintain its technological lead in coal use in a way that
    addresses climate concerns. This is the largest budget request for coal
    research development and demonstration in over 25 years and leverages a
    nearly $1 billion investment in Clean Coal Technology.
        The budget includes $406.5 million for Coal R&D including in-house
    R&D; $85 million for the Clean Coal Power Initiative and $156 million
    for a new approach to the FutureGen program.
        The fiscal year 2009 request demonstrates the administration's
    continuing commitment to domestically produced energy from coal.
    Combined with the required private sector cost sharing contribution as
    directed by the Energy Policy Act of 2005 (EPACT), this budget will
    bring the total public and private investment in coal technology
    leveraged by FE to nearly $1 billion. In addition, the Federal
    Government provides support to advance coal technologies through tax
    incentives for clean coal plants, and through loan guarantees to be
    allocated to various types of coal power and other gasification
    projects.
        The $344 million fiscal year 2009 budget request for the Strategic
    Petroleum Reserve, an 84 percent increase over fiscal year 2008
    approved funding, will allow for expansion activities at two existing
    storage sites and the development of a new site in fiscal year 2009.
    This expansion is in accordance with the provision in EPACT for an
    expansion of reserve capacity from 727 million to 1 billion barrels of
    oil, and with the president's recommendation to further increase the
    reserve's capacity to 1.5 billion barrels of oil.
                     fossil energy research and development
        I will begin the detailed presentation of our proposed budget with
    the work of Fossil Energy Research and Development (FERD), which is
    directed at electric power generation from coal, our most abundant and
    lowest cost domestic fossil fuel. Coal today accounts for nearly one-
    quarter of all the energy--and about half the electricity--consumed in
    the United States.
        FERD supports many Presidential initiatives and priorities
    including the Coal Research Initiative, Hydrogen Fuel Initiative, and
    FutureGen. FERD also supports the Climate Change Technology Program,
    which is a priority for the Department. The components of the FERD
    program begin with FutureGen.
                                   futuregen
        FutureGen promotes advanced, full-scale integration of integrated
    gasification combined cycle (IGCC) and carbon capture and storage
    technology to produce electric power from coal while capturing and
    sequestering carbon dioxide (CO2), resulting in near-zero
    atmospheric emissions coal energy systems. FERD is restructuring
    FutureGen in a way that accelerates the commercial use of carbon
    capture and storage technologies.
        The new approach proposes multiple 300-600 Megawatt (MW)
    commercial-scale demonstration clean coal power plants--as opposed to a
    single, 275 MW R&D facility--each producing electricity and capturing
    and safely sequestering at least an estimated annual 1 million metric
    tons of CO2 from each. FutureGen receives an $81.7 million
    funding increase from fiscal year 2008 in the fiscal year 2009 budget
    proposal.
                          clean coal power initiative
        The Clean Coal Power Initiative (CCPI) is a cooperative, cost-
    shared program between the Government and industry to demonstrate
    advanced coal-based power generation technologies. CCPI is now focused
    on projects to help accelerate development and deployment of coal
    technologies that could economically capture carbon dioxide, including
    increasing the efficiency and reliability of carbon capture
    technologies. CCPI allows the Nation's power generators, equipment
    manufacturers, and coal producers to help identify the most critical
    barriers to coal use and the most promising advanced technologies to
    use coal cleanly, affordably, and with higher efficiencies that reduce
    carbon intensity.
        The budget request of $85 million for CCPI in fiscal year 2009 will
    complete the third round of project solicitations, proposal
    evaluations, and project selections of advanced technology systems that
    capture carbon dioxide for sequestration or beneficial reuse.
                                 sequestration
        The fiscal year 2009 budget request of $149 million for carbon
    sequestration, one of the key components of the Fuel and Power Systems
    program, is an increase of $30 million over the $119 million provided
    in fiscal year 2008.
        The increase should help develop economical ways to separate and
    permanently store (sequester) greenhouse gas emissions from the
    combustion of fossil fuels. The technologies will help existing and
    future fossil fuel power generating facilities by reducing the cost of
    electricity impacts and also providing protocols for carbon capture and
    storage demonstrations to capture, transport, store, and monitor the
    CO2 injected in geologic formations.
        The increase will support site selection and characterization,
    regulatory permits, community outreach, and completion of site
    operation plans for large-scale, geologic, carbon storage tests. It
    will also fund large-scale injections and remaining infrastructure
    development. The additional funding also permits work on capture
    projects and initiates an effort to prepare for and augment the
    monitoring, measurement and verification being conducted in the Phase
    III tests.
                                    hydrogen
        The budget request of $10 million in fiscal year 2009 for hydrogen
    from coal--a clean fuel for future advanced power technologies such as
    fuel cells and transportation systems--is down nearly $15 million from
    fiscal year 2008. The decrease is due to the elimination of integrated
    coal-biomass processing for carbon emissions research (which is
    generally advanced through the gasification program), elimination of
    substitute natural gas and coal-to-liquids production research (which
    are mature industries and not the high-return investment that FE
    focuses on), and a right-sizing of the effort level for early
    engineering and design studies on hydrogen production modules in near-
    zero emission coal plants.
                            gasification technology
        The Integrated Gasification Combined Cycle (IGCC) budget request
    for fiscal year 2009 is $69 million, a $15.5 million increase over
    fiscal year 2008. The IGCC program develops advanced gasification-based
    technologies aimed at reducing the cost of coal-based IGCC plants,
    improving thermal efficiency, and achieving near-zero atmospheric
    emissions of all pollutants. These technologies will be an integral
    part of the carbon capture and storage demonstration projects.
                                   fuel cells
        Flexible fuel cell systems that can operate in central coal-based
    power systems and with applications for electric utility, industrial
    and commercial/residential markets, receive a funding request of $60
    million in fiscal year 2009--an increase over the fiscal year 2008
    appropriation of $55.5 million. This activity enables the generation of
    highly efficient, cost-effective electricity from domestic coal with
    near-zero atmospheric emissions of carbon and air pollutants in central
    station applications. The technology also provides the technology base
    to permit grid-independent distributed generation applications.
                         oil and natural gas technology
        Consistent with the budget requests for fiscal years 2006, 2007 and
    2008, the Petroleum-Oil Technology and Natural Gas Technologies
    research and development programs are being terminated in fiscal year
    2009.
        The Ultra-Deepwater and Unconventional Gas and Other Petroleum
    Research Fund was created by the Energy Policy Act of 2005 (Public Law
    109-58) as a mandatory program beginning in fiscal year 2007. The
    program is funded from mandatory Federal revenues from oil and gas
    leases. Consistent with the fiscal year 2007 and 2008 budget requests,
    the fiscal year 2009 budget proposes to repeal the program through a
    legislative proposal.
                          strategic petroleum reserve
        The Strategic Petroleum Reserve (SPR) exists to ensure America's
    readiness to respond to severe energy supply disruptions. The Energy
    Policy Act of 2005 directs DOE to fill the SPR to its authorized 1
    billion barrel capacity as expeditiously as practicable. Additionally
    the President has proposed expanding the Reserve's capacity to 1.5
    billion barrels.
        The fiscal year 2009 budget request of $344 million would continue
    preparations for doubling the current 727 million barrel capacity up to
    1.5 billion barrels and increasing the drawdown capability from 4.4
    million barrels per day (MMB/day) to more than 6 MMB/day. The
    administration strongly believes that this expansion is necessary to
    protect the economic and energy security of the Nation, given the
    increased risk of disruption that is now apparent in the global oil
    market. Increasing the inventory to 1 billion barrels requires
    expanding two existing sites and adding one new site.
        The fiscal year 2009 budget request reflects completion of land
    acquisition activities for the Richton, Mississippi site in fiscal year
    2008 and the addition of expansion activities at the two existing sites
    and the new site in fiscal year 2009.
                       northeast home heating oil reserve
        The fiscal year 2009 budget request of $9.8 million will fund
    continuing operation of the Reserve and the leasing of commercial
    storage space.
        The President directed DOE in 2000 to establish a Northeast heating
    oil reserve which is capable of assuring a short-term supplement to
    private home heating oil supplies during times of very low inventories
    or in the event of significant threats to immediate energy supplies.
    The 2 million barrel reserve protects the Northeast against a supply
    disruption for up to 10 days, the time required for ships to carry
    heating oil from the Gulf of Mexico to New York Harbor.
                     naval petroleum and oil shale reserves
        The fiscal year 2009 budget request of $19.1 million is slightly
    less than the fiscal year 2008 request of $20.3 million. The decrease
    is due to the completion of the Risk Assessment and Corrective Action
    Studies to determine the cleanup requirements of the Elk Hills site
    (NPR-1) and reductions in operating and facility maintenance costs at
    NPR-3.
        The Naval Petroleum and Oil Shale Reserve (NPOSR) mission is to
    complete environmental remediation activities and determine the equity
    finalization of NPR-1 and to operate NPR-3 until its economic limit is
    reached, while maintaining the Rocky Mountain Oil Field Test Center as
    a field demonstration facility. Because the NPOSR no longer served the
    national defense purpose envisioned in the early 1900s, the National
    Defense Authorization Act for Fiscal Year 1996 (Public Law 104-106)
    required the sale of the Government's interest in Naval Petroleum
    Reserve 1 (NPR-1).
        To comply with this requirement, the Elk Hills field in California
    was sold to Occidental Petroleum Corporation in 1998, two of the Naval
    Oil Shale Reserves (NOSR-1 and NOSR-3) were transferred to the
    Department of the Interior's (DOI) Bureau of Land Management, and the
    NOSR-2 site was returned to the Northern Ute Indian Tribe.
        The Energy Policy Act of 2005 transferred administrative
    jurisdiction and environmental remediation of Naval Petroleum Reserve 2
    (NPR-2) in California to the Department of the Interior. DOE retains
    the Naval Petroleum Reserve 3 (NPR-3) in Wyoming (Teapot Dome field).
    Environmental remediation is performed on those facilities which no
    longer have value to either of the missions.
                   meeting the nation's critical energy needs
        In conclusion, I'd like to emphasize that the Office of Fossil
    Energy's programs are designed to promote the cost-effective
    development of energy systems and practices that will provide current
    and future generations with energy that is clean, efficient, reasonably
    priced, and reliable. Our focus is on supporting the President's top
    priorities for energy security, clean air, climate change, and coal
    research. By reevaluating, refining and refocusing our programs and
    funding the most cost-effective and beneficial projects, the fiscal
    year 2009 budget submission is designed to help meet the Nation's needs
    for energy, environmental and national security.
        Mr. Chairman, and members of the committee, this completes my
    prepared statement. I would be happy to answer any questions you may
    have at this time.

                            POWER OUTAGE IN FLORIDA

        Senator Dorgan. Mr. Slutz, thank you very much.
        Mr. Kolevar, as you know, the recent power outage in south
    Florida disrupted normal life for more than 1 million people
    for a number of hours. The news reports that I read said the
    system worked as it was supposed to, shutting down transformers
    and power units, including two nuclear power sites, and then I
    read later that it was a human error.
        So, how is it the system worked as it was supposed to work?
    I mean tell me about what has happened there.
        Mr. Kolevar. The system did work as it was designed. It was
    human error. The individual took down protective relays at a
    substation during maintenance, attempted to put the relay back
    online without reengaging the protective systems and caused a
    short and a voltage drop within the system that affected Turkey
    Point and, subsequent to Turkey Point's going offline, other
    generation units.
        And the system is designed to try and limit the cascading
    effects of a drop in voltage and certainly the drop of
    generation. The drop in generation, 4,000 megawatts, was felt
    all the way through the system. Operators in New York could see
    that something had happened. They didn't know what it was, but
    they could see that something had happened.
        The reason I make that point is because that, while they
    could see it as far north as New York and probably farther
    north into Canada, the system was able to contain that outage,
    localize it, and Florida Power and Light did an impressive job
    of getting service back on to all of their customers in about a
    3- or 4-hour time frame.

                          STRATEGIC PETROLEUM RESERVE

        Senator Dorgan. Mr. Slutz, in the Office of Fossil Energy,
    there's about a $200 million increase in the fiscal year 2008
    enacted versus the administration's 2009 request. It appears to
    me that about $160 million of that is for the expansion of the
    Strategic Petroleum Reserve. Is that correct?
        Isn't a substantial portion of your increase for the
    increased request for the SPR?
        Mr. Slutz. Correct. About--yes.
        Senator Dorgan. Yes. And you heard me describe why I
    support SPR. I've always supported saving and creating an
    energy security blanket here with Strategic Petroleum Reserve,
    but I just think it is nuts at about $100 a barrel to be
    sticking that oil underground and taking it out of supply. And
    so, to the extent the chairman has the votes on this
    subcommittee, I intend in the chairman's mark to stop this on
    the first day of the next fiscal year. My hope is that I'll be
    able to stop it earlier than that on the floor of the Senate by
    adding it to another piece of legislation.
        We shouldn't be putting 60,000 or 70,000 barrels a day
    today underground, and we shouldn't increase that to 120,000
    barrels a day in the second half of this year. So, I just want
    you to know that, to say that we have a substantial increase in
    the Office of Fossil Energy, when I understand most of that
    increase is in the SPR, building facilities and so on is
    deceiving. My major concern is in the fossil R&D accounts
    because half of this electricity comes from coal, and if we're
    going to be able to use coal in the future, we need to have
    expanded carbon capture and carbon sequestration activities.
    That's going to require a lot of effort and a lot of resources.

                            FOSSIL BUDGET PRIORITIES

        Mr. Slutz, when you talk about increasing the request for
    carbon sequestration by $30 million, I've got to tell you
    that's a drip as opposed to a stream that's needed for us
    because there's an urgency for action.
        We need to figure out how do we capture and how do we
    sequester carbon in order to continue to use coal. I've had
    some really interesting people come in to talk to me. There is
    a Texas demonstration project where they are turning the
    effluents from that plant into chloride, hydrogen, and baking
    soda, and the CO2 from the plant is embedded in the
    baking soda, and they put it in the landfill. That's
    interesting to me.
        I'm going to go see a location within the next couple of
    weeks where they're taking the CO2 and feeding a
    contiguous algae pond, because algae lives on wastewater and
    CO2. They not only consume the CO2 with
    algae, but then they process the algae for a super fuel. So,
    you destroy the CO2, and you produce diesel as a
    result.
        So, a lot of interesting things going on, but in response
    to Senator Domenici's question, I think Carl Bauer is an
    extraordinary resource for us. He's running a great operation
    over there, but we need to do a lot of projects, both in
    research and demonstration and deployment of technologies.
    However, in my judgment, to take most of the increase in your
    Office of Fossil Energy and direct it into SPR doesn't make a
    lot of sense to me.
        We need to be directing that, in my judgment, into fossil
    R&D so that we can use our coal resources in the future in a
    way that captures the carbon and doesn't contribute to global
    warming. Your response?
        Mr. Slutz. Well, I think there are two key components that
    are significant. The Coal Program does have significant
    increases. That was a--the $648 million that is focused,
    proposed for coal research and development, is more than 25
    percent--I think it's a 25 percent increase and that includes--
    --
        Senator Dorgan. That includes FutureGen?
        Mr. Slutz. Yes, yes. When you look at the Coal Program and
    break it down, there are both key demonstration projects, which
    include FutureGen and the CCPI Program, and then other very
    important research aspects. And there's about 400--I think $400
    million in the research programs and then--well, $156 million
    for FutureGen and $85 million for CCPI, and the $156 million
    for FutureGen is about--I think I mentioned it was an $80 some
    million increase from previous budgets.
        So, there is significant increase in coal. There is an
    increase--we're proposing about a $171 million in the SPR
    budget for developing new facilities. All but $13 million of
    that $175 million is targeted at increasing from 750 million to
    the 1 billion level which is what was authorized by EPACT.
        There's only $13 million of that $171 million that is
    targeted for the 1 billion to 1.5, and that is for some initial
    environmental impact statement work and some of the analytical
    work needed on site selection. So, just kind of put that in the
    frame of reference that it is incremental steps that are being
    proposed for that.
        Senator Dorgan. I understand that, but resources are
    scarce. In fact, as we give discretion to the Department with
    respect to this process, then we must use them wisely, I mean,
    if you were going to plan a journey with your car some day, and
    you say here's the road I'm taking and then somebody says,
    well, but there's a bridge out halfway through that trip. You
    say, well, it doesn't matter, I'm just going to take this road.
    But when we come to the bridge, we'll just drop off the bridge.
    This is your SPR policy.
        That wouldn't be very smart, and it's not very smart for us
    to say here's the road we're taking with respect to SPR. No
    matter the consequences, no matter the circumstances, no matter
    the price of oil, we're still going to stick it underground.
        I mean, my point is I think there's a need for a pause, a
    1-year pause with a price-cap issue, and I'm going to work on
    that.
        I don't know whether you have described, as Mr. Spurgeon
    has described, a 330 percent increase in his accounts in 7
    years. He smiled broadly as he said it, and I'm sure he feels
    very good about it.
        Have we had a 330 percent increase in the funding for clean
    coal technology and the fossil accounts in the last 7 years?
        Mr. Slutz. I can't answer that question. I mean, I don't
    know the percent increase that we've had or what we had.
        Senator Dorgan. I'm not diminishing Mr. Spurgeon's dramatic
    success, much of which should be attributed to my colleague to
    the left here, but----
        Senator Domenici. Well, I don't have anything to do with
    running the Government.
        Senator Dorgan. No, but, look, we've not been blind here.
    We understand what's been going on.
        Senator Domenici. I thought it was a great priority to get
    nuclear power plants on board and there are.
        Senator Dorgan. We have others that want to ask questions,
    and I want to recognize Senator Domenici, but I just want to
    say this.

                              CARBON SEQUESTRATION

        There isn't a ghost of a chance of us being successful in
    our fossil programs unless we understand that to continue to
    use coal in the future, given what's coming at us and the
    debate on global climate change legislation, unless we decide
    this is urgent. It's going to require significant increases in
    research and also especially in development, because you've got
    to get the commercial-scale development applications to
    understand what technology works and at what cost. Both are
    very important.
        So, as we work on this in this subcommittee, we're going to
    try to find a way to recalculate some of this and make bigger
    investments and bolder investments because we've got to
    continue to use coal, but we have to do it in a manner that
    doesn't injure our environment.
        We're not going to have a future without coal. The question
    is what kind of a future are we going to have with coal when we
    describe conditions of capture and sequestration? I'm a real
    believer that technology can solve some of these problems, but
    technology isn't inexpensive, and so, Mr. Slutz, I'm hoping
    that the next time you come, you'll be able to smile as Mr.
    Spurgeon has about what we might be able to do to increase the
    accounts that you can't ask for because you've got to be here
    supporting the President's request. You know and I know that,
    if we do what I think we should do to your accounts, you would
    be very appreciative.
        Would you agree to that?
        Mr. Slutz. I will agree that managing coal requires us to
    solve the carbon sequestration issue, and it is a huge
    challenge that we need to solve.
        Senator Dorgan. Diplomatically said. Thank you. Senator
    Domenici.
        Senator Domenici. Well, Mr. Chairman and members of the
    executive branch here in front of us, let me say, regardless of
    what my emphasis has been, along with others, like Senator
    Craig, in the field of nuclear and I'm trying to get a nuclear
    renaissance going, there's no doubt in my mind that the
    chairman has properly expressed the situation in the United
    States in terms of our future, and coal is an American--just
    the backbone of America's ability to solve the problem of
    having to import our energy needs.
        In my opinion, it would be a good thing and maybe we could
    do this. We have been spending money on coal research and it
    not all comes to you. Some goes to the Department of the
    Interior, and I think it would be good if we asked the
    administration to submit to us the amount of money that's been
    spent on coal, clean coal research, and let ``clean coal'' be a
    generic term for any kind of research that's been done on coal
    to make it more usable and friendly to American ambient air
    standards and the like.
        I'd like to see how much we've spent in the last 10 years,
    if you could ask them to tell us, and then if there are other
    departments that spend it, you could tell us who they are and
    we could ask them.
        Senator Dorgan. Mr. Slutz, would you submit that to our
    committee?
        Mr. Slutz. Yes. Yes, sir.
        [The information follows:]
                               Clean Coal Funding
        The Department of Energy has invested $3.4 billion in clean coal
    research over the last 10 years to dramatically reduce coal power plant
    emissions (including CO2) and significantly improve
    efficiency, thereby reducing carbon emissions. While funding is not
    readily available, other Government agencies that invest in clean coal
    include the National Science Foundation, the Department of Interior and
    the U.S. Geological Survey.

                         CARBON SEQUESTRATION CONTINUES

        Senator Domenici. What worries me is we've been--every year
    since I've been around doing my work on this subcommittee, we
    hear about the additions that are made to research on clean
    coal. The new addition has been CO2.
        First we had clean coal and we weren't trying to get
    CO2 out of it because climate wasn't a part of the
    issue. We were trying to clean it to meet the standard so we
    could use it in our utility. Now we've added to the research
    the burden of cleaning it and removing and making
    CO2, the removal stick.
        It seems to me that is a question to ask you and maybe you
    can get your experts to tell us. Has the fact that we are
    asking our researchers to find a way to remove and stabilize
    the removed CO2 made the research job of cleaning up
    our coal more difficult and are we ignoring clean coal and
    putting more effort on clean coal and carbon sequestration? Do
    you understand my concern?
        Mr. Slutz. As we focus on CO2, we're missing
    some of the other aspects.
        Senator Domenici. Making it more difficult. If we broke
    through and had clean coal, that'd be one thing. That'd be a
    pretty giant step. We've tried that for years. At least the
    utility companies and America would say we could burn that
    coal.
        If we say research clean coal and carbon sequestration, we
    might be making the clean coal more difficult to achieve and we
    may be taking more time to get it done, and I think I'd like an
    answer from some of your experts as to what we're doing with
    our money in that regard.

                         NATURAL GAS AND COAL RESOURCES

        It is very important. Right now the utilities of America
    are in an absolute dilemma, and that's your business and that's
    your business. You know they can't start a new powerplant,
    right? What they're all going to do is go to natural gas,
    right?
        Mr. Kolevar. Yes, sir.
        Senator Domenici. There's no question. They're going to be
    pushed up against the wall and they're going to eventually say
    whatever the cost, we have no other alternative. We're going to
    natural gas.
        Mr. Kolevar, you don't think that's good policy for
    America, do you?
        Mr. Kolevar. No, sir, it's not.
        Senator Domenici. And then how about you in your research?
    You don't think that's good for America, do you?
        Mr. Spurgeon. No, sir.
        Mr. Slutz. I think its good policy. I think there's a role
    for each of those fuels. There's going to be a role for both
    natural gas and for clean coal. There's--it's not an if--it's
    not an either/or.
        Senator Domenici. Sure.
        Mr. Slutz. It's clearly both.
        Senator Domenici. But if you ignore cleaning up the coal or
    make it take 10 years longer, your utilities can't sit by and
    wait. They're going to add capacity. You just described the
    capacity add-ons that are predicted by Caruso over there at--
    that does a great job. His predictions are probably as accurate
    as any, and he says they're going to have to add great
    capacity, right?
        Mr. Slutz. Yes, sir.
        Senator Domenici. Thirty-five--what does he say?
        Mr. Kolevar. About 35 percent by 2030.
        Senator Domenici. Do you know what the utilities are saying
    they're going to do to meet the requirement? We have nuclear
    coming along, but it's by nature pretty slow.
        Mr. Kolevar. I think it's fair to say that a lot of
    utilities are not quite sure how they're going to get there.
        Senator Domenici. That's correct.
        Mr. Kolevar. But we are seeing the cancellation of planned
    coal units now, and much of that new generation coming online
    is going to be natural gas and that will make us more reliant
    on foreign sources of gas.
        Senator Domenici. And you know what natural gas is worth
    now. Remember when we started, Larry? Now it's up to nine. When
    we started, look at here. It's nine-plus, and then they're
    going to have to use it, even though it's in short supply.
        I have a number of questions, but I'm just going to get you
    on this, Bond and others, that keep attacking you. Are you
    feeling all right? Are you holding up under the barrage?

                                   FUTUREGEN

        Mr. Slutz. Thanks, Senator. Yes, we are--I'm holding up.
    We're holding up. It was not an easy decision to make the
    decision on FutureGen, I can tell you, and we're working
    through that. We're working through it with our various
    industry partners. And let me just add one, which I think is--
    and we'll have much more in the next few days to come out, but
    after we made the announcement, we immediately released a
    request for information.
        We requested those comments come in by Monday, March 3. I
    was able to determine yesterday we received over 50 comments,
    which is very significant for that type of technical request
    for information.
        I don't want to get ahead of myself because we need to
    analyze those comments, but I'm very optimistic that we have a
    path forward with this restructure of FutureGen that gets these
    projects out quicker in a full-scale commercial environment,
    and we're seeing a lot of interest by utilities because they
    see this as key to being able to use coal, and we're hearing a
    lot of excitement out there.
        So, we need to work through these comments. We're going to
    be working over the next month with some structured outreach
    programs with industry. And we anticipate coming out with a
    funding opportunity announcement very soon, and we'll be
    working very closely with Congress as well on this.
        Senator Domenici. Well, you've got to be smart on what
    you're going to do at the next go-around because you had the
    areas that were committed to this and perceived to have won,
    and now if you have a new program and there in some way it's
    made difficult for them to be participants, this issue will go
    on for years. And so my advice is to work with these companies
    that were part of your proposal before, and I'm sure you're
    going to do that.
        Mr. Slutz. Yes. Yes, sir.

                                 NUCLEAR ENERGY

        Senator Domenici. Now let me talk about nuclear just for a
    little bit. Mr. Spurgeon, you're going to leave this Government
    when the President's term's up, I assume, or close thereto.
        Mr. Spurgeon. Yes, sir.
        Senator Domenici. First, I want to say together it would
    appear to me that your short term in this office will be
    evidenced by enormous positive success in the direction of
    nuclear power being used again in large quantities by America
    and certainly much more in the world than it ever has been, and
    we may be a player, whereas before we were doomed.
        We may, in my opinion, be back at it producing engineers
    that are experts, et cetera, and we may be interested in
    nuclear power at every level.
        Am I stating it halfway right?
        Mr. Spurgeon. Yes, sir.
        Senator Domenici. Now, since we've got nuclear power and
    got a lot of companies ready to go, there must be some things
    that are problematic about the future of nuclear power, and I
    might ask you in a minute to tell us a few, if you have them,
    but it seems to me that the overhang that is really big is,
    even though it's not as big a problem in my mind now as it was
    10 years ago, but the problem of what are we going to do with
    the waste is the only thing that stands in the way of maximum
    acceptance of nuclear power.
        You know that, right?
        Mr. Spurgeon. Yes, sir.
        Senator Domenici. That's the only thing people that know
    what they're talking about say and then it's accepted by the
    masses that, well, something's wrong, we don't have the waste
    control. We're doing darn well. We could stay a long time
    without a new repository because of the way things are right
    now.
        But are we going to find a way, a direction to move ahead
    so that we are assured of the next step which would be a
    reprocessing, a recycling plant in America? Is that going to be
    set before you and Mr. Bodman leave office or not or do you
    know?
        Mr. Spurgeon. I certainly hope so, sir. The future is
    always hard to predict, but we have all the ingredients in
    place that should allow that to happen, and that's not taking
    away anything from our long-term R&D efforts which will
    eventually get us to the point in advanced reactors and
    advanced systems that we need to get to and will get to some
    time later in this century.
        But the key to the revival of nuclear energy is making
    concrete progress, and I don't mean that as a pun, but
    ``concrete'' meaning real things getting built.
        Senator Domenici. You bet.
        Mr. Spurgeon. That's our next step with respect to nuclear
    reactors in this country. We have the systems in place. We have
    some of the support mechanisms in place, but we need to push it
    over the goal line. Therein you'll see the emphasis in our 2010
    program in this year's budget because it's the new reactors
    that are going to be the pole that gets the flywheel turning.

                              SPENT FUEL RECYCLING

        But for the sustainability of nuclear energy long term--
    because we don't just need the 30 or so plants that are on the
    drawing boards in one stage or another today; we need more than
    300 if we're going to have any chance of meeting some of our
    carbon goals in the near term. And so to do that then, we've
    got to solve that second of the two basic questions that have
    been out there for nuclear energy since the 40 years I've been
    in this business, which is, is it safe and what are you going
    to do with the waste?
        I think we have basically answered the question through
    good, solid, reliable operation of our nuclear plants that it
    is safe. We've got that second one to answer, but I think we
    can do that by looking at the entire back end of the fuel cycle
    as a unit.
        We need to look at used fuel and what is the best way and
    an integrated way of managing used fuel? Because through
    recycling, you can make the repository challenge much easier.
    You can put a much more stable waste form into the repository,
    making it such that it's easier to license, easier to----
        Senator Domenici. What is the objection? What is the
    objection to recycling?
        Mr. Spurgeon. It is something that goes back a long time.
    When this business started in the late 1960s and early 1970s,
    the whole policy was that the fuel coming out of a lightwater
    reactor would be recycled back into a lightwater reactor and
    the solidified, vitrified high-level waste would go into a
    repository, and at that point in time it was a salt mine that
    we were looking at for that kind of a repository. And that was
    our plan and that was moving forward, and that's when nuclear
    energy was going to provide a large share of our electric
    energy--projected to provide a large share of our electrical
    energy generation requirement.
        In 1977, President Carter indefinitely deferred
    reprocessing in this country. Now President Reagan did reverse
    that in 1981, but by 1981 nuclear energy was kind of on the
    downslide and there was no basic economic or business
    imperative for us to move forward with recycling.
        Senator Domenici. Yes, sir.
        Mr. Spurgeon. But we're now getting back to where we're now
    seeing that curve again turn upward and where we do need a
    substantial amount of new nuclear power, and to do that, we are
    now relooking at, through the Advanced Fuel Cycle Initiative
    and other programs, the ability to recycle fuel.
        I don't think--I'm sorry. I'll be quiet.
        Senator Dorgan. Let me just mention, though, that I think
    it requires a longer discussion. The reprocessing decision in
    1978 had to do with nonproliferation concerns. Valid or not,
    one might agree or disagree, this is also part of a concern
    about nonproliferation. So that's the origin of that, right?
        Mr. Spurgeon. No question, sir.
        Senator Dorgan. Okay.
        Mr. Spurgeon. Actually, I was there. I mean, I was one of
    the people that were doing the report.
        Senator Domenici. Well, just a minute because I ran out of
    time and you gave a long answer and that's sufficient. You've
    explained it.
        I want to say this. President Carter did stop this by
    executive order, and he said it was based upon the desire of
    the United States that there not be the proliferation that this
    would add to the atmosphere and that if we didn't do it, others
    would not do it since we were a leader that the world followed.
    The problem is that was a mistake and they didn't sit by and
    say we'll skip reprocessing, we'll do something else. They
    reprocessed and we did not, and now we're in a position of
    deciding whether we should or not. And the chairman is correct,
    that President that did it had a good reason. The problem is
    that the reason didn't turn out to be right, and it's many,
    many years since the decision and Europe, led by France, is
    recycling. And that's one of the giant, giant concerns that we
    must confront, and I don't know whether we're ready to confront
    it. I am, but I don't know whether others are.
        Thank you, Mr. Chairman.
        Senator Dorgan. Senator Domenici, the reason I interrupted
    is only to say that the issue of reprocessing is not a
    technical issue. I mean, the decision wasn't made on a
    technical basis. It was made on a broader basis, and one might
    or might not feel it's time to revisit that.
        I think the issue of reprocessing requires a discussion
    about the kinds of things Senator Domenici has just described
    and the kinds of things others would describe about
    reprocessing. That was my only point.
        Senator Craig.
        Senator Domenici. That was fine.
        Senator Craig. Thank you very much, Mr. Chairman. I'll
    become a little more parochial. These are extremely valuable
    discussions, and I would suggest, as it relates to FutureGen
    and clean coal technology, I think the utility industry is
    ready to participate in phenomenally aggressive ways in
    partnerships to provide substantial resources.
        One of the things, if I have any disappointment in this
    administration, is we've not crossed that line of partnerships
    that I think we must if we're going to bring the resources to
    bear on the urgency that you hear this committee speak of when
    we speak about technology and the future and the need.
        Senator Domenici. You're right.
        Senator Craig. We still think we have to fund everything
    out of the hip pocket of the taxpayer, and those relationships
    are to come and they must come. Whether it's building an NGNP
    or whether it's FutureGen, they have to be targeted, they have
    to build consensus, but there's phenomenal resource out there
    waiting.
        I had the president of a major utility the other day tell
    me that they could meet the targets of a cap-and-trade in a
    reasonable fashion given the running room and the technology
    and the partnerships and the relationships with the Federal
    Government. But you all three understand, as we all four up
    here do, we have three people vying for the presidency today
    that hold nearly the same position on climate change and a
    scheme of cap-and-trade that nobody yet can figure out. And if
    that were to become policy today, the fuel switching we talk
    about would go on and distort the marketplace in ways that are
    awfully hard to perceive because utilities would be forced to
    move in the direction they must move to build their base loads,
    the clean coal technology not being in place and certainly the
    nuclear backlog and the building of infrastructure there and
    capability that's obviously under way. That's a frustration to
    all of us, or certainly it is to this senator. It may not be to
    others.

                             ADVANCED TEST REACTOR

        But, Dennis, last April, DOE designated the Advanced Test
    Reactor, ATR, as a national user facility. ATR is a unique test
    reactor that the university research community and the
    commercial nuclear industry can use to perform critical tests.
        Up until now, only the lab and the Navy have had access to
    the ATR. Now the fiscal year 2009 DOE budget only includes $2.5
    million for this activity.
        Do you consider this to be enough funding and what more
    could be done with additional funding?
        Mr. Spurgeon. I think it's a good start, sir. You're
    pointing out something that I consider to be a major
    accomplishment of moving the ATR into the marketplace, if you
    will, because it has a tremendous amount of untapped
    capabilities that can be used. And so, starting this summer, as
    you know, we are going to be having researchers from
    universities that are going to be starting to take advantage of
    that very unique facility.
        So, is it a start? Is it an acceptable start? I believe so.
    I'm hoping that this will take off and grow, and we will
    continue this program because it's--it can be a great example
    of how we can take and make full use of our national assets,
    especially the ATR, which, while it's been around for quite
    awhile, it's a very young 30-year-old plant.
        Senator Craig. Well, we'll watch it very closely because it
    is that nexus of partnership that I think ATR may assist us in
    doing, increasing those relationships with the private sector
    and the university communities that are going to be
    tremendously important.

                            ENVIRONMENTAL MANAGEMENT

        When the Secretary testified before the Energy Committee, I
    asked him to respond to the Idaho delegation's repeated request
    to transfer clean-up liability from the lab to the clean-up
    contractor. The fiscal year 2009 budget did not provide funding
    for these clean-up activities in either of the NE or EM
    budgets.
        Are you planning to fund these clean-up activities through
    NE? That would be the one question. What impact will this have
    on the R&D activities, like NGNP and GNEP, on the lab's
    infrastructure--and the lab's infrastructure?
        Mr. Spurgeon. Obviously any clean-up activity that is done
    at Idaho, however the budget funds end up getting requested,
    would be managed through the EM contractor. Nuclear Energy is
    not in the business of doing clean-up. My office is not in the
    business of managing clean-up, but it all goes through the
    Idaho Operations Office.
        Consequently, the issue here is more of how do we get
    adequate funds to manage the overall national clean-up activity
    that is ongoing and that needs to continue? From my personal
    perspective, I'm in the business of building things. I'm not in
    the business of taking things apart. There's another
    organization within the Department that does that.
        Senator Craig. Okay. Am I out of time, Mr. Chairman?
        Senator Dorgan. Close.

                       OUTER CONTINENTAL SHELF RESOURCES

        Senator Craig. Close. One last question then to you, Mr.
    Slutz, last year I included $10 million to perform an inventory
    analysis of domestic oil reserves in the Outer Continental
    Shelf, in the Energy and Water Appropriations bill.
        What are your thoughts on investing in this type of
    analysis to establish once and for all the Nation's oil
    reserves to be used at a time of need?
        And I say this because what we're looking at today is old
    knowledge, and yet we know that when incentivized, we went into
    the deep waters of the gulf and we applied today's technology
    and found phenomenal oil and oil reserves, and I am just amazed
    that we have decided to put a blindfold on because of the
    politics involved that are old, they're not the new politics
    that ought to be fitted to the new technologies. And I'm going
    to make a run at that again. I'm going to work awfully hard on
    it to see if we can't break through the mental fog out there of
    knowing where our country is as it relates to our reserves.
        Senator Domenici. What is that, Senator, you're going to
    work on, the inventory?
        Senator Craig. Ten million dollars to build the inventory.
        Senator Domenici. We did it. You put it in and then they
    took it out, and we had to take it out in conference.
        Senator Craig. I know we did it and----
        Senator Domenici. It's not law yet.
        Senator Craig [continuing]. My effort is to do it again.
        Senator Domenici. Right. I got you. I didn't understand.
        Senator Craig. Your thoughts, sir?
        Mr. Slutz. Well, let me just tie it back in, I think
    broader, when you look at it from an oil and gas reserve
    assessment, technology assessment, it's actually something
    that, as a nation and the world, that we actually do need to do
    periodically.
        It is probably--and I'll reference a study I was personally
    very involved in, was the National Petroleum Council Study that
    was titled ``Facing the Hard Truth'' when it was issued. And
    one of the key findings from that study, which was actually a
    study of studies and projections that are out there, was that
    it was something not just the United States but globally we
    needed to have a better understanding of our resource base and
    that it was time to really update that, and I think there's
    some real good information in that piece of work on how to get
    started under that.
        And, of course, almost every projection in the world, I
    think, all except one major projection, relies on the United
    States Geological Survey and their reserve assessment. So, I
    think the United States has always shown leadership in reserve
    assessment. I think it is a critical issue, not just to know
    what we have in the offshore and Outer Continental Shelf but
    also, as we look more toward unconventional resources, past
    reserve assessments have not--because of new technology
    developments over the last probably 15 years, some of those
    past assessments don't actually take into account a lot of--for
    instance, what is the real opportunity with oil shale and some
    of those things?
        So, yes, I think there is some opportunity there for us to
    better understand this.
        Senator Dorgan. Mr. Slutz, thank you very much. I do want
    to mention that we put the inventory in our bill last year, and
    I supported that. But it properly belongs with the Interior
    Appropriations Subcommittee.
        Mr. Slutz. Right.
        Senator Dorgan. Both of us are on Interior, I believe.
    That's probably where we'll want to put it.
        Mr. Slutz. I was giving you the general technology answer.
        Senator Dorgan. I understand. I also want to make a point
    that the administration has zeroed out the ultra-deep and
    unconventional oil and gas drilling research. We added back the
    money in the past, but for the second year in a row, the
    administration zeroed that out. I think is a very big mistake
    because there are resources there that we need to further
    research and develop technologies so that we can find them.

                               PREPARED STATEMENT

        Let me call on Senator Allard.
        Senator Allard. Thank you, Mr. Chairman. I would like to
    have my statement made a part of the record, if I might.
        Senator Dorgan. Without objection.
        [The statement follows:]
                   Prepared Statement of Senator Wayne Allard
        Mr. Chairman, thank you for holding this hearing today. I think it
    appropriate that we are hearing from, not only the offices responsible
    for dealing with electricity production, but also the Office of
    Delivery and Reliability. And as we are all aware, no amount of
    electricity does us any good if we cannot get it to where it is needed.
        No one can argue that we are dangerously reliant on foreign sources
    of energy. We must decrease our reliance on foreign sources of energy
    by diversifying our energy sources and increasing conservation. I have
    long felt that a balanced energy portfolio which takes no technology
    off of the table is what is best for this Nation.
        For this reason I am a strong supporter of nuclear energy. Nuclear
    generation facilities produce vast and reliable quantities of
    electricity. I am pleased with the recent movement toward increasing
    our nuclear capacity, which has been the result of the Energy Policy
    Act passed in 2005. I am hopeful that we can continue this progress.
        In the area of fossil energy production, technological advancements
    have made the use of coal cleaner and more efficient than ever before.
    In the United States, and in the State of Colorado, we have vast
    amounts of domestic resources from traditional oil, coal and gas
    resources to unconventional sources such as oil shale. I firmly believe
    that we can and must continue to use these resources responsibly.
        I look forward to working with the committee to ensure that
    research and development in all fields of energy technology are funded
    in a manner that is responsible, but sufficient to ensure that the
    development and implementation of new technologies continues.
        Again, Mr. Chairman, thank you for holding this hearing. And thank
    you to all of the witnesses for being present.

                              SPENT FUEL RECYCLING

        Senator Allard. Thank you, Mr. Chairman. My approach on our
    energy crisis is that we need to have a balanced approach. We
    can't take any energy source off the table right now, and I
    think that's critical. That's a position that I think is good
    for the country, happens to be good for the State of Colorado
    because we have lots of natural gas, we have lots of clean
    coal, we have lots of sources for renewable energies, and we
    have a lot of the technology to develop some of this.
        The question that I have is when we're talking about
    nuclear energy, what is being done to--that you're familiar
    with--to push the recycling of nuclear energy?
        I visited the recycling nuclear energy plants in Sellafield
    in England. I've been to France and visited those recycling
    units there, and anybody that hasn't been to those areas, I
    think they ought to spend the time to go there because it's
    American technology that they've taken to the European
    community, and I know that we're working on what we call a MOX
    plus, which means when we recycle, we end up with a byproduct
    that is more difficult to convert to a nuclear weapon of some
    type.
        Would you comment on that recycling part on nuclear energy,
    please?
        Mr. Spurgeon. From the budgetary standpoint, that's found
    in the Advanced Fuel Cycle Initiative, which is looking to
    develop the technologies which will allow us on a long-term
    basis to proceed forward with advanced recycling and also with
    advanced reactors that would then be used to recycle the
    material into.
        On a near-term basis, we are looking at, well, what can we
    do to make the fuel cycle more proliferation resistant, that
    is, so that you don't separate out pure plutonium? I don't
    happen to call it MOX plus, but on the other hand your
    description of it is accurate. And that is something that we
    are looking at.
        We look at that as the--I personally look at that as the
    next incremental step along the way toward the ultimate goal of
    long-term fast reactor recycle, but what that also does, as
    Senator Domenici was commenting on just a moment ago, it gets
    us to the point where we can have an easier solution than just
    disposing of used fuel directly in a repository, an easier
    solution to the disposition of high-level waste because the
    product of a recycle facility is a vitrified glass form that is
    easier to dispose of and gives us many more alternatives as to
    how we dispose of that material.
        Senator Allard. Reduces the waste stream.
        Mr. Spurgeon. It does reduce the waste stream. It reduces
    toxicity, but more importantly, if you just dispose of a spent
    fuel element, then you need to be able, because you don't know
    but what you might want to use that material and that resource
    that's still contained in there at some later time, it needs to
    be recoverable or retrievable. That defines a harder problem
    for a repository than if you're disposing of a glass log and it
    just needs to go in there and be safe for the time frame that
    needs to be maintained geologically stable.

                              CLEAN COAL RESEARCH

        Senator Allard. Thank you for that. I also think that we
    have to continue to rely on working on our traditional energy
    sources. Mentioned was coal. Colorado has a source of clean
    coal because it's hard, has high mercury levels. You go further
    east, you have soft coal with lower mercury levels.
        What is being done in clean coal technology to look at how
    we can easily remove mercury from coal? Is anything being done
    there?
        Mr. Slutz. In the past, we have had programs that focused
    strictly on clean coal and particularly mercury, and that was
    in our Innovations to Existing Plants Program.
        Now, what we've done is we are proposing in 2009--we
    actually proposed no funding in 2008 because much of that work
    had been done, and in 2009, we're proposing money in the
    Innovations to Existing Plants but that again is focused on the
    carbon capture piece of it and it's capturing carbon from the
    existing coal fleet, is where that line is moving to.
        So, we are--in the past, we have done work on mercury, but
    now we're moving more toward carbon capture.
        Senator Allard. Now, what I'm hearing on this carbon
    capture, some of this you're talking about disposing of the
    carbon in one way or another.
        Just sitting here listening to your discussion, I know that
    we make carbon compounds that are very light and extremely
    strong. Is there a possibility of taking those carbon compounds
    that you have left over from your coal utilization, and
    converting those into a commercial product like these carbon
    compounds where they're extremely light and extremely hard? And
    they're actually using them. Taking these synthetics and
    actually making them part of the fuselage of planes and whatnot
    because of their lightness and durability. Is there anything
    being done on that?
        Mr. Slutz. I think there's been past work being done on
    other ways to store it, other than sequestration, but right
    now, we're focused on sequestration. And I'll tell you part of
    the challenge----
        Senator Allard. Is there a future in that?
        Mr. Slutz. Well, part of the challenge is the scale. And if
    I could just give you a sense of that----
        Senator Allard. If you would.
        Mr. Slutz. If you captured all the carbon from all the
    power--the coal-burning powerplants in the United States and
    then you compressed it so it was a liquid, like it was, it's
    called super-critical, so it's like a liquid. You would have to
    manage 50 million barrels a day of that liquid. That's 2\1/2\
    times our current oil-handling capability.
        So, from a scale--it's not that I'm not saying it doesn't--
    I don't know the answer to whether it does and we can look into
    that from a standpoint of giving a technical answer of the
    possibility of that, but the part of the challenge is the
    amount of carbon dioxide we could deal with.
        Senator Allard. Well, I see that, is this liquid carbon
    dioxide or is this----
        Mr. Slutz. When you move it, you compress it.
        Senator Allard. Is this frozen carbon dioxide what you're
    dealing with in the end?
        Mr. Slutz. No, it's actually--carbon dioxide is a gas when
    you compress it.
        Senator Allard. Right. And then it----
        Mr. Slutz. And then it becomes like a liquid.
        Senator Allard [continuing]. Becomes a liquid and then a
    solid.
        Mr. Slutz. Yes.
        Senator Allard. Yes. But when you--carbon sequestration. I
    mean, if you take the oxygen out, you've got carbon?
        Mr. Slutz. Right. But CO2 is you inject it for
    sequestration.
        Senator Allard. Okay, all right. So, you inject the
    CO2 for sequestration. My point is there a carbon
    compound that's left over in the process?
        Mr. Slutz. In----
        Senator Allard. Not really?
        Mr. Slutz. Not really.
        Senator Allard. Not really. So, when we combine this with
    soda, soda ash, for example, what is happening? I mean, why are
    we combining it with soda ash? Is this a way of disposing of
    the carbon, CO2?
        Mr. Slutz. I would have to get back with you on that. I'm
    not sure of the answer to that question.
        Senator Allard. I'm trying to get an understanding here of
    the disposal cycle as we go through the sequestration.
        Mr. Slutz. Oh, sequestration. You're actually inject--what
    you're doing is you're injecting the CO2 into a deep
    underground saline aquifer, so it stays in that--because of the
    geologic pressure, it stays in that super-critical liquid.
        Senator Allard. CO2.
        Mr. Slutz. CO2, yes.
        Senator Allard. Okay.
        Mr. Slutz. Now----
        Senator Allard. No attempt has been made to take these
    byproducts and put them to a useful purpose, is what I'm trying
    to get to.
        Mr. Slutz. In the past, I think there's been some limited
    work in that.
        Senator Allard. Yes. But do you think that there--we should
    be doing something like that?
        Mr. Slutz. I don't know what the--I'm not sure what the
    potential is on that.
        Senator Allard. I think we ought to look at that. I mean,
    we always have a disposal problem, but we need to look at, you
    know, how you recycle this stuff, and if there's the technology
    there to put it to some useful purpose, I think we ought to
    look at that.
        Mr. Slutz. There is one area that we see a significant--
    it's still not done on a full scale, but using CO2
    for enhanced oil recovery is one very likely possibility and an
    early possibility for finding an alternate use for
    CO2. As it's injected into the oil reservoir, it
    increases oil production. It's done--there are some--at Permian
    Base in west Texas, significant enhanced oil recovery is done
    by using CO2. So, yes, that's probably one of the
    largest reuse opportunities in enhanced oil recovery.
        Senator Allard. I see my time has expired. Thank you.
        Senator Domenici. Excuse me, Mr. Chairman. Might I comment?
        Senator Dorgan. Senator Domenici?
        Senator Domenici. I might say Senator and Mr. Secretary,
    this injection that you speak of has been done for--that's a
    pretty old use of carbon dioxide, and it was not done for the
    purpose of leaving CO2 underground. Nobody was
    trying to remove CO2. We didn't know it was a
    problem. It was a good way to fill the underground veins of oil
    and push the oil up. So, we find out now that maybe that's a
    way to get CO2 out of circulation, and it does quite
    well.
        I might say to the Senator, one of the most interesting
    things happened in testimony yesterday from Mr. Caruso from the
    Energy Information Agency. When we passed the CAFE standard for
    automobiles, Mr. Caruso just told us yesterday how much carbon
    dioxide we saved, will save by 2030 because of the forced
    change in the size of automobiles and et cetera.
        We're going to save 5 billion tons just by that law and its
    implementation among the car owners of America. So, we're not
    going to get rid of carbon dioxide only by----
        Senator Allard. Well, you need to have CO2 if
    you're going to have plant life on this world.
        Senator Domenici. Yes. But what I'm saying is there's lots
    of ways we're going to reduce it. That's one. We didn't even
    have to do anything except pass a bill to change the model of
    cars and you cut 5 billion tons in that.
        I've told the chairman that I had to leave, Secretaries,
    and I want to thank all of you and especially you, Mr.
    Spurgeon. We'll be working hard with you for the next 10 months
    to see that we can come up with some more good things before
    you leave.
        Thank you, Mr. Chairman.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Dorgan. Senator Domenici, thank you very much. At
    this time I would ask the committee members to please submit
    any additional questions they have for the witnesses for the
    record.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                 Questions Submitted to Hon. Dennis R. Spurgeon
                Questions Submitted by Senator Pete V. Domenici
        Question. The difference between the Department's fiscal year 2008
    request and fiscal year 2009 request for the Advanced Fuel Cycle
    Initiative (formerly GNEP) is down roughly $100 million. Clearly this
    will result in significant change in the research objectives of this
    program. Can you please explain to the subcommittee how the Department
    has modified the scope of this program and what are the near term
    technology goals for this program?
        Answer. The reduced funding between the fiscal year 2008 budget and
    fiscal year 2009 budget for AFCI, which is the domestic technology
    research and development component of GNEP, results from, among other
    considerations, a planned reduction in R&D resulting from industry
    feedback to date showing that prior R&D scope might be greater than
    required to meet industry needs. In fiscal year 2008 the Department
    solicited input from industry to determine whether the near-term
    technology and deployment goals of GNEP could be met using commercially
    available technologies. This interaction indicated that the initial
    deployment of spent nuclear fuel recycling technologies could utilize
    technologies already in use on an industrial scale in Europe and Asia,
    with modifications to ensure pure plutonium is not separated.
        Question. The fiscal year 2008 Energy and Water bill directed the
    Department to develop a strategy to address the spent fuel inventories
    at the closed civilian nuclear facilities in New England and the West
    Coast. These sites, which have no ongoing nuclear operations, are
    simply long term storage facilities for spent nuclear fuel. What is the
    Department doing to implement this Congressional direction and what are
    the options currently under consideration?
        Answer. The fiscal year 2008 Report language requested the
    Department of Energy (DOE) develop a plan for accepting spent nuclear
    fuel currently stored at decommissioned reactors at either an existing
    Federal site, at one or more existing reactor sites, or at a
    competitively-selected interim storage site (including those sites that
    volunteered to host Global Nuclear Energy Partnership facilities). The
    Department is currently evaluating pertinent information and preparing
    a report in response to this request.
        Question. As I noted in my opening remarks, the MOX fuel
    fabrication facility has not received adequate funding and the
    Department will be forced to rebaseline the program to establish a new
    budget and schedule for this project. Can you please inform the
    subcommittee of the impacts of Congressional cuts to the MOX program
    and how much taxpayers will pay as result of these cuts? What will this
    do in terms of delaying our goal of eliminating excess plutonium from
    the U.S. weapons stockpile?
        Answer. DOE is currently analyzing the MOX cost and schedule
    impacts that will result from the $217 million funding reduction to the
    MOX project (this reduction includes $100 million cut from the budget
    request, the rescission of $115 million and a $2 million reduction in
    Other Project Costs) in the 2008 Consolidated Appropriations Act. It is
    premature to speculate on the impacts of these changes until this
    analysis is completed. However, we expect that the funding reductions
    could increase the total project cost of the currently validated
    baseline for the MOX facility, delay the facility construction and
    operations schedule, and ultimately, delay our goal of eliminating
    plutonium that has been declared excess to U.S. defense needs.
        Question. Last year, as part of the Energy and Water bill, Congress
    directed the Department to make investments in our national labs
    instead of pursuing a brand new consolidated fuel technology center.
    The labs support a wide variety of nuclear research ranging from
    nuclear weapons to medical isotopes, but the infrastructure at these
    facilities are aging and require new investments to sustain the
    scientific capability. Do you agree that we need to continue to invest
    in our scientific infrastructure and how does the fiscal year 2009
    budget request support this goal?
        Answer. The Department of Energy (DOE) strongly believes that
    investment in our scientific infrastructure is critical to successful
    accomplishment of our mission. The fiscal year 2009 budget supports
    this goal, and DOE will continue to support and maintain our facilities
    and equipment so that research and development (R&D) of nuclear energy
    technology can be conducted with the best available laboratory assets.
        DOE is actively reviewing existing facilities to determine how they
    can be used in the near term to develop and demonstrate the
    technologies we envision for the Global Nuclear Energy Partnership
    (GNEP) such as advanced fuel separations, transmutation fuel
    fabrication, improved waste forms, and integrated safeguards. Potential
    new GNEP facilities are being evaluated to inform policy decisions and
    understand the environmental impacts associated with them. It is
    important to have facilities that can perform integrated testing at an
    engineering scale to enable the United States to become a leader in
    advanced fuel cycle R&D.
        The fiscal year 2009 budget request supports funding for
    establishment of the Materials Test Station (MTS) at the Los Alamos
    Neutron Science Center (LANSCE). This work, conducted in parallel with
    NNSA's LANSCE-Refurbishment, will establish an advanced-fast-reactor-
    fuel test capability in a currently unused target station at LANSCE.
    The budget request also supports infrastructure investment at the Idaho
    National Laboratory, DOE's lead laboratory for nuclear energy R&D. It
    also supports the continuation of an effort initiated this year to
    characterize the full compliment of nuclear facilities and capabilities
    that will provide data to inform future decision making. One goal of
    this effort is to help assure needed nuclear facilities are maintained
    without regard for their location or ownership. This is an ambitious
    undertaking, but I feel it is critically important to understand our
    infrastructure requirements and to target future investments according
    to a well-researched plan.
        Question. NRC Licensing of New Nuclear Plants.--It seems to me that
    the most successful NE program has been the NP 2010 program, which is a
    joint DOE/Industry cost share program to design and prepare a standard
    license for NRC review. It occurs to me that many of the new facilities
    being supported by DOE research such as the Next Generation Nuclear
    Power Plant and the spent fuel recycling facilities must at some point
    address the NRC licensing requirements and safety standards. What is
    your office doing to respond to the inevitable NRC licensing
    requirements for these facilities?
        Answer. The Energy Policy Act of 2005 (EPAct), requires the
    Secretary of Energy and the Chairman of the U.S. Nuclear Regulatory
    Commission (NRC) to jointly submit to Congress a licensing strategy for
    the Next Generation Nuclear Plant (NGNP), by August 8, 2008. EPAct also
    directs the U.S. Department of Energy (DOE) to develop the NGNP
    prototype for commercialization and directs NRC to license the
    prototype. DOE and NRC staff have worked closely together to jointly
    develop a comprehensive strategy for licensing the NGNP. This report
    was completed and submitted on August 13, 2008. This strategy
    identifies NRC policies considerations, procedures, analytical tools,
    and methods expected to be needed to establish a gas reactor safety
    review infrastructure.
        DOE envisions that spent fuel recycling facilities will be
    designed, constructed, and operated by commercial entities under NRC
    regulation. In July 2007, DOE established a Memorandum of Understanding
    (MOU) with NRC that provides for increased cooperation between DOE and
    NRC to allow NRC staff to become more educated on technologies and
    engineering aspects of potential nuclear fuel recycling facilities. NRC
    is participating in meetings, observing testing, touring DOE
    facilities, and reviewing industry deliverables provided to DOE. NRC
    staff members are considering regulatory framework issues associated
    with licensing and regulating a nuclear fuel recycling facility.
        Question. Later today, the Energy Committee will receive testimony
    on the status of the domestic nuclear fuel cycle and how various trade
    agreements and the ``Eurodif'' decision will impact the our domestic
    energy security. (I am sure you are fully aware that the United States
    is over 80 percent dependent on foreign uranium enrichment today.) Do
    you have any concerns about the viability of a domestic mining,
    enrichment and conversion industry to keep pace with expected growth in
    nuclear plants?
        Answer. The Department of Energy (DOE) agrees that the United
    States is very dependent on foreign sources of uranium, conversion, and
    enrichment to meet its domestic nuclear fuel needs. Over the past
    several years, DOE has observed encouraging signs that higher prices
    for uranium have spurred interest in domestic uranium exploration which
    will lead to increased uranium production, that the U.S. conversion
    industry is increasing its annual output, and that the United States
    will increase its domestic uranium enrichment capacity. Louisiana
    Energy Services and USEC Inc. have received licenses from the Nuclear
    Regulatory Commission to build and operate new enrichment plants in the
    United States. AREVA NC and GE Hitachi have also announced plans to
    build new enrichment plants in the United States. The Department is
    working with these private enrichers by assisting these companies in
    complying with U.S. laws and regulations regarding the protection of
    proliferation-sensitive enrichment technology. Additionally, the fiscal
    year 2008 appropriations legislation authorizes DOE to issue up to $2
    billion in loan guarantees for advanced nuclear facilities for the
    ``front-end'' of the nuclear fuel cycle.
        Question. Based on the trade history of the Russian Government do
    you have any concerns regarding the ability of U.S. nuclear fuel
    industry to be competitive with their Russian counterparts?
        Answer. The U.S. enrichment industry is in a transitional phase and
    is beginning to plan and construct newer, more efficient enrichment
    plants. The Department of Energy (DOE) is concerned that unlimited
    sales of foreign enrichment at less than fair value prices in the
    United States could pose a threat to the viability of plans for
    constructing and expanding modern enrichment technologies in the United
    States. DOE is currently working with other U.S. departments and
    agencies on a number of options to address this issue.
        On December 21, 2007, DOE, the Departments of State, Commerce, and
    Defense jointly sent a letter to Senators McConnell and Bunning and
    Representative Whitfield expressing the administration's views
    regarding H.R. 4929 and a companion bill S. 2531 that would amend the
    Tariff Act of 1930 to make clear that all imports of low enriched
    uranium (LEU) are subject to coverage under the antidumping law without
    regard to the nature of the transactions pursuant to which LEU is
    imported.
        Question. USEC recently announced that the cost of the American
    Centrifuge Plant is going to increase from $2 billion to $3.5 billion.
    This plant is being counted on to replace the existing gaseous
    diffusion plant and provide a much needed source of domestic uranium
    enrichment. This technology was provided to USEC by the U.S. Government
    at no cost. Can you tell me what the state of this project is and
    whether or not you believe this facility will be commercially viable?
        Answer. While the Department of Energy (DOE) granted USEC, Inc.
    (USEC) a nonexclusive patent license to DOE-developed centrifuge
    technology at no initial cost in 2006, the license contains substantial
    royalty payments once commercialization at USEC's American Centrifuge
    Plant (ACP) is at a certain level, with royalty payments capped at $100
    million. It should be noted that the cost of developing and deploying
    centrifuge technology and constructing the ACP is being borne by USEC,
    and not the Federal Government. The Government provided access to USEC
    to the existing centrifuge facilities at Portsmouth for the purpose of
    deployment of advanced enrichment technology in a commercial plant
    under a lease amendment, executed in 2006. USEC has spent an estimated
    $540 million of its own funds to advance the centrifuge technology, a
    highly classified technology the Government still owns. In the next
    year, USEC plans to spend an additional $1 billion on research,
    deployment, and construction of the ACP. These funds have in part been
    used to support research into centrifuge technology by the Oak Ridge
    National Laboratory (ORNL) and to upgrade and modernize DOE-owned
    centrifuge facilities at the former Gaseous Diffusion Plants (GDPs) in
    Portsmouth, Ohio, and Oak Ridge, Tennessee under a Cooperative Research
    and Develop Agreement (CRADA) executed in 2002. Under the CRADA, USEC
    retains rights to inventions USEC makes during the work; however, the
    Government retains a license for Government use and a right to
    negotiate for commercial rights. Any inventions made by ORNL employees
    under the CRADA work are owned by DOE.
        Retaining the domestic capability to enrich uranium is vital to the
    Nation's energy security and national security. USEC has demonstrated
    in a lead test cascade that the American Centrifuge is capable of
    producing the level of enrichment required by its customers and has
    increased machine performance beyond initial objectives. These
    developments suggest that USEC has advanced the American Centrifuge
    sufficiently to build and operate a commercially viable full-scale
    enrichment production facility. DOE's Office of Nuclear Energy
    continues to closely monitor the progress of development and deployment
    of the American Centrifuge and to assure that the Department's rights
    and options are protected.
        Question. What will happen to this Government technology if USEC
    fails to commercialize the project technology?
        Answer. A number of actions are possible. As noted above, the
    technology license is nonexclusive. If USEC fails to commercialize the
    technology, the technology will remain available for license to another
    entity by DOE. Additionally, under the 2006 lease of the gas centrifuge
    facilities at Portsmouth with DOE, the lease can be terminated and
    rights to USEC's background technology and new technology can be
    assumed by the Government should certain commercialization failures
    occur. Similar provisions regarding the assumption of technology are
    contained in a DOE-USEC 2002 Memorandum of Understanding.
        Question. Your office has been working on a strategy to sell excess
    uranium inventories, the largest amount of material contained in the
    depleted uranium tails still stored at Paducah and Portsmouth
    enrichment facilities. I understand that the plan will propose to sell
    up to 10 percent of total annual market to avoid undermining the market
    prices. When will this plan be available for review and what does the
    Department propose to do with the proceeds of these sales?
        Answer. The Secretary of Energy recently released a Policy
    Statement on the Management of the Department of Energy's (DOE) Excess
    Uranium Inventory. This statement provides the framework within which
    DOE will make decisions concerning future use and disposition of its
    inventory. During the coming year, DOE will continue its ongoing
    program for down-blending excess highly enriched uranium into low
    enriched uranium (LEU), evaluate the benefits of enriching a portion of
    its excess natural uranium into LEU, and complete an analysis on
    enriching and/or selling some of its excess depleted uranium. Specific
    transactions are expected to flow from these analyses.
        As stated in the Policy Statement on Management of the Department's
    Excess Uranium Inventory, in the absence of otherwise applicable
    statutory authority, the Department currently may not retain any money
    it receives from the sale of uranium and use that money for
    Departmental programs, but rather must treat any such proceeds as
    receipts subject to the Miscellaneous Receipts Act.
        Question. Mr. Spurgeon, your budget proposes to spend $20 million
    this year and $100 million over the next 5 years to develop ``grid
    appropriate reactors''. It is my understanding that these small
    reactors are intended to be sent to countries with ``limited nuclear
    experience'' (fiscal year 2009 budget justification). Everything I have
    learned about nuclear power over my 36 years in the Senate is that
    economies of scale are critical to making these zero-emission
    facilities economic. Before the Department commits $100 million of
    taxpayer resources, I would be very interested in your explanation of
    the business case for this project.
        Answer. Economy of scale (EOS) is an important factor when
    optimizing the cost of electricity from any power source, but it is not
    the only factor to consider in a decision to deploy nuclear power. More
    than half of the developing countries interested in pursuing nuclear
    power have physical and/or financial constraints that preclude them
    from considering large plants. Factors such as grid capacity and
    stability, availability of investment capital, and concerns for total
    project risk will likely limit these countries to consider plants with
    electrical capacities less than 500-600 MW and total construction cost
    less than $1 billion. Because the cost of power from alternative energy
    sources in many of these countries is 5-10 times higher than for the
    United States, the modest EOS penalty on the cost of electricity from a
    smaller-sized nuclear power plant is of less concern than the total
    project cost.
        Detailed analyses by the IAEA have shown that the EOS penalty can
    be reduced (by about 85-90 percent from a large reactor) by several
    other factors associated with smaller plants, including: common systems
    shared among a group of reactors; more rapid ``learning'' during
    fabrication; phased construction of multiple small units, allowing
    revenues from initial plants to offset capital outlays of follow-on
    plants; reduced interest costs due to shorter construction times and
    lower capital outlays; economic efficiencies gained by better matching
    of the energy supply and demand rates; and simplifications in the plant
    design enabled by their smaller size. Given all these factors, it is
    likely a small reactor will be extremely competitive with other energy
    forms in the local economy of a developing country.
        The introduction of nuclear energy brings other benefits that favor
    its introduction even if economics favor a less expensive alternative.
    The need to be technically competent to safely regulate and operate
    nuclear technology requires a significant amount of infrastructure
    development that will enable significant spin-off benefits. For
    example, once a competent nuclear regulator and radiation protections
    are in place, the country can pursue nuclear medicine. Once nuclear
    certified welders, electricians and mechanics are available, they can
    also fill other skilled occupations. Engineering and science based
    academic curricula will produce technical talent for other sectors in
    the economy. In short, introduction of nuclear energy will act as a
    fulcrum to raise the technological competence of an entire nation, with
    substantial benefits. For example, the Republic of Korea's first
    reactor was purchased as a turn-key project from Westinghouse. An
    element of the deal was training the welders to perform portions of the
    construction. After completion of the reactor these highly-trained,
    skilled welders became available to expand ROK's shipbuilding industry,
    which is now a world leader.
        Question. On Saturday, the Washington Post reported that the United
    States and Russia have initialed but not signed a ``123 Agreement'' on
    nuclear cooperation. However, without final signatures and Senate
    approval, there are limits on our ability too cooperate with Russia on
    civilian nuclear research and trade. Can you explain how this will
    impact your GNEP program?
        Answer. Work with Russia under the Global Nuclear Energy
    Partnership (GNEP) has not been impacted by the lack of a 123 Agreement
    with Russia. We continue to interface with Russia on issues concerning
    GNEP. However, without a 123 Agreement, GNEP research and development
    (R&D) collaboration with Russia will be delayed. This will limit our
    access to Russia's experience and facilities, both of which could
    reduce the cost and time to develop the technologies required to close
    the fuel cycle. GNEP could develop the technologies without the
    assistance of Russia or other international partners, but the time,
    effort, and cost will be greater.
        Integration of foreign experience into the U.S. advanced fuel cycle
    R&D program significantly declined in the 1980s and 1990s, which
    accelerated our loss of expertise and nuclear infrastructure. The
    United States now lacks many of the facilities needed for GNEP. We have
    no commercial-scale separations plant, no engineering-scale separations
    or transmutation fuel fabrication capability, no operating sodium fast
    reactor, etc. Meanwhile, Russia, France, Japan, and others have made
    significant progress in developing technology and related
    infrastructure. Collaboration with GNEP R&D partners is necessary, at
    least until the United States has rebuilt the required domestic
    infrastructure. Collaboration with Russia will give the United States
    access to a significant number of research laboratories that have
    relevant expertise. During the last 9 years, we gained significant
    access to Russian experts and facilities, allowing us to rebuild our
    capabilities by integrating their most recent results.
        Question. Will the lack of an agreement limit U.S. commercial
    entities from selling natural uranium or fuel services to Russia?
        Answer. Section 123 Agreements for Cooperation act in conjunction
    with other nonproliferation tools, particularly the Non-Proliferation
    Treaty, to establish the legal framework for significant nuclear
    cooperation with other countries. While the lack of such an agreement
    will prevent the United States from exporting natural uranium to
    Russia, a wide range of cooperative activities with Russia may still go
    forward. The United States and Russia drafted a report, entitled Joint
    Working Group on the Development of a Bilateral Action Plan to Enhance
    Global and Bilateral Nuclear Energy Cooperation that details principal
    areas of cooperation as well as short-term cooperative focus areas. The
    report establishes measures that will promote sustainable and safe
    nuclear energy use and expansion, in the United States, Russian
    Federation, and worldwide while strengthening nuclear nonproliferation
    and effectively addressing waste management. Specifically, it outlines
    national strategies in nuclear power; identifies the common bases for
    U.S.-Russian cooperation in advanced reactors, exportable small and
    medium reactors, nuclear fuel cycle technologies, and nonproliferation;
    and defines a plan for cooperation.
        Question. In the fiscal year 2006 Energy and Water bill, Congress
    provided $20 million and directed the Department to work with
    interested communities to support site development plans for a
    recycling plant, advanced fuel fabrication facility and an advanced
    reactor. What is the status of this effort and what is the Department
    doing to support these sites and provide technical support? What is the
    status of the Programmatic Environmental Impact Statement? What are the
    next steps for these communities?
        Answer. The Site Characterization Reports conducted by 11
    commercial and public consortia are the product of the $10,458,242 in
    grant awards made on January 30, 2007. Recipients had 90-days to
    complete these studies and submitted the reports to DOE on May 1, 2007.
    Information generated from these reports, coupled with existing site
    information, provide a variety of data relating to both DOE and non-DOE
    sites, including: site and nearby land uses; demographics; ecological
    and habitat assessment; threatened or endangered species; historical,
    archaeological and cultural resources; geology and seismology; weather
    and climate; and regulatory and permitting requirements. The Site
    Characterization Reports were made available to the public, and
    reviewed by DOE as part of the National Environmental Policy Act (NEPA)
    process and used in preparing the draft Programmatic Environmental
    Impact Statement (PEIS). DOE met with the associated communities last
    fall to identify key community issues related to GNEP that included the
    need to educate the public about the program.
        The Department received more than 14,000 comment documents during
    the scoping period for the GNEP PEIS. Evaluation of these comments
    resulted in consideration of several alternative nuclear fuel cycles
    and technologies.
        DOE is working to clarify the impact of GNEP technical and policy
    decisions on the local communities. Communications with potentially
    affected communities will continue throughout the NEPA process.
        Question. The Department has significantly increased its support
    for this program. While the two reference reactor designs continue to
    develop better fidelity in the project details, costs continue to
    increase and reactor vendors are now concerned that the original
    agreement to cost share $1.1 billion will not be sufficient to provide
    the total cost for the Standard Design. What are the Department's plans
    to address the potential shortfall?
        Answer. The fiscal year 2009 congressional budget request is based
    on an increase in the licensing demonstration project from an initial
    total estimate of $1.1 billion to $1.45 billion ($727 million in
    Federal cost share). This increase is required to address increases in
    regulatory related costs and design standardization costs.
        The Department of Energy's (DOE) cost share primarily supports the
    development and implementation of the ``untested'' regulatory process
    for the combined Construction and Operating License (COL) applications
    for two new nuclear plants. Since the 2005 Baseline estimates were
    prepared, Nuclear Power 2010 (NP 2010) has evolved from a
    ``demonstration'' program to become the centerpiece of two Design
    Centered Working Groups (DCWG) on which COL applications for 10 or more
    plants (most are twin units) depend for success. It also supports the
    completion of the first-of-a-kind engineering for two reactor designs.
    The designs must have sufficient engineering design details to provide
    power companies reliable cost and schedule information they need to
    make plant orders. A number of the utilities participating in NP 2010
    also need this information to support regulatory approvals at the State
    level via their Public Utility Commissions (PUC).
        Additional funding related to increases in regulatory-related costs
    primarily supports the evolving Nuclear Regulatory Commission (NRC)
    licensing process (significant revisions to NRC rules/requirements,
    responses to NRC requests for information, etc.) and escalating NRC
    review fees. Additional funding related to increased standardization
    supports the industry's effort to extend the level of design detail
    required for increased standardization for procurement, operation, and
    maintenance of the plants. This level of design detail would provide
    specifications of equipment and components. DOE believes this degree of
    standardization is critical to ensuring the past inefficiencies of our
    existing commercial nuclear fleet are not repeated. Without additional
    funding, there is a high risk that the aggressive operational dates
    (approximately 2015) for the first units of the two standard designs
    may not be met.
                                     ______

                  Questions Submitted to Hon. Kevin M. Kolevar
                 Question Submitted by Senator Byron L. Dorgan
        Question. I am pleased that the President has proposed to double
    the Energy Storage and Power Electronics account in your budget. It
    still seems to me that this number ($13.4 million) is far too low to
    adequately address our needs to develop commercial scale energy storage
    capabilities which are critical to placing renewable energy onto the
    grid. Do you believe that $13 million is enough to allow you to
    accomplish what needs to be done in this area? What other technical
    challenges would your office focus on with additional funding, and how
    would these technologies facilitate integration of renewable energy
    onto the grid?
        Answer. The President's budget request of $13.4 million for the
    Office of Electricity Delivery and Energy Reliability adequately funds
    Energy Storage and Power Electronics to further storage technology as
    an important component of the modern electrical grid. The request
    focuses on critical areas of concern. The fiscal year 2009
    Congressional request will continue to demonstrate utility scale
    storage technologies (cost-shared, pre-commercial projects) and
    initiate a partnership with the Office of Science specifically
    investigating the use of nano-materials for advanced storage electrodes
    and new high voltage electrolytes.
        Additional technical challenges include developing new storage
    technologies with improved cost effectiveness, safety, and reliability.
    Applied research would include new engineered materials and ionic
    liquids to increase energy density of storage systems. Additional
    systems research would focus on scaling up existing technologies into
    megawatt devices suitable for grid applications. Energy storage systems
    will advance the penetration of renewables by helping to eliminate
    integration concerns such as short term variations and ramping
    problems, and allow energy management by dispatching renewable energy.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
        Question. Part of DOE's mission is to promote America's energy
    security through reliable, clean and affordable energy. I understand
    that EPA plans to propose a revised rule before the end of the year
    governing cooling water intake structures at existing power plants as a
    result of a recent 2nd Circuit Court decision. The central question
    before the agency is what should be deemed the best technology
    available (BTA) to minimize the adverse environmental impacts that
    might result from cooling water intake structures. The Court has
    directed the agency to clarify why cooling towers or their performance
    equivalent, were not deemed BTA. I understand that approximately 40
    percent of the Nation's existing generation will be directly and
    materially affected by this rulemaking. Has DOE examined the short and
    long term energy reliability and security impacts of designating
    cooling towers as BTA for existing generation facilities and does DOE
    believe they would be significant?
        Answer. The Department has not prepared a study on the specific
    issue of electricity reliability impacts of a cooling tower mandate,
    but has studied the energy penalties that would occur if existing steam
    generators were required to replace existing ``once-through'' cooling
    systems with recirculating cooling tower systems. This October 2002
    report is titled the Energy Penalty Analysis of Possible Cooling Water
    Intake Structure Requirements on Existing Coal-Fired Power Plants (see
    attached). The Department agrees that a new Clean Water Act rule
    requiring cooling towers for existing steam generation units could have
    implications on the adequacy and reliability of electricity supplies in
    the near and mid-term. Moreover, the effect of such a rule could be
    significant if combined with other retrofit mandates that may be
    required of existing generators under, for example, the Clean Air Act.
    The Department participated in an interagency review of EPA's original
    rule under E.O. 12866 and will do so again when the new rule is
    submitted to the Office of Management and Budget for review.
        Question. Could DOE do an analysis of the potential impacts for
    this committee, including the impacts on electricity reliability on a
    regional basis, and provide preliminary results as early as May so that
    these results could be meaningfully considered in the EPA rulemaking?
        Answer. DOE will prepare an expedited analysis of the potential
    impacts of a ``cooling tower'' rule on electricity supply and
    reliability in order to provide the committee with preliminary results.
    In addition, the Office of Electricity Delivery and Energy Reliability
    will conduct a more thorough analysis of the issues facing the existing
    steam generation fleet, with a goal of completing that study in the
    fall of this year. We have asked EPA and the Federal Energy Regulatory
    Commission to cooperate with the Department on these studies,
    particularly with respect to the electricity reliability analysis.
                                     ______

                       Questions Submitted to James Slutz
                 Questions Submitted by Senator Byron L. Dorgan
        Question. We see news around the country about proposed coal-fueled
    power plants being canceled or postponed almost every week due to
    rising construction costs, the uncertainty of future regulations on
    carbon emissions, and much more. The Office of Fossil Energy has a
    longstanding relationship of working with industry in the various clean
    coal programs. The next round for the Clean Coal Power Initiative
    (CCPI) is slated to focus on carbon capture and storage and other
    beneficial uses of CO2. What do you propose to do to get new
    coal plants built so we can continue to utilize our abundant domestic
    coal resources?
        Answer. The Department of Energy's Clean Coal efforts begin with
    Research and Development (R&D) to advance technologies serving as
    building blocks for affordable, near-zero atmospheric emissions coal
    plants. These technologies, such as advanced turbines, gasifiers, fuel
    cells, and carbon capture and storage technologies are then integrated
    and demonstrated at commercial scale through the Clean Coal Power
    Initiative (CCPI). In parallel to CCPI, large volume carbon
    sequestration tests will demonstrate the technical viability of
    geologic CO2 injection at commercial scale. FutureGen is
    restructured to focus on accelerating the commercial experience with
    the integration of carbon capture into advanced plants including
    Integrated Gasification Combined Cycle (IGCC). These early commercial
    demonstrations will help accelerate deployment of carbon capture and
    storage by addressing technical, siting, permitting and regulatory
    issues. Loan Guarantees and Tax Credits may help accelerate commercial
    deployment of advanced technologies through financial incentives and
    mitigation of some risk.
        Question. When will the Department release the CCPI Round III
    Solicitation? Is the redirection of the FutureGen program hindering the
    release?
        Answer. The CCPI Round III Draft Funding Opportunity Announcement
    (FOA) was released on October 3, 2007. The redirection of the FutureGen
    program did not hinder its release. A Public Workshop was held on
    November 1, 2007, to answer questions and receive public input on the
    Draft FOA. The public comment period was held open until November 23,
    2007. The Department is currently revising the FOA based on public
    input to ensure that it is best suited to meet the needs of both the
    public and the Department. The Department is planning to release the
    Announcement this fiscal year, with project selections taking place in
    fiscal year 2009.
        Question. How much does the Department believe will be available
    for this next solicitation?
        Answer. The Department currently expects to have $224 million
    available for CCPI Round III, which includes an anticipated $85 million
    in fiscal year 2009 funding.
        Question. In the Clean Coal Power Initiative Rounds I and II, in
    2003 and 2004 respectively, the Department made more than $300 million
    available. Is the Department still planning to go ahead even though
    this $300 million threshold may not be met?
        Answer. Yes, the Department plans to issue the CCPI Round III in
    fiscal year 2008. The Department has received a significant amount of
    interest from industry in CCPI Round III. Over 80 participants from
    industry attended the CCPI Round III Public Workshop, and they
    identified numerous projects that will be seeking to participate in
    CCPI Round III. The Department believes that meaningful projects can be
    selected. Delays of an additional 6 to 9 months would be required to
    wait for fiscal year 2010 funds to become available.
        Question. Why is the Department planning on combining the funding
    for the CCPI and FutureGen programs (as indicated in the fiscal year
    2009 budget request) and how does the Department propose to go forward
    with both?
        Answer. In the fiscal year 2009 budget request, funding for the
    CCPI and FutureGen programs has been requested as separate line items.
    The Department plans to move forward with both CCPI and FutureGen by
    issuing a separate Funding Opportunity Announcement (FOA) for each
    program. Each FOA will outline the specific requirements of each
    program, allowing potential applicants to determine which program is
    the best fit for their technology and business model.
        Question. The carbon sequestration program has grown significantly
    in the last few years and the regional partnership program has been
    well received by many stakeholders. Four of the seven Regional Carbon
    Sequestration Partnerships have been funded to conduct large-scale
    demonstrations. The Departments budget request for fiscal year 2009 is
    $149 million. Does the Department plan to fund remaining three
    partnerships with this funding in the coming year? If not, why not?
        Answer. DOE has made awards for five large-scale tests to four of
    the Regional Carbon Sequestration Partnerships (RCSP) for Phase III
    Large Volume Sequestration Testing. DOE is developing a peer-reviewed
    plan to be completed this spring that will identify the scientific and
    engineering test parameters to guide design and selection of large-
    scale tests. Items to be addressed include: rate of injection, duration
    of injection, and number and phasing of tests. The remaining proposed
    Phase III projects will be evaluated in the context of this plan. The
    evaluation process requires: (1) finalizing the technical scope of the
    projects by means of an independent study by an international group of
    experts; (2) undertaking a scientific evaluation; and (3) performing a
    cost analysis of the proposed projects to ensure the project costs are
    adequate prior to award. The estimated time frame for evaluating the
    remaining awards is the summer of fiscal year 2008.
        Question. Are these funds sufficient enough to conduct the large
    scale carbon sequestration demonstrations in every region of this
    country to insure carbon sequestration is a valid option from coal-
    fired power plants and other facilities?
        Answer. There are sufficient funds in the fiscal year 2009 budget
    request to conduct the pre-injection activities and initiate some
    preliminary injection activities for the large scale carbon storage
    demonstrations. These demonstrations will require funding beyond fiscal
    year 2009 for remaining CO2 injection and post-injection
    monitoring activities.
        Question. The administration has asked Congress for funding in
    fiscal year 2009 to expand the SPR to the 1.5 billion level. This will
    require a national commitment through 2029 to get to that level under
    the Bush administration's plan. Has the Department done an estimate of
    how much it would cost to construct the facilities and fill oil to the
    1.5 billion barrel level?
        Answer. The Department has not finalized its expansion plan, nor
    selected the sites for the expansion of the SPR from 1.0 billion to 1.5
    billion barrels. DOE has requested $13.5 million in fiscal year 2009 to
    prepare its expansion plans and complete a NEPA environmental review.
    However, assuming the development of 2 additional new salt dome storage
    sites of 250 million barrels in the gulf coast, the total estimated
    construction cost for the expansion of the SPR from 1.0 billion to 1.5
    billion barrels, is estimated in the order of $6.5 billion.
        Question. What is the cost of developing the Richton, MS site and
    expanding the Bayou Choctaw, LA and Bill Hill, TX sites to reach the 1
    billion barrel level?
        Answer. The total estimated construction cost for the expansion of
    the SPR from its current capacity of 727 million barrels to 1 billion
    barrels, is estimated at $5.1 billion. This is based on conceptual
    design estimates which were prepared in 2006.
        Question. How does the administration respond to its policy efforts
    to put the SPR fill on autopilot without consideration of cost and at
    the same time? Are there not better ways that we can invest our
    resources this year? Over time?
        Answer. It is the policy of this administration to expand and fill
    the Strategic Petroleum Reserves in a manner that is both consistent
    and deliberate in order to maximize the energy security of the United
    States. The costs associated with this endeavor are important and they
    are carefully considered at every step.
        Question. I have also noted that there is approximately $585
    million in the SPR account from the sale of oil after Hurricane
    Katrina. Does the Department plan to issue more RIK contracts later
    this year or seek to directly purchase oil for the SPR with this $585
    million regardless of the price of oil or offers made in a solicitation
    for direct purchase?
        Answer. The fiscal year 2009 budget states ``In fiscal year 2008
    DOE will use available balances for the purchase of additional SPR oil,
    and will continue to fill using Federal royalty oil until 727 MMB is
    achieved in fiscal year 2009.'' The administration's objective is to
    complete the fill of the SPR to 727 million barrels before the end of
    calendar year 2008 by using the $584 million in available balances from
    the Hurricane Katrina oil sale for direct purchases and continuing the
    modest transfer of royalty oil from the Department of the Interior.
        The Strategic Petroleum Reserve has undertaken a market analysis in
    accordance with the Procedures for the Acquisition of Petroleum for the
    Strategic Petroleum Reserve (10 CFR 626) to assure that the planned oil
    acquisition will not stress the market.
        Question. The Energy Policy Act of 2005 provides guidance to expand
    the Strategic Petroleum Reserve (SPR) to the level of 1 billion barrels
    but only ``without incurring excessive cost or appreciably affecting
    the price of petroleum products to consumers.'' The Department has said
    it conducts market analysis the impacts of filling the SPR and the
    price of petroleum and did so before the recent RIK contracts. Can you
    provide more detail about how the Department performs this analysis?
    Was the analysis peer-reviewed by the EIA, other agencies or
    independent experts? Is the analysis available to the public?
        Answer. Prior to engaging in activities to acquire crude oil for
    the Strategic Petroleum Reserve, the Office of Petroleum Reserves
    conducts an assessment of market conditions to evaluate the potential
    for impacts on crude oil markets. A number of market indicators are
    examined in these assessments including stock levels, spot and futures
    prices, market fundaments, and energy security policy. The most recent
    market assessment was conducted in February 2008 and is currently being
    reviewed by Department officials and was informally peer reviewed by
    staff at the Energy Information Administration. However, EIA was not
    asked to comment on or evaluate the policy recommendations contained
    within the document. These assessments are not published on the
    internet, but they have been transmitted to the Congress.
        Question. Does the Department believe there is a price threshold
    for not continuing the RIK transfer?
        Answer. It is difficult to assign such a threshold without consider
    other contemporaneous market conditions. However, in the past the
    Department of Energy has suspended or delayed its fill activities in
    response to major petroleum market events and would do so again should
    the need arise. When acquiring petroleum, whether by purchase or
    royalty transfer, DOE will seek to balance the objectives of assuring
    adequate security and minimizing impact to the petroleum market. To
    this end, DOE will consider various factors that may be affecting
    market fundamentals and the geopolitical climate. DOE decisions on
    crude oil acquisition will take into consideration the current level of
    inventories, import dependency, the international and domestic
    production levels, oil acquisition by other stockpiling entities, the
    security value of additional storage, incipient disruptions of supply
    or refining capability, market volatility, the demand and supply
    elasticity, petroleum logistics, and any other considerations that may
    be pertinent. Monetary policy, the rate of economic growth, specific
    domestic market segments, and foreign policy considerations will also
    be evaluated. The timing of DOE entry into the market, its sustained
    presence, and the quantities sought will all be sensitive to these
    factors and their impact on U.S. energy security.
        Question. Secretary Bodman stated to me and other Senators in a
    letter dated Jan. 8, 2008, that one of the reasons to increase the
    capacity of the SPR is that it only contains 57 days of import
    protection. However, Department's own website said that the United
    States has 118 days of public and private strategic stocks for import
    protection. The requirement to meet U.S. treaty obligations with the
    International Energy Agency (IEA) is for 90 days of import protection.
    Why is the Department telling U.S. policy makers that we need to fill
    the SPR for import protection and telling the international community
    that we are currently meeting our treaty obligations for import
    protection?
        Answer. Under the Agreement on an International Energy Program (the
    Charter of the IEA), member countries are permitted to meet their
    required 90 day stockholding obligations through both public and
    private stocks. The United States currently relies on U.S. industry
    stocks to make up a significant portion (one-third) of its obligation.
        Question. The fiscal year 2009 budget once again proposes to
    eliminate all oil and natural gas R&D programs. Ninety-four percent of
    this funding goes to small, independent producers that do not
    sufficient funding to conduct R&D of their own. The fiscal year 2009
    budget request also proposes to eliminate $50 million in direct
    spending for ultra-deepwater offshore and unconventional onshore
    natural gas exploration technologies that would go largely to smaller
    independent oil and gas producers.
        Small, independent, domestic producers and universities are the
    primary beneficiaries of Federal oil and gas R&D funding. Contrary to
    the administration's views, ``Big Oil'' does not have an interest in
    these programs. I am particularly concerned about the impacts of the
    cuts on the education of our next generation of energy professionals.
    Why is this administration being so shortsighted by decreasing funding
    to programs that are so vital to the Nation's future energy security
    and domestic energy production?
        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 have the resources to 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. Why is the administration turning its back on potential
    long-range solutions to declining domestic gas production?
        Answer. DOE is supportive of efforts to increase the availability
    of domestic sources of natural gas. DOE supports the prompt
    construction of an Alaska natural gas transportation system to deliver
    gas from the North Slope of Alaska to the lower-48 States. Alaska's
    North Slope gas resources are estimated at 35 trillion cubic feet (TCF)
    discovered and 100 TCF potential. Industry has estimated the cost at
    more than $25 billion to build a 4.5 billion cubic feet per day (bcfd)
    pipeline with expansion capacity to 5.6 bcfd. To support such a
    project, the Department is authorized under section 116 of the Alaska
    Natural Gas Pipeline Act (ANGPA) to issue loan guarantees up to $18
    billion, indexed for inflation according to the Consumer Price Index
    from October 13, 2004, to a qualified infrastructure project or, in the
    case of a qualified liquefied natural gas project, up to $2 billion of
    principal.
        Question. A significant research project within the Natural Gas
    program is Methane Hydrates. If only 1 percent can be rendered
    economic, it would double the Nation's supply of natural gas. Why would
    the Department turn its back on this huge potential resource?
        Answer. The administration does not support spending Department of
    Energy funds for research and development (R&D) on safety or production
    of methane hydrates, given the economic incentives industry has to
    pursue this R&D on its own. This is consistent with its position that
    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 and gas companies in these efforts.
    However, several other Government agencies are supporting methane
    hydrate research where it fits their missions, including the U.S.
    Geological Survey (USGS), the Bureau of Land Management (BLM), and
    Minerals Management Service (MMS) within the Department of the
    Interior; the National Oceanic and Atmospheric Administration (NOAA);
    the National Science Foundation; and the Naval Research Laboratory.
        Question. In the fiscal year 2008 Omnibus legislation, Congress
    requested that the Department begin the development of coal/biomass to
    liquids technologies with funding in the Fuels subaccount. Why is the
    Department's Coal Fuels request only focused on hydrogen from fossil
    fuels?
        Answer. The Fossil Energy Coal Fuels Research Development and
    Demonstration (RD&D) Program was identified as a participant in the
    Hydrogen Fuel Initiative at the beginning of the Department's Hydrogen
    Program. Therefore, the focus on hydrogen from coal is the principal
    activity proposed in the Coal Fuels Program for fiscal year 2009, as
    the Coal-to-Liquid Fuels Technology Program had successfully achieved
    its RD&D goals for turning synthesis gas into liquid fuels, and these
    technologies can be commercialized by the private sector. The fiscal
    year 2009 budget includes development of technology for co-feeding and
    gasifying coal/biomass for electricity generation application. As with
    much of DOE's gasification program, DOE's fiscal year 2009 coal/biomass
    research targets electricity generation applications, but could also be
    used by the private sector for other applications, such as production
    of transportation fuels.
        Question. Why does the Department not support this coal-biomass
    technology opportunity?
        Answer. Consistent with the fiscal year 2008 appropriated funding,
    the Department has prepared, and will soon release, a Coal and Biomass
    to Liquid Fuels Funding Opportunity Announcement. This announcement
    will request applications for research and development proposals
    specifically limited to liquid hydrocarbon fuels from coal/biomass
    mixtures.
        Coal-biomass to liquids technology involves two major steps: First,
    the coal-biomass feedstock must be turned into a synthesis gas. Second,
    the synthesis gas must be turned into liquid fuel. The first step,
    gasification of coal-biomass, is not mature and therefore continues to
    receive funding in the fiscal year 2009 budget. As with much of DOE's
    gasification program, DOE's fiscal year 2009 coal/biomass research
    targets electricity generation applications, but could also be used by
    the private sector for other applications, such as production of
    transportation fuels. The second step, turning synthesis gas into
    liquid fuel is mature and therefore is not supported in the fiscal year
    2009 budget. The Coal-to-Liquid Fuels Technology Program had
    successfully achieved its RD&D goals for turning synthesis gas into
    liquid fuels, and these technologies can be commercialized by the
    private sector.
        Question. Congress also directed that the Department address
    energy/water technology issues in the fiscal year 2008 Omnibus
    legislation. This includes a research program to help develop tools
    that thermoelectric power plants can apply to better manage the
    critical link between water and fossil energy extraction and
    utilization is vital. The Department only supported CO2
    capture at existing facilities in its fiscal year 2009 budget request
    for the Innovations for Existing Plants program. Why does the
    Department not support the availability of funding for technologies to
    reduce water usage and consumption, while minimizing impacts on water
    quality?
        Answer. Many of the technologies for reducing water use are mature
    and subject to incremental improvement that the private sector has the
    incentives and capability to undertake on its own. Improved water
    associated with transformational technologies is supported in the
    fiscal year 2009 budget request. Integrated Gasification Combined Cycle
    (IGCC) technology supported by the Gasification program uses
    significantly less water than the conventional Pulverized Coal (PC)
    technology. The focus of the Innovations for Existing Plants Program
    (IEP), will be on the continued research and development of advanced
    carbon capture technologies applicable to new and existing coal-fired
    power plants. The IEP program will develop technologies to separate and
    permanently store CO2 that can be economically and
    effectively employed on pulverized coal power plants. As noted in the
    fiscal year 2009 budget request, the Department will also conduct
    research on optimizing power plant water use as it relates to
    CO2 capture efficiency and optimization.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
        Question. As I noted in my opening statement, the Department has
    shifted its strategy from a single 275 Megawatt facility toward
    multiple commercial demonstrations of carbon capture and sequestration
    applied to an IGCC facility. I am concerned that this strategy will
    take years to develop before we have any serious results from these
    demonstration efforts. What is the Department doing to accelerate this
    important research and what other near term efforts is the Department
    undertaking to support carbon capture and sequestration research?
        Answer. Our commitments to the program goals of FutureGen are
    unchanged--to make near-zero atmospheric emission coal power plants a
    viable technology solution to address energy security and climate
    change concerns.
        The Department is refocusing its investment on multiple, commercial
    demonstrations of Carbon Capture and Storage (CCS) technology
    integrated with Integrated Gasification Combined Cycle (IGCC) systems
    or other advanced technology coal power plants. The difference is that
    under the restructured program, our plan, with current cost estimates,
    is to support not just a single less-than-commercial-scale R&D testing
    laboratory, but rather to provide funding for commercial demonstration
    of integrated advanced carbon capture and storage technologies.
        The restructured FutureGen will provide commercial data on cost,
    performance, and reliability. This information will help reduce risk of
    siting/permitting and operations for subsequent deployment, confirm
    economics associated with CCS, and facilitate industry-wide private
    capital offerings. It is expected that these commercial projects will
    be in operation in the next 6 to 8 years or possibly sooner depending
    on the sites selected.
        The Department's fiscal year 2009 budget request proposes
    substantial increases for FutureGen, Clean Coal Power Initiative (CCPI)
    demonstration of CCS, and Carbon Sequestration. We have also increased
    overall R&D in the area of carbon capture and storage. For example, the
    fiscal year 2009 Sequestration Program budget was increased to $149
    million with the bulk of this funding being used to support the field
    test program through the Carbon Sequestration Regional Partnerships--
    including five large-scale (Phase III) demonstrations of the
    feasibility of storing CO2 in geological formations. The
    results of this research will be directly applicable to the capture and
    storage of CO2 from advanced power systems such as IGCC and
    existing coal-fired power plants. Further, the Gasification Program
    fiscal year 2009 budget of $69 million will focus on continuing to
    increase the efficiency of IGCC while lowering costs. Research from
    both programs will advance the development and ultimate commercial
    deployment of IGCC with carbon capture and storage.
        Question. I am pleased to see that the office of Fossil Energy
    remains committed to expanding the Strategic Petroleum Reserve to a 1
    billion barrel capacity, as outlined in the Energy Policy Act of 2005.
    I have noticed in your budget that there is $13.5 million for planning
    purposes to expand past a one billion barrel capacity. In these tight
    budgetary times, do you not believe that we should focus on reaching
    the one billion barrel capacity before we fund the planning of further
    expansion?
        Answer. The expansion of the Strategic Petroleum Reserve to 1.5
    billion barrels is essential to providing the United States with
    critical energy security. The Department has requested an initial $13.5
    million to perform planning studies to determine the optimum
    configuration of the expansion beyond 1 billion barrels, and complete
    the environmental review process and site selection. Once the sites
    have been selected, the expansion project is expected to require in the
    range of 12 to 15 years to develop the additional 500 million barrels
    of storage capacity.
        Question. The new CURC-EPRI roadmap, released in September 2006,
    defines the steps necessary to achieve near zero emissions from coal
    use, including the capture and sequestration of CO2, and
    suggests that the investment necessary to achieve the goals of Roadmap
    is approximately $17.0 billion between now and 2025. In fiscal year
    2008, we provided nearly half that amount through the DOE Loan
    Guarantee Program. Do you believe that the funds provided through the
    Loan Guarantee Program in fiscal year 2008 will get us half way to near
    zero emissions from coal use?
        Answer. No, the Loan Guarantee Program, although an important
    incentive for deployment of new clean coal technologies, by itself is
    not expected to move the Nation half-way to near-zero atmospheric
    emissions for coal use. The CURC-EPRI roadmap, released in September
    2006, proposes a funding level for a Research, Development, and
    Demonstration (RD&D) program focused solely on coal-based electricity
    generation. The loan guarantee program is intended to provide
    incentives for deployment of early commercial facilities, which would
    come online after successful commercial-scale demonstration. As stated
    in the program regulation, it isn't a research, development or
    deployment program. Though we expect there to be some synergy between
    early commercial projects and demonstration projects, by and large the
    Government spending proposed by CURC-EPRI is geared toward reducing the
    cost and improving the performance of the technologies. The Loan
    Guarantee Program will support commercialization of technologies that
    have already been successfully demonstrated.
                                     ______

                  Questions Submitted by Senator Thad Cochran
        Question. What are the Department's goals in regards to Clean Coal
    and Carbon Capture? Request levels have varied dramatically in the last
    few years, but I'm pleased to see an increase in the program. Is the
    Department planning on researching coal-to-liquids technology?
        Answer. The technology goal for the Carbon Capture and
    Sequestration Program is ``to develop, by 2012, fossil energy
    conversion systems that offer 90 percent carbon dioxide capture with 99
    percent storage permanence at less than a 10 percent increase in the
    cost of energy services.''
        With respect to researching coal-to-liquids technology, the
    Department is planning and will soon release a Coal and Biomass to
    Liquid Fuels Funding Opportunity Announcement. This announcement will
    request applications for research and development proposals
    specifically limited to liquid hydrocarbon fuels from coal/biomass
    mixtures.
        Question. The Department of Energy has chosen a site in my State as
    the preferred location for expansion of the Strategic Petroleum
    Reserve, and funds were included last year for land acquisition. Mr.
    Slutz, can you speak about the time frame and future steps required for
    such expansion to occur?
        Answer. It will take approximately 12 years to complete the site.
        Project Steps and Schedule: Design and Land Acquisition--2008-2011;
    Facilities and Pipeline Construction--2010-2016; Cavern Development
    (Solution Mining)--2014-2018; Initial Oil Fill Capability--2016;
    Planned Site Completion--2019.
                                     ______

                  Questions Submitted by Senator Wayne Allard
        Question. I understand that the administration has decided to
    restructure their approach to FutureGen. Can you tell me more about
    that decision and the reasoning behind it?
        Answer. The FutureGen project encountered significant cost
    increases, which raised the total estimated project cost from $950
    million (in 2004 constant year dollars) to $1.757 billion (in 2007 as-
    spent dollars). Since the Department was responsible for 74 percent of
    the total project cost, DOE's projected investment had risen to
    approximately $1.3 billion. The Department was concerned over the
    prospect of further uncontrollable cost increases and attempted to
    limit its exposure to future cost growth by engaging the Alliance in a
    series of discussions. After several months of negotiation with the
    Alliance, a mutually acceptable agreement with the Alliance could not
    be reached.
        Therefore, a ``restructuring'' of the FutureGen initiative was
    pursued in order to maintain the Department's commitment to the
    administration's goal of developing a near-zero atmospheric emission
    power plant operating on coal. A Request for Information (RFI) was
    released on January 30, 2007, and the comments received from that RFI
    are now being reviewed and analyzed.
        Rather than investing in the total cost of a single commercial-
    scale experimental facility integrated with carbon capture and storage,
    the restructured FutureGen approach will invest only in the carbon
    capture and storage portion of several commercial power projects. This
    will limit taxpayers' financial exposure to only help fund the carbon
    capture and storage portion of the plant. Furthermore, this new
    approach will allow us to accelerate nearer-term technology deployment
    in the marketplace faster than the timetable for the previous approach.
    In order to be successful in competitive power markets (and comply with
    the Department's competitive proposal evaluation process), the
    underlying power plant projects will still need to be efficient,
    competitive, and environmentally sound.
        Question. What does this decision do to ensure that the results of
    the project are something that industry can pick-up and integrate into
    current or future facilities smoothly, especially with regard to high-
    altitude.
        Answer. FutureGen will provide early carbon capture and storage
    (CCS) demonstration experience in a commercial setting, which is aimed
    at accelerating deployment and advancing carbon capture policy. The
    previous approach to FutureGen would have created a single ``living
    laboratory'' for research and development of advanced technologies,
    which may have needed significant testing before being considered to be
    ``commercial'' by industry.
        The intent is to select multiple projects competitively and at full
    commercial size. The scale of these projects is in the range of 300 to
    600 MW, with the demonstration portion involving CCS integration to be
    on one power unit (300MW). Depending upon where the winning projects
    are located, this approach should yield more diverse information for
    future facilities than would a single FutureGen project in terms of
    coal types, regional geology, and altitude.

                              SUBCOMMITTEE RECESS

        Senator Dorgan. Let me thank all three of the Secretaries
    who have joined us today, and I think this is a useful and
    important hearing to try to establish priorities and necessary
    funding requirements as we proceed with some very important
    programs at the Department of Energy.
        This hearing is recessed.
        [Whereupon, at 11:02 a.m., Wednesday, March 5, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2009

                                  ----------

                            WEDNESDAY, APRIL 2, 2008

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:32 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Byron L. Dorgan (chairman)
    presiding.
        Present: Senators Dorgan, Murray, Domenici, Cochran, Craig,
    and Allard.

                              DEPARTMENT OF ENERGY

    STATEMENT OF HON. RAYMOND L. ORBACH, UNDER SECRETARY
                FOR SCIENCE

                  OPENING STATEMENT OF SENATOR BYRON L. DORGAN

        Senator Dorgan. The hearing will come to order. I thank all
    of you for being here today. We are here today to take
    testimony from three program offices within the Department of
    Energy that oversee major aspects of the U.S. Government's
    Science and Energy Research, Development, Demonstration and
    Deployment programs. This is a hearing of the Senate
    Appropriations Subcommittee on Energy and Water Development.
        The programs that we will be discussing today from the
    Department of Energy run the gamut from basic research to
    applied research and development, and, finally, deployment of
    innovative energy technology projects. In essence, they
    represent the A to Z for energy technology research development
    and commercial deployment in the Department of Energy.
        Important research performed by the Office of Science is
    the underpinning of our colossal achievements in energy. The
    research development and demonstration conducted by the Office
    of Energy Efficiency and Renewable Energy builds upon that
    basic research by working to make new technologies deployable.
        And the Loan Guarantee Office provides the financial
    backing to industry for the development of new and innovative
    forms of conservation and energy. Without scientific and
    technical breakthroughs in these programs, the United States
    cannot expect to achieve the lofty goals that we have set for
    ourselves. Both the administration and the Congress have set
    very substantial goals in various energy initiatives and in
    recently enacted energy laws.
        In the 2009 recommended budget for this Department, I think
    there are some concerns. I will express them during the
    questions. Science, of course--Mr. Orbach is with us--is the
    beneficiary in the budget request. The $749 million increase is
    the largest in the Department's budget; energy efficiency is
    evidently the donor. The $467 million reduction is also the
    largest reduction in the budget.
        It seems to me that if we are serious about balancing our
    energy issues--for example, greater independence from foreign
    oil and all the other related matters--we've got to be serious
    about a wide range of things. That includes science.
        It also includes energy efficiency, and it includes
    renewable energy, and so we'll talk about all of that today.
    The proposal from the President is simply his recommendation or
    set of recommendations. The Congress, both Republicans and
    Democrats, take a look at that and then evaluate what our
    recommendations are. In some cases we agree with the President
    and in other cases we do not.
        I understand that those who are here today are duty-bound
    to tell us that they think the President's budget is just
    really wonderful, that they wouldn't change a thing, and that
    they think it's great. But I think, as we look at the
    priorities here, it's important for us in the Congress to
    evaluate how these recommendations relate to the decisions that
    we have previously made about where we want this country to go
    in energy policy.
        With that, I will call on the ranking member, Senator
    Domenici.

                 OPENING STATEMENT OF SENATOR PETE V. DOMENICI

        Senator Domenici. Thank you very much, Mr. Chairman. I look
    out at the three witnesses, and the only one that I am not
    personally familiar with--and that's my fault--is David Frantz.
    I have read about what you are doing, and I think we have hired
    the right person, but I wonder if you don't wonder, sometimes,
    whether you have been hired to do the right job, since it seems
    like more and more people want to make your job difficult when
    we thought it was going to be a very simple proposition.
        Having said that, we hope that you are truly ready to go
    into the market and issue some loan guarantees as soon as
    possible, and we'll all be asking you that with a great deal of
    anticipation.
        Mr. Chairman, I have prepared remarks. In some respects
    they sound somewhat like yours because you have put your finger
    on what this is that's before us here today. I want to take
    just a few moments, nonetheless, to talk about some of the
    things that are here.
        Today we have these three witnesses who represent the
    entire pipeline of energy technology. Dr. Orbach has
    responsibility for discovery science and developing new
    technology solutions. The budget requests include $100 million
    for Energy Frontier Research Centers, and I think we ought to
    have that explained so we know what that means.
        Last year was a difficult year for Science funding, but I
    am pleased to see that the administration has not changed its
    direction and remains committed to its 10-year strategy of
    doubling the Office of Science: Not just you but all science
    was to be doubled in the next 10 years on the hard side, the
    science, engineering, physics, mathematics, et cetera.
        Assistant Secretary Karsner and his office is the next step
    in the technology development, as you have indicated, and then
    I won't repeat the ins and outs of his budget but we'll talk
    about it here today.
        It is important to put into perspective $42 billion is
    nearly 10 times the annual budget of the Office of Science. The
    reason I bring that up is because Congress has provided $42.5
    billion in guarantee authority for all three for both nuclear
    and the two others that go with it that received excellence
    funding for their guarantees.
        And this is a very large amount of money, but when we look
    at what America will probably have to spend to achieve some
    degree of energy independence, the number approaches $350 to
    $500 billion, and, certainly, some people say it's much higher.
    My own guesstimate would be that we'll spend much more than
    that to get out of the mess that we are in. And the loan
    guarantees are a substantial part, and that's why it makes it
    so important, Mr. Frantz, that we get this part moving.
        I want to comment on, while we have Dr. Orbach here, I'm
    deeply concerned about the lack of investment in upgrading the
    science facilities of NNSA laboratories, specifically the
    LANSCE facility which is needed to be refurbished in order to
    support the ongoing science mission.
        Third, I am frustrated that the Congressional Budget Office
    has charged our bill, Mr. Chairman, with 1 percent of the cost
    of Loan Guarantees program despite the fact that this program
    is self-financed, and the Department is required to cover the
    cost of the program. CBO believes the Department will miss the
    mark by 1 percent. I don't know why they assume it will be 1
    percent all in one direction. It seems if you're going to miss,
    you'll miss some high, some low, and probably come out neutral.
    But they assume it will all be a miss, and we get charged $352
    million.
        That's wrong. And if we had to bear that, that's just like
    coming into our budget, slicing out $352 million for which we
    get nothing. Nothing. And, to me, the Congressional Budget
    Office just didn't read the law. I read the law this morning,
    and it's clear that we cannot lose money. And you have to
    deliver the full cost of the loan to the Secretary before he
    makes the loan and the full cost of the loan to the Government,
    That's the way it's done, and that's what you're going to do.
        I don't understand it, and I hope we all get a hold of this
    one and make sure we do it right. Thank you, Mr. Chairman.
        Senator Dorgan. Senator Craig?

                        STATEMENT OF SENATOR LARRY CRAIG

        Senator Craig. Mr. Chairman, thank you. Both you and
    Senator Domenici have done the broad overview. I'll be more
    specific and probably a little more parochial. And, let me say
    to all of you gentlemen, this will be the last time you will be
    making full budget presentations before this committee. It will
    also be my last time as a Senator to be specific about some of
    the issues that I've been involved in for a good long while.
        Secretary Orbach, as you know, I've been generally pleased
    with your office, overall. My only advice since we first met
    was to look for ways to utilize our Nation's lead nuclear
    laboratory, the INL, as it relates to the help necessary and
    important with nuclear science. The fiscal year 2009 Science
    budget spends about $3.6 million. That's less than 1 percent of
    your total annual budget at INL. That remains a question to me
    as to why that. But there are ways to fix it, and let me
    propose some ideas to you.
        Your budget more than any other reflects the work of the
    Energy Committee, and the work we did in passing the COMPETES
    bill last year. Many educational provisions were funded. If
    you'll remember, a provision I put in with the cosponsorship of
    Senator Domenici and Senator Bingaman was the Nuclear Science
    Talent provision. That is section 5006.
        It's my hope that this provision will be funded above the
    $12 million that had been authorized so that DOE science and
    the INL Center for Advanced Energy studies, the CAES, can
    administer this provision and increase our competitiveness in
    nuclear science. We've simply got to get there, and it is not
    as robust as it has been authorized or as we should allow it.
        Secretary Karsner, I've been continually impressed with the
    results of your office to do so much with so little--only $1.2
    billion. So I guess I am unabashedly pro-renewable, and I serve
    as a member of the Board of the Alliance to Save Energy. And
    efficiency is truly the most affordable clean energy solution
    we have.
        A list of accomplishments from your office is too long, but
    there are some that attract my attention. The biomass, R&D,
    utilizing farm and forest waste is, I think, the nominal
    opportunity for us. Wind power in America, we're now frustrated
    about how we integrate the potential of so much wind power as
    an intermittent source into a baseload situation. Certainly, in
    the Pacific Northwest that may well be an opportunity and a
    difficulty.
        Vehicle technology, advanced factories. I want my grand
    kids driving electric cars, so get with it because they're
    young, but they will soon be at that level, and I see that as a
    phenomenal opportunity even in a distant state like Idaho. Get
    us up to 400 miles, and we're in business. And I think that
    potential is there.
        Industrial technology, I think across the board the R&D
    that we do there advances the efficiencies in all that are
    possible. So let me suggest that your lab and my lab have great
    synergy and cooperative relationships that can produce a lot of
    what you're attempting.
        And, as Pete Domenici said, Director Frantz, we're glad to
    see you. We've been waiting for you for 2\1/2\ years and very
    disappointed that you weren't before us 2\1/2\ years ago. So
    get with it and deliver to us those kinds of loan guarantees
    that push science and push the technology out there.
        As you know, I have focused a good deal on the frustration
    we now have growing out of this bulge in ethanol production,
    corn-base needing the move to cellulosic. In fact, I'm headed
    into Canada next week to look at a stand-up up there that we
    think has some potential, so it is very exciting that we get
    there. Caution is valuable, but daringness is more important as
    we push the edges of technology to get us to an area of energy
    independence. Caution will not get us there.
        Thank you, Mr. Chairman.
        Senator Dorgan. Senator Murray.
        Senator Murray. Thank you, Mr. Chairman. I join you in
    welcoming our witnesses today. I will save my time for
    questions.
        Senator Dorgan. Senator Allard?

                       STATEMENT OF SENATOR WAYNE ALLARD

        Senator Allard. Mr. Chairman, for holding this hearing
    today. I don't think anybody can argue we're dangerously
    relying on foreign sources of energy, and we must decrease our
    reliance on foreign sources of energy by diversifying our
    energy sources, and increasing conservation. I have long felt
    that a balanced energy portfolio that takes no technology off
    of the table is what is best for this country.
        I'd like to extend a special welcome to Mr. Karsner, who
    oversees the Office of Energy Efficiency and Renewable Energy,
    which, in turn, oversees the National Renewable Energy
    Laboratory in Colorado. NREL makes a major contribution to the
    development of renewable energy technology, and the
    technologies that are developed at NREL will remain vital to
    our Nation's energy progress, and they have established a great
    relationship with the research universities there, joining in
    the partnership with the University of Colorado, School of
    Mines, and Colorado State University in this renewable energy
    effort. And I commend them for joining that coalition. I think
    it helps make this a hub of renewable energy ideas.
        Mr. Chairman, you and I co-chaired the Renewable Energy and
    Energy Efficiency caucus, and so I know I don't have to tell
    you about the importance of renewable energy. Renewable energy
    is a very important way that we can begin to reduce the demand
    for oil and thereby help make our country more secure.
        There are great opportunities for solar, wind, geothermal,
    biomass, fuel cells, and hydro to make significant
    contributions. Research and the unit of both government and
    industry partners are very important to allowing these
    opportunities to live up to their potential.
        I look forward to working with the community and share the
    research and development and all fields of energy technology
    are funded in a manner that is responsible, but sufficient to
    ensure that the development and implementation of new
    technology continue.
        Thank you again, Mr. Chairman.
        Senator Dorgan. Senator Allard, thank you very much.
        We will now turn to the witnesses, and I want to thank all
    of them for coming today. We will begin with Dr. Orbach. Dr.
    Orbach, please.

                      STATEMENT OF HON. RAYMOND L. ORBACH

        Dr. Orbach. Thank you, Mr. Chairman. Thank you, Chairman
    Dorgan, Ranking Member Domenici, members of the committee. I'm
    very pleased to be able to appear before your committee for
    what I expect to be my final budget presentation for the
    Department of Energy's Office of Science. I would like to thank
    the Committee for your strong support for the Office of Science
    during my tenure.
        I would particularly like to thank Senator Domenici for his
    invaluable service to the Nation and for his strong support for
    the Nation's scientific enterprise.
        The President's budget request for fiscal year 2009
    continues his strong and clear support for science in this
    country, expressed through his American Competitiveness
    Initiative and Advanced Energy Initiative, both announced in
    2006. Congress has shown strong bipartisan support for an
    aggressive innovation and energy security agenda through the
    Energy Policy Act in 2005 and the America COMPETES Act and the
    Energy Independence and Security Act in 2007.
        The President's fiscal year 2009 request to Congress for
    the Office of Science sustains this bipartisan platform for the
    long-term economic health, energy security, and intellectual
    strength of our country. Just a few examples:
        We are introducing the concept of Energy Frontier Research
    Centers to accelerate scientific breakthroughs and innovations
    essential to the development of advanced energy technologies in
    the 21st century. We are providing $100 million in fiscal year
    2009 to award grants of $2 million to $500 million per year for
    an initial 5-year period on a competitive basis to groups of
    researchers in universities, laboratories, industry, and other
    institutions.
        We seek to engage the Nation's finest intellectual and
    creative talent to tackle the scientific grand challenges
    associated with how nature works to direct and control matter
    at the quantum, atomic, and molecular levels, and to harness
    this new knowledge and capability for some of our most critical
    energy challenges.
        Another example is ITER. While the 2008 appropriation for
    ITER was reduced to R&D, the President's request calls for the
    full $214 million needed to fully engage in this crucial
    experiment. It is high risk, but the potential for energy
    security is immense. ITER will directly benefit U.S. domestic
    industries creating an American workforce knowledgeable in R&D
    and in the production of high tech components for the fusion
    industry.
        My last example is high energy physics. The President's
    request firmly places this critical field back on track for
    world leadership. Former Princeton University President Harold
    Shapiro led the major National Academy of Sciences study on
    Elementary Particle Physics in the 21st century. He stated:

        ``The United States has been at the forefront of elementary
    particle physics for more than half a century. Particle physics
    inspires U.S. students, attracts talent from around the world,
    and drives critical intellectual and technological advances in
    many other fields. The United States has an unprecedented
    opportunity as a leader of nations to undertake this profound
    scientific challenge.''

        President Shapiro's last sentence applies equally across
    the frontiers of basic research in science. The Office of
    Science has prioritized its investments to maintain U.S. global
    scientific leadership. The President's fiscal year 2009 request
    to Congress gives us the chance to be a leader of nations. I
    urge this committee to give our country and its citizens that
    opportunity.

                               PREPARED STATEMENT

        Thank you again for your strong support for the Office of
    Science and for basic research. I look forward to answering
    your questions.
        Senator Dorgan. Dr. Orbach, thank you very much.
        [The statement follows:]
                  Prepared Statement of Hon. Raymond L. Orbach
        Thank you Mr. Chairman and members of the committee. I am pleased
    to appear before your committee for what I expect to be my final budget
    presentation for the Department of Energy's Office of Science. I would
    like to thank the Committee for your strong support for the Office of
    Science during my tenure. This support has enabled the Office of
    Science to make investments in basic research and advanced research
    capabilities that have and will continue to improve U.S. global
    competitiveness, energy security, the environment, and our fundamental
    understanding of the universe around us.
        Our Nation continues to face significant challenges in energy
    security and in our ability to maintain the scientific leadership and
    innovation that assures our continued economic security. These
    challenges are addressed by the President in his American
    Competitiveness Initiative and Advanced Energy Initiative announced in
    2006. In this year's State of the Union address, the President again
    called our attention to the importance of harnessing the creative
    genius of American researchers and entrepreneurs in developing the next
    generation of clean energy technologies and in keeping our Nation at
    the forefront of basic research in the physical sciences. The budget
    request for fiscal year 2009 demonstrates his forceful, continued
    commitment to these important initiatives. The Congress has also spoken
    and expressed strong, bipartisan support for an aggressive innovation
    and energy security agenda in passing the Energy Policy Act (EPAct) of
    2005 and in following up with both the America COMPETES Act and the
    Energy Independence and Security Act (EISA) in 2007.
        EPAct and the COMPETES Act both recognize the pivotal role of the
    Office of Science in securing the advantages that basic research as
    well as science, math, and engineering education can bring to the
    Nation. EISA's provisions are intended to reduce America's dependence
    on oil, improve efficiency, and cut emissions. Technology development
    proceeds fastest where there is a strong grounding in scientific
    understanding, but we will not meet the targets with solely incremental
    improvements in current technologies. We need the breakthroughs that
    will result only from transformational basic research.
        Here are a few examples. EISA mandates the use of at least 36
    billion gallons of biofuels by 2022. Without transformational
    breakthroughs in deriving fuels from plant cellulose materials, we
    reduce our chances of reaching these aggressive goals. Even though
    conventional approaches, such as sugar-based and corn-based ethanol,
    can be modestly energy positive--although this is still debated--they
    consume large quantities of food and feed grain. Increasing use of
    these feedstocks raises environmental concerns associated with land use
    changes and impacts on atmospheric concentrations of carbon dioxide.
    Biofuels derived from cellulose, and in particular feedstock crops such
    as switchgrass that can be grown on marginal land with minimal water
    and nutrient requirements, can provide the basis for a sustainable
    biofuels economy in the United States while benefiting the American
    farmer. Breakthroughs in science are essential for the development of
    more efficient and cost-effective processes for deriving fuels from
    cellulose and for developing dedicated feedstock crops. The approaches
    to cellulosic ethanol deployed in many pilot and demonstration
    bioethanol plants across the United States rely on niche feedstocks and
    conversion technologies that are not yet cost competitive. New
    scientific discoveries supported by the Office of Science will speed
    revolutionary gains in production efficiencies and cost reduction--and
    in some cases may be the only way to meet our goals.
        The transformational basic research undertaken by the Office of
    Science's Bioenergy Research Centers is one way the Department is
    addressing the difficulties of cost-effective bioethanol production
    with minimal environmental footprint, by using plant and microbial
    genomics and other novel approaches.
        EISA also mandates a national fuel economy standard of at least 35
    miles per gallon by 2020--an increase in fuel economy of some 40
    percent that will save billions of gallons of fuel. Automobile
    manufacturers will need to employ numerous conventional and advanced
    engine and vehicle technologies to reach this goal. Office of Science
    basic research will be critical in the development of cost effective
    advanced engine and vehicle technologies through research in areas such
    as high-strength, low-weight materials; electrical energy storage;
    hydrogen production, use, and storage; fuel cell materials; catalysts,
    combustion processes, and materials under extreme environments.
        In fiscal year 2009 the Office of Science will initiate Energy
    Frontier Research Centers. They will pursue innovative basic research
    to accelerate the scientific breakthroughs needed to create advanced
    energy technologies for the 21st century. These Centers will pursue
    fundamental basic research areas mentioned above as well as solar
    energy utilization; geosciences related to long-term storage of nuclear
    waste and carbon dioxide; advanced nuclear energy systems; solid state
    lighting; and superconductivity.
        The Office of Science seeks to engage the Nation's intellectual and
    creative talent to address scientific grand challenges. These are the
    necessary transformational discoveries which will fundamentally alter
    our approaches to energy production and use, and they will come from
    the next generation of scientists, mathematicians, and engineers. If
    our fiscal year 2009 request is approved, the Office of Science will be
    able to directly support the research of more than 4,300 graduate
    students--and many more who are supported by other agencies will use
    our world-leadership scientific research facilities in their
    dissertation research.
        The Office of Science is accelerating the pace of discovery and
    innovation to address the Nation's energy needs through our
    multifaceted research portfolio. Your confidence in the Office of
    Science is based on a number of demonstrated successes in our mission
    areas, and your support for the Office of Science has enabled us to
    assess the basic research needs and engage the scientific community to
    respond aggressively. We routinely assess and update these research
    opportunities and priorities with an eye to our mission and with an ear
    to the research community, whether at a national laboratory, a
    university, or in industry. Since we build and operate large-scale,
    long-term, and, by necessity, cost-effective scientific research
    facilities, and because our mission is so important, we take these
    assessments seriously. We cannot afford to go in a wrong direction; we
    need the most complete and robust analysis of scientific opportunity,
    mission need, cost, and benefit.
        A large part of this assessment effort in recent years has been
    accomplished through a series of Basic Research Needs workshops and
    other workshops led by our science programs in partnership with the
    Department's technology programs. These workshops have brought together
    subject experts with diverse views from the broader basic and applied
    research community to discuss and identify areas of focus for DOE's
    basic research efforts. These efforts have enabled the Office of
    Science to stay informed of research needs and new opportunity areas,
    as well as scientific and technological roadblocks, and have enabled us
    to create a prioritized and comprehensive research portfolio within our
    available funding.
        While these workshops are critical to building and balancing our
    research portfolio, we also have a number of planning and advisory
    resources at our disposal to inform our long-term research portfolio
    planning. The National Academy of Sciences, our Federal Advisory
    Committees, informal and formal communication with the international
    scientific community, OSTP, OMB, the Congress, and our in-house Office
    of Science personnel all play important roles. Our programs are strong
    because our research portfolio and facilities are internally and
    externally assessed regularly and because our research and facilities
    are awarded through a competitive merit review process.
        We have established effective processes for assessing basic
    research needs, and we have also developed the capacity to respond
    quickly with highly leveraged investments in scientific facilities and
    research at the national laboratories and universities. This informed,
    rapid response provides the world-class research results that will help
    solve some of our most intractable energy supply and environmental
    challenges, while keeping our Nation's scientific enterprise and
    industry at the forefront.
        I think the best way to bring my statement into sharp focus is to
    discuss some examples of how your investments in the Office of Science
    have brought quick and remarkable results, and what we plan to do with
    the funding requested for fiscal year 2009 to enhance the U.S.
    scientific and innovation enterprise and ensure the best possible
    return to the taxpayer.
        Perhaps the best example of this aggressive and nimble approach is
    the response by the Office of Science to the challenge of High
    Performance Computing (HPC). In 2002 the Japanese announced the Earth
    Simulator, a high performance computer for open science which combined
    unprecedented performance and efficiency. Congress responded by
    dramatically increasing HPC funding, and making the Office of Science
    the lead in an effort to surpass the Earth Simulator. I am pleased to
    report that your confidence in us has already resulted in the United
    States attaining world leadership in open scientific computing--by the
    end of this year we will achieve peak capacity of one petaflop at our
    Leadership Computing Facility in Oak Ridge. This exceptional capability
    is helping us model such phenomena as turbulent flows related to
    combustion and to model and simulate complex climate processes that
    will inform decisionmakers on climate change, mitigation, and
    adaptation.
        The benefits of Office of Science HPC capabilities extend well
    beyond DOE. We provide access to these resources to other Federal
    agencies, universities, laboratories, and industry. We have been
    involved in modeling and simulation runs as diverse as determining
    hurricane effects to save lives, and modeling aircraft engines and
    airframes to improve energy efficiency and reduce time-to-market. We
    use the Innovative and Novel Computational Impact on Theory and
    Experiment (INCITE) program to openly compete access to these world-
    leading HPC resources. The Office of Science created INCITE for the
    purpose of bringing the capabilities of terascale computing to the
    community in order to transform the conduct of science and bring
    scientific simulation through computational modeling to parity with
    theory and experiment as a scientific tool. As a result, HPC modeling
    and simulation is now seen as a potent tool in the scientific toolbox;
    one that will potentially save lives, increases our energy and national
    security, and propels us to a competitive edge.
        Another accomplishment of the past year is the successful
    competition and award of three Bioenergy Research Centers. These
    Centers will each take different approaches to discovering
    fundamentally new solutions and solving critical roadblocks on the path
    to energy security--how will we meet the new requirement to produce 36
    million gallons of biofuels by 2022 from renewable plant sources that
    don't compete with the food supply? In authorizing and funding the
    Bioenergy Research Centers, Congress expressed its confidence in the
    ability of the Office of Science to tap the talent of our national
    laboratories and universities to tackle our fuels challenge, and these
    Centers are up and running well.
        U.S. leadership in science and technology depends on the continued
    availability of the most advanced scientific tools and facilities for
    our researchers. The suite of research capabilities operated by the
    Office of Science and used annually by 20,000 researchers from
    industry, academia and government labs are still the envy of the world.
    And over the past several years, with your support, we have delivered
    new facilities and have achieved remarkable technical milestones with
    existing facilities, enabling the United States to work at the cutting-
    edge of many scientific disciplines. The Spallation Neutron Source,
    which came on line in 2006, is the world's forefront neutron scattering
    facility providing more neutrons, by a factor of 10, than any other
    neutron source in the world for research of materials and biological
    complexes. Let me give you just one example of why neutrons are so
    important. Neutrons are the only way to peer inside an operating fuel
    cell to view water forming and moving throughout the cell. In a fuel
    cell, water is formed as a by-product of the reaction between hydrogen
    and oxygen. If the water does not drain quickly and efficiently, then
    fuel cells will not work properly.
        The Linac Coherent Light Source currently under construction will
    produce x-rays 10 billion times more intense than any existing x-ray
    source in the world when it comes on line in fiscal year 2010. It will
    have the capabilities for structural studies of nanoscale particles and
    single molecules and for probing chemical reactions in real time. All
    five Office of Science Nanoscale Science Research Centers are now in
    operation, providing unparalleled resources to the scientific community
    for synthesis, fabrication, and analysis of nanoparticles and
    nanomaterials. The Tevatron at Fermilab currently remains the world's
    most powerful particle collider for high energy physics. New records
    for performance in peak luminosity were achieved in 2006, enabling the
    observation of the rare single top quark and bringing researchers
    closer to understanding the basic constituents of matter and the laws
    of nature at high energies.
        On October 24, 2007, the international ITER Agreement went into
    force. The ITER experiment will demonstrate for the first time that a
    reactor can create and sustain a burning plasma. The implications of
    this research are far-reaching. The world faces a series of tough
    choices in meeting our energy needs over the next century. While no
    silver bullet may exist, fusion appears to be the closest. Fusion
    energy provides the real possibility of abundant, economical, and
    environmentally benign energy, starting around mid-century. Our
    investments today will have huge pay-offs for our children and
    grandchildren. We are part of an international consortium that is
    sharing the cost and the risk of the project and will have full access
    to all experimental research data.
        The Office of Science is aggressively pursuing a range of research
    areas that will provide answers critical to our future energy security,
    as the material that follows will show--and we also continue to plan
    for the future, seeking to identify opportunities within available
    resources and to update our priorities appropriately. An example of
    this is the ``Facilities for the Future of Science: A 20-Year Outlook''
    report, which was released in November 2003 and updated last year. The
    Outlook contained a prioritized list of facilities to underpin our
    major research thrusts over the next 20 years and beyond. These
    facilities are designed to be world class and adaptable to evolving
    basic research needs to ensure that U.S. taxpayers get the most value
    for their money. These facilities also allow researchers access to the
    full array of physical and biological science large-scale resources,
    creating an all-important balance and ``unity'' of science within the
    Office of Science. I ask the members during this appropriations cycle
    especially to consider the lasting value of the basic energy research
    done in the Office of Science to our Nation's well-being and economic
    prowess.
        The following programs are supported in the fiscal year 2009 budget
    request: Basic Energy Sciences, Advanced Scientific Computing Research,
    Biological and Environmental Research, Fusion Energy Sciences, High
    Energy Physics, Nuclear Physics, Workforce Development for Teachers and
    Scientists, Science Laboratories Infrastructure, Science Program
    Direction, and Safeguards and Security.

                       OFFICE OF SCIENCE FISCAL YEAR 2009 PRESIDENT'S REQUEST--SUMMARY BY PROGRAM
                                                 [Dollars in thousands]
    ----------------------------------------------------------------------------------------------------------------
                                                                                              Fiscal Year 2009 vs.
                                                     Fiscal Year  Fiscal Year  Fiscal Year      Fiscal Year 2008
                                                         2007         2008         2009    -------------------------
                                                       Approp.      Approp.      Request      Request      Percent
    ----------------------------------------------------------------------------------------------------------------
    Basic Energy Sciences..........................   $1,221,380   $1,269,902   $1,568,160    +$298,258        +23.5
    Advanced Scientific Computing Research.........      275,734      351,173      368,820      +17,647         +5.0
    Biological and Environmental Research..........      480,104      544,397      568,540      +24,143         +4.4
    High Energy Physics............................      732,434      689,331      804,960     +115,629        +16.8
    Nuclear Physics................................      412,330      432,726      510,080      +77,354        +17.9
    Fusion Energy Sciences.........................      311,664      286,548      493,050     +206,502        +72.1
    Science Laboratories Infrastructure............       41,986       66,861      110,260      +43,399        +64.9
    Science Program Direction......................      166,469      177,779      203,913      +26,134        +14.7
    Workforce Dev. for Teachers & Scientists.......        7,952        8,044       13,583       +5,539        +68.9
    Safeguards and Security (gross)................       75,830       75,946       80,603       +4,657         +6.1
    SBIR/STTR (SC funding).........................       86,936  ...........  ...........  ...........  ...........
                                                    ----------------------------------------------------------------
          Subtotal, Office of Science..............    3,812,819    3,902,707    4,721,969     +819,262        +21.0
    Adjustments\1\.................................       23,794       70,435  ...........      -70,435       -100.0
                                                    ----------------------------------------------------------------
          Total, Office of Science.................    3,836,613    3,973,142    4,721,969     +748,827       +18.8
    ----------------------------------------------------------------------------------------------------------------
    \1\ Adjustments include SBIR/STTR funding transferred from other DOE offices ($39,319,000 in fiscal year 2007),
      a charge to reimbursable customers for their share of safeguards and security costs (-$5,605,000 in each of
      fiscal year 2007 and fiscal year 2008), Congressionally-directed projects ($123,623,000 in fiscal year 2008),
      a rescission of a prior year Congressionally-directed project (-$44,569,000 in fiscal year 2008), and offsets
      for the use of prior year balances to fund current year activities (-$9,920,000 in fiscal year 2007 and -
      $3,014,000 in fiscal year 2008).

            basic and applied research and development coordination
        I would also like to highlight the fact that the Office of Science
    continues to coordinate basic research efforts in several areas with
    the Department's applied technology offices through collaborative
    processes established over the last several years. These areas include
    biofuels derived from biomass, solar energy, hydrogen, solid-state
    lighting and other building technologies, the Advanced Fuel Cycle,
    Generation IV Nuclear Energy Systems, vehicle technologies, and
    improving efficiencies in industrial processes. The Department's July
    2006 report to Congress DOE Strategic Research Portfolio Analysis and
    Coordination Plan identified 21 additional areas of opportunity for
    coordination that have great potential to increase mission success. The
    Office of Science supports basic research that underpins nearly all 21
    areas; and 6 areas are highlighted in the fiscal year 2009 Office of
    Science budget request for enhanced R&D coordination: Advanced
    Mathematics for Optimization of Complex Systems, Control Theory, and
    Risk Assessment; Electrical Energy Storage; Carbon Dioxide Capture and
    Storage; Characterization of Radioactive Waste; Predicting High Level
    Waste System Performance over Extreme Time Horizons; and High Energy
    Density Laboratory Plasmas. The Office of Science has sponsored
    scientific workshops corresponding to these focus areas in
    collaboration with related DOE applied technology program offices. The
    workshop reports identified high priority basic research areas
    necessary for improved understanding and revolutionary breakthroughs.
        Advanced Mathematics for Optimization of Complex Systems, Control
    Theory, and Risk Assessment.--The Advanced Scientific Computing
    Research (ASCR) program supports basic research in advanced mathematics
    for optimization of complex systems, control theory, and risk
    assessment. A recommendation from the workshop focused on this subject
    indicated additional research emphasis in advanced mathematics could
    benefit the optimization of fossil fuel power generation; the nuclear
    fuel lifecycle; and power grid control. Such research could increase
    the likelihood for success in DOE strategic initiatives including
    integrated gasification combined cycle coal-fired power plants and
    modernization of the electric power grid.
        Electrical Energy Storage.--About 15 percent of the Basic Energy
    Sciences (BES) program funding requested to support basic research in
    electrical energy storage (EES) is targeted for a formally coordinated
    program with DOE applied technology program offices. The workshop
    report on this focus area noted that revolutionary breakthroughs in EES
    have been singled out as perhaps the most crucial need for this
    Nation's secure energy future. The report concluded that the
    breakthroughs required for tomorrow's energy storage needs can be
    realized with fundamental research to understand the underlying
    processes involved in EES. The knowledge gained will in turn enable the
    development of novel EES concepts that incorporate revolutionary new
    materials and chemical processes. Such research will accelerate
    advances in developing novel battery concepts for hybrid and electric
    cars and will also help facilitate successful utilization and
    integration of intermittent renewable power sources such as solar,
    wind, and wave energy into the utility sector, making these energy
    sources competitive for base-load supply.
        Carbon Dioxide Capture and Storage.--BES, ASCR and the Biological
    and Environmental Research (BER) program support basic research in
    carbon dioxide capture and storage. The storage portion of this R&D
    coordination focus area was a subject of a BES workshop on Basic
    Research Needs for Geosciences in February 2007 that focused on the
    research challenges posed by carbon dioxide storage in deep porous
    saline geological formations. The workshop report noted that the
    chemical and geological processes involved in the storage of carbon
    dioxide are highly complex and would require an interdisciplinary
    approach strongly coupling experiments with theory, modeling, and
    computation bridging multiple length and time scales. The BES effort
    supports fundamental research to understand the underlying chemical,
    geochemical, and geophysical processes involved in subsurface
    sequestration sites. The BER research effort focuses on understanding,
    modeling, and predicting the processes that control the fate of carbon
    dioxide injected into geologic formations, subsurface carbon storage,
    and the role of microbes and plants in carbon sequestration in both
    marine and terrestrial environments. These aspects of this focus area
    were also the subject of additional SC workshops that identified basic
    research areas in carbon dioxide capture and storage that could benefit
    the optimization of fossil fuel power generation and the development of
    carbon neutral fuels. The ASCR research effort supports two Scientific
    Discovery through Accelerated Computing (SciDAC) partnerships with BER
    to advance modeling of subsurface reactive transport of contaminants;
    an area that has been identified as directly relevant to carbon
    sequestration research efforts.
        Characterization of Radioactive Waste.--BES, BER, and the Nuclear
    Physics (NP) program support research in radioactive waste
    characterization. This R&D coordination focus area was the subject of
    six Office of Science workshops, including three BES workshops. The
    workshop reports noted that the materials and chemical processes
    involved in radioactive waste disposal are highly complex and their
    characterization requires an interdisciplinary approach that strongly
    couples experiments with theory, modeling, and computation bridging
    multiple length and time scales. The BES effort will focus on research
    relating to the underlying physical and chemical processes that occur
    under the conditions of radioactive waste storage, including extremes
    of temperature, pressure, radiation flux, and multiple complex phases.
    The BER research effort addresses processes that control the mobility
    of radiological waste in the environment. The NP research effort is
    focused on characterization of radioactive waste through the advanced
    fuel cycle activities. The NP program areas are structured as
    scientific disciplines with goals to understand the nuclear cross
    sections important for advanced fuel cycle reprocessing. A small
    portion of on-going research is relevant to the issues involved with
    radioactive waste and related advanced fuel cycles. The knowledge
    gained from this research will lead to enhanced understandings of
    radioactive waste characterization, which would make nuclear power a
    far more attractive component in primary energy usage.
        Predicting High Level Waste System Performance over Extreme Time
    Horizons.--BES supports basic research in predicting high-level waste
    system performance over extreme time horizons. This R&D coordination
    focus area was a subject of a BES workshop on Basic Research Needs for
    Geosciences in February 2007, which focused on research challenges
    posed by geological repositories for high level waste. The workshop
    report identified major research priorities in the areas of
    computational thermodynamics of complex fluids and solids,
    nanoparticulate and colloid physics and chemistry, biogeochemistry in
    extreme and perturbed environments, highly reactive subsurface
    materials and environments, and simulation of complex multi-scale
    systems for ultra-long times.
        High Energy Density Laboratory Plasmas.--The Fusion Energy Sciences
    (FES) program supports basic reach in high energy density laboratory
    plasmas. In May 2007, Office of Science and the National Nuclear
    Security Administration (NNSA) jointly sponsored a workshop to update
    the high energy density laboratory plasmas (HEDLP) scientific research
    agenda. Three scientific themes emerged from the workshop: enabling the
    grand challenge of fusion energy by high energy density laboratory
    plasmas; creating, probing, and controlling new states of high energy
    densities; and catching reactions in the act by ultra-fast dynamics. In
    fiscal year 2009, the FES request expands existing HEDLP research in
    response to the research opportunities identified in the workshop.

                                   BASIC AND APPLIED R&D COLLABORATION FUNDING SUMMARY
                                                 [Dollars in thousands]
    ----------------------------------------------------------------------------------------------------------------
                                                                                              Fiscal Year 2009 vs.
                                                     Fiscal Year  Fiscal Year  Fiscal Year      Fiscal Year 2008
                                                         2007         2008         2009    -------------------------
                                                       Approp.      Approp.      Request      Request      Percent
    ----------------------------------------------------------------------------------------------------------------
    Advanced Mathematics for Optimization of
     Complex Systems, Control Theory, & Risk
     Assessment:
        Science: Advanced scientific computing       ...........       $1,900       $2,000        +$100         +5.3
         research..................................
        Energy Efficiency and Renewable Energy.....  ...........  ...........          500         +500  ...........
        Nuclear Energy.............................      $10,000       19,410       55,000      +35,590       +183.4
                                                    ----------------------------------------------------------------
          Total, Advanced Mathematics..............       10,000       21,310       57,500      +36,190       +169.8
                                                    ================================================================
    Electrical Energy Storage:
        Science: Basic energy sciences.............  ...........  ...........       33,938      +33,938  ...........
        Energy Efficiency and Renewable Energy.....  ...........  ...........        2,000       +2,000  ...........
        Electricity Delivery and Energy Reliability  ...........  ...........       13,403      +13,403  ...........
                                                    ----------------------------------------------------------------
          Total, Electric Energy Storage...........  ...........  ...........       49,341      +49,341  ...........
                                                    ================================================================
    Carbon Dioxide Capture and Storage:
        Science: Basic energy sciences.............        5,915        5,915       10,915       +5,000        +84.5
        Advanced scientific computing research.....  ...........          976          976  ...........  ...........
        Biological and environmental research......       16,841       16,874       17,374         +500         +3.0
                                                    ----------------------------------------------------------------
          Total, Science...........................       22,756       23,765       29,265       +5,500        +23.1
        Fossil Energy..............................       97,228      118,908      149,132      +30,224        +25.4
                                                    ----------------------------------------------------------------
            Total, Carbon Dioxide Capture and            119,984      142,673      178,397      +35,724        +25.0
             Storage...............................
                                                    ================================================================
    Characterization of Radioactive Waste:
        Science: Basic energy sciences.............  ...........  ...........        8,492       +8,492  ...........
        Biological and environmental research......  ...........  ...........        1,500       +1,500  ...........
        Nuclear physics............................          200          200        6,603       +6,403       +3,202
                                                    ----------------------------------------------------------------
          Total, Science...........................          200          200       16,595      +16,395       +8,198
        Nuclear Energy.............................       37,190       53,722       59,000       +5,278         +9.8
        Environmental Management...................        2,100        2,100        9,500       +7,400       +352.4
                                                    ----------------------------------------------------------------
            Total, Characterization of Radioactive        39,490       56,022       85,095      +29,073        +51.9
             Waste.................................
                                                    ================================================================
    Predicting High Level Waste System Performance
     Over Extreme Time Horizons:
        Science: Basic energy sciences.............  ...........  ...........        8,492       +8,492  ...........
        Environmental Management...................          500          500        1,500       +1,000       +200.0
                                                    ----------------------------------------------------------------
          Total, Predicting High Level Waste System          500          500        9,992       +9,492       +1,898
           Performance.............................
                                                    ================================================================
    High Energy Density Laboratory Plasmas:
        Science: Fusion energy sciences............       15,459       15,942       24,636       +8,694        +54.5
        National Nuclear Security Administration...       10,000       12,295       10,147       -2,148        -17.5
                                                    ----------------------------------------------------------------
          Total, High Energy Density Laboratory           25,459       28,237       34,783       +6,546        +23.2
           Plasmas.................................
                                                    ----------------------------------------------------------------
          Total, Basic and Applied Research              195,433      248,742      415,108      166,366        +66.9
           Collaborations..........................
    ----------------------------------------------------------------------------------------------------------------

                                   conclusion
        I want to thank you, Mr. Chairman, for providing this opportunity
    to discuss the Office of Science research programs and our
    contributions to the Nation's scientific enterprise and global
    competitiveness. On behalf of DOE, I am pleased to present this fiscal
    year 2009 budget request for the Office of Science.
        This concludes my testimony. I would be pleased to answer any
    questions you might have.

        Senator Dorgan. Next we will hear from Secretary Karsner.
    You may proceed.
        Mr. Karsner. Thank you, sir.
    STATEMENT OF HON. ALEXANDER KARSNER, ASSISTANT
                SECRETARY FOR ENERGY EFFICIENCY AND
                RENEWABLE ENERGY
        Mr. Karsner. Chairman Dorgan, Ranking Member Domenici,
    members of the committee, thank you for this opportunity of
    testifying in the President's fiscal year 2009 budget request
    for the Office of Energy Efficiency and Renewable Energy.
        EERE's fiscal year 2009 request of $1.25 billion is
    approximately $19 million higher than the fiscal year 2008
    request and provides a balance in diverse portfolio of
    solutions to address the energy and environmental challenges
    facing us today. The request will enable the EERE to research
    and develop renewable energy technologies, to dramatically
    increase the amount of clean energy produced in the United
    States' advanced energy technologies and practices, to
    sustainably decouple energy demand from economic growth, and
    strengthen commercialization and deployment to support rapid
    adoption by private industry of clean energy technologies.
        The need for clean energy solutions is abundantly clear.
    With the Nation's energy challenges plainly identified, our
    efforts today and onward need to be about the implementation of
    solutions: well-identified solutions, multipath solutions,
    parallel path solutions, trying what we must and at a pace that
    is commensurate with the magnitude and urgency of the
    challenges that we face.
        On December 19, 2007, the President signed the Energy
    Independence and Security Act of 2007 into law. The new
    mandates included in EISA are unprecedented in size and in
    scope and in time frame. Together we've taken great strides to
    move beyond problem identification and towards problem-solving
    that will enhance our energy security, diversify our energy
    systems, and reduce our greenhouse gas emissions that
    contribute to the serious challenge of climate change.
        EERE's overall budget request reflects the funding needed
    to meet our energy challenges head on. Advanced fuels in
    vehicles, renewable power, efficiency in buildings and
    industry, and technology deployment comprise EERE's portfolio
    and multipronged approach to energy solutions.
        My written testimony which I'll submit for the record
    includes a description of the priorities and specific funding
    requests of the EERE's program areas. The achievement of EERE
    program goals could save consumers over $600 billion by the
    year 2030, and as much as $4 trillion by 2050, cumulatively.
        Similarly, we expect that our portfolio will avoid at least
    six gigatons of carbon by 2030 and nearly 50 gigatons by 2050,
    cumulatively.
        With action plans, performance milestones, clearly
    articulated deliverables, and continued performance, EERE's
    Budget Request will strengthen our dynamic partnership with
    private industry and academia that have grown our Nation's
    economic well-being.

                               PREPARED STATEMENT

        Our laboratory products and partnerships resulting in
    industry commercialization at unprecedented levels will bring
    clean energy technologies and sources to large-scale commercial
    viability in the foreseeable future.
        This concludes my prepared statement, and I'm happy to
    answer any questions the committee members may have. Thank you.
        [The statement follows:]
                  Prepared Statement of Hon. Alexander Karsner
        Mr. Chairman and members of the committee, thank you for this
    opportunity to testify on the President's fiscal year 2009 budget
    request for the Office of Energy Efficiency and Renewable Energy
    (EERE).
        EERE's fiscal year 2009 request of $1.255 billion, approximately
    $19 million higher than the fiscal year 2008 request, provides a
    balanced and diverse portfolio of solutions to address the energy and
    environmental challenges facing us today. The request will enable EERE
    to research and develop renewable energy technologies that can help
    increase the amount of clean energy produced in the United States;
    advance energy efficiency technologies and practices; and promote
    adoption by private industry of clean energy technologies.
        The need for clean energy solutions is clear. With the Nation's
    energy challenges plainly identified, our efforts today and onward need
    to be about the development of solutions--balanced, diverse, well-
    identified solutions, multipath solutions, as well as parallel path
    solutions.
        On December 19, 2007, the President signed the Energy Independence
    and Security Act of 2007 (EISA) into law. Together, we have taken great
    strides to move beyond problem identification and toward problem
    solving that will enhance our energy security, diversify our energy
    systems, and reduce emissions that contribute to climate change.
        EERE's overall budget request reflects the funding needed to meet
    our energy challenges head on. Advanced fuels and vehicles, renewable
    power, efficiency in buildings and industry, and technology deployment
    comprise EERE's portfolio and multipronged approach to energy
    solutions. I will now provide a description of the priorities and
    specific funding requests of EERE's program areas.
                      biomass and biorefinery systems r&d
        In fiscal year 2009, the Department is requesting $225 million for
    the Biomass Program, an increase of $26.8 million from the fiscal year
    2008 appropriation. The Biomass Program's funding supports the Biofuels
    Initiative that was launched in 2006 as part of the Advanced Energy
    Initiative (AEI) and is designed to achieve cost competitive cellulosic
    ethanol by 2012. The funding also supports the President's ``Twenty-in-
    Ten'' initiative, announced in the 2007 State of the Union, to reduce
    gasoline consumption by 20 percent by 2017.
        EISA includes increased Corporate Average Fuel Economy (CAFE)
    standards and an increased Renewable Fuel Standard (RFS). The act
    increases CAFE standards to 35 miles per gallon for all passenger
    automobiles, including light trucks, by 2020; and mandates the
    replacement of 36 billion gallons of gasoline with renewable fuel by
    2022, including 16 billion gallons of cellulosic ethanol. The Biomass
    Program's funding request for technology development and demonstration
    is expected to support timely achievement of EISA requirements. The
    program is focused on: Feedstock Infrastructure to reduce the cost of
    feedstock logistics; Platforms R&D for efficiently converting
    feedstocks into cost competitive commodity liquid biofuels; and
    Utilization of Platform Outputs to demonstrate and validate integrated
    technologies that achieve commercially acceptable performance and cost
    targets through public-private partnerships. The program strategy is to
    accelerate development of the next generation of feedstocks and
    conversion technology options for validation and demonstration in
    integrated biorefineries at commercial and 10 percent of commercial
    scale. This strategy balances the program's research, development, and
    deployment (RD&D) portfolio by encouraging technology transfer while
    maintaining core R&D funding for next generation technologies. The
    program will continue to emphasize cellulosic ethanol and expand the
    focus on other renewable biofuels, such as biobutanol and green diesel.
                          vehicle technologies program
        The fiscal year 2009 Vehicle Technologies Program's request is
    $221.1 million, an $8 million increase over the fiscal year 2008
    appropriation.
        Vehicle Technologies Program activities focus on advanced, high-
    efficiency vehicle technologies, including combustion engines and
    enabling fuels, hybrid vehicle systems (including plug-in hybrids),
    high-power and high-energy batteries, advanced lightweight materials,
    and power electronics. These technologies are critical to near-term oil
    savings when used in advanced combustion hybrid and plug-in hybrid
    electric vehicles (PHEVs). In fiscal year 2009, emphasis will increase
    R&D for PHEVs, such as high energy storage batteries.
        The program continues to place increasing emphasis on accelerating
    RD&D on lithium-ion batteries, plug-in hybrids (including plug-in
    hybrid vehicle demonstrations), and drive-train electrification to
    diversify and make our Nation's vehicles more efficient to reduce
    petroleum dependency. The R&D centers on improving advanced combustion
    engine systems and fuels and on reducing vehicle parasitic losses. The
    Vehicle Technologies budget is modified in the fiscal year 2009 request
    by transferring three activities from the Hydrogen Technology Program:
    Education; Technology Validation; and Safety and Codes and Standards.
    These activity areas have congruent objectives with other efforts
    within the Vehicle Technologies Program, and combining them within one
    program enables management efficiencies.
        The Program will continue fiscal year 2008 efforts to evaluate the
    impact of intermediate ethanol blended gasoline (i.e., greater than
    E10) in conventional (i.e., non-FFV) vehicles and to improve the
    efficiency of engines operating on ethanol blends. Late model and
    legacy vehicles will be tested for emissions, performance, and
    materials impacts. Intermediate blends could provide a way to increase
    ethanol use sooner. These efforts support existing requirements and the
    President's 20 in 10 plan.
                          hydrogen technology program
        The Hydrogen Technology Program's fiscal year 2009 budget request
    is $146.2 million, $64.8 million less than the fiscal year 2008
    appropriation, due in part to the movement of the three activities
    mentioned above to the Vehicle Technologies Program. In 2009, the
    program will focus on remaining critical path barriers to the
    technology readiness goals for 2015. Substantial increases are included
    for hydrogen storage and fuel cell R&D. To provide for those increases,
    all funding for hydrogen production from renewables was eliminated and
    systems analyses continues at a somewhat reduced funding level.
        The Hydrogen Program continues to research and develop critical
    hydrogen technologies that enable near-term commercialization pathways.
    Hydrogen Storage is one of the most technically challenging barriers to
    the widespread advancement of hydrogen and fuel cell technologies in
    the transportation sector. Our portfolio continues to identify new
    materials for on-board storage having the potential for greater than 50
    percent improvement in capacity than those available prior to 2004.
    Much needs to be done to enable these materials to operate at practical
    temperatures and pressures.
        In 2009, the Hydrogen Program will significantly increase
    investment in applied R&D of novel materials and breakthrough concepts
    with potential to meet on-board storage system performance targets. R&D
    funding will be competitively awarded and conducted through both
    Centers of Excellence and independent projects. The overarching goal is
    lightweight, low-cost, low-pressure, and efficient on-board vehicular
    storage systems to achieve a driving range of greater than 300 miles,
    without impacting vehicular cargo or passenger space to be competitive
    with today's vehicles.
        To address the critical barriers of fuel cell cost and durability,
    the fiscal year 2009 request significantly increases funding for Fuel
    Stack Components R&D. Our R&D efforts have made significant progress in
    this area and will continue efforts to achieve our stated goals,
    reducing the high-volume cost of automotive fuel cells from $275 per
    kilowatt in 2002 to $94 per kilowatt in 2007. In 2009, we hope to
    reduce the modeled cost of hydrogen fuel cell power systems to $60 per
    kilowatt. One notable recent achievement was the cost-shared
    development of a membrane with 5,000 hours lifetime, a giant leap
    toward the 2010 goal of 5,000 hours durability in an automotive fuel
    cell system.
        The Hydrogen Program's fuel cell R&D will continue to pursue a
    number of technological advancements. Proton-conducting membranes that
    are low-cost, durable, and operable at a low relative humidity will be
    developed. Non-precious metal and alloy catalysts will be identified
    and developed to further lower the cost of fuel cell systems. Gas flow
    through the flow fields will be modeled and measured while fuel cells
    are in operation to ensure optimal gas and water distribution over the
    catalyst and membrane surface. And fuel cells for distributed energy
    generation will continue to be developed with an emphasis on system
    integration, cost reduction and efficiency improvements. The Department
    will also continue its participation in the International Partnership
    for Hydrogen Economy (IPHE)--collaborating on R&D of materials for both
    fuel cells and storage, and working on such projects as the evaluation
    of fuel cell-related test protocols from different countries, as well
    as hydrogen pathway and infrastructure analyses.
                              solar energy program
        The fiscal year 2009 budget request for the Solar Energy Program is
    $156.1 million, $12.3 million less than the fiscal year 2008
    appropriation. Through the President's Solar America Initiative (SAI),
    announced in the 2006 State of the Union, the Solar Program will
    accelerate market competitiveness of solar photovoltaic technologies
    through R&D aimed at less expensive, more efficient, and highly
    reliable solar systems. Targeting improved performance and reliability
    with reduced cost, the Solar Program focuses its RD&D activities in two
    technology areas: photovoltaics (PV) and concentrating solar power
    (CSP).
        The Solar Program's goal in the area of photovoltaics is to develop
    and deploy highly reliable PV systems that are cost-competitive with
    electricity from conventional resources. The Program focuses on
    improving the performance of cells, modules, and systems; reducing the
    manufacturing cost of cells, modules, plant components, and systems;
    reducing the installation, interconnection, and certification costs for
    residential, commercial, and utility systems; and increasing system
    operating lifetime and reliability. To lower costs more rapidly and
    improve performance, the Solar Program is focusing on PV technology
    pathways that have the greatest potential to reach cost competitiveness
    by 2015. Industry-led partnerships, known as ``Technology Pathway
    Partnerships,'' will be continued in fiscal year 2009 to help address
    the issues of cost, performance, and reliability associated with each
    pathway.
        The Program's CSP focus is to develop concentrating solar
    technologies. A solicitation issued in fiscal year 2007 resulted in 12
    industry contract awards focused on establishing a U.S. manufacturing
    capability of low cost trough components and the technical feasibility
    of low cost thermal storage. In fiscal year 2008, funds will be
    provided for Phase I of these contracts with the more promising
    contracts moving into Phase II in fiscal year 2009. One of the most
    important advantages of CSP is its ability to thermally store power for
    later use. The development of advanced thermal energy storage
    technologies in fiscal year 2009 will be expanded to include single
    heat transfer fluid systems that eliminate the need for multiple heat
    exchangers and thereby increase system efficiency and reduce cost. For
    distributed applications, research in fiscal year 2009 will continue on
    improving the reliability of dish systems through the operation and
    testing of multiple units as well as improving the manufacturability of
    dish systems.
                              wind energy program
        The Wind Energy Program's fiscal year 2009 request is $52.5
    million, an increase of $3.0 million from the fiscal year 2008
    appropriation. The Wind Energy Program supports the AEI objective to
    maximize wind energy resource utilization in the United States by
    leading the Nation's R&D efforts to improve wind energy generation
    technology and address barriers to the use of wind energy in
    coordination with stakeholders.
        In 2007, the United States installed more wind generation capacity
    than any other country by bringing on-line 5 GW of new wind
    installations. Wind is now a major source of new electricity
    generation, and accounts for roughly 30 percent of new capacity from
    all energy sources. Since 2000, wind energy has increased more than 6-
    fold, from about 2.5 GW to nearly 16.8 GW today. While there are
    significant challenges, wind resources have the potential to provide up
    to 20 percent of our Nation's generation potential.
        The Wind Program believes that wind energy is at a transitional
    point, particularly for large land-based wind systems. The program is
    concentrating on reducing technological barriers that limit the growth
    potential of wind energy in the United States by focusing on improving
    cost, performance, and reliability of large scale land-based
    technology. As a part of the effort, NREL will be testing its first
    utility-scale multi-megawatt turbine at the National Wind Technology
    Center in Colorado, through a competitive CRADA solicitation.
        In addition, the Wind Program is facilitating wind energy's rapid
    market expansion by anticipating and addressing potential regulatory,
    transmission and manufacturing barriers; and investigating wind
    energy's application to other areas, including distributed and
    community owned wind projects.
        The Program's focus also includes energy storage efforts in
    coordination with the Office of Electricity Delivery and Energy
    Reliability to maximize wind energy resource utilization, which
    supports diversifying the domestic energy supply while enhancing system
    reliability.
                              water power program
        The Water Power Program's budget request of $3.0 million will
    support initial R&D activities, and follows an initial congressional
    appropriation of $9.9 million in fiscal year 2008. The program needs to
    evaluate the results of its fiscal year 2008 R&D projects and
    technology assessments (which will continue into fiscal year 2009)
    before considering further applied research efforts. The mission of the
    Water Power Program is to research and develop innovative and effective
    technologies capable of harnessing hydrokinetic energy resources,
    including ocean wave and current energy.
        The program will focus on conducting technology characterizations
    to identify manufacturers, performance limits and issues, known
    environmental impacts, and other relevant technical and market
    variables. In addition the program will engage in collaborative
    international activities.
                         geothermal technology program
        The fiscal year 2009 request for the Geothermal Technology Program
    is $30 million, which is an increase of $10.2 million from the fiscal
    year 2008 appropriation. The Geothermal Technology Program works in
    partnership with industry to establish Enhanced Geothermal Systems
    (EGS) as an economically competitive contributor to the U.S. energy
    supply. Geothermal energy generates ``base-load'' electricity and/or
    supplies heat for direct applications, including aquaculture, crop
    drying, and district heating, or for use in heat pumps to heat and cool
    buildings.
        The Program focuses on the innovative technology of Enhanced
    Geothermal Systems (EGS), which are engineered reservoirs created to
    produce energy from geothermal resources that would otherwise not be
    economical. EGS is a new pathway for producing geothermal energy by
    drilling wells into hot rock, fracturing the rock between the wells,
    and circulating a fluid through the fractured rock to extract the heat.
    While EGS reservoirs have been designed, built, and tested in various
    countries, a number of technical hurdles remain to be overcome, the
    most important involving creation of EGS reservoirs with commercial
    production rates and lifetimes. The Department's approach will
    concentrate initially on issues related to reservoir creation,
    operation, and management. This may involve working with cost-sharing
    partners at existing geothermal fields to develop, test, and perfect
    the tools needed to fracture hot, impermeable rock and efficiently
    circulate fluids.
        A feasibility study by the Massachusetts Institute of Technology
    (MIT) estimates that EGS could provide 100,000 MW of electric power by
    2050--10 percent of currently installed electric capacity. This
    compares with today's 2,800 MW of installed capacity at existing U.S.
    geothermal power plants using today's technology. Expected program
    outcomes will include creation of a commercial-scale geothermal
    reservoir and power plant (approximately 5 MW in generating capacity)
    capable of operating for 7 years by 2015. This initial plant, followed
    by others in differing geologic environments, should foster rapid
    growth in the use of geothermal energy as predicted by the MIT study.
                         building technologies program
        The Building Technologies Program's fiscal year 2009 request is
    $123.8 million, an increase of $14.8 million from the fiscal year 2008
    appropriation. The Building Technologies Program develops technologies,
    techniques, and tools for making residential and commercial buildings
    more energy efficient, productive, and cost-competitive. The Program's
    funding supports a portfolio of activities that includes solid state
    lighting (SSL), improved energy efficiency of other building components
    and equipment, and their effective integration using whole building
    system design techniques that will enable the design of net Zero Energy
    Buildings. The Program also includes the development of building codes
    and appliance standards and successful education and market
    introduction programs, including ENERGY STAR and EnergySmart Schools.
        The Residential and Commercial Buildings integration components of
    the Building Technologies Program aim to transform the carbon footprint
    of the built environment through Zero Energy Buildings. The
    residential-focused Building America subprogram focuses on reducing
    total energy use in a new home by 60 to 70 percent. During fiscal year
    2009, research for production-ready new residential buildings that are
    40 percent more efficient will continue for three climate zones, with
    completion in two. The Program's activities in the commercial sector
    are focused on alliances of leading market companies with national
    portfolios of buildings. The Program will engage with the developers of
    these buildings, which will provide the opportunity to better
    understand what R&D is needed to help promote the construction of
    highly efficient commercial buildings. DOE's role as convener of
    partnerships with developers and other key actors help promote
    leveraging of resources and encourage the private sector to undertake
    market transformation activities.
        The Emerging Technologies subprogram seeks to develop cost-
    effective technologies for residential and commercial buildings that
    enable reductions in building energy use. Solid State Lighting will
    develop technologies that can help reduce commercial building lighting
    electricity consumption. Space Conditioning and Refrigeration R&D will
    continue work on innovative HVAC design concepts. Other highlights
    include highly insulating windows and building integrated solar heating
    and cooling systems.
        The Equipment Standards and Analysis subprogram develops minimum
    energy efficiency standards that are technologically feasible and
    economically justified as required by law. Federal energy conservation
    standards that have gone into effect since 1988 are projected to save a
    cumulative total of 75 quadrillion Btus (quads) of energy by the year
    2045 (in 2007, total annual United States consumption of primary energy
    was about 103 quads). Between fiscal year 2005 and fiscal year 2007,
    the Department identified and carried out significant enhancements to
    rulemaking activities. The Department has made a commitment to clear
    the backlog of delayed actions that accumulated during prior years,
    while simultaneously implementing all new requirements of the Energy
    Policy Act (EPACT) of 2005. EISA significantly increases the number of
    efficiency standards and test procedures DOE must develop. The
    Department will continue to implement productivity enhancements that
    will allow multiple rulemaking activities to proceed simultaneously,
    while maintaining the rigorous technical and economic analysis required
    by statute. Energy conservation standards for 10 products were
    initiated in fiscal year 2006 and 2007 that will continue in fiscal
    year 2009. In fiscal year 2008, efficiency standards rulemakings were
    initiated on four additional products. In fiscal year 2008, DOE is
    proceeding simultaneously on rulemakings for 15 products and 10 test
    procedures. In fiscal year 2009, four more standards and test
    procedures for seven more products will be added.
        The Technology Validation and Market Introduction subprogram funds
    activities that validate and promote clean, efficient, and domestic
    energy technologies. Expanding and modernizing the ENERGY STAR program
    to include solid state lighting, water heaters, photovoltaics, fuel
    cells, micro-wind turbines, combined heat and power, and other advanced
    technologies, as well as targeting the civic infrastructure (e.g.,
    schools, hospitals, libraries, municipal facilities), are central
    activities that the program carries out to invest in Energy Smart
    solutions. DOE will continue to work with the Environmental Protection
    Agency on the development and implementation of Energy Star and other
    efforts to minimize duplication and maximize efficiency. In addition to
    these efforts, the Program focuses on outreach efforts to help move
    specific technologies--such as solid-state lighting and high-
    performance windows--toward commercial applications. These efforts
    include design and rating tools, durability and product lifetime data,
    testing procedures, demonstrations, retailer education, and training on
    proper installation.
                        industrial technologies program
        The Industrial Technologies Program seeks to reduce the energy
    intensity (energy demand per unit of industrial output) of the U.S.
    industrial sector through coordinated research and development,
    validation, and technical assistance activities to increase
    dissemination of energy efficiency technologies and operating
    practices. The fiscal year 2009 budget request for the Industrial
    Technologies Program (ITP) is $62.1 million, which is $2.3 million less
    than the fiscal year 2008 appropriation. Internal funding shifts
    reflect a continued strategy to emphasize more effective ways to
    increase energy efficiency among energy intensive industries. The shift
    toward more crosscutting and higher impact R&D activities will allow
    ITP to develop advanced, energy-efficient technologies to serve a
    broader set of industries.
        The program will continue to support the Secretary of Energy's
    ``Easy Ways to Save Energy'' campaign through the Save Energy Now (SEN)
    industrial energy savings assessments at the Nation's most energy-
    intensive industrial facilities. This has been a very successful
    activity, having reached its 24-month goal of conducting 450
    assessments from 2006 through 2007. With 89 percent of the plants
    reporting results from these assessments, the program has identified
    savings of over 88 trillion Btus of source energy, including more than
    71 trillion Btus of natural gas, the amount used by almost a million
    U.S. homes. If implemented, the improvements recommended through SEN
    assessments have a potential energy savings of more than $727 million
    per year and could also reduce carbon dioxide emissions by 6.3 million
    metric tons annually, which is equivalent to taking over one million
    automobiles off the road
        Building on this success, ITP will expand partnerships with leading
    corporations across major manufacturing supply chain and deliver DOE
    plant assessments, tools, and technologies to enable dramatic energy
    efficient improvements, contributing to the EPACT 2005 goal of reducing
    industrial energy intensity by 2.5 percent per year from 2006 to 2016.
                       federal energy management program
        The Federal Energy Management Program (FEMP) budget request for
    fiscal year 2009 is $22 million, which is an increase of $2.2 million
    from the fiscal year 2008 appropriation. FEMP enhances energy security,
    environmental stewardship, and cost reduction within the Federal
    Government through reductions in energy intensity in buildings,
    increased use of renewable energy, and greater conservation of water.
    These goals are accomplished by means of technical assistance,
    coordination of Federal reporting and evaluation, supporting
    alternative fuel use in the Federal vehicle fleet, and supporting the
    Secretary's Transformational Energy Action Management (TEAM)
    Initiative.
        In a new effort this year, FEMP will support private sector
    development of alternative fuel stations at Federal sites, help the
    Federal Government identify opportunities for petroleum displacement to
    increase alternative fuel use, and conduct reporting and analysis of
    the Federal vehicle fleet. In addition, with DOE Specific Investments,
    FEMP will support the Secretary's TEAM Initiative, which will establish
    DOE as the Federal agency leader in strengthening energy and
    alternative fuels management. The TEAM Initiative works with DOE
    programs to help meet and exceed the goals of Executive Order 13423,
    such as a reduction of energy intensity of 30 percent by the end of
    fiscal year 2015.
        As part of the TEAM initiative, the Secretary has instructed all
    DOE sites to host private sector energy service companies to assess
    efficiency opportunities across the complex, addressing all lifecycle,
    cost-competitive options. DOE will lead by example, deploying a wide
    variety of lighting and other advanced technologies to achieve maximum
    energy savings. The Secretary's TEAM Initiative is bold and, as
    Congress looks to ``green'' the Capitol Complex, I would be pleased to
    provide additional information and periodic updates to this Committee
    on our efforts and actions.
            weatherization and intergovernmental activities program
        The fiscal year 2009 request for Weatherization and
    Intergovernmental Activities is $58.5 million. Stakeholders and
    partners include State and local governments, Native American Tribes,
    utilities, and international agencies and governments.
        Significant changes in the fiscal year 2009 budget request include
    increases for the State Energy Program and the Asia Pacific
    Partnership, a refocusing for Tribal Energy Activities, and conclusion
    of funding for the Weatherization Assistance Program (WAP) and the
    Renewable Energy Production Incentive. The results of DOE's
    weatherization assistance activities are little changed in the last 2
    decades: provision of positive limited benefits to selected recipients,
    but failing to catalyze broader solutions for the tens of millions of
    eligible homes that have never received retrofits. The Department
    requests no funding for WAP activities; however, States can continue to
    support weatherization assistance activities with resources provided by
    the Low-Income Home Energy Assistance Program at the Department of
    Health and Human Services. Concluding the program at DOE will allow the
    Department to focus on higher priority research and development as well
    as State, local, and utility energy projects in the State Grants
    program. Through fiscal year 2008, the Renewable Energy Production
    Incentive (REPI) provided financial incentive payments to publicly
    owned utilities, nonprofit electric cooperatives, and tribal
    governments and native corporations that own and operate qualifying
    facilities generating renewable electricity. The incentive value of
    REPI has diminished over time as renewable energy technologies have
    become competitive, rendering the program no longer necessary
        In fiscal year 2009, the State Energy Program will continue to
    include competitive grants for State policies and programs that
    increase adoption and compliance of advanced building energy codes,
    accelerate the use of performance contracting and alternative financing
    by State and local governments, and increase investments in utility
    delivered efficiency programs and other high priority EPACT 2005 and
    EISA programs.
        The State Energy Program helps enable State governments to target
    their high priority energy needs and expand clean energy choices for
    their citizens and businesses. Benefits include reduced energy use and
    costs, environmentally conscious economic development, increased
    renewable energy generation capacity, and lessened reliance on imported
    oil. A combination of technical assistance, outreach, and financial
    assistance support effective program implementation of the National
    Action Plan for Energy Efficiency and provisions of EPACT 2005 and
    EISA.
                         facilities and infrastructure
        The budget request for Facilities and Infrastructure supports
    operations and maintenance (O&M) for the National Renewable Energy
    Laboratory (NREL), a single-purpose laboratory dedicated to R&D for
    energy efficiency, renewable energy, and related technologies. The
    request for fiscal year 2009 is $13.9 million: $10.0 million for core
    O&M (a $3.1 million increase) and $4.0 million required to complete
    Phase I construction of the Energy Systems Integration Facility (ESIF).
        This budget request represents a decrease of $62.2 million compared
    to the fiscal year 2008 appropriation, primarily a reflection of
    Congress's fiscal year 2008 provision of $54.5 million to initiate
    construction activities for the ESIF and to begin additional site
    infrastructure work. Funding beyond that which is requested for fiscal
    year 2009 is not needed, as much of the construction taking place was
    fully funded in prior years. The remainder of the decrease is a result
    of including requested solar research capital equipment replacements
    within the Solar Energy Program budget, where such equipment is
    typically funded.
                                   conclusion
        The penetration of EERE technologies into the marketplace could
    save consumers over $600 billion by the year 2030 and save as much as
    $4 trillion by 2050, cumulatively. Similarly, the technologies in our
    portfolio could avoid 6 gigatons of carbon (GTC) by 2030 and nearly 50
    GTC by 2050, cumulatively.\1\ With action plans, performance
    milestones, clearly articulated deliverables, and continued
    performance, EERE's budget request supports priority R&D and the
    achievement of stated goals. Our laboratory products and partnerships
    will help bring cleaner energy technologies and sources to commercial
    viability in the foreseeable future.
    ---------------------------------------------------------------------------
         \1\ Energy Efficiency and Renewable Energy Fiscal Year 2009
    Congressional Budget, 20.

        Senator Dorgan. Mr. Karsner, thank you very much. Finally,
    we will hear from David Frantz. Mr. Frantz, you may proceed.
    STATEMENT OF DAVID G. FRANTZ, DIRECTOR, LOAN GUARANTEE
                PROGRAM OFFICE, OFFICE OF THE CHIEF
                FINANCIAL OFFICER
        Mr. Frantz. Mr. Chairman, members of the committee, I am
    pleased to be before you today to review our budget for fiscal
    year 2009 as well as give you a program update on our office.
        I am happy to inform you that significant progress on this
    program has been made over the past year. In fact, just 1 year
    ago, the Department began its processing of the first 143
    applications from the 2006 solicitation, and that period
    involved very rigorous technical and financial evaluations in
    accordance with criteria set forth by our Credit Review Board,
    the governing board of our program.

                       STAFFING OF LOAN GUARANTEE PROGRAM

        Coincidental with this activity, I was hired and began as a
    top priority: the immediate staffing of the office with
    permanent Government, Federal employees. In the way of a
    background, I have over 35 years of international project
    financing experience, and that also includes over 10 years of
    experience with the Overseas Private Investment Corporation as
    a director of loan origination.
        And I would add, parenthetically, that the initial cadre of
    our officers that we are hiring reflect my background. They are
    significant professional people who have long experience in the
    field and who also have experience with the Overseas Private
    Investment Corporation as well.

                       LOAN GUARANTEE PROGRAM APPLICANTS

        On October 4th, we reached our first significant milestone.
    On that day we announced the promulgation, the announcement of
    the release of the final regulations for our program under
    title XVII, and we also announced the selection of 16
    preapplicants to be invited to submit 4 applications for the
    Loan Guarantee Program.
        Prescreening conferences have been held with all of these
    applicants, finishing in the month of January, and all 16 have
    indicated the desire to proceed with us to full loan guarantees
    through our process of due diligence.
        In addition, a prodigious amount of work has been completed
    to formulate and write policies and procedures to execute this
    program and to institute systems that will facilitate us in a
    very responsive way to process these applications.

                             LOAN GUARANTEES BUDGET

        I would bring your attention to emphasize two points with
    respect to our 2009 budget. The first is that we are asking for
    $19.9 million of additional administrative expense to operate
    our office. And that is a function of the requirement to,
    essentially, double the size of our office within a year to
    accommodate our future solicitations.
        And, finally, we also are seeking an extension on the
    fiscal year 2008 budget in accordance with the report language.
    As you're aware, the whole obligation terminates on September
    30, 2009, and that's far too short a period of time for us to
    begin to prosecute our current workload as well as the new
    solicitations that you have envisioned in the report language.
    So we are seeking to extend that deadline to September 30,
    2010, for all projects other than the nuclear plant facilities
    and for the nuclear plant facilities to extend that deadline to
    2011.
        In addition to the report, the language requires us to
    submit to you and the House Committee on Appropriations a
    Solicitation Implementation Plan for our future solicitations.
    We're in the process of working on that plan, and we hope to
    have it up to you within a month or so.

                        SOLICITATION IMPLEMENTATION PLAN

        In conclusion, I would emphasize one or two items. We
    understand the objectives and roles of title XVII program. We
    are not a research and development program, nor are we an early
    stage venture capital finance group. We issue loan guarantees
    to help fund the advanced stages of projects that are designed
    to take pilot and documentation projects to full commercial
    viability.
        We, in conjunction with the Department's Program Offices,
    will seek innovation and eligible projects as well as
    environmental benefits, and a reasonable assurance of repayment
    of our guaranteed loans in order to bring advances into the
    market, enabling others to replicate or to expand these
    technologies with full participation of the private sector.
        Mitigating financial risk to the taxpayers is of utmost
    importance to us. In my personal conversations with the
    Secretary, he emphasized this point with me, and I can assure
    you our office is committed to do that.
        A number of measures are being taken to ensure risks are
    properly mitigated for each project including a thorough
    investigation and analysis of each project's financial,
    technical, and legal strengths and weaknesses, as well as all
    identifiable risks. In addition to the underwriting expertise
    of our office, each project will be reviewed in consultation
    with independent engineering consultants outside of the
    Department of Energy.

                               PREPARED STATEMENT

        Over the past 12 months a remarkable amount of work has
    been accomplished. Based on my experience at OPIC and my
    familiarity with other loan guarantee programs at other
    agencies in the Federal Government, I can tell you that the
    Department has moved very quickly in making the title XVII
    program operational. I know there has been some congressional
    frustration with the pace of activity, but we have sought to
    move quickly as possible while ensuring technical and fiscal
    soundness of the program.
        I appreciate the opportunity to be before you today, and I
    will be happy to answer any questions you may have. Thank you.
        [The statement follows:]
                     Prepared Statement of David G. Frantz
        Mr. Chairman and members of the committee, I am pleased to be
    before you today to present the Department of Energy's Loan Guarantee
    Program Office (LGPO) fiscal year 2009 budget proposal and program
    update. The LGPO administers the Federal loan guarantee program that
    was authorized for title XVII of the Energy Policy Act of 2005 (EPAct
    2005). Under this program, DOE may issue loan guarantees for innovative
    energy technology projects that avoid, reduce, or sequester air
    pollutants or anthropogenic emissions of greenhouse gases, and have a
    reasonable prospect of repaying the principal and interest on their
    debt obligations.
        I am happy to inform you that significant progress on this program
    has been made over the past year. Let me quickly review with you some
    salient milestones. A year ago this week, two very experienced
    individuals were detailed from the U.S. Treasury Department to help
    lead the effort of evaluating a total of 143 pre-applicants seeking an
    invitation to submit full applications for loan guarantees. The 143
    pre-applicants resulted from the initial solicitation of the program
    which officially closed on December 31, 2006. Supported by contractors,
    over the course of last summer the pre-applicants underwent a rigorous
    technical and financial review in accordance with criteria set forth by
    the Department of Energy's Credit Review Board (CRB), the governing
    board for the program. Coincidental with this activity, I was hired and
    began as a top priority the immediate staffing of the office with
    permanent Federal employees. In the way of background, I have over 35
    years of project finance experience, predominantly in energy,
    independent power and heavy infrastructure industries. I have spent the
    past 10 years with the Federal Government's Overseas Private Investment
    Corporation (OPIC) as a Director of Loan Origination, which provided me
    with significant experience working under the Federal Credit Reform Act
    of 1990.
        On October 4, 2007, DOE achieved two major milestones. DOE
    announced the release of its final regulations implementing the title
    XVII EPAct 2005. These regulations marked a significant step forward
    and were the result of a rigorous review and evaluation of Federal
    credit policy, public comments received on the notice of proposed
    rulemaking and analysis by DOE. The provisions of the final regulations
    have provided greater flexibility in the structuring of transactions as
    compared to the Guidelines originally published in August 2006,
    including the ability to provide guarantees up to 100 percent of one or
    more debt instruments employed in eligible projects. Simultaneously,
    the Department announced that 16 projects from the 143 pre-applications
    submitted in response to DOE's August 2006 initial solicitation would
    be invited to submit full applications for a loan guarantee.
        Pursuant to those invitations, pre-screening conferences were
    conducted with the 16 pre-applicants during the months of December 2007
    and January 2008 to provide the LGPO updates on the respective projects
    as well as to inform the project sponsors of the policies and
    procedures to be followed in preparing and submitting full
    applications. All 16 of the pre-applicants have indicated a desire to
    submit full applications and are currently in the process of preparing
    their applications in compliance with the requirements of title XVII
    program regulations. We expect that the first applications will be
    submitted to DOE this month through the Department's electronic data
    submission system, and the balance of the applications are expected to
    be received in an evenly distributed progression over the next several
    months. To date, the CRB has not established a firm deadline by which
    the 16 applications must be filed but the CRB may do so in the future.
    A prodigious amount of work has been completed to formulate and write
    policies and procedures for the application process; to establish the
    electronic data submission system for receipt of applications and
    supporting documents; to install requisite accounting systems and
    procedures for the office; and to develop a model for determining the
    credit subsidy cost of loan guarantees for projects that receive title
    XVII loan guarantees.
        The LGPO has worked aggressively to assemble a staff of highly
    qualified project finance experts with significant experience in the
    private sector as well as in Government working under the Federal
    Credit Reform Act of 1990 closing other Federal loan guarantees. In
    accordance with the fiscal year 2008 budget, the plan is to fulfill
    organizational staffing for a total of 16 Federal full time equivalent
    (FTE) employees by September 2008 augmented by 6 to 10 contractors.
    This organization is sufficient to perform the credit underwriting and
    due diligence process associated with the 16 projects invited to submit
    full applications, as well as to issue new solicitations within the
    next year. The schedule for hiring additional staff will be undertaken
    in close coordination with the requirements for managing the new
    solicitations and the processing of subsequent applications.
                        fiscal year 2009 budget request
        The Department requests $19.9 million in funding in fiscal year
    2009 for administrative expenses to operate the LGPO and for support
    personnel and associated costs. This request essentially doubles the
    size of the office, over the fiscal year 2008 appropriation, to support
    continued processing and then monitoring of loan guarantees that may be
    issued in response to the August 2006 solicitation, as well as the
    execution of new solicitations to be released this year. This request
    will be offset by fee collections from project sponsors in the same
    amount, as authorized both by EPAct 2005 and the Department's
    implementing regulations.
        In the Committee Report accompanying the Consolidated
    Appropriations Act, 2008, Congress stated the Department should issue
    no more than $38.5 billion in loan guarantees under the title XVII
    program before the end of fiscal year 2009. Pursuant to the act, the
    budgetary authority provided by the act to issue loan guarantees is
    available only until September 30, 2009. DOE's fiscal year 2009 budget
    request seeks to extend that budget authority through fiscal year 2010
    for all projects other than advanced nuclear power facilities and
    through fiscal year 2011 for advanced nuclear power facilities. This
    extension is necessitated by long development lead times for completing
    all of the steps preceding the issuance of loan guarantees for major
    energy projects. Of the total loan guarantee amounts made available by
    Congress and identified in the fiscal year 2009 budget request, $20.0
    billion will be available through fiscal year 2010 to support projects
    such as Uranium Enrichment, Coal Based Power, Advanced Coal
    Gasification, Renewables, and Electricity Delivery. The remaining $18.5
    billion will be available through fiscal year 2011 to support nuclear
    power facilities. The $38.5 billion total is in addition to the $4.0
    billion in authority provided in fiscal year 2007 under Public Law 110-
    5.
     fiscal year 2008 and fiscal year 2009 solicitation implementation plan
        The Consolidated Appropriations Act, 2008 requires that at least 45
    days prior to the execution of a new loan guarantee solicitation, DOE
    must submit a loan guarantee implementation plan to the Appropriations
    Committee of both houses of Congress. The implementation plan must
    define award levels and eligible technologies. DOE is in the process of
    preparing such an implementation plan. The Department plans to submit
    the plan to the Committees on Appropriations later this month.
                                   conclusion
        In conclusion, I would like to emphasize the following points:
        We understand the role and objectives of the title XVII loan
    guarantee program. We are not a research and development program nor
    are we early stage venture capital providers. We issue loan guarantees
    to help fund the advanced stages of projects that are designed to take
    pilot and demonstration projects to full commercial viability. We, in
    conjunction with the Department's Program Offices, will seek innovation
    in eligible projects as well as environmental benefits, and a
    reasonable assurance of repayment of our guaranteed loans, in order to
    bring advances into the market enabling others to replicate and to
    expand these technologies with full participation of the private
    markets.
        Mitigating financial risk to taxpayers is of utmost importance to
    Secretary Bodman and to the LGPO in implementing the title XVII
    program. A number of measures are being taken to ensure risks are
    properly mitigated for each project prior to approval of a loan
    guarantee. First, the due diligence process includes a thorough
    investigation and analysis of each project's financial, technical, and
    legal strengths and weaknesses as well as all identifiable risks. In
    addition to the underwriting expertise of the LGPO staff, each project
    will be reviewed in consultation with independent engineering
    consultants. Finally, in addition to taking a significant equity stake
    in a project, each project sponsor will also be required to pay to the
    Federal Government the credit subsidy cost to offset the risks
    associated with the DOE's issuance of the loan guarantee.
        The LGPO, when evaluating the eligibility of projects for loan
    guarantees, and throughout the process of negotiating terms and
    conditions with eligible applicants, will give due consideration to the
    technological and commercial maturity of each project in its
    development cycle. For that purpose, the LGPO will draw upon technical
    appraisals from experts both within and outside DOE.
        Over the past 12 months, a remarkable amount of work has been
    accomplished. Based on my experience at OPIC and my familiarity with
    loan guarantee programs at other agencies, I can tell you that the
    Department has moved very quickly in making the title XVII program
    operational. I know there has been some Congressional frustration with
    the pace of activity, but we have sought to move as quickly as possible
    while ensuring the technical and fiscal soundness of the program. We
    are continuing to recruit additional qualified staff to finalize the
    credit subsidy model, as well as to institute comprehensive policies
    and procedures to initiate the application and due diligence process.
    Finally, we are developing state of the art accounting and processing
    systems that will allow the LGPO to monitor and manage the loans over
    the life of the projects.
        I appreciate the opportunity to appear before you today. I will be
    happy to take any questions that the members of the committee may have.

        Senator Dorgan. Mr. Frantz, thank you very much.
        We thank all three of you for testifying. Senator Cochran
    has arrived. Senator Cochran, did you have an opening
    statement?

                       STATEMENT OF SENATOR THAD COCHRAN

        Senator Cochran. Mr. Chairman, I simply want to
    congratulate the witnesses for the work they're doing to lead
    the way with the President's Competitiveness Initiative. It's
    hard work, and I think you're doing a commendable job, and I
    ask unanimous consent that the balance of my statement be
    printed in the record.
        Senator Dorgan. Without objection.
        [The statement follows:]
                   Prepared Statement of Senator Thad Cochran
        Mr. Chairman, I appreciate your holding this hearing to review
    budgets of the Department of Energy's Office of Energy Efficiency and
    Renewable Energy, Office of Loan Guarantees, and Office of Science.
    Development of efficient and clean energy technologies is one of the
    most pressing issues in the world today. I'm glad that we are here to
    consider the budgets for these accounts within the Department of
    Energy. I am pleased to welcome Dr. Raymond Orbach, who has been
    gracious in his efforts to keep me informed about current initiatives
    in the Office of Science. I'd also like to thank Dr. Karsner and Mr.
    Frantz for being here to provide testimony and answer questions.
        It is important that the Department continue to look for
    alternative and renewable sources of energy to lessen our dependence on
    foreign sources of oil and gas, while promoting cleaner energy
    production. Mississippi is blessed with abundant resources capable of
    producing biomass-based energy, and funds need to be directed to the
    unique capacities of the Southeastern region of the United States. In
    order to reach a goal of domestic energy sustainability, we must
    research and develop a broad energy portfolio. I am hopeful that
    partnerships between Mississippi's research institutions and the
    Department of Energy will continued be strengthened.
        I am glad that the Department of Energy has created cohesion
    between the Office of Science and the Office of Energy Efficiency and
    Renewable Energy. Without basic scientific research capability, the
    United States cannot reap the benefits of our natural resources to meet
    our growing energy demand. As the rest of the world rapidly increases
    energy demand, they are also advancing their scientific research. We
    need to stay competitive in the world market and make wise choices
    about fulfilling our energy needs.
        Finally, I am pleased that the Loan Guarantee program has begun
        designating its appropriated funds to deserving technologies. I
    hope the program will continue to succeed in helping to fund forward-
    thinking projects.
        Thank you all for your time today and for the good work you are
    doing.

                            RENEWABLE ENERGY FUNDING

        Senator Dorgan. First of all, Mr. Karsner, I'm going to ask
    you a series of questions and as I've indicated before, I'm
    pleased that you have joined public service. I think you do an
    excellent job, and have an excitement and a passion for
    renewable energy. So let that be a precursor to my questions.
        You indicate in your testimony, Mr. Karsner, EERE's fiscal
    year 2009 request of $1.25 billion is approximately $19 million
    higher than fiscal year 2008, and as I heard you I thought,
    well, that's good news. At least they are proposing an
    increase. And then I took a look at the grid sheet and saw that
    I'd already known: In fact, the budget proposal is nearly $450
    million less than the Congress appropriated last year.
        So it's clever to say this is a $19 million increase, but,
    in fact, your budget requests for a very important part of the
    Energy Department is close to a half a billion dollars less
    than last year. To me, that's not justifiable, and so let me
    describe my concern.
        Hydrogen technology. I'm a big fan of hydrogen fuel cells.
    Senator Domenici and I were the only two legislators invited to
    a big deal with President Bush about 3 years ago, because both
    of us have been big supporters of hydrogen, hydrogen fuel cell
    futures. So we went down to the Building Museum, and the
    President talked about his support. The fact is, this year's
    request for hydrogen is not only well under last year's
    request--it cuts it by well over a quarter--it's $50 million
    short of what we were spending three years ago.
        Weatherization Assistance is zero. And I'm going to show
    you when we talk about this, the McMillan Report demonstrates
    that building issues are by far the most likely areas to
    achieve substantial gains in energy efficiency. You know, my
    concern about solar energy is cut. The fact is, we're way
    behind in solar energy, and we ought to be doing much more with
    respect to solar.
        So let me have you take a shot at that. I know you have a
    passion for these things. I know you can't possibly be up here
    feeling good about a budget request that's nearly a half a
    billion dollars under what we gave your office last year. How
    bad do you feel about this?
        Mr. Karsner. Well, thank you, Mr. Chairman, and thanks for
    your passionate support of our portfolio.
        I feel good every day I serve the President and get to work
    with Congress and advance these goals. So to be clear, the
    budget request is above our 2008 request. Of course, the
    Congress was more generous with the request than last year--and
    that was an aberration over the historical line--so we enjoyed
    an enormous plus-up of our portfolio last year, an
    unanticipated surprise, and we are working to integrate and
    manage that money usefully.
        But in terms of the multiyear planning, the programmatic
    technological R&D and deployment portfolio, it is a substantial
    aberration that we went up almost 50 percent last year, and so
    what I'm suggesting is that this year's request is back in line
    with what the administration's request had been consistent.
        Senator Dorgan. Well, Mr. Karsner--let me apologize for
    interrupting you--the decision by myself and Senator Domenici
    and other members of this subcommittee, should not be called an
    aberration. We decided that this is where we wanted to invest
    the money because, in the context of the Energy bill that
    Congress passed, we decided we have to do much, much, much more
    in renewables.
        And, if I might continue to interrupt for one second, this
    is the McKinsey & Company study which you're well aware of.
        Mr. Karsner. Yes.
        Senator Dorgan. Go to the far left side. By far the biggest
    bang for the buck by far in terms of saving energy is building
    insulation. And yet you come with this proposal to zero out
    Weatherization Assistance. I mean, just because we added a half
    a billion dollars in this day and age when energy is so
    critical, don't call it an aberration. It was a decision by a
    subcommittee that was a very informed decision.
        I'm sorry to interrupt.
        Mr. Karsner. No, it's a quite fair statement.
        Would you like me to address each of those, categorically?
        Senator Dorgan. Please do.

                          HYDROGEN TECHNOLOGY FUNDING

        Mr. Karsner. Okay. First let's talk about hydrogen.
    Hydrogen, obviously, was announced in the 2003 State of the
    Union and the President introduced it, a 5-year plan for $1.2
    billion. The Department had completed that 5-year plan in 2008
    for the $1.2 billion. Hydrogen remains amongst the most
    robustly funded of any of the programs in the EERE portfolio,
    precisely because of the progress that was made during the
    years of the hydrogen fuel initiative that enabled us to focus
    on the acute problems and the metrics that would define the
    barriers that needed to be overcome in order to achieve a 2014
    commercialization decision.
        We have upped the amount of budgetary focus on those key
    areas, principally: on-board storage in the vehicles that would
    enable a 300-mile driving range and further reduction of the
    fuel cell stacks, the Pennfuel cell stacks, that would get them
    to the programmatic target of $30 per kilowatt on a
    manufactured basis. We are making continual progress on that,
    but we seek to accelerate the progress by moving more money,
    disproportionately, into those areas.
        It's a little bit deceptive when we talk about the amount
    of money it was cut, because, actually, more than half of the
    hydrogen funding that appears to be lowered was moved over into
    the Vehicles Technology program--things like education cogent
    standard, technology validation, and demonstration--because of
    the need to diversify all of those things across biofuels,
    across plug-ins and hydrogen. In other words, Vehicles
    Technologies was a better-placed program to have a more
    agnostic technology-neutral view of all the technologies that
    we are cultivating for gasoline displacement. In order to do
    that, it has sort of become the air traffic control of
    transportation platforms for education cogent standard.
        The other portion of hydrogen that was diminished are
    specifically those elements that we think are ready for prime
    time and commercialization, and eligible for the Loan Guarantee
    Program today, and that would be renewable production of
    hydrogen, principally through electrolysis. Electrolysis is not
    overly high tech; there is not a lot of value added. When
    compared to the amount of investment, we need to dedicate the
    fuel cell stacks and storage, and so we think we can still, in
    places like the Dakotas, wind power to hydrogen with
    electrolysis using loan guarantees on a commercial basis today.
    That would be a better use of the $10 billion allocation that
    we have in that area. There are some things that need to
    graduate out based on the progress that we've made. That really
    sort of addresses hydrogen. Would you like me to go on, on
    this?

                             WEATHERIZATION GRANTS

        Senator Dorgan. Well, because I want my colleagues to have
    ample time. Weatherization you zero out, and I was thinking of
    the--I forget who it was describe something as the
    ``homeopathic soup made from boiling the shadow of a pigeon.''
        How do you zero out weatherization and come here and say
    this is a good approach to dealing with energy efficiency?
        Mr. Karsner. Well, we're driven precisely by the chart that
    you held up with regard to the need to address building
    technologies in the built environment. The question isn't what
    is the mission of weatherization with respect to doing that,
    but what is the efficacy and efficiency of this mechanism, this
    program in doing that?
        Weatherization grants are income-related assistance grants
    that are good and worthwhile things for the Federal Government
    to do, but, chronically, every year we have a discussion about
    not whether we should do them but where in the Federal budget
    they belong. Because competing against the Building Technology
    programs that are the ones that can satisfy the McKinsey
    metrics for 50 percent efficiency savings and that get 20-to-1
    return, these chronically fall short, being rated at about 1.5
    return on the dollars.
        All of the metrics for weatherization suggest that it
    should be competed where it belongs in income-related
    assistance programming, which is a good and worthwhile thing,
    but it is, unfortunately, lodged to compete against these
    building technologies that deal with climate change, national
    security, that require much greater leveraging.
        Senator Dorgan. But the President does not recommend it be
    over in the other area competing in his budget as I see the
    budget. So, I understand your point, but that's not what the
    President is recommending.
        Mr. Frantz, I'm going to allow my colleagues, Senator
    Domenici and Senator Craig to have a pretty good opportunity to
    talk to you, and I know they've got a lot on their minds.
        And, Dr. Orbach, I'm going to wait until a second round. I
    appreciate the work that goes on at our laboratories. Our
    laboratories are very important institutions for investment in
    the future of this country's science. And so I'll wait. But I
    appreciate your testimony, and you've raised a lot of
    interesting questions as well.
        Senator Domenici.

                                LOAN GUARANTEES

        Senator Domenici. Well, first, Mr. Chairman, thank you for
    holding this meeting, and let's hope that within the next 2 or
    3 months we will be fully aware of the facts and the funding
    that we are going to put together for the country in this bill,
    which many fail to understand is so important to the country,
    this small appropriations bill.
        First, let me talk about loan guarantees because nothing is
    more frustrating--it's not your fault, Mr. Frantz, but my good
    friend, Senator Craig, just handed me a piece of paper a little
    bit ago, and he put two dates on it, 2005 and 2011, because you
    indicated that you probably needed 2011 for the Nuclear--which
    is not your fault again. But we just looked at those two
    numbers and shook our heads.
        Six years from the passage of the bill, the General Energy
    bill first in 12 or 15 years that had a provision in it about
    loan guarantees that, frankly, I can tell you everyone on this
    committee that helped with it--two of the members here helped
    on it--he helped a lot--we thought we passed a loan guarantee
    provision in that bill, and we run it through every lawyer
    around, and we thought it was self-executed. And if you read
    it, it's clear that the full authorization for as much loan
    guarantee authority as the Secretary wanted, he could exercise.
    He didn't have to come back to Congress, and we were very
    happy. We thought even though we had then a reluctant Secretary
    of Energy--he was reluctant, he didn't think loan guarantees
    were the right thing--but let me make sure it's understood, he
    changed his mind, and he's been a strong supporter. But the
    changing of the mind took a little while.
        Then we have the Secretary of the Treasury. You remember
    that, Senator Craig. I came to you and said, ``Can you imagine?
    Now we have even a bigger bomber against us, the Secretary of
    the Treasury.'' He didn't know what he was talking about--
    excuse me, Mr. Secretary, but you didn't. He thought--he didn't
    read the section of the law, he thought we were pledging the
    Federal Government's full faith in credit to these loan
    guarantees when we aren't. And he didn't read they would pay
    for themselves, and they'd pay an up-front fee equivalent to
    what the estimate risk was. That was the theme, right? And it
    was right.
        So contrary to that we had to go through this whole process
    of appropriating it, getting you hired, setting up a whole new
    operation, and it's been 6 years and we still do not--it'll be
    6 years and we might get some of the loan guarantees for
    Nuclear. They're a little different, and it's how many do you
    have? How many do you clear?
        Senator Craig. Sixteen, Senator.
        Senator Domenici. Sixteen. They're different than that, and
    they're going to be big guarantees for a project, and we
    understand that's not going to be quite as difficult as sorting
    out, because you're not going to have 50 to compete. And we've
    got seven formal applications pending, though, which is rather
    exciting for our country.
        Now, let me ask you, do you have everything you need to
    proceed with your job?
        Mr. Frantz. I do, sir, thank you.
        Senator Domenici. You're adequately funded and adequately--
    the Energy Department gives you adequate authority?
        Mr. Frantz. Yes, sir, Senator. With the approval of this
    budget, I'll have sufficient resource to prosecute the----
        Senator Domenici. All right. Now let me ask you, you were
    with which department of the Federal Government doing loan
    guarantees?
        Mr. Frantz. With the Overseas Private Investment
    Corporation, sir.
        Senator Domenici. Now, doesn't it strike you strange that
    the OPIC made money on its loan guarantees using the same
    provisions that we are? They don't lose money, they make money,
    and we've got the Office, the Congressional Budget Office,
    insisting that this one is going to lose 1 percent because
    we're going to make mistakes. You didn't even know who you are,
    what--how good you are, you're just going to lose 1 percent. So
    he charges us $352 million for the whole portfolio even though
    we haven't spent a penny yet.
        Does that strike you as a little bit wrong?
        Mr. Frantz. It does, sir. As a matter of fact, I made a
    presentation, ironically enough, to the Congressional Budget
    Office on December 7, on this very subject and made the very
    point that you're making. And that is when a self-pay program
    which differentiates us from the Overseas Private Investment
    Corporation, as you're well aware, where our clients are
    actually paying this credit subsidy cost to cover our risk,
    that seems redundant, to say the very least, that this
    additional 1 percent would be levied on the projects.
        The answer, the only answer we've received, is that it's
    because it's a new program and there is the technology aspect,
    the unproven technology risk associated with them.
        Senator Domenici. Well, when you build a nuclear
    powerplant, it isn't as if somebody is toying around with new
    technology. When they invest $4 billion, they're using a
    technology that is well known, and it has passed all kinds of
    gifted overseers to make sure that it's correct, and all kinds
    of things are built into the law to make sure that this
    happens. And so it's not like a gamble. They wouldn't gamble.
    American industry wouldn't gamble on nuclear power if they
    thought it was what he thinks over there at CBO.
        Thank you very much. Let me move over to Dr. Orbach.

                              AMERICA COMPETES ACT

        Dr. Orbach, last August Congress passed the President's--
    and the President signed--COMPETES, the COMPETES law. This
    proposal is consistent with the recommendations of the National
    Academy of Sciences rising above the gathering storm, and it
    directs the Department to focus greater attention on Science,
    Mathematics, Education.
        Can you tell us, specifically, how your Department is
    supporting this legislation, and how much money is provided in
    the President's request, if you know, for COMPETES legislation?
        Dr. Orbach. Well, in the educational----
        Senator Domenici. For COMPETES.
        Dr. Orbach. For the COMPETES----
        Senator Domenici. Yes.
        Dr. Orbach [continuing]. Itself, I'll have to answer that,
    for the record, our budget is responsive to the America
    COMPETES Act and actually covers the issues that were
    addressed. So I would say that our increase in the budget
    request would deal with the America COMPETES Act.
        Senator Domenici. All right.
        Dr. Orbach. In the specific area of education, we've
    increased the Workforce Development program within the Office
    of Science together with the Fellowship program that matched
    the education components of the America COMPETES Act. About
    half of them--there's a considerable opportunity there--will be
    found in our fiscal year 2009 budget request.
        Senator Domenici. So is it fair to say that this time we
    are taking the COMPETES Act seriously, and we're attempting to
    fund it?
        Dr. Orbach. Yes, sir. I believe it's an opportunity for our
    country, and we are going to be fully behind it.

                 LOS ALAMOS NEUTRON SCATTERING CENTER (LANSCE)

        Senator Domenici. All right. LANSCE Refurbishment and
    MaRIE, a proposal that is built around LANSCE; Dr. Orbach, you
    and I have spoken extensively about maintaining our science
    capability at our national laboratories, both the Office of
    Science facilities and NNSA labs. I believe you share my belief
    that we need to update LANSCE at the LANSCE facility to sustain
    cutting-edge science at that lab on materials research. That's
    what it has to do with. This will have relevant science
    applications for both NNSA Weapons programs and the Office of
    Science.
        Now, why doesn't the 2009 budget request provide funding
    necessary to upgrade this excellent facility called LANSCE?
        Dr. Orbach. Well, our part of the funding that surrounds
    the operations of LANSCE works through the Lujan Neutron
    Center, and that's fully funded in the President's request.
        In addition, the Nuclear Physics program has increased its
    funding at Los Alamos to about $4 million. And, finally, we
    have invited Los Alamos to participate in the Energy Frontier
    Research Center competition, and there is a provision in there
    for materials under extreme conditions. And we think this is an
    opportunity for the whole country, but especially for Los
    Alamos in the competitive environment.

                        ENERGY FRONTIER RESEARCH CENTERS

        Senator Domenici. What are the frontiers of science that
    you spoke of?
        Dr. Orbach. The Energy Frontier Research Centers cover the
    basic science that will enable energy prospects for our country
    for the future. Very frankly, we can't get to where we want to
    go using technology that was invented in the 19th century and
    developed in the 20th century.
        The opportunities in the 21st century, as I outlined at the
    atomic molecular level, have yet to be plumbed. And those
    centers are focused on those issues, namely energy issues that
    use modern technology.
        We're talking about opportunities for photosynthesis,
    artificial photosynthesis to take solar energy and produce
    fuels. We're talking about an electrical energy storage that
    will enable the grid issue, which was brought up before, to be
    dealt with which we can't do now, but with advanced
    technologies, with nanotechnology, and multielectron transfer,
    we believe are possible.
        And other elements that I can go into----
        Senator Domenici. That's fine.
        Dr. Orbach [continuing]. Of that basis.
        Senator Domenici. So you're going to do this kind of
    advanced frontier work?
        Dr. Orbach. Absolutely.
        Senator Domenici. Thank you, Mr. Chairman. I have some
    additional questions. I'll wait or I'll submit them.

                       ETHANOL TECHNOLOGY AND PRODUCTION

        Senator Dorgan. Senator Craig?
        Senator Craig. Thank you very much, Mr. Chairman.
        Mr. Frantz, the chairman has already offered you up to
    Senator Domenici and I, so I will not miss that challenge or
    opportunity.
        Let me walk you through a scenario that's going on in
    America as we speak that would suggest to me your sense of
    urgency in dealing with some of these loan guarantees in
    Advance Technology. Last year we produced 7.8 billion gallons
    worth of ethanol, corn-based. Everybody's frustrated now by its
    potential disruption of the food chain right down to, if you
    will, tortilla shells. And the reality that America's
    agriculture will suggest that we may be planting 8 percent less
    corn this year than we did last year.
        We just have a new ethanol plant coming on in Idaho, and
    you're going to see unit trains of corn, literally, moving out
    of the Midwest to Idaho because we're not a corn-production
    State. We're largely cold weather grains and all of that, and
    yet those prices, the whole commodity market is considered by,
    at least historic values, upside down today.
        Farmers are smiling and they should, and they're profiting
    and they should. The consumer is beginning to feel it at the
    shelf in some areas.
        Having said that, last year we suggested, by law, that if
    ethanol production by 2022 can be at 36 billion gallons and yet
    we anticipate that corn-base can only take us to about 15, now
    having said that, we are already stressing out under the
    current environment at 8 to 10 billion gallons. So 15 may be a
    very real stretch unless Monsanto can bring on their GMO of 300
    bushel of corn. But that's still out there in the scientist
    eye.
        Now the environmentalists are concerned about the carbon
    footprint of corn-based ethanol and what that does in climate
    change, and it's very energy intensive, and it needs to be
    subsidized, but yet it's factoring into the price at the pump.
    Articles last week suggested that consumers were paying less
    for gas because of ethanol in the world market.
        My point is quite simple: We believe, many of us who spend
    a lot of time looking at this, that to get to the 36 billion
    gallons or near that, we've got to get to cellulosic ethanol,
    and we must get there as soon as we can. And if you were the
    consumer out there--and you are, like all of us are--buying
    $3.30 or $3.40 a gallon for gas, there is a very real sense of
    urgency, the reason I penciled for Senator Domenici the spread
    of 6 years of time of bureaucratic movement in which we sense
    no urgency whatsoever.
        Now, having said that, New York Auto Show, almost every
    automobile on the floor was a flex fuel or E85 or an electric
    car. And yet the world is not yet ready to produce that, or at
    least we had our discussion about hydrogen today, and the world
    is not yet ready to produce it in the volume that the car
    companies will need because they're about ready to bring to
    commercial value a hydrogen fuel cell car.
        Time is of the essence, and I know you talk very
    optimistically about how you've geared up to handle this. Now,
    I hope that you have running shoes on and you are bringing that
    sense of urgency into that staff.
        Now, diligence, surely. Responsibility, of course. But run
    12 hours a day, turn the lights on, don't oh-hum this and move
    it through. America is ready to become independent, and we are
    struggling to get there, and this whole committee senses that,
    and that's why we jumped in front of it in 2005, and we hit it
    again last year. And we're phenomenally frustrated when it's
    handed off downtown to a sluggish, uncertain, frustrating, and
    sometimes less-than-willing participant.
        I don't know if we can get to cellulosic. I think there are
    some commercial operations stood up, but we ought to try. And
    we ought to try and if we fail in one, there are some
    technologies out there that might lead to the front.
        Now, if you had the loan guarantees ready 2 years ago, we
    would probably have a commercial-grade stand-up operation going
    right now.
        Senator Dorgan. For which?
        Senator Craig. But we don't have that.
        Senator Dorgan. For what?
        Senator Craig. Cellulosic ethanol.
        Senator Dorgan. Cellulosic ethanol.
        Senator Craig. At least that's what we're told by the
    industries involved. I don't necessarily believe you need to
    respond to my small rant, but I hope you appreciate what we're
    sensing on the ground with the consumer, both in food and in
    energy as to their frustration today about their pocketbooks
    being stretched beyond their capability.
        Mr. Orbach, I would like to suggest that in my conversation
    with the Center for Advanced Energy Studies in Idaho this last
    week, they will be contacting you, and sensing the
    opportunities that you hold in your office and that we hold at
    the lab; and I assured them that they should anticipate and
    expect full cooperation from you, as I know that will be the
    case, and I thank you for it.
        I'm out of time, I'll come back. Thank you.
        Senator Dorgan. Senator Craig, thank you very much.
        Senator Murray?

                           PHYSICAL SCIENCES FACILITY

        Senator Murray. Thank you very much.
        Dr. Orbach, as you know well, we've had a number of
    conversations about the level of funding and various pieces of
    the budget that relate to the tri-party memorandum of
    understanding for the Physical Sciences Building being built at
    PNNL, and the 300 Area. I know you know the topic well.
        Last year's fiscal year 2008 appropriations resulted in
    about $65 million to the Department of Energy and the
    Department of Homeland Security. That wasn't an easy task
    because the Department of Homeland Security request was zero,
    and we had to work with our colleagues here to include an
    increase of $15 million for that project.
        I appreciate that the Department of Energy this year has
    requested the appropriate level of funding in the 2009 budget.
    However, the Department of Homeland Security's 2009 budget
    request is not what was assumed in that memorandum of
    understanding. Now, I have no idea what conversations have been
    between your office and Under Secretary Cohen's office, but I
    have been ensured by them that whatever additional funds I will
    be able to add to the Department of Homeland Security budget
    for 2009 will be received, enthusiastically.
        I wanted to ask you while you're in front of our committee
    today what your understanding is of the reasons why DHS didn't
    see the required funding in 2009 consistent with that MOU.
        Dr. Orbach. Senator Murray, first of all I want to thank
    you for your help in moving this critical project forward. We
    deeply appreciate it.
        To be honest with you, I don't know why DHS submitted the
    numbers that it did. It is, as you point out, $13 million less
    than the MOU requirement that we had agreed to. I have been in
    contact through my staff with Under Secretary Cohen, and your
    description is the same as mine, namely, that he is eager to
    implement the MOU. We will do everything that we can to see to
    it that that building is built on time and on schedule.
        Senator Murray. Okay. I don't know the timing for the
    fiscal year 2009 appropriations bill, but ensuring that we have
    sufficient funds for that MOU is going to be a top priority of
    mine.
        I want to ask you if I have your commitment that you will
    do what you can to assure this project as it is currently
    envisioned is going to continue on schedule regardless of when
    the funding is made available in 2009?
        Dr. Orbach. We'll do our very best to do precisely that.
        Senator Murray. Okay, I appreciate that, and we'll work
    with you to do that.

                  ENVIRONMENTAL MOLECULAR SCIENCES LABORATORY

        Dr. Orbach, I'm also really pleased to see a small increase
    in funding for the Environmental Molecular Sciences Laboratory,
    and I know the lab is planning to upgrade some of their
    equipment that's now several years old. I wanted to ask you
    today what your vision is for EMSL and what kind of challenges
    you foresee in the future?
        Dr. Orbach. Well, I have two comments to make both of which
    are laudatory about EMSL. When we visited 4 years ago, we set
    them a target. We said this is over the edge. ``This is beyond
    normal, and if you can meet it, we will continue and expand our
    support of the laboratory.'' We didn't tell them what areas to
    invest in, but those two areas that they chose are now world-
    leading, and Interfacial Chemistry and Subsurface
    Biogeochemistry, if you say that phrase, people think EMSL. And
    it's really wonderful.
        The opening of the new facility, jointly with Washington
    State University, is again a statement of how successful EMSL
    has been and how it now will have an educational component as
    well.

                      SCIENCES LABORATORIES INFRASTRUCTURE

        With regard to the future, and in particular the
    infrastructure issue that you raised, this is, unfortunately,
    true not just of PNNL but of all of our laboratories. And you
    will see an increase in what we call our SLI component, our
    infrastructure component in the President's request. And I can
    tell you that over the next 5 to 10 years you will see that
    component increasing substantially as we attempt to address
    these needs.
        I met yesterday with all 10 of the laboratory directors of
    the Office of Science, and to a person they spoke of the need
    for infrastructure support. And you will see substantial
    numbers increases as a consequence in our budget proposals.
        Senator Murray. Very good, I appreciate that.
        Mr. Karsner, I also wanted to ask you about the budget
    request for a small investment in Water Power to study the
    potential of marine, ocean, and wave energy. As you know, the
    2007 Energy bill explicitly authorizes R&D for marine and
    hydrokinetic technologies--can you tell me a little bit about
    what your goal is for that research, including ocean and wave
    energies?
        Mr. Karsner. Yes, Senator. I'm actually quite excited about
    the introduction of that budgetary item as part of our request,
    along with the geothermal--reinvention of the Geothermal
    Program. It demonstrates what I'd like to think of as portfolio
    agility as new technologies evolve.
        Obviously, in the early years, it is standing up the
    correct programmatic organizational piece that would be
    disproportionate than what we would predict for subsequent
    years. But we have specific statutory requirements as well that
    need to be addressed in terms of soliciting for Marine Energy
    Center partnerships around the countries. So finding out where
    the best skills lie in universities and laboratories, in
    businesses and product manufacturers around the country, we are
    not long for putting out a solicitation for that purpose in the
    very near future.
        As well, we intend to facilitate some of the existing
    technologies that we know have evolved during the period of
    time that the Department has been engaged in this activity. So
    thanks for run-of-the-river hydro, buoys off the west coast of
    Washington and Oregon, in Hawaii, other places, and we also see
    an international component to this. There are other nations
    that have been engaged in this activity, principally in the
    United Kingdom and Scotland, in Spain, in China, where we want
    to sort of galvanize what the best of has been out and around
    the world.
        We have our work cut out for us to catalyze something new.
    There's a hardware component to it--an organizational component
    to it.
        Senator Murray. Okay. Well, you may know that the DOE's
    only Marine Science Lab is located on the Olympic peninsula in
    my home State.
        Mr. Karsner. I hope to visit there soon.
        Senator Murray. And we'd love to have you come out and see
    it.
        Mr. Karsner. Yes, and I'm going to.
        Senator Murray. I think you'd be really excited about it
    and some of the opportunities there.
        Mr. Karsner. Sure.
        Senator Murray. And while you're out--my time is short--I'd
    love to have you stop by the Bioproduct Science and Engineering
    Lab at WSU and see that great public partnership there that's
    working on some biofuel and bioproduct.
        Mr. Karsner. My intention is to visit PNNL on May 8.
    Hopefully, I can work with your office in collaborating on it.
        Senator Murray. We'd love to work with you on that.
    Fantastic. Thank you very much.
        Senator Dorgan. Senator Allard?

                              ENERGY TRANSMISSION

        Senator Allard. Thank you, Mr. Chairman, and Mr. Karsner.
    It's good to see you with us this morning. I'm real proud of
    the work that's being done on Colorado Renewable Energy.
        I'm going to focus on another tangential area which I think
    is important when we look at the total energy picture. One is
    transmission. You know, particularly, in rural areas
    transmission is an issue where you're having electricity travel
    over a certain period of time. There's not only access to
    getting transmission lines, but I think there's some efficiency
    issues that come out.
        What are we doing to develop some technology where, when
    you move your electrical current over a long period of time,
    you don't lose a lot of the electrons in the transmission
    process? And what are you doing in that particular area?
        Mr. Karsner. Thank you, Senator, and thank you for your
    leadership, both in terms of the Colorado Caucus and hosting
    NREL and the Renewable Caucus here up on the Hill. Let me say
    that the principal responsibility for the questions that you've
    asked reside in my colleague Kevin Kolevar's office, the Office
    of Electricity which at one point was part of our office, but
    has, because of the growing role----
        Senator Allard. Yes.
        Mr. Karsner [continuing]. Of the issues that you just
    addressed has stood up admirably, an excellent program for both
    emergency response and grid integration issues.
        On the latter, grid integration and integrating the new
    technologies to meet the intrinsic characteristics of renewable
    technologies, Kevin and I have worked very closely. In fact, we
    jointly program a great deal, and much of that is reflected in
    the budget. He talks about long distance DC lines and available
    technology that need citing, permitting, the transmission
    corridor authority that he's exercising, and also
    superconductivity. I don't want to go----

                               SUPERCONDUCTIVITY

        Senator Allard. I do want to get into the superconductivity
    at this time. I understand those other problems, and what are
    you doing in that area?
        Mr. Karsner. And as I was just about to say, that
    superconductivity is an area where I can't go too far in,
    because that really is Kevin's portfolio.
        Senator Allard. I see.
        Mr. Karsner. But I just would like to add, because of
    NREL's role, because of the new Energy Systems Integration
    facility that we're building, that the Office of Electricity
    will have a role in, that the transmission technologies that
    are evolving through Kevin's portfolio, and the deployment of
    those technologies that David's portfolio are taking care of,
    are indispensable to the growth of renewable technologies on
    the trajectories that our office plans.
        Senator Allard. Okay. Yes, Mr. Orbach?
        Dr. Orbach. Senator Allard, I would like to comment on the
    Superconductivity, directly----
        Senator Allard. Okay.
        Dr. Orbach. Because the Office of Science works very
    closely with Assistant Secretary Kolevar's program on
    electrical transmission. This is an example of where the
    applied program through Kevin Kolevar's program and the basic
    research work very closely together. And you will find in the
    budget a coordinated program for this effort.
        We are using nanotechnology and other methods to increase
    the current carrying capacity at temperatures for high-
    temperature superconductors that would allow us to use liquid
    nitrogen cooling rather than having to go down to helium. This
    is a tremendous advance and a power line in the State of New
    York in Albany has already been put into place to demonstrate
    that you can, over reasonably short distances, conduct
    electricity without loss----
        Senator Allard. That's interesting.
        Dr. Orbach [continuing]. Using high TC.
        Senator Allard. I knew with high--with very cold
    temperatures you could do that. This is high temperatures using
    nitrogen.
        Dr. Orbach. Precisely, and that's what we've been working
    on very closely, and that's a perfect example of the
    interaction between basic science and the applied programs
    where we would call it use-inspired research.
        Senator Allard. Yes.
        Dr. Orbach. And because of the new, as I referred to in my
    opening comments, the new capabilities that we have in the 21st
    century, we have made substantial progress.

                            ELECTRIC ENERGY STORAGE

        Senator Allard. Thank you for your comments. The other area
    that's sort of tangential to all the energy development is
    storage. And, of course, though, when you talked about solar or
    wind, it's intermittent to some degree. In Colorado we happen
    to have plenty of both, so maybe it's not as much of a problem
    as it is in some States. But again, storage, I think, is an
    important issue.
        What are you doing on storage technology? I'd like to hear
    some of your comments on that. Yes?
        Dr. Orbach. Could I respond to that? The problem that we
    have currently with storage is that our batteries are no
    different than they were in the 19th century.
        Senator Allard. Yes, you have to think beyond just a
    traditional battery.
        Dr. Orbach. Precisely.
        Senator Allard. Yes.
        Dr. Orbach. And there are two developments that are taking
    place right now that we have great expectations for, but
    they're difficult.
        Senator Allard. Uh-huh.
        Dr. Orbach. The first is to take the battery, which
    currently takes one electron and transfers it, and do two-
    electron transfer--actually up to four-electron transfer. That
    would increase the capacity of storage by factors of two to
    four.
        Senator Allard. Uh-huh.
        Dr. Orbach. That's what nature does.
        Senator Allard. Are you changing the materials
        or----
        Dr. Orbach. Oh, yes. We'll be going to vanadium compounds,
    for example.
        Senator Allard. Uh-huh.
        Dr. Orbach. People have even talked about six-electron
    storage.
        Senator Allard. Uh-huh.
        Dr. Orbach. We're looking at these new materials to see
    which would be most efficient, but there's another area that's
    also developing, and if you ever built a radio, you remember
    the electrolytic capacitors back when I was growing up. They
    had microfarads of capacity.
        We now, in the same volume, can store farads--a million
    times more electrical charge--and this is because, again, the
    new technologies that are being developed for nanoparticles,
    the very, very tiny spaces between the electrodes. So it's very
    possible that supercapacitors, which is what we call them, may
    well be an efficient energy storage device.
        Senator Allard. I'd--go ahead.
        Mr. Karsner. I was just going to comment from the applied
    perspective.
        Senator Allard. Sure.
        Mr. Karsner. Ray, Kevin, and myself, in fact, work very
    closely on storage because we all see it as a priority to
    enabling the growth of the technology solutions. So in our
    context it's both transportation and generation. We are moving
    on a much more wholesale basis on the generation side from
    multiple storage solutions that we had not previously invested
    in, like compressed air, molten salt for concentrated solar
    power, grid-based battery storage, electrolysis to hydrogen,
    viewing our hydrogen not just as a source but as a carrier and,
    of course, trying to optimize the best storage that's already
    available out there, which is natural gas turbines that we
    begin to alleviate the gas dependency in already existing
    hardware.
        Senator Allard. Yes, I like the idea of the hydrogen.

                               CELLULOSIC ETHANOL

        Mr. Chairman, I have one comment I want to make. I know my
    time has run out.
        I visited a company in Colorado--they're a research
    company--call Range Fuels, and this is for Senator Craig.
        They actually have developed a very ready-to-go on the
    product, cellulosic source of ethanol. And the by-product they
    bring back into the equipment and itself--they don't have to
    rely on energy itself, it can stand alone--and they're using
    wood chips and converting it to product, a combination of
    alcohols: ethyl, methyl, propo, butanol.
        Then, obviously, there's a way of, you know, separating out
    those different alcohols. So they're ready to go, they tell me,
    but they need more wood than what Colorado can provide, and so
    they're going ahead to Georgia or Southern States where they
    have more wood and shorter growths time as far as the forests
    and what not are concerned.
        So that's good news, and they did it with, I believe, a
    grant from your Energy Department in doing that, and they tell
    me they're ready to go to market.
        Mr. Karsner. In fact yesterday, it was announced in The
    Wall Street Journal that that group was the first to close of
    the six contracts related to the section 932 cellulosic
    facilities. They closed $150 million in private funding against
    the $76 million grant that we provided through the sector
    capital. So it is a success story, particularly in the current
    investment environment that cellulosic ethanol companies that
    are just breaking ground of this initial six are still able to
    track enormous private sector capital.
        Senator Allard. Thank you, that's good to hear.

                                  ITER PROJECT

        Senator Dorgan. Dr. Orbach, a quick question about the
    Fusion Energy Sciences Program. Tell me, how close are we to
    some unbelievably exciting breakthroughs in that area?
        Dr. Orbach. Mr. Chairman----
        Senator Allard. Unbelievable.
        Dr. Orbach.--I hope we're very close. We are, together with
    six other parties representing half of the world's population,
    prepared to put our money on the table to build an experimental
    reactor called ITER. And the reason we can do that now and
    could not do that before is our computational facilities have
    now shown that there's a good chance that we can keep that
    plasma continued and operating for significant periods of time.
        This is the most important thing that I think the world
    addresses because we're starting construction within 8 years.
    The construction will be finished, we hope, within 5 to 10
    years. It will meet its target of producing 10 times as much
    energy as it goes into the machine itself.
        I think we're closer, so close that it's so exciting the
    opportunities that fusion brings if either is successful, will
    then generate a demonstration powerplant. And my guess is
    that's somewhere between 20 and 30 years away. So we're not
    talking 50, we're not talking in abstract terms; we're talking
    about leapfrogging the technology from ITER to a demonstration
    power plant.
        ITER itself is half a gigawatt. It's not a small machine,
    and we have every expectation that it will work and work well,
    and we're working very hard on the basic science to make sure
    that it does work.
        Senator Dorgan. The President's recommending close to a
    half a million dollar--half a billion dollars in this coming
    fiscal year, $493 million.
        You talk about the other countries involves. What kinds of
    contribution exists from other countries?
        Dr. Orbach. We have fallen behind an order of magnitude.
    Europe is at the same level we are or higher, and Japan is also
    at the same level or higher. But you have to also now count
    China and India, which are making major investments in fusion.
        In fact, the world's first superconducting tokamak is
    called East in Hefei, China. It's, believe it or not, our
    design, which we never developed. But it is now operating. They
    are putting major efforts into fusion research.
        Senator Dorgan. Do my other colleagues have questions? One
    last one, go ahead, Senator Domenici?
        Senator Domenici. Let Senator Craig, go ahead.

                           IDAHO NATIONAL LABORATORY

        Senator Dorgan. Senator Craig, go ahead.
        Senator Craig. Mr. Karsner, I did not have an opportunity
    to visit with you. In combination with the work that you're
    doing and the work that we have done and are currently involved
    in at Idaho and I'm talking about--we've already talked about
    hydrogen, hydrogen fuel cells, advanced vehicles in that sense,
    both the hybrids and the electrics. We've done a good deal of
    that work out at the lab, and the testing team continues to
    provide this function for present and future vehicle testing.
        I would hope that, you know, where we partner that there's
    a relationship there that makes sense between what you do and
    what they do, and, you know, I know there is this desire that,
    oh, that's that technology. We will reach out and grab it and
    pull it in, and sometimes that effort isn't as productive as it
    relates to how you effectively utilize resources as it is to
    team and to partner.
        We've, you know, when all of us sit here and look at our
    phenomenal lab facilities nationwide and sort out the resources
    as it relates to these labs, we recognize levels of expertise
    and talent, and know that that's where it ought to be versus
    going somewhere else.
        Can you respond to that? What is your vision for the
    vehicle testing program, and what future do you see in the
    relationship that you would have with the INL and its role?
        Mr. Karsner. Well, yes Senator, and I would say I don't
    want to limit my comments to just vehicle testing, because you
    may or may not know that Idaho National Lab was the
    instrumental lab working together with NREL last year in
    resolving the FAA, Department of Defense radar challenges that
    we face.
        Senator Craig. Yes
        Mr. Karsner. It almost closed down the wind industry, and
    the difference between the work that was done, the
    collaborative work between INL and NREL had it not occurred,
    had we not had that collaboration from that expertise located
    at the Idaho National Lab, we would not have been the world
    leader in wind energy last year. Arguably we would have had a
    fraction of the projects come on line.
        What that tells us is exactly what you're suggesting, is
    that there are repositories of good work all around the
    laboratory system, and it has been my philosophy that even
    though I have responsibility exclusively for an applied lab,
    working together with Ray and the Office of Science, we want to
    maximize the available talent spread across all of these
    laboratories. That inspires our visits to Lawrence Livermore
    where they have 50 years of experience on radioactive diffusion
    of particles, so the best wind assessment data available
    globally that can inform the way that we grow that industry:
    Idaho on vehicles and battery technology, and wind, as I
    suggested has been indispensable. Sandia has a very old
    relationship with us and is a leader on the solar technologies
    and high performance computing. We are doing generalized lab
    calls that are new to us to say, what do you have out there?
    Who are we underperforming the opportunity to engage? That's
    the way we approach these labs as national assets.
        Senator Dorgan. Senator Domenici?
        Senator Domenici. Thank you, Mr. Chair--Senator Craig are
    you finished?
        Senator Craig. Thank you, I----
        Senator Dorgan [continuing]. You at the end of the answer
    there, I think.

                                  WIND ENERGY

        Senator Craig. No, no. No. No, it's what I wanted to hear
    because I think that we sense that, and we hope that those
    relationships continue, then, and the wind issue, yes, I'm
    familiar with what went on out there. I think it was Gary
    Siefer?
        Mr. Karsner. That's right.
        Senator Craig. That did the work. The Air Force might have
    stopped wind development otherwise. I mean there was that
    problem that got worked out, and he deserves a lot of credit
    for it.
        Mr. Karsner. Absolute credit for Gary. And bear in mind
    because that was a high security lab, we had all those people
    that can contribute had top-level to Q clearances that could
    engage the long-range missile radar that folks in my laboratory
    couldn't.
        Senator Craig. Yes.
        Mr. Karsner. And so it was just a very important
    collaboration we intend to----
        Senator Domenici. Thank you. Thank you very much.
        First, Mr. Karsner, I wanted to say that I suspected when
    we had you before us not too long ago for your hearings on
    whether we should send you to the Senate after the President
    had sent you up here, I was convinced that there was no way to
    contain your enthusiasm, and that if we gave you enough to do,
    you would be enthusiastic every day of the week, and if you
    could invent an extra day you'd use that, too. And I have come
    to believe that that analysis that I made when I said we should
    hurry up and get you there was right.
        Mr. Karsner. Thank you, sir.
        Senator Domenici. And I commend you for the exceptional
    work, and you also work--if you remember, you were very willing
    to say it--you were going to get something done even if we only
    had 2\1/2\ years.
        Mr. Karsner. Yes, sir.
        Senator Domenici. Because no one expects you to stay on if
    a Democrat was elected president. We'll just have to see how
    that all works out. If it works out otherwise, you can rest
    assured we'll be recommending that you stay longer, if that's
    what you'd like.
        Mr. Karsner. Thank you, sir.
        Senator Domenici. In any event----
        Mr. Karsner. My family has other plans for me.
        Senator Domenici. I--specific questions. Did you want to
    comment? Am I wrong about your----
        Mr. Karsner. Thank you for that kind compliment, and I
    would say to you and Senator Dorgan, we've enjoyed so much
    support from your committee, the authorizers and the
    appropriators, that it has made our job easier to work on a
    bipartisan basis and get things done.
        Senator Domenici. I think the real problem we have is that
    so much is going on the poor American people don't believe us
    and don't know what's going on because to get from where we are
    to where we're going to be, it's not going to be a one-way
    path.
        Mr. Karsner. That's right.
        Senator Domenici. And it's paths all over the place things
    are going on. Our money, private money is being invested all
    over with all kinds of people excited, and the public can't
    discern that. A breakthrough is going to be made in one or two
    of these areas and it makes things a lot easier to get where we
    have to go.
        Who knows which ones it's going to be? It might be the one
    you and Dr. Orbach spoke about on capacitors, on storage. That
    may be one of the big ones, if we break it. But it seems to
    have difficulties. I hope you're right, both of you, that
    you're going to make some movement.

                        FEDERAL PROCUREMENT REGULATIONS

        But I'm going to ask you about a New Mexico problem. Part
    of your responsibility problem includes increasing the Federal
    Government's usage of renewable energy, and I've been made
    aware of a Federal Procurement Rule that prevents an air base
    in Albuquerque from signing a long-term power purchase
    agreement beyond 10 years.
        We have a site in New Mexico located between a major piece
    of property called Mesa del Sole and Kirtland Air Force Base.
    It has been identified as an ideal site for 100 megawatt
    concentrating power plant with a molten salt storage reservoir.
    However, procurement rules prevent the base from entering into
    the contract beyond 10 years. That's short of the useful life
    of the plant, which has a big impact on the economics of this
    transaction agreement--potential agreement.
        Do you believe these procurement limitations are having an
    impact on the deployment of Clean Energy Technology, and if
    Congress were to change the requirement to allow Federal
    agencies to enter into a longer term power contracts, do you
    believe this would have a positive impact on commercial
    development of renewables?
        Mr. Karsner. Yes, sir. The answer is, unequivocally, yes it
    would have an impact, and I would go further and say nothing
    would have a greater impact to the Federal Government's role as
    an early adopter moving markets than to change the rules that
    enable life-cycle, cost-effective long-term procurement. It is
    a foolish limitation that is put upon ourselves to not be able
    to buy things cheaper.
        An air base down in Texas buys renewable energy credits
    because it has to when it is surrounded by the cheapest source
    of wind energy available that those wind developers would like
    to sell to the Air Force direct. But they can't sell it
    directed 2\1/2\ cents because of the limitation in long-term
    contracting, so they have to sell it to them as renewable
    energy credits for 15 cents. So we lose twice. We fail to
    stimulate the market, and we charge the taxpayer more for it.
    Nothing could be greater than long-term contracts; and without
    it none of the dams across the West would have ever been built.
    Life-cycle benefits of clean energy can't be realized if we
    can't give 20 and 30-year contracts.
        Senator Domenici. Well, maybe we have to look into that and
    seek your assistance with where we'll put it.
        Mr. Karsner. We'd be pleased.
        Senator Dorgan. Senator Domenici, might I interrupt for
    just a moment, as I want to understand this. I fully agree with
    you and with the intent of Senator Domenici's question.
        But what would prevent, in the absence of a long-term
    contract, a wind developer from Texas providing power at 2\1/2\
    cents to the air base in Texas. I don't understand what would
    prevent them doing that.
        Mr. Karsner. They do it, indirectly.
        Senator Dorgan. But at 15 cents, what would prevent them
    from doing it, directly, at 2\1/2\?
        Mr. Karsner. Because what the power developer is seeking is
    that long-term contract----
        Senator Dorgan. I understand what they're seeking.
        Mr. Karsner [continuing]. So if the base can't provide it,
    they sell it to the utility. So the utility gets the 2\1/2\
    cent power, and the obligation then for the military to buy it
    is achieved through the sale of the attributes of the power,
    which is an independent market, the RECs, the Renewable Energy
    Credit.
        Instead of buying the power, they're buying the attributes,
    the green attributes of the power. But it's driven by the fact
    that, ultimately, the developer needs a long-term contract from
    somebody. So the question is; is the Government allowed to be
    that somebody, in its own interest. They will get it from
    somebody. They will get it from a utility, or they won't show
    up.
        Senator Dorgan. But I was trying to understand the point.
    Texas has the largest reservoir of wind power in the country.
        Mr. Karsner. Right.
        Senator Dorgan. That wind power already exists. And I'm not
    talking about what's potentially----
        Mr. Karsner. But the base has to buy it, not wholesale, not
    direct from the supplier, but retail, indirect, from the
    utility.
        Senator Dorgan. There's nothing that prevents them from
    buying it direct except----
        Mr. Karsner. The inability to get the long-term contract.
        Senator Dorgan. But what prevents them from buying another
    short-term contract, year to year buying it direct?
        Mr. Karsner. A private developer won't have--that would put
    them in a merchant power situation where they're selling on the
    spot market their electrons. They need one big long-term,
    stable offtake agreement to pay for that new facility and to
    fund the project without it----
        Senator Dorgan. You're talking about new facilities. I'm
    talking about the largest reservoir of wind power in America
    that's already built. So we'll talk about that later. I'm just
    trying to understand.
        Mr. Karsner. We'd be pleased to engage on this issue.
        Senator Dorgan. I don't disagree on the central point that
    you're making----
        Mr. Karsner. Yes.
        Senator Dorgan [continuing]. But I don't understand another
    piece of that.
        Mr. Karsner. Okay.
        Senator Domenici. Okay. Well, we'll have to work on it
    because we've got to get agreement if we're going to get this
    change.
        Mr. Karsner. I'm enthusiastic about that one as a renewable
    energy developer.
        Senator Domenici. All right.
        Mr. Karsner. So we'd definitely be pleased to provide any
    technical bipartisan direct----

                             CLIMATE CHANGE MODELS

        Senator Domenici. Dr. Orbach, 2 weeks ago I traveled to New
    Mexico with Senator Bennett for a tour of the NNSA
    laboratories. During the tour we received briefings on the
    status of various climate models and challenges facing the
    scientist to develop an accurate predictive capability.
        While your budget seeks modest increases in funding for
    climate modeling, it is unclear what your specific goals and
    priorities are for this program. Does the Department or the
    Federal Government have a roadmap for identifying and solving
    data gaps and modeling limitations, and what is the Department
    of Energy's role in solving these complex problems?
        Dr. Orbach. This is a very serious issue that we take
    particular interest in. There is an increase, as you noted, in
    our budget for Climate Modeling. Last week we held a measure
    workshop on precisely this question. It was joint with the NOA
    from Commerce, the two agencies that are most active in the
    Climate Change Science Program. And it's through that program
    that the Office of Science contributes.
        We believe that the new computational capabilities, some of
    which you visited, will give us opportunities for long-term
    climate change prediction that we've never had before. And so
    the purpose of this workshop was to lay out advice to us on
    where to invest our funding: how much we should invest in
    Measurements and how much we should invest in Modeling.
        The results of that workshop are just becoming clear, and
    we're very excited about the prospect for U.S. leadership in
    this area.
        Senator Domenici. Thank you very much.

                            SOLAR ENERGY TECHNOLOGY

        Mr. Karsner, on Solar Power, recently Sandia Laboratory
    announced a world record for solar to energy conversion. On
    January 31, 2008, a sterling concentrating solar array located
    at Sandia Thermal Test Facility achieved a world record of
    31.25 net efficiency rate.
        Despite the promising performance, your budget maintains a
    wide disparity between funding for Photovoltaic research, $137
    million, and Concentrating Solar research (CSP), $19 million.
    Based on the economics and technology performance with
    concentrating solar, a wide, large disparity, or is there--am I
    missing something?
        Mr. Karsner. No, sir, you're not. It's actually the CSP
    that has come back from almost nothing. Concentrated Solar
    Power a few years ago before I was confirmed was actually
    knocked by the National Academy of Science and others that
    wasn't viable at all.
        I think that their views on that have evolved, largely with
    the engagement of our office and much credit to Sam Baldwin, my
    chief technology officer, so we robustly funded it again,
    organizationally, to start it out and get the ball in motion.
    Because of some of the down selects last year and a greater
    focus on precisely the technology you were talking about,
    molten sodium, molten salt storage, it's a little lower this
    year than it was last year.
        To be clear, I view the potential for concentrated solar
    power to be at par with wind power in this country if we can
    begin to iron out intermittency with improved storage
    capacities. And these new records that we are setting in that
    are proof of that.
        Senator Domenici. What happened is exactly what you said.
    They had this capacity 20 years ago when we had the first solar
    energy push followed by the dramatic drop in oil prices down to
    $8 again, and everybody went out of business. And up there at
    Sandia was this gigantic array thought to be worthless. But
    you're saying it's not worthless.
        Mr. Karsner. Not only that, I'm saying to your previous
    question, if we had 20- and 30-year Federal contracting
    authority through my Federal Energy Management Program, to
    bring the bases into compliance, to bring Federal assets into
    compliance with the EISA law, if we had that tool, you would
    see an explosion of concentrated solar projects in the country.

                           NANOSCALE SCIENCE RESEARCH

        Senator Domenici. And my last one to you has to do with
    nanotechnology, Dr. Orbach. And the Department now has all the
    National Nanotechnology Centers in operation. And each center
    has more applications than they financially support. This
    leaves many important research projects without funding and you
    hear that, we hear that, it's a reality.
        Your budget request provides $20 million in operational
    funding for each center, roughly the same level for the last 2
    years.
        Now, I, myself, understand your limitations. You can't get
    around the fact that when the Federal Government's balancing
    the whole budget and talking about that to the people, and
    they're taking it all out of domestic discretionary spending,
    we don't have enough money to spend even for exciting things.
    And that's got to stop one of these days when we'll be down to
    zero, and then maybe we'll stop cutting it.
        But, in any event, these Nano Center centers have great,
    great potential, and five of them you have in the country. They
    have to have money, and I'm just wondering, is $20 million the
    right number for 2 years in a row for such an evolving,
    explosive kind of R&D? And they need to work with the private
    sector. Each one of them has to go out there and find people
    that work in the same area that put up money for the
    development. That has to happen, right? At each center and
    universities.
        But can they do it with $20 million?
        Dr. Orbach. So far we believe they can. Last year's budget
    was severe, and we were unable to fully fund those operations.
    This year we restored the operations to what we believe is the
    optimum level.
        But you are quite right. These centers are achieving
    performance targets that we did not expect them to achieve in 3
    to 4 years, and so as their needs increase we will support
    them. It's a truly remarkable opportunity for the country. And,
    to be honest with you, we had no--we had some idea, but we were
    delighted at the developments that have taken place, especially
    at CINT.
        Senator Domenici. Let me close by just telling you and Mr.
    Karsner, both, when you have an opportunity to go visit a Nano
    Center, or have an opportunity to go visit a Micro-Engine
    Management Center like they have at Sandia at Mason, and you
    see the development of little things, that's the real push: the
    development of little things.
        And this doesn't mean ``little'' like this, so little that
    you have to work under a microscope, you can't see the machines
    you were operating. They're so small, and you put them on a pad
    just like you do now for computers and you see what they're
    going to do in the future; you just wish that you were 21
    instead of my terrible vintage of 75, because it's so exciting.
        And the nano is just coming to meet up with the micro.
    They're matching up, and I just think you don't want to drop
    the ball on the five centers that are fortunate to have this
    nanotechnology at their disposal. And if they need $25 or $30
    or $40 million, to me it's the best money we could spend.
        I thank you, and thank you for listening to me so much
    today.
        Mr. Karsner. Thank you, sir.
        Senator Domenici. I appreciate it.

                        FEDERAL PROCUREMENT REGULATIONS

        Senator Dorgan. Senator Domenici, thank you very much.
        Let me come back to the point I was trying to make, because
    I think we were talking past each other, Secretary Karsner, on
    the issue of wind energy. You're talking about the incentives
    to develop new wind energy.
        Mr. Karsner. Correct.
        Senator Dorgan. I'm talking about an air base that's paying
    15 cents a kilowatt hour for energy that exists. We have two
    air bases in North Dakota that are buying wind power. I set
    that up. There are no long-term contracts. The two wind
    turbines that provide that power for the Grand Forks and the
    Minot base, two wind turbines each, are owned by Rural Electric
    Co-ops. They then resell to the base, and that puts some money
    in the budget for the base to buy green power.
        But, look, I'd agree with the central point that Senator
    Domenici was making and you're making about long-term
    contracts. I want to ask you about something else.

                                 ALGAE RESEARCH

        Two weeks ago I was in Phoenix, Arizona, and I toured an
    area where they are taking carbon off of a coal plant and using
    it to invest in algae. Now, algae is single-cell pond scum. It
    grows in waste water, and it grows by CO2 and
    sunlight.
        And we stopped funding algae research about 15 years ago.
    Last year for the first time I think we put some algae research
    money in, but this particular application is really interesting
    because when you get rid of the CO2 by feeding pond
    scum, you create this algae. The algae increases its bulk in
    hours, and then you harvest it for diesel fuel.
        And the diesel fuel from algae, for an equivalent amount of
    corn-based ethanol, for example, and equivalent amount of
    acreage, algae will produce roughly 10 times the diesel fuel
    that corn-based ethanol will produce for an equivalent amount.
    And so you have the capability of consuming CO2--
    which is a terrific thing because we need to be able to use our
    coal plants--by feeding it to algae, growing the algae, and
    harvesting the algae for diesel fuel.
        Now, there are a couple of projects around the country that
    I'm very interested in. The one in Arizona is a very big
    project, and they're not doing it in algae ponds, they're doing
    it in long greenhouse.
        And so my question is, are you looking at that under
    renewable fuels? Because this is a renewable fuel when you can
    harvest the algae, and it's up to 10 times more capable of
    production than, for example, corn-based ethanol. Are you
    looking at that?
        Mr. Karsner. Yes, sir, we are looking at that. We just
    started looking at that, you're right. All of this has been in
    hibernation for quite some time while oil prices were low, and
    we're working, inaugurating work, with folks out of Sandia and
    Los Alamos. NREL has engaged Chevron on that subject. I'm aware
    of the project you're talking about. It's really two separate
    topics that require work. And Ray is aware of this, the push
    for carbon utilization as much as sequestration, as a pathway
    for dealing with climate change solutions, but also, obviously,
    the benefit of using algae and other microorganisms for
    advanced fuels that go beyond ethanol alone. So both of those
    areas are of keen interest to us.
        Senator Dorgan. The Texas company that told me about the
    process they have developed--and this is not renewable energy,
    this goes more to carbon capture--and I know this is fossil
    energy--but they are apparently treating the flue gas
    chemically and producing chloride, hydrogen, and the equivalent
    of baking soda. And the baking soda contains and captures the
    CO2, and then they just landfill the baking soda.
        Dr. Orbach, you're waving your head yes?
        Dr. Orbach. Yes, that's correct.
        Senator Dorgan. Do you agree with that?
        Dr. Orbach. There are two different ways of handling it.
    One is the way you just described it, which is chemically.
    Another is with the IGCC, the integrated plan where you
    actually separate out the CO2 before combustion.
    Both of those now are becoming, you know, within factors of 20
    percent, 30 percent, the same cost as normal coal-fired
    powerplant.
        So those technologies are moving rapidly, and I can assure
    you that fossil energy, the Office of Science and EERE work
    very closely together in developing those parameters.
        Senator Dorgan. I hope. And I hope that's the case because,
    50 percent of this electricity comes from coal. We're going to
    have to continue to use coal. The question is not whether, it's
    how, and we've got to find a way to capture and use, or
    sequester, or contain.
        In June, we're going to have a climate change debate on the
    floor of the Senate. It's going to be a big debate. The
    question is: are the targets of that bill going to meet the
    capability, technologically, for us to deal with CO2
    and to be able to continue to use coal? And much of that is
    going to come, I think, from the basis of scientific inquiry
    and from the work in the case of algae. It would be a terrific
    thing if we could convert CO2 that we don't want
    entering the atmosphere into a superfuel. It represents the
    best of all choices, it seems to me.

                             WEATHERIZATION PROGRAM

        Now, one other point I want to make. I think that we have
    not done a very good job on solar. The fact is, there have been
    some technology changes in the last 20 years. I understand that
    the solar plates are still solar plates, but there have been
    some advances in solar capability, and I think both from a tax
    incentive standpoint and in other areas, our country has not
    done well with solar. We need to do much, much better, and I
    hope we can continue to talk about that.
        And, finally, Mr. Karsner, you seemed not to be very
    disappointed about a proposal to cut your funding by about half
    a billion dollars. We're hoping to make you happier than you
    might want to let on.
        Mr. Karsner. Can I speak to that, sir?
        Senator Dorgan. Yes, of course.
        Mr. Karsner. Because--and it's considered bad form to not--
    to speak to something and I wasn't directly asked, but this is
    my last hearing in front of this committee, and most of that
    cut is about the Weatherization Program.
        Senator Dorgan. About half of it.
        Mr. Karsner. And so I wanted--but the largest chunk is
    weatherization.
        Senator Dorgan. That's true.
        Mr. Karsner. Most of my mission today is making my
    successor more successful than I was. This issue is chronic,
    and we will work with anybody in this town, any administration
    or in Congress, to rationalize where income-related
    weatherization assistance can best be placed. It's something
    that is worthwhile and good, and I believe that the people that
    deserve that money ought to get it.
        But 30 years into this, we have delivered 5\1/2\ million
    homes with an annual need of 27 million people. So we are
    underperforming that mission. Then, at the same time, we're
    underperforming the mission of the McKinsey Study that you held
    up by not enabling greater investment in the building
    technologies that can seriously transform the built-
    environment. We have got to separate the assistance programs
    from the technology programs and be able to serve them both.
    That is our mission this year.
        Senator Dorgan. But the key is to serve them both, and the
    zeroing out here and not adding it elsewhere means that we're
    missing a part. And so that was my point.
        I don't put on your shoulders the zeroing out of
    weatherization assistance. I don't assume that you recommended
    that, but--and it is about half of the reduction--I do think,
    however, that the reduction in the Hydrogen Technology, and for
    all the reasons you have described, I still think it is not
    justifiable.
        I think, if we're going to really make progress looking out
    15 and 25 and 40 years from now about what we want to have our
    grandchildren drive--in my judgment hydrogen fuel cell
    vehicles--I think we really need to put our shoulder to the
    wheel and fund these projects. The same with solar and other
    things.
        So I agree with Senator Domenici, I like your spirit and
    your passion, and, you know, I wish you had the resources in
    your President's budget to match your passion. But we'll
    probably see if we can help a little bit on that this year.

                          LONG-TERM INVESTMENT FUNDING

        I do want to make one final point, because Senator Domenici
    was chairman of the Budget Committee for so long, and he made
    the point that we've got to make sense of all this. We
    understand that there has to be some belt-tightening, but it's
    also important the things that really invest in this country's
    future, really invest in a big way and pay dividends such as
    trying to fix this energy situation. Failure to invest also can
    cost you a lot of money.
        Now, we have a big fiscal policy problem. People say the
    deficit this year is $400 billion in the President's proposal.
    It's not. We're going to end up borrowing $800 billion this
    year on the fiscal policy side, and $800 billion red ink, and
    then Trade side $800 billion. That's $1.6 trillion on a $14
    trillion economy. There isn't anybody that looks at that from
    around the world and says that that's an economy on track.
        So I understand the challenge. We've got to find a way to
    deal with all of this. My hope remains, however, that the
    allocation this subcommittee gets is an allocation that
    understands the difference between spending and investing. And
    there's a very big difference: Investments bring dividends,
    dividends that will accomplish a better future for this
    country. And I think if we understand that as we allocate
    funding in the appropriations process, the investments in
    energy, the investments of basic science, investments in clean
    energy facilities for the future, this country will be well
    served by those investments.
        I want to thank all three of you for being here today, and
    wish you well as you work through this year. And I thank my
    colleague Senator Domenici for his work on this subcommittee.

                      FEDERAL LOAN GUARANTEE APPLICATIONS

        Senator Domenici. Mr. Chairman, could I ask David Frantz,
    you mentioned how many applications you have and how many
    you've cleared. Are the subject matter of those cleared
    applications private? Or are they available for committee to
    look at?
        Mr. Frantz. They're private, Senator, while we're
    processing them. They're business-confidential and proprietary
    information relative to each of the projects that are----
        Senator Domenici. How long will that last? How long will
    that--a couple years, or----
        Mr. Frantz. Yes, at least. Really, a lot of the information
    can only be released by the applicants that are applying, not
    on our side. Most of that information is business-confidential
    proprietary.
        Senator Domenici. And aren't we going to know, for the
    people of our country, that we have funded a program doing such
    and such, or is that not going to happen on along that----
        Mr. Frantz. We'll publicly, with their permission, we will
    publicly make announcements as we have reached a successful
    conclusion on each one of their applications.
        Senator Domenici. I would hope so. I mean, it's very, very
    important.
        Mr. Frantz. Yes, sir.
        Senator Domenici. Not next week but that it be on your
    agenda.
        Mr. Frantz. Yes, sir.

                             SOLAR ENERGY RESEARCH

        Senator Domenici. And on solar and what I say, Mr.
    Chairman, I agree with you. And I think the mistake was made
    because we stopped the program when the price of oil cam down
    because we made it--too big of demands on solar were made at
    that point because of the disparity.
        But now we ought to relook at where we are, and maybe you
    and I could figure out a way to meet for an hour or so and talk
    about solar in our budget and see where we might make some
    better investments. And your use of the word ``investment''
    used to not impress me when I was doing the budget because I
    was always being asked for more money; but as I look at how we
    spend our Government's money, the committees and all, without
    trying to take precedence, our committee over another, it is
    not too difficult to determine where we have an energy crisis,
    where we have energy-related investments.
        I mean, this is the nucleus of whether we're going to get
    out of this mess 10 years early or 30 years later. Science
    breakthroughs, that's the difference. And we're there whether
    people like to spend money on us or not.
        Thank you all very much.
        Senator Dorgan. Senator Domenici, thank you.

                         ADDITIONAL COMMITTEE QUESTIONS

        At this time, if the members of the subcommittee have any
    additional questions, please submit them for the record.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                 Questions Submitted to Hon. Raymond L. Orbach
                 Questions Submitted by Senator Byron L. Dorgan
                                    competes
        Question. Last August the Congress passed and the President signed
    the COMPETES legislation into law. This proposal, consistent with the
    National Academy of Sciences study ``Rising Above the Gathering
    Storm,'' directs the Department to focus greater attention on science
    and mathematics education and research. Can you tell me specifically
    how the Department is supporting this legislation and how much money is
    provided in the President's request to implement the COMPETES
    legislation?
        Answer. The Department is committed to meeting its responsibility
    to help increase America's talent pool in science, technology,
    engineering, and mathematics and ensure that we will have the
    scientific workforce we will need in the 21st century to address future
    challenges and maintain U.S. global competitiveness. No additional
    funds were appropriated in fiscal year 2008 to expand existing programs
    or to establish new programs authorized under the COMPETES Act. The
    fiscal year 2009 request, however, contains increases for STEM
    education efforts aligned with the American Competitiveness Initiative
    and consistent with the goals of the COMPETES Act.
        The fiscal year 2009 budget request includes $13,583,000 for the
    Office of Science Office of Workforce Development for Teachers and
    Scientists (WDTS), a $5,539,000 increase from the fiscal year 2008
    appropriated levels. Of this increase, $4,214,000 is for the DOE
    Academies Creating Teacher Scientists (DOE ACTS) program. The $6.4
    million requested for the DOE ACTS program is consistent with the
    summer institutes authorized in section 5003(d) of the COMPETES Act.
    This section calls for the establishment or expansion of programs of
    summer institutes at each of the DOE national laboratories to provide
    additional training to strengthen the science, technology, engineering,
    and mathematics (STEM) teaching skills of teachers employed in public
    schools for K-12 students. Fiscal year 2008 is the fourth year the DOE
    ACTS program will bring K-12 teachers into the laboratories for
    research intensive experiential-based opportunities to build their
    content knowledge in STEM fields that they then bring back to their
    classrooms. The teachers selected for the program participate in
    research at the DOE national laboratories for three consecutive summers
    and bring their new knowledge and skills back to their school
    districts. The fiscal year 2009 request will support an additional 227
    teachers to participate in the program, for a total of 341 teachers.
        The Outstanding Junior Investigator award programs carried out by
    the Office of High Energy Physics, the Office of Fusion Energy
    Sciences, the Office of Nuclear Physics, and the Office of Advanced
    Scientific Computing Research, and the Office of Science Early Career
    Programs are consistent with the early career award programs authorized
    in section 5006 of the COMPETES Act. These programs are focused
    outstanding scientists that are yet to be tenured university faculty
    early in their careers and support the development of their individual
    research programs. Approximately $10,298,000 is requested in fiscal
    year 2009 across the programs to support early career scientists.
        In addition to the programs above, the Office of Science supports
    several activities that are consistent with the intent of several
    sections of the COMPETES Act, but differ in their specific
    implementation. The fiscal year 2009 budget request outlines several
    programs targeted towards support of graduate student activities and
    graduate student fellowships that are consistent with the PACE
    fellowships authorized in section 5009 of the COMPETES Act. The fiscal
    year 2009 request provides approximately $19,121,000 in graduate
    programs that range from traditional graduate fellowships that include
    stipend and tuition support to summer programs for graduate students
    for experiential learning experience in a number of scientific
    disciplines supported by the Office of Science. This is an increase of
    $983,000 over the fiscal year 2008 appropriated levels.
        Section 2008 of the COMPETES Act authorizes discovery science and
    engineering innovation institutes at the DOE national laboratories.
    These institutes must focus on the missions of the Department and
    should support science and engineering research and education
    activities related to areas such as sustainable energy technologies,
    multiscale materials and processes, micro- and nano-engineering,
    computation, and genomics and proteomics. Several research centers
    supported by the Office of Science for a total of $183 million are
    consistent with this authorization. This includes two of the three DOE
    Bioenergy Research Centers located at Lawrence Berkeley National
    Laboratory and Oak Ridge National Laboratory ($50,000,000 total in
    fiscal year 2009) and seven of the Scientific Discovery through
    Advanced Computing (SciDAC) Centers for Enabling Technologies that are
    multiple institution partnerships but centered at the national
    laboratories. In fiscal year 2009 approximately $18,800,000 is provided
    to support these seven centers. Additionally, approximately
    $100,000,000 is requested for the Energy Frontier Research Centers in
    fiscal year 2009. The competition for centers is open to laboratories,
    universities, and private sector organizations, or partnerships among
    these groups. Awards for each center will be $2-5 million per year for
    an initial 5-year period and centers will focus on innovative basic
    research to advance scientific breakthroughs relevant to 21st century
    energy technologies.
        The fiscal year 2009 request of $4,721,969,000 for the Office of
    Science will support approximately 23,700 Ph.D's, graduate students,
    undergraduates, and technical staff at universities and the national
    laboratories, a significant number of the Nation's scientific and
    technical skilled workforce. Additionally, the request will support the
    use of the Office of Science scientific user facilities by over 21,000
    researchers in fiscal year 2009. These sophisticated research
    instruments and facilities are a significant pillar of the U.S.
    scientific enterprise, enabling U.S. researchers to remain at the
    cutting-edge of science and innovation, and provide tremendous training
    opportunities for researchers and students across the country.
                              lansce refurbishment
        Question. Dr. Orbach, you and I have spoken extensively about
    maintaining our science capabilities at our national labs--both the
    Office of Science facilities and the NNSA labs. I believe you share my
    belief that we need to upgrade the LANSCE Facility to sustain cutting
    edge science at the lab in advanced materials research. This will have
    relevant scientific applications for both the NNSA weapons program and
    the Office of Science. Why doesn't the fiscal year 2009 budget request
    provide the funding necessary to support an upgrade of this facility?
        Answer. The Office of Science-supported Manuel Lujan Jr. Neutron
    Scattering Center (Lujan Center) is part of the Los Alamos Neutron
    Science Center (LANSCE). The combined facility is comprised of a high-
    power 800-MeV proton linear accelerator, a proton storage ring, and
    instrumented beam lines for the Lujan Center for civilian research and
    the National Nuclear Security Administration (NNSA) Weapons Neutron
    Research facility for national security research. NNSA is responsible
    for the accelerator upgrade project, which would increase the LANSCE
    neutron source intensity by delivering more proton beam power to the
    neutron production target.
        The Office of Science has invested a total of $26 million in the
    development of six new instruments and the refurbishment of two
    existing instruments at the Lujan Center in the last decade, and
    significant strides have been made at the Lujan Center during the past
    several years. New sample environment capabilities complement existing
    strengths in high pressure and engineering stress, and the improved
    quality of user experiments are resulting in more scientific
    publications. Continued support of the Lujan Center by Science is
    contingent upon the Science triennial peer review, and further
    instrument upgrades by Science are contingent on the LANSCE accelerator
    upgrade by NNSA. The LANSCE accelerator upgrade was not possible in
    fiscal year 2009 due to competing priorities in NNSA.
        Although the Spallation Neutron Source (SNS) will become the
    Nation's signature neutron scattering facility, an October 2006
    workshop, ``The Lujan Center in the SNS Era,'' concluded that a strong
    national neutron research program requires the SNS plus other high
    intensity user facilities. The Lujan Center can remain world class with
    a future emphasis on cold neutron instruments optimized for 20Hz
    repetition rate and a shift to more inelastic neutron scattering
    capabilities at the facility.
                           sandia--advanced computing
        Question. The fiscal year 2008 Energy and Water Conference report
    directed the Department to establish an Institute for Advanced
    Architectures and Algorithms at Sandia National Labs and Oak Ridge as a
    joint endeavor between the NNSA and the Office of Science to continue
    research of high performance computing architectures. I included this
    language because I am very concerned about maintaining the U.S. and DOE
    leadership in high performance computing. As you are well aware the
    Science-based Stockpile Stewardship program and the NNSA labs pioneered
    the advanced computing platforms being deployed today and we should not
    forfeit our leadership in this field. What is your office doing to
    carry out the congressional direction to establish this joint Advanced
    Computing R&D capability and what is your plan to sustain this research
    capability?
        Answer. The Office of Science appreciates this committee's support
    for High Performance Computing in the Department. On January 28, 2008,
    Sandia and Oak Ridge briefed NNSA and the Office of Science and opened
    a dialogue about the Institute for Advanced Architectures and
    Algorithms. This was followed by a series of conference calls and a
    formal proposal from Sandia. The proposal was funded by the Office of
    Science in May and it is being jointly managed by the Office of Science
    and the NNSA.
        As we look to the future, research on advanced architectures and
    algorithms will continue to be a critical element of the computing
    programs of both the Office of Science and the NNSA. This area is one
    in which sustained, multi-year efforts are required to achieve progress
    and where active collaboration between the Office of Science and the
    NNSA will leverage scarce resources and enable the broadest impact.
                                 climate change
        Question. Dr. Orbach 2 weeks ago, I traveled to New Mexico to host
    Senator Bennett on a tour of the NNSA laboratories. During this tour we
    received briefings on the status of various climate models and the
    challenges facing the scientists to develop an accurate predictive
    capability. While your budget seeks a modest increase in funding for
    climate modeling, it is unclear what your specific goals and priorities
    are for this program. Does the Department, or the Federal Government,
    have a roadmap for identifying and solving data gaps and modeling
    limitations? What is the Department of Energy's specific role in
    solving these complex problems?
        Answer. The Department coordinates its climate change research,
    including its climate modeling activities, with other agencies through
    the interagency Climate Change Science Program (CCSP). While the CCSP
    has a Strategic Plan that was released in 2003, it does not have an
    implementation plan or roadmap for achieving the scientific goals of
    the CCSP. The Department of Energy's Climate Change Research Program is
    focused on addressing data and information gaps and uncertainties that
    are limiting climate modeling. DOE has a draft strategic plan that
    provides a roadmap to address the key gaps and uncertainties and
    improve climate models and modeling. We will utilize findings and
    recommendations from several recent reports and workshops to revise our
    draft strategic plan before it is released. The reports we will use to
    guide the revision include a pending report from a recent DOE-sponsored
    workshop on grand challenges in climate change research, the 2007
    Intergovernmental Panel on Climate Change (IPCC) Working Group I Report
    on the Physical Science Basis of Climate Change, a 2007 report from a
    jointly organized workshop by the Department of Energy's Program for
    Climate Model Diagnosis and Intercomparison and the World Climate
    Research Program on Systematic Errors in Climate and Numerical Weather
    Prediction Models, and National Research Council reports on climate
    change research science.
        DOE's specific role in solving data gaps and limitations in climate
    modeling include developing and applying diagnostic tools and methods
    for evaluating climate model performance and identifying the
    limitations in model performance; supporting research and
    infrastructure to collect data and information; developing new and
    improved process models and parameterization schemes that more
    accurately represent the effects of clouds and aerosols, the two
    largest sources of uncertainty in climate modeling; developing and
    applying new and improved ocean, sea ice and land ice models for
    simulating their role in climate and sea level changes and potential
    feedbacks between sea and land ice changes and climate change;
    providing the climate modeling community with access to high
    performance computing capabilities at DOE laboratories needed to
    implement advanced, high resolution climate and Earth system models
    that are essential to modeling the physics of climate processes (e.g.,
    transport of heat, atmospheric motion, formation and evolution of
    clouds, etc.) and the resulting response of climate to natural and
    human-induced forcing at regional to global resolution over decade to
    century time scales; and developing new and improved models of global
    carbon cycling in the ocean and terrestrial biosphere that can be
    incorporated in an Earth system model to simulate the interactions and
    feedbacks between climate, carbon cycling and CO2 forcing of
    climate.
        Question. The Advisory Committee for the Office of Biological and
    Environmental Research raised concerns in its report from May 2007
    regarding the availability of computing time at the laboratories to run
    climate simulations. They also raised concerns regarding general
    difficulties in ``engaging'' DOE. What has been done to improve this
    interaction and access?
        Answer. Two DOE Federal Advisory Committees, the Biological and
    Environmental Research Advisory Committee (BERAC) and the Advanced
    Scientific Computing Advisory Committee (ASCAC) were charged by me to
    address the computing needs for climate modeling, including changes
    that may be needed to provide and improve access to DOE high
    performance computing capabilities for climate modeling. The findings
    and recommendations in the report of a joint ASCAC-BERAC committee are
    under review, and a plan will be forthcoming that addresses the climate
    modeling access issues raised in the May 2007 BERAC report.
                                 nanotechnology
        Question. Dr. Orbach, the Department now has all the National
    Nanotechnology Centers in operation and each center has more
    applications than they financially support. This leaves many important
    research projects without funding. Your budget request provides $20
    million in operations funding for each center, roughly the same level
    for the last 2 years. In light of the tremendous interest in this field
    of research, why hasn't your office sought an increase? If additional
    funding was provided to these centers, do you believe it would be well
    spent?
        Answer. The fiscal year 2009 request provides for support that will
    allow for full operation of the five Office of Science Nanoscale
    Science Research Centers (NSRCs). The recently completed NSRCs are user
    facilities that scientists from all sectors--academia, Federal
    laboratories, and industry--can access to pursue their ideas and are
    still in the early phases of maturing their operations. As the unique
    capabilities of the NSRCs become more widely known, the NSRCs are
    becoming oversubscribed with applications for time from potential
    users. The synchrotron and neutron scattering user facilities operated
    by the Basic Energy Sciences program have a history of such
    oversubscription. It is important to understand that such
    oversubscription is natural and healthy, because all applications for
    use of the NSRCs undergo rigorous peer review, which ensures that the
    best user proposals are supported. Furthermore, the number of users to
    whom time can be allocated is not simply dependent on the level of
    operating funds. Each NSRC was designed to operate at its full capacity
    to serve users with an annual operating budget of approximately $20
    million. It is imperative, however, that the operating budgets for the
    NSRCs--and all SC user facilities--receive appropriate cost-of-living
    increases in subsequent fiscal years so that they may maintain full
    operations. This was not possible in fiscal year 2007 and 2008, and the
    fiscal year 2009 budget request for the NSRCs seeks to redress the
    situation. As with other user facilities, additional funding will be
    required and requested in subsequent years to re-capitalize the
    equipment in the NSRCs.
                                 radiation r&d
        Question. Dr. Orbach, in your testimony, you highlight the role
    your office is playing in ``Predicting high level waste system
    performance over extreme time horizons.'' I would think this research
    would be very valuable to the EPA and the NRC which has responsibility
    for setting regulatory and safety standards for nuclear waste. How will
    the data your office develops be integrated into the rulemaking process
    to ensure that the standards are scientifically sound? How far into the
    future do you intend for your models to predict? Do you intend to make
    predictions as far out as 1 million years?
        Answer. Predicting high level waste (HLW) system performance over
    extreme time horizons is one of the research coordination efforts
    proposed for the Office of Science in the fiscal year 2009 budget
    request. This area was identified as one of the scientific grand
    challenges in the Basic Energy Sciences (BES) workshop on Basic
    Research Needs for Geosciences in February 2007. The regulatory
    framework for HLW systems asks that the performance of a geological
    repository be predictable for time periods of up to 1 million years.
    Current models require significant improvements to become capable of
    more accurate predictions on such time scales. This is why the
    scientific community identified this area as a grand challenge in the
    BES Geosciences report and why we are targeting this area as one of our
    R&D coordination efforts in fiscal year 2009. The BES workshop report
    noted that the chemical and geological processes involved in the
    performance of HLW systems over extreme time scales are highly complex
    and require an interdisciplinary approach that strongly couples
    validation experiments with theory, modeling, and computation bridging
    multiple time and length scales. The report further concluded that
    fundamental research is required to provide the scientific basis for
    predictive models of HLW in geological repositories over extreme time
    horizons, including research on: computational thermodynamics of
    complex fluids and solids, the physics and chemistry of particles and
    colloids on the nanoscale, biogeochemistry in extreme and perturbed
    environments, highly reactive subsurface materials and environments,
    and simulation tools that can handle an enormous range of spatial and
    temporal scales.
        The Office of Science is not directly involved in rulemaking
    regarding HLW systems. The data, scientific knowledge, and
    computational models generated from the fundamental studies we perform
    will, of course, be widely and openly disseminated in the scientific
    literature. In addition, the R&D coordination effort proposed for
    fiscal year 2009 will directly benefit and involve the Office of
    Civilian Radioactive Waste Management (OCRWM) and the Office of
    Environmental Management (EM). An important component of integration
    between BES and these offices are the strong BES programs in the DOE
    laboratories in actinide and radiation chemistry, materials sciences,
    and geosciences. Capabilities and knowledge developed in these lab
    programs are readily and directly conveyed to complementary programs in
    the labs that are supported by OCRWM and EM.
                           joint dark energy mission
        Question. I have a few questions that underscore this committee's
    continued interest and support for DOE's role in JDEM and the science
    it is meant to address. Given that this now appears to be a NASA-led
    mission, are you comfortable that JDEM will yield the best science to
    address the science priorities of the Office of Science's High Energy
    Physics Office?
        Answer. DOE and NASA will coordinate in selecting the winning
    concept for JDEM. An important part of the selection process will be to
    ensure that the science obtained by the concept will address the needs
    of both the NASA science mission and of the High Energy Physics science
    mission. If the submitted concepts fall short of either agency's
    mission need, then the agencies will reevaluate the mission.
        Question. Last year the National Research Council considered a
    number missions and experiments to advance the state of physics
    ``Beyond Einstein.'' The resulting report stated that JDEM should be
    the top priority. Unfortunately, we've heard from BEPAC panel members
    that the mission being planned will not meet their very explicit
    expectations due to budget restrictions within NASA. Are you confident
    that the Joint Dark Energy Mission that results from NASA's competition
    will be within the range of the specific scientific objectives laid out
    by the NRC panel?
        Answer. NASA and DOE are jointly planning the mission. Although
    NASA will issue the Announcement of Opportunity (AO), we will be
    working with them to write the terms of the AO and will coordinate the
    selection process. We will work together to ensure that the selected
    mission will significantly advance the study of dark energy in the most
    cost-effective manner. Until we see the actual proposals we cannot
    evaluate how well they meet the scientific objectives of the NRC panel.
    The agencies will need to decide whether the science provided by the
    selected JDEM concept is sufficient.
        Question. Recent reports from NASA indicate that DOE's contribution
    to JDEM will be ``up to'' $200 million. This is a big reduction from
    the $400 million that DOE had pledged earlier. First, is this accurate?
    Second, if so, why was this change made and where is the remaining $200
    million going? DOE has requested and this committee has provided tens
    of millions of dollars in research and development for JDEM. We would
    hate to see our significant investments go underutilized.
        Answer. DOE's expertise is in the areas of scientific
    collaborations and instrumentation. NASA, in addition to expertise in
    these areas, is the agency with the expertise and stewardship
    responsibilities for space launches and operations. The mission concept
    studies that are nearly complete indicate that the science could be
    done in a medium-class strategic mission targeted at a cost of
    approximately $600 million, not including the launch services. The
    scientific package is estimated to cost about $400 million and both DOE
    and NASA want to participate in the fabrication and operation of the
    scientific package. An equal partnership in the scientific package is
    the basis of the present $200 million cost estimate for DOE.
        With the reductions from the requested levels in the fiscal year
    2007 and fiscal year 2008 congressional appropriations, there is no
    ``remaining $200 million,'' and indeed the present $200 million
    commitment will stress the High Energy Physics program. In our
    planning, the projects and programs that can be supported depend upon
    the funding available and their priority for mounting a world-class,
    productive U.S. High Energy Physics program. The funding level is
    determined by congressional appropriations. We use guidance from the
    scientific community as input to establishing priorities within the
    funding available. Guidance is presently being sought from the High
    Energy Physics Advisory Panel about the options and priorities for an
    optimal U.S. program at different funding levels.
        Question. Are you confident that DOE's investment in this project
    to date--that is, the country's investment in this project--will be
    adequately utilized?
        Answer. Yes, DOE's investment has been and will be well utilized.
    DOE's investment to date is mostly in the Supernova/Acceleration Probe
    (SNAP) concept for JDEM for R&D on the advanced optical and infrared
    sensors that would be used in the camera, as well as in designing a
    mission concept. This sensor development R&D can also be used for other
    missions and by the general scientific community. The SNAP concept
    development funded by DOE has helped the technical advancement of the
    whole JDEM mission, which was noted by the National Research Council
    study as a particular strength of JDEM compared to some other Beyond
    Einstein mission proposals.
        Question. Will DOE and NASA jointly select the winner of the JDEM
    competition?
        Answer. Yes, DOE and NASA will coordinate in selecting the winning
    concept for JDEM.
        Question. Dr. Orbach, can you give us the background on the
    development and overall strategy for the Energy Frontier Research
    Centers? As you know, this is an initiative contained in the fiscal
    year 2009 budget that some might construe as an alternative to ARPA-E
    or as another way of funding additional programs in the Science budget,
    as opposed to the Energy R&D budgets.
        Answer. The overall goal of the Energy Frontier Research Centers
    (EFRCs) is to foster, encourage, and accelerate high-risk, high-reward
    research that may provide the basis for transformative energy
    technologies of the future. The EFRCs will bring together the skills
    and talents of a critical mass of investigators, especially from
    universities, to enable energy relevant, basic research of a scope and
    complexity that would not be possible with the standard single-
    investigator or small-group award. EFRCs will enable research programs
    that are balanced and comprehensive and, as needed, support
    experimental, theoretical, and computational efforts. Finally, the EFRC
    program provides a tremendous opportunity for universities to engage in
    fundamental basic research critical to future energy technologies, and
    to inspire, train, and support leading scientists of the future who
    have a deep and sincere appreciation for the global energy challenges
    of the 21st century.
        The scientific background for the EFRC initiative has been
    developed over the last 6 years through an extensive series of
    workshops sponsored by the Basic Energy Sciences (BES) program and its
    advisory committee, the Basic Energy Sciences Advisory Committee
    (BESAC). In 2002, BESAC sponsored a workshop on Basic Research Needs to
    Assure a Secure Energy Future. That workshop lead to a series of 10
    more BES workshops on basic research needs for the hydrogen economy,
    solar energy utilization, superconductivity, solid state lighting,
    advanced nuclear energy systems, combustion of 21st century
    transportation fuels, geosciences, electrical energy storage, materials
    under extreme conditions, and catalysis for energy. Finally, BESAC
    recently completed a report entitled Directing Matter and Energy: Five
    Challenges for Science and the Imagination. This set of 12 workshop
    reports, developed by some 1,500 scientists from universities, DOE
    laboratories, and industry, define the scientific and technological
    basis for the EFRC initiative.
        The high-risk, high-reward fundamental research within the EFRCs
    represents 15 percent of the total BES funding for research; the
    success of the EFRCs depends in part on their integration with the core
    research programs in BES. All of the core research programs in BES are
    actively engaged in coordination efforts with the DOE technology
    offices to promote the flow of knowledge and ideas from basic to
    applied research. This integration obviates the need for the creation
    of a new ARPA-E bureaucracy, rendering it unnecessary and
    counterproductive.
        Question. Dr. Orbach, can you give us the background on the level
    of funding for General Plant Projects (GPP)? I understand that the GPP
    level has increased over time to reflect inflation, etc. and the
    current level is $5 million per project. Anything above $5 million
    requires a reprogramming or to be a part of a Science Laboratory
    Infrastructure project. Do you believe the current level of $5 million
    provides you the flexibility to do the projects that are necessary
    under those constraints? If not, what level would you recommend?
        Answer. General Plant Projects are miscellaneous minor new
    construction projects of a general nature, the total estimated costs of
    which may not exceed $5 million per project. This $5 million threshold
    has been set since fiscal year 1999. A construction project that
    otherwise met the GPP criteria, but with a total cost above $5 million,
    would have to be requested and appropriated as a line-item construction
    project, which could stretch the necessary time frame between
    identification of the need and completion of the project, and thus
    increase overall costs. Based upon the Engineering News Report Annual
    Construction Inflation Index, $5 million in fiscal year 2009 would
    construct a project that would have required only $3.6 million in
    fiscal year 1999. So over time, inflation has reduced the Department's
    flexibility to pursue minor construction projects using GPP. An
    increase in the GPP threshold to $7 million would make the GPP
    threshold approximately equivalent after inflation to what it was when
    it was last increased in fiscal year 1999. GPP is supported both
    through direct funding and through Institutional General Plant
    Projects, or IGPP, which are funded through laboratory overhead for
    projects that cannot be allocated to a specific program. Examples of
    acceptable IGPP projects include site-wide maintenance facilities and
    utilities, such as roads and grounds outside the plant fences or a
    telephone switch that serves the entire facility. In the fiscal year
    2009 Office of Science request, $31 million is planned for direct-
    funded GPP and an additional $35 million is anticipated in IGPP funding
    at Office of Science laboratories, for an overall level of $66 million
    for such minor construction projects.
        Question. Dr. Orbach, the Basic Energy Sciences budget has grown
    substantially over the past few years with the construction of several
    projects, namely SNS, the Nano Centers, and CLS at Stanford, etc. What
    do you envision the Basic Energy Sciences budget's steady state being
    in 5 years?
        Answer. The fiscal year 2009 budget request of $1,568 million for
    the Basic Energy Sciences (BES) program in the Office of Science
    reflects part of a Government-wide strategy to enhance U.S. world
    leadership in the physical sciences and maintain our Nation's
    competitive lead in technology. This strategy is the result of
    important actions by two branches of Government--first by the
    administration's American Competitiveness Initiative (ACI), and second
    by the congressional passage of two authorization acts, the America
    COMPETES Act (Public Law 110-69) and the Energy Independence and
    Security Act of 2007 (Public Law 110-140). Together these actions would
    approximately double the budget for the SC over a period of 7 to 10
    years. The Science portfolio supports a broad research program and
    facilities operations that seek to understand the fundamentals of how
    nature works and then to use this understanding to promote
    transformational changes in the way we approach energy production,
    conversion, transmission, storage, and waste mitigation.
        Under the ACI and congressional authorizations, we envision that
    the BES program will continue to be strong in 5 years with many
    exciting new capabilities. In developing future BES budget requests,
    Science will consider giving priority to six components of the BES
    budget: providing increases at least at the rate of inflation for core
    research programs and core facility operations; providing significant
    research increases in energy sciences, including the growth of Energy
    Frontier Research Centers; providing optimal construction funding,
    including for the NSLS-II project; providing instrumentation upgrades
    and fabrication for the scientific user facilities and the core
    research programs; upgrading and expanding the Spallation Neutron
    Source; and planning and conducting R&D toward the next-generation of
    light sources. The fiscal year 2009 request begins to put the BES
    budget on track with respect to the doubling path defined by the ACI
    and congressional authorizations. Projecting along that path in
    subsequent fiscal years would see the BES budget grow to approximately
    $2 billion by fiscal year 2013. I encourage your strong support of the
    President's fiscal year 2009 request to help bring this vision to
    fruition.
        Question. Dr. Orbach, the Office of Science budget this year
    includes funding that was formerly in the Office of Nuclear Energy
    budget dealing with medical isotopes. What is the rationale for the
    decision to transfer the funding from Nuclear Energy to Nuclear
    Physics?
        Answer. The Office of Science, with sustained commitment in
    promoting physical science research and experience in facility
    operation and infrastructure management, is well equipped to meet the
    needs for a successful and viable national isotope program. In fiscal
    year 2009, the Nuclear Energy isotopes program will be transferred to
    the Nuclear Physics (NP) program within Science, and will be renamed
    and reformed as the Isotope Production and Applications program. This
    new program will expand the scope of the present program of
    radioisotope production to include research production of commercially-
    unavailable radioisotopes in response to the needs expressed by the
    entire research community. Based on the successful NP model of
    fostering fundamental research, and within the scope of fiscal year
    2009 budget, the new program will include the support of $3.2 million
    for development and production of research isotopes, based on
    competitive peer review. The recent report of the National Academy of
    Sciences (NAS), entitled ``Advancing Nuclear Medicine Through
    Innovation'' (September 20, 2007) raises concerns about Federal support
    for sustained U.S. competitiveness including deteriorating
    infrastructure, lack of a domestic source for research isotopes,
    shortage of trained workforce and lost opportunities. The NP has
    established a working group with the National Institutes of Health to
    address the recommendations in the report and is also planning a
    workshop in the summer that will bring, for the first time, all of the
    major stakeholders in isotope production together discuss the Nation's
    needs in isotope development and production and initiate the
    development of a community-driven strategic plan.
                                     ______

                Questions Submitted by Senator Dianne Feinstein
        Question. The Department of Energy (DOE) does not always allocate
    funding to transform basic research results into applied applications.
    What is the Department doing to expedite development and deployment of
    fuel cell technology and other technologies to bridge the gap between
    basic and applied research?
        Answer. The Office of Science's fiscal year 2009 budget request
    contains proposals for four new areas of coordination between programs
    in Basic Energy Sciences (BES) and the applied technology offices
    within DOE. In each area, the basic research needs required to advance
    energy technologies and close the gap between basic and applied
    research have been identified through one or more of the Basic Research
    Needs workshops conducted by BES. The four areas are Electric Energy
    Storage (EES), Carbon Dioxide Capture and Storage, Characterization of
    Radioactive Waste, and Predicting High-Level Waste System Performance
    Over Extreme Time Horizons.
        In EES, the BES workshop on Basic Research Needs for EES (April
    2007) identified key areas of interfacial chemistry, electrochemistry,
    and materials science required to advance EES for novel battery
    concepts in hybrid and electric cars and for the effective utilization
    in the utility sector of renewable, but intermittent energy sources,
    including solar, wind, and wave energy. DOE technology offices that
    might benefit include Electricity Delivery and Energy Reliability for
    utility-scale energy storage and Energy Efficiency and Renewable Energy
    for the FreedomCAR and Vehicle Technologies program and the Solar
    Energy Technologies program.
        Carbon Dioxide Capture and Storage was a primary topic of the BES
    workshop on Basic Research Needs for Geosciences (February 2007), which
    identified the research challenges associated with the complex chemical
    and geological processes that occur when carbon dioxide is stored in
    deep porous underground formations. The Office of Fossil Energy is the
    primary beneficiary of this coordination effort.
        Characterization of Radioactive Waste is a broad coordination area
    that was covered in three BES Basic Research Needs workshops: Advanced
    Nuclear Energy Systems (July 2006), Geosciences (February 2007), and
    Materials Under Extreme Environments (June 2007). These workshops noted
    the extraordinary combination of complex chemical and physics processes
    that occur under the extreme environments associated with radioactive
    waste (temperature, pressure, radiation flux, and multiple complex
    phases) and defined the materials, chemical, and geological sciences
    needed to address them. Technology offices that could benefit from this
    coordination area include the Offices of Nuclear Energy (NE),
    Environmental Management (EM), and Civilian Radioactive Waste
    Management (RW).
        Predicting High-Level Waste System Performance over Extreme Time
    Horizons was also covered in the BES workshop on Basic Research Needs
    for Geosciences (February 2007), which addressed the remarkable
    challenge of developing the scientific understanding of the chemical
    and geological behavior of high-level waste in geological repositories
    necessary to develop models with predictive capability over extreme
    time durations, perhaps up to 1 million years. The DOE technology
    offices benefiting from this area include EM, NE, and RW.
        These four new coordination areas complement and expand already
    ongoing areas of coordination between Science and the technology
    offices in the hydrogen fuel initiative (HFI) and solar energy
    utilization. Our HFI coordination is noteworthy because it has been in
    operation for over three fiscal years and has demonstrated impressive
    results, particularly in the area of fuel cells. The BES and EERE have
    coordinated their HFI activities through extensive interactions between
    program managers, including information sharing on proposal
    solicitations and awards, and by promoting scientific interactions
    between BES investigators and those supported by EERE through joint
    contractor research meetings, which began in fiscal year 2006 and have
    continued on an annual basis since then.
        An example of the benefits of the HFI coordination in the area of
    fuel cells comes from work funded both by BES and EERE and conducted at
    Brookhaven National Laboratory. This work is aimed at developing
    electro-catalytic materials for hydrogen fuel cells that address one of
    the key barriers to widespread use of this technology--the prohibitive
    cost of fuel-cell catalysts that are based on precious metals,
    typically platinum. Basic research supported by BES led to the rational
    design, enabled in part by advanced computational chemistry, and
    development of nano-structured, electrocatalytic materials that have
    ultra-low platinum content. Detailed characterization of these new
    materials demonstrated improved catalytic activity toward the oxygen
    reduction reaction, which causes most of the efficiency loss in low-
    temperature fuel cells. In work supported by EERE, this fundamental
    discovery is being examined for its potential in making efficient
    catalysts that may be used to convert hydrogen to electricity in fuel
    cells for electric vehicles. While platinum is the most efficient
    electrocatalyst for accelerating chemical reactions in fuel cells in
    electric cars, platinum dissolves in reactions during stop-and-go
    driving--a major impediment. Recently, however, Brookhaven researchers
    added gold clusters to a platinum electrocatalyst, which kept it intact
    during an accelerated stability test under laboratory conditions, a
    potential breakthrough for fuel-cell technology.
        Question. I am pleased to see the administration has again asked
    for an increase in spending at the Office of Science. DOE's Office of
    Science plays an essential role in developing cleaner sources of
    energy, stimulating breakthroughs in the biological sciences, pushing
    the frontiers of knowledge in physics, and improving energy efficiency.
    If Congress provides you with the increase to $4.7 billion for the
    Office of Science, as requested, what will the agency be able to do
    that it cannot do under its current budget?
        Answer. The fiscal year 2009 budget request will help enable the
    Office of Science to meet mission needs of the Department in energy,
    the environment, and national security as well as the goals of the
    American Competitiveness Initiative and the America COMPETES Act of
    2007 for U.S. leadership in science and innovation.
        Specifically the increase in the budget request will fully fund the
    U.S. fiscal year 2009 commitment for ITER (+$203,874,000). In fiscal
    year 2008 funding for ITER was limited to $10,626,000 and fell far
    short of the U.S. commitment of $160,000,000. The ITER project, which
    will demonstrate the scientific and technical feasibility of fusion
    power, is the top priority new facility for the Office of Science and a
    high-visibility international commitment. While the Office of Science
    and the U.S. ITER Project Office have implemented a strategy to
    mitigate the adverse impacts in fiscal year 2008, the United States
    would likely be forced to default on its ITER commitments and terminate
    the U.S. ITER project if sufficient funds are not provided and would
    likely damage our credibility as a partner in future large scale
    international projects.
        The requested increase will also allow the Office of Science Basic
    Energy Sciences program to initiate support for new areas in what we
    refer to as use-inspired research related to future energy technologies
    and fundamental research grand challenges that could result in greater
    understanding of how nature works. Approximately +$100,000,000 will be
    for the Energy Frontier Research Centers. The centers will bring
    together the Nation's intellectual and creative talent from
    universities, national laboratories, and private sector organizations
    to conduct innovative basic research to advance scientific
    breakthroughs relevant to 21st century energy technologies. Research
    topics would include solar energy utilization; hydrogen production,
    storage, and use; electrical energy storage; advanced nuclear energy
    systems; superconductivity; solid-state lighting; materials under
    extreme environments; catalysis; combustion of 21st century
    transportation fuels; and geosciences related to long-term storage of
    CO2 and nuclear waste. Awards for each center will be $2-5
    million per year for an initial 5-year period and we would expect to
    make 20-30 awards.
        Approximately +$71,270,000 of the requested increase would provide
    for more optimal operations of our major scientific user facilities.
    These facilities, from synchrotron light sources, neutron scattering
    sources, and whole genome sequencing facilities to particle colliders,
    high-performance computing resources, and nanoscale science research
    centers, are used by over 21,000 individuals each year. The suite of
    research capabilities and instruments supported by the Office of
    Science make up a significant pillar of the U.S. scientific research
    enterprise. Users come from universities, national laboratories, and
    industry. The increase in funding requested for the facilities will
    provide for maintenance, improved operations and extended operation
    times which enable greater researcher utilization
        Approximately +$136,280,000 is requested for construction of the
    next generation scientific user facilities and instruments. This
    includes continued construction of the Linac Coherent Light Source at
    Stanford Linear Accelerator Center, an x-ray light source with
    unprecedented intensity and ultrashort pulses for probing materials and
    biological molecules and observing chemical reactions in real time; the
    initiation of construction of the National Synchrotron Light Source II
    at Brookhaven National Laboratory, which will have the capability to
    resolve molecular and materials structures down to the 1 nanometer
    level resolution; and the 12 GeV upgrade to the Continuous Electron
    Beam Accelerator Facility at Jefferson Laboratory, which will enable
    advanced studies of nuclear structure. The funding increase will also
    support scientific instrument fabrication for several projects
    including the Neutrinos at the Main Injector (NuMI) Off-Axis Neutrino
    Appearance (NOvA) detector at Fermilab.
        Additional increases for research (+$265,387,000) is requested for
    high performance computing, systems biology for bioenergy and
    environmental applications, chemistry, materials sciences, climate
    change research, plasma sciences, high energy physics, and nuclear
    physics and radioisotopes. Part of this increased funding is requested
    for international linear collider (ILC) research and superconducting
    radiofrequency (SRF) research to support the development of next
    generation accelerator-based facilities such as light sources, neutron
    sources, and particle colliders. Such research is not only critical to
    push the technology frontiers of future facilities, but it also enables
    advancements in technologies for medical instruments and cancer
    treatments. Fiscal year 2009 funding increases for neutrinos research
    capabilities such those enabled by NOvA, the ILC, and SRF research
    provide support for U.S. researchers to participate in the Large Hadron
    Collider at CERN. Such investments will position U.S. researchers to
    participate in the leading-edge high energy physics research here and
    abroad and maintain the critical scientific and technical capabilities
    to successfully lead the development of the next-generation particle
    collider facility in the coming decades.
        Research increases in scientific computing and applied mathematics
    will enable U.S. researchers to take advantage of petascale computing
    capabilities for the advancement of some of our most challenging
    scientific questions that are not tractable through theory or
    experimentation. Increases will also support transfer of the DOE
    Isotope Program to the Office of Nuclear Physics from the Office of
    Nuclear Energy and the creation of a research and isotope production
    program that will focus on addressing the radioisotope needs of the
    medical, research, and industry communities in the United States.
        The fiscal year 2009 request of $4,721,969,000 for the Office of
    Science will support approximately 23,700 Ph.D's, graduate students,
    undergraduates, and technical staff and universities and the national
    laboratories, a significant number of the Nation's scientific and
    technical skilled workforce. In fiscal year 2006, the Office of Science
    provided approximately $161,472,000 to California universities and
    research and industry organizations, not including the research and
    facilities supported at the four DOE laboratories in your State. The
    contributions that California scientists and engineers make to the
    Department's mission and to U.S. innovation and competitiveness are
    tremendous and I assure you they are well positioned to participate in
    the research activities we have proposed as part of the fiscal year
    2009 budget request.
        Question. I am interested by your proposed plan to establish Energy
    Frontier Research Centers (EFRC) Initiative. I think we can anticipate
    that many California universities will be eager to apply for the
    centers. How is the Department soliciting input from the scientific
    community on the initial areas of investment?
        Answer. The areas of emphasis for the EFRC initiative were
    developed over the last 6 years in an extensive series of workshops
    sponsored by the Basic Energy Sciences program and its advisory
    committee, the Basic Energy Sciences Advisory Committee (BESAC). These
    began with a BESAC workshop on Basic Research Needs to Assure a Secure
    Energy Future in 2002. This was followed by a series of 10 Basic
    Research Needs workshops run by BES that covered the hydrogen economy,
    solar energy utilization, superconductivity, solid state lighting,
    advanced nuclear energy systems, combustion of 21st century
    transportation fuels, geosciences, electrical energy storage, materials
    under extreme conditions, and catalysis for energy. Finally, BESAC
    recently completed a report on scientific grand challenges, ``Directing
    Matter and Energy: Five Challenges for Science and the Imagination.''
    In total, some 1,500 scientists, the bulk of whom were from
    universities, participated in these workshops. The EFRC initiative
    requests proposals that satisfy two criteria with regard to topical
    areas--that they address one of the grand challenge themes from the
    BESAC report and that they address one of the energy grand challenges
    put forth in the series of 10 Basic Research Needs workshop reports.
        Question. What is your vision for the centers?
        Answer. We envision the EFRCs as centers that will bring together
    the skills and talents of a critical mass of investigators to enable
    energy relevant, basic research of a scope and complexity that would
    not be possible with the standard single-investigator or small-group
    award. The EFRCs should present research programs that are balanced and
    comprehensive and, as needed, support experimental, theoretical, and
    computational efforts. We expect that EFRCs will be lead and managed in
    such a way as to present world-leading programs that encourage high-
    risk, high-reward research. Finally, the EFRC program provides a
    tremendous opportunity to inspire, train, and support leading
    scientists of the future who have a deep and sincere appreciation for
    the global energy challenges of the 21st century.
        Question. When do you anticipate the competition to be announced?
        Answer. The Funding Opportunity Announcement (FOA) for the ERFC
    competition (DE-PS02-08ER15944) was initially published on April 4,
    2008, and was amended on April 23, 2008. Applications in response to
    the FOA will be accepted through October 1, 2008.
        Question. How will universities be judged?
        Answer. Pursuant to section 989 of EPAct 2005 regarding DOE merit
    review of proposals, the EFRC FOA provides a single opportunity
    announcement for universities, for-profit companies, nonprofit
    entities, and DOE laboratories. The FOA is open equally and fairly to
    all of these entities and, importantly, is very flexible with regard to
    teaming between such entities. All applications, regardless of the
    nature of the lead organization, will be judged through rigorous merit
    review, in accordance with 10 CFR 605.10(b), on the basis of four major
    criteria: scientific and/or technical merit of the project,
    appropriateness of the proposed method or approach, competency of the
    applicant's personnel and adequacy of the proposed resources, and
    reasonableness and appropriateness of the proposed budget. Additional
    information on the EFRCs, including a link to the FOA, can be found on
    the EFRC webpage on the BES website at http://www.sc.doe.gov/bes/
    EFRC.html.
        Question. As you know, Berkeley Lab is leading the Joint BioEnergy
    Institute (JBEI), along with Sandia, Livermore, UC Davis, UC Berkeley
    and the Carnegie Center for Plant Biology at Stanford. With funding
    from the Office of Science, JBEI is developing the science and
    technology that will drive sustainable biofuel solutions to the market
    in time to make a difference. Could you please give the committee a
    report on the progress of JBEI and the other bioenergy research
    centers? Is $25 million per year, per center, enough to meet the
    biofuel production targets in the Energy Independence and Security Act?
        Answer. All three DOE GTL Bioenergy Research Centers (BRCs) are up
    and running today and engaged in cutting-edge basic research needed to
    develop cost-effective methods of producing cellulosic biofuels.
    Secretary Bodman announced the award of the three BRCs on June 26,
    2007, following an open competition and an intensive scientific merit
    review process. From July through September, DOE negotiated with the
    lead institutions of the selected BRCs on the terms and conditions of
    the awards. These negotiations were concluded before the end of fiscal
    year 2007, and each of the BRCs received $9.97 million in fiscal year
    2007 funds to accelerate their start-up. The Department plans to
    provide each BRC with $25 million per year through fiscal year 2012,
    for a total 5-year program investment of $405 million.
        The three BRCs are the Joint BioEnergy Institute (JBEI), led by the
    Lawrence Berkeley National Laboratory (LBNL) and located near Berkeley,
    CA.; the BioEnergy Sciences Institute (BESC), led by Oak Ridge National
    Laboratory (ORNL) and based on the ORNL campus in Oak Ridge, TN; and
    the Great Lakes Bioenergy Research Center (GLBRC), led by the
    University of Wisconsin-Madison (UMW) in partnership with Michigan
    State University and based on the UMW campus in Madison, WI. All three
    BRCs represent multi-institutional partnerships. Partner institutions
    include universities, DOE National Laboratories, private firms, and one
    nonprofit.
        DOE will evaluate the performance of the BRCs on a yearly basis.
    The Department conducted an early Technical and Management Review of
    the BRCs in November 2007. As a result of the review, all three BRCs
    have put in place strong management plans and systems and have
    established clear sets of scientific milestones and deliverables to
    focus and guide their research programs.
        The BRCs are geographically dispersed, with scientific approaches
    that are complementary and synergistic. All three BRCs are using the
    advanced genomics-based techniques of modern systems biology to re-
    engineer both plants and microbes for more efficient biologically-based
    conversion of plant fiber into fuels.
        JBEI is focusing on the widely studied ``model plants'' of
    Arabidopsis and rice (as well as some work on switchgrass), for which
    there is abundant genotypic and phenotypic information. JBEI believes
    that critical changes can be accomplished more readily in model plants
    and then transferred to bioenergy crops. JBEI is pursuing a novel
    strategy vis-a-vis lignin--a substance that occludes cellulose and
    forms a major barrier to deconstruction of plant fiber. Through
    detailed analysis of cell wall biosynthesis, JBEI is seeking to change
    the monomer composition of lignin, replacing existing monomers with new
    monomers whose mutual bonds can be cleaved by specialized enzymes. In
    addition, JBEI is studying the use of ionic liquids for pretreatment
    using advanced imaging technology, in an effort to overcome the
    limitations of current pretreatment methods, which produce chemical
    byproducts that inhibit enzymes used in subsequent hydrolysis and that
    are often toxic to the microbes used for fuel synthesis. JBEI is
    pursuing a series of unique strategies on microbes, including re-
    engineering microbes to better degrade plant fiber and to produce a
    range of fuels beyond ethanol that are more like gasoline. JBEI is also
    seeking to adapt microbes to achieve Consolidated Bioprocessing, using
    single microbes or microbial communities.
        BESC is focusing on the central problem of ``recalcitrance,'' i.e.,
    overcoming the resistance of plant fiber, or lignocellulose,
    degradation into sugars that can be converted into fuels (usually by
    fermentation). Research by BESC investigators has shown that
    recalcitrance of plant fiber forms the major cost barrier to achieving
    commercially viable production of cellulosic ethanol and other fuels
    from lignocellulose. BESC is focusing directly on the bioenergy crops
    of switchgrass and poplar as well studying the microbes that can
    degrade them, attempting to re-engineer both the plants and microbes to
    facilitate degradation. On the plant side, BESC is building a high-
    throughput screening system with standardized pretreatment and
    enzymatic hydrolysis steps to screen thousands of genetic variants of
    switchgrass and poplar for amenability to deconstruction. The genomes
    of the most readily deconstructed variants will then be re-sequenced to
    identify the genes responsible for cell wall digestibility, providing a
    basis for genetically engineering optimized feedstocks. On the
    microbial side, BESC has engaged in bioprospecting in hot pools in
    Yellowstone National Park, inhabited by thermophiles that degrade
    cellulose. Samples are being subjected to metagenomic DNA sequencing
    and analysis in an effort to discover more efficient cellulases
    (cellulose-degrading enzymes) that operate at high temperatures. BESC's
    long-term objective is to achieve ``Consolidated Bioprocessing,'' or
    combined degradation and fuel synthesis in one step, using a re-
    engineered microbe or community of microbes.
        GLBRC, in addition to focusing on recalcitrance of plant fiber, is
    pursuing the alternative approach of engineering plants to produce more
    starches and oils. These substances can be more readily converted to
    fuels. GLBRC points out that a 20-percent increase in plant oil content
    could nearly double the fuel yield from plant biomass. GLBRC,
    reflecting its affiliation with universities with strong agricultural
    programs, is focusing on re-engineering a wide variety of plants as
    well as microbes that can degrade plants and produce fuels, and they
    are investigating the sustainability of biofuel production. GLBRC plant
    researchers (mostly located at the Plant Research Laboratory at
    Michigan State University) are pursuing in-depth, genomics-based
    analysis of the complex process of cell wall biosynthesis to find
    methods of inducing more starch and lipid production in these
    structures. GLBRC is also engaged in bioprospecting and metagenomic
    analysis of microbial communities using somewhat different techniques
    and focusing on samples from Costa Rican rain forests. GLBRC is
    utilizing the technique of directed evolution (accelerated by a new
    generation of genomic sequencing technologies now available at the DOE
    Joint Genome Institute) to optimize microbes for ethanol production.
    GLBRC is also studying the production of hydrogen through microbial
    biorefineries.
        The current level of proposed funding for the three Bioenergy
    Research Centers will yield transformational discoveries that will
    enable dramatic improvements in our ability to produce biofuels from
    biomass at greatly reduced cost.
        Question. Recently you described to me how the Joint Genome
    Institute in Walnut Creek, California is sequencing the genomes of the
    organisms within the guts of termites in search of ways to more
    efficiently and cost-effectively break down biomass for conversion into
    fuel. Could you please elaborate on why this research is important and
    why the Office of Science is the appropriate funder and steward of this
    type of scientific inquiry? Additionally could you explain the broader
    role the JGI is playing in the Office of Science's energy research
    objectives? Finally, please describe how technologies developed through
    the bioenergy research centers will make their way to the marketplace.
        Answer. The diverse community of microbes inhabiting the guts of
    termites is one of nature's most efficient systems for breaking down
    cellulosic plant material and converting it into simpler products,
    including hydrogen and short chain carbon compounds, that feed the
    termite host. Although we have a general understanding of the chemical
    reactions that take place in the termite gut, we know relatively little
    about the specific microorganisms and enzymes that carry out these
    processes. However, new research techniques are now allowing us to
    directly probe novel metabolic capabilities encoded in the genomes of
    termite gut microbes. The DOE Joint Genome Institute recently completed
    sequencing of the microbial community genomes (i.e. ``metagenomes'') of
    two Costa Rican termites capable of very high rates of cellulose
    degradation. More than 800 new genes believed to be involved in
    cellulose breakdown were identified, as well as over 150 genes involved
    in hydrogen production and hundreds of additional genes encoding
    functions crucial to the operation of the system. Far more than just a
    catalogue of new genes and enzymes, this study provides researchers
    with an important new tool to understand the complex systems biology
    that allows the host and microbial community to act as an integrated
    whole. Continued studies of the termite gut symbiosis will allow us to
    not only consider novel approaches that are being applied to the
    conversion of plant biomass to biofuels, but also provides critical new
    information on a key component of the global carbon cycle. As the
    Federal Government's lead agency for biofuels research, DOE's Office of
    Science is the appropriate funder and steward for this fundamental,
    transformation research.
        In addition to its critical sequencing of the termite gut
    metagenome, the JGI is playing a key role in the DNA sequencing and
    analysis of prospective biomass crops, including the poplar (the first
    tree genome), soybean (for biodiesel), and switchgrass and of other
    microbes with enzymes or biochemical pathways important for cellulose
    degradation and carbon cycling.
        All three DOE Bioenergy Research Centers have already begun laying
    the groundwork for eventual transfer of new technologies that emerge
    from their research. Both the BioEnergy Sciences Institute (BESC), led
    by Oak Ridge National Laboratory (ORNL), and the Great Lakes Bioenergy
    Research Center (GLBRC), led by the University of Wisconsin-Madison
    (UMW) in partnership with Michigan State University, have industry
    partners as integral members of their respective teams. All three BRCs
    have advisory boards with industry representatives. The Joint BioEnergy
    Institute (JBEI), led by the Lawrence Berkeley National Laboratory
    (LBNL) and located near Berkeley, CA is developing close relations with
    the biotech industry and investment community centered in the San
    Francisco Bay Area. The BRCs will have multiple paths for
    commercialization of new technologies that flow from their discoveries.
    In addition, BER is coordinating the research in its Genomics:GTL
    program, including research at its Bioenergy Research Centers, with
    biorefinery demonstration projects funded by DOE's Office of Biomass
    Programs.
        Question. The Department of Energy's Office of Science pioneered
    the field of modern supernova cosmology. DOE's strength in this area
    has led to many awards, prizes and international recognition of the
    strength of this program. It was your personal support of this
    important work that set the stage for this international scientific
    leadership. Through the Joint Dark Energy Mission, which is a
    collaboration between your office and NASA, are you confident that DOE
    will maintain its vitality and leadership in the field? Please give the
    Committee an update on the Joint Dark Energy Mission.
        Answer. The DOE sponsored scientific community has broad expertise
    in scientific collaborations, data analysis, and advanced
    instrumentation. By contributing to these areas of expertise the
    community will maintain vitality and a leadership role in the field.
        DOE, NASA, and OSTP have been meeting regularly to lay out the plan
    for the Joint Dark Energy Mission (JDEM). As a result of the agency
    collaboration, DOE and NASA have agreed to participate in a JDEM; JDEM
    will be a medium-class strategic mission with a competitively selected,
    principal investigator-led dark energy science investigation; DOE and
    NASA will partner in the fabrication and operation of instrumentation
    necessary to execute the science investigation; and DOE's cost for the
    fabrication and operations phase is estimated to be up to $200 million
    in fiscal year 2008 dollars, or roughly 25 percent of the cost of the
    expected total lifecycle mission. The agencies are currently working on
    a Memorandum of Understanding describing the collaboration. The
    planning schedule includes the release of the Announcement of
    Opportunity (AO) near the end of 2008, with a draft in summer;
    selection of a particular concept and start of conceptual design in
    fiscal year 2009, and launch in 2014 or 2015.
                                     ______

                 Questions Submitted to Hon. Alexander Karsner
                 Questions Submitted by Senator Byron L. Dorgan
                            biomass/ethanol mandate
        Question. The Energy Independence and Security Act of 2007 requires
    that suppliers must blend 36 billion gallons of renewable fuel into
    gasoline by 2022. Of the 36 billion gallons of renewable fuel, 21
    billion gallons must be ``advanced biofuels'' (fuels produced from non-
    corn feedstocks). On March 4, Guy Caruso, Administrator of the Energy
    Information Administration, testified before the Senate Energy
    Committee, and said that it was unlikely that we would reach these
    mandates by 2022. Do you believe that we can reach the 36 billion
    gallon mandate by 2022?
        Answer. The Department believes that the Renewable Fuels Standard
    (RFS) established in EISA is achievable. Achievement of the RFS will
    require consistent policy and regulatory certainty so as to sustain the
    necessary private investment.
        The RFS is not limited to ethanol. Other biofuels, including
    biodiesel and biomass-to-liquids, may contribute to the mandates
    specified in the RFS. However, ethanol is expected to play a central
    role in the fulfillment of this standard. In terms of ethanol produced
    from corn, the current U.S. ethanol production capacity exceeds 9.9
    billion gallons with an additional 3.7 billion gallons under
    construction.\1\ Based on current trends and our analysis of industry
    plans, we believe that the industry will likely reach the 15 billion
    gallons of conventional biofuel requirement before the scheduled 2015
    date.
    ---------------------------------------------------------------------------
        \1\ See Renewable Fuels Association, http://www.ethanolrfa.org/
    industry/locations/ as of August 20, 2008.
    ---------------------------------------------------------------------------
        Integrating large amounts of renewable fuels required by the RFS
    into the current transportation fuel distribution system presents
    unique challenges, most likely requiring the use of either E85 or
    possibly intermediate ethanol blends. Combining the supply and demand
    elements of the RFS will require close coordination among renewable
    fuel and feedstock producers, transportation fuel producers and
    blenders, and Federal and State agencies. The Biomass R&D Board will
    play an important role in achieving the national goals established in
    EISA by bringing coherence to Federal strategic planning. The Board is
    co-chaired by the Departments of Energy and Agriculture, and also
    consists of senior decisionmakers from across the Federal Government.
        Question. What advanced biofuel do you foresee making up the 21
    billion gallon requirement?
        Answer. In terms of advanced biofuels, DOE's goal is to make
    cellulosic ethanol cost-competitive by 2012. We anticipate that
    cellulosic ethanol will comprise the majority of the 21 billion gallon
    ``advanced biofuel'' requirement.
                                 weatherization
        Question. Mr. Karsner, I understand that since 1976, we have spent
    $8 billion on the Weatherization Program, but only improved 5 million
    homes. Your budget states that, ``EERE's Energy Efficiency portfolio
    has historically provided approximately a 20 to 1 benefit to cost
    ratio; in comparison, Weatherization has a benefit to cost ratio of 1.5
    to 1.'' Clearly, we have a considerable amount of work to do to make
    our buildings and homes more energy efficient. But, as policy makers we
    need to understand the quickest and most cost effective way to do so.
    If you were to develop a more effective program what would you propose?
        Answer. After almost three decades, DOE has weatherized about 5.5
    million homes out of the 34 million annually eligible. As you have
    noted, based on a study by the National Research Council, investments
    in some energy efficiency applied R&D between 1978 and 2000 resulted in
    returns 20 times greater than the cost of the investment.\2\ In
    contrast, the energy savings from Weatherization Assistance Program
    grants result in a significantly lower benefit/cost ratio of 1.53 to 1.
    This ratio was calculated by Oak Ridge National Laboratory based on
    past evaluation efforts and Energy Information Administration projected
    energy prices.\3\ Weatherization Assistance is an important goal, but
    is an anomaly because it addresses social welfare goals in addition to
    energy efficiency improvement.
    ---------------------------------------------------------------------------
        \2\ ``Energy Research at DOE: Was It Worth It?'' National Research
    Council (http://www.nap.edu/openbook.php?isbn=0309074487). This study,
    published in 2001, analyzed investments in 17 energy efficiency R&D
    activities between 1978 and 2000 costing a total of $1.566 billion
    (p.23) and representing about one fifth of energy efficiency program
    spending in that time frame. The NRC found overall net economic returns
    of about $30 billion (p.29) . This is a public return 20 times greater
    than the cost of the investment within the time period considered. In
    addition, the NRC calculated net environmental benefits worth $3-20
    billion for these activities. As is the case with many diverse R&D
    investment portfolios, most of the benefits were generated by few--in
    this case, 3 of 17--activities assessed (p. 29).
        \3\ The ORNL analysis can be found on the web (http://
    weatherization.ornl.gov/pdf/CON-493FINAL10-10-05.pdf). The benefit/cost
    ratio in the study is 1.34--the 1.53 ratio cited above uses the same
    calculations with energy cost data updated for 2006.
    ---------------------------------------------------------------------------
        Prudent portfolio management requires DOE to focus available
    resources on its core areas of expertise and mission consistent with
    the DOE Strategic Plan. DOE is currently prioritizing development of
    new technologies, model building codes, and innovative programs for
    existing homes. Through the Building Technologies Program, the
    Department is committed to developing reliable, affordable, and
    environmentally sound renewable energy and energy efficiency
    technologies that significantly reduce the energy consumption and peak
    electrical demands of residential and commercial buildings. During the
    design and construction of a new home, far more can be achieved to
    bring it to net zero energy use in a cost-effective way than can be
    done with an existing building. Furthermore, many of these gains can be
    achieved in new construction at no initial first cost. It is important
    that buildings added to the housing stock be more energy efficient when
    built, so as to prevent the more costly and less effective task of
    fixing the problem by retrofitting them in the future.
        However, building energy codes only establish a minimum level of
    construction below which builds cannot be built. While it is important
    to continue to raise the building energy codes bar, it is also
    important to invest in research, development and demonstration of homes
    that can achieve greater energy efficiency than code and eventually
    net-zero energy homes, as well as to apply these technologies to
    existing homes as much as possible. It is important to raise the bar on
    appliance standards, so that replacement appliances and equipment are
    made continually more efficient than the models they replace. It is
    also important to put in place incentive programs, such as Home
    Performance with ENERGY STAR, to encourage private sector investment in
    greater efficiency, as well as upgrade our existing building stock.
                           mesa del sol solar project
        Question. Mesa del sol.--Mr. Karsner, part of your responsibilities
    include increasing the Federal Government usage of renewable energy. I
    have been made aware of Federal procurement rules that prevent Kirtland
    Air Force Base from signing a long term power purchase agreement beyond
    10 years. We have a site in New Mexico, located between Mesa del sol
    and Kirtland AFB that has been identified as an ideal site for a 100 MW
    concentrating power plant with a molten salt storage reservoir.
    However, procurement rules prevent the base from entering into a
    contract beyond 10 years, well short of the useful life of the plant,
    which has a big impact on the economics of the deal. First, do you
    believe these procurement limitations are having an impact on the
    deployment of clean energy technology?
        Answer. It is true that the Government-wide authority for utility
    purchases is limited, in most instances, to 10 years. That authority
    was created for traditional utility purchases and is not well-suited to
    the type of renewable energy projects that would require a substantial
    initial capital investment.
        Question. If Congress were to change the requirement to allow
    Federal agencies to enter into longer term power contracts, do you
    believe this would have a positive impact on the commercial deployment
    of renewable energy technology? Would you support this change?
        Answer. The Federal Government should lead by example in its use of
    renewable energy. To do so, we should assess whether there are legal
    impediments to its use. If so, the administration stands ready to work
    with Congress to develop workable solutions.
                           concentrating solar power
        Question. Recently Sandia National Lab announced a world record for
    solar to energy conversion. On January 31, 2008, a sterling
    concentrating solar array located at Sandia Thermal Test Facility
    achieved a world record of 31.25 percent net efficiency rate. Despite
    the promising performance, your budget maintains a wide disparity
    between funding for photovoltaic research ($137 million) and
    concentrating solar research. ($19 million). Based on economic and
    technology performance with concentrating solar technology, why the
    large disparity in funding? How will the Department facilitate the
    commercial deployment with such low levels of funding?
        Answer. The Department believes that it has struck an appropriate
    balance between photovoltaic (PV) and concentrating solar power (CSP)
    technology funding. CSP's advantages include a lower cost than solar PV
    technology, as well as the capability to store thermal energy for later
    use. PV, however, remains the focus of most of DOE's solar program
    funding for several reasons.
        Primarily, PV can provide energy solutions for the entire Nation,
    not just the Southwest. Also, PV technology faces more challenges to be
    cost competitive with conventional electricity sources. It has a
    significantly larger and more diverse industry base with Federal R&D
    support needs in multiple technology areas (e.g., crystalline silicon,
    thin films, multi-junction cells) at various links in the supply chain
    (e.g., semi-conductor devices, PV modules, inverters). Significant R&D
    advances will be needed to achieve the aggressive Solar America
    Initiative PV electricity goal, to be cost-competitive nationwide with
    grid electricity by 2015.
                           plug in hybrid technology
        Question. There is no doubt that we must improve our battery
    technologies across a broad range energy sources that rely on storage
    as a key component. In my opinion, energy storage is one of the most
    important pieces currently missing in our energy puzzle. What is EERE
    currently doing to advance battery technologies?
        Answer. In fiscal year 2008, DOE's Office of Energy Efficiency and
    Renewable Energy (EERE) is providing approximately $48.2 million to
    support long-term research, applied research, and technology
    development of advanced batteries for electric, hybrid-electric and
    plug-in hybrid vehicle (EV, HEV and PHEV) applications. EERE's applied
    research is focused on developing advanced materials for the next
    generation of energy storage technologies that offer the potential for
    significant improvements over existing batteries. In fiscal year 2009,
    DOE plans to award battery contracts focusing on improving battery
    performance through the development of manufacturing technology. This
    approach is expected to improve performance attributes such as cycle
    life, while simultaneously fostering domestic manufacture of advanced
    battery technology and reducing production cost.
        In addition to battery research, EERE is providing $22 million in
    support of modeling, simulation and testing of PHEVs in fiscal year
    2008. Activities include laboratory and closed track testing, and real-
    world monitored fleet evaluations.
        Question. When do you believe we can have large scale deployment of
    plug-in hybrid cars and what public policies changes are needed to
    achieve this objective?
        Answer. The Department is working to achieve faster market
    penetration of plug-in hybrids (PHEVs) by developing technological and
    cost improvements to battery and electric drive components. The
    Department's goal is to reduce the high-volume production cost of
    lithium ion batteries to $300/kW by 2014, which, along with other
    improvements, could help PHEVs become cost competitive.
        Lower costs help enable industry make the decision to
    commercialize, but ultimately greater market penetration is dependent
    on automakers as they make production decisions over the next several
    years, and by investments in battery manufacturing. GM plans to
    introduce its Chevy Volt PHEV in 2010, but we expect that there will be
    significant incremental cost that may prevent large-scale deployment.
    Other manufacturers have been non-committal on dates for commercially
    offering PHEVs.
        Consistent and durable policies have been critical to the rapid
    uptake of hybrids, and will be critical to PHEVs as well. Automakers,
    suppliers, and battery manufacturers may also be eligible to apply for
    the Department's Loan Guarantee Program under title XVII of the Energy
    Policy Act of 2005, which lowers the financial risk of private
    enterprise in moving the successful results of research investments
    from the laboratory to the commercial marketplace. The Department is
    currently soliciting up to $10 billion in loan guarantees for
    innovative energy efficiency, renewable energy, and advanced
    transmission and distribution technologies in fiscal year 2008.
                             building technologies
        Question. I know that it is the goal of the Building Technologies
    program to spur commercial production of Net-Zero Energy Homes by 2020.
    I believe that building technologies can play a very significant role
    in reducing our Nation's energy consumption. How do you expect this
    program to have nationwide effectiveness when numerous States do not
    even have a building code?
        Answer. The Department's Building Technologies Program goal of
    achieving commercially viable Net-Zero Energy Homes by 2020 is a
    research and development effort involving building industry leaders,
    many of whom recognize the inherent value in building homes that
    perform significantly beyond State and/or national model codes. While
    State and national building codes set the minimum levels of
    performance, our zero energy building-related efforts do not rely on
    the existence of codes in a jurisdiction, in moving ``beyond code.''
    Codes require a minimum level of construction and energy efficiency
    below which houses should not be built. While there is substantial
    value in State adoption, implementation, and enforcement of building
    energy codes for the Nation, it is important for all housing can
    benefit from advances in building energy codes. We can encourage the
    construction of a significant number of Net-Zero Energy Homes by 2020.
        To reduce energy consumption and to help U.S. home builders and
    buyers make informed decisions about efficiency and distributed energy,
    the Department has developed activities to encourage a robust market
    demand for more efficient homes through national and regional consumer
    education efforts. Combined with market forces (i.e. energy prices) and
    acceptance (i.e. consumer demand), builder training and codes can work
    in concert to drive standard practice toward net-zero energy homes over
    the long term for broader deployment of energy efficient technologies.
                                     ______

                Questions Submitted by Senator Dianne Feinstein
        Question. Mayor Villaraigosa and the city of Los Angeles are
    interested in the green technologies funded by EERE. What is the best
    way for the Appropriations Committee to assure that EERE's funding is
    spent in a way that rewards the best ideas of local government?
        Answer. The proven way to ensure funds are allocated to the best
    ideas is the competitive solicitation process. The Department offers a
    number of resources for local governments, including programs in the
    Solar Technologies Program (Solar America Cities), Vehicle Technologies
    Program (Clean Cities), Building Technologies Program (Building
    America), and the Wind and Hydropower Technologies Program (Wind
    Powering America). In addition, cross-cutting resources are available
    such as the State Energy Program formula and competitive grants, and
    the Technical Assistance Project supported by the Department's national
    laboratories and funded by the State Energy Program. Funds for Solar
    America Cities and State Energy Program-competitive grants are awarded
    competitively to applicants through a rigorous merit review process.
    Funds provided to local governments through the State Energy Program-
    formula grants are allocated according to a method determined by the
    individual State. The Technical Assistance Project (TAP) requires an
    application process and proposal review to determine eligibility for
    assistance. TAP helps States with individualized, short-term assistance
    in areas that are not covered by other DOE programs. Projects are
    limited to $5,000 or between 30-60 hours of staff time. Funding is used
    to cover staff time and travel for laboratory experts and is not
    distributed directly to the applicant.
        Question. According to a recent study by McKinsey and Company, one
    of the most cost effective opportunities to reduce greenhouse gas
    emissions is in household electronics. Specifically, the growing use of
    electricity in televisions and computers is a matter of great concern.
    What can EERE or Congress do to reduce this energy use?
        Answer. DOE is actively engaged in establishing energy efficiency
    standards for consumer electronics. The Energy Independence and
    Security Act recently prescribed efficiency standards for the most
    common class of external power supplies which become effective July 1,
    2008. In addition, the Department is currently in the beginning phases
    of initiating a rulemaking on battery chargers and external power
    supplies, which is scheduled for completion by July 2011. This
    rulemaking will address the energy use associated with a wide variety
    of products including laptop computers, cell phones, power tools, and
    printers, among others.
        In addition, the Energy Independence and Security Act of 2007 (EISA
    2007), Public Law 110-140, authorizes DOE to incorporate standby mode
    and off mode energy consumption into all new or revised standards
    adopted after July 1, 2010 (for residential products). The Department
    is now working to revise certain test procedures to account for standby
    mode and off mode energy consumption in accordance with the deadlines
    in EISA 2007. When in place, these energy efficiency standards have the
    potential to greatly reduce energy consumption and greenhouse gas
    emissions.
        DOE and the Environmental Protection Agency jointly administer the
    ENERGY STAR program to promote more efficient products, including
    consumer electronics. The Federal Government generally is required to
    purchase energy efficient products, including ENERGY STAR-labeled
    products, and has led in the procurement of low standby power devices.
        Question. I was pleased to see EERE ask for money to fund
    geothermal research this year. Please describe exactly how these funds
    will be spent, and for what purpose.
        Answer. The mission of the Department's Geothermal Technology
    Program is to conduct research and development (R&D) on Enhanced
    Geothermal Systems to advance the technology as an economically
    competitive contributor to the United States energy supply. Enhanced
    Geothermal Systems (EGS) are engineered reservoirs created to produce
    energy from geothermal resources deficient in hot water and/or
    permeability. If EGS development is successful, the technology may be
    deployable nationwide as opposed to conventional geothermal technology
    that is limited to the western United States.
        The Department issued a competitive solicitation on June 18, 2008,
    for awarding industry cost-shared EGS projects. Two topic areas are
    listed in the solicitation: component R&D technologies that address key
    aspects of reservoir creation, management, and utilization, and
    demonstration projects that will test and validate stimulation
    techniques for improving well productivity. The EGS-related R&D in the
    areas of reservoir stimulation, fracture mapping, and fluid circulation
    will also have applicability for expanding conventional (i.e.,
    hydrothermal) fields.
        impact of tax credits for renewable energy and energy efficiency
        Question. I have worked with my Senate colleague Olympia Snowe to
    extend existing tax credits for renewable energy and energy efficiency.
    Please describe what impact these tax credits are having in the market
    place. Please identify the amount of new investment in renewable energy
    and energy efficiency that has resulted as a result of these tax
    provisions. Please estimate the job impacts if Congress allowed these
    credits to expire at the end of 2008.
        Answer. While the Department is unable to quantify the exact amount
    of investment in energy efficiency and renewable energy directly
    resulting from these tax provisions, the past 10 years demonstrate a
    strong correlation between the intermittent availability of the 1-year
    production tax credit (PTC) extension and the volume of investment in
    renewable energy sources such as wind power. The tax policy has likely
    spurred investment; however, American Wind Energy Association data show
    that expirations of the Federal PTC in 1999, 2001, and 2003 were
    followed by drops in new wind installations in 2000, 2002, and 2004.
        With the tax credit in effect in 2007, the United States led the
    world in new wind installations with over 5,300 MW installed.\4\ This
    growth translates into approximately $9 billion (real 2007 dollars)
    invested in wind project installations.\5\ While there are no studies
    on the exact number of jobs directly associated with the tax credit,
    increased demand has led to increased manufacturing jobs in the wind
    industry, which may compete with other energy sectors.
    ---------------------------------------------------------------------------
        \4\ See Annual Report on U.S. Wind Installation, Cost, and
    Performance Trends: 2007, U.S. Department of Energy's Office of Energy
    Efficiency and Renewable Energy (May 2008) http://www.nrel.gov/docs/
    fy08osti/43025.pdf.
        \5\ Id.
    ---------------------------------------------------------------------------
                                     ______

                     Questions Submitted to David G. Frantz
                 Questions Submitted by Senator Byron L. Dorgan
                                   timetable
        Question. Mr. Frantz, it has been over 90 days since the President
    signed the Consolidated Appropriations Act providing the Department
    with $38.5 billion in loan guarantee authority. This bill directed the
    Department to develop a plan to execute the program and to send this
    report to Congress for review within 45 days. When can we expect the
    Department to send this proposed plan to Congress? When do you expect
    to put a solicitation out on the street for bids and how soon do you
    expect to make awards?
        Answer. On April 11, 2008, the Department of Energy submitted an
    ``fiscal year 2008 Implementation Plan.'' The Consolidated
    Appropriations Act, 2008, requires that DOE wait for a period of 45
    days from submission of the Implementation Plan to Congress prior to
    issuing a new loan guarantee solicitations. The Implementation Plan
    outlines the Department's plans to issue loan guarantee solicitations
    in two stages this summer for up to $38.5 billion for projects that
    employ advanced technologies that avoid, reduce, or sequester emissions
    of air pollutants and greenhouse gases. These planned solicitations
    will mark the second and third rounds of solicitations for the
    Department's Loan Guarantee Program, which encourages the development
    of new energy technologies and is an important step in paving the way
    for clean energy projects.
                            loan guarantee potential
        Question. Mr. Frantz, I have noticed from your bio you have over 35
    years of experience in project finance in the energy sector and served
    10 years as the Director of Project Finance for OPIC. That is quite an
    extensive amount of experience. Can you please explain what the
    financial advantage the loan guarantee program provides to the
    investors of these alternative energy projects? What is the cost
    savings of receiving Federal assistance?
        Answer. One of the goals of the Department of Energy's title XVII
    Loan Guarantee Program is to encourage the commercial use in the United
    States of new or significantly improved energy-related technologies.
    There are a number of financial advantages that the loan guarantee
    program provides to investors of these types of alternative energy
    projects. Primarily, without a loan guarantee, investors in an
    innovative energy project may not have the financing necessary to
    establish the project, thereby potentially denying the commercial scale
    up of their respective technologies due to the unavailability of
    alternative debt financing.
        While the Department's loan guarantee program offers clear benefits
    to alternative energy project investors, there is no measurement of the
    aggregate cost savings of participating in the program. In fact, energy
    investors might not even be permitted to proceed to full
    commercialization due to the unavailability of alternative financing.
    Each project supported by a loan guarantee will be evaluated on its
    particular strengths and weaknesses to determine the risk factor
    associated with the project. Depending on this risk assessment, each
    project will be levied a credit subsidy cost and other fees that will
    determine the ultimate cost to the project sponsors.
                              credit subsidy model
        Question. Mr. Frantz, I understand that the Department has been
    working to perfect its credit subsidy model, which is the risk
    calculation of each loan. Getting this model correct is important as it
    sets the level of payment each borrower is required to pay under the
    EPACT title 17 loan program and will have an impact on the scoring of
    our bill by the Congressional Budget Office. What is the status of the
    credit subsidy model and how confident are you that this will provide
    an accurate risk analysis of each loan to ensure taxpayers are not on
    the hook for bad technology loans? What other agencies have reviewed
    this model for accuracy?
        Answer. The Department has been working for several months to
    develop the credit subsidy cost model and is confident that once
    completed it will allow the Department to accurately calculate the
    subsidy costs of title XVII loan guarantees. It will not be made
    publicly available. The Office of Management and Budget must review and
    approve credit subsidy cost estimates. We expect it to be completed in
    the near future.
                       staffing of loan guarantee office
        Question. Mr. Frantz, in your testimony you state that you have 16
    people on your staff to execute the $40 billion loan guarantee program.
    This sounds like an immense challenge. Can you explain how this
    compares to similar loan guarantee programs at other Federal agencies?
        Answer. There are presently 16 members of the staff which is an
    adequate number to prosecute the 16 successful applicants under the
    2006 solicitation representing an allocation in excess of $4 billion.
    This staff is also adequate to initiate the proposed solicitations for
    fiscal year 2008 which is presently planned for $38.5 billion. This
    staff is presently inadequate to prosecute the results of the fiscal
    year 2008 solicitation. The Loan Guarantee Program Office (LGPO) has
    requested in its fiscal year 2009 administrative budget $19.9 million
    with a planned staff of 35 full-time employees (FTEs), augmented by
    independent contractors as necessary to handle the workload associated
    with the fiscal year 2008 solicitations. The organizational plan of the
    LGPO is based upon years of experience by the existing LGPO staff at
    the Overseas Private Investment Corporation.
                           current investment climate
        Question. Mr. Frantz and Mr. Karsner, the clean energy technologies
    being developed by the Department can only be effective if they are
    commercially deployed. Can you please describe the financial
    environment for renewable energy technologies and the financial
    barriers facing these technologies? How has the credit crisis impacted
    investment in these sectors?
        Answer. The two principal goals of the title XVII Loan Guarantee
    Program are to encourage commercial use in the United States of new or
    significantly improved energy related technologies and to achieve
    substantial environmental benefits, with a reasonable certainty of
    repayment. In general, debt capital, a key component of an optimally
    financed project and the kind of financing the loan guarantee program
    encourages, flows to what is perceived to be the least risky
    investment. While many renewable energy projects can represent both a
    sound investment to investors and a benefit to the public through
    environmental benefits, debt financing will often instead flow to
    projects in industries that have a long and established history of low
    risk. The credit crisis only magnifies the barriers to financing of
    advanced renewable energy projects, both making capital less available
    for all project finance deals, but also encouraging the flight of
    capital to established industries and technologies and away from the
    type of projects supported by the Department's Loan Guarantee Program.

                              SUBCOMMITTEE RECESS

        Senator Dorgan. This hearing is recessed.
        [Whereupon, at 11:21 a.m., Wednesday, April 2, the subcom
    mittee was recessed, to reconvene subject to the call of the
    Chair.]

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2009

                                  ----------

                            WEDNESDAY, APRIL 9, 2008

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:33 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Byron L. Dorgan (chairman)
    presiding.
        Present: Senators Dorgan, Murray, Domenici, Bennett, and
    Craig.

                              DEPARTMENT OF ENERGY

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

                  OPENING STATEMENT OF SENATOR BYRON L. DORGAN

        Senator Dorgan. Calling the hearing to order. This is the
    Senate Appropriations Subcommittee on Energy and Water
    Development. The hearing today is an oversight hearing on the
    fiscal year 2009 budget request for the Office of Environmental
    Management and the Office of Civilian Radioactive Waste
    Management.
        We're here to take testimony from the two program offices
    that I just indicated. One is the Government's clean up of the
    cold war legacy and the other is the ultimate disposal of
    nuclear waste. This year's budget request of $5.5 billion for
    the Environmental Management Program represents the fourth
    straight year that President Bush has reduced the clean up
    budget and the strain is showing.
        The fiscal year 2009 request is down $167 million from
    fiscal year 2008. And that's down $1.75 billion from 2005. It's
    no coincidence that at the same time the White House has cut
    this budget, the U.S. Government's third largest liability, the
    environmental clean up liability has grown by 25 percent to
    $342 billion.
        Mr. Rispoli has indicated that this program will not and
    cannot meet the legally mandated clean up milestones because
    there's not enough money. We've learned that EM will miss 23
    legal milestones and lay off, we believe, upwards of 600 people
    solely because of a lack of funding. In his statement before
    the House Energy and Water Subcommittee last month, Mr. Rispoli
    estimated that the EM program may need $900 million more to
    meet all of its requirements in 2009.
        In spite of the shortfall in this particular area, the
    Department of Energy has submitted a budget to the Congress
    that is $1.1 billion higher than in 2008. The Office of Science
    has proposed an increase of $750 million. National Nuclear
    Security Administration increase of almost $300 million. Even
    Mr. Sproat's office has an increase of over $100 million in
    2009. I might also say that with respect to water funding, the
    Bureau of Reclamation and the Corps of Engineers, the President
    requests a $1 billion cut in funding in this year.
        The legal requirement of mandating the clean up is
    something that we ought not take lightly. It seems to me, with
    its budget recommendations, the Department shrugs its shoulders
    and wrings its hands and talks about hard decisions. But
    frankly, I don't think it is the right decision to decide that
    we're not going to meet our mandated requirements on clean up.
        The legal milestones that are mentioned in the 2009 budget
    for Mr. Rispoli, are milestones that were negotiated long ago.
    And they are subject to some technical problems that make some
    of them unachievable. But that's true for some. It is not true
    for all the requirements. The fact is the administration is not
    asking for the funding to meet 23 milestones that are perfectly
    achievable in 2009, milestones for which we have made a
    commitment.
        I wanted to point out that with this clean up budget work
    on contaminated soil and ground water around the EM complex
    will not be dealt with for decades to come. Meanwhile the EM
    will literally spend millions of dollars propping up old
    buildings hoping that they will stay up long enough to be torn
    down safely. That seems Byzantine to me.
        If anyone thinks that the under funding of the EM is the
    right decision I would point out that the EM is becoming the
    choke point on modernizing both the National Nuclear Security
    Administration's and the Office of Science's complexes. Both
    organizations have announced, for example, ambitious plans to
    bring about technological capability into the 21st century at
    Oak Ridge, Tennessee. Yet both programs are being stymied
    because Environmental Management doesn't have in its base line
    the $5 billion needed to tear down and clean up Oak Ridge by
    2015.
        Mr. Rispoli, I want to recognize your hard work over the
    last 3 years in trying to get the cost and scope and schedule
    of 80 clean up projects under control. I think that's been good
    work. And I want to recognize that.
        But I must say that I'm very disappointed that that work
    has not been rewarded by the Office of Management and Budget
    and the White House. In the budget that you and I know, in the
    Appropriations request, you and I know, is far short of what
    you need to do your job. For all of your effort, the
    administration and the Office of Management and Budget have
    sent us recommendations to cut your budget by $1.75 billion
    over the last 4 years even as the responsibilities and the
    commitments have grown.
        Today we'll hear from Mr. Sproat on the status and the
    progress of the Yucca Mountain disposal site. His request for
    $495 billion is $108 million above the 2008 appropriation. Mr.
    Sproat and his organization have a lot of work ahead of them.
    They have a legal mandate to attempt to develop a disposal site
    for both civilian reactor fuel and defense nuclear waste.
        Mr. Sproat, I know you recognize your program has a lot of
    challenges and some problems to overcome before it can claim
    victory. My understanding is that the first is getting your
    license application to the Nuclear Regulatory Commission. I
    understand you intend to submit that in just a few months,
    perhaps no later than June 30, of this year. But that will, I'm
    sure, be scrutinized and challenged by many who hold the
    position that Yucca Mountain is not the right solution for our
    Nation's nuclear waste program.
        I want to thank both of you for coming today. These are
    complicated programs, and important programs that Congress has
    to think through carefully. The White House and the Budget
    Office have given us their evaluation, and now it is our turn
    to evaluate. We appreciate the work that both of you do, and we
    appreciate both of you being here today. Senator Domenici.

                 OPENING STATEMENT OF SENATOR PETE V. DOMENICI

        Senator Domenici. Thank you very much, Mr. Chairman. And
    thanks to our two witnesses.
        Mr. Rispoli, you have the difficult job of cleaning up the
    contaminated sites and disposing the nuclear waste throughout
    the complex. This budget, however, is not up to the task. It
    simply provides insufficient resources to do the job.
        In fact this budget request is one of the lowest I've seen
    during my tenure as chairman or ranking member. More than a
    decade is the amount of time that I have spent watching these
    budgets. And never have I seen one that misses the mark so
    much. Well below 2005-2006 when the Congress provided an excess
    of $7 billion for environmental clean up efforts.
        And when those budgets were in that ballpark, your
    Department was doing excellent work at re-prioritizing and
    doing some exciting things. Included in that was the closure of
    Rocky Flats, a rather important and outstanding achievement.
    But you're not going to have outstanding achievements with
    budgets as small as this one.
        As a result of these low funding levels it appears that the
    Department is resorting to creativity to cover its shortfalls.
    I have begun to hear about ``acceleration'' strategy, similar
    to those of your predecessors. You promised immense savings by
    accelerating clean ups in order to dramatically shorten the
    overall clean up schedule.
        I understand that things like this must be tried. And I
    welcome an opportunity to hear from you how you intend to do
    that. I'm still waiting to see the savings on the closure of
    Rocky Flats materialize in investments in plutonium missions at
    Los Alamos.
        While I don't believe there is any substitute for providing
    adequate funding for major clean up sites. I can't blame you
    for trying to find ways to prioritize clean up based on risk.
    If we would have done that from the beginning and stuck with
    it, we'd be much further along than we are now. But it's very
    difficult to change horses in midstream, especially not to have
    the money for ordered clean ups, court ordered agreements.
        I'll just take a minute on New Mexico because you will hear
    much about this unless we're able to find some money. Your
    budget again fails to provide adequate funding to my State for
    milestones negotiated between the DOE and State of New Mexico.
    You're aware of that.
        Each year the gap grows. And I have to do everything within
    my power, seek the help of the chairman to try to find the
    shortfall. This year I'm not confident that we will be able to
    find $100 million needed to clean up, in compliance with the
    agreement you negotiated with New Mexico. I hope you can tell
    me something to the contrary on the witness stand.
        Now let's talk a minute about nuclear waste with you.
    You've done a great job. You're a very enthusiastic leader and
    that's what we needed. Sandia took a very big job when they
    agreed to use their personnel and their expertise to try and
    get you a document that could be filed for a license.
        With regard to Yucca Mountain. Everybody knows that I
    strongly favor nuclear power and expanding its use as an
    emissions free source of load generation. However, I believe
    the current strategy limiting our policy option to a permanent
    repository for the disposal of spent fuel is deeply flawed. I
    believe this path will prove to be the highest cost solution.
    And it fails to take advantage of recycling, which would
    maximize our energy resources and minimize our waste
    requirements.
        Nobody in the world is putting spent fuel rods underground
    as a way of getting rid of waste. Nobody is even planning to
    take spent fuel rods and putting them in a repository for any
    long period of time as a means of disposing of waste. Why?
    Because spent fuel rods are loaded with energy.
        Only 3 percent of the energy has been used and 97 remains.
    And that's foolhardy to build a plan as we have if it would
    have even worked, if we would have gotten it through the
    Congress. To put spent fuel rods away has almost reached a
    point where it's unfathomable.
        I would like to say to the chairman and for this record
    that we have to pursue a comprehensive policy on waste. And I
    will be introducing legislation, Mr. Chairman. I will show it
    to you and share it with you, which will provide our country
    with an alternative pathway to address commercial spent fuel
    and not letting our policy to Yucca Mountain, Yucca only
    approach.
        My legislation will authorize a portion of the nuclear
    waste fund to support the development of spent fuel storage and
    reprocessing facilities. Some of these funds would be used by
    DOE to renegotiate spent fuel storage agreements with local
    communities to store and recycle spent fuel to utilize untapped
    energy and to minimize the waste volumes. I will also propose
    the Government be a full partner and sharing in the cost of
    developing the model licenses for commercial reprocessing
    facilities. Such model approaches would apply to existing as
    well as any more advanced recycling approaches. Should these
    facilities become available, DOE should be authorized to enter
    into long-term service contracts with private entities like to
    construct and operate reprocessing facilities.
        Mr. Sproat, I know that you have worked hard to manage
    Yucca. And the people at Los Alamos who work with you deserve
    every credit for taking something that was more gone than
    breathing life into it. The question now is, is it adequate for
    our country, or not. Should we proceed with it, or not?
        And I have just stated as best I could in a minute and a
    half what I think we should do. And obviously I will be ready
    with a full bill soon. Thank you very much, Mr. Chairman.
        Senator Dorgan. Senator Bennett?

                     STATEMENT OF SENATOR ROBERT F. BENNETT

        Senator Bennett. Thank you, Mr. Chairman. Assistant
    Secretary Rispoli and Director Sproat, I appreciate your taking
    the time to come before the committee. I come in listening to
    Senator Domenici talk about clean up.
        It will come as no surprise to you that I want to talk
    about clean up. Once again the project in Utah to renew uranium
    meltings from Moab and I know your staff is doing the best you
    can to keep us up to date on this. I simply want to make a few
    observations on this so that no one thinks that I've forgotten
    about it or that we've lost track of it.
        I'm pleased that you recently amended the record of
    decision to include trucking as a way of moving this material.
    It creates some problems in the State of Utah. But we will
    resolve those problems, primarily the need to have a bigger
    road.
        We will respond to that. It gives us additional flexibility
    than the pure railroad solution of how to move the tailings.
    And I'm glad to see us go down that road.
        Now as you remember I strongly objected to the Department's
    timeline of 2028 as the date for completing this project. And
    with the support of this subcommittee and the Defense
    subcommittee, we directed the Department to finish the project
    by 2019. I simply want to make it clear, again, that this is
    not a wish. This is a Congressional mandate and the Congress
    has spoken. And 2019 is the date.
        Now as part of the mandate the Appropriations Committee
    gave you 180 days from the date the President signed the bill
    to prepare a report on the funding requirements you will need
    to meet the date of 2019. And I assume that you're anxiously
    working on that report. And I look forward to receiving it
    sometime this summer when it's finished.
        Now this project started out with a cost of $80 million
    when I first came to the Senate and it first came to my
    attention. The current price tag attached to it is $800
    million. So it's gone up. It's a neat symmetry. It's gone up 10
    times in 10 years.
        Now I hope we don't have that same kind of acceleration.
    But I do think we probably will see some additional
    acceleration and we need to know in advance as much as we can
    know. We need to have accurate figures as quickly as we can get
    them so that we can appropriate accordingly.
        So, I look forward to working with you on the project. And
    want to be as helpful as I can. I appreciate the efforts that
    you have put into that. And with that parochial opening
    statement, Mr. Chairman, I have nothing further.
        Senator Dorgan. Senator Bennett, thank you very much. We
    will hear now from the Honorable James Rispoli. Mr. Rispoli,
    you may proceed. Your entire statements for both of you will be
    part of the permanent record. And we would ask that you
    summarize.

                       STATEMENT OF HON. JAMES A. RISPOLI

        Mr. Rispoli. Thank you, Mr. Chairman. Good morning, Mr.
    Chairman, Senator Domenici, Senator Bennett, members of the
    subcommittee. I also understand that a group of students from
    Jamestown in the State of North Dakota is here with us today.
    And I just thought I would mention that and welcome them. This
    is a great opportunity, I think, for these students to see a
    part of the appropriations process that's absolutely vital.
        Senator Bennett. Could you speak up a little, Mr. Rispoli?
        Mr. Rispoli. I think it's important to----
        Senator Bennett. That's better.
        Mr. Rispoli [continuing]. For this group of students from
    Jamestown, North Dakota to be here today because they get to
    see a part of the appropriations process that is so vital to
    the way our Government operates. So I welcome the students from
    Jamestown.
        Senator Dorgan. Mr. Rispoli, I did not know that they were
    in the room. But let me ask those from Jamestown to stand up
    and wave at us.
        They are all experts on the issue of waste disposal, and
    environmental management. They must be, I think you're with the
    Close Up groups. So we welcome you here.
        I know I'm meeting with a Close Up group later today. So
    that must be the group. We welcome all of them here.
        Mr. Rispoli, thank you.
        Mr. Rispoli. Well I would be remiss then, Mr. Chairman, by
    not pointing out that our budget person, Cindy Rheaume here is
    also from the great State of North Dakota.
        Senator Dorgan. Well, Cindy, welcome. Would you like to
    testify for a while?
        Mr. Rispoli. So clearly the State of North Dakota is well
    represented in the room today. I'm pleased to be here and would
    like to note this year marks the 20th year since the EM program
    was first established. Clearly a lot has been accomplished and
    a lot more needs to be done.
        When I first appeared before this subcommittee 2 years ago,
    I pledged that safety would remain our first priority. I've
    stated that no milestone is ever worth an injury to our
    workforce. Today I'm pleased to report that worker injuries
    have been reduced by 50 percent during the past 3 years and
    that our injury rate is less than 10 percent of that in the
    commercial waste disposal and construction industries. I think
    that's very, very notable for the people that are doing the
    work for all of us and for our country.
        Also, after I was sworn into this position, I set about to
    refine all of our cost and schedule baselines which guide every
    project. During the past 18 months, all, that is all, EM
    projects, both line item and clean up have undergone
    independent audits to verify their costs and schedules as valid
    and reasonable. Today our project estimates and assumptions for
    the entire EM portfolio, I believe can be viewed with far
    greater confidence than ever before.
        At that time I also stated that our goal was for the cost
    and schedule performance of at least 90 percent of our projects
    to be on target or better than on target. In July 2005, 17 of
    our projects were not on cost or on schedule. That is only 51
    percent of all projects at that time were on target.
        Today our portfolio, which currently numbers more than 65
    projects, consistently meets that 90 percent goal. And we
    actually track this regularly. We are up near 100 percent on
    cost, on schedule with the entire portfolio, which I think is a
    notable accomplishment for all the people that work in this
    program.
        Turning now to our fiscal 2009 budget request, our request
    is for $5.53 billion. And it continues to be based on the
    principle of prioritizing risk reduction across the entire
    complex.
        Let me address an issue that I know has caused concern to
    several Members of Congress and that is that this request has
    broken with past understandings related to the Department's
    clean up budget strategy. I would like to quote part of
    testimony from my predecessor, Assistant Secretary Jessie
    Roberson before this subcommittee in 2003 and 2004. She
    testified that after a period of accelerated funding peaking in
    fiscal year 2005 and here I quote, ``we anticipate funding will
    then decline significantly to about $5 billion in 2008.''
    Viewed from this perspective and with that quote in mind, our
    fiscal 2009 budget is about a half billion dollars more than
    what she projected 5 years ago.
        The administration recognizes that with the budget before
    you as you all have noted, some of the milestones contained in
    our clean up agreements are in jeopardy of being missed. It's
    important to note that other milestones are in jeopardy due to
    technical reasons regardless of funding. As a result we had to
    make very careful decisions regarding our priorities. The
    regulatory agreements that guide our work have been and remain
    important measures of progress. The Department's strategies
    continue to focus on clean up that will produce the greatest
    environmental and safety benefit and the largest amount of risk
    reduction.
        I would like to just take a minute to share. I believe you
    all have photographs before you, but just share a couple of
    those with you. The first photograph is actually from Senator
    Domenici's home State. It's the underground of the Waste
    Isolation Pilot Plant. And it's, I think, a very good photo of
    the remote-handled waste placement machine that places the
    remote-handled waste into the horizontal bore holes in the
    walls.

        The second photograph is the 300 Area of Hanford. And this
    photograph shows by the ``X's'' through the buildings in the
    photograph how many of the buildings have actually been taken
    down. It's an amazing accomplishment. A total of 140 structures
    have been safely removed just in this area alone.

        The third photograph is a photograph of the Energy
    Technology Engineering Center in California. And this is
    another example of a before and after shot that shows that more
    than 250 buildings have been taken down in that location.

        The fourth slide is before and after at Paducah, Kentucky
    that shows a huge metal waste pile. A blight on the entire area
    that has been totally removed. Enough metal equal to the
    displacement of a World War II battleship.

        And the last slide is of DOE contractors of Idaho removing
    transuranic waste under a structure, while the structure
    provides the safety so that this waste does not become airborne
    and then migrate off the site.

        Mr. Chairman, I'm proud of the progress our 34,000
    contractors and Federal employees have made in recent years.
    And the wise and secure foundation we have built for the
    future. This subcommittee has provided the critical guidance
    that has enabled us to accomplish the successes we've had to
    date.

                               PREPARED STATEMENT

        I look forward to working with you in my remaining time at
    the Department. And I thank you for supporting our efforts to
    reduce risk to our citizens, our communities and our Nation.
    Thank you and I'm happy to answer your questions.
        [The statement follows:]
                  Prepared Statement of Hon. James A. Rispoli
        Good morning Mr. Chairman, Senator Domenici, and members of the
    subcommittee. I am pleased to be here today to answer your questions on
    the President's fiscal year 2009 budget request for the Department of
    Energy's Office of Environmental Management (EM). I want to thank the
    subcommittee for your support of the EM program.
        The year 2009 will mark 20 years since the EM program was first
    established just as the cold war was coming to an end. While the budget
    we are considering today is oriented toward the future, I think it is
    appropriate to begin today by considering how much this program has
    accomplished since its creation.
        At that time, nearly 50 years of nuclear weapons production and
    energy research had left a legacy of enormous amounts of waste and
    environmental contamination at more than 100 sites across the country.
    The extent of the risk to our citizens and communities was literally
    unknown, and certainly many of the processes and technologies to reduce
    that risk had not yet been invented.
        Since then, we have closed 86 of 108 sites nationwide. The national
    ``footprint'' of the Department's nuclear complex and its accompanying
    risks has been drastically reduced, and eliminated altogether from many
    States. We have packaged and safely stored all of the Nation's excess
    plutonium inventory. We have pioneered new technologies that have
    allowed us to make progress retrieving millions of gallons of tank
    waste, and to safely dispose tens of thousands of cubic meters of
    transuranic waste. In fiscal year 2006 and fiscal year 2007 alone, we
    demolished approximately 500 buildings (nuclear, radioactive, and
    industrial) as part of our decontamination and decommissioning (D&D)
    projects. And finally, we have made great strides in protecting
    groundwater using innovative treatment systems.
        Today marks likely the final time that I will be testifying before
    you regarding our program's budget request. When I first assumed the
    position of Assistant Secretary for Environmental Management in August
    2005, I set out to institute a rigorous project management system, and,
    above all, to continue to emphasize safety and risk reduction. I sought
    to refine and independently verify our project baselines--the estimates
    of scope, schedule and cost that guide every project--to ensure that
    they are realistic and executable. I will discuss our successes in this
    area as well as our ongoing challenges.
        The fiscal year 2009 budget request is once again built on the
    principle of prioritizing risk reduction across the entire complex for
    which EM is responsible, supported by our four guiding tenets of
    safety, performance, cleanup and closure. The budget request totals
    $5.528 billion, a decrease of $167 million from the fiscal year 2008
    appropriation. With 90 percent of our budget addressing mission
    activities at our cleanup sites, more than half of fiscal year 2009
    funding will go towards our highest-risk activities of stabilizing tank
    waste, nuclear materials and spent nuclear fuel; another one-quarter of
    the budget will be devoted to cleaning up contaminated soil,
    groundwater, and excess facilities, and about 14 percent going to
    manage wastes streams related to those cleanup activities. The
    remaining 10 percent covers mission activity support, including costs
    for program oversight provided by our Federal personnel, and technology
    development.
        Mr. Chairman, let me point out that the administration recognizes
    that EM's fiscal year 2009 budget request of $5.528 billion is based
    on, and would implement, an environmental management approach under
    which the Department would not meet some of the milestones and
    obligations contained in the environmental agreements that have been
    negotiated over many years. It is also important to recognize that some
    upcoming milestones will be missed regardless of the approach that is
    chosen and its associated level of funding.
        Moreover, some of the relevant agreements were negotiated many
    years ago, with incomplete knowledge by any of the parties of the
    technical complexity and magnitude of costs that would be involved in
    attempting to meet the requirements. This incomplete knowledge, coupled
    with other issues including contractor performance, overly optimistic
    planning assumptions, and emerging technical barriers, also have
    impeded the Department in meeting all milestones and obligations
    contained in the environmental compliance agreements.
        In planning its environmental cleanup efforts and developing the
    budget for those activities, the Department seeks to focus on work that
    will produce the greatest environmental benefit and the largest amount
    of risk reduction. The Department strongly believes that setting
    priorities and establishing work plans in this way is the most
    effective use of taxpayer funds and will have the greatest benefit, at
    the earliest possible time, to the largest number of people.
        In determining these priorities, the Department works closely with
    the Federal and State regulators, and will seek the cooperation of
    those entities in helping evaluate needs and focus work on the highest
    environmental priorities based on current knowledge, particularly where
    doing so necessitates modification of cleanup milestones embodied in
    prior agreements with the Department.
                            managing our priorities
        When I appeared before this subcommittee 2 years ago, I pledged
    that safety would remain our first priority. All workers deserve to go
    home as healthy as they were when they arrived at the job in the
    morning. No milestone is worth any injury to our workforce. I am
    pleased to say that EM's safety performance continues to be
    outstanding. As a result of collaborative efforts by DOE and our
    contractors, worker injuries have been reduced by 50 percent during the
    past 3 years. Currently EM's injury rate is less than 10 percent of
    comparable commercial waste disposal and construction industries.
        Another priority we discussed 2 years ago was my goal of making EM
    a high-performing organization by every measure. This goal has required
    us to look critically at every aspect of how we plan, procure, execute
    and manage every project under our jurisdiction, and how we align every
    dollar the taxpayers provide to achieving environmental cleanup goals.
        On the subject of our management practices, in September 2005,
    Congress asked NAPA to undertake a management review of EM, including
    an assessment of EM's human capital. NAPA's study, conducted over a
    period of 18 months, was very interactive; we opened our operations to
    NAPA for scrutiny and in turn have embraced and implemented nearly all
    of NAPA's proposals.
        Most of all, we were gratified that NAPA concluded in its final
    report issued this past December that EM, ``is on a solid path to
    becoming a high-performing organization.'' We know we have much
    remaining to be accomplished, but we take NAPA's conclusion as a sign
    that we are, in fact, headed in the right direction with regard to how
    we function as an organization.
        A budget is only as good as its planning basis. Our request is
    developed from our project baselines that define the scope, cost, and
    schedule for each project, and I have much to report to you in this
    area. When I assumed this position, I was concerned that the accepted
    baselines for many of our projects were unrealistic. The reasons for
    this included overly aggressive assumptions in the technical and
    regulatory arenas, increasing costs of materials and simple
    underperformance.
        Since that time, our sites have undergone an independent review to
    verify the reasonableness of the scope, cost, and schedule for each
    project. This review also documented assumptions and associated risk
    management plans that supported baseline development. As a result, all
    near-term baselines up to 5 years have now been independently reviewed
    and verified, while long-term cost ranges have been determined to be
    reasonable. As we move forward in the fiscal year 2009 budget process,
    I believe that the subcommittee can view near-term cost assumptions
    associated with our projects with greater confidence than ever before.
        The majority of EM sites do, in fact, include baselines with
    completion dates beyond 2013. Through a collaborative process with our
    field sites, EM is seeking to define aggressive but achievable
    strategies for accelerating cleanup of distinct sites or segments of
    work that involve multiple sites. Moreover, it is important to note
    that EM's site cleanup activities are managed as one integrated
    national program; the work and risks associated with each site are
    inherently interrelated with that at other sites. Thus, we continue to
    evaluate and implement cross-site risk priorities and cleanup
    activities.
        In 2005, we set out to integrate proven project management tools
    into our business processes, and address our shortcomings in project
    management by using DOE and industry-standard business management
    tools. I stated to you in 2006 that our goal was for at least 90
    percent of our projectized portfolio to perform on-target, or better
    than on-target regarding cost and schedule. I am pleased to report that
    we now consistently meet that goal--in excess of 90 percent of our
    portfolio, currently numbering more than 65 independently audited
    projects, consistently performs within cost and schedule targets.
        As an ``acquisition'' organization, EM accomplishes its mission
    through procurement and execution of our projects. Since the contract
    serves as the principal agreement governing how a project is executed
    between DOE and the contractor, contract and project management must be
    seamlessly managed in parallel. To oversee this process, about 18
    months ago, we implemented an organizational structure, including the
    creation of a Deputy Assistant Secretary for Acquisition and Project
    Management. This position integrates the two functions of procurement
    planning and project management, helping us to professionalize the
    procurement process so that we learn from, and improve upon, each
    contract experience. Moreover, it provides us with strong management
    oversight after the contract is awarded. We are striving to make EM
    nothing short of a ``Best-in-Class'' organization for project and
    contract management and engineering and technology.
        The fiscal year 2009 Technology Development and Deployment Program
    will be highly focused and concentrate its investments in EM high
    priority cleanup areas, including radioactive tank waste, soils and
    groundwater remediation, and deactivation and decommissioning excess
    facilities. Best-in-class performers, including other Federal agencies,
    the national laboratories, the university system, and private industry
    will be utilized to conduct the Technology Development and Deployment
    scope.
        The EM program has always required a strong technology component to
    accomplish its mission, one that is focused on developing and deploying
    technologies to enhance safety, effectiveness, and efficiency. As we
    look ahead to our cleanup work, we face the ongoing challenge of
    maturing and integrating technology into first-of-a-kind solutions. An
    Engineering and Technology Roadmap has been developed to address this
    need. The Roadmap identifies the technical risks the EM program faces
    over the next 10 years, and strategies to address the risks. EM's
    validated baselines are a powerful tool that allows EM managers to
    identify the points at which new knowledge and technology can be
    efficiently inserted into EM cleanup projects to address risks.
                          budgeting for our priorities
        Before I discuss the fiscal year 2009 budget request, allow me to
    draw attention to the significant cleanup progress achieved recently.
    We have:
      --Completed stabilization and packaging for all plutonium residues,
            metals, and oxides and begun consolidation of all of these
            materials at the Savannah River Site (SRS);
      --Produced for disposition more than 2,500 cans of vitrified high-
            level waste from highly radioactive liquid wastes;
      --Completed retrieval and packaging for disposal of more than 2,100
            metric tons of spent nuclear fuel from K-basins at Hanford to
            protect the Columbia River;
      --Shipped more than 50,000 cubic meters of transuranic (TRU) waste
            from numerous sites to the Waste Isolation Pilot Plant (WIPP)
            for permanent disposal, including 25,000 out of a planned
            30,000 drums from SRS;
      --Disposed of nearly one million cubic meters of legacy low-level
            waste and mixed low-level waste;
      --Eliminated 11 of 13 high-risk material access areas through
            material consolidation and cleanup;
      --Cleaned up the Melton Valley area at the Oak Ridge Reservation and
            continued decontamination and decommissioning of three gaseous
            diffusion buildings at Oak Ridge; and
      --Disposed of more than 8,500 tons of scrap metal from Portsmouth.
        The program has made significant progress in shifting focus from
    risk management to risk reduction. This focus on measurable risk
    reduction continues to be the guiding principle behind the development
    of our fiscal year 2009 budget request.
        To strike the balance that allows EM to continue achieve risk
    reduction and pursue cleanup goals, we propose funding the following
    risk reduction and regulatory activities in priority order:
      --Stabilizing radioactive tank waste in preparation for treatment
            (about 32 percent of the fiscal year 2009 request);
      --Storing, stabilizing, and safeguarding nuclear materials and spent
            nuclear fuel (about 18 percent of the fiscal year 2009
            request);
      --Disposing of transuranic, low-level, and other solid wastes (about
            14 percent of the fiscal year 2009 request); and
      --Remediating major areas of EM sites, and decontaminating and
            decommissioning facilities (about 26 percent of the fiscal year
            2009 request).
                        fiscal year 2009 budget request
        The Department's fiscal year 2009 budget request for the Office of
    Environmental Management is $5.528 billion. The request consists of
    three appropriations, Defense Environmental Cleanup, Non-Defense
    Environmental Cleanup, and the Uranium Enrichment Decontamination and
    Decommissioning Fund.
        For fiscal year 2009, EM's funding priorities to best address our
    environmental cleanup challenges are:
      --Conducting cleanup with a ``Safety First'' culture that integrates
            environment, safety and health requirements, and controls into
            all work activities to ensure protection to the worker, public,
            and the environment;
      --Establishing a disposition capability for radioactive liquid tank
            waste and spent nuclear fuel;
      --Securing and storing nuclear material in a stable, safe
            configuration in secure locations to protect national security;
      --Transporting and disposing of transuranic and low-level wastes in a
            safe and cost-effective manner to reduce risk;
      --Remediating soil and groundwater in a manner that will assure long-
            term environmental and public protection; and
      --Decontaminating and decommissioning facilities that provide no
            further value to reduce long-term liabilities while remediating
            the surrounding environment.
        Examples of milestones and planned activities for fiscal year 2009
    by site-specific categories are:
    Idaho
      --Meet requirements in the Idaho Settlement Agreement to ship stored
            contact-handled and remote-handled transuranic (TRU) waste to
            the Waste Isolation Pilot Plant (WIPP).
        The Idaho National Laboratory will continue characterizing,
    treating, packaging, and transporting of contact-handled and remote-
    handled TRU waste to WIPP.
      --Continue construction of the sodium-bearing waste treatment
            facility to support tank waste retrievals.
        The overall objectives of this project are to treat and dispose of
    sodium-bearing tank wastes, close the tank farms tanks, and perform
    initial tank soil remediation work. Construction and operation of the
    sodium-bearing waste treatment facility will reduce potential risk to
    human health and the environment by preventing the potential migration
    of contamination into the Snake River Plain Aquifer, which is a sole-
    source aquifer for the people of Southeastern Idaho.
      --Complete the transfer of all EM-managed spent nuclear fuel to dry
            storage.
        EM will continue to promote the safe and secure receipt and dry
    storage of spent fuel to protect the Snake River Plain Aquifer.
    Los Alamos National Laboratory
      --Promote soil and water remediation.
        The Los Alamos National Laboratory (LANL) Soil and Water
    Remediation Project scope includes identification, investigation, and
    remediation of chemical and or radiological contamination attributable
    to past Laboratory operations and practices. In order to support the
    project scope, in fiscal year 2009 EM plans to: complete required
    groundwater monitoring within eight watersheds, install four regional
    aquifer monitoring wells, complete four soil cleanups, including
    Material Disposal Area R in Technical Area-16, and continue remediation
    of tanks at the Material Disposal Area A in Technical Area-21.
      --Continue TRU waste shipments to WIPP.
        The Solid Waste Stabilization and Disposition Project includes the
    treatment, storage, and disposal of legacy TRU and mixed low-level
    waste generated between 1970 and 1999 at LANL. The end-state of this
    project is the safe disposal of legacy waste from LANL. In fiscal year
    2009, EM plans to continue characterization and certification of TRU
    waste for shipment to WIPP and continue services and safety-related
    activities to maintain the waste inventories in a safe configuration
    and within allowable Material-at-Risk limits established for the site.
    Moab
      --Complete necessary transportation upgrades and tailings handling
            infrastructure and initiate movement of uranium tailings off
            the Moab site.
        The relocation of the mill tailings at the Moab site to a
    Department of Energy constructed disposal facility near Crescent
    Junction, Utah, is necessary. In fiscal year 2009, EM plans to complete
    the rail upgrades between Moab and Crescent Junction and begin
    transporting tailings to Crescent Junction from Moab. Moreover, the
    Record of Decision has been amended to allow the tailings to be
    transported by either truck or rail. In addition, EM will continue
    disposal cell excavation at Crescent Junction.
    Oak Ridge
      --Continue decontamination and decommissioning (D&D) of K-25 Process
            Building.
        The gaseous diffusion plant comprises one of the largest complex of
    buildings in the world. In fiscal year 2009, EM will continue to vent,
    purge, and drain, characterize, remove of high risk equipment and carry
    out required foaming activities for the east and north wings of the K-
    25 process building. Demolition of the west wing of the K-25 process
    building will be conducted.
      --Complete final design for the Uranium-233(U-233) down-blending
            project and begin Building 3019 modifications.
        The U-233 inventory in Building 3019 will be down-blended as
    expeditiously as possible to reduce the substantial annual costs
    associated with safeguards and security requirements and to address
    nuclear criticality concerns raised by the Defense Nuclear Facilities
    Safety Board (DNFSB).
      --Process and ship contact-handled and remote-handled TRU waste to
            WIPP.
        Approximately 300 cubic meters of contact-handled TRU debris and
    100 cubic meters of remote-handled TRU debris will be processed for
    disposal at WIPP.
      --Decontaminate and decommission (D&D) the Y-12 National Security
            Complex and Oak Ridge National Laboratory (ORNL).
        Remediation of the Corehole 8 plume at ORNL and of mercury
    contamination at Y-12 will be performed. The on-site disposal cell for
    receipt of D&D debris and cleanup waste will be expanded.
    Paducah
      --Initiate operations of the Depleted Uranium Hexafluoride
            (DUF6) Conversion Facility.
        The DUF6 conversion facility will convert depleted
    uranium hexafluoride into a more stable form, depleted uranium oxide,
    which is suitable for reuse or disposition. The depleted uranium oxide
    will be sent to a disposal facility or reused, the hydrogen fluoride
    by-products will be sold on the commercial market, and the empty
    cylinders will be disposed of or reused.
      --Complete disposition of legacy waste.
        The Paducah Gaseous Diffusion Plant is responsible for some of the
    waste streams that were generated by the United States Enrichment
    Corporation's operation of the Plant. The disposition of this legacy
    waste will reduce risk and storage costs and is critical to
    accelerating site cleanup.
      --Reduce risk through focused cleanup of soil and waste.
        The completion of characterization and disposition of recently
    discovered soil and rubble piles along the river and closure and
    disposition of all DOE Material Storage Areas will also aid in lowering
    the risk to human health and the environment.
    Portsmouth
      --Initiate operations of the DUF6 Conversion Facility.
        Similar to Paducah, the DUF6 conversion facility will
    convert depleted uranium hexafluoride into a more stable form, depleted
    uranium oxide, for reuse or disposal. The depleted uranium oxide will
    be sent to a disposal facility or reused, the hydrogen fluoride by-
    products will be sold on the commercial market, and the empty cylinders
    will be disposed of or reused.
      --Complete cold shutdown activities in the former gaseous diffusion
            operations facilities and award the D&D contract.
        The transition of the Gaseous Diffusion Plant from cold shutdown to
    decontamination and decommissioning will continue. In addition,
    Portsmouth plans to complete X-701B oxidation injection system
    groundwater field treatment activities.
    Richland
      --Complete shipping of special nuclear materials from the Plutonium
            Finishing Plant (PFP).
        The PFP complex consists of several buildings that were used for
    defense production of plutonium nitrates, oxides and metal from 1950
    through early 1989. As part of the PFP cleanup, Richland's goal is to
    complete shipments of special nuclear materials off-site to the
    Savannah River Site and procure additional casks to support completion
    of the shipping campaign by the end of fiscal year 2009.
      --Enhance groundwater remediation at the Central Plateau and along
            the Columbia River.
        Over 50 years of weapons production at the Hanford site has left
    the groundwater contaminated by carbon tetrachloride, chromium,
    technetium 99, strontium, and uranium. EM is dedicated to protecting
    the groundwater resources at Hanford as well as the Columbia River,
    through deployment of innovative technologies in fiscal year 2009 to
    address all of the contaminants in the vadose zone and groundwater,
    with supporting investigations such as installation of new wells for
    monitoring and characterization, and geophysical logging to provide
    additional subsurface information on contaminant distribution.
      --Cleanup of waste sites and facilities along the Columbia River
            Corridor including K-East Basin D&D.
        The K Basins project is a high priority risk reduction activity due
    to its close proximity to the Columbia River. To date, we have
    completed the removal, packaging, and transportation of approximately
    2,100 metric tons of degrading spent nuclear fuel, removal of an
    estimated 44 cubic meters of radioactively contaminated sludge, and the
    basin water is now being pumped out. In fiscal year 2009, the K-East
    basin will be completely demolished. The end-state of the K Basins
    cleanup will mean the removal of more than 55 million curies of
    radioactivity from near the Columbia River.
      --Retrieve suspect contact-handled and remote-handled TRU waste from
            burial grounds and continue to ship to WIPP.
        The Hanford Site contains thousands of containers of suspect
    contact-handled and remote-handled TRU waste, low-level waste, and
    mixed low-level waste. Activities planned in fiscal year 2009 are to
    retrieve 1,100 cubic meters of suspect contact-handled and remote-
    handled TRU waste from the low-level burial grounds, continue
    certification of transuranic waste, and dispose of on-site generated
    low-level and mixed low-level wastes at the mixed waste disposal
    trenches.
    River Protection
      --Manage the tank farms in a safe and compliant manner until closure.
        The radioactive waste stored in the Hanford tanks was produced as
    part of the Nation's defense program and has been accumulating since
    1944. To protect the Columbia River, the waste must be removed and
    processed to a form suitable for disposal and the tanks must be
    stabilized. To reach these goals, EM plans to enhance the Single-Shell
    Tank Integrity Program, continue to develop retrieval technologies and
    retrieve waste from approximately one tank per year, and continue to
    evaluate supplemental treatment technology, and interim pre-treatment
    capabilities.
      --Advance in Waste Treatment and Immobilization Plant construction.
        The Waste Treatment and Immobilization Plant (WTP) is critical to
    the completion of the Hanford tank waste program by providing the
    primary treatment capability to immobilize the radioactive tank waste
    at the Hanford Site. The WTP complex includes five facilities: the
    Pretreatment Facility, the High-Level Waste Facility, the Low-Activity
    Waste Facility, the Balance of Facilities, and the Analytical
    Laboratory. In fiscal year 2009, EM plans to continue construction of
    all of these facilities to achieve approximately 55 percent completion,
    while maintaining the viability of other supplemental treatment
    options. The end-state of this project will be the completion of the
    WTP hot commissioning and transfer of the facilities to an operations
    contractor to run the plant.
    Savannah River
      --Continue consolidation and disposition of special nuclear
            materials.
        The receipt, storage, and disposition of materials at the Savannah
    River Site allows for de-inventory and shutdown of other DOE complex
    sites, providing substantial risk reduction and significant mortgage
    reduction savings to the Department. In fiscal year 2009, the Savannah
    River Site will complete the receipt of surplus plutonium from the
    Hanford Site, Los Alamos National Laboratory, and Lawrence Livermore
    National Laboratory. Also in fiscal year 2009, EM plans to operate H-
    Canyon/HB-Line to disposition special nuclear materials and begin
    processing of Savannah River Site's spent nuclear fuel in H-Canyon.
      --Reduce radioactive liquid waste.
        The mission of the tank waste program at Savannah River is to
    safely and efficiently treat, stabilize, and dispose of approximately
    37 million gallons of legacy radioactive waste currently stored in 49
    underground storage tanks. In fiscal year 2009, planned EM activities
    include: continue operation of Actinide Removal Project, Modular
    Caustic-Side Solvent Extraction Unit, and the Defense Waste Processing
    Facility, continue the construction of the Salt Waste Processing
    Facility; and prepare sludge batches in support of continued high-level
    waste vitrification. Activities are planned to free up additional tank
    space, such as treatment of organic waste in the 1.3 million gallon
    Tank 48 to return the tank to useful service.
    Waste Isolation Pilot Plant
      --Continue safe shipment, receipt, and disposal of contact-handled
            and remote-handled TRU waste.
        WIPP in Carlsbad, New Mexico, is the Nation's only mined geologic
    repository for the permanent disposal of defense-generated TRU waste.
    In fiscal year 2009, the budget request supports up to 21 contact-
    handled TRU and up to 5 remote-handled TRU shipments per week from
    across the DOE complex.
                                   conclusion
        Mr. Chairman, I am proud of the progress the EM program has made in
    recent years, both in terms of meeting the Nation's cleanup priorities,
    and in building the foundation for future efforts. I respectfully
    submit EM's fiscal year 2009 budget request and am pleased to answer
    your questions.

        Senator Dorgan. Mr. Rispoli, thank you very much. Finally
    we will hear from Mr. Sproat. Mr. Sproat, you may proceed.
    STATEMENT OF HON. EDWARD F. SPROAT III, DIRECTOR,
                OFFICE OF CIVILIAN RADIOACTIVE WASTE
                MANAGEMENT
        Mr. Sproat. Good morning, Senator and good morning, members
    of the committee. And thank you very much for the opportunity
    to come this morning to address you about my office, the Office
    of Civilian Radioactive Waste Management and the President's
    2009 request for the Yucca Mountain program.
        But I'd like to start off with just recapping what I told
    this committee last year at this time in terms of what we
    planned to do in fiscal year 2008 with the President's budget
    request for fiscal year 2008, which was $494.5 million. I told
    the committee at that time that with that money in this fiscal
    year we intended to deliver the license application for Yucca
    Mountain to the Nuclear Regulatory Commission no later than
    June 30, of this year. I also told the committee that we would
    certify the licensing support network the major litigation
    support database that the NRC requires by December 2007. I also
    said that we would complete the supplemental environmental
    impact statement.
        I said we would deliver the report to Congress, that
    Congress requires on a need for a second repository. And I said
    we would revise and issue to file an environmental impact
    statement for the Nevada rail line in fiscal year 2008.
        Now as the committee is very much aware, we ended up
    receiving from Congress $386.1 million or $108 million less
    than the President requested. And we received that at the end
    of the first fiscal quarter, or the first quarter of the fiscal
    year. Obviously it presented significant management challenges
    to my management team.
        However, we have put in place significant improvements in
    the management approaches, management processes for our office.
    And I'm very pleased to be able to report to the committee that
    despite the $108 million reduction in appropriations, we will
    meet or beat all of the deliverables schedules that we told
    this committee that we would provide at this time last year. So
    we are on schedule. And we will deliver a high quality
    docketable license application to the Nuclear Regulatory
    Commission for the repository during the month of June of this
    year.
        Now one of the things I would like to point out to the
    committee is that with that $108 million reduction from the
    President's request in fiscal year 2008, on top of the $100
    million reduction from fiscal year 2007 we are not able to
    maintain the best achievable date for opening a repository of
    March 2017. That date is no longer achievable. And I'll talk a
    little bit in a minute about what we're doing to provide the
    committee a better understanding and a better forecast of when
    a repository could be open and under what conditions.
        So let me turn to our fiscal year 2009 appropriation
    request, which is $494.7 million or essentially a flat request
    compared to the President's request for fiscal year 2008. One
    of the things the committee may not or may be aware when I
    talked to you last year, I talked about, within the context of
    the best achievable date for opening a repository, what the
    cash flows, projected cash flows, were required to do that; to
    open by 2017.
        And that cash flow included a projected budget request of
    $1.2 billion for fiscal year 2009. And as the committee will
    note, we have not requested anywhere near that amount for
    fiscal year 2009. And we have limited our budget request to an
    amount that we need to support the license application review
    and defense in front of the Nuclear Regulatory Commission and
    to maintain certain critical path design activities, but we
    will not be able to maintain all of the critical path
    activities needed to support a 2017 opening date with this
    budget request.
        And the reason that we haven't requested that $1.2 billion
    is that based on our experience and the difficulties that this
    committee is very much aware of in the appropriations process
    that we've gone through in fiscal year 2007 and fiscal year
    2008. We believe it's unrealistic to expect Congress to
    authorize a significant increase in my program's funding that's
    required to open the repository in the shortest possible time.
    Therefore what we are doing is we're rebaselining this program
    in terms of a new set of assumptions that assumes essentially
    flat funding during the license application defense process and
    then ramping up after the Nuclear Regulatory Commission gives
    the Department a construction authorization in 2011 or 2012.
        So, just turning back to fiscal year 2009 with the budget
    request that's in front of you, we intend to defend the license
    application that we'll be submitting to the Nuclear Regulatory
    Commission. We'll begin some detailed design for the repository
    facilities itself. We're going to complete some of the contour
    mapping for the Nevada rail line. And we're going to continue
    with developing the Federal capability to actually oversee
    construction and operation of this repository as well as
    further development of the security and safeguards programs
    needed to run a high level waste repository under the Federal
    Government.
        So, let me just close by addressing the issue of what is it
    going to take to actually be able to build this repository?
    It's very clear that under any scenario of recycling or non-
    recycling, we still will need a deep geological repository for
    both the defense level waste and spent nuclear fuel and that
    funding required to build a repository will be at levels
    significantly higher than historical funding levels that this
    program has received in the past.
        And that without a dependable funding source from the
    Nuclear Waste Fund, which was originally intended, it really
    becomes impossible to provide a new firm date to the committee
    as to when the repository could be open. And I'd like to remind
    the committee, based on my discussions with you last year at
    this time, that for each year beyond 2017 that we defer opening
    a repository, it's an additional half a billion dollars of
    potential taxpayer liability associated with the Government's
    non-performance on taking commercial spent nuclear fuel. And
    that our forecast that if we were opening a repository in 2017,
    that liability number was approximately $7 billion and that
    would grow at about $500 million a year beyond that date.

                               PREPARED STATEMENT

        In summary what I'd like to say is that we have made
    substantial progress on this program over the last 2\1/2\, 3
    years. I have a very high confidence level in the management
    team that I'll leave behind after I leave Government service to
    move this program forward. And that it is vitally important to
    this country that under any scenario of either open fuel cycle,
    closed fuel cycle, that we have a deep geologic repository. And
    I would respectfully request this committee to give serious
    consideration to the President's request to fund this program
    at the requested levels for fiscal year 2009.
        Thank you very much. I'd be pleased to answer whatever
    questions the committee may have.
        [The statement follows:]
                Prepared Statement of Hon. Edward F. Sproat III
        Mr. Chairman and members of the committee, I am Edward F. Sproat
    III, Director of the Department of Energy's (DOE) Office of Civilian
    Radioactive Waste Management (OCRWM). I appreciate the invitation to
    appear before the committee to discuss the President's fiscal year 2009
    budget request for my office which has the responsibility to design,
    license, construct, and operate the Nation's repository for the
    disposal of spent nuclear fuel and high-level radioactive waste, as
    defined in the Nuclear Waste Policy Act (NWPA) of 1982, as amended.
        When I came to this committee last year, I outlined a number of
    specific deliverables that OCRWM would achieve in fiscal year 2008,
    assuming appropriation of the President's request of $494.5 million,
    including:
      --Submit a License Application for a Construction Authorization for a
            geologic repository for disposal of spent nuclear fuel and
            high-level radioactive waste at Yucca Mountain to the Nuclear
            Regulatory Commission (NRC) by June 30, 2008;
      --Certify DOE's Licensing Support Network collection in accordance
            with NRC requirements and regulations by December 21, 2007;
      --Complete the Supplemental Environmental Impact Statement (EIS) for
            a Geologic Repository for the Disposal of Spent Nuclear Fuel
            and High-Level Radioactive Waste at Yucca Mountain;
      --Perform the analysis and deliver the report to Congress required by
            the NWPA on the need for a second repository; and
      --Complete the final EIS for a Rail Alignment for the Construction
            and Operation of a Railroad in Nevada to a Geologic Repository
            at Yucca Mountain.
        Despite the President's request of $494.5 million, the Congress
    appropriated $386.4 million for OCRWM in fiscal year 2008, a reduction
    of $108.1 million from the President's request. This large reduction,
    which occurred well into the fiscal year, contributed to significant
    management challenges, and following the fiscal year 2007 appropriation
    which was approximately $100 million less than the President's request,
    caused a reduction in force of approximately 900 personnel from the
    program. The cumulative impact of these significant appropriation
    reductions is that DOE is no longer able to maintain the best
    achievable opening date of March 2017 that I presented to the committee
    last year. However, because of significant improvements we have made in
    management practices and processes, we will be able to complete all of
    the deliverables for fiscal year 2008 that I promised the committee
    last year on or near schedule, including the submittal of the License
    Application to the NRC this June.
               fiscal year 2009 budget request and key activities
        The President's fiscal year 2009 budget request for this program is
    $494.7 million. The committee will note that this amount is
    significantly less than the $1.2 billion for fiscal year 2009 that I
    presented to the committee last year as the amount needed to achieve
    the best achievable opening date of March 2017. This fiscal year 2009
    funding request reflects what the administration sees as the realities
    of the effects of the current discretionary spending budget caps on
    this program. Because the funding mechanism established by Congress for
    the program when it established the Nuclear Waste Fund is not currently
    available to offset appropriations for this program, we have limited
    our budget request to an amount that is needed to support the process
    to attain a Construction Authorization from the NRC and to continue
    some of the other critical path activities. We believe that unless
    Congress addresses the funding mechanism issue for this program by
    acting affirmatively on the proposed legislation this administration
    has sent to Congress, it is unrealistic to expect Congress to
    appropriate the significant increases in funding needed to open the
    repository in the shortest possible time (i.e., by 2017). We are
    therefore re-baselining the Program schedule and budget authority cash
    flow projections to reflect what we expect to be flat funding until the
    NRC issues the Construction Authorization. I will provide this revised
    information to the committee when it is completed.
        Fiscal year 2009 will be the first year of a multi-year license
    defense process. Following an acceptance review by the NRC, it is
    anticipated that the NRC will docket the License Application, thus
    beginning the formal licensing phase that is anticipated to last 3 to 4
    years. In fiscal year 2009, our objectives are to:
      --Defend the License Application for the repository before the NRC;
      --Begin detailed design for the facilities required for receipt of
            spent nuclear fuel and high-level radioactive waste at the
            repository;
      --Continue essential interactions with State, local, and tribal
            governments needed to support national transportation planning;
      --Complete efforts to finalize the contour mapping and the layout of
            the rail line to support land acquisition and complete a right-
            of-way application for the Nevada rail line;
      --Continue design and licensing work on the Transportation, Aging and
            Disposal (TAD) canister system;
      --Continue staffing and training the OCRWM organization so that it
            has the skills and culture needed to design, license, and
            manage the construction and operation of the Yucca Mountain
            project with safety, quality, and cost effectiveness; and
      --Continue planning and designing a compliant and well-integrated
            safeguards and security, safety, and emergency management
            program.
        In addition, the budget request also includes funds for the
    following activities:
      --Funding for payments-equal-to-taxes to the State of Nevada and Nye
            County, Nevada, where Yucca Mountain is located. Our fiscal
            year 2009 request also includes oversight funding for the State
            of Nevada, affected units of local government and an affected
            tribe, as well as funding for the University System of Nevada
            and Nye County, Nevada, and Inyo County, California for
            independent scientific studies;
      --Funding for cooperative agreements with State regional groups and
            other key parties involved in transportation planning; and
      --Funding for Program direction which supports Federal salaries,
            expenses associated with building maintenance and rent,
            training, and management and technical support services, which
            include independent Nuclear Waste Fund audit services,
            independent technical and cost analyses, and University-based
            independent technical reviews. We also have included funding to
            begin the upgrade of obsolete data storage systems which house
            the scientific data collected over the years of this program;
            this significant asset is now at risk of loss.
              implications of non-access to the nuclear waste fund
        The NWPA establishes the requirement that the generators of high-
    level nuclear waste must pay for its disposal costs. As a result, the
    Nuclear Waste Fund was created and is funded by a 1 mil per kilowatt-
    hour fee on all nuclear generation in this country. As of today, the
    Fund has a balance of approximately $21.0 billion which is invested in
    U.S. Treasury instruments. The Government receives approximately $750
    million per year in revenues from on-going nuclear generation and the
    Fund averages about 5.5 percent annual return on its investments. At
    the present time, due to technical scoring requirements, appropriations
    for the Yucca Mountain repository have a significant negative impact on
    the Federal budget deficit. Specifically, the monies collected are
    counted as mandatory receipts in the budgetary process, while spending
    from the Nuclear Waste Fund is scored against discretionary funding
    caps for the Department. In legislation the administration submitted to
    the 109th Congress and has submitted again to this Congress, the
    President proposes fixing this problem by reclassifying mandatory
    Nuclear Waste Fund receipts as discretionary, in an amount equal to
    appropriations from the Fund for authorized waste disposal activities.
    Funding for the Program would still have to be requested annually by
    the President and appropriated by the Congress from the Nuclear Waste
    Fund.
        Sustained funding well above current and historic levels will be
    required if the repository is to be built. Funding at current levels in
    future years will not be adequate to support design and the necessary
    concurrent capital purchases for repository construction,
    transportation infrastructure, and transportation and disposal casks.
    The development of a credible schedule for the program is highly
    dependent upon a steady and reliable funding stream.
        The Department estimates that U.S. taxpayers' potential liability
    to contract holders who have paid into the Nuclear Waste Fund will
    increase from approximately $7.0 billion to approximately $11 billion
    if the opening of the repository is delayed from 2017 to 2020. The
    calculation of potential costs to taxpayers is a complex matter that
    depends on a number of variables that change year to year, however, on
    average the liability will increase $500 million annually. The
    Department has not attempted to calculate precisely what these costs
    would be if the opening of the repository were delayed beyond 2020.
    There will also be added costs associated with keeping defense waste
    sites open longer than originally anticipated. The Department has not
    yet estimated those costs. It can be seen, however, that each year of
    delay in opening the repository has significant taxpayer cost
    implications, as well as the potential for delaying construction of
    needed new nuclear power plants. Therefore, the administration believes
    it is in the Country's best interest to expedite construction of the
    repository and the transportation infrastructure necessary to bring
    both defense and commercial spent nuclear fuel and high-level waste to
    Yucca Mountain.
                                    summary
        In summary, the President's fiscal year 2009 budget request will
    provide the needed funds to defend the License Application for a
    Construction Authorization of a geologic repository for disposal of
    spent nuclear fuel and high-level radioactive waste at Yucca Mountain.
    The significant reductions in appropriated funding for fiscal year 2007
    and fiscal year 2008, however, have negated the Department's ability to
    meet the March 2017 best achievable opening date. Each year's delay
    beyond the March 2017 date will result in increased potential taxpayer
    liability to utility contract holders as well as increased costs for
    storage at defense waste sites across the country. I respectfully urge
    the Congress to consider and pass the President's fiscal year 2009
    budget request for the OCRWM.

                              EM BUDGET SHORTFALLS

        Senator Dorgan. Mr. Sproat, thank you very much. Mr.
    Rispoli and Mr. Sproat, I was just observing to Senator
    Domenici that some while ago, some years ago, former
    Congressman Mike Parker was working for the Corps of Engineers
    representing the administration as an appointee. He came to
    Congress and in a disarming moment of candor, he said that we
    don't have enough money in the budget to do what we need to be
    doing. The next morning he was fired.
        I understand your role here today. Your role here today is
    to come up and defend the administration's budget. I understand
    that.
        But, Mr. Rispoli, your job is to clean up the mess from all
    of these nuclear weapons plants that were spread around the
    country. The plants have created an environmental hazard that's
    dramatic. So we've got to clean them up and the job of
    Environmental Management is to clean up all those plants.
        Hanford, for example, my colleague from Washington is here.
    And the fact is we have made agreements and reached agreements
    on milestones to clean them up. And the fact is this budget
    doesn't even allow you to reach the milestones that have been
    previously agreed to. Is that not the case?
        Mr. Rispoli. Senator, that is the case for there are
    milestones in jeopardy both for budget reasons as well as for
    other technical reasons. So yes, that is the case. And that has
    been acknowledged actually in the President's budget that was
    submitted to the Congress.
        Senator Dorgan. I don't understand why a portion of it is
    missing from the milestones that we've contractually agreed to
    meet. We've said here's what we're going to do. And then we
    don't ask for the money for it. Is it because it's less
    important than something else?
        And, as I have indicated your budget has decreased $1.75
    billion over the last 4 years even as the cost of all of this
    has grown substantially. I mentioned earlier that the President
    proposes $1 billion less in water projects for this committee,
    the Corps of Engineers, and Bureau of Reclamation. We're not
    going to do that.
        I assume that someone downtown understands that we have an
    obligation to meet these milestones. And so there must be
    delivered under funding hoping we'll put the money back in, in
    order to meet our contractual obligations. Is there currently a
    proposal that you'll be laying off up to 600 people because of
    the lack of funding?
        Mr. Rispoli. Mr. Chairman, there would be approximately
    that number of people that could be looking at work force
    adjustments. It doesn't have to be that high. We're evaluating
    alternatives with several of our site managers now to see
    whether or not we can smooth out and minimize any reductions.
    It's not the pure number that we worry about. It's the loss of
    the skill.
        We have people that are very, very skilled and experienced
    at what they do. And we don't think it's healthy for the
    program to have perturbations that have sharp drops and then
    have to try to hire people back.
        Senator Dorgan. Yes. I complemented you Mr. Rispoli in my
    opening because I think this is a tough job. And you've tried
    very hard and in many areas have succeeded, but I think it is
    unfair to you and the people that are engaged in your mission
    not to have the funding that will allow us to meet what we have
    already obligated ourselves to do. You know, we're going to
    have to try to think through that here on the subcommittee.

                       YUCCA MOUNTAIN LICENSE APPLICATION

        Mr. Sproat, the license application that you are
    submitting. You're going to be submitting that before June 30.
    How has the 2008 budget that we passed impacted the content of
    the license application you're submitting this year?
        Mr. Sproat. It has not impacted the content or the quality
    of the license application that we'll be submitting primarily
    because we recognize that is the highest priority the program
    had. It's on the critical path to repository construction. And
    so we diverted resources from other parts of the program to
    make sure that we had the right people and retained the right
    people in scientific expertise and engineering expertise needed
    to put together a high quality license application to meet our
    commitment date of submitting that by June 30, of this year.
        Senator Dorgan. If you submit a license application for
    Yucca Mountain and the Nuclear Regulatory Commission ultimately
    authorizes construction, can the Department of Energy begin
    construction of the repository without any changes to existing
    law and can DOE begin transporting and disposing of nuclear
    waste in the repository without changes to existing law?
        Mr. Sproat. No, Senator, there will be additional changes
    required. Specifically, the Nuclear Regulatory Commission would
    not give the Department a construction authorization until
    Congress had legislated land withdrawal for the geologic
    repository operations area or GROA, around the Yucca Mountain
    site, even though it's federally owned land to withdraw the
    land, similar to what was done with the Waste Legislation Pilot
    Project in New Mexico. Congressional legislation is required so
    that the Secretary of Energy can show to the Nuclear Regulatory
    Commission that the Department has total ownership and control
    of that land in perpetuity.
        Senator Dorgan. Do you agree with Senator Domenici's
    implied suggestion in his opening statement that a Yucca only
    policy is leading us into a box canyon of sorts?
        Mr. Sproat. What I would say is I think the primary thrust
    of the Senator's point is that there is a lot of residual
    energy in commercial spent nuclear fuel. And to put it directly
    underground as waste or dispose of that energy content doesn't
    make sense, I think is a very valid point.
        What I would say, though, is this is not an either/or
    question. That under any scenario, even if we go to fuel
    recycling of spent nuclear fuel, there is high level nuclear
    waste residual from that. And we currently have a significant
    inventory of high level nuclear waste from the Defense Program
    and the naval spent nuclear fuel from the naval reactors that
    needs to go into a deep geologic repository regardless of what
    we do with the commercial spent nuclear fuel inventory.
        Senator Dorgan. Senator Domenici?

                              SPENT FUEL DISPOSAL

        Senator Domenici. Mr. Chairman, thank you for laying the
    question directly before Mr. Sproat. Let me make sure the
    record is clear from my standpoint. Your statement that even if
    we go, we have a recycling facility, and I would assume we're
    both talking when you say recycling, we're talking about the
    French model perhaps. There is, the British have one too.
        But let's talk about the French model. If in fact that was
    used, the residual, the ultimate waste to be disposed of is
    nothing like spent fuel rods, right?
        Mr. Sproat. That is correct.
        Senator Domenici. It is much less toxic in terms of its
    half-life, right?
        Mr. Sproat. That is correct.
        Senator Domenici. It is far less in quantity than the
    quantity that is the spent fuel rod quantity, right?
        Mr. Sproat. Well, Senator, in terms of the high level
    waste, that's correct. However there are additional waste
    streams out of the recycling process greater than Class C waste
    and there are significant volumes of that that are produced.
        Senator Domenici. Yes, but the point that I make is that
    you don't need a Yucca Mountain type repository for most of the
    waste that is part of the residual of recycling. In fact, you
    could if you wanted to without any question, you could put it
    in the salt of Carlsbad, most of it.
        Mr. Sproat. Under, if the law was changed to allow that,
    yes. However----
        Senator Domenici. But wait, I'm not talking about WIPP, I'm
    talking about salt.
        Mr. Sproat. While salt is a great medium for storage of
    high level waste and for isolation from the environment, and
    the Germans are using salt beds, the problem is, is that under
    current U.S. regulations, under the Nuclear Waste Policy Act,
    retrievability is a requirement. In other words----
        Senator Domenici. I understand.
        Mr. Sproat. Salt is not a medium that makes retrievability
    very easy.
        Senator Domenici. We're not going to ask the Congress to
    authorize the building, Mr. Chairman, of a recycling facility
    and leave all the other laws in place. We would change the law
    at the same time that you were referring to. There's no need to
    have the ultimate waste that would come from recycling, that
    small amount of modest level waste. It's not a high. There's no
    need to have it retrievable. That law was----
        Mr. Sproat. That's correct.
        Senator Domenici. The reason for that law was we were
    putting in the ground very valuable sources of energy and it
    was stupid to put it in and lock it up because someday we might
    find that we take it out, like they are in Russia. They use it.
    But they recycle it and use it or in any event that's the
    answer to your question.
        I want to thank you very much for what you've done for the
    country. And I'll ask you the questions. You could not have
    done this, you could not be where you are without the good
    people at Los Alamos. Is that correct?
        Mr. Sproat. At Los Alamos and Sandia.
        Senator Domenici. Sandia is the leader.
        Mr. Sproat. Sandia National Laboratory is our lead lab on
    the post closure scientific analysis. They're the ones who have
    integrated all the 20 plus years of scientific data and put
    together the analysis that's contained in the licensing
    application. They've done an outstanding job.
        Senator Dorgan. Mr. Chairman, would you yield on that
    point? I complemented Mr. Rispoli. Let me also say I neglected
    to say how much I appreciate the work of Mr. Sproat. That's a
    tough job that you took on and I appreciate it very much.
        Mr. Sproat. Thank you, Senator.
        Senator Domenici. Thank you, Mr. Chairman. I tell you that
    when he told me some time ago he would get it done. And when
    those troops up there at Sandia said they'd get it done, I said
    you won't. The first time I wanted to scream at you all and you
    were right. You did it.
        Mr. Sproat. Thank you.
        Senator Domenici. So far. We'll see what they say over
    there.

                 MISSED COMPLIANCE AGREEMENTS MILESTONES FINES

        Mr. Rispoli, let me just get square on record so we'll
    know. Who will pay the fines, fines that may ensue in New
    Mexico for the failure to meet the court agreed time on clean
    up at Los Alamos. You know they have an environmental man who
    imposes hearty fines. Are you all going to pay or do you expect
    the laboratory at Los Alamos to pay it?
        Mr. Rispoli. In the past the fines have been paid either by
    the Department or by the contractor that operates the activity
    depending upon the basic reason for missing the milestone or
    violation of the agreement. If it were, for example, purely a
    budget driven reason then I would expect the United States
    Government would pay for it from our budget. If on the other
    hand, a milestone were missed because of some technical
    difficulty or a different interpretation, for example, of the
    requirement, then typically the contractor would wind up paying
    for that fine.
        Senator Domenici. As a result of this budget can you tell
    me how many of the milestones you anticipating missing and the
    resulting delays this may have on project completion? And since
    that's a very big number, would you just do that on Los Alamos,
    please?
        Mr. Rispoli. At Los Alamos, we would expect to miss because
    of budget, three milestones. And we anticipate that the cost to
    accomplish those three milestones would be about $100 million.
    I would also point out that at any given time, we are tracking
    over 1,500 milestones in our program. At any given time over
    1,500, typically 250 a year.
        And that does not include some intermediate milestones that
    the sites also track because they're so small that they are
    just on their schedules. So, yes, we will be looking at
    milestones throughout the complex. But I do want to state for
    the record that we basically renegotiate milestones rather
    regularly, as there are technical difficulties or in some cases
    the regulator can't review the documents fast enough.
        Senator Domenici. Yes.
        Mr. Rispoli. So I just wanted to point out that it's a huge
    number of milestones that we deal with. And that for the number
    missed, we basically try to do that as best we could from a
    risk prioritization method.
        Senator Domenici. Now, let's stay with the one in Los
    Alamos. It's--if you miss the milestone there is there any
    serious risk if the milestone is reset in that particular clean
    up project?
        Mr. Rispoli. If we are in jeopardy of missing milestones we
    do, in all cases, attempt to negotiate, meet with the regulator
    to see whether they would have us reprioritize the resources we
    have. So without answering specifically to any of the
    milestones that we're looking at this year, we would always
    dialogue with the regulator to see whether we should do some
    that we thought would be a lower priority but perhaps in their
    view would be a higher priority. And I will state that we do
    that across-the-board with the regulators in all our States.
        Senator Domenici. So this serious risk at Los Alamos, that
    would be readjusted.
        Mr. Rispoli. Yes, sir.
        Senator Domenici. With others in mind.
        Mr. Rispoli. That is correct, Senator.
        Senator Domenici. Can you keep us posted on that?
        Mr. Rispoli. Yes, we can.
        Senator Domenici. Through the committee if you'd like so
    the chairman could know also.
        Mr. Rispoli. Yes, we can.
        Senator Domenici. Thank you, Mr. Chairman.
        Senator Dorgan. Senator Craig.
        Senator Craig. Thank you, Mr. Chairman. Mr. Rispoli, let me
    pick up where Senator Domenici left off. You're obviously
    calculating the potential for fines with milestones missed. So,
    system wide, how much would that figure be if there was a
    refusal to renegotiate? You just simply missed a milestone,
    paid the fine. Have you calculated that?
        Mr. Rispoli. We've run numbers for the milestones that are
    in jeopardy. We don't know that all of them would be missed.
    And in fact we're in the process of renegotiating some now.
        Senator Craig. Ok.
        Mr. Rispoli. But if all were missed it would approach $10
    million, if all were missed.
        Senator Craig. Ten million dollars?
        Mr. Rispoli. It would approach that number, yes, Senator.
        Senator Craig. You know you're down $94 million in the
    Idaho clean up. And, you know, I guess my sadness there is
    you've done so well. And I mean that as a compliment.
        And you ought to be complimented for it because you have
    done well. And Idaho has recognized it and applauded it. And
    it's given the lab a level of recognition that is very, very
    important.
        We were never a weapons lab. We don't have the kind of
    legacies, if you will, that some do. But we do have legacies.
    We've obviously got the legacy of Rocky Flats.
        And we're also very proud. We cleaned up Rocky Flats where
    we did that by moving it out of Idaho. And we're going to miss
    a milestone or two in Idaho. At least that's what we're being
    told could be the consequence of this $94 million reduction.
        So, Mr. Chairman, when you talk about frustrations as
    Senator Domenici and I do, I mean, that's all part of it. Also
    as you know, I've been pushing to take lab waste, move it over
    to EM and I understand the frustration of that. I understand
    there's going to be a response coming forward sooner rather
    than later.
        What if Congressman Mike Simpson and I just simply
    legislated it? Just said here it is. Now the argument is you
    won't take it because there isn't any money.
        But at the same time the other side of the lab has a
    different mission than EM. It is an EM problem, ultimately. So
    why don't we just line it up appropriately and if you can't do
    it because of money then what would be wrong with us just in a
    conference report of a report simply saying, here it is. It
    doesn't change the status of it. It just simply changes your
    responsibility in relation to it.
        Mr. Rispoli. Senator Craig, I might mention that we
    actually put out a call to all departmental elements including
    the Office of both Nuclear Energy, NNSA, and the Office of
    Science. All of them have proposed transfer to EM of both
    facilities and materials. And we are evaluating that now.
        Sometime during this summer we should know. We need to be
    able to put a dollar amount on it.
        Senator Craig. Yes.
        Mr. Rispoli. Or a range, a dollar range. We don't really
    even know yet what that would be until we finish the evaluation
    of what's been proposed. It's actually over 200 facilities and
    a lot of materials that are still in those facilities.
        Senator Craig. Well, if you can get that done by this
    summer, you'll probably beat us legislatively because we're at
    a bit of a stall out here. And at the same time remember that
    money is not necessarily the treater. Because you've already
    demonstrated you're willing to cut back or have to cut back
    budgets on EM and not meet milestones.
        So what we're talking about in Idaho is doing this. Now
    this does not cost money. And nor has it changed the status of
    the need. It has simply changed who handles it.
        Mr. Rispoli. Yes, sir.
        Senator Craig. I don't see that as a money issue. I see
    that as an appropriate realigning in relation to
    responsibilities. Am I wrong?
        Mr. Rispoli. I understand. And I don't disagree. I think
    what this will enable us to do by assembling it all and
    quantifying it and putting a cost range, it will enable us to
    include it in our multiyear program.
        You can only take two points of view. One is that you
    pretend it's not there. And the other is that you recognize it
    is there and work it into your program.
        Senator Craig. Sure.
        Mr. Rispoli. And we take the view that we want to recognize
    what's there and incorporate it into our program, quantify how
    long it will take and what the cost is. So that's the approach
    we're taking.
        Senator Craig. Well, that's--it's important we do that. And
    let me say again, thank you. Work well done, a great reputation
    out in Idaho for the clean up that's underway. I'm saddened
    that all of a sudden we are consciously intending to miss
    milestones at a time when we're trying to build credibility and
    reputation as it relates to DOE's responsibility and handling
    of it.
        Very quickly, Mr. Chairman, Yucca Mountain. Listen to what
    the Director has just said. There is a legacy out there that
    has to be dealt with.
        You need to come to Idaho and look at our lab and look at
    the phenomenal volume of military waste we have there. We store
    almost all of the Navy's nuclear waste. It's cladding is such
    that it must be stored. It cannot be recycled.
        Now there is a responsibility. There is a national
    responsibility that that be handled in a permanent way. I
    understand the politics of Yucca Mountain.
        But I complement Mr. Sproat for doing exactly what he said
    he could do and he's delivering. And we have an obligation, I
    believe, to carry forward to determine. We may be recycling.
        And I agree with Senator Domenici, we ought to. The
    commercial spent fuel ought to be moved into a recycling mode.
    But following that there will remain a need for a permanent,
    deep, geologic repository for certain types of waste of the
    waste stream of clean up and also our military waste. We have--
    we're now mostly bringing in about of its wet storage into dry
    storage.
        But I'll invite you to Idaho. There are a lot of shiny
    little vessels out there that are a great history that we're
    very proud of, our nuclear navy. And we have every reason to be
    proud of it. But we have every responsibility to take care of
    that waste stream.
        My position on Yucca Mountain simply cannot change, nor
    will it change as long as I'm here. And afterwards as an
    advocate for the industry there will be a need for a type of
    repository that Yucca Mountain or something like it will
    demand. Even a contemporary new nuclear industry 50 years out
    fully bound to recycling.
        Where do we then finalize the last of that legacy? You do
    it in a permanent storage facility. In the case of what we're
    doing at Yucca Mountain, we've moved that along in under
    tremendous political odds. And I think the Director needs to be
    complemented in that work. And I thank you.
        Thank you, Mr. Chairman.
        Senator Dorgan. Senator Murray.

            ENVIRONMENTAL MANAGEMENT FISCAL YEAR 2009 BUDGET REQUEST

        Senator Murray. Thank you very much, Mr. Chairman. And I,
    of course, thank you both for the work you've done. However,
    I've heard the word sad used about this budget request. I
    almost can't believe the low budget request for Environmental
    Management, and I just think it's disgraceful.
        There's an ongoing debate here on Capitol Hill right now
    about the cost of war in Iraq and Afghanistan. And we're still
    talking about cleaning up the waste that was left over from
    World War II and the cold war. This is the fourth year in a row
    that the administration has requested a budget lower than a
    year before. And the second year Congress has received a budget
    from the administration that is clearly non-compliant to meet
    the milestones across the States.
        You know this is not a partisan issue. It's not a regional
    issue. It really is a moral and a legal obligation that the
    Federal Government has to clean up and properly store dangerous
    waste across the country.
        Mr. Rispoli, several years ago, before you were working on
    this issue, there was an agreement to work on these clean up
    problems with a plan that was called Accelerated Clean Up,
    which really called for a focus on cleaning up and closing the
    less complicated sites so that we could shrink the total size
    of the complex. But it left a lot of serious issues out there.
    And the funds that were no longer needed to clean up those
    smaller sites were then supposed to be used for the larger
    sites without a reduction in the overall EM spending.
        Now working with my colleagues on the Senate Budget
    Committee this year we worked hard and we passed a budget that
    increases EM by about $500 million. But that is only the start
    of the work that needs to be done this year to properly address
    the portion of the funds that are needed. We cannot continue to
    have the administration send us declining budgets and expect
    miracles to occur here in Congress to add funding and then veto
    those appropriation bills because they're over the President's
    budget request. It just can't happen.
        So, Mr. Rispoli, I just have to ask, are you proud of this
    budget?
        Mr. Rispoli. I think, Senator, any budget process is
    difficult. I think it's true that in all the programs that you
    evaluate as Members of the Senate, you probably see most of
    them that could use more than they have. But at some point----
        Senator Murray. But these are meeting legal obligations.
        Mr. Rispoli. These are to address milestones that have been
    negotiated over many, many years. I think we are in dialogue
    with all of the States. As I indicated, to address from a
    relative risk standpoint, which of them need to be done and
    which can be postponed a bit, if you will.
        I would point out for example at Hanford at the beginning
    of this administration there was $1.2 billion per year going to
    Hanford. Now there's $2 billion per year going to Hanford. Even
    as----
        Senator Murray. Overall complex, the big plants being
    built. At it's river corridor clean up, it's a complex site.
    These are expectations that happen to be in my State, but the
    country needs this cleaned up. This is a nuclear waste site.
        Mr. Rispoli. Yes, we agree with that. And with respect to
    the river corridor, I think we are making tremendous head way
    with ground water. I'm sure----
        Senator Murray. I'll ask you about that in a minute, but
    let me go back. Do you think this budget request is adequate
    for EM overall?
        Mr. Rispoli. The President's budget in writing as submitted
    to the Congress acknowledges that the budget request will
    result in putting milestones at jeopardy both for budget
    reasons and for technical reasons.
        Senator Murray. It almost feels like there's this little
    conversation going on in the White House where they send over a
    budget request that's less than adequate in many, many ways,
    knowing that we're going to do our job because we represent
    States that are going to have disasters if those sites aren't
    cleaned up, and we're going to add the additional dollars. Then
    there's another room in the other part of the White House where
    they're saying veto every appropriation bill that's over the
    administration's request. Those two rooms better start talking
    to each other because we have potential disasters coming.
        I'm not just saddened by this budget request, I'm angered
    by this budget request. We have an obligation to clean up these
    sites.

                     EM FISCAL YEAR 2009 BUDGET PRIORITIES

        Let me ask you about the river corridor closure. That is a
    project that is performing well. It's ahead of schedule, and
    it's on budget. The workers have made great progress,
    decommissioning and demolishing the buildings in the 300 areas
    that cocoon the reactors along the Columbia River, cleaning up
    the burial sites.
        That sounds really successful to me. Yet the budget, this
    budget, that you sent us cuts that funding by $77 million. I do
    not understand why we're going to pull the rug out from under a
    high performance project.
        Now, you said you increased groundwater funding by $60
    million. But I have to ask, how do you expect the workers to
    get at the ground water when the buildings are still sitting on
    top of those sites?
        Mr. Rispoli. Senator, I think we are paying a lot of
    attention to groundwater. We are focusing on the highest
    priority locations as are shown on this map of the Hanford
    reservation. There's also a photo before you that shows that in
    the 300 Area alone we've taken down over 200----
        Senator Murray. I know that. But until we take those
    buildings down we can't get to the ground water. So
    undercutting that project by $77 million means we can't get to
    the ground water.
        Mr. Rispoli. What we are prepared to do is negotiate with
    the State. And if the State believes it's a higher priority for
    us to shift funds to tear down buildings, we can certainly
    discuss that with them. But I do believe that the commitment
    that the Secretary has shown to the Waste Treatment Plant, one
    of the largest public works----
        Senator Murray. That's not fair to dump it on the State.
    When the administration asks for $77 million less for river
    corridor closure what it truly means is that there will have to
    be layoffs this summer. Once the appropriation bill is written
    with additional dollars it will be too late. Somehow we're
    supposed to find these people again a few months later and hire
    them back.
        These jobs are dangerous. And we have to have, as you said
    a few minutes ago, people who are highly skilled doing them. I
    don't understand how we can manage these complex jobs that are
    out there and just say we'll negotiate with the State. This is
    in my State, but this is a national project.
        Mr. Rispoli. Senator, with all due respect I wasn't meaning
    to dump anything on the State. I think we, and the State, have
    a very, very formidable challenge in Washington. I think we
    recognize that Hanford is probably the most significantly
    contaminated site we have.
        And I believe that it's important that we and the State
    work together. We have over 10,000 workers there just in the
    environmental program that are residents of that State, working
    very, very hard to deliver the good work that they're
    delivering. I think the reality is that when your needs exceed
    the budget amounts you have to use some sort of a
    prioritization.
        Senator Murray. When our needs exceed our budget amounts,
    somebody over in OMB decides a random budget amount and then
    says anything above that is just a need someplace. These are
    clean up sites. This is nuclear waste. These are projects that
    are highly complicated.
        Mr. Chairman, I just think we're playing with fire here the
    way these have been volleyed back and forth. I'm out of time. I
    do have some other questions, but I will wait until the next
    round.
        Senator Dorgan. Well, Senator Murray, I understand your
    passion and concern. I share it. I don't know whether you were
    here when I mentioned about former Congressman Mike Parker. But
    when he showed up and expressed dissatisfaction with the
    President's budget he lost his job the next morning. So I guess
    neither of us probably expects someone from the administration
    to come and say that they're short of money.
        But it's pretty clear to me that this budget, Mr. Rispoli,
    does not give you the resources that had previously been
    committed to be spent to meet milestones. And if we live in a
    State, as Senator Murray does, where we have very substantial
    clean up obligations, there's every reason to be angry about
    that. When the Government makes commitments, the Government
    should keep its commitments.
        And there's plenty of money for other priorities of the
    administration, but this apparently is less a priority. I think
    that we're going to have to, as a subcommittee, try to
    determine how we allocate our resources this year. It's hard to
    do. As I indicated we're short of money in a wide range of
    areas given the President's budget request. But we're going to
    work hard to try to reallocate this funding to meet the
    obligations that we believe we have.
        Senator Murray, if you wanted to ask additional questions
    I'd be glad to recognize you.
        Senator Murray. Well I appreciate that and I know that you
    need to move on. I did have some questions about the VIT plants
    and supplemental treatment. I would like to submit them and I
    really would appreciate a response back.
        On a good note, the B reactor is open for tours. I know
    we're getting great response out there at the site. I
    understand that the 2,064 seats were filled in less than 24
    hours. In my State we would say those tickets sold out faster
    than a rock concert, even if they're free.
        I do think that the B reactor is an important piece of
    history and I hope that we can continue to work with all of you
    to make it more available for the public. It's an important
    site, and it's an important part of our history, good, bad and
    ugly. I think it's important that future generations see what
    some of the people sacrificed there, what they gave up and the
    ingenuity that this country came to at a time of great
    importance.
        I will submit my other questions for the record and thank
    you very much.
        Senator Dorgan. Senator Murray, thank you very much. I want
    to mention, Mr. Rispoli, before you testified I had an
    opportunity to view these photographs and what the photographs
    demonstrate to me is that money spent on this clean up is very
    important. When we clean up a site, that's real progress and
    real value.
        So this isn't a debate about money that has little
    consequence. The expenditure of the money and the completion of
    the clean up is a very significant event. And you show some of
    that in these photographs. Although it looks like you took one
    of the photographs during the winter and the comparison in the
    spring, which gives it a slightly different look, Mr. Rispoli.
    But nonetheless, I think that this is very helpful to the
    committee. And we appreciate your work.
        Let me say to both of you, we likely will be back in touch
    with you as we move toward a mark up to solicit additional
    information about both of these programs and priorities because
    we're going to have to find a way to sift through the
    President's recommendations and come up with a set of
    recommendations that represent what the committee feels the
    appropriate priorities are.

                         ADDITIONAL COMMITTEE QUESTIONS

        I would like to ask at this time that the subcommittee
    members submit any additional questions they have for the
    record.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                  Questions Submitted to Hon. James A. Rispoli
                   Question Submitted by Senator Patty Murray
                           three hanford procurements
        Question. Mr. Rispoli, my understanding is that the decisions
    regarding the award of two of the pending Hanford contracts--Central
    Plateau and Tanks Farm Operations have been delayed again.
    Additionally, there seems to be an indication the Mission Support
    Contract will be awarded last rather than first as originally expected.
    There is much uncertainty with these three large contracts yet to be
    decided and I'm looking forward to the day when Hanford has a full
    complement of Federal managers and all the major contracts awarded and
    running with adequate funding. With cleanup schedules and funding as
    tight as they are I would certainly like to see teams in place that
    have solid track records of staying on time and on budget.
        Having the Mission Support contract in place prior to awarding the
    Central Plateau and Tank Farm Operations would seem to offer an
    efficiency and ease of transition for the workers. Would you please
    explain the reason behind the order of the award of the contracts?
        Would you please provide an outline of the timing of the three
    contract awards and when they would be in place and running?
        Answer. With the recent award of the Tank Operations Contract on
    May 29, 2008 and the Plateau Remediation Contract on June 19, 2008 and
    the Mission Support Contract on track for a projected award in July-
    September 2008 time frame as originally forecasted, this next
    generation of contracts will continue the important cleanup work
    conducted on the Hanford Site Central Plateau.
        The order of award is based on the uniqueness of each procurement,
    the evaluation process leading up to award along with the Department's
    efforts to minimize disruption to ongoing work while improving overall
    efficiency. Maintaining the cleanup momentum is one of several
    important considerations to the Department. Impacts are minimized given
    the specific scope of work contained in each of the three new
    contracts, detailed contract requirements for each contract transition,
    and a 90-day transition period that provides the flexibility to overlap
    each of the contract transition periods. Departmental planning for
    contract transition has considered the logical alternatives for
    contract award sequence, and can support award of the three contracts
    in any sequence
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                                  lanl cleanup
        Question. Secretary Bodman has testified earlier this year that the
    fiscal year 2009 EM budget is short across the board, and that there
    will be missed milestones. In particular, it has come out in subsequent
    testimony that the funding for environmental cleanup work at Los Alamos
    National Laboratory is short $100 million for fiscal year 2009. Who
    will pay for the expected fines that LANL will get from the State of
    New Mexico? Will it come out of planned cleanup dollars, further
    exacerbating the problem? As a result of this budget, can you tell me
    how many of the milestones you anticipating missing and the resulting
    delays this may have on project completion?
        Answer. It is important to recognize that some milestones and
    obligations would have been missed regardless of the budgetary approach
    and the level of funding that was chosen. This is primarily the result
    of the relevant agreements having been negotiated years ago with
    incomplete knowledge by any of the parties of the technical complexity
    and magnitude of costs that would be involved in attempting to meet the
    requirements. Moreover, the cleanup program continues to be impacted by
    various safety, contract administration, project management,
    regulatory, legal, technical, economic, and other significant
    challenges. Consequently, isolating funding as the only issue placing
    some of the Department's cleanup milestones in jeopardy given the other
    confounding factors would be inaccurate and misleading.
        When a milestone is missed, whether a fine or penalty is imposed is
    left to the discretion of the Department's regulators. Once imposed,
    who pays a fine or penalty depends on whose actions are responsible for
    missing the milestone. In the past, some fines for missed milestones
    have been paid by the Department, others by contractors. There is no
    separate appropriation for fines and penalties. Therefore, fines and
    penalties paid by the Department come out of cleanup budgets.
        Of the seven Los Alamos National Lab compliance milestones
    scheduled for completion in fiscal year 2009, EM anticipates that three
    are at-risk based on the program's expected performance through fiscal
    year 2008. Since none of these milestones are on critical path to
    project completion, their delay will not result in an extension to the
    project completion date.
                         renegotiate lanl consent order
        Question. A recent newspaper story reported that Ron Curry of the
    New Mexico Environmental Department believed that Department of Energy
    actions seem to indicate that the Department wants to renegotiate and
    weaken the terms of the clean up agreement between the Department and
    the State. Is there any truth to this statement?
        Answer. No. The Department does not intend to renegotiate or weaken
    the terms of the 2005 Order on Consent. Rather, we have proposed,
    within the existing structure of the Consent Order, priorities with a
    goal of arriving at mutually agreeable opportunities to complete
    cleanup.
                          missed milestones nationwide
        Question. It is my understanding that this budget puts at risk
    three milestones at Los Alamos for fiscal year 2009. How many
    milestones nationwide do you estimate will be missed under this budget
    and how much funding will it take for Congress to add to recover these
    milestones?
        Answer. It is important to recognize that some milestones and
    obligations would have been missed regardless of the budgetary approach
    and the level of funding that was chosen. This is primarily the result
    of the relevant agreements having been negotiated years ago with
    incomplete knowledge by any of the parties of the technical complexity
    and magnitude of costs that would be involved in attempting to meet the
    requirements. Moreover, the cleanup program continues to be impacted by
    various safety, contract administration, project management,
    regulatory, legal, technical, economic, and other significant
    challenges. Consequently, isolating funding as the only issue placing
    some of the Department's cleanup milestones in jeopardy given the other
    confounding factors would be inaccurate and misleading. Of the
    approximately 120 compliance milestones scheduled for completion in
    fiscal year 2009, EM anticipates that 32 are at risk based on the
    expected progress through fiscal year 2008.
                                      wipp
        Question. Today, the Waste Isolation Pilot Plant is operating at
    full capacity, processing an average of 26 waste shipments per week.
    This throughput is helping to ensure that sites such as Idaho National
    Laboratory and Los Alamos National Laboratory meet State-mandated
    milestones for the removal of TRU waste. Your fiscal year 2009 budget
    proposes $211.5 million for WIPP, a 10 percent decrease from the fiscal
    year 2008 level. This cut will reduce the rate of waste shipments to
    WIPP. Slowing waste transfers to WIPP means that the material will
    remain where it was created and delivery milestones will be missed. Mr.
    Rispoli, why did you propose this reduced funding level? How many
    State-mandated milestones will be missed? Will there be impacts on
    storage facilities at Los Alamos and Idaho National Laboratories?
        Answer. The EM fiscal year 2009 request reflects the Department's
    priorities to focus on risk reduction while maximizing regulatory
    compliance. As noted in the budget request, the proposed fiscal year
    2009 funding would allow WIPP to support a disposal capability of 26
    waste shipments per week: 21 shipments per week of contact-handle
    transuranic waste and 5 shipments per week of remote-handled
    transuranic waste. We do not currently anticipate missing any State-
    mandated milestones in fiscal year 2009 at any of our sites based on
    the WIPP program's expected performance through fiscal year 2008. There
    will be no adverse compliance impacts at the Idaho National Laboratory
    because the Department is ahead of schedule in meeting the Idaho
    Settlement Agreement milestones and the Site Treatment Plan targets for
    processing and shipping transuranic (TRU) waste. At Los Alamos National
    Laboratory, there are no State-mandated milestones specific to
    transuranic waste operations, and no adverse storage conditions are
    expected.
     los alamos national laboratory--national academy study on groundwater
                                   protection
        Question. At the request of the Office of Environmental Management
    the National Academy of Sciences initiated a study of groundwater
    protections activities at Los Alamos National Laboratory, which was
    published last year. (``Plans and Practices for Groundwater Protection
    and the Los Alamos National Laboratory.'') Their recommendations
    include: completing the characterization of disposal sites; performing
    additional modeling to understand potential pathways between watersheds
    and adding monitoring locations in the southern area of the site (and
    near the San Ildefonso Pueblo lands). Mr. Rispoli, has any decision
    been taken to act upon these recommendations? What is the status of
    these efforts? Has money been requested in the fiscal year 2009 budget
    to support this work?
        Answer. Yes, the EM program has developed an implementation plan
    for the 17 recommendations in the National Academy of Sciences study.
    Of the 17 recommendations, 13 describe work that has already been done
    or is ongoing. Funding for these activities has been requested in the
    fiscal year 2009 budget.
                             science and technology
        Question. In the ``Science and Technology Needs for DOE Site
    Cleanup'' workshop held last year, it was mentioned several times that
    current EM cleanup contracts actually serve as a barrier to new
    technology deployment. What is being done within EM to incentivize
    contractors to deploy new technologies to improve upon the efficiency
    and effectiveness of future cleanup contracts?
        Answer. The Office of Environmental Management is committed to
    further developing and utilizing an array of contract structures that
    will provide for the safe and efficient cleanup of our sites, and where
    appropriate, incentivize our contractors to deploy new and/or
    innovative technologies and approaches. Our major contracts are
    structured to incentivize the successful completion of defined mission
    objectives. As such, our incentives are geared toward rewarding results
    achieved and not the methods by which those results are achieved. The
    result of this approach is that our private sector contractors are
    incentivized to utilize their ingenuity and creativeness, including the
    use of new and/or innovative technologies, as appropriate, in bringing
    forth the best solutions to our cleanup challenges.
        In addition, and on a more specific level, we have recently issued
    guidance for using a new project management tool, the Technology
    Readiness Assessment (TRA). The TRA process, as adapted for
    environmental cleanup, is a tool for understanding, and mitigating, the
    complexity and risks associated with implementing first-of-a-kind
    technologies required for the safe and efficient cleanup of our sites.
    Rigorous application of this tool within the framework of our incentive
    contracts will enable our contractors to substantially reduce the risk
    associated with deploying new and/or innovative technologies.
        Question. If additional funding is not secured to enable Los Alamos
    to meet the milestones prescribed in the Consent Agreement that would
    result in a 2 year delay in the cleanup milestone, will this have a
    measurable impact on nearby populations? What impact will this have on
    the cost of cleanup?
        Answer. The budget request provides funding that makes any
    measurable impact on nearby populations very unlikely. The LANL site is
    extensively monitored, with thousands of environmental samples
    routinely analyzed for measurable contamination that could potentially
    impact nearby populations. These results are reported annually in site
    monitoring reports. While the potential for accidents cannot be
    completely eliminated, the Department believes that these risks are
    also very low. Administrative and engineered controls and operational
    safety protocols all contribute to the continued protection of the
    local populations.
        The Environmental Management program's goal is to meet the terms of
    the consent Agreement and finish cleanup at the earliest possible
    juncture in a cost-efficient manner.
                                     ______

                Questions Submitted to Hon. Edward F. Sproat III
                Questions Submitted by Senator Pete V. Domenici
           implementation of e&w direction to consolidate spent fuel
        Question. The fiscal year 2008 Consolidated Appropriations Act,
    Public Law 110-161, which contains the Energy and Water Division,
    directed the Department ``to develop a plan to take custody of spent
    fuel currently stored at decommissioned reactor sites.'' This language
    is borne out of frustration over the lack of options being considered
    for addressing out commercial spent fuel options. What is the status of
    this report and can you please explain to me what options you are
    considering?
        Have you reached out to the communities interested in hosting the
    GNEP facilities as the public law directs?
        Answer. The Department is preparing a report that will discuss what
    is required to develop an interim storage facility for the acceptance
    of spent nuclear fuel from decommissioned nuclear reactor sites; we
    expect to release the report this summer. The report will consider
    siting options at an existing Federal site, at one or more existing
    operating reactor sites, or at a competitively-selected interim storage
    site. While the Office of Civilian Radioactive Waste Management (OCRWM)
    has not yet reached out to the communities interested in hosting the
    Global Nuclear Energy Partnership, the report will take into account
    information the Department has acquired through the efforts of the
    Office of Nuclear Energy to reach out to such communities.
                              license application
        Question. You appear to have high confidence that DOE's Yucca
    Mountain license application will be of high quality. However, the
    Department has had numerous problems with quality assurance in the
    past. Please describe what standards you have put in place to ensure
    the application will be of the highest quality and how, during the
    transition from one administration to another, we can be assured the
    standards will be maintained.
        How long do you estimate it will take the NRC to take to review and
    approve the license for Yucca Mountain?
        Answer. The Department has taken several steps to build quality
    into the development of the License Application (LA) and we are proud
    of that work. Specifically, the Department followed a rigorous,
    disciplined process that included development of the LA in four phases,
    final LA completeness and accuracy verification reviews, and
    independent quality control checks and validation. In addition, the
    Office of Quality Assurance conducted oversight activities in parallel
    with LA development. Review and approval of the LA was required by all
    organizations at each of the four phases of development, and senior
    management from the Federal and contractor staffs were fully integrally
    and involved in LA preparation and development.
        Section 114 of the Nuclear Waste Policy Act requires that the
    Nuclear Regulatory Commission (NRC) issue a final decision on
    construction authorization for all or part of a repository within 3
    years of the date of submission of the application, except that the
    Commission may extend the deadline by not more than 12 months if the
    NRC submits to the Secretary and the Congress a written report
    explaining the reason for its failure to meet the deadline. We expect
    that the NRC will meet its mandated statutory time frame.
                           yucca mountain next steps
        Question. Beyond the resources required for DOE to support NRC
    review of its license application, have you identified additional
    activities that should be funded in order to position the Department to
    begin construction of the repository in a timely and efficient manner
    should a Construction Authorization be received from NRC? Have any such
    activities been included in your fiscal year 2009 budget request?
        Answer. Beyond funding to participate in the licensing proceeding,
    the fiscal year 2009 budget request includes funding adequate to
    execute the minimum set of critical activities which are sufficient to
    continue to make forward progress on the program. Activities to be
    funded include continued detailed design for facilities required for
    the receipt of spent nuclear fuel and high-level radioactive waste;
    continued essential interactions with State, local, and tribal
    governments needed to support national transportation planning;
    completion of efforts to finalize the contour mapping needed to
    finalize the layout of the rail line in pursuit of land acquisition and
    completion of a right-of-way application for the Nevada rail line;
    continued design work on the transportation, aging and disposal
    canister system; staffing and training of the OCRWM organization so
    that it has the skills and culture required to design, license, and
    manage the construction and operation of the Yucca Mountain Project;
    and planning for a compliant and well-integrated safeguards and
    security, safety, and emergency management program for the disposal,
    transportation, and management of spent nuclear fuel and high-level
    radioactive waste.
        Question. When the Yucca Mountain Development Act of 2002
    authorized DOE to go ahead and proceed into the licensing process for
    Yucca Mountain, the Department originally planned to submit a license
    application to NRC in 2004. This of course has been delayed. It is my
    understanding that, during the extended period that we have been
    waiting for the now forthcoming license application you have had
    significant and regular pre-application interactions with the NRC. Can
    you comment on what you have learned from these interactions in terms
    of types and extent of questions you might expect from NRC during their
    review of your application?
        How has what you have learned informed your planning in terms of
    the resources that will be required for DOE to be in a position to
    respond to NRC questions in a timely manner?
        Also, given this knowledge, what is your level of confidence that,
    provided you get the resources you believe are required for DOE to be
    responsive to NRC's review (and NRC's funding requirements are
    similarly met), that the review can be completed in the 3 to 4 years
    called for in the Nuclear Waste Policy Act?
        Answer. We believe that the pre-licensing interactions have helped
    the NRC to better understand DOE's approach to demonstrating compliance
    with the applicable regulations. Also, in some instances these
    interactions have led the Department to revise its approaches to better
    meet NRC's expectations. We are not in a position to speculate on the
    type of questions that may result from the NRC's review of the LA.
        The Department's planning relating to the resources that will be
    necessary to support the licensing proceedings has been informed by
    past interactions with the NRC, the Department's experience in
    preparation of the LA, and the Department's experiences in supporting
    regulatory proceedings and/or litigation in connection with major
    Federal projects. Subject to the availability of the requested funding,
    the Department believes that with the submittal of a high quality LA
    and the available technical Federal and contractor staff that the
    Department will be able to respond to NRC requests for additional
    information in a timely manner.
        The Department is confident that, assuming receipt of the requested
    funding, that we will be able to respond to NRC requests for additional
    information in a manner such that NRC will be able to complete their
    Safety Evaluation Report within 18 to 24 months. This will support
    timely issuance by the NRC of a decision regarding construction
    authorization within the 3 to 4 year time frame.
        Question. As you know there is now considerable interest in
    recycling used nuclear fuel. It is my understanding that recycling
    removes many of the radioactive constituents from the used fuel and
    processes them into waste forms having reduced volume as compared to
    what is originally in the used fuel. Can you comment on the ability of
    the Yucca Mountain repository to safely dispose of the waste forms that
    might result from recycling and how this might impact the amount of
    material that could be stored in the Mountain?
        Answer. Until the current law is changed, recycling of spent
    nuclear fuel will have no effect on the amount of waste that can be
    disposed of in Yucca Mountain. This is because the Nuclear Waste Policy
    Act of 1982, as amended, sets a limit of 70,000 metric tons of heavy
    metal (MTHM) based on the original uranium content of the fuel.
    Therefore, regardless of the amount of volume reduction or radionuclide
    transformation that takes place by recycling, only the amount generated
    by the original 70,000 MTHM can be placed in the repository. If the law
    were to be changed to lift that limit, the high-level waste products
    from recycled fuel in amounts greater than 70,000 MTHM could be
    disposed of in Yucca Mountain.
        The Department is in the process of evaluating the benefits of
    recycling spent nuclear fuel; however, it is premature to analyze how
    the various waste forms resulting from recycling might impact the
    amount of material that could be stored in Yucca Mountain. Further
    technical information on the characteristics of the waste form is
    required before such analyses can be performed. Studies prepared for
    the Global Nuclear Energy Partnership have indicated that the recycling
    initiative can potentially produce a waste form with less volume and
    lower heat generation.
                               new nuclear plants
        Question. What are the implications of the recent announcements of
    nuclear power plant license submittals with regard to the Yucca
    Mountain license application and the utility contracts?
        Answer. The recent announcements of nuclear power plant license
    application submittals to the NRC will not impact the License
    Application for Yucca Mountain, which is being prepared based upon the
    current statutory limit of 70,000 MTHM. The announcements similarly
    will have no impact on the Department's existing utility spent fuel
    disposal contracts, which were executed in the 1980s.
        Notwithstanding the above, the Nuclear Waste Policy Act of 1982, as
    amended, requires that any applicant seeking a license to construct and
    operate a new nuclear plant must have entered into a contract with the
    Secretary of Energy for disposal services, or that the Secretary
    affirms that such a person be in good faith negotiations with the
    Secretary for such a contract. In view of the announcements of
    applications for new nuclear plants, the Department is considering
    execution of appropriate contracts with interested utilities.

                              SUBCOMMITTEE RECESS

        Senator Dorgan. So we appreciate both of you coming to the
    Senate today and appreciate your testimony. This hearing is
    recessed.
        [Whereupon, at 10:38 a.m., Wednesday, April 9, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2009

                                  ----------

                            THURSDAY, APRIL 10, 2008

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:30 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Byron L. Dorgan (chairman)
    presiding.
        Present: Senators Dorgan, Murray, Johnson, Landrieu, Reed,
    Domenici, Bennett, Craig, and Bond.

                          DEPARTMENT OF DEFENSE--CIVIL

                             DEPARTMENT OF THE ARMY

                           Corps of Engineers--Civil

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

                  OPENING STATEMENT OF SENATOR BYRON L. DORGAN

        Senator Dorgan. We'll call the hearing to order. This is a
    hearing of the Appropriations Subcommittee on Energy and Water
    Development. This is a hearing on the fiscal year 2009 budget
    request for the U.S. Army Corps of Engineers and the Bureau of
    Reclamation.
        I want to say to my colleagues and to the witnesses, as
    well, that we have three votes in the Senate starting--I
    believe--at 10:45, which means we would have to leave the room
    here about 5 till 11. My hope is that we can finish this
    hearing in about an hour and a half, otherwise we will need
    about a 40 to 45 minute recess during those votes.
        So, I'm going to truncate my opening remarks, and I only
    point that out--not to disadvantage anybody--but hope that
    perhaps we can complete the hearing in an hour and a half.
        Today the subcommittee will take testimony on the budget
    for 2009 for the U.S. Army Corps of Engineers and Department of
    Interior.
        Testifying for the Corps will be John Paul Woodley, the
    Assistant Secretary of the Army for Civil Works, as well as
    Lieutenant General Robert L. Van Antwerp, Chief of Engineers
    for the U.S. Army Corps of Engineers.
        Testifying for the Interior will be Kameron Onley, Deputy
    Assistant Secretary of the Department of the Interior, and
    Robert Johnson, Commissioner of the Bureau of Reclamation.
        General, this is your first opportunity to appear before
    the committee, I believe. And since assuming--at least, since
    assuming the command of the Corps of Engineers. We welcome you
    here, I look forward to working with you on many water resource
    problems that we have across this entire country, and in
    particular, I hope you'll familiarize yourself--I know you
    will--with the special water issues we have in North Dakota,
    the continuing flood in Devil's Lake that is causing a lot of
    difficulty and the management of the Missouri River System.
        You know, and I know that I've been highly critical of the
    management--or the mismanagement--of the Missouri River System,
    but you and I will talk about that at a later time.
        The President proposes a fiscal year 2009 budget for the
    Corps of Engineers of $4.74 billion, which is $851 million
    below the fiscal year 2007 enacted $5.59 billion. When you take
    a look at the Corps of Engineers and the Bureau of Reclamation
    sitting in front of us today, the proposal is to reduce funding
    by almost $1 billion.
        I must say, I don't think the committee is going to do
    that, I don't think that represents the country's urgent need,
    but I understand that you come here supporting the President's
    budget.
        I do think--I made the point yesterday when Senator
    Domenici was here, I remember that former Congressman Parker
    once came to the Congress. And apparently Senator Bond asked
    him the question, and Congressman Parker--in a moment of
    careless candor, said, ``Yes,'' he thought the budget was short
    of what is needed, and the next morning he was fired.
        So, I understand the four of you are here to support the
    budget sent to us by the President, but I do want to say--
    investment in water resources is unbelievably important for
    this country. And we're doing, I think, 950 water projects in
    the country of Iraq, paid for by the American people, right
    now--950 water projects in Iraq--and we come to this table with
    the proposal that we should cut $1 billion from water project
    investment in this country. I personally think that's misplaced
    priorities.
        I will not go down the list, in total, I'm going to
    truncate my opening statement and put the entire statement in
    the record--I was going to talk some about the President's
    comments about earmarks. As you know, most of this
    subcommittee's earmarks are for ongoing projects, and if we
    didn't do them, they wouldn't get done.
        So, I will truncate, again, that comment, as well.
        I will just say to my colleagues who just arrived, that
    we're going to try to finish this hearing in an hour and a
    half, because we have three votes starting at about that period
    of time. If we could finish this hearing at that time, I'd
    appreciate it.
        Let me call on my colleagues for very brief opening
    statements, if I might.
        First, Senator Domenici.

                 OPENING STATEMENT OF SENATOR PETE V. DOMENICI

        Senator Domenici. Yes, thank you, Mr. Chairman.
        I just wanted to indicate that this will be my last hearing
    of this type, and the--it has been a rather exciting experience
    working on this committee.
        You are the 11th Chief of Engineers, and Commissioner
    Johnson, you are the 15th Commissioner of Reclamation that I've
    had the pleasure of working with, so I think that makes me a--
    probably, I hold a record that won't be broken for awhile.
        Senator Dorgan. Senator Domenici, does that reflect how
    long you've been here, or how much turnover there's been?
        Senator Domenici. A little bit of both. I've been here, and
    some other departments for 36 years, and they've only had one
    or two leaders, or three. So this--it's quite a bit of
    turnover.
        I have statements regarding both of your functions, and I
    have some statement here regarding the tax that was placed
    upon, in the Nusra Waterway, when I was a freshman Senator,
    believe it or not, that was my bill that put on the--that
    levied the tax.
        Senator, I beat all of the powerhouses then, you know, this
    bill ran against the grain of Russel Long, and on the House
    side, Dingell, everybody--and it passed, nonetheless, and the
    tax was put on. And now it seems like it's not working, and the
    administration says they're going to send something else up to
    take its place, I don't think you've seen what they plan to put
    in, nor have I.
        In my State, I want to say to you, General, you have made a
    commitment to join us there when we dedicate the Bosque in
    Albuquerque, we established quite a big park there among those
    beautiful cottonwood trees, and I certainly hope to see you
    there.
        And Commissioner, we have one big job left with you, we
    have a wonderful building that is to house research entities
    that want to look into water research, and they can go there
    and rent space in this rather visionary idea that you could
    establish a place where they could come and do their research
    and rent space in a well-equipped building. And I hope we can
    work out the management aspects of that, and the--who's going
    to run it. And perhaps within a couple of months you'll have
    that worked out.
        Senator Dorgan. Senator Murray.

                       STATEMENT OF SENATOR PATTY MURRAY

        Senator Murray. Thank you very much, Mr. Chairman, for
    calling this hearing.
        And thank you to all of the witnesses, I appreciate your
    attendance this morning to discuss these important topics.
        I do have to leave in just a few minutes to chair a hearing
    of Transportation and HUD Subcommittee, so I won't be able to
    probably make it back for questions. I wanted to take this
    opportunity to raise a few items with you now, and I will be
    submitting questions for the record.
        Secretary Woodley, and General Van Antwerp, I want to
    commend the three Army Corps of Engineers districts that
    directly work with Washington State, Seattle, Portland and
    Walla Walla Districts--they do great work for my State and the
    people who live there. The military and civilian staff both are
    responsive, and they've worked very well with my staff, and I
    appreciate that.
        While I do have a great working relationship with those
    offices, it's often very difficult to make progress without
    adequate budgets being sent from this administration. And I am
    deeply concerned by the $846 million in cuts to the budget from
    the fiscal year 2008 appropriated dollars. It seems to me this
    is just an annual game where the administration sends us short-
    sighted budget requests, expects Congress to fill in these
    important budget items, we send them back to them, and they
    veto them. It's a game that is playing with lives, and
    important projects and I resent it.
        I want to comment, as well, on the newly proposed user fees
    for the navigation locks to fund the Inland Waterway Trust
    Fund. This would place a large burden on some river systems,
    more than others, and it makes no sense to me to abandon the
    established diesel tax and try to create this entire new
    bureaucracy. I don't understand why we don't work to update the
    current vehicle.
        You know, for years now, I've been working with this
    committee and with you and the administration to deepen the
    Columbia River Channel, so we can allow larger ships and barges
    to carry millions of tons of cargo to domestic and
    international markets. I am pleased with the inclusion of funds
    to continue this effort, as the Columbia and Snake River System
    is a very important economic engine, of great importance to our
    country.
        However, it seems really illogical to me that the Corps
    would invest so much in the river transportation system, and
    then try to implement a fee that could discourage those users
    away from the river system and back onto our roads and
    highways, which is a more expensive mode of transportation. So,
    I am deeply concerned about that.
        Turning back to the severe budget cuts, and the projects
    left off the President's request--I do want to talk to you
    about a project in Centralia, Washington. We have been working
    with the Corps for many years on an important flood control
    project along the Chehalis River. This is a project that has
    been studied, reported, and finally authorized in the Water
    Resources Development Act (WRDA) bill that was passed by
    Congress last year, over a Presidential veto.
        As I'm sure you are aware, there was a tremendous storm off
    the coast of Washington State, and in Oregon, last December. It
    caused tremendous flooding and damage--we haven't seen anything
    like that in my State for some time. The flooding shut down I-
    5, which is the main north/south freeway from Washington State
    all the way to California, for 4 days. The flooding overwhelmed
    the Chehalis River, the entire river basin, damaged homes,
    killed thousands of farm animals, destroyed local
    transportation infrastructure and it cost us millions--
    millions--in debris cleanup.
        We still have people in Centralia and the surrounding areas
    who are still trying to pick up the pieces of their homes,
    businesses, and lives that were destroyed. I have been down
    there many times, and visited with the people and the local
    officials, and they are all really eager to find a way to
    prevent this from ever happening again.
        I made a promise to those people to work here in Congress
    to get those funds--it's to an inexpensive project, it's
    authorized at $74 million on our side, $50 million on the
    State. But in the budget that we're discussing today, Mr.
    Chairman, there is zero dollars. We cannot continue to do this,
    and I'm--if I can't come back, I will submit questions about
    this. I would like to ask you to come to my office and work
    with me on this.
        But Mr. Chairman, I just reiterate--we can't keep having
    this administration send us budgets that don't adequately fund
    the projects that we've been working with them on.
        Senator Dorgan. Senator Murray, thank you.
        Senator Bond.

                    STATEMENT OF SENATOR CHRISTOPHER S. BOND

        Senator Bond. Thank you very much, Mr. Chairman.
        I certainly agree with the words of the chairman, and
    Ranking Member Domenici, and my colleague from Washington on
    the inadequacy of the budget, and also the admonition that, if
    you can't agree with this openly, you'll get canned. But we
    want you to know, and we want everybody else to know, how bad
    we think this budget is. And it's totally inadequate, and it's
    a great disappointment.
        Just a few weeks ago, Missouri was hit with devastating
    floods that ruined homes, damaged farmland, took the lives of
    too many people. This disaster served as one more harsh
    reminder of the importance of our infrastructure, including
    flood control of our rivers. And a very special thank you to
    Chairman Dorgan, Senator Domenici, the subcommittee and the
    staff for their strong commitment to flood control. Let me give
    you one specific point.
        Earmarks that were added by this committee are responsible
    for the recently completed construction of the Valley Park
    Project outside of St. Louis. This project was constructed just
    in time to protect 1,000 people, and almost $100 million in
    property, under flood water. Surely, we can agree that the
    extra $5 million earmarked by Congress to accelerate completion
    by 1 to 2 years on a project that cost almost $50 million, was
    well worth the effort and didn't come a moment too soon.
        But again, this year OMB has put us in a funding
    predicament. I'm disappointed that the administration continues
    to frustrate and under fund our efforts to modernize our water
    infrastructure.
        Despite the overwhelming and bipartisan support in Congress
    for the Water Resources Development Act, the President's budget
    does not provide money to update our Depression-era locks and
    dams. This is the most energy-efficient, economical way to
    transport commodities--both inputs coming up the river to
    agricultural areas, and the vitally important agricultural
    exports that go to the world market, that give us significant
    favorable balance of trade.
        This budget, presented to us, does not address our
    crumbling infrastructure, and provides no means to fix it. We,
    as a committee, as a Senate, must work together to address our
    navigation channels, and flood control. We must invest in the
    structures to keep our citizens safe, and the river
    transportation networks working.
        Given the flooding, and the disaster's impacts, Missourians
    need serious help to recover from the storms that we are
    enduring already this spring. Unfortunately, Missouri is not
    out of the woods yet, we have lakes near overflowing and levies
    weakened, and I looked at the weather map today, and it showed
    a solid sheet of rain all over the Midwest.
        We're in a state of repair, and at the same time, we're
    still under severe storm watches. I look to this committee to
    aid in providing supplemental funds for repair from the storms
    we've already had, and flood protection for storms Missouri
    continues to endure.
        On a side note, I would express my appreciation to the
    Corps for their creativity that has spared Missouri an
    additional man-made flood in the spring rise. I realize that
    this year the Corps did their best to alleviate the insult to
    an already-flooded State and we're grateful.
        However, in case any new reason is needed next year, you
    may be interested to know that the U.S. Geological Survey has
    completed peer-reviewed studies that a spring rise has no
    benefit to the pallid sturgeon. I wish somebody would
    understand that.
        In any event, I regret that Senator Murray and I have
    another hearing, so I will not be able to join with the
    chairman in the discussion of the Missouri River policy, which
    is always an interesting subject. We have a couple of areas of
    agreement, and even those we can't get through.
        But I look forward to working with you, Mr. Chairman, the
    committee and your staff, and I appreciate the good efforts of
    our witnesses here today, and please don't agree with me,
    because we need to keep your jobs.
        Senator Domenici. But listen, Senator, if you can't stay
    and represent your interests, I'm just sorry for you.
        Senator Bond. Well, Senator Domenici, you've heard these
    arguments so long you can--I deputize you to be my
    representative in the Missouri River basin.
        Senator Domenici. I don't want that.
        Senator Dorgan. We'll fix the Missouri River Management
    System, as soon as Senator Bond has left the room.
        Senator Bond. That's right.
        Senator Dorgan. Senator Johnson.

                        STATEMENT OF SENATOR TIM JOHNSON

        Senator Johnson. Chairman Dorgan and Ranking Member
    Domenici, thank you for calling this meeting. I will truncate
    my remarks.
        I'm very disappointed that the administration recommended
    cutting the VOR's Water and Energy Management and Development
    Account by 40 percent. This account funds several, ongoing
    regional and rural drinking water supply projects in my State.
    The Lewis and Clark Regional Water System and Mni Wiconi Rural
    Water System are the two largest. Their priority should be in
    completing these systems.
        Failing to budget any Federal funds for the Lewis and Clark
    Project delays construction completion dates, and adds further
    costs as material prices continue double-digit annual
    increases.
        The Corps of Engineers budget request falls short in
    prioritizing funds for the construction program. The
    shortcoming that I am hopeful that this committee will reverse,
    by providing additional resources for flood control and several
    works construction projects.
        In reviewing the budget request, I do want to highlight a
    positive outcome. I'm pleased that the Corps continues to
    request funds for the Missouri River Recovery Program.
        Chairman Dorgan, I'll conclude my statement at this point.
        Senator Dorgan. Senator Johnson, Thank you very much.
        Senator Bennett.

                     STATEMENT OF SENATOR ROBERT F. BENNETT

        Senator Bennett. Thank you very much, Mr. Chairman. I won't
    add to the litany that has been cited here. I do thank the
    witnesses for their appearance here, and I thank Commissioner
    Johnson for bringing along Robert Wolf--pardon me, Reed Murray,
    the Program Manager for the Central Utah Project Completion
    Act. That's very important to my State, and I appreciate his
    highlighting that by bringing that particular official along.
        And, I too, have another hearing I have to go to, I
    apologize for that. But, I'm grateful to our witnesses for the
    great work that they've done in the State of Utah, and to you
    for calling this hearing.
        Senator Dorgan. Senator Bennett, Thank you very much.
        Senator Reed.

                         STATEMENT OF SENATOR JACK REED

        Senator Reed. Well, thank you very much, Mr. Chairman. I
    briefly just want to welcome the witnesses.
        And particularly, General Van Antwerp who was a
    contemporary at West Point, it's good to see you here, Bob. And
    if you could pass on my great regards to Colonel Kurt Talken
    and Bobby Burn in the First District, they do a superb job,
    both the General and the Secretary--you should know that.
        I will be going to other hearings, but I want to get back
    and talk about issues of the Fox Point Hurricane Dam, and also
    the Woonsocket Levy Project.
        Thank you very much, gentlemen.
        Thank you, Mr. Chairman.
        Senator Dorgan. Secretary Woodley, we will begin with you,
    and then we will hear from General Van Antwerp, and then go to
    the Interior Department Secretary.
        Secretary Woodley, your entire statement will be part of
    the full record, and you may summarize. You may proceed.

                    STATEMENT OF HON. JOHN PAUL WOODLEY, JR.

        Mr. Woodley. Thank you, Mr. Chairman.
        The President's budget for fiscal year 2009 annual Civil
    Works Program is $4.74 billion. In addition, the request
    includes $5.762 billion in fiscal year 2009 emergency
    appropriations for the Federal share of the additional funds
    needed to reduce the risk to the Greater New Orleans, Louisiana
    area, from storm surges that have a 1 percent annual chance of
    recurring.
        The budget for the Annual Civil Works Program proposes
    performance criteria to allocate funds among construction
    projects. These criteria give priority for funding for the
    projects that yield the greatest returns to the Nation, based
    upon objective performance criteria.
        The fiscal year 2009 construction performance criteria
    mirror those of the fiscal year 2008, except that priority is
    also accorded to projects that can be completed in fiscal year
    2009.
        For operation and maintenance of civil works projects, the
    fiscal year 2009 budget provides nearly $2.6 billion for the
    operation and maintenance account, and $163 million for the
    Mississippi Rivers and Tributaries Account.
        As anticipated at this time last year, the fiscal year 2009
    budget is based on enactment of proposed legislation to
    establish a lockage-based barge user fee, and to phase out the
    existing fuel tax. The proposed legislation was transmitted to
    the President of the Senate and the Speaker of the House of
    Representatives last Friday, April 4. Prompt enactment of this
    legislation is needed to address the declining balance in the
    Inland Waterways Trust Fund, which otherwise will run out of
    funds around the end of the 2008 calendar year.
        The budget provides $185 million for the Corps of Engineers
    share of the South Florida Everglades Restoration Program,
    which is the most ever budgeted or appropriated for the Corps
    in 1 year for these activities.
        The budget also provides $180 million for the Corps
    regulatory program, to protect wetlands and other waters of the
    United States. This is the same amount as in the budget and
    appropriation for fiscal year 2008, and represents a $55
    million increase since 2001.
        I'd like to turn now to the proposed budget for the
    emergency appropriation. The fiscal year 2009 budget proposes
    to authorize the New Orleans Area Hurricane and Storm Damage
    and Risk Reduction System to be constructed with the State of
    Louisiana, as a single, non-Federal cost share sponsor, and
    subsequently maintained and operated by the State. Based on
    statutory language proposed in the budget, the non-Federal
    sponsor would provide $1.5 billion for the non-Federal share of
    this work. The New Orleans area system would not only be
    higher, but also stronger than the pre-Hurricane Katrina
    system.
        I'm pleased to announce, Mr. Chairman, that on March 31,
    2008, the Department of Defense Inspector General issued a
    qualified audit opinion on both the 2006 and 2007 Civil Works
    Financial Statements. This is very significant, as it marks the
    first time a major component of the Defense Department has
    received an audit opinion of any kind, qualified or not.
        This achievement by the Corps of Engineers demonstrates
    exceptional stewardship on behalf of the taxpayers, and non-
    Federal sponsors dollars, and the Army is extremely proud of
    the Corps.
        In summary, at $4.74 billion, the fiscal year 2009 Army
    Civil Works budget does not do all of the good things that the
    Corps could accomplish in 2009. It does, however, provide
    resources for the Civil Works Program, to pursue investments
    that will yield very good returns for the Nation in the future.
        Mr. Chairman, members of the subcommittee, this is the last
    time that I will have the privilege of appearing before the
    subcommittee to present the Army's Civil Works budget on behalf
    of President Bush. It has been a great pleasure and privilege
    to work with you.

                               PREPARED STATEMENT

        And it would be remiss of me not to mention, also, the
    privilege I've had in working with the excellent staff that
    serves the subcommittee. I don't believe that any subcommittee
    or any committee of any body anywhere in the world is better
    served than by the professional and capable staff--and
    extremely knowledgeable staff--that this subcommittee has the
    privilege of employing.
        [The statement follows:]
                Prepard Statement of Hon. John Paul Woodley, Jr.
        Mr. Chairman and distinguished members of the subcommittee, thank
    you for the opportunity to testify before the subcommittee, and to
    present the President's budget for the Civil Works program of the Army
    Corps of Engineers for fiscal year 2009.
                                    overview
        The fiscal year 2009 budget for Army Civil Works provides funding
    for development and restoration of the Nation's water and related
    resources within the 3 main Civil Works program areas, namely,
    commercial navigation, flood and coastal storm damage reduction, and
    aquatic ecosystem restoration. The budget also supports hydropower,
    recreation, environmental stewardship, and water supply services at
    existing water resources projects owned or operated by the Corps.
    Finally, the budget provides for protection of the Nation's regulated
    waters and wetlands; cleanup of sites contaminated as a result of the
    Nation's early efforts to develop atomic weapons; and emergency
    preparedness. The budget does not fund work that should be the
    responsibility of non-Federal interests or other Federal agencies, such
    as wastewater treatment and municipal and industrial water treatment
    and distribution.
        Total discretionary funding for the fiscal year 2009 annual program
    is $4.741 billion. This is $130 million less than the fiscal year 2008
    budget and $846 million less than Energy and Water Development
    appropriations for fiscal year 2008. Within the total Civil Works
    budget, $2.475 billion is for activities funded in the operation and
    maintenance (O&M) account. This is slightly higher than the funding
    level for operation and maintenance proposed in the President's fiscal
    year 2008 budget, which in turn was a substantial increase over prior
    budget or appropriation levels for comparable O&M activities.
        The budget also provides $5.761 billion in an fiscal year 2009
    emergency appropriations request for the Federal share of the
    additional funds needed to reduce the risk of storm surge damage to the
    greater New Orleans, Louisiana area. Based on statutory language
    proposed in the budget, the non-Federal sponsor would provide $1.527
    billion for the non-Federal share of this work. This proposal is
    discussed further below.
        A budget Five Year Development Plan (FYDP) is under development and
    will be provided to the relevant committees of Congress.
        Enclosure 1 displays the current estimate for the distribution of
    new discretionary funding among eight appropriation accounts; eight
    program areas; supervision and general administration of the Civil
    Works program; policy direction and oversight by the Army Secretariat;
    and five funding sources, including the general fund of the Treasury
    and trust funds. Enclosure 2 is a crosscut between appropriation
    accounts and program areas.
                          performance-based budgeting
        The fiscal year 2009 budget reflects a continuing maturation of the
    Army's performance-based approach to budgeting. Competing investment
    opportunities for studies, design, construction, and operation and
    maintenance were evaluated using multiple metrics. Objective
    performance criteria guided the allocation of funds among construction
    projects (see below).
        The budget includes initiatives leading to the development of a
    more systematic, performance-based budget and improved asset
    management. For example, the budget allocates operation and maintenance
    funding among 54 geographic areas based on USGS sub-watersheds. This
    approach will improve the overall performance of Civil Works assets by
    enabling managers within each of these regional areas to focus on their
    key facilities and address emerging needs.
        The focus on Civil Works program performance has a number of
    foundations. First, the 2004-2009 Civil Works Strategic Plan provided
    goals, objectives, and performance measures that are specific to
    program areas as well as some that are crosscutting. A new Civil Works
    Strategic Plan is under development for 2009-2014. Second, each program
    area has been assessed using the Program Assessment Rating Tool (PART).
    Progress to improve the performance measures was made on several
    programs during the past year. Summaries of all completed civil works
    program assessments can be found on the administration's new website,
    www.ExpectMore.gov. The Civil Works Strategic Plan and the PART-based
    program evaluations are works in progress and will continue to be
    updated.
                highlights--water resources development accounts
    Studies and Design
        The fiscal year 2008 budget provides $91 million for the
    Investigations account and $1 million for investigations in the
    Mississippi River and Tributaries account. The budget funds 65 studies
    and preconstruction engineering and design (PED) activities. We
    selected these for funding based on their likely performance. For
    instance, the projects funded for PED were those with benefit-to-cost
    ratios (BCRs) of 3.0 to 1 or higher.
        Within this $91 million, $10 million is for studies and PED under
    the Louisiana Coastal Area ecosystem restoration program and $10
    million more is for the science program that supports, and is an
    integral component of, this Corps effort to help protect and rebuild
    the ecosystem. In addition, $21 million is for other project-specific
    studies and design, $17 million is for research and development, and
    $33 million is for other coordination, data collection, and study
    activities.
        The administration urges the Congress to support the President's
    budget for the investigations program, which limits the number of
    proposed projects funded at the study or design stage. The Corps has a
    very large backlog of ongoing construction work. Adding to the number
    of projects heading for a construction start or to their funding will
    delay the completion of ongoing projects and realization of their
    benefits to the Nation. The enactment of the Water Resources
    Development Act of 2007 (WRDA 2007) has heightened this concern.
        The Civil Works budget includes $1 million to comply with the
    independent peer review requirements of section 2034 of WRDA 2007. This
    covers only the studies funded in the budget. If the Congress were to
    increase the number of studies or their funding, the Corps would likely
    need more than $1 million to comply with section 2034.
        Independent review previously was funded through individual study
    line items as study costs shared with the non-Federal sponsor. Under
    WRDA 2007, the costs of independent review are now fully Federal. In
    future budgets, we expect to include these costs under individual study
    line items after studies requiring section 2034 independent review are
    identified and accounting codes are set up to distinguish the fully
    Federal independent review costs from the other study costs, which the
    non-Federal sponsor will share.
        The fiscal year 2009 budget includes 2 new studies: The
    Investigations account includes $2 million for a high-priority study of
    the vulnerability of the United States to damage from flooding,
    including an assessment of the comparative risks faced by different
    regions of the United States. This study will provide background for a
    subsequent effort by policy officials to develop recommendations to
    improve existing Federal programs, authorities, and roles. The other
    new study is the Atchafalaya Basin Land Study in the Flood Control,
    Mississippi River and Tributaries account, for which the administration
    has repeatedly requested funding. I urge you to fund this study. It has
    a high priority because land acquisition is an important component of
    the overall flood damage reduction plan for this watershed. The fiscal
    year 2009 budget also specifically identifies $100,000 for Corps
    support to the efforts of the inter-agency committee on the Marine
    Transportation System, established by the President in the 2004 Ocean
    Action Plan. Costs to support the committee previously were included in
    the coordination with other agencies allocation in the investigations
    account.
    Construction Program
        The budget provides $1.402 billion in the Construction account and
    $76 million for construction projects in the Mississippi River and
    Tributaries account.
        Many more construction projects have been authorized, initiated,
    and continued than can be constructed efficiently at any one time. The
    funding of projects with low economic and environmental returns and of
    projects that are not within Civil Works main mission areas has led to
    the postponement of benefits from the most worthy projects, and has
    significantly reduced overall program performance.
        To remedy this situation and to achieve greater value to the Nation
    from the Civil Works construction program, the budget again proposes
    performance guidelines to allocate funds among construction projects.
    The guidelines give priority for funding to the projects that yield the
    greatest returns to the Nation, based upon objective performance
    criteria. The fiscal year 2009 guidelines mirror those for fiscal year
    2008, except that priority also is accorded to projects that can be
    completed in fiscal year 2009.
        Under the guidelines, the budget allocates funds among construction
    projects based primarily on these criteria: BCRs; contribution to
    reducing significant risk to human safety or to dam safety assurance,
    seepage control, or static instability correction concerns; capability
    of high performing projects to be completed in fiscal year 2009 in
    order to bring significant benefits online; and the extent to which
    projects cost-effectively contribute to the restoration of nationally
    or regionally significant aquatic ecosystems that have become degraded
    as a result of Civil Works projects, or to a restoration effort for
    which the Corps is otherwise uniquely well-suited. The construction
    guidelines are provided in Enclosure 3.
        The 79 construction projects funded in the budget consist of: 11
    dam safety assurance, seepage control and static instability correction
    rehabilitation projects; 16 projects funded to address a significant
    risk to human safety (including 2 new deficiency correction projects);
    and 52 other projects (including 5 in the Mississippi River and
    Tributaries program).
    Operation and Maintenance Program
        The fiscal year 2009 budget proposes $2.475 billion for the
    operation and maintenance account and $163 million for maintenance
    activities in the Mississippi River and tributaries account. The total
    amount is $16 million higher than the fiscal year 2008 budget for
    comparable activities.
        The budget emphasizes performance of existing projects by focusing
    on the maintenance of key commercial navigation, flood and storm damage
    reduction, hydropower, and other facilities. The proposed funding would
    enable the Army Corps of Engineers to carry out priority maintenance,
    repairs, and rehabilitations, and priority initiatives such as the
    development of asset management systems.
        As in the fiscal year 2007 and 2008 budgets, the operation and
    maintenance program includes four activities that are directly related
    to the operation and maintenance of Corps projects, but previously were
    funded in the Construction program--compliance with the Endangered
    Species Act at operating projects; rehabilitation of existing projects;
    replacement of sand due to the operation and maintenance of Federal
    navigation projects; and construction of facilities, projects, or
    features (including islands and wetlands) to use materials dredged
    during Federal navigation operation and maintenance activities. The
    budget transfers responsibility for these activities to improve
    investment decisions on project operation and maintenance and better
    provide accountability and oversight for those decisions. For the
    inland navigation rehabilitation projects budgeted in the operation and
    maintenance account, one-half of the project funding would be derived
    from the Inland Waterways Trust Fund. Construction, replacement, and
    expansion of inland waterways projects continue to be budgeted in the
    Construction account.
        Like the budgets for the past 2 years, the fiscal year 2009 budget
    proposes to allocate operation and maintenance funding on a regional
    basis. Last year, the budget proposed allocation of funding by 21
    watersheds identified by the U.S. Geological Survey's watershed and
    sub-watershed identification system. This year, in order to more
    clearly identify the systems among which funding is allocated, the
    budget proposes to allocate funding among 54 systems. Within these 54
    systems, the justification materials allocate funding for illustrative
    purposes to flood and coastal storm damage reduction, commercial
    navigation, hydropower, stewardship, recreation, and water supply
    program areas. Funding operation and maintenance using this framework
    will increase efficiency in the operation and maintenance of Civil
    Works projects. Managers in the field will be better able to properly
    maintain key infrastructure, adapt to uncertainties, and address
    emergencies, as well as other changed conditions over the course of the
    fiscal year, while complying with congressional direction for the
    appropriations.
                           highlights--program areas
        The Army Civil Works program includes eight program areas;
    commercial navigation, flood and coastal storm damage reduction,
    environment, recreation, hydropower, water supply, emergency
    management, and the regulatory program. The budget also funds the
    supervision and general administration of the Civil Works program in
    the Corps headquarters and the eight division offices; and the policy
    direction and oversight for the program by the Office of the Assistant
    Secretary of the Army (Civil Works). Budget proposals for all areas are
    discussed below.
    Flood and Coastal Storm Damage Reduction, and Emergency Management
        The fiscal year 2009 budget provides $1.322 billion for flood and
    coastal storm damage reduction and $58 million for emergency
    management.
        Among the 79 construction projects funded in the fiscal year 2009
    budget, 50 are for flood and coastal storm damage reduction, including
    11 dam safety and seepage control and static instability correction
    rehabilitations, 2 deficiency correction projects at St. Louis Flood
    Protection, Missouri and Wood River Levee, Illinois; and 29 other
    projects that address a significant risk to human safety or were
    selected based on their benefit-to-cost ratios.
        The budget for the emergency management program includes $40
    million in the Flood Control and Coastal Emergencies account to fund
    preparedness for flood and coastal emergencies and other natural
    disasters. This funding is needed in fiscal year 2009 to maintain and
    improve the Corps of Engineers ability to respond to disasters.
    Specifically, this funding would cover review and updating of emergency
    response plans, periodic exercises to test and evaluate plans,
    training, procurement of critical supplies and equipment, and pre-
    disaster coordination with State and local governments and other
    Federal agencies. The fiscal year 2009 budget reflects the strong
    belief of the Army in the importance of providing regular funding for
    emergency preparedness, rather than relying on supplemental
    appropriations to finance emergency preparedness. The emergency
    management program also includes $6 million for the National Emergency
    Preparedness Program and $12 million for facility protection, both of
    which are funded in the operation and maintenance account. We continue
    to fund facility protection as a remaining item in the operation and
    maintenance account. In the past, we allocated these costs among the
    eight program areas. This year, we included these costs instead under
    the emergency management program area.
        The budget includes $14 million in multiple accounts for Actions
    for Change--a set of actions identified by the Chief of Engineers to
    aggressively incorporate the lessons learned from Hurricanes Katrina
    and Rita into the way the Corps plans, designs, constructs, and
    maintains its infrastructure. The program is being executed by four
    national teams. All actions are interrelated, but each of the four
    teams has one of the following focus areas: comprehensive systems
    approaches; risk-informed decisionmaking; risk communications; and
    professional and technical expertise. A common theme throughout the
    program is increased accountability for public safety. The Corps is
    working toward the goal of making these changes self-sustaining.
        The fiscal year 2009 operation and maintenance account includes $10
    million for the National Levee Inventory/Inspection and Levee Safety
    Program. These funds will be used to continue the national levee
    inventory, assessment, and database development that were begun with
    emergency supplemental appropriations of $30 million in fiscal year
    2006. Funds also will be used for administrative and travel costs of
    the National Levee Safety Committee established pursuant to title IX of
    the Water Resources Development Act of 2007. Title IX broadened the
    authority under which the Corps conducts the levee inventory program
    and is being implemented under the ongoing levee inventory and
    inspection program. The national levee inventory is an interagency
    effort to improve management of the Nation's flood and storm damage
    reduction infrastructure. The results of the national project inventory
    and risk-based project assessments will be linked to the Federal
    Emergency Management Agency's ongoing flood mapping program, as well as
    to the Corps levee rehabilitation and inspection program.
        The budget provides funding for all work currently planned to
    remedy the most serious (Action Class I and II) dam safety, seepage,
    and static instability problems at Corps dams. The planning, design,
    and construction of these projects are funded at the maximum amount
    that the Corps estimates that it can use efficiently and effectively.
        The budget continues to support Federal participation in initial
    construction, but not in re-nourishment, at beach nourishment projects
    that provide storm damage reduction or ecosystem restoration outputs.
    Commercial Navigation
        The fiscal year 2009 budget provides a total of $1.892 billion for
    the commercial navigation program area.
        The amount budgeted for inland waterway construction projects
    (construction, replacements, and expansions in the construction
    account, and rehabilitations in the operation and maintenance account)
    is about $326 million, which includes funding to continue 14 inland
    waterway projects; 3 seepage and static instability correction
    rehabilitation projects; completion of 5 projects; and continuation of
    construction on 5 other projects. Half of the funding for these inland
    waterways investments, about $167 million, would be derived from the
    Inland Waterways Trust Fund, reflecting both concurrent financing of 50
    percent of construction costs on most projects and rebalancing of the
    proportion where prior expenditures from the general fund of the
    Treasury exceeded 50 percent.
        The fiscal year 2009 budget is based on enactment of proposed
    legislation to establish a lockage-based barge user fee and to phase
    out the existing diesel fuel tax for the inland waterways. The prompt
    enactment of such legislation is needed to address the declining
    balance in the Inland Waterways Trust Fund, which otherwise will run
    out of funds around the end of the 2008 calendar year, and to support
    ongoing and future inland waterways projects. The funding in the Inland
    Waterways Trust Fund, which comes from the diesel fuel tax, will not be
    sufficient after fiscal year 2008 to support needed levels of
    investment in these waterways.
        Enactment of the administration's legislative proposal would ensure
    that the commercial users of the Corps locks continue to cover their
    share of project costs. The amount of the user fee would be tied to the
    level of spending for inland waterways construction, replacement,
    expansion and rehabilitation work. The proposed legislation will be
    transmitted to Congress shortly.
        The budget includes $170 million to construct channel and harbor
    projects.
        The budget focuses navigation operation and maintenance funding of
    $1.375 billion on those waterway segments and commercial harbors that
    support high volumes of commercial traffic, such as the heavily-used
    Mississippi and Ohio Rivers and the Illinois Waterway. The budget also
    funds maintenance of harbors that support significant commercial
    fishing, subsistence, safety, harbor of refuge, national security, or
    public transportation benefits.
        The Corps continues development of techniques to identify and
    compare the marginal impacts on the Nation's waterborne commerce of
    varying maintenance levels for coastal channels and harbors. The fiscal
    year 2009 budget provides for $729 million to be appropriated from the
    Harbor Maintenance Trust Fund for operation and maintenance. The growth
    of the trust fund balance and ways to address this balance are being
    discussed within the administration. We will continue to work within
    the administration to develop policies to effectively use the Harbor
    Maintenance Trust Fund.
        The budget continues the policy of funding beach replenishment,
    including periodic re-nourishment, where the operation and maintenance
    of Federal navigation projects is the reason for the sand loss on
    shorelines.
    Environment
        The fiscal year 2008 budget provides $511 million for environmental
    activities overall, including $286 million for aquatic ecosystem
    restoration. The costs of compliance with Biological Opinions at
    existing projects are not included in the above figures. The budget
    includes these costs as part of the joint operation and maintenance
    costs of the affected projects and allocates these costs among the
    program areas served by the projects.
        Within the $286 million for aquatic ecosystem restoration, $185
    million is for the Corps of Engineers share of the South Florida
    Everglades Ecosystem Restoration Program, which is the most ever
    budgeted or appropriated for the Corps in 1 year for these activities.
    This level of funding for the Corps is an increase of $54 million, or
    41 percent, compared to the fiscal year 2008 enacted level. The
    increase reflects the program's priorities for 2009--which include more
    funding for the Modified Water Deliveries to Everglades National Park
    (Mod Waters) project, a key element of this effort that both the
    National Park Service and the Corps are funding (+$40 million); and
    funding to restore a 90 square mile area west of the Everglades known
    as Picayune Strand, which will provide habitat suitable for the
    endangered Florida panther and other species (+$24 million). The budget
    for this program also emphasizes continued construction of the
    Kissimmee River restoration effort; and studies and design work under
    the Comprehensive Everglades Restoration Plan, or CERP. Finally, the
    budget also continues construction of the Everglades and South Florida
    Ecosystem Restoration ``Critical Projects,'' and the South Dade County
    (C-111) and West Palm Beach Canal (C-51 & STA 1-E) Central and Southern
    Florida (C&SF) projects.
        The budget provides $20 million for the Upper Mississippi River
    System Environmental Management Program and $20 million for the
    Louisiana Coastal Area restoration effort, including $10 million for
    its important Science Program, which will assist the State and Federal
    managers of the LCA Ecosystem Restoration Program by providing science
    support aimed at improving implementation. The Science Program will
    inform and guide the program by reducing uncertainties and insuring
    that effective tools and processes are available for use by the project
    delivery team.
        The budget includes $95 million for environmental stewardship. The
    Corps administers lands and waters covering 11 million acres, an area
    equal in size to the States of Vermont and New Hampshire. Funded
    activities include shoreline management, protection of natural
    resources, support for endangered species, continuation of mitigation
    activities, and protection of cultural and historic resources.
        The budget provides $130 million for the Formerly Utilized Sites
    Remedial Action Program (FUSRAP) to clean up contamination at sites
    resulting largely from the early atomic weapons program. This funding
    will enable completion of remedial action at one site (Linde Air
    Products Soil operable unit) and support continued progress toward
    completion of remedial actions at a number of other FUSRAP sites.
    Regulatory Program
        The fiscal year 2009 budget provides $180 million for the Corps
    Regulatory Program to protect wetlands and other waters of the United
    States. This is the same as the amount in both the budget and
    appropriations for fiscal year 2008, and represents a $55 million
    increase since 2001. The funding will be used for permit processing,
    enforcement and compliance actions, and jurisdictional determinations,
    including the significant additional field documentation, coordination
    and evaluation work associated with the Supreme Court's Carabell and
    Rapanos decisions.
        Investing in the Regulatory Program has a win-win result, since it
    protects valuable aquatic resources while enabling over $225 billion in
    economic development to proceed annually. The Corps will also use the
    requested funding to develop and implement improvements such as
    electronic permit applications and data sharing with other agencies and
    the public, consistent with sections 2017 and 2040 of WRDA 2007.
    Recreation
        The fiscal year 2009 budget provides $270 million for recreation
    operations and related maintenance. The budget re-proposes the Corps of
    Engineers recreation modernization initiative, which first was
    developed as part of the fiscal year 2006 and fiscal year 2007 budgets.
    This initiative, which requires legislation to implement, would allow
    the Corps to upgrade and modernize its recreation facilities through an
    expansion of the current fee structure. It would also enable the Corps,
    working at the national, State, and local levels, to pursue voluntary
    public/private partnerships and other means to help finance the
    recreation program.
    Hydropower
        Hydropower is a renewable source of energy. The Civil Works program
    is the Nation's largest producer of hydroelectric energy. The Corps
    provides one-quarter of the Nation's hydroelectric power generation
    capacity and satisfies 3 percent of the Nation's total energy needs.
        The fiscal year 2009 budget provides $319 million for hydropower.
    This investment will help to reduce the forced outage rate, which
    remains well above the industry average. In addition, the 4 ongoing
    replacement projects, once completed, will produce enough power to
    electrify 37,000 homes and reduce carbon dioxide emissions into the
    atmosphere by 190,000 metric tons.
    Water Supply
        On average, Civil Works projects provide 4 billion gallons of water
    per day to meet the needs of municipal and commercial users across the
    country. The budget includes $6 million for this program under the
    operation and maintenance account. These costs can be broken into 5
    categories: costs to manage water supply contracts and to operate and
    maintain specific water supply facilities; ongoing water reallocation
    studies; the National Portfolio assessment of water reallocation
    possibilities; the allocated share of costs for compliance with the
    Endangered Species Act; and the allocated share of other project joint
    costs. The water supply program manages 307 water supply agreements
    that cover 7.2 million acre-feet of storage space in 136 of the Corps'
    multiple purpose reservoir projects. This storage space has an assigned
    repayment value of $9.8 billion. These costs are repaid directly to the
    U.S. Treasury by the water users. The opportunities that are being
    identified through the National Portfolio assessment to reallocate
    storage space in existing reservoirs can assist in addressing unmet
    demand for municipal and industrial water supply without building
    additional projects.
    Management Expenses of the Army Corps of Engineers
        The fiscal year 2009 budget provides $177 million for the Expenses
    account to cover the costs of the Army Corps of Engineers Headquarters,
    Major Subordinate Commands or Divisions, and national support Corps
    offices such as the Humphreys Engineer Center Support Activity, the
    Institute for Water Resources, and the Finance Center.
    Army Secretariat Policy Direction and Oversight
        The fiscal year 2009 budget includes $6 million for the Office of
    the Assistant Secretary of the Army (Civil Works). The Assistant
    Secretary of the Army (Civil Works) has oversight responsibility on
    behalf of the Secretary of the Army for all aspects of the Civil Works
    program of the Army Corps of Engineers; for the Army Cemeterial
    Expenses budget and program for Arlington National Cemetery and the
    Soldiers' and Airmen's Home National Cemetery; for reimbursable support
    by the Army Corps of Engineers for other domestic agencies; and for all
    international activities of the Army Corps of Engineers except those
    directly in support of U.S. forces overseas. This account finances the
    personnel and other direct costs of the Assistant Secretary's office in
    the energy and water development appropriation, consistent with
    recently enacted appropriations for this office.
                protection of the metropolitan new orleans area
        In addition to fiscal year 2009 regular appropriations for the
    Civil Works program, the fiscal year 2009 budget recommends enactment
    of fiscal year 2009 emergency appropriations of $5.761 billion for the
    remaining Federal share of the New Orleans Area Hurricane and Storm
    Damage and Risk Reduction System (HSDRRS), which is designed to reduce
    the risk to the greater New Orleans, Louisiana, area from storm surges
    that have a 1 percent annual chance of occurring and to improve
    internal drainage; to restore and complete construction of hurricane
    and storm damage reduction features in surrounding areas to previously
    authorized levels of protection; and to incorporate certain non-Federal
    levees into the Federal system. The fiscal year 2009 budget also
    proposes to authorize the HSDRRS to be constructed with the State of
    Louisiana as the single non-Federal cost-sharing partner and
    subsequently maintained and operated by the State. Pre-Katrina, the
    HSDRRS was built as a collection of separately authorized projects,
    designed with differing standards, subject to differing requirements
    for non-Federal cost-sharing, and managed by different local entities.
        The new HSDRRS system will be not only higher, but also stronger
    than the pre-Hurricane Katrina system. Armoring of critical elements
    will improve resilience during storm events. New pump stations, water
    control structures, and floodgates will add perimeter protection to
    reduce the threat of storm surges from outfall canals and navigation
    channels. Completing the Southeast Louisiana urban drainage project
    within the geographic perimeter of the Lake Pontchartrain and Vicinity
    and West Bank and Vicinity projects will enhance the effectiveness of
    interior drainage systems.
        Based on the proposed statutory language included in the
    President's budget, local entities would be responsible for 35 percent
    of the cost of the Southeast Louisiana project located within the
    geographic perimeter of the Lake Pontchartrain and Vicinity and West
    Bank and Vicinity projects, and for 35 percent of the increment of
    levee raises and other enhancements needed to the Lake Pontchartrain
    and Vicinity and West Bank and Vicinity projects above currently
    authorized levels to reduce the risk to the greater New Orleans area
    from storm surges that have a 1 percent annual chance of occurring.
    Local entities would also be responsible for 100 percent of the
    operation, maintenance, repair, replacement, and rehabilitation cost.
                            other budget highlights
    General Provisions
        The budget includes proposed statutory language to authorize
    continuation of limits on reprogramming with certain proposed changes;
    to replace the continuing contract authority of the Corps with multi-
    year contracting authority patterned after the authority available to
    other Federal agencies; and to prohibit committing funds for ongoing
    and new contracts beyond the appropriated amounts available, including
    reprogramming.
    Improved Cost Estimating
        With my full support, the Chief of Engineers is undertaking several
    initiatives to strengthen the Corps performance in project cost
    estimating. The Chief will discuss these initiatives in detail in his
    statement.
                    water resources development act of 2007
        Upon passage of WRDA 2007 on November 7, 2007, the Chief of
    Engineers and I established a joint team to oversee the implementation
    of this lengthy, complex, and costly act. We have designated a senior
    Corps policy analyst to lead our joint efforts. I meet at least bi-
    weekly with the joint WRDA implementation team to review and approve
    guidance for major policy and project provisions of WRDA.
        The purpose of implementation guidance is to ensure a common
    understanding of the policies and procedures that will be used to meet
    the requirements of the law. Provisions that require development of
    implementation guidance are being identified and prioritized, and the
    writing of the guidance is underway. Implementation guidance for those
    provisions directly affecting work within the Divisions and Districts
    is being developed in consultation with the appropriate District,
    Division, and Headquarters Regional Integration Team. Due to the large
    number of provisions in the law, it will take time to issue guidance on
    each of the provisions. Priority for implementation guidance is being
    given to national policy provisions (mostly in title II) and to those
    project and program provisions where funds are currently appropriated.
        Following are some examples of WRDA provisions receiving priority
    for implementation guidance:
      --Section 2003--Written Agreements for water resources projects.
      --Section 2027--Fiscal Transparency Report.
      --Section 2031--Water Resources principles and guidelines.
      --Section 2032--Water Resources Priorities Report.
      --Section 2033--Planning.
      --Section 2034--Independent Peer Review.
      --Section 2035--Safety Assurance Review.
      --Section 2036--Mitigation for fish and wildlife and wetlands losses.
      --Title VI--Florida Everglades.
      --Title VII--Louisiana Coastal Area.
      --Title IX--National Levee Safety Program.
        Working through the joint implementation team, we are making
    excellent progress in implementation strategies for the significant
    policy provisions and numerous individual project provisions.
                         president's management agenda
        The Army Civil Works program is pursuing 5 Government-wide
    management initiatives, as are other Federal agencies, plus a sixth
    initiative on real property asset management. ``Scorecards'' for the
    Army Corps of Engineers and other Federal agencies can be found at the
    following website: http://www.whitehouse.gov/results/agenda/
    scorecard.html.
        For the first quarter of the 2008 fiscal year, the scorecard rates
    the Corps status as red on one initiative, yellow on four, and green on
    one. I am pleased that the Corps is rated green on progress on all six
    initiatives. The Corps has worked diligently to achieve these ratings,
    and I am proud of their efforts. The Army is hopeful that the Corps of
    Engineers will receive an audit opinion in the very near future from
    the Inspector General of the Department of Defense for its fiscal year
    2006 and 2007 Civil Works financial statements. This would be the first
    time ever that a major component of the Defense Department has received
    an audit opinion. The opinion is expected to be qualified, and it is
    anticipated that the auditors will recommend a number of areas that
    need improvement. With a qualified opinion in hand and this guidance
    from the DOD Inspector General, the Army has every expectation that the
    Corps can achieve an unqualified audit opinion on its fiscal year 2008
    financial statements.
                                   conclusion
        In developing this budget, the administration made explicit choices
    based on performance. The sustained level of O&M funding, transfer of
    activities from construction to O&M, emphasis on construction projects
    based on their returns, and focus on preparedness for flood, hurricane,
    and other natural disasters, for example, all reflect a performance-
    based approach.
        At $4.741 billion, the fiscal year 2009 Army Civil Works annual
    budget provides the resources for the Civil Works program to pursue
    investments that will yield good returns for the Nation in the future.
    With the proposed $5.761 billion in fiscal year 2009 emergency
    appropriations, the Corps can also complete the Federal share of work
    necessary to significantly reduce the risk of storm surge damage to the
    greater New Orleans area.
        This budget represents the wise use of funding to advance worthy,
    mission-based objectives. I am proud to present it.
        Thank you, Mr. Chairman and members of the subcommittee, for this
    opportunity to testify on the President's fiscal year 2009 budget for
    the Civil Works program of the Army Corps of Engineers. This is the
    last time I will appear before this subcommittee to present the Civil
    Works budget on behalf of President Bush. It has been my pleasure
    working with this subcommittee.

      ENCLOSURE 1.--DEPARTMENT OF THE ARMY, CORPS OF ENGINEERS--CIVIL WORKS
                     ANNUAL BUDGET, FISCAL YEAR 2009 SUMMARY
    ------------------------------------------------------------------------
                                                                  Amount
    ------------------------------------------------------------------------
    Requested New Appropriations for Annual Program by
     Account:
        Investigations.....................................     $91,000,000
        Construction.......................................   1,402,000,000
        Operation and Maintenance..........................   2,475,000,000
        Regulatory Program.................................     180,000,000
        Flood Control, Mississippi River and Tributaries...     240,000,000
        Expenses...........................................     177,000,000
        Office of the Assistant Secretary of the Army             6,000,000
         (Civil Works).....................................
        Flood Control and Coastal Emergencies..............      40,000,000
        Formerly Utilized Sites Remedial Action Program....     130,000,000
                                                            ----------------
          TOTAL............................................   4,741,000,000
                                                            ================
    Requested New Appropriations by Program Area:
        Commercial Navigation..............................   1,892,000,000
            (Inland and Intracoastal Waterways)............    (931,000,000)
            (Channels and Harbors).........................    (961,000,000)
        Flood and Coastal Storm Damage Reduction...........   1,322,000,000
            (Flood Damage Reduction).......................  (1,295,000,000)
            (Coastal Storm Damage Reduction)...............     (27,000,000)
        Environment........................................     511,000,000
            (Aquatic Ecosystem Restoration)................    (286,000,000)
            (FUSRAP).......................................    (130,000,000)
            (Stewardship)..................................     (95,000,000)
        Hydropower.........................................     319,000,000
        Recreation.........................................     270,000,000
        Water Supply.......................................       6,000,000
        Emergency Management...............................      58,000,000
            (Flood Control and Coastal Emergencies)........     (40,000,000)
            (National Emergency Preparedness)..............      (6,000,000)
            (Remaining Items Operation and Maintenance)....     (12,000,000)
        Regulatory Program.................................     180,000,000
        Oversight and Management...........................     183,000,000
                                                            ----------------
          TOTAL............................................   4,741,000,000
                                                            ================
    Sources of New Appropriations:
        General Fund.......................................   3,844,000,000
        Harbor Maintenance Trust Fund......................     729,000,000
        Inland Waterways Trust Fund........................     167,000,000
        Disposal Facilities User Fees......................       1,000,000
                                                            ----------------
          TOTAL............................................   4,741,000,000
                                                            ================
    Additional New Resources:
        Rivers and Harbors Contributed Funds...............     400,000,000
        Coastal Wetlands Restoration Trust Fund............      84,000,000
        Permanent Appropriations...........................      17,000,000
                                                            ----------------
          TOTAL............................................     501,000,000
    ------------------------------------------------------------------------

                                                  ENCLOSURE 2.--DEPARTMENT OF THE ARMY, CORPS OF ENGINEERS--CIVIL WORKS ANNUAL BUDGET, FISCAL YEAR 2009
                                                                       [Crosscut Between Appropriation Accounts and Program Areas]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Aq. Ec.                                              Water        Emerg.       Regul.
                                           Navigation  Flood/Storm   Recreation    Restor.    Stewardship    FUS-RAP     Hydropower     Supply       Mgmt.        Prog.     Ovrsgt/Mgmt     TOTAL
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Investigations......................           20           36  ...........           35  ...........  ...........  ...........  ...........  ...........  ...........  ...........           91
    Construction........................          487          627  ...........          245  ...........  ...........           43  ...........  ...........  ...........  ...........        1,402
    Operation & Maint...................        1,346          482          255            2           90  ...........          276            6           18  ...........  ...........        2,475
    MR&T-I..............................  ...........            1  ...........  ...........  ...........  ...........  ...........  ...........  ...........  ...........  ...........            1
    MR&T-C..............................           10           62  ...........            4  ...........  ...........  ...........  ...........  ...........  ...........  ...........           76
    MR&T--O&M...........................           29          114           15  ...........            5  ...........  ...........  ...........  ...........  ...........  ...........          163
    FUSRAP..............................  ...........  ...........  ...........  ...........  ...........          130  ...........  ...........  ...........  ...........  ...........          130
    FC&CE...............................  ...........  ...........  ...........  ...........  ...........  ...........  ...........  ...........           40  ...........  ...........           40
    Regulatory..........................  ...........  ...........  ...........  ...........  ...........  ...........  ...........  ...........  ...........          180  ...........          180
    Expenses............................  ...........  ...........  ...........  ...........  ...........  ...........  ...........  ...........  ...........  ...........          177          177
    Office of the ASA(CW)...............  ...........  ...........  ...........  ...........  ...........  ...........  ...........  ...........  ...........  ...........            6            6
                                         -----------------------------------------------------------------------------------------------------------------------------------------------------------
          TOTAL.........................        1,892        1,322          270          286           95          130          319            6           58          180          183        4,741
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

     enclosure 3.--department of the army, corps of engineers--civil works
          budget fiscal year 2009 construction performance guidelines
        Project Rankings.--All ongoing specifically authorized construction
    projects, including projects funded in the Mississippi River and
    Tributaries account, will be assigned based upon their primary purpose
    to one of the main mission areas of the Corps (flood and storm damage
    reduction; commercial navigation; aquatic ecosystem restoration) or to
    hydropower. Flood and storm damage reduction, commercial navigation,
    and hydropower projects will be ranked by their total benefits divided
    by their total costs (BCR), calculated at a 7 percent real discount
    rate. Aquatic ecosystem restoration projects will be ranked by the
    extent to which they cost-effectively contribute to the restoration of
    a nationally or regionally significant aquatic ecosystem that has
    become degraded as a result of a civil works project, or to a
    restoration effort for which the Corps is otherwise uniquely well-
    suited (e.g., because the solution requires complex alterations to the
    hydrology and hydraulics of a river system).
        Projects Funded on the Basis of Their Economic and Environmental
    Returns.--Ongoing flood and storm damage reduction, commercial
    navigation, and hydropower construction projects with a BCR of 1.5 or
    higher and ongoing aquatic ecosystem restoration construction projects
    that are cost-effective in contributing to the restoration of a
    nationally or regionally significant aquatic ecosystem that has become
    degraded as a result of a civil works project or to a restoration
    effort for which the Corps is otherwise uniquely well-suited will
    receive at least the amount needed to pay estimated contractor earnings
    required under ongoing contracts and related costs. In allocating funds
    among these projects, priority will be given to those with the highest
    economic and environmental returns and to projects where the Corps can
    complete physical construction of the project and/or related
    administrative activities in the budget year.
        Projects Funded to Address Significant Risk to Human Safety.--Flood
    and storm damage reduction projects that are funded to address
    significant risk to human safety will receive sufficient funding to
    support an uninterrupted effort during the budget year.
        Projects With Low Economic and Environmental Returns.--Ongoing
    flood and storm damage reduction, commercial navigation, and hydropower
    construction projects with a BCR below 1.5 will be considered for
    deferral, except for flood and storm damage reduction projects that are
    funded to address significant risk to human safety. Likewise, ongoing
    aquatic ecosystem restoration construction projects that do not cost-
    effectively contribute to the restoration of a nationally or regionally
    significant aquatic ecosystem that has become degraded as a result of a
    civil works project, and do not cost-effectively address a problem for
    which the Corps is otherwise uniquely well-suited, will be considered
    for deferral.
        New Starts and Resumptions.--The budget could include funds to
    start up new construction projects, or to resume work on ongoing
    construction projects on which the Corps has not performed any physical
    work under a construction contract during the past 3 consecutive fiscal
    years, only if the project would be ranked that year in the top 20
    percent of the ongoing construction projects in its mission area. The
    term ``physical work under a construction contract'' does not include
    activities related to project planning, engineering and design,
    relocation, or the acquisition of lands, easements, or rights-of-way.
    For non-structural flood damage reduction projects, construction begins
    in the first fiscal year in which the Corps acquires lands, easements,
    or rights-of-way primarily to relocate structures, or performs physical
    work under a construction contract for non-structural project-related
    measures. For aquatic ecosystem restoration projects, construction
    begins in the first fiscal year in which the Corps acquires lands,
    easements, or rights-of-way primarily to facilitate the restoration of
    degraded aquatic ecosystems including wetlands, riparian areas, and
    adjacent floodplains, or performs physical work under a construction
    contract to modify existing project facilities primarily to restore the
    aquatic ecosystem. For all other projects, construction begins in the
    first fiscal year in which the Corps performs physical work under a
    construction contract.
        Other Cases.--Projects will receive the amount needed to ensure
    that they comply with treaties and with biological opinions pursuant to
    the Endangered Species Act, and meet authorized mitigation
    requirements. Dam safety assurance, seepage control, and static
    instability correction projects that are funded in the construction
    program will receive the maximum level of funding that the Corps can
    efficiently and effectively spend in each year.

        Senator Dorgan. Secretary Woodley, thank you very much for
    your testimony.
        Next we will hear from Lieutenant General Van Antwerp.
    General.
    STATEMENT OF LIEUTENANT GENERAL ROBERT VAN ANTWERP,
                CHIEF OF ENGINEERS
        General Van Antwerp. Thank you, Mr. Chairman, distinguished
    members of the committee.
        Senator Dorgan. Is that turned on, by the way?
        General Van Antwerp. I didn't push it hard enough, there I
    am. I'm with you.
        Thank you, Mr. Chairman, distinguished members of the
    subcommittee.
        I'm the 52d Chief of Engineers, I guess if you were there
    for all of us, you'd be over 200 years old, and you're still a
    young man. You've worked with 11 Chiefs, I'm proud to be the
    11th or 12th, here.
        Senator Domenici. Young man?
        General Van Antwerp. The President's budget is a
    performance-based budget. It reflects a focus on projects and
    activities that provide the highest returns--economic,
    environmental, and address significant contributions to safety.
        It allocates funding for 79 projects overall, it includes
    11 dam safety projects, 16 life safety, and it completes 12
    projects in fiscal year 2009.
        The greatest part of the budget, as expected, supports the
    Nation's navigation network. We are an expeditionary Corps, we
    have about 800 people deployed today, we have 4 districts in-
    theater, Gulf Region Division, with the north, central and the
    south districts, and a district in Afghanistan. So, we covet
    your prayers for our folks deployed, and who are doing the
    heavy lifting every day overseas.

                               PREPARED STATEMENT

        We have a commitment to being good stewards of what you
    give us for continuous improvement, and I would just like to
    thank you for the opportunity to appear before you today, and I
    look forward to your questions.
        Thank you, sir.
        [The statement follows:]
          Prepared Statement of Lieutenant General Robert Van Antwerp
        Mr. Chairman and distinguished members of the subcommittee: I am
    honored to be testifying before your subcommittee today, along with the
    Assistant Secretary of the Army (Civil Works), the Honorable John Paul
    Woodley, Jr., on the President's fiscal year 2009 budget for the United
    States Army Corps of Engineers' Civil Works Program.
        My statement covers the following 4 topics:
      --Summary of fiscal year 2009 Program budget;
      --Construction Program;
      --Cost Engineering Improvements; and
      --Value of the Civil Works Program to the Nation's Economy, and to
            the Nation's Defense.
                   summary of fiscal year 2009 program budget
    Introduction
        The fiscal year 2009 Civil Works budget is a performance-based
    budget, which reflects a focus on the projects and activities that
    provide the highest net economic and environmental returns on the
    Nation's investment or address significant risk to human safety. Direct
    Program funding totals $5.242 billion, consisting of discretionary
    funding of $4.741 billion and mandatory funding of $501 million. The
    Reimbursed Program funding is projected to involve an additional $2
    billion to $3 billion. In addition, the budget requests $5.761 billion
    of emergency funding for continuing efforts to improve storm protection
    for the greater New Orleans area.
    Direct Program
        The budget reflects the administration's commitment to continued
    sound development and management of the Nation's water and related land
    resources. It proposes to give the Corps program managers more
    flexibility to properly maintain our key facilities. The budget
    incorporates objective performance-based metrics for the construction
    program, funds the continued operation of commercial navigation and
    other water resource infrastructure, provides significant funding for
    the regulatory program to protect the Nation's waters and wetlands, and
    supports restoration of nationally and regionally significant aquatic
    ecosystems, with emphasis on the Florida Everglades and the Upper
    Mississippi River. It also would improve the quality of recreation
    services through an expanded fee structure and stronger partnerships,
    in support of modernization. Additionally, it emphasizes the basic need
    to fund emergency preparedness activities for the Corps as part of the
    regular budget process.
    Reimbursed Program
        Through the Interagency and Intergovernmental Services Program we
    help non-DOD Federal agencies, State, local, and tribal governments,
    and other countries with timely, cost-effective implementation of their
    programs. Rather than develop their own internal workforce to oversee
    large design and construction projects, these agencies rely on Corps of
    Engineers capabilities. Such intergovernmental cooperation is effective
    for agencies and the taxpayer by using the skills and talents that we
    bring to our Civil Works and Military Program missions. The work is
    principally technical oversight and management of engineering,
    environmental, and construction contracts performed by private sector
    firms, and is totally financed by the Agencies we service.
        Currently, we provide reimbursable support for about 70 other
    Federal agencies and several State and local governments. Total
    reimbursement for such work in fiscal year 2009 is projected to be $2.0
    billion to $3.0 billion. The exact amount will depend on assignments
    received from the agencies.
                              construction program
        The goal of the construction program is to produce as much value as
    possible for the Nation from available funds. Our fiscal year 2009
    budget of $1.478 billion (including $76 million under the Mississippi
    River and Tributaries program) furthers this objective by giving
    priority to the continued construction and completion of those water
    resources projects that will provide the best net returns on the
    Nation's investment for each dollar invested (Federal plus non-Federal)
    in the Corps primary mission areas. The budget also gives priority to
    projects that address a significant risk to human safety,
    notwithstanding their economic performance. Under these guidelines, the
    Corps allocated funding to 79 construction projects, including 11 other
    dam safety assurance, seepage control, and static instability
    correction projects, 16 projects that address a significant risk to
    human safety, and 52 other projects.
        The budget uses objective performance measures to establish
    priorities among projects and, through a proposed statutory change in
    Corps contracting practices, would also increase control over future
    costs. The performance measures used include the benefit-to-cost ratios
    for projects with economic outputs; and, for aquatic ecosystem
    restoration projects, the extent to which the project cost-effectively
    contributes to the restoration of a nationally or regionally
    significant aquatic ecosystem that has become degraded as a result of a
    Civil Works project or to an aquatic ecosystem restoration effort for
    which the Corps is otherwise uniquely well-suited. The selection
    process also gives priority to dam safety assurance, seepage control,
    static instability correction, and to projects that address a
    significant risk to human safety. Under each of these criterions,
    resources are allocated based on performance. This approach
    significantly improves the realization of benefits to the Nation from
    the Civil Works construction program and will improve overall program
    performance by allowing the Nation to realize the benefits of the
    projects with the best net returns (per dollar invested) sooner.
    Maintenance Program
        The facilities owned and operated by, or on behalf of, the Corps of
    Engineers are aging. As stewards of this infrastructure, we are working
    to ensure that its key features continue to provide an appropriate
    level of service to the Nation. Sustaining such service poses a
    technical challenge in some cases, and proper maintenance is becoming
    more expensive as this infrastructure ages.
        The operation and maintenance (O&M) program for the fiscal year
    2009 budget includes $2.638 billion (including $163 million under the
    Mississippi River and Tributaries program), with a focus on the
    maintenance of key commercial navigation, flood and storm damage
    reduction, hydropower, and other facilities. Specifically, the
    operation and maintenance program supports completed works owned or
    operated by the Corps of Engineers, including administrative buildings
    and laboratories. This program includes, for example, significant
    funding for our efforts in the Columbia River Basin and Missouri River
    Basin to support the continued operation of Corps of Engineers multi-
    purpose projects by meeting the requirements of the Endangered Species
    Act. Other work to be accomplished includes dredging, repair, aquatic
    plant control, removal of sunken vessels, monitoring of completed
    coastal projects, and operation of structures and other facilities, as
    authorized in the various River and Harbor, Flood Control, and Water
    Resources Development Acts.
                         cost engineering improvements
        The Corps has implemented some cost engineering improvements in an
    effort to ensure the development of quality project estimates in
    support of our Civil Works customers and partners for the successful
    accomplishment of projects. Three initiatives have been implemented
    that will provide more reliable project recommendations at the
    feasibility phase of the project by developing project cost
    contingencies using a standard cost risk analysis program. Cost risk
    analysis is the process of identifying and measuring the cost impact of
    project uncertainties and risks on the estimated total project cost.
        The first initiative mandates that the National Planning Centers of
    Expertise coordinate with the Cost Engineering Directory of Expertise
    at the Walla Walla District for independent review of cost estimates,
    and include contingencies in all decision documents requiring
    Congressional authorization. This approach will provide consistency in
    business practices and in the use of cost engineering tools.
        The second initiative, which went in effect on October 1, 2007,
    requires that Corps project delivery teams conduct a cost risk analysis
    to develop contingencies for Civil Works total project cost estimates
    of all decision documents requiring Congressional authorization for
    projects exceeding $40 million.
        The third initiative requires that project managers and their
    project delivery teams use project risk management principles and
    methods in developing a project risk management plan that includes a
    risk assessment and analysis and a risk response plan to support the
    cost risk analysis. Together the project risk management plan along
    with the cost risk analysis will produce a defensible assessment of the
    Civil Works total project cost estimate. This gives the management team
    an effective tool to assist in managing the planning study and will
    assist decisionmakers in making project recommendations.
        The Corps will be incorporating lessons learned into its cost
    estimating practices on an ongoing basis. Our goal is to improve the
    accuracy of our cost estimates much earlier in the development of a
    proposed project--at the project formulation stage--in order to provide
    greater assurance in determining whether the alternatives that we are
    exploring are highly cost-effective.
      value of the civil works program to the nation's economy and defense
        We are privileged to be part of an organization that directly
    supports the President's priorities of winning the global war on
    terror, securing the homeland and contributing to the economy.
    The National Welfare
        The way in which we manage our water resources can improve the
    quality of our citizens' lives. It has affected where and how people
    live and influenced the development of this country. The country today
    seeks economic development as well as the protection of environmental
    values.
        Domestically, Corps of Engineers personnel from across the Nation
    continue to respond to the call to help re-construct and improve the
    hurricane and storm damage reduction system for southeast Louisiana.
    The critical work they are doing will reduce the risk of damage from
    future storms to people and communities.
        The budget also includes a 2009 Emergency Appropriation in the
    amount of $5.761 billion for the Federal Share of additional funds
    needed to provide risk reduction from hurricane and storm surges for
    the greater New Orleans, Louisiana, area. These funds will be used to
    restore and complete construction of hurricane and storm damage risk
    reduction features into the Federal System. The budget also proposes
    that the existing systems be authorized as a single, integrated
    project, and that cost-shares of this re-authorized project be made
    consistent with cost-shares that are applied nationally.
    Research and Development
        Civil Works Program research and development provides the Nation
    with innovative engineering products, some of which can have
    applications in both civil and military infrastructure spheres. By
    creating products that improve the efficiency and competitiveness of
    the Nation's engineering and construction industry and providing more
    cost-effective ways to operate and maintain infrastructure, Civil Works
    program research and development contributes to the national economy.
    The National Defense
        Internationally, the U.S. Army Corps of Engineers continues to
    support the mission to help Iraq and Afghanistan build foundations for
    democracy, freedom and prosperity.
        I also want to recognize the many Corps of Engineers civilians--
    each of whom is a volunteer--and Soldiers who are providing engineering
    expertise, quality construction management, and program and project
    management in other nations. The often unsung efforts of these
    patriotic men and women contribute daily toward this Nation's goals of
    restoring the economy, security and quality of life for all Iraqis and
    Afghans.
        In Iraq, the Gulf Region Division has overseen the initiation of
    more than 4,300 reconstruction projects valued in excess of $6.5
    billion. More than 500 projects valued at $2.6 billion are ongoing.
    These projects provide employment and hope for the Iraqi people.
        In Afghanistan, the Corps is spearheading a comprehensive
    infrastructure program for the Afghan national army, and is also aiding
    in important public infrastructure projects.
                                   conclusion
        The Corps of Engineers is committed to staying at the leading edge
    of service to the Nation. We're committed to change that ensures an
    open, transparent, and performance-based Civil Works Program.
        Thank you, Mr. Chairman and members of the subcommittee. This
    concludes my statement.

        Senator Dorgan. General, thank you very much, we appreciate
    your testimony as well.

                           DEPARTMENT OF THE INTERIOR

                             Bureau of Reclamation

    STATEMENT OF KAMERAN ONLEY, ACTING ASSISTANT SECRETARY
                FOR WATER AND SCIENCE
    ACCOMPANIED BY:
            ROBERT W. JOHNSON, COMMISSIONER
            REED MURRAY, DIRECTOR, CENTRAL UTAH PROJECT COMPLETION ACT
                OFFICE
            ROBERT W. WOLF, DIRECTOR, PROGRAM AND BUDGET, BUREAU OF
                RECLAMATION
        Senator Dorgan. Secretary Onley.
        Ms. Onley. Mr. Chairman and Mr. Domenici and members of the
    subcommittee, thank you for the opportunity to appear before
    you in support of the President's fiscal year 2009 budget
    request for the Bureau of Reclamation and the Central Utah
    Project Completion Act.
        With me today is Bob Johnson, the Commissioner of the
    Bureau of Reclamation, and we also have Reed Murray, the
    Director of the Central Utah Project Completion Act Office with
    us here, if you have any questions on that program.
        I've submitted written testimony which presents a detailed
    summary of the Department's appropriation request. Today I'd
    like to highlight the 2009 Water for America initiative, and
    touch briefly on Reclamation and the Central Utah Project
    request before turning to Commissioner Johnson for more
    detailed discussion on the Reclamation request.
        The Department of the Interior's mission is complex and
    multi-faceted. Our program and mission stretch from the North
    Pole to the South Pole, and across 12 time zones, from the
    Caribbean to the Pacific Rim. Nearly every American lives
    within a 1 hour drive of lands or waters managed by the
    Interior Department.
        Our 2009 budget of $10.76 billion, benefits every American
    each day, in some way. The 2009 budget continues investments
    that Congress provided in 2008 for our top priorities. The 2009
    budget also addresses other nationally significant issues
    within a budget that maintains the President's commitment to
    fiscal restraint.
        The 2009 budget builds on our 2008 budget, which charted a
    course for excellence for our national parks, broadened our
    planning horizons to achieve healthy lands while securing
    energy for the Nation, and puts the needs of Indian country
    center stage. We continue these commitments, and are also
    proposing four new initiatives in 2009, to address water
    crisis, managing our oceans, reverse the dramatic decline in
    wild birds, and protect our borders. These initiatives have
    addressed some of the most critical issues facing this Nation.
        The Water for America initiative would ensure that
    communities have a reliable water supply for the 21st century.
    Last year, the National Science and Technology Council reported
    that abundant supplies of clean, fresh water can no longer be
    taken for granted.
        Our water scarcity is not just a problem for the West; it
    is a problem for the Nation. We are seeing prolonged droughts
    and water conflicts in such areas as the Southeast, where
    people are used to having unlimited water.
        Through this initiative, the Bureau of Reclamation and the
    U.S. Geological Survey will help communities secure reliable
    water supplies through information, technologies and
    partnerships.
        With regard to the programs under the jurisdiction of this
    subcommittee, the 2009 request for the Bureau of Reclamation
    and the Central Utah Project Completion Act is $961.3 million.
    I will defer to Commissioner Johnson to discuss the details of
    the Reclamation request, but note that the 2009 proposal of
    $919.3 million supports managing, developing and protecting
    water and related resources in an environmentally and
    economically sound manner.
        Reclamation continues to strive for the highest levels of
    service to the American people, and for the highest levels of
    management excellence.
        The request for the implementation of the Central Utah
    Project Protection Completion Act is $42 million. The majority
    of the fiscal year 2009 funding will continue to continue
    construction of the Utah Lakes System, the last component of
    the Central Utah Project which, when complete, will provide
    much-needed water for Salt Lake and Utah counties.
        The Central Utah Project anticipates ongoing construction
    of the Spanish Fork Canyon Pipeline, the return of two more of
    the high lakes in the Uinta Mountains, and natural conditions,
    and implementation of the East Juab Water Efficiency Project,
    to conjunctively use ground water and surface water.
        While here, I would be remiss if I did not mention, the
    Department strongly supports the President's $50 million
    request that is pending before this subcommittee for the Army
    Corps of Engineers work to implement the modified waters
    delivery to Everglades National Park, which Congress authorized
    in 1989. Mod waters is intended to restore the natural flow of
    water to Everglades National Park and thereby restores park
    habitat which has been adversely affected by the operations of
    the last 5 decades of Army Corps Central and Southern Florida
    Project.
        The funds for the Army Corps, when combined with the funds
    requested for the National Park Service, will allow to continue
    the work on this project and bring it closer to completion. We
    have just completed--with the Corps of Engineers--an evaluation
    of a key component related to bridging in the Tamiami Trail,
    U.S. Highway 41, which serves as the barrier to restore flow.
    We appreciate your favorable support for this project, which is
    supported by the State of Florida, and is a necessary
    prerequisite for the Everglades restoration work.
        In summary, the Department's 2009 budget will continue
    efforts to improve our national parks, protect our wildlife in
    its habitat, and make investments in Indian country for safe
    communities and Indian education. In addition, we will help
    communities address water and supply needs, conserve wild birds
    and ocean resources, improve the safety of public lands along
    the border for employees and visitors, and continue to address
    other ongoing mission priorities.

                               PREPARED STATEMENT

        I appreciate the strong support from this committee has
    given to both the Department--to the Department, and in
    particular, the Bureau of Reclamation, and to the Central Utah
    Project, and I look forward to working with you to advance the
    goals of these programs.
        Thank you.
        [The statement follows:]
                      Prepared Statement of Kameran Onley
        Mr. Chairman, Senator Domenici, and members of this subcommittee,
    it is a pleasure to appear before this subcommittee today to discuss
    the President's 2009 budget for the Department of the Interior and to
    update you on our progress in implementing our 2008 programs.
        The Department of the Interior's mission is complex and
    multifaceted. Our programs and mission stretch from the North Pole to
    the South Pole and across 12 time zones, from the Caribbean to the
    Pacific Rim. Our extensive mandate rivals any Government agency in its
    breadth and diversity--and its importance to the everyday lives of
    Americans. In a recent poll of Federal agencies, the Department of the
    Interior received the highest rating for its public service.
        Nearly every American lives within a 1 hour drive of lands or
    waters managed by the Interior Department. With 165,000 facilities at
    2,400 locations, Interior is second only to the Department of Defense
    in managed assets. The Department's law enforcement agents, over 4,000,
    comprise the third largest civilian law enforcement presence in the
    Federal Government.
        Approximately 31 million people in the West rely on drinking water
    provided through water systems managed by the Department. Interior
    irrigation systems deliver water to farmers who generate over half of
    the Nation's produce.
        The lands and waters we manage generate one-third of the Nation's
    domestic energy production. Managing these areas, Interior generates
    $18 billion annually in revenues that exceeds Interior's $10.7 billion
    appropriated budget.
        Interior fulfills special responsibilities to Native Americans as
    the manager of one of the largest land trusts in the world--over 10
    million acres owned by individual Indians and 46 million acres held in
    trust for Indian Tribes. In addition to lands managed in trust, the
    Department manages over $3.3 billion of funds held in over 1,800 trust
    accounts for approximately 250 Indian tribes and over 370,000 open
    Individual Indian Money accounts. Interior also operates one of only
    two school systems in the Federal Government, the Bureau of Indian
    Education school system. The Department of Defense operates the other.
                          overview of the 2009 budget
        The 2009 budget request for current appropriations is $10.7
    billion, $388.5 million or 3.5 percent below the level enacted by
    Congress for 2008, excluding fire supplemental funding, but $59 million
    above the amount requested in the 2008 President's budget. Permanent
    funding that becomes available as a result of existing legislation
    without further action by the Congress will provide an additional $6
    billion, for a total 2009 Interior budget of $16.7 billion. Including
    permanent funding and excluding 2008 fire supplemental funding, the
    2009 budget for Interior is slightly above 2008 amounts.
        The 2009 request includes $9.8 billion for programs funded within
    the Interior, Environment and Related Agencies Appropriation Act.
    Excluding fire supplemental funding, this is a decrease of $198.9
    million, or 2 percent, below the level enacted for 2008. The 2009
    request for the Bureau of Reclamation and the Central Utah Project
    Completion Act, funded in the Energy and Water Development
    Appropriations Act, is $961.3 million, $189.6 million below the level
    enacted for 2008.
                              the challenges ahead
        Interior's responsibilities are expanding as the Nation looks to
    its public lands for energy, water, wildlife protection, and
    recreation. Since 2001, the Nation has created 13 new parks and 15
    wildlife refuges. Population has grown dramatically near once-rural or
    remote public lands, increasing access to public lands and complicating
    land management. In the last 10 years, 60 percent of the new houses
    built in America were located in the wildland-urban interface. Changing
    land conditions, including the effects of a changing climate, have
    heightened threats from fire and other natural hazards, complicating
    land management.
        The Department is improving program efficiency, setting priorities,
    and leveraging Federal funds through partnerships and cooperative
    conservation to meet these challenges. Interior's accomplishments have
    been many and varied, with noteworthy advances in management
    excellence.
        Interior has made progress on all dimensions of the President's
    management agenda--a result achieved despite decades-long challenges in
    Indian trust management, a highly decentralized organization structure,
    and a highly dispersed workforce. In 2001, Interior had 17 material
    weaknesses reported in the annual financial and performance audit. With
    the annual audit just completed for 2007, we have eliminated all
    material weaknesses. Despite these successes, as public lands become
    increasingly important to the economy, national security, and the
    public, continued success will require a strategic focus of resources
    to address emerging challenges, achieve key priorities, and maintain
    current levels of success.
                           interior's accomplishments
        The Department's accomplishments exemplify Interior's core values:
    Stewardship for America with Integrity and Excellence. Our
    achievements, in combination with an outstanding workforce, create a
    strong foundation for continued stewardship of the Nation's resources.
    Since 2001, the Department has:
      --Restored or enhanced more than 5 million acres and 5,000 stream and
            shoreline miles through cooperative conservation.
      --Restored, improved, and protected wetlands to help achieve the
            President's goal to protect, enhance, and restore 3 million
            acres by 2009.
      --Improved park facilities for visitors by undertaking over 6,600
            projects at national parks and earning a 96 percent
            satisfaction rate from park visitors.
      --Reduced risks to communities from the threat of catastrophic fire,
            conducting over 8 million acres of fuels treatments on Interior
            lands through the Healthy Forests Initiative.
      --Enhanced energy security by more than doubling the processing of
            applications for permits to drill and increased the production
            of renewable energy with new wind, solar, and geothermal
            projects.
      --Awarded $9.8 million to 140 Preserve America projects involving
            public-private partnerships that serve as nationwide models for
            heritage tourism, historic preservation, education, and other
            Federal programs.
      --Leveraged a four-to-one investment through a water conservation
            challenge grant program, generating more than $96 million for
            122 water delivery system improvements and conserving over
            400,000 acre-feet of water to help meet the water needs of
            people across the West.
      --Completed planned lease sales and generated a new 5-year plan for
            2007-2012 that opens up an additional 48 million acres to
            leasing and has the potential to produce 10 billion barrels of
            oil and 45 trillion cubic feet of natural gas over the next 40
            years, enough to heat 47 million homes for 40 years. The
            October 2007 Central Gulf of Mexico OCS lease sale generated
            $2.9 billion, $1.6 billion more than originally estimated.
      --Removed the American bald eagle from the endangered species list
            and put in place a set of management guidelines to secure the
            future of our Nation's symbol.
      --Advanced protection of the Papahanaumokuakea Marine National
            Monument in Hawaii, the largest marine protected area in the
            world, with the publication of regulations codifying management
            measures.
      --Hosted over 464 million visitors to parks, refuges, public lands,
            and Bureau of Reclamation sites and increased the number of
            fishing programs on refuges by 24 and the number of hunting
            programs on refuges by 34.
      --Established a new Recreation Reservation Service, a unified pass to
            public lands, and clarified entrance and recreation fees, in
            coordination with other agencies.
      --Distributed over $79 million to individual Indian money account
            holders whose whereabouts were previously unknown and archived
            400 million pages of trust documents in a state-of-the-art
            facility.
        Our 2009 budget continues investments the Congress provided in 2008
    for our top priorities. We continue our Centennial Initiative with
    record funding levels for park operations. We propose to augment
    funding for our landscape-scale Healthy Lands Initiative to protect
    wildlife and assure access to energy resources on public lands. We
    propose to sustain funding increases in 2008 to combat the
    methamphetamine scourge in Indian country and improve education
    programs for students in Indian schools.
        Fulfilling the President's commitment to cooperative conservation,
    since 2001, the Department has provided $2.5 billion in conservation
    grants to achieve on-the-ground protection, restoration, and
    enhancement of lands and waters with partners. This commitment
    continues with $321.7 million requested in 2009 for challenge cost
    share and partnership programs that leverage Federal funding, typically
    more than doubling the Federal investments with matching funds.
        We also propose four new initiatives. We will advance efforts to
    improve the status of birds, including migratory birds, and avert
    further declines in bird populations with an increase of $9.0 million
    for a Birds Forever initiative. The budget continues the $35.9 million
    refuge funding increase provided by the Congress in 2008, which will
    restore 200,000 acres of bird habitat. The 2009 budget seeks an
    increase of $7.9 million to collect data that is needed to define U.S.
    jurisdiction of the extended continental shelf under the Law of the
    Sea, protect wildlife and habitat in ocean environments from marine
    debris, and conduct high priority research to support coastal
    restoration. The 2009 budget includes $8.2 million to increase the
    protection of employees, visitors, lands and resources that are
    increasingly at risk from illegal activities at parks, refuges, public
    lands, and Indian lands along the border with Mexico. Of particular
    interest to this subcommittee, we request an increase of $21.3 million
    for the Water for America initiative that will enhance knowledge of
    water resources and improve the capacity of water managers to avert
    crises caused by water supply issues and better manage water resources
    to assist in endangered species recovery.
                               water for america
        In 2007, the National Science and Technology Council reported that
    ``abundant supplies of clean, fresh water can no longer be taken for
    granted.'' The Council of State Governments echoed this concern,
    concluding that ``water, which used to be considered a ubiquitous
    resource, is now scarce in some parts of the country and not just in
    the West . . . The water wars have spread to the Midwest, East, and
    South, as well.''
        Competition for water is increasing because of rapid population
    growth and growing environmental and energy needs. These water needs
    are escalating at a time of chronic drought and changes in water
    availability resulting from a changing climate.
        In 2009, our budget includes an increase of $21.3 million for a
    Water for America initiative to help communities secure reliable water
    supplies through information, technologies, and partnerships. This
    collaborative effort, which involves the Bureau of Reclamation and the
    U.S. Geological Survey, will help address the water needs of the
    Nation.
        Knowing how much water is available--and how much we consume--lies
    at the foundation of good water management. Yet this Nation has not
    completed a water census in over 3 decades. Our Water for America
    initiative will fill this void. The U.S. Geological Survey request
    includes an additional $8.2 million to begin funding the first water
    census in 30 years. USGS will begin a nationwide assessment of water
    availability, water quality, and human and environmental water use. The
    census, planned for completion by 2019, will generate information to
    assist others in managing water in a context of competing demands. The
    census will provide a national groundwater information system, new
    technology that integrates surface and groundwater information, and
    better measurements that result in better management of water
    resources.
        For more than 100 years, USGS has collected, managed and
    disseminated data on stream behavior. The USGS operates its
    streamgaging network of 7,000 gages in cooperation with State, local,
    municipal, and tribal partners. The 2009 budget will modernize 350
    gages and re-establish 50 gages discontinued in the past 2 decades to
    improve capability to ensure a consistent, historical record of
    streamflow.
        The Bureau of Reclamation will recast its water conservation
    programs and will merge Water 2025 and the Water Conservation Field
    Services program to stimulate water conservation and improved water
    management through an integrated approach that addresses urban, rural,
    and agricultural uses of water throughout the West. Through the use of
    West-wide criteria to competitively award grants, this new water
    conservation challenge grant program will stretch water supplies
    through water conservation, technology, reuse and recycling, and new or
    improved infrastructure development. This program will leverage $15.0
    million in Federal dollars with State and local funds. We will also
    protect endangered species and their habitats while protecting water
    for traditional purposes with an increase of $8.9 million. Funding will
    be used to acquire water to increase flows in the Platte River; improve
    tributary habitats for spawning on the Columbia and Snake Rivers;
    restore habitats on the Yakima River basin, the Middle Rio Grande
    River, and the Klamath basin, and improve endangered species conditions
    in the California Bay-Delta.
        The Bureau of Reclamation's 2009 budget request of $919.3 million
    is offset by $48.3 million in funds from the Central Valley Project
    Restoration Fund Offset. This request supports Reclamation's mission of
    managing, developing, and protecting water and related resources in an
    environmentally and economically sound manner in the interest of the
    American people. The budget emphasizes reliable water delivery and
    power generation by requesting more than $396 million to fund
    operation, maintenance, and rehabilitation activities at Reclamation
    facilities.
        To address important infrastructure funding needs, the budget
    includes an increase of $15.5 million for the Bureau of Reclamation's
    Safety of Dams program. This will allow the Bureau to address
    correction actions at Folsom Dam and other high priority projects.
        Reclamation is currently developing programmatic criteria for a
    Rural Water Program as required under the Reclamation Rural Water
    Supply Act of 2006. Reclamation expects to begin appraisal level
    studies in 2009. The 2009 budget includes $39.0 million for two ongoing
    authorized rural water projects: $24 million supports the
    administration's commitment to complete construction of ongoing rural
    water projects including ongoing municipal, rural and industrial
    systems for the Pick Sloan-Missouri Basin Program--Garrison Diversion
    Unit in North Dakota and the Mni Wiconi Project in South Dakota. The
    first priority for funding rural water projects is the required
    operations and maintenance component, which is $15.0 million for 2009.
    For the construction component, Reclamation allocated funding based on
    objective criteria that gave priority to projects nearest to completion
    and projects that serve tribal needs.
        The $50.0 million budget for Animas-La Plata funds the completion
    of major project components including the Ridges Basin Dam, Durango
    Pumping Plant, and Ridges Basin Inlet Conduit; enables the Bureau to
    begin filling Lake Nighthorse; and begins construction of the Navajo
    Nation Municipal Pipeline.
        The Bureau will complete removal of the Savage Rapids Dam in 2009.
    The budget includes $22.7 million for the Middle Rio Grande project to
    continue to focus on the protection and recovery of the silvery minnow
    and southwestern willow flycatcher.
        The budget request for CALFED is $32.0 million, continuing
    implementation of priority activities that will resolve water conflicts
    in the Bay-Delta of California. Funds will be used for the
    environmental water account, storage feasibility studies, conveyance
    feasibility studies, science, implementation of projects to improve
    water quality, and overall program administration.
                      supporting the department's mission
        The 2009 budget aligns resources to achieve these and other high-
    priority goals guided by the Department's integrated strategic plan.
    The Department's strategic plan links the Department's diverse
    activities into four common mission areas: Resource Protection,
    Resource Use, Recreation, and Serving Communities. A fifth area,
    Management Excellence, provides the framework for improved business
    practices, processes, and tools and a highly skilled and trained
    workforce.
        Interior continues to utilize the services of over 200,000
    volunteers and extensive seasonal employees. However, the workforce
    capacity of the Department's programs is an essential ingredient for
    the uninterrupted delivery of programs and services to the American
    public.
                            other budget priorities
        Financial and Business Management System.--The Financial and
    Business Management System, an enterprise-level, integrated,
    administrative management system, is replacing the Interior
    Department's existing legacy systems. When fully implemented, the
    project will support the business requirements of all Interior bureaus
    and offices including core accounting, acquisition, personal property
    and fleet, travel, real property, financial assistance, budget
    formulation, and enterprise management information.
                             legislative proposals
        The 2009 budget is accompanied by legislative proposals that will
    affect receipt or spending levels in 2009 or in future years. These
    proposals will be transmitted to the Congress for consideration by this
    committee and other authorizing committees of jurisdiction.
        Many of these legislative changes were presented in the 2008
    President's budget, including proposals for reallocation of the
    repayment of capital costs for the Pick-Sloan Missouri Basin Program,
    and authorization for the San Joaquin River Restoration settlement.
                                   conclusion
        Our 2009 budget will--in its entirety--make a dramatic difference
    for the American people. We will continue efforts to improve our
    national parks, protect our wildlife and its habitat, and make
    investments in Indian Country for safe communities and Indian
    education. In addition, we will help communities address water supply
    needs, conserve wild birds and ocean resources, improve the safety of
    public lands along the border for employees and visitors, and continue
    to address other ongoing mission priorities. This concludes my overview
    of the 2009 budget proposal for the Department of the Interior and my
    written statement. I will be happy to answer any questions that you may
    have.

        Senator Dorgan. Secretary Onley, thank you very much.
        Commissioner Johnson, you may proceed.

                         STATEMENT OF ROBERT W. JOHNSON

        Mr. Johnson. Thank you, Mr. Chairman, it's a pleasure for
    me to be here, also, and it's an honor to be in front of the
    members of the committee here, as well.
        I have Mr. Robert Wolf with me today, he is the head of our
    Program and Budget Group with the Bureau of Reclamation, and
    he'll be assisting me with details if I need some help.
        I would like to truncate my oral remarks, and very quickly
    hit on three broad categories of the Reclamation budget, and
    then just spend a minute talking about our Water for America
    initiative that's included in the 2009 request.
        Reclamation's budget breaks down into three really broad
    categories. Our first priority is the operation and maintenance
    of our facilities. We deliver water to 10 million acres of
    irrigated farmland, we deliver water to 31 million people, and
    we produce 44 billion kilowatt hours of energy annually.
        We have 58 power plants, 350 high dams--450 dams, if you
    count the lower dams--and maintaining that infrastructure,
    which largely is 50 years old, or older, is the first priority
    of the Bureau of Reclamation. And when we look at our budget,
    we have about $400 million associated with insuring that we're
    able to maintain that infrastructure and continue to deliver
    those water and power supplies like we have in the past.
        The second component of our program that I like to
    generalize about is what I would call River Restoration
    Programs. The Endangered Species Act, the National
    Environmental Policy Act, and the Clean Water Act have really
    established a new set of public values that Reclamation has to
    deal with, and the Corps, as well. And we found ourselves--in
    complying with those acts--being heavily involved in restoring
    river basins--river basins where we've had heavy involvement in
    developing water supply systems. We found that in order to be
    able to deliver, or continue to deliver, the benefits of our
    projects--that we have to be very active in managing those
    river basins to maintain the ecosystems and protect the species
    that live there.
        We have about $150 million in our budget for those kinds of
    activities--the Rio Grande, the Colorado, the Snake, the
    Columbia, the Platte, the Sacramento and San Joaquin, the
    Trinity River--all have major river basin restoration programs,
    the Klamath, I don't want to leave out the Klamath--certainly
    an important river basin--and we are putting a lot of our
    resources into meeting those requirements on those river
    basins.
        The third is, Reclamation continues to be involved in the
    development of new water supplies. We're still constructing
    water projects, we're heavily into the Animas La Plata Project
    in Colorado and New Mexico, we have an active Rural Water
    Program, that I know you all have a great interest in. We have
    a Water Reuse Program, funding additional water reuse. We have
    Indian programs to develop facilities to deliver water to
    Indian tribes. And that component of our program is also
    approximately $150 million.
        So, that in a very broad framework is the crux of the
    Reclamation program, and what our 2009 budget represents.
        Quickly, I would like to touch on Water for America, a new
    initiative. An initiative that I am very excited about, I think
    it's going to help Reclamation continue to be a key player in
    dealing with some of the critical water supply issues that
    we're facing in the Western United States. Chronic drought,
    changing climate, rapid population growth, and increased
    environmental and energy needs has created water conflicts
    leading to growing interstate and intrastate competition for
    water resources.
        In fiscal year 2009 Reclamation will partner with the U.S.
    Geological Survey to implement a Water for America initiative
    aimed at addressing 21st century water challenges. The 2009
    budget request for Water for America is $31.9 million. Of this,
    $19 million appears as the Water for America line item in our
    budget. The remaining $12.9 million is included in specific
    projects for enhanced endangered species recovery activities,
    which is about $8.9 million, and investigation programs, which
    is about $4 million.
        The goal of the Water for America initiative is to address
    the impending confluence of three factors, threatening to
    overwhelm our current ability to provide water to the arid
    West--increased water demands, aging infrastructure and
    decreased, or altered, availability of water supplies.
        Reclamation's part in Water for America will focus on two
    strategies. First, Reclamation will conduct several
    comprehensive basin-wide water supply and demand studies, in
    conjunction with willing partners in areas where high levels of
    anticipated water and supply/demand imbalances exist.
        Each study will include three main elements, state of the
    art projections of future water supply and demand for the river
    basin, analysis of the basin's existing water and power
    infrastructure performance in face of changing water realities,
    and finally, recommendations for adaptation and optimizing
    current operations and activities; or by changing or
    supplementing existing infrastructure and operations and
    adopting new technologies. These activities will be carried out
    in concert with Reclamation's existing planning programs.

                               PREPARED STATEMENT

        Second, we will look at expanding, protecting and
    conserving our Nation's water resources through a broad-based
    Challenge Grant Program, building on the existing Water 2025
    Challenge Grant Program that we've had over the last 4 or 5
    years. Our intent is to broaden that program to include
    Challenge Grants that would advance water technology, water
    treatment technology, and support proactive efforts to address
    endangered species problems, as well as the traditional grants
    to encourage water conservation in areas where there is
    potential conflict in water resource use.
        Thank you, Mr. Chairman, that concludes my oral remarks.
        [The statement follows:]
                    Prepared Statement of Robert W. Johnson
        Thank you, Mr. Chairman, Senator Domenici and members of the
    subcommittee, for the opportunity to appear before you in support of
    the President's fiscal year 2009 budget request for the Bureau of
    Reclamation. With me today is Robert W. Wolf, Director of Program and
    Budget. Additionally, we have Reed Murray, Program Manager for the
    Central Utah Project Completion Act should you have any questions on
    that program.
        I appreciate the time and consideration this subcommittee gives to
    reviewing and understanding Reclamation's budget and its support for
    the program. Reclamation works hard to prioritize and define our
    program in a manner that serves the best interest of the public and
    those who rely on Reclamation for their water and power.
        Our fiscal year 2009 request has been designed to support
    Reclamation's core activities to deliver water and generate hydropower,
    consistent with applicable State and Federal law, in an environmentally
    responsible and cost-efficient manner while meeting the President's
    goal of balancing the budget by 2012.
        The proposed funding will allocate funds to projects and programs
    based on objective and performance-based criteria to most effectively
    implement Reclamation's programs and its management responsibilities
    for the water and power infrastructure in the West. The President's
    budget request emphasizes the following principle: enhancing management
    of our water infrastructure and programs in the West by eliminating
    program redundancies, leveraging partnerships with our western
    stakeholders and maximizing opportunities for competitive processes.
        The fiscal year 2009 request for Reclamation totals $919.3 million
    in gross budget authority. This takes into consideration the effects of
    the proposed legislation for fiscal year 2009 that will redirect $7.5
    million for Friant surcharges from the Central Valley Project
    Restoration Fund to the San Joaquin River Restoration Fund. The request
    also is partially offset by discretionary receipts in the Central
    Valley Project Restoration Fund of $48.3 million.
                          water and related resources
        The fiscal year 2009 request for Water and Related Resources is
    $779.3 million. The request for Water and Related Resources includes a
    total of $383.0 million for water and energy, land, and fish and
    wildlife resource management activities (which provides for
    construction and management of Reclamation lands, and actions to
    address the impacts of Reclamation projects on fish and wildlife). The
    request also includes $396.3 million for facility operations,
    maintenance, and rehabilitation activities which is used to ensure
    sound and safe ongoing operations.
        Adequate funding for facility operations, maintenance, and
    rehabilitation continues to be one of Reclamation's highest priorities.
    Reclamation continues to work closely with water users and other
    stakeholders to ensure that available funds are used effectively. These
    funds are used to allow the timely and effective delivery of project
    benefits; ensure the reliability and operational readiness of
    Reclamation's dams, reservoirs, power plants, and distribution systems;
    and identify, plan, and implement dam safety corrective actions and
    site security improvements.
    Highlights of the Fiscal Year 2009 Request for Water and Related
            Resources
        I would like to share with the committee several highlights of the
    Reclamation budget, including one of the most significant and exciting
    elements of our 2009 request, the Water for America Initiative. In
    fiscal year 2009, Reclamation will partner with the U.S. Geological
    Survey to implement the Water for America initiative aimed at
    addressing 21st century water challenges and ensuring secure water
    supplies for future generations.
        Water for America ($31.9 million).--Of this amount, $19.0 million
    appears as the Water for America Initiative line item. While the
    remaining $12.9 million is funded in specific projects for enhanced
    endangered species recovery activities ($8.9 million) and displayed as
    individual investigation programs ($4.0 million) in the budget request,
    collectively the $31.9 million supports the cohesive Water for America
    initiative. Reclamation's efforts focus on two of the Initiative's
    three strategies: Plan for Our Nation's Water Future; and Expand,
    Protect, and Conserve Our Nation's Water Resources. The third
    component, Enhance our Nation's Water Knowledge is funded with the
    USGS.
        As part of the Plan for Our Nation's Water Future component of the
    Initiative, Reclamation will incorporate the existing investigations
    programs with a new basinwide studies program, thus initiating
    comprehensive water supply and demand studies to assess the impact of
    increased water demands on finite water sources. The Expand, Protect,
    and Conserve Our Nation's Water Resources component merges the most
    successful elements of two existing water conservation programs, Water
    2025 and the Water Conservation Field Services Program. Competitive
    grants will be awarded based upon West-wide criteria to address
    emerging challenges and prevent future conflicts.
      --Plan for Our Nation's Water Future ($8.0 million).--In planning for
            our Nation's water future, Reclamation will conduct
            comprehensive water supply and demand studies. The studies, to
            be done in conjunction with willing partners, will occur in
            areas where high levels of anticipated water supply/demand
            imbalances exist. Each study will include three main elements:
            state-of-the-art projections of future supply and demand by
            river basin; analyses of how the basin's existing water and
            power infrastructure will perform in the face of changing water
            realities; and recommendations for satisfying future water
            needs through adapting and optimizing current operations and
            activities, or by changing or supplementing existing
            infrastructure and operations and adopting new technologies.
            Additionally, Reclamation`s investigation programs will
            complement the comprehensive basin studies and will place an
            additional emphasis on resolving 21st century challenges.
      --Expand, Protect, and Conserve Our Nation's Water Resources ($23.9
            million).--The Expand, Protect, and Conserve Our Nation's Water
            Resources effort will use a broad-based challenge grant program
            (building upon and recasting the existing Water 2025 Challenge
            Grant program and the Water Conservation Field Services
            Program) to accelerate the implementation of cost-effective
            actions that will conserve water by improving efficiency;
            recycle and desalt water to create new supplies; and support
            proactive efforts to avoid the decline of sensitive species.
        Another component of this strategy is accelerating endangered
    species activities in order to maintain and improve existing resident
    populations and/or localized critical habitat for various species
    impacted by Reclamation projects, thereby safeguarding the water
    supplies associated with these projects. Activities will include
    acquiring land for habitat development and improvement projects,
    recovery activities for listed species, improvements to stream flow,
    removal of barriers to spawning grounds, restoration of critical
    habitat and other related actions.
        Other significant programs and highlights include:
        Klamath Project in Oregon and California ($25.0 million).--The
    fiscal year 2009 President's budget request will continue funding for
    Reclamation to collaborate with other Federal and State agencies,
    tribes and the public to develop a basin-wide recovery plan that
    addresses water supply, water quality, fish habitat, and fish
    populations.
        Lower Colorado River Operations Program in California, Arizona and
    Nevada ($16.4 million).--The fiscal year 2009 President's budget
    request will provide funds for the work necessary to carry out the
    Secretary's responsibilities as water master of the lower Colorado
    River. The fiscal year 2009 request funds measures under the multi-
    species conservation program to provide long-term Endangered Species
    Act compliance for lower Colorado River operations for both Federal and
    non-Federal purposes.
        Middle Rio Grande in New Mexico ($22.7 million).--The fiscal year
    2009 President's budget request will continue funding for endangered
    species activities and Reclamation's participation in the Middle Rio
    Grande Endangered Species Act Collaborative Program as well as repair
    of priority river maintenance sites.
        Animas-La Plata in Colorado and New Mexico ($50.0 million).--The
    fiscal year 2009 President's budget request will continue construction
    of the project's major features, Ridges Basin Dam and Durango Pumping
    Plant and the Ridges Basin Inlet Conduit. It will allow for initiation
    of testing on the Durango Pumping Plant and Ridges Basin Inlet Conduit,
    thereby enabling the initial filling of Lake Nighthorse. With this
    level of funding Reclamation will start constructing components of the
    Navajo Nation Municipal Pipeline. In addition to construction funding,
    this request includes funding for continued operation and maintenance
    of improvements for wetland and wildlife mitigation lands associated
    with the project.
        Savage Rapids in Oregon ($3.0 million).--The fiscal year 2009
    President's budget request will provide funds for continuing
    construction of the pumping facilities. Removal of this irrigation
    diversion dam and the installation of pumping facilities will allow the
    local farming community to continue irrigated agriculture and remove a
    migration barrier for the threatened Southern Oregon and Northern
    California coho salmon.
        Columbia/Snake River Salmon Recovery in Idaho, Oregon, Montana, and
    Washington ($18.0 million).--The fiscal year 2009 President's budget
    request will address the requirements in the biological opinions issues
    in December 2000 by the U.S. Fish and Wildlife Service and in November
    2004 by the National Oceanic and Atmospheric Administration Fisheries
    (NOAA Fisheries). The 2004 biological opinion has been remanded to NOAA
    Fisheries and a new biological opinion is due in May 2008. During the
    remand, the 2004 biological opinion remains in place as Reclamation
    continues to implement actions identified in the 2004 updated proposed
    action.
        Platte River Endangered Species Recovery Program ($11.5 million).--
    The President's fiscal year 2009 budget request for the Platte River
    Recovery Implementation Program is $11.5 million. The agreement for the
    program was signed by Secretary Kempthorne and the Governors of
    Nebraska, Colorado and Wyoming in late 2006. Platte River habitat is
    essential to the recovery of the whooping crane, interior least tern,
    piping plover, and pallid sturgeon (all threatened or endangered
    species). Legislation was introduced in the 110th Congress to authorize
    the Secretary of the Interior, through the Bureau of Reclamation, and
    in partnership with the States of Wyoming, Nebraska, and Colorado,
    other Federal agencies, and other non-Federal entities to participate
    in the implementation the Platte River Recovery Implementation Program
    for Endangered Species in the central and lower Platte River Basin and
    to modify the Pathfinder Dam and Reservoir.
        Site Security ($29.0 million).--The President's 2009 budget request
    for site security helps to ensure the safety and security of the
    public, Reclamation's employees and key facilities. The funds will
    support ongoing security activities, including physical security,
    personnel security, information security, law enforcement and research
    activities to maintain an effective and reliable security program and
    allow Reclamation to conduct security-related studies and reviews. The
    request also includes appropriated funds for guards, patrols, and law
    enforcement, including coordination, execution, and maintenance of law
    enforcement agreements with agencies outside Reclamation. In fiscal
    year 2008, 2009, and in future years, Reclamation plans to collect all
    reimbursable costs, including guards and patrols, as well as operation
    and maintenance of facility fortifications. Reclamation will continue
    to treat facility fortification, studies, and anti-terrorism
    management-related expenditures as non-reimbursable.
        Safety of Dams ($91.3 million).--The President's budget allows
    Reclamation to ensure that safety and reliability of Reclamation dams
    is one of the Bureau's highest priorities. The Dam Safety Program is
    critical to effectively manage risks to the downstream public,
    property, project, and natural resources. Of the budget request of
    $91.3 million, $71.5 million is for modifications at several facilities
    including Folsom Dam.
        Rural Water Program Development ($1.0 million).--The fiscal year
    2009 President's budget request of $1.0 million will allow Reclamation
    to begin implementation of the program on a pilot basis. Reclamation is
    currently working on meeting the requirements of title I of the Rural
    Water Act in order to implement the program. First, Reclamation is
    undertaking a rulemaking process, to develop programmatic criteria.
    Second, as required by the Act, Reclamation will complete an assessment
    of the status of authorized rural water supply projects and of other
    Federal programs that address rural water supply issues. This study
    will enable Federal agencies to maximize coordination in order to
    promote efficiency in those Federal activities targeting rural water
    supply needs in the West.
        Science and Technology (S&T) ($9.0 million).--The fiscal year 2009
    President's budget request includes funding for the development of new
    solutions and technologies which respond to Reclamation's mission-
    related needs. Reclamation's S&T work will contribute to the innovative
    management, development, and protection of water and related resources.
    This does not include the $2.0 million for the Desalination and Water
    Purification Research program.
                          ongoing rural water projects
        This request includes $39.0 million for two ongoing authorized
    rural water projects: The first priority for funding rural water
    projects is the required operations and maintenance component, which is
    $15.0 million for 2009. The budget includes $24 million to support the
    administration's commitment to complete construction of ongoing rural
    water projects including ongoing municipal, rural and industrial
    systems for the Pick Sloan-Missouri Basin Program--Garrison Diversion
    Unit in North Dakota and the Mni Wiconi Project in South Dakota. For
    the construction component, Reclamation allocated funding based on
    objective criteria that gave priority to projects nearest to completion
    and projects that serve tribal needs.
                                   title xvi
        The request includes $7.0 million to support ongoing title XVI
    construction projects, title XVI research activities, and the title XVI
    feasibility study review process developed in 2007. The title XVI
    projects develop and supplement urban and irrigation water supplies.
    Reclamation will continue to place priority on funding projects that:
    (1) are economically justified and environmentally acceptable in a
    watershed context; (2) are not eligible for funding under another
    Federal program; and (3) directly address administration priorities for
    the Reclamation program such as providing instream flows for Federally
    endangered or threatened species, meeting the needs of Native American
    communities, and meeting international commitments.
                           policy and administration
        The $59.4 million request in fiscal year 2009 funds the
    development, evaluation, and implementation of Reclamation-wide policy,
    rules, and regulations, including actions under the Government
    Performance and Results Act, and implement the President's Management
    Agenda. These funds are also used for management and performance
    functions that are not chargeable to specific projects and required for
    ongoing Commissioner's activities.
                    central valley project restoration fund
        This fund was established by the Central Valley Project Improvement
    Act, title XXXIV of Public Law 102-575, October 30, 1992. The request
    of $48.6 million is expected to be offset by discretionary receipts
    totaling $48.3 million, which is the maximum amount that can be
    collected from project beneficiaries under provisions of section
    3407(d) of the act. The discretionary receipts are adjusted on an
    annual basis to maintain payments totaling $30.0 million (October 1992
    price levels) on a 3 year rolling average basis.
        The CVPRF request is a net of $48.6 million. This includes a
    redirection of $7.5 million collected from the Central Valley Project
    Friant Division water users to the new San Joaquin River Restoration
    Fund for fiscal year 2009. Previously, these funds went into the CVPRF
    as outlined in the Reclamation Projects Authorization and Adjustments
    Act of 1992, title XXXIV of Public Law 102-575, section 3406(c)(1).
    Under the Settlement, the legislation proposes to redirect
    approximately $17.3 million per year of payments from the Central
    Valley Project, Friant Division water users into the Fund which would
    be available without further appropriations to implement the provisions
    of the settlement. These funds will be used for habitat restoration,
    improvement and acquisition, and other fish and wildlife restoration
    activities in the Central Valley Project area of California.
            san joaquin river restoration fund proposed legislation
        Funding in fiscal year 2009 will be used to continue planning,
    engineering, environmental compliance, fisheries management, water
    operations, and public involvement activities related to the
    Restoration and Water Management goals in the settlement. The
    administration will again support passage of authorizing legislation,
    the San Joaquin River Restoration Settlement Act, which includes a
    provision to establish the San Joaquin River Restoration Fund.
                 california bay-delta restoration fund (calfed)
        Title I of Public Law 108-361, titled the Calfed Bay-Delta
    Authorization Act, was signed by the President on October 25, 2004. The
    act authorized $389 million in Federal appropriations over the period
    of fiscal year 2005 through fiscal year 2010. For fiscal year 2009,
    $32.0 million is requested to enable Reclamation to continue to advance
    its commitments under the CALFED Record of Decision and with a focus
    toward implementation of priority activities included in the Calfed
    Bay-Delta Authorization Act that will contribute to resolving water
    resource conflicts in the CALFED solution area. Funds will specifically
    be used for the environmental water account, feasibility studies of
    projects to increase surface storage and improve water conveyance in
    the Delta, conduct critical science activities, implementation of
    projects to improve Delta water quality, ecosystem enhancements, and
    program planning and management activities.
                      fiscal year 2009 planned activities
        Reclamation's fiscal year 2009 priority goals are directly related
    to fulfilling contractual requests to deliver water and power, while
    balancing a range of competing water demands. Reclamation will continue
    to deliver water consistent with applicable State and Federal law, in
    an environmentally responsible and cost-efficient manner. Reclamation
    will deliver 28 million acre-feet of water to meet contractual
    obligations while addressing other resource needs (for example, fish
    and wildlife habitat, environmental enhancement, recreation, and Native
    American trust responsibilities).
        Reclamation will maintain dams and associated facilities in good
    condition to ensure the reliable delivery of water. Reclamation will
    continue to meet or beat the industry forced outage average to ensure
    reliable delivery of power. Reclamation will reduce salinity by
    preventing an additional 13,500 tons of salt from entering the water
    ways.
        Moreover, the fiscal year 2009 budget request demonstrates
    Reclamation's commitment in meeting the water and power needs of the
    West in a fiscally responsible manner. This budget continues
    Reclamation's emphasis on managing those valuable public resources.
    Reclamation is committed to working with its customers, States, tribes,
    and other stakeholders to find ways to balance and provide for the mix
    of water resource needs in 2009 and beyond.
                            managing for excellence
        Reclamation continues to make significant advancements in its quest
    for management excellence. Reclamation's Managing for Excellence Action
    Plan reflects specific actions to realize the underlying principles of
    the President's Management Agenda. The National Academy of Sciences, at
    Reclamation's request, completed and published its study in 2006 to
    assist Reclamation in determining the appropriate organizational,
    management, and resource configurations to meet its construction and
    related infrastructure management responsibilities associated with
    fulfilling its core mission of delivering water and power for the 21st
    century.
        The Managing for Excellence action plan, developed in response to
    the Academy's report, outlines a process and timeframe for identifying
    and addressing the specific actions that can be taken to increase
    transparency, efficiency, and accountability within Reclamation. To
    date, Reclamation has completed 38 out of 41 activities. The balance
    will be completed by the end of February 2008.
                                   conclusion
        Mr. Chairman, please allow me to express my sincere appreciation
    for the continued support that this subcommittee has provided
    Reclamation. This completes my statement. I would be happy to answer
    any questions that you may have at this time.

        Senator Dorgan. Commissioner Johnson, thank you very much.
        I have a number of questions, but I want to start. I
    mentioned in the statement as I introduced you all that I was
    looking at the Special Inspector General for Iraq
    Reconstruction report and he was reporting on the number of
    water projects that we're doing in Iraq. He noted that we're
    paying for 967 water projects we're finding in Iraq including a
    water treatment plant in Sadr City, water treatment plant al-
    Wathba, water treatment plant Shark Dijla, water treatment
    plant al-Wahda, design/construct Euphrates Main Water Supply
    Project, Baldaruse Water Supply Project, Phase II Water Supply
    Project, Meshkab, and I could go on and on. And then you come
    before our committee on behalf of a budget that says, ``By the
    way, let's cut funding for water projects in the United States
    by $1 billion.''
        And I know you prepared a budget. And you probably won't
    tell us what you prepared, because the way our game is played,
    you have to send it up and it goes through the Office of
    Management and Budget strainer, then over to the White House.
    If you would come here and tell us that you didn't get as much
    as you think you need, you'll lose your job. So, that's the way
    this dance occurs yearly.
        We don't blame you for it, but I think it's very hard for
    you to come and support a proposition that we should spend $1
    billion less on water investment projects in this country in
    the coming year than we did last year.
        And frankly, I think it's very hard to make the case that
    we can do hundreds and hundreds of water projects funded by the
    United States in Iraq, but we can't afford water projects that
    are needed here. And so, we do. We paid for those. That's a
    Special Inspector General report of all of the funding that
    we're doing in Iraq.
        Let me ask the Bureau of Reclamation, since we're in the
    ninth year of a drought in western and central North Dakota, do
    you have predictions for what might happen in the future in our
    area?
        Mr. Johnson. That's part of our Water for America
    initiative. We are going to be looking at a number of basins
    West-wide, and we haven't specifically identified those basins
    yet. We're going to be going through a public process to
    identify them.
        Certainly we're aware of what's going on in the Great
    Plains Region, and there certainly has been--over the last 8 or
    9 years--significant drought that's occurred up there. We're
    aware of the reservoirs decline. In fact, I'm sure the Corps is
    probably more aware of it than us, since it's their reservoirs
    that have declined the most, but yes, we're very aware of that,
    Senator.
        Senator Dorgan. Let me ask a question about the Law of
    Armed Conflict Rural Water Project. That's been funded for the
    previous 4 years, even in 2007 when the administration prepared
    a spending plan under the continuing resolution, and yet you
    send us a request that says we shouldn't fund that project this
    year. Tell me how you came to that conclusion?
        Mr. Johnson. I think what it comes down to is the balancing
    of the priorities within the President's budget and also
    meeting the goal of achieving a balanced budget by 2012.
        Senator Dorgan. But that's not responsive. My question is
    about this project. We've funded it 4 years, and so has the
    President's budget, and all of a sudden you say, ``Don't
    continue.''?
        Mr. Johnson. Within the Rural Water Program, for the funds
    that we had, we used two primary criteria to fund the projects
    that we did. One, we tried to focus on projects that served
    Indian tribes, and two, we tried to focus on those projects
    that were farthest along, where we could put money and make the
    most progress. And that was the primary criteria that we used
    to come up with the funding that we've presented in our budget.
        Senator Dorgan. Okay. Again, you've got a tough job, and
    that's an artful answer, but you have a tough job.
        General, the President's proposed a $5.7, $5.8 billion in
    emergency Federal funding to be matched by $1.5 billion in
    local funding to complete the Hurricane Protection System. The
    President said that he committed that he was going to finish
    that in time for the 2011 hurricane season.
        Now, the funding was proposed as a part of the regular 2009
    Appropriations bill, rather than the supplemental, which means
    this will be done later than the supplemental. My understanding
    is these funds are needed by October 1, or the construction
    schedule can't be maintained, number one. And number two, my
    understanding is that it may well be the case that there's not
    $1.5 billion locally to meet the local share on this. Tell me
    about that?
        General Van Antwerp. First, a good portion of that money
    needs to be available on October 1, to award some of the
    contracts. So, that is an emergency, but not under a
    supplemental. So, we have to deal with that. And a day slipped
    will be a day slipped in the project, and the 2011 date will be
    in jeopardy if that funding isn't available on October 1.
        Senator Dorgan. But why would it not have been requested in
    a supplemental? Last year, we had veto threats against, I
    think, 10 appropriations bills, and so the result was what they
    wanted. The appropriations bills weren't done in October, but
    rather much later. And that may be the case this year. If
    that's the case, what happens, these--you can't meet these
    construction schedules? Is that what's going to happen?
        General Van Antwerp. Ultimately, if the funding isn't
    there, there will be slippage in the construction schedules,
    that's true.
        I think the second part of your question, very quickly, is
    in the cost-sharing--is that there is a provision where we can
    allow the sponsor to have additional time, up to a year, but we
    are counting on the sponsor coming up with their portion of
    this, and that's being worked very hard right now.
        Senator Dorgan. But WRDA 86 allows the non-Federal share to
    be repaid over 30 years, which would probably have been a less
    risky proposition for you to recommend.
        I have a good number of questions about the Missouri River,
    and also Devil's Lake, and I want to defer those to allow my
    colleagues to ask questions.
        Senator Domenici.
        Senator Domenici. Is it still a lake?
        Senator Dorgan. It's still flooding.
        Well, the fact is, it's overflowed, and it's now filled a
    second lake next to it, so there's no additional capacity left,
    I mean we've got real problems.
        Senator Domenici. Well, I've worked on it a couple of
    times, maybe this will be--do something this year might be my
    last time.
        In any event, let me say I'm willing to help.
        Let me put--Corps of Engineers Secretary Woodley, and your
    testimony before the subcommittee told us that there's a
    looming problem on the Inland Waterway Trust Fund, that needed
    to be addressed. However, we never received a proposal to
    mitigate the pending disaster.
        The President in 2009 budget proposal announced that
    legislation would be forthcoming. Finally, last week, the
    administration proposal was submitted to Congress, is that
    correct?
        Mr. Woodley. That is correct.
        Senator Domenici. And why did it take a year to prepare the
    legislation, and preparing it--this brand-new policy, which is
    indeed that, brand-new, and going to be very difficult to get
    through here--did you consult with relevant authorizing and
    appropriations committees? Or was that not you job?
        Mr. Woodley. Yes, sir, we consulted very heavily with a
    very wide variety of people in the community, throughout the
    administration and received views from a very large cross-
    section of the people that were affected by it. I don't know
    that we would be entitled to receive formal views from the
    committee, but----
        Senator Domenici. I don't think you submitted it to us, but
    that's--that's all right.
        This legislation, from what I can tell, will be tough to
    get enacted in any year, much less this year. It took me
    several years before I was able to finally get the legislation
    establishing the Inland Water Trust Fund, I don't think you
    were here then, when that happened.
        Mr. Woodley. Very likely not, Senator.
        Senator Domenici. You probably still had hair on your head
    when that occurred.
        Mr. Woodley. Very likely so, Senator.
        Senator Domenici. A long time ago. And now you want us to
    complete this change--fundamental mechanism change in the next
    6 months, I really don't think that's going to happen, and
    nonetheless I look with interest on your proposal and look to
    learn about it, as much as I can, Senator.
        Secretary Woodley, in your press release, you state that
    the budget represents the prudent use of available funding to
    advance important mission objectives. Unfortunately, this
    budget is implemented--if it is--the Corps will be forced to
    stop construction on 75 percent construction projects. Is it
    prudent to provide no funding for projects that have been under
    construction for a year, 2 years, or, in fact, years? What are
    we supposed to tell the project's sponsors that are sharing the
    costs of these projects? How much do you estimate the Corps
    will pay in termination fees, if any? Could you just talk to me
    about this problem that we're going to have?
        Mr. Woodley. Yes sir, our effort has been to concentrate
    the very limited funding that we have on the projects that have
    the greatest potential for return. And as I say, there is no
    question that this budget does not provide all of the resources
    for all of the good things that the Corps of Engineers could
    accomplish in fiscal year 2009. I do not represent that it
    does, and I will not represent that it does. We leave a lot of
    good work on the table.
        Senator Domenici. Secretary Woodley, could you, Secretary,
    only explain the President's Executive order on earmarks, and
    based on what you know, how do you believe it will be
    implemented?
        Either of you?
        Mr. Woodley. Secretary, our view that we have taken is that
    it is something that leaves a lot of questions unanswered, and
    that will have to be answered in the course of implementation.
    And I certainly hope that we're able to work with the Office of
    Management and Budget and the Appropriations Committees to come
    to a clear understanding of exactly how it's to be implemented.
        Senator Domenici. Okay, well, I don't need anything
    further. What you're really saying is that it leaves much to be
    desired, and a lot of--there are a lot of questions about the
    earmark policy, how it would be done. And there's some holes in
    it that have to be filled, and the like, is that right?
        Mr. Woodley. Well, certainly as an Executive order, it is a
    expression of the policy of the executive branch and we will be
    implementing it as we understand it, fully and rightly. And we
    support it in every way.
        Shall I say that again?
        Senator Domenici. No, that's fine.
        Mr. Woodley. Thank you.
        Senator Domenici. Let me talk to the Commissioner a minute?
        In your quest for more water projects, and water
    activities, water action--I didn't hear you mention de-sal, or
    water purification. Are those included in your process as you
    think of getting involved more, and more effectively in water
    needs?
        Mr. Johnson. Yes, they are. We have--as part of our
    research program--have included research activities for water
    desalinization, and water technology development. In fact, we
    have O&M dollars for the Tularosa Plant that you referenced
    earlier. Our research facility there. And we do have some
    research dollars, as well, to help fund initial research
    activities at that facility.
        Senator Domenici. Well, I just want to say, you know,
    desalinization and water clean up technology is just on the
    cutting edge, I mean, we're just close to making some giant
    breakthroughs. And in States like mine which are very dry, we
    have huge amounts of inland water, and then water that's salty,
    that we could use, and which has changed the future of our
    State.
        And I hope you will continue to emphasize it, and not be
    concerned to make it something that you will be out front in,
    because you can do that.
        My last comments and observations go to you, General.
        The Corps has been doing an outstanding job for the last 10
    years on the Rio Grande River basin, with reference to the huge
    greenbelt that exists because of cottonwood trees. We have just
    about changed that area to something absolutely beautiful from
    an area that was fragile, frail, burned down anytime--two or
    three times a year, the big, big fires. It's going to be used
    by the people, and there are marshes in it for ducks and geese
    and other kinds of activities, and now a park is going to be
    constructed right in the middle of that basin, centering in
    Albuquerque. That's been authorized by Congress, and I
    understand the Corps intends to show that you know how to do a
    real water-land park with green trees in it, in an arid State.
    And I hope you will be there when we dedicate the project,
    because I think it's going to be a real credit to the Corps,
    what is going to be there, in this park, in Albuquerque, New
    Mexico.
        Senator Domenici. Thank you, Mr. Chairman.
        Senator Dorgan. Senator Johnson.
        Senator Johnson. Commissioner Johnson, it occurs to me that
    we Johnsons ought to stick together. In your testimony, we're
    getting the budget for BOR water projects, you indicate that
    the Bureau prioritized funding for operation and maintenance
    costs, and then construction funding for ongoing rural water
    systems nearest to completion, to serve populations.
        Using those criteria, the Bureau provided no funding for
    several other ongoing regional water system projects. In making
    this decision, did the Bureau examine the fact on how delaying
    funding for these projects will add to the total cost to
    complete? Do you agree that deferring construction on ongoing
    drinking water projects will contribute to an even greater
    future funding crisis at the Bureau?
        Mr. Johnson. Senator, certainly to the extent that we're
    not funding projects, they do continue to have cost increases,
    there's just no denying that. That's a very correct
    observation.
        Senator Johnson. My second question is about the effect on
    the specific projects and the view of some in the Congress that
    the Senators and House Members should have no ability to direct
    funds to specific initiatives.
        Commissioner Johnson, is there any other Federal agency
    that is funding the Lewis and Clark Regional Water System?
        Mr. Johnson. Not that I'm aware of, sir.
        Senator Johnson. Since the Bureau is proposing no Federal
    funding for the Lewis and Clark Regional Water System in fiscal
    year 2009, the only way for this project to receive Federal
    funding next fiscal year, is for the Congress to appropriate
    funding, is that correct?
        Mr. Johnson. The--you're getting back to the question on
    earmarks, I suppose.
        Senator Johnson. Yes.
        Mr. Johnson. And, you know, I think that that's--there's a
    lot of detail in that that has to be worked out, certainly
    Reclamation will follow the Executive order, as I'm sure the
    Corps will, but there's a lot of details there that are yet to
    be defined. And we'll certainly be working to--with the
    Department and with OMB, you know, on the Reclamation program
    and where that has an effect, and where it doesn't.
        Senator Johnson. Mr. Chairman, I will submit my additional
    questions to the Corps of Engineers and the BOR for a written
    response.
        Thank you.
        Senator Dorgan. Senator Johnson, thank you very much.
        Senator Craig.
        Senator Craig. Thank you very much, Mr. Chairman.
        I guess there's another way of--another perspective of
    looking at earmarks. Now that we have heard your earmarks,
    isn't that a reality? Have we not heard the priorities of the
    agencies of the executive, and therefore heard the President's
    earmarks? But, how dare we even consider those, or think of
    them in that context?
        I'm just--I guess I get a little constitutional when I
    think of who has the priorities and the responsibilities of
    budgeting under the Constitution, and not under the statute.
    And if that were the case, then I think what I just said, Mr.
    Chairman, would be constitutionally accurate--we have now heard
    the President's earmarks.
        Having said that, though, let me turn to you, Secretary
    Woodley, and thank you for at least a few earmarks that you
    have established, and one of those that I think is something,
    Mr. Chairman, we've got to take a very close look at. This
    happens to be specific to the Pacific Northwest, and to the
    Columbia Snake River Transportation System, and I'm speaking
    now to, of course, the dredging of the Lower Columbia River,
    and the budget you've put there, That certainly helps us get to
    the near completion of that project, which is critical to all
    locks and barge systems up river. Why does the Senator from
    Idaho focus on that? Because the last sea port in that system
    is in the State of Idaho.
        And, Mr. Chairman, something that I think we will
    increasingly focus on as it relates to the responsibility of
    the Army Corps of Engineers and Secretary Woodley in days to
    come will be the value of water transportation as surface road
    transportation goes up dramatically and costs of fuel, and the
    ability to move large, heavy loads through the system.
        Now, our canal and water systems in the United States are
    becoming increasingly important by the day, as we see fuel
    costs go up to $4 plus for diesel, $1,100 to fuel a big 18-
    wheeler truck, versus the ability of our barge and waterway
    systems to move a large freight.
        So, therefore, completing the dredging below Portland and
    the Lower Columbia is critical to the whole of the system.
        Let me also commend you for your response to the incident
    at the John Day navigation locks. That was very important, too,
    General, as we--and you moved promptly and timely in doing
    that.
        Now, interestingly enough, I was there when Animas La Plata
    was simply an idea in the eye of a Congressman from that
    district, and few interested groups. Ray Kagosic was the
    Congressman at that time, and I was a freshman on the Interior
    Committee in the House--28 years ago, Commissioner. Does it
    take a long time to do anything around here? It sure does. But
    I understand we're about ready to cut the ribbon on Animas La
    Plata.
        So, I guess my advice to you, Mr. Chairman, is with Devil's
    Lake--just simply hang in there. It takes a long time to get
    these things done, even if we define them as an emergency.
        But, let me also say--and this is simply not a request for
    resource, because I think while I don't agree with all of your
    earmarks this year, I think they are priorities that represent
    a lot of our needs.
        In the northern tier, especially north Idaho, in a time of
    global warming, has received an unprecedented amount of
    snowfall this year. In fact, we now have historic record levels
    of snow on the ground, in the panhandle and the areas of north
    Idaho, and parts of Montana, eastern Washington and others. And
    we're hoping above hope that it leaves us slowly, and
    gradually, this spring.
        But if it doesn't, I'm quite confident the Army Corps of
    Engineers will be there. This is simply a head's up--watch
    closely as our record snow falls melt into the system. I
    believe the Snake Columbia system is at a near 30 year high in
    potential runoff, so--it is difficult to talk drought or to
    talk climate change in this particular environment. All I am
    saying to you, General, and certainly to you, Secretary, is--
    stay ready. Depending on how this valuable moisture leaves us.
        Thank you, Mr. Chairman.
        Senator Dorgan. Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman.
        And again, gentlemen, thank you for joining us.
        Secretary Woodley, the Fox Point Hurricane Barrier became
    the responsibility of the Corps of Engineers in October 2008,
    and the Woonsocket Levy project will become the Corps
    responsibility in January 2009. How do you propose to meet
    those obligations under the law?
        Mr. Woodley. Authorization has been provided, Senator, so
    far we have not been able to identify the funding within our
    system to undertake that, but I can assure you, we are very
    much aware of the obligation, and intend to do everything we
    can to discharge it.
        Senator Reed. Do you have a timeline where you're going to
    identify the funds? And do you have a work plan at least, even
    though the funds might not be evident or tangible at the
    moment?
        Mr. Woodley. Yes, sir. We have estimates as to how much
    would be called for, and we are actively seeking the ability to
    do that.
        But, you know, it's certainly--when you, when an obligation
    is established or authorization is established, it is something
    that we would like to have the opportunity to budget for or
    program for, anyway, before it takes place. But in this case,
    we're just going to have to manage it as best we can.
        Senator Reed. Well, I appreciate that, Mr. Secretary, and I
    just want to make it clear, again, I think you understand this,
    that this is something I feel is very, very important, that it
    has to be done, and I obviously will work with you and General
    Van Antwerp and your colleagues, but I will return again, and
    again, to make sure that this is successfully completed. And
    I--anything you think we could do, let us know. But I expect it
    to get done.
        Mr. Woodley. Yes, sir. We understand very well your views
    on the matter.
        Senator Reed. Thank you.
        Thank you, Mr. Chairman.
        Senator Dorgan. General and Mr. Secretary, coming back to
    Devil's Lake, it's easy for us to wait, but it's not easy for
    the lake to wait. This is one of, I think, only a couple of
    examples in America where there is lake flooding, which is
    different than river flooding.
        River flooding comes and goes, it courses down, takes cars
    and homes with it, and then all of a sudden a couple of days
    later, everything looks calm.
        This lake flooding is in a closed basin, like the Great
    Salt Lake, the Devil's Lake basin has an upper area that's
    close to the size of the State of Massachusetts, and it all
    funnels down into this area at the bottom called Devil's Lake.
    And it's up 25 feet and stays up, and it's now been running off
    into Stump Lake. Stump Lake is up 15 feet in the last 2 years,
    because there's no place else for it to run, and it appears to
    me that the USGS says there's a 70 percent chance that the wet
    cycle will continue for at least another decade, and a 40
    percent chance the wet cycle there will continue for another
    three decades.
        So, in terms of protect not only the community of Devil's
    Lake, but the roads and the infrastructure in that region, the
    Corps has to be involved now in planning an increase in the
    levees and dikes and a range of other things. Can you tell me,
    is the Corps actively involved in this area, General?
        General Van Antwerp. Yes, sir, we definitely are. By the
    way, the lake elevation is 1,447 feet this morning. In these
    two lakes, as you're well aware, they do operate together, and
    we're considering in the reevaluation, how do they work
    together and what do we have to do for the levees that are
    supporting this?
        So, we are very much on top of this, we are very much
    interested in getting this fixed now, with the predictions for
    the next decade.
        Senator Dorgan. The reason I'm sensitive to the fact that
    you may not find the local sheriff $1.5 billion down in the
    gulf, is the local share that will be required for Devil's Lake
    for a levee increase. Those folks don't have the money, and
    they've been fighting a lake flood that came and stayed now for
    many, many years. So, we--let me say this about the Corps.
        I admire the Corps in the way it fights floods. I mean,
    I've watched the Corps stand on the dikes of the Red River, and
    saw the dikes breach, and saw an entire town of 50,000 people
    evacuated--I admire what the Corps does to fight floods, you do
    a good job.
        I really have great problems with what the Corps does to
    manage the Missouri River, so that's a different subject. In
    Devil's Lake and our region, we really need your help, we need
    you to be way out in front of what we need done here in terms
    of policy choices, and we need to protect people and property
    and try to manage a very difficult flood. Lake flooding is not
    something you're accustomed to, and our laws don't even comport
    to lake flooding. Most of the way we write laws have to do with
    river flooding.
        But with respect to the river, I might say, the management
    of the Missouri River is a continuing serious problem. You're
    continuing to remove water from the upper main stem dams in the
    Missouri River, North Dakota, South Dakota, Montana, and so on,
    in order to support a barge industry which apparently was
    intended to be a whale, but has now become a minnow.
        There are times when there's one barge, one barge on the
    Lower Missouri River, and for that one barge, you are releasing
    water, instead of storing it in the upper reservoirs. That's
    not in anybody's interest. That's not in Senator Bond's
    interest, because he should want that water stored so that, at
    some point whether it's the lower Missouri, or especially the
    substantial amount of barging on the Mississippi, that we would
    save that water to be using it when they need it.
        You know, it's of interest to me that when there's too much
    water down south, then they want some help with those of us up
    north, but otherwise, they want to manage the river for their
    one barge.
        Does it seem strange to you that you're releasing water, a
    pretty substantial amount of water to float one barge? And the
    reason I mention one barge, I can show you the reports, the
    weekly reports, in which there's one barge floating in the
    lower Missouri, and we have scarce water in the upper
    reservoirs and you're releasing water to float this little cork
    down there someplace, I mean, does that bother you? Tell me
    yes.
        Mr. Woodley. Yes, Senator, that is very troubling. The
    original project, of course, was authorized many years ago,
    with navigation as an authorized project purpose. I believe
    that the people that are served by the navigation channel see a
    value in continuing that navigation support, and I think that
    we have made some substantial improvements in the management
    scheme when we implemented the new Master Manual in 2004, but
    certainly at times of--particularly in times of drought--that
    is a very difficult balancing that has to take place.
        Senator Dorgan. My point is that now that river system
    would now have about 54 million acre feet in it, instead of
    that, it's roughly a 34 million, 35 million acre feet. And yet
    it still doesn't trigger drought emergency measures. And so,
    we're moving water out of these upstream reservoirs in which we
    should store it, to float one barge.
        And so, if the market system were such that the barges were
    determined to be very valuable, you'd think you'd have barge
    traffic down there. But that's not the case, there's not any
    significant barge traffic. A fair amount of what's going on
    down there, to the extent that there's any barging at all, is
    sand and gravel, and I intend to hold a hearing of this
    subcommittee, just on this issue, and it will be held a little
    later this year, as soon as we're through the appropriations
    process.
        But we're going to explore this in great, great depth.
    That's why, General Antwerp, I'm so pleased that you've joined
    us, and you and Secretary Woodley are going to be witnesses at
    that hearing, because we need to talk through this and fix it.
    The upstream industry that has developed is 10 times the barge
    industry--10 times. And yet, we are managing the river for the
    minnow, and ignoring the whale. It makes no sense to me at all,
    I've been at this for about 10 years, and I haven't been able
    to really get any satisfaction--well, once in a great while
    somebody throws us a small bone, but the management of that
    river is, in my judgment, not competent, and not at all with
    any kind of reservoir of common sense.
        So, we're going to have a hearing, I will ask you back for
    that hearing, but I did want to raise it today, because it
    really bothers those of us--Senator Johnson, myself, and
    others--who live upstream and know that there's a much
    different way to manage that for the benefit of all States--the
    States in the up-river and down-river areas.
        I have a large number of questions that--with your
    indulgence, I'm going to submit to--because we won't have a
    chance to ask all of them today, but I do want to ask a series
    of questions and as I call on my colleagues for additional
    questions--the hearing has just been changed to 11 o'clock--or,
    excuse me, the votes have just been changed to start at 11
    o'clock, so we have a few more minutes.
        I want to mention what my colleagues, Senator Domenici and
    Senator Craig had mentioned on this issue of earmarks. I don't
    understand and I think it's perhaps unworkable, these
    suggestions the President has made. I think what he has made,
    and Senator Craig was suggesting it--what he is saying is,
    ``I'm going to send my earmarks to Congress, it's what I think
    we should invest in, in this country, and then if you add
    anything to it, we're going to consider those special interest,
    congressional pork, earmarks,'' or whatever lexicon you might
    want to use. That is a--that's a curious way to engage with the
    legislature.
        The Congress--certainly the President has priorities, has
    every right, and we would expect that he would pursue those
    priorities. He should, as a matter of respect, understand there
    are priorities in the Congress, as well. And perhaps a merging
    of the best of which both have to offer, rather than the worst
    of each, would be in the best public interest of this country.
        So, I raise that only because my colleagues did. I think
    the President's suggestion--especially in this subcommittee,
    more than perhaps any other, is completely unworkable. Most of
    what we do represents earmarks by the President, and in many
    cases by us, and approved by us, and that's the way this
    committee almost has to work, in terms of choosing what kind of
    investments in water policy we want to engage in around the
    country.
        Senator Craig.
        Senator Craig. I do have one additional question and I
    think Senator Domenici engaged you, Secretary Woodley, briefly
    as it relates to the proposals for the Inland Water Trust Fund,
    and what that will mean.
        And we might, for just a moment, get some of your insight
    as to what we could expect. So, I want to set this scenario up.
    Keeping in mind that a commercial vessel must pass through
    eight navigation locks from Portland to the Port of Lewiston,
    it's my understanding that this fee would be imposed on
    commercial barges using locks operated by the U.S. Army Corps
    of Engineers, the fee would be phased in, beginning October 1,
    2008, with increases each year through 2012, adjusted
    thereafter based on the total net assets of the Inland Waterway
    Trust Fund.
        It's also my understanding that this Trust Fund is used to
    pay half of the cost of new capital construction projects and
    major rehabilitation. None of us dispute the need, certainly,
    for rehabilitation.
        What would this cost? In that scenario of eight locks--how
    much will it cost, per lock? What would be the net gain in fees
    collected, using a lock versus a gas tax that is currently
    used? And how will this affect the Columbia River Navigation
    System? Can you give us some insight into that proposal?
        Mr. Woodley. Yes, sir. The net cost would have to be
    calculated by netting out the elimination or phasing out, over
    time, of the 20 cent per gallon fuel tax that exists----
        Senator Craig. Right.
        Mr. Woodley. That is to be eliminated.
        The amount will go, per barge, per lockage, from a $50
    charge, to an $80 charge by 2012, and then will, because if I'm
    not mistaken, all of the locks on their system are 600 feet or
    larger.
        And so----
        Senator Craig. I think that's right.
        Mr. Woodley. So, we are making a special provision for the
    smaller locks so that they would pay at a lower rate.
        Senator Craig. You say smaller locks, you mean smaller
    vessels?
        Mr. Woodley. No, sir, I mean smaller locks in the upper
    reaches of the system, the less than 600 foot long lock.
        Senator Craig. Oh, yes.
        Mr. Woodley. We would charge a smaller fee in order to
    provide for a more equitable distribution between the large
    locks and the smaller locks.
        The--I would expect that it would--so there's a net I can't
    figure out, the rest is a pretty straightforward calculation,
    but essentially we are projecting a need in the Fund of an
    additional $100 million a year in revenue, from whatever
    source, that it can come from indefinitely into the future as
    we continue to make the important improvements that we've made.
        We are, to some degree, a victim of our own success here,
    Senator, we have been able to budget--and the committee has
    supported--a very strong level of investment in the Inland
    Waterway System, in both new construction and in rehabilitation
    efforts. And that has--there was a time some years ago before I
    took office that the balances in the Inland Waterway Trust Fund
    had actually been allowed to accumulate, and increase. And we
    have invested those balances, but the needs for investment have
    outstripped the revenue that we're receiving from the tax.
        So, one thing that was surprising to me, in recent years,
    in spite of increases in traffic, the tax amounts, of
    collections, have actually in some--in one fiscal year--
    declined. And that was a good thing, I guess, because----
        Senator Domenici. Why is that?
        Mr. Woodley. I believe that the reason is that the
    increases in fuel--in the cost of fuel--had encouraged the
    barge tow boat operators to repower their boats with more
    efficient diesel engines. Which is, of course, a good thing,
    unless you're counting on revenue from----
        Senator Craig. Sure.
        Mr. Woodley [continuing]. Them buying gallons of diesel
    fuel.
        So, this is certainly not something on which reasonable
    minds could not differ.
        Senator Craig. As this develops, we'll take a look at it.
        Last question, tied to that--non-commercial traffic,
    recreational traffic using the locks--?
        Mr. Woodley. Would not be charged any fee whatsoever, as is
    the case today.
        Senator Craig. As the current case.
        Senator Domenici. They don't pay now.
        Senator Craig. They don't pay now, no, and that's why I was
    saying----
        Mr. Woodley. On the other hand, the general revenue, the
    general fund pays 50 percent of the cost of rehabilitation, and
    all of the recreational people are, at least, we expect them to
    be taxpayers in some form or another.
        Senator Craig. Uniquely enough, but in the Snake Columbia
    System, a sizable amount and a growing traffic is in cruise
    boats, that literally make it all the way up to Lewiston,
    Idaho, Clarkston, Washington--sizable cruise boats. Are they
    considered commercial traffic in this sense, that they would
    pay a fee?
        Mr. Woodley. No, sir, I believe not. I believe that this is
    specifically for cargo-carrying barges.
        Senator Craig. Thank you, Mr. Chairman.
        Thank you, Mr. Secretary, General, Secretary.
        Senator Dorgan. The Senator from Louisiana?
        Senator Domenici, do you have an additional question?
        Senator Domenici. Yes, Mr. Chairman.
        I just wanted to close this up and talk to Secretary
    Woodley about this inland fee, waterway fee.
        You know, that was a--believe it or not, I was a freshman
    Senator when somehow or another I was challenged to do
    something about this, and passed a bill to tax the commercial
    barges. It was totally unexpected that it could be done, but we
    were aided and abetted by the Washington Post which took on the
    task of helping to pass this, by choosing the bill that would
    impose this tax to be their choice of a bill to educate their
    readers on how a bill is passed, how a law is made. And they
    logo-ized the bill, S. 789, and anytime anything was done, they
    put it on the front page, and editorially commented what phase
    this was of moving a bill.
        And of course, they played the Domenici--David against
    Goliath--and one afternoon we had a vote and we won by 12 votes
    in the United States Senate against Russell Long, my good
    friend from Louisiana. That's right.
        But let me tell you to close the record, because things are
    different now. But I won that hearing here and in the House,
    and then I was home campaigning for reelection, and I was told
    that somebody was going to open the issue while I was gone
    campaigning, and kill the tax. And my staff said, ``Abandon
    your campaign and come back,'' and I said, ``No, I can't do
    that. Can't you talk to somebody around there?''
        Well, the word got to Russell Long who had lost, I had beat
    him, that somebody threatened to do this. And he put in a phone
    call to me, and said, ``Don't you come back,''--he was a
    Democrat, I was a Republican--``You do your campaigning. I was
    beaten by you, fair game, and I'll see to it that nobody does
    that to your bill,'' himself. And, of course, I felt totally
    confident that he could do better than I, why should I return?
        And sure enough, the person--I know who it was, it was the
    Senator from the State with the lock that we were then
    building--and he saw better than to take on Russell Long, and
    the tax remained. It's been a long time, and I wish you well,
    in trying to pass a better one. And a better one would be what
    you're talking about. But don't think it will be easy, because
    people have to understand what's happening to them, and all
    kind of stories get told about what's happening to them, you
    know, until it gets down the facts. It takes a long time.
        Thank you, Mr. Chairman.
        Senator Dorgan. Thank you.
        Senator Landrieu.
        Senator Landrieu. Thank you, Mr. Chairman.
        And let me begin, I'm sorry that I was delayed in getting
    here, I had another markup in the Homeland Security Committee
    and had several bills pending, and so I apologize to the
    panelists for being late because this is a very, very important
    subject, as you know, for our State.
        But I'd like to begin, I'm going to submit my opening
    statement, Mr. Chairman, for the record. But, I'd like to begin
    by showing the expenditure chart, that is very concerning, and
    I don't think I have to explain this to the members of the
    committee who have been working on this issue long before I
    took a seat here.
        But, this is the civil works and capital investment, as a
    percentage of GDP, Mr. Chairman, and if I could just have you
    look up for just a second, at this chart, up here, it's really
    rather frightening to me.
        This is since 19--Alan, is it 1940? Since 1929. The civil
    works and capital investment is a percentage of the Gross
    Domestic Product, of which this budget sits within. I think
    this is frightening to our country. I don't think our country
    sustains its economic strength on a budget like this. We're
    going to have this chart updated, General, we're working on
    that now, it goes through 2001, but we're going to extend it
    out to the present.
        But, this brings me to my first question--that is, how are
    we justifying a Presidential budget of $800 million less than
    you used last year, when the needs are substantially greater,
    and the trend lines are extremely troubling. And I would like
    to hear from you, General, about what your comments have been
    about this, what speeches do you give about your ability to do
    your job that you have to do to protect people and to promote
    commerce with trend lines like this, and a budget that's $800
    million less than we had last year?
        General Van Antwerp. Well, ma'am, I think one thing that we
    looked at was the American Society of Civil Engineers scorecard
    that said the backlog in this particular area is about $1.6
    trillion. So, there's no question there is a huge need in the
    country to do this. What we did was, as best we were able, to
    put together a performance-based budget, based on the dollars
    that we have, to do the right things, and first things first.
    And so it was based on, there are health and safety, there are
    11 dam safety projects in there that we have to get at.
        There are a number of other projects we wanted to
    complete--we looked at cost/benefit ratios. So, basically we're
    taking a limited amount of money, and with some performance
    criteria that we could lay out for you, we racked and stacked
    those projects.
        But there is no question there is a huge backlog of
    infrastructure needs in the country.
        Senator Landrieu. Well, are you prepared to testify this
    morning, and if you would, suggest what percentage of those
    trillion dollar projects does not have a significant
    consequence for not completing them? Would you say that 10
    percent of them, or 20 percent of them, or 30 percent of them
    are actually completely without any merit? Or with such limited
    merit that we shouldn't, you know, shouldn't try to address
    them? Do you have any sort of handle on those projects?
        I understand that you've listed the trillion plus that you
    don't have money for, in some sort of rank order. I think that
    would be, actually, very easily said but very difficult to do.
        So, my question is, what percentage of that do you think we
    could potentially eliminate, and not suffer, really, a grave
    consequence? Whether it's flooding, or commerce, or et cetera?
        General Van Antwerp. Well, I guess I would approach it that
    the $1.6 trillion needs to be done over time, but some things
    are more urgent and compelling. For instance, when we look at
    the dams of the country--and there are over 3,500 significant
    ones--and then there are a lot of smaller agriculture and
    privately owned dams in this country, even.
        But, we look at those in categories one to six. And the
    most--the number 1, of which we are doing 11 of those right
    now, they are what we call ``urgent and compelling,'' we know
    that there is either seepage or piping, which is the material
    actually flowing with the water through the dam. Those need to
    be fixed now. Those are in the budget.
        We are studying Tier 2 but we're not getting at a lot of
    Tier 2. So, it goes like that. And Tier 6--that would be a
    dream for many, many years down.
        So, we're trying to really look at the life and health
    safety----
        Senator Landrieu. Where are the levees in that--levees not
    just for the Mississippi, but for the other major rivers?
        And, if Alan, you'd put up the next chart?
        General Van Antwerp. Well, we have 12,000 miles of levees
    in this country, one-third of the levees that are in harm's way
    are really in the Sacramento area, and then, of course, the
    levees in New Orleans and a lot of crucial levees across the
    country, we do have an inventory of them, we did a very
    extensive levee inventory, we know the risks and we're trying
    to get at those sections of levees first, that need to be done
    first.
        Senator Landrieu. Mr. Chairman, I think this chart is
    instructive. I asked my staff to basically show a chart of the
    major waterways, navigation waterways in the country.
        And as you can see, it's heavily weighted to the east
    coast, because the great river systems are in the east coast,
    and the channels along the southern part--which you can see
    from Texas all the way to Florida--is the intercoastal canal.
    There's also an intercoastal canal going up the eastern
    seaboard, which bears basically the predominant burden, if you
    will, and responsibility for the commerce of the Nation.
        And so, when people continue to say to me, well, ``Senator,
    Louisiana gets a very high portion of the Water bill,'' my
    simple response is, ``We have an inordinate proportion of the
    water.'' And the Water bill isn't a Desert Resources bill; it's
    a Water Resources bill. And basically, wherever the water is,
    that's where the resources need to go.
        So, I make no apologies for the 17 percent of the
    authorizations in that Water bill, and intend to see all of
    them built and--planned and built over time. But you can see
    why Louisiana, and to some degree Mississippi--because we share
    the mouth of the river, Mr. Chairman. But this drainage system
    impacts our Corps of Engineer district, I would suggest, unlike
    any in the country.
        Now, it is really telling to me, to understand the water
    battles in the West. I now understand them after looking at
    this chart, because they simply don't have enough. And what
    they do have, they're trying to use some for power and some for
    irrigation, I'm not certain they have, really, for either one.
        And at great expense to the Nation, to try to help them
    figure out their situation which I'm very sympathetic for. But
    our situation is the opposite. Today, I understand--did the
    spillway open today? Did you order the spillway opened, or did
    your Director?
        General Van Antwerp. Ma'am, I did, at 10 o'clock this
    morning, so----
        Senator Landrieu. The spillway was open. Today, because the
    river is so high, at 10 o'clock this morning, which is----
        General Van Antwerp. I think if I could correct myself, I
    think the announcement was going to be made, but I don't
    believe it's going to be open until probably tomorrow.
        Senator Landrieu. Okay, but today at 10 o'clock, Mr.
    Chairman----
        General Van Antwerp. The announcement.
        Senator Landrieu. The spillway, which is a great, sort of,
    flood prevention mechanism, if you will, is being opened for
    the first time since 1997. Because the river, the Mississippi
    River is so high, as we've all been following now for,
    actually, weeks, and the Corps has made a decision. The good
    thing about that decision, it will prevent flooding. The bad
    news about that decision, is moving water from the river into a
    fresh-water lake system has other consequences that we have to
    deal with.
        But, this is a constant battle where--in the State that I
    represent--trying to manage this water. And let me just say,
    Mr. Chairman, we can not manage it on the budget we have.
        We will have another major floods--this last one cost
    upwards of $200 billion to the Federal Government, that's going
    to be the cost of Katrina/Rita when all is said and done. And
    the primary--the primary reason of that number is not the
    hurricanes that could not be avoided, it's the collapse of the
    infrastructure system that should have held, and didn't.
        So, I know that I'm going on past my time, and I do have a
    few questions if the chairman would give me just a few more
    minutes.
        Senator Dorgan. Let me observe, the vote has just started,
    I believe, in the Senate.
        Senator Landrieu. Okay.
        Senator Dorgan. So, we'll have a very brief period, and
    then we're going to have to go back to the Senate to vote.
        Senator Landrieu. Does Senator Murray have a question?
    Okay, let me then just ask one question, but I'll wrap this up
    by saying, we cannot sustain this budget either in the State of
    Louisiana or in the country.
        Just real quickly--are you considering the drainage to the
    river proposal to the metropolitan area of New Orleans? In
    other words, the pump to the river, as opposed to the pump to
    the lake proposal? And just a very brief answer, is it even on
    your radar screen? Because it's a very important project for us
    to consider, as a better way to fix our system so it doesn't
    break again?
        General Van Antwerp. Yes, ma'am, we are. We're considering
    that as an alternative.
        Senator Landrieu. Okay, and second the Morganza to the gulf
    project, which you all have temporarily put on hold, when was
    the last time you used section 902, if you know, to prohibit
    the advancement of a project that's been authorized by this
    Congress? Do you know?
        Mr. Woodley. Senator, our practice is when we believe that
    a project is going to exceed the amount authorized by Congress,
    our practice is to return to Congress and to achieve--to make
    that known--and to seek additional authorization, and I believe
    that that is a longstanding practice, and that that is indeed
    by far the most appropriate thing for the agency to do under
    the circumstances.
        Senator Landrieu. Well, I'd like to know the last time, and
    my final word on this, it took us 25 years, Mr. Chairman, to
    get this project authorized. The Corps is the one that gives us
    the estimates. So this game--which I call it a game--they give
    you a low estimate, you can't get a higher estimate in the bill
    if their estimate is low--so they give you a low estimate, you
    finally get it authorized after you get it authorized, they
    tell you, then, it's too little and we can't--you know, we
    can't go forward.
        So, we're going to be visiting this again, this issue of
    Morganza to the gulf.
        Senator Dorgan. Senator Landrieu, Thank you very much,
    Senator Murray?
        Senator Murray. Thank you, Mr. Chairman, I know a vote's
    been called, but I want to ask just two critical questions and
    one is on the Centralia Flood Project. This is the first budget
    request since the passage of WRDA, and the Centralia Flood
    Control Project was included in that bill, it's a much needed
    project to prevent further damage from the Chehalis River
    rising over its banks.
        Now, I understand there are many projects that need funds,
    but it is really shortsighted to pass up an opportunity to get
    moving on this levy project. Can you share with me why this was
    not included in the President's proposed budget?
        Mr. Woodley. Yes, Senator. The authorization came, I
    believe, in November. By that time, our budget is very much in
    place, and very few changes are made--I was only able to make a
    very few changes to respond to matters that were included in
    the authorization. We will be working on that project for
    future fiscal years----
        Senator Murray. So, you do expect it to be in the next
    request?
        Mr. Woodley. I will say that unless--I have not seen how it
    competes in that process, it will be in a position to compete,
    I believe, in that process----
        Senator Murray. To compete in that process--that doesn't
    sound very promising.
        Mr. Woodley. No, it doesn't sound very promising, Senator,
    I will say that we have not----
        Senator Murray. Well, I mean this is my frustration in my--
    go ahead.
        Mr. Woodley. We have not funded new starts in our budget,
    generally speaking, for some time.
        Senator Murray. Well, my understanding is----
        Mr. Woodley. That is a new start.
        Senator Murray. Yes, the capacity of this is $1.2 million.
        Mr. Chairman, these are what we have to do because the
    administration doesn't send us the adequate requests that we
    have passed in our authorization bills. We end up having to--
    and this project, I think, is about $1.2 million that is needed
    this year--have to do it as an earmark, and then we hear,
    ``Well, all the bills are going to be vetoed that have
    earmarks,'' well, that's irresponsible. We have to start
    figuring out the honesty of this budget process, and realize
    that the reason that we have to go back and do these earmarks
    is because we have an administration that is not following
    through and giving us what we need in authorized projects.
        And quickly, on the Chehalis River Basin Study, same idea.
    This is a project that is sitting out there, can you tell me
    why that was left off the table?
        Mr. Woodley. Pardon?
        We don't have the details on the Chehalis, so if you pardon
    me one second, I may be able to get you----
        Senator I apologize, I will have to answer that for the
    record.
        Senator Murray. I would appreciate that, and appreciate the
    opportunity, Mr. Chairman, to come back and ask those
    questions. I think my State is seeing what a lot of States are,
    we're losing homes, and it's costing us millions of dollars in
    damage, because we're not doing an adequate job of fulfilling
    our responsibilities as a country.
        Thank you, Mr. Chairman.
        Senator Dorgan. There's about 6 or 7 minutes left on this
    vote. Senator Landrieu, I should mention to you that I asked
    questions about the request that has been made with respect to
    the gulf, and especially the $1.5 billion anticipated local
    share which should be paid in a short period of time. I asked
    questions about how they expected that region to pay a local
    share, when WRDA would have anticipated that to the extent that
    local share existed, they might have up to 30 years. So, I
    asked that series of questions on the record, I wanted you to
    know.
        Senator Murray. Thank you.
        Senator Landrieu. And may I just say, for the record, I
    thank the Chair, because that is something I'd like to work out
    a longer time to pay, but Washington power permits, Port of
    Iberia, category five report and the ongoing cooperative
    arrangements with the Dutch were other things I wanted to ask.
    I'll submit those questions to the record, and I really thank
    the chairman for asking some of the questions about the cost
    share that's very important for us to tackle, thank you.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Dorgan. Let me thank all of the witnesses who've
    appeared today, I apologize that we've had a vote intervene,
    but I think we have at least exhausted many of the inquiries
    that we wanted to make, and there--we will submit a list of
    written questions, and we appreciate your being at this
    hearing.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
               Questions Submitted to Hon. John Paul Woodley, Jr.
                Questions Submitted by Senator Pete V. Domenici
                           inland waterway trust fund
        Question. Secretary Woodley, In your testimony before this
    subcommittee last year you told us that there was a looming problem
    with the Inland Waterways Trust Fund that needed to be addressed.
    However, we never received a proposal. The President's fiscal year 2009
    budget proposal announced that legislation would be forthcoming to
    address the shortfall in the Inland Waterway Trust Fund. Finally, last
    week the administration proposal was submitted to Congress. What took
    so long to get us this legislation?
        Answer. Coordination within the administration took longer than we
    originally anticipated.
        Question. The fiscal year 2009 budget submittal states that the
    President's request utilizes all balances in the Trust Fund as well as
    all receipts expected to be generated in 2009. This is about $167
    million. How much have we been funding on average for Inland Waterways
    over the last several years?
        Answer. Annual funding from the Inland Waterways Trust Fund
    increased from $102 million in fiscal year 2003, to $203 million in
    fiscal year 2007 for an average of $149 million for the period fiscal
    year 2003-2007.
        Question. How much does the current Inland Waterways Trust Fund
    generate in annual receipts?
        Answer. The existing $0.20 per gallon diesel fuel tax generates
    about $90 million per year.
        Question. Then you have known for a number of years that this day
    of reckoning was coming and you waited until now, halfway through the
    fiscal year, to make this type of proposal?
        Answer. The balance in the Trust Fund has been adequate until the
    last 2 years when it became clear that project costs were increasing
    dramatically and the number of construction and major rehabilitation
    projects were increasing, while revenues were generally declining.
        Question. This will be tough legislation to get enacted in any
    year, much less this year. It took me several years before I was able
    to finally get the initial legislation establishing the Inland Waterway
    Trust Fund enacted in 1978. And now, you want us to completely change
    the funding mechanism in the next 6 months?
        Answer. Due to the continuing decline in the Trust Fund balance we
    urge Congress to take action at its earliest convenience.
        Question. What has been the navigation industry's reaction to your
    proposal to phase out the fuel tax and replace it with a lock user fee?
        Answer. The navigation industry in general does not support the
    imposition of any additional costs on the industry to increase revenues
    to the Trust Fund, through either lock user fees or increased taxes.
    The industry supports increased Federal expenditures and reduced Inland
    Waterways Trust Fund contributions by changing the cost-sharing
    percentages from 50 percent Federal and 50 percent Trust Fund to 75
    percent Federal and 25 percent Trust Fund.
        Question. The fuel tax has been 20 cents per gallon for more than
    10 years. Was any thought given to a proposal to raise the fuel tax?
    Why was that idea rejected?
        Answer. Yes, consideration was given to raising the fuel tax.
    However, the user fee more appropriately aligns the costs and revenues
    by financing the Trust Fund's 50 percent share of the capital costs
    from revenues paid by the users who most directly benefit from reduced
    lock outages, improved safety, reductions in the time per lockage, and
    other benefits associated with the expenditures for new locks, lock
    replacements and expansions, and rehabilitations. The existing fuel tax
    is paid by towboat operators purchasing fuel on the 27 inland and
    intracoastal waterways listed in 33 U.S.C. 1804. Operators do not pay a
    fuel tax on the 40 waterways segments that are not listed, even when
    they use a lock, while operators on the extensive open water reaches of
    the system (such as on the Lower Mississippi River) are paying a
    substantial portion of the overall fuel tax where there are no locks
    and dams. Therefore, many system users receive little direct benefit
    from the investments that are being funded with the fuel tax, while
    others are receiving these benefits but not paying for them.
        Question. It appears that the proposed lock user fee will fluctuate
    depending on the balances in the Trust Fund? Do you believe the
    industry will support a user fee that could change up or down annually?
        Answer. We believe that a fee schedule that provides sufficient
    funding to construct, replace, or rehabilitate the infrastructure
    desired by the industry, while not creating a large surplus or
    depleting the balance in the Trust Fund, could be supported since it is
    in the overall interest of the industry.
                                 budget request
        Question. Secretary Woodley, in your press release on the fiscal
    year 2009 budget you state that ``The budget represents the prudent use
    of available funding to advance important, mission-based objectives. I
    am proud to present it.''
        What exactly are you proud of? Is it the decrease of $79 million
    over what you proposed in fiscal year 2008, or is it the $851 million
    decrease from what we provided in the fiscal year 2008 Omnibus?
        Answer. We are keenly aware that the nation has many competing
    needs, and this budget reflects the President's priorities for the
    Civil Works program. The Army Corps of Engineers must execute the
    budgetary resources it is provided as efficiently and effectively as
    possible. The budget provides a continued high level of funding for
    operation and maintenance of key infrastructure, with a $16 million
    increase over last year's budget. The budget also focuses resources on
    completing the highest-return construction projects, in order to
    realize their economic and environmental benefits sooner, giving
    priority to 79 high performing projects and will result in 12 project
    completions in fiscal year 2009, bringing significant benefits on line.
        Question. Is it prudent to provide no funding for projects that
    have been under construction for years?
        Answer. The fiscal year 2009 budget uses objective performance
    measures to establish priorities among projects and, through a proposed
    statutory change in Corps contracting practices, would also increase
    control over future costs. The performance measures used include the
    benefit-to-cost ratios for projects with economic outputs; and, for
    aquatic ecosystem restoration projects, the extent to which the project
    cost-effectively contributes to the restoration of a nationally or
    regionally significant aquatic ecosystem that has become degraded as a
    result of a Civil Works project or to an aquatic ecosystem restoration
    effort for which the Corps is otherwise uniquely well-suited. The
    selection process also gives priority to dam safety assurance, seepage
    control, static instability correction, and to projects that address a
    significant risk to human safety. Under each of these criteria,
    resources are allocated based on performance. This approach
    significantly improves the realization of benefits to the Nation from
    the Civil Works construction program and will improve overall program
    performance by allowing the Nation to realize the benefits of the
    projects with the best net returns (per dollar invested) sooner.
        Question. What are we supposed to tell the project sponsors that
    are sharing in the costs of these projects?
        Answer. The President's fiscal year 2009 budget for the Army Civil
    Works program is based on performance. All funds available for Civil
    Works are allocated in the budget based on the outputs and outcomes
    they would produce, and no funds are explicitly requested for paybacks.
    Likewise, the Corps capabilities to perform additional work are
    formulated based on the prospective work that could be performed, not
    based on prior reprogrammings and other transactions.
        Question. It will cost them more. It will cost us more. Again, how
    is this prudent?
        Answer. This budget is based on the administration's desire to
    produce a performance based budget focusing on completing investment
    opportunities that will yield good returns for the Nation in the
    future. It also provides the highest level of funding ever requested
    for the Civil Works program in the President's budget.
                                    earmarks
        Question. Secretary Woodley, Could you explain the President's
    Executive order on earmarks?
        Answer. Executive Order No. 13457, entitled ``Protecting American
    Taxpayers from Government Spending on Wasteful Earmarks'', is intended
    to ensure that Federal funds are spent in accordance with laws,
    regulations, and merit-based decisionmaking. The recent performance-
    based budgets for the Civil Works program are examples of the
    application of merit-based decisionmaking.
        Question. Based on what you know, how do you believe it will be
    implemented?
        Answer. Implementation guidance has not yet been developed. The
    Executive order is prospective and does not apply to previously enacted
    appropriations for fiscal year 2008, so as yet we have no experience
    implementing it. The Executive order supports this administration's
    strong emphasis on performance-based decisionmaking, as reflected in
    the President's Management Agenda and recent Civil Works budgets.
        Question. Secretary Woodley, do you believe that in a project based
    budget such as yours, that all of the projects in the statement of
    managers will be considered as earmarks that are advisory under this
    Executive order?
        Answer. Thoughtful consideration needs to be applied to the
    question of the designation ``earmark'' in programs, like the Army
    Civil Works program, that historically have been line-item funded for
    individual programs, projects, and activities. I believe the Executive
    order should be applied in a way that furthers the intent of
    encouraging performance based decisionmaking.
        Question. If I understand you correctly, the Intent of Congress is
    irrelevant under this Executive order. Is that correct?
        Answer. The Comptroller General established years ago that
    committee reports accompanying Acts of Congress are advisory, but are
    to be afforded great deference. Moreover, the Comptroller General
    advised that if the executive branch intends to act contrary to the
    statement of managers as laid out in such a report, an explanation is
    owed to the committee or committees that issued the guidance. Also, the
    statement of managers and other committee reports are part of the
    legislative history of the respective appropriations acts.
        Question. Have you considered how you will manage a program if all
    of these projects are contained in legislative language? You have
    always had some flexibility to allow proper management of your
    respective programs. This Executive order seems to be hurting you, more
    than it is restraining Congress. Won't your jobs be harder?
        Answer. Certainly, having allocations to each program, project and
    activity laid out in statutory language would change current management
    practices to some extent and would require greater attention and
    accuracy in the development of cost estimates. Such legislation also
    could include provisions authorizing reprogrammings or transfers among
    the line items within specified limits, which would give the program
    managers some flexibility.
        Question. How will you deal with emergency situations if all
    funding is earmarked in legislative language?
        I can assure you that Congress is not going to provide you a lump
    sum appropriation and trust that you will do the right thing. That
    would be irresponsible of us and an abdication of our constitutional
    duties. Additionally, it would also impede our ability to undertake
    proper oversight over your execution of these programs.
        Answer. If Congress were to itemize funding allocations in
    statutory language, either directly or by referencing the statement of
    managers, it would be critically important for Congress to also provide
    a mechanism to ensure that agencies have sufficient discretion to
    respond to emergencies. This could be done by statutory establishment
    of reprogramming or transfer process and conditions and/or by providing
    a line item allotment of funding to be used for emergency purposes. An
    example would be the emergency transfer authority provided to the
    Secretary of the Army in Public Law 84-99. I would note that in fiscal
    year 2007, while operating under a year-long continuing resolution, my
    staff worked closely with the Army Corps of Engineers Headquarters to
    first establish objective, transparent criteria and then to apply those
    criteria in allocating the fiscal year 2007 appropriations for the
    Civil Works program. If the executive branch were to be allowed great
    discretion in allocating Civil Works appropriations, then advance
    consultation on transparent, merit-based criteria and periodic
    reporting to Congress on program execution certainly would be
    appropriate to ensure Congress has sufficient information to carry out
    its oversight role.
                                     ______

          Questions Submitted to Lieutenant General Robert Van Antwerp
                 Questions Submitted by Senator Byron L. Dorgan
                          collective bargaining rights
        Question. What impact, if any, will implementation of the HPO have
    on collective bargaining rights and the way in which Corps employees
    are represented by Federal employee unions during and after the
    implementation of the HPO? What impact, if any, will implementation of
    the HPO have on existing bargaining units within the agency, the rights
    of employees to collectively bargain within the agency and on the
    ability of various unions to continue to represent employees in the
    agency after collective bargaining agreements expire and are
    renegotiated? Will any positions within existing bargaining units be
    moved to new bargaining units? Will any positions within existing
    bargaining units be moved outside bargaining units? Why will this HPO
    be different from the logistics HPO which cast 400 employees out of
    collective bargaining arrangements for no apparent reason, given that
    their work and their worksites have not changed?
        Answer. We do not expect any change in bargaining rights. Unlike
    the Logistics High Performing Organization (HPO), the NavLocks study is
    not proposing to create a new organizational entity, therefore, local
    labor relations agreements will continue as negotiated locally.
            negotiating over appropriate arrangements and procedures
        Question. Many of the employees affected by the HPO will be
    represented by unions, both during and after implementation. Does the
    Corps acknowledge unreservedly that all represented Federal employees
    would be able to negotiate at the local level appropriate arrangements
    and procedures of the HPO and if necessary pursue appeals to Federal
    labor authorities including but not limited to the Federal Labor
    Relations Authority and Merit Systems Protection Board? What
    differences if any would there be in terms of negotiating over impact
    and implementation at the local level under the HPO and if the HPO were
    instead being separately implemented by several Corps districts
    simultaneously as several distinct reorganizations?
        Answer. There will not be any changes in bargaining rights. The
    study is not proposing a new organizational entity, therefore, local
    labor relations agreements will continue as negotiated locally. No
    Corps district reorganization is recommended in this study.
                                   workforce
        Question. Will there be fewer Federal employee jobs in the locks &
    dams, district offices, and fleet maintenance crews during
    implementation and the first 5 years after implementation than there
    were on the first day of the HPO's development? If so, please provide
    an explanation that includes estimates for the Federal employee jobs
    lost for each of the three categories (locks & dams, fleet maintenance,
    and district offices). If there will be fewer jobs, how will these
    reductions be achieved in each of the three categories? What role will
    attrition play in reducing the workforce? If attrition will be used,
    when and to what extent will it be used in each of the three
    categories? Corps management has said that no employee would
    involuntarily lose his job because of the HPO--is this still the case?
    What, if any, job losses will there be through re-engineering of jobs,
    i.e., retaining the jobs but changing the types of positions, thus
    leaving current employees unqualified? In which if any of the three
    categories [locks & dams, district offices, and fleet maintenance
    crews] do you anticipate adding Federal employee jobs, and by how many?
    If so, what efforts will the Corps undertake to ensure that it has the
    funding necessary to hire the additional employees? If the HPO
    recommends an increase in the number of Federal employees, will OMB
    allow for such an increase?
        Answer. We cannot predict future funding levels and events that are
    beyond the control of the Corps and that may impact staffing levels
    throughout the organization. However, given sufficient funding for
    operating and maintaining the locks and dams, there would be no net
    loss of jobs as a result of this study. The study is not going to
    propose any new organizational entity to operate and maintain the locks
    and dams in the inland waterway system. The study will be recommending
    a series of business process improvements that are intended to provide
    consistency in O&M procedures across the Corps, while working within
    the long-range strategy of applying resources to the most critical
    projects based on risk and reliability within a watershed (or division)
    boundaries.
        If the study should recommend increases in staffing, the funds to
    support those positions would be considered through the normal budget
    process.
                                contracting out
        Question. Corps employees were told by the agency's management that
    the HPO would obviate the need for any contracting out. What
    contracting out of work either performed by Federal employees or last
    performed by Federal employees (e.g., employees who are lost through
    attrition) would occur as part of the HPO? If contracting out of work
    currently performed or last performed by Federal employees is part of
    the HPO, in which of the three categories of affected work would this
    contracting out occur, the work of how many Federal employees would be
    affected for each category, and through what procurement process would
    this contracting out occur? Would Federal employees, either already on
    the agency's staff or to be added later, be given opportunities to
    perform new work and work currently outsourced? If so, in which
    categories would this insourcing occur, the work of how many Federal
    employees would be insourced, and through what process would this
    insourcing occur?
        Answer. No contracting out of work performed by Federal employees
    will occur as part of or as a result of the study. Additionally, work
    previously outsourced may be considered for insourcing through an
    appropriate process allowed under the prevailing legislation. We do not
    have any estimate of number of positions that may be considered for
    insourcing, pending additional analysis after the completion of this
    study and as existing contracts are up for renewal.
                              terms of employment
        Question. Employees who were involved in the logistics HPO and the
    information management A-76 were forced to reapply for their jobs. Will
    any of the employees covered by the HPO be required to reapply for
    their jobs? If so, which ones? Will any of the employees covered by the
    HPO be involuntarily required to take downgrades? If so, which ones?
    Will any of the permanent employees covered by the HPO be involuntarily
    required to take seasonal employment? If so, which ones? Will the HPO
    change the pay structure of locks and dams operations and maintenance
    personnel based on where they live? Will district office personnel be
    expected to move to another district office? Please provide estimates
    by district on the numbers of district employees to be shifted to other
    districts. What adverse impacts will the HPO have for fleet maintenance
    personnel? Will fleet maintenance personnel be expected to move to
    other districts? Please provide estimates by district on the numbers of
    affected fleet maintenance employees to be shifted to new districts.
    Would fleet maintenance personnel be expected to work more outside of
    their home districts? If so, for how many more days per year?
        Answer. No employee will be required to reapply for his/her job,
    take a downgrade, or to change status from permanent to seasonal. The
    study does not recommend changes to the existing Corps chain-of-
    command, organizational structure, or a decrease in the staffing
    levels.
        The NavLocks study will not require that employees in a district
    office move to another district office.
        The NavLocks study will not recommend that employees in one
    district's maintenance fleet permanently move to another district's
    maintenance fleet. However, on a short term basis, as is the current
    practice, we envision using personnel from several districts'
    maintenance fleets to assists other districts to more rapidly restore
    functionality/operating capability to a lock. As we try to manage work
    and perform the most critical tasks in a river system, on a short term
    basis, we envision making teams of service personnel from maintenance
    fleets to increase capability to quickly perform tasks to minimize
    system downtime. We realize that working away from home is inconvenient
    to employees and we will try to minimize the adverse impacts to the
    extent possible.
                                 hpo structure
        Question. To what extent is the HPO different from reorganizations
    that Corps districts could accomplish on their own? What additional
    legislative authority will the Corps be seeking in order to carry out
    the HPO? Will districts continue to decide, within the parameters set
    by the Congress, how money is spent on locks and dams projects--or will
    such decisions be made by another entity, perhaps one created by the
    implementation of the HPO? Will districts continue to negotiate and
    administer contracts for locks and dams--or will such arrangements be
    determined by another entity, perhaps one created by the implementation
    of the HPO?
        Answer. The study is conducted Corps-wide for improving reliability
    and availability of the entire inland navigation system through better
    business processes. The study is not being conducted for the purpose of
    reorganizing districts; therefore, it should not be confused with
    ``reorganizations'' that could be done by individual districts, based
    on their workload and/or mission changes. Regarding how money is spent
    on locks and dams projects, there will be no new organization as a
    result of the HPO and districts will continue to carry out their
    current role with regard to determining how funding is to be spent. No
    change is anticipated to the current budget development and program
    execution processes.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                              civil works program
        Question. General Van Antwerp, in your role as the Chief of
    Engineers, what do you see as the major water resource challenges
    facing this Country in the future?
        Answer. The facilities owned and operated by, or on behalf of, the
    Corps of Engineers are aging and may not have undergone a recent major
    rehabilitation. As stewards of this infrastructure, we are working to
    ensure that its key features continue to provide an appropriate level
    of service to the Nation. Sustaining such service poses a technical
    challenge in some cases, and proper maintenance is becoming more
    expensive as this infrastructure ages.
        Question. What level of funding would be necessary to maintain the
    progress realized in the Civil Works Program through the enacted
    appropriations levels for the past couple of years?
        Answer. Sir, while I cannot give you an exact number at this time,
    I believe that approximately $6 billion should be sufficient to
    maintain and continue the funding level appropriated over the last
    couple of years.
        Question. If the administration's budget proposal is enacted, what
    will be the impact on meeting the Army Corps' O&M backlog? The
    construction backlog?
        Answer. The budget of the President is viewed as the appropriate
    mix of construction and O&M funding as well as the appropriate level
    for those respective activities. The operations and maintenance backlog
    and the construction backlog do not represent a prioritization of work
    either within the two accounts or between different accounts in the
    Corps. For instance, some work in the backlog is higher priority,
    whereas other work may be a lower priority relative to funding needs in
    other Corps areas. The proposed fiscal year 2009 funding for O&M and
    construction does not significantly reduce the O&M and construction
    backlogs.
        Question. What is the percentage of the Nation's commerce that come
    into or leaves this country that goes through a Corps built and
    maintained harbor?
        Answer. Sir, we estimate that 95 percent of our Nation's foreign
    commerce goes through our Federally maintained harbors and channels.
        Question. Could you characterize the proportion of the
    discretionary budget of the Federal Government that is directed toward
    building and maintaining this Country's water infrastructure today
    versus 30 years ago?
        Answer. One way is to compare absolute budget amounts over time.
    For example, the discretionary budget of the United States is five
    times larger today than it was 30 years ago while the Corps'
    discretionary budget has doubled in size over the past 30 years.
    Another comparison is a relative comparison over time. Thirty years
    ago, slightly more than 1 percent of the discretionary budget of the
    Federal Government was designated to the Corps of Engineers to build
    and maintain the country's infrastructure. Today less than one-half of
    1 percent of the Federal Government's discretionary budget is proposed
    for the Corps of Engineers to build and maintain the country's
    infrastructure.
        In 1978 the Corps of Engineers' budget relative to the total
    discretionary budget allowance = $2.778 billion/$259.940 billion =
    .0106 or 1.06 percent. In 2008, the Corps of Engineers' budget relative
    to the total discretionary budget of the Nation = $5.586 billion/
    $1,153.798 billion = .0048 or 0.48 percent.
        Question. Could you provide a historical perspective on the value
    of the Nation's inland waterways for National security and economic
    security?
        Answer. The Corps navigation services play an essential role in
    ensuring that commercial goods move smoothly along the Nation's ports
    and waterways distribution chain. A smooth, well-functioning navigation
    system is crucial to the Nation's economy. Inland and intracoastal
    waterways directly serve 38 states throughout the Nation's heartland as
    well as the States on the Atlantic seaboard, the gulf coast and the
    Pacific Northwest. The shippers and consumers in these States depend on
    the inland waterways to move about 630 million tons of cargo valued at
    over $73 billion annually. States on the gulf coast and throughout the
    Midwest and Ohio Valley especially depend on the inland and
    intracoastal waterways. Texas and Louisiana each ship over $10 billion
    worth of cargo annually, while Illinois, Pennsylvania, West Virginia,
    Kentucky, Mississippi, Alabama, and Washington State each ship between
    $2 billion and $10 billion annually. Another eight States ship at least
    $1 billion annually. According to research by the Tennessee Valley
    Authority, this cargo moves at an average transportation savings of
    $10.67 per ton compared to other modes of transportation. The unit cost
    to transport commodities over inland waterways is two to three times
    lower than other forms of transportation. Corps navigation projects
    also help limit air pollution emissions by enabling tows with many
    barges to move cargo long distances on considerably less fuel than
    trains or trucks would need to move the same amount of cargo the same
    distance.
        The inland waterways have played a key role in National defense and
    military strategy. During World War II, large quantities of strategic
    commodities were moved on the inland and intracoastal waterways. During
    the war period, the total annual ton-mileage more than doubled the
    record peacetime movements on the Mississippi, Ohio, and Illinois
    Rivers. The Gulf Intracoastal Waterway played a crucial role in moving
    strategic commodities, particularly crude and refined petroleum, and in
    1944 carried five times as much freight as in 1939. Barges were
    credited with transporting over 1.7 billion barrels of petroleum and
    petroleum products, equal to more than 7 million tank car loads, or
    73,000 trains of 100 cars each. The Gulf and Atlantic Intracoastal
    Waterways provided a protected route for the daily delivery of some 1.3
    million barrels of petroleum, in contrast with oceangoing tankers that
    were vulnerable to submarine attack. The waterways also served the
    shipbuilding and repair industries. During World War II the number of
    inland shipbuilding and repair facilities increased from 85 to 140. At
    the end of the war the Army also shipped grain down the Mississippi as
    part of the European civilian relief program.
        The waterways continue to move strategic cargo destined for
    military facilities, especially petroleum products such as gasoline,
    distillate and jet fuels, military cargo and equipment. Moving military
    vehicles and equipment by barge has provided increased security and
    simplified loading and unloading compared to rail, and has saved fuel
    and wear-and-tear compared to over-the-road moves.
        Another key role of the waterways today is for the movement of
    oversized cargo that would be difficult or impossible to move by road
    or rail. Waterways are used to move industrial plant components,
    including nuclear reactors and other power plant equipment, offshore
    oil platforms, as well as automobile factory presses and even rocket
    boosters from assembly plants to Cape Canaveral.
        Question. How much unobligated funding did the Corps carry over
    from fiscal year 2008 to fiscal year 2009?
        Answer. Mr. Chairman., our total carryover of unobligated
    appropriated Civil Works funds from fiscal year 2007 to fiscal year
    2008 was $7.4 billion. Our estimated carryover into fiscal year 2009 is
    estimated to be $5.2 billion, including supplemental funding.
        Question. To what do you attribute this large carryover?
        Answer. In brief, the carryover is attributable to a surge in
    supplemental funding and changes in internal processes. Of the total
    projected carryover of $5.2 billion, about $3.5 billion is Flood
    Control and Coastal Emergencies and Construction funds that were
    appropriated for reconstruction of New Orleans area protection and that
    will be obligated through fiscal year 2011. Another $600 million is
    other supplemental funds that were appropriated for the rehabilitation
    of projects damaged in the numerous storm and hurricane events in the
    past few years, but that cannot be obligated through fiscal year 2008.
    Finally, $1.1 billion is regularly appropriated funds. Carryover of
    regular funds is projected to grow from around $300 to $400 million in
    the years preceding fiscal year 2006 to the $1.1 billion figure due to
    changes in contracting and reprogramming processes in response to the
    guidance in the fiscal year 2006 conference report and fiscal year 2008
    statement of managers. These changes emphasize carrying over funds
    where necessary to fully fund contracts, and limiting the reprogramming
    of funds. The Corps plans to reduce carryover in the future by
    improving its scheduling and estimating practices prior to projects
    receiving funds, and by focusing on project execution, such as metrics
    for obligations and milestones, once funds are received.
        Question. What tools could we give you to help manage the program
    better?
        Answer. Mr. Chairman, I believe recent Congressional direction has
    improved Corps business practices with regard to the management of
    appropriations. Our goal is to plan well and to execute funds as
    planned, rather than to simply maximize expenditures. In the interest
    of administrative efficiency, we would welcome greater flexibility in
    allocating funds among operation and maintenance activities, and we
    would like to explore the possibility of reducing prior notification
    requirements for reprogramming, while remaining focused on executing as
    planned. This would involve giving clear guidance to the field on when
    and when not to reprogram, and then freeing them to operate within the
    framework of that guidance. This also would involve continuing to
    provide periodic reports to Congress on reprogramming, to ensure the
    necessary oversight.
        Question. General Van Antwerp, the fiscal year 2008 Omnibus
    required you to submit a report by May 1, 2008 concerning the positive
    and negative impacts of the revised policy on continuing contracts to
    the execution of the Civil Works Program. Can you give us a preview of
    this report?
        Answer. This report will discuss changes in Corps processes that
    were incorporated into execution plans and acquisition strategies to
    ensure that implementation of programs, projects, and activities (PPAs)
    complies with Congressional guidance. It will discuss impacts of the
    changes and offer recommendations.
                                     ______

                    Questions Submitted to Robert W. Johnson
                 Questions Submitted by Senator Byron L. Dorgan
                                    drought
        Question. What is the prediction for the drought situation across
    the West in fiscal year 2009? We are entering our 9th year of the
    drought in western North Dakota.
        Answer. As a general rule, for every year of drought as many years
    of above-normal precipitation is needed to counter the effects of
    drought. Without significant snow pack or substantial rainfall, current
    drought conditions are expected to continue. Precipitation outlooks are
    generally unreliable beyond 3 months. Reclamation itself does not
    forecast weather or drought conditions. Reclamation tracks current
    drought conditions based on information provided by other agencies
    focused on weather, including the National Oceanic and Atmospheric
    Administration's Climate Prediction Center (http://www.cpc.noaa.gov/),
    and the Drought Monitor, managed by the National Drought Mitigation
    Center (http://www.drought.unl.edu/dm/monitor.html).
                              energy and water act
        Question. There are a number of projects in the fiscal year 2008
    Energy and Water Act that were not included in the President's fiscal
    year 2009 budget request. Can you provide us the capability amounts
    needed for those projects?
        Answer. The projects are California Bay-Delta Restoration and
    Central Valley Project Restoration Fund. The capability statements are
    below:
        Project Name in Hill Request.--California Bay-Delta Ecosystem
    Restoration (CA)
        Bureau Project.--California Bay-Delta Restoration (CA)
        Appropriation.--California Bay-Delta Restoration
        Authorization.--The Reclamation Act of 1902, as amended and
    supplemented, June 17, 1902; Public Law 89-561, Feasibility Studies,
    September 7, 1965; Public Law 96-375, Feasibility Studies, October 3,
    1980; Reclamation Projects Authorization and Adjustments Act of 1992,
    title XXXIV of Public Law 102-575, October 30, 1992; and Public Law
    104-333, the Omnibus Parks and Public Lands Management Act of 1996,
    title XI, California Bay-Delta Environmental Enhancement Act, November
    12, 1996; Public Law 107-66, Energy and Water Development
    Appropriations Act, 2002, November 21, 2001; Public Law 108-7,
    Consolidated Appropriations Resolution, 2003, February 20, 2003; Public
    Law 108-137, Energy & Water Development Appropriations Act, 2004,
    December 1, 2003; and Public Law 108-361, Calfed Bay-Delta
    Authorization Act, October 25, 2004.

                                                CALFED BAY-DELTA PROGRAM
                                               [Summarized Financial Data]
    ----------------------------------------------------------------------------------------------------------------
                                                                          Federal       Non-Federal        Total
    ----------------------------------------------------------------------------------------------------------------
    Total Estimated Cost............................................         ( \1\ )         ( \1\ )         ( \1\ )
    Allocations through fiscal year 2007 \2\........................    $292,778,000  ..............    $292,778,000
    Approved by Congress fiscal year 2008...........................      40,098,000  ..............      40,098,000
    Budget Request for fiscal year 2009.............................      32,000,000  ..............      32,000,000
    Balance to Complete after fiscal year 2009......................         ( \1\ )         ( \1\ )         ( \1\ )
    Amount Requested by Member (H)..................................      40,000,000  ..............      40,000,000
    Amount Requested by Member (S)..................................      42,000,000  ..............      42,000,000
    Additional Capability for fiscal year 2009......................      10,000,000  ..............      10,000,000
    ----------------------------------------------------------------------------------------------------------------
    \1\ Unknown.
    \2\ The $292.7 million reflects funds appropriated to the California Bay-Delta Restoration Account in fiscal
      year 1998 through fiscal year 2000 and fiscal year 2006 thru fiscal year 2007. Does not include funds provided
      in the fiscal year 2002, fiscal year 2003, fiscal year 2004 and fiscal year 2005 Water and Related Resources
      Appropriation, Central Valley Project.

        Location and Description.--CALFED is a collaborative effort among
    25 State and Federal agencies and representatives of California's
    environmental, urban, and agricultural communities to improve water
    quality, fish and wildlife habitat, and water supply reliability in the
    San Francisco Bay/Sacramento-San Joaquin River Delta (Bay-Delta), the
    hub of the State's water distribution system. The Bay-Delta is
    California's principal source of drinking water for more than 22
    million Californians, supplying irrigation water for the State's $27
    billion agricultural industry, and is the largest wetland habitat and
    estuary in the West supporting 750 plant and animal species.
    Ultimately, California's trillion-dollar economy is at risk if
    environmental and water management problems to restore the ecosystem
    are not resolved.
        The California Bay-Delta Environmental Enhancement Act (Bay-Delta
    Act), enacted in late 1996, authorized a total of $430 million over 3
    years (fiscal year 1998 to fiscal year 2000) for ecosystem restoration
    activities in the Bay-Delta region. From fiscal year 1998 to fiscal
    year 2000 a total of $190 million was provided through this account to
    support ecosystem restoration, as well as $30 million for other than
    ecological Bay-Delta activities. Existing agency authorities and
    appropriation language in 2002 and 2003 allowed Federal agencies to
    continue Program implementation after the Bay-Delta Act sunseted the
    end of 2000, until such time as the new authorization was enacted in
    2004.
        Project Status.--Lead CALFED agencies released the Final
    Programmatic Environmental Impact Statement/Environmental Impact Report
    and Preferred Alternative on July 21, 2000. Stage 1 of Phase III
    implementation activities (the first 7 years of a 30-year program)
    began with the signing of the Record of Decision (ROD) on August 28,
    2000, formally approving a long-term plan for restoring the Bay-Delta
    ecosystem and improving water management. Program components include
    ecosystem restoration, watershed management, water supply reliability,
    storage, conveyance, an environmental water account, water use
    efficiency (conservation and recycling), water quality, water
    transfers, levees, and science. All aspects of the Program are
    interrelated/interdependent and will incorporate a high level of
    stakeholder participation and science-based adaptive management during
    implementation.
        On October 25, 2004, the President signed the CALFED Bay-Delta
    Authorization Act, Public Law 108-361, authorizing the Secretary of the
    Interior to implement water supply technology and infrastructure
    programs aimed at increasing and diversifying domestic water resources.
    The Act provided Federal authorization through fiscal year 2010 for
    four new and expanded authorities--Environmental Water Account (EWA),
    the Levee Stability Program, specific conveyance projects, and
    oversight activities identified in sec. 103(f)(1) thru (f)(4). The Act
    authorized up to $389 million to be appropriated for these four
    activities, and it requires a number of reporting requirements,
    including annual updates to Congress.
        Additional Capability for Fiscal Year 2009.--The additional $10
    million would be used to support the CALFED Bay-Delta Program to
    provide improved water supply and water quality in the Bay-Delta. The
    full capability presented here represents the specific projects and
    programs that were recommended for implementation in the budget
    request. Reclamation has the capability to use the additional funds
    requested under existing and new authority to support the following
    programs:
        Storage Program.--Reclamation, in coordination with the State of
    California, is continuing feasibility investigations and environmental
    documentation for four proposed CALFED storage projects: Shasta
    Enlargement, Upper San Joaquin River Basin, Los Vaqueros Enlargement,
    and North of Delta Offstream Storage (NODOS; aka Sites Reservoir).
    Planning studies will focus on refinement and evaluation of alternative
    plans, benefit/cost analysis, and environmental compliance. Draft
    Feasibility Reports and NEPA documentation are due for completion in
    2008 and Final Feasibility Reports and environmental documents are due
    for completion and submittal to the Department of the Interior in 2010.
        Conveyance.--Reclamation is continuing feasibility studies for: (1)
    increased capacity of the intertie between the State Water Project
    California Aqueduct and the Central Valley Project Delta Mendota Canal,
    (2) San Luis Reservoir Lowpoint Improvement Project, (3) actions at
    Franks Tract to improve water quality in the Delta, evaluation of a
    screened through Delta facility on the Sacramento River, coordinating
    actions for relocating drinking water intake facilities for in-Delta
    water users, including assessing the feasibility of the project and
    developing a finance plan, and evaluating the environmental benefits of
    re-operating the Delta Cross Channel; and (4) recirculation of export
    water to reduce salinity and improve dissolved oxygen in the San
    Joaquin River.
        Additional funds would be used to support alternative conveyance
    options under the Bay-Delta Conservation Plan (BDCP) and the Delta
    Vision Strategic Plan in coordination with the State of California.
        Water Quality.--Reclamation is continuing implementation of
    activities that will help meet water quality standards and objectives
    for which the Central Valley Project has responsibility. Projects will
    include those within the preferred alternative proposed by the San
    Joaquin River Water Quality Management Group, of which Reclamation is a
    participant. The approach focuses on managing salt loading in the San
    Joaquin River in areas where the highest salt loads originate and
    incorporates an element of real-time management, to manage salt loading
    into the San Joaquin River, while not redirecting impacts to the Delta.
    Specific activities include continued implementation of the Westside
    Regional Drainage Plan, water quality monitoring, wetlands management,
    and other actions identified in the program to meet water quality
    standards and objectives in the lower San Joaquin River. Additional
    funds would be used for implementation of activities that reduce salt
    discharges into the San Joaquin River that are consistent with the
    Westside Regional Drainage Plan.
        Ecosystem Restoration.--Under Ecosystem Restoration Reclamation is
    participating as the Federal co-lead agency for NEPA in the BDCP. The
    BDCP contributes to the objectives of CALFED's Ecosystem Restoration
    Program. BDCP supports planning for projects that improve and increase
    aquatic and terrestrial habitats and improve ecological functions in
    the Bay-Delta system to support sustainable populations of diverse and
    valuable plant and animal species. Additional funds would be used to
    support the environmental documents for alternative conveyance under
    BDCP and in support of implementation of the Delta Vision Strategic
    Plan toward broad restoration of the Delta.
        Science.--Reclamation is continuing to participate as a key agency,
    in coordination with the Interagency Ecological Program (IEP) agencies
    and the CALFED Science Program, with investigations to determine causes
    for the decline in the Delta of pelagic organisms. Reclamation is also
    participating with expert evaluations and scientific assessments of
    Program elements and assisting the CALFED agencies with the
    establishment of performance measures, and monitoring and evaluating
    the performance of all Program elements. Additional funds will
    contribute to Reclamation's participation in both the IEP and the
    Pelagic Organism Decline studies.
        Environmental Water Account.--Reclamation is continuing as the lead
    Federal agency in this cooperative water and operations management
    program whose purpose is to provide protection to the fish of the Bay-
    Delta estuary through environmentally beneficial changes in the
    operations of the State Water Project (SWP) and the Central Valley
    Project (CVP), at no uncompensated water cost to the Projects water
    users. The future of an EWA through 2011 is being discussed; a ROD will
    be signed in the next few months at which time the agencies will
    determine the future of an EWA.
        Water Use Efficiency (WUE).--Reclamation does not have the
    authority for a grant program for WUE grants. Any funding would need to
    come with authority to manage such a program.
        Planning and Management Activities.--Reclamation is continuing to
    support administration of storage, conveyance, water use efficiency,
    environmental water account, ecosystem restoration, science and water
    transfer consistent with our CALFED appropriation. Consistent with
    Public Law 108-361, activities also include: (1) Program support, (2)
    Program-wide tracking of schedules, finances, and performance, (3)
    multi-agency oversight and coordination of Program activities to ensure
    Program balance and integration, (4) development of interagency cross-
    cut budgets and a comprehensive finance plan to allocate costs in
    accordance with the beneficiary pays provisions of the Record of
    Decision, and (5) coordination of public outreach and involvement,
    including tribal, environmental justice, and public advisory activities
    in accordance with the Federal Advisory Committee Act (5 U.S.C. App.),
    and (6) development of Annual Reports.

                   ADDITIONAL CAPABILITY FOR FISCAL YEAR 2009
    ------------------------------------------------------------------------
                                                    President's   Additional
                        Program                       Request     Capability
    ------------------------------------------------------------------------
    Storage Program...............................   $6,450,000  ...........
    Conveyance....................................    7,050,000   $4,000,000
    Water Quality.................................    5,000,000    3,000,000
    Ecosystem Restoration.........................    1,500,000    2,000,000
    Science.......................................    3,000,000    1,000,000
    Environmental Water Account...................    7,000,000  ...........
    Water Use Efficiency (WUE)....................  ...........  ...........
    Planning and Management Activities............    2,000,000  ...........
                                                   -------------------------
          Total...................................   32,000,000   10,000,000
    ------------------------------------------------------------------------

        Submission of this capability statement does not reflect
    departmental support. The Department does not support the addition of
    funds for any program or project that would result in the reduction of
    funding for other programs or projects in the President's budget.
        Problem Areas.--These additional capabilities are for Reclamation
    activities only. There are other Federal agencies responsible for
    implementing critical aspects of the Program. For example, funding for
    levee improvement projects in the Delta, which is an important
    component of the CALFED program, is not within Reclamation's authority
    to implement and not part of these additional capabilities.
        Congressional Location and Representation.--State of California
        Congressional Districts.--Statewide
        Senators.--Dianne Feinstein (D), Barbara Boxer (D)
        Congressional Members Requesting Additional Funding.--Senator
    Dianne Feinstein
        Project Name in Hill Request.--Trinity River Restoration (CA)
        Bureau Project.--Central Valley Project Improvement Act/Central
    Valley Project, Trinity River Division (CA)
        Appropriation.--Central Valley Project Restoration Fund
        Authorization.--Public Law 98-541, To Provide for the Restoration
    of the Fish and Wildlife in the Trinity River Basin, California, and
    for Other Purposes, October 24, 1984; Public Law 104-143, Trinity River
    Basin Fish and Wildlife Management Reauthorization Act of 1995, May 15,
    1996; Central Valley Project Improvement Act, Title XXXIV, Public Law
    102-575

                                 WATER AND RELATED RESOURCES CVP--TRINITY RIVER DIVISION
                                             [Summarized Financial Data \1\]
    ----------------------------------------------------------------------------------------------------------------
                                                                          Federal       Non-Federal        Total
    ----------------------------------------------------------------------------------------------------------------
    Approved by Congress 2008.......................................     $10,295,000      $3,039,000     $13,334,000
    Budget Request for fiscal year 2009                                   10,317,000       3,133,000      13,450,000
    ----------------------------------------------------------------------------------------------------------------
    \1\ Includes Water and Related Resources only, does not include Restoration funds.

                                        CENTRAL VALLEY PROJECT--RESTORATION FUND
                                             [Summarized Financial Data \1\]
    ----------------------------------------------------------------------------------------------------------------
                                                                          Federal       Non-Federal        Total
    ----------------------------------------------------------------------------------------------------------------
    Approved by Congress 2008.......................................     $59,122,000  ..............     $59,122,000
    Budget Request for fiscal year 2009                                   48,579,000  ..............      48,579,000
    ----------------------------------------------------------------------------------------------------------------
    \1\ The summarized financial data is based on the Central Valley Project Restoration Fund.

                               TRINITY RIVER DIVISION WATER & RELATED AND RESTORATION FUND
                                               [Summarized Financial Data]
    ----------------------------------------------------------------------------------------------------------------
                                                                            CVP
                                                          Federal       Restoration     Non-Federal        Total
                                                                           Fund
    ----------------------------------------------------------------------------------------------------------------
    Total Estimated Cost \1\........................    $166,432,952         ( \2\ )  ..............    $166,432,952
    Allocations through fiscal year 2007 \1\........     107,921,637      $7,126,498  ..............     115,048,135
    Approved by Congress 2008.......................       6,938,000       4,000,000  ..............      10,938,000
    Budget Request for fiscal year 2009.............       7,140,000       1,000,000  ..............       8,140,000
    Balance to Complete after fiscal year 2009......      44,433,315         ( \2\ )  ..............      44,433,315
    Amount Requested by Member (S)..................  ..............       4,000,000  ..............       4,000,000
    Additional Capability for fiscal year 2009        ..............         600,000  ..............         600,000
    ----------------------------------------------------------------------------------------------------------------
    \1\ Does not include Grass Valley Creek (Buckhorn Debris Dam).
    \2\ N/A.

        Location and Description.--The Trinity River Division is located in
    Trinity County in northwestern California. The Trinity River
    Restoration Program was initiated in 1984 to restore and maintain the
    fish and wildlife stocks of the Trinity River Basin to levels that
    existed just prior to construction of the Trinity River Division. The
    Central Valley Project Improvement Act of 1992 further supported
    restoration objectives, acknowledged the Federal Government's trust
    responsibilities, specified minimum releases of 340,000 acre feet per
    year, and established completion dates for a Flow Evaluation Study. The
    current phase of the program resulted from the Trinity River Mainstem
    Fishery Restoration Environmental Impact Statement and Record of
    Decision (ROD) signed on December 19, 2000. It calls for establishment
    of a strong science program, significant physical/mechanical
    restoration actions in the mainstem, as well as increased releases to
    the river from the historical 25 percent up to 48 percent of the
    average annual inflow to Trinity Reservoir.
        Project Status.--Significant progress has been made in many aspects
    of the program, with four bridge modifications completed and open to
    traffic (April 2005), one house acquired and relocated (March 2006),
    and all floodplain infrastructure modifications completed to allow for
    peak releases of up to 11,000 cubic feet per second (cfs) depending on
    water year type (April 2007). The largest release for fishery
    restoration purposes since completion of the dams in 1963, 7,000 cfs,
    was made on May 10, 2005, followed by an even larger release of 10,200
    cfs in May 2006. Construction of the first major channel rehabilitation
    project (over 1 mile in length) was completed in November 2005. Four
    sites were constructed in 2006, and three more in 2007. Eight channel
    rehabilitation sites will be constructed in the summer and fall of
    2008, with an additional eight sites planned for 2009. The remaining 23
    rehabilitation sites are in the initial planning stages and scheduled
    for construction at the rate of 6-8 per year during the period of 2010
    to 2012. Fisheries and related studies have been funded at $4.0 to $4.5
    million per year with the objective of monitoring long term progress
    toward juvenile salmonid production goals, habitat creation, returning
    adult spawners, and harvest.
        Additional Capability for fiscal year 2009.--Reclamation has the
    capability to use an additional $600,000 in fiscal year 2009 funds to
    fully obligate the channel rehabilitation construction contracts
    planned for the summer of fiscal year 2009, resulting in important new
    fishery habitat. Planning, design, and environmental compliance
    activities for the next set of channel rehabilitation projects
    scheduled for fiscal year 2010-2012, and related monitoring activities
    in fiscal year 2009 are adequately funded.
        Submission of this capability statement does not reflect
    departmental support. The Department does not support the addition of
    funds for any program or project that would result in the reduction of
    funding for other programs or projects in the President's budget.
        Problem Areas.--Earmarking of funds in the Restoration Fund could
    impact other programs and projects. Funding priorities of the
    Restoration Fund are established through a deliberative process,
    including stakeholder input that assesses the relative benefits and
    urgency of restoration and infrastructure projects that are competing
    for funds.
        Congressional Location and Representation.--State of California
        1st Congressional District.--Mike Thompson (D)
        2nd Congressional District.--Wally Herger (R)
        Senators.--Dianne Feinstein (D), Barbara Boxer (D)
        Congressional Members Requesting Additional Funding.--Senator
    Dianne Feinstein
                                  rural water
        Question. You funded only two rural water projects in your budget.
    Can you explain the rational for this?
        Answer. The fiscal year 2009 President's budget balances several
    priorities. This includes funding for ongoing construction projects
    such as rural water, while maintaining existing infrastructure and
    other ongoing priorities, all within the established budget targets.
    The President's budget includes $39 million for rural water projects;
    $26.2 million is allocated to the Mni Wiconi rural water system and
    $12.76 million is allocated to the Garrison rural water supply system.
        The criteria used for funding rural water projects give first
    priority to operation and maintenance of rural water systems. This
    priority is consistent with previously enacted Federal legislation and
    for the protection of the Federal investment. Once operation and
    maintenance needs are met, funds are allocated for rural water
    construction. For rural water construction, the criteria and number of
    considerations consist of two factors: (1) Percent of ongoing projects
    completed, and (2) projects serving tribal communities. These
    evaluation factors allow Reclamation to finish some of the ongoing
    rural water projects within the constrained budget in the near future.
        Question. Don't the Fort Peck/Dry Prairie and the Rocky Boys
    projects in Montana also have a Tribal component? What would it take to
    get them funded?
        Answer. Yes, both projects have tribal components. The Assiniboine
    and Sioux Tribes of the Fort Peck Reservation sponsor for the Fort Peck
    Reservation/Dry Prairie Rural Water System in northeast Montana. The
    Chippewa Cree Tribe of the Rocky Boys Reservation sponsors the Rocky
    Boys/North Central Regional Water System in north-central Montana.
        The outstanding costs for construction of the Fort Peck
    Reservation/Dry Prairie and the Rocky Boys/North Central projects are
    approximately $247 million and $314 million, respectively.
        Within the funding available, Reclamation focused on funding
    projects with greater percentage completion.
        Question. If I am understanding you correctly, these ongoing
    projects need to continue to have Congress add funds to them so that
    maybe they might eventually be far enough along that you might budget
    for them. Correct?
        Answer. The fiscal year 2009 President's budget balances several
    priorities including funding for ongoing construction projects such as
    rural water, while maintaining existing infrastructure and other
    ongoing priorities. Additionally, all projects are within the budget
    targets that have been established. There is no correlation between
    projects included in the President's budget and Congressional write-
    ins.
        Question. The Lewis and Clark rural water project has been funded
    for the previous 4 years, even in fiscal year 2007, when the
    administration prepared a spending plan under the continuing
    resolution. Why was this project not funded for fiscal year 2009? It
    certainly makes one wonder if there could have been a hint of politics
    in your decisionmaking process since Senator Johnson is up for
    reelection this year. I realize that this may just be a coincidence,
    but it does make one question the prevailing belief by some folks that
    all recommendations by the administration are merit-based or
    competitive allocations of funding but anything that Congress provides
    is self serving or tainted by political considerations.
        Answer. Given the need to work within the framework of today's
    budget realities, as well as the need to be attentive to priorities
    associated with existing water and power infrastructure throughout the
    West, Reclamation is unable to fund the needs of all of the ongoing
    rural water projects.
        Question. Will the MR&I funding amount that you proposed for the
    Garrison Diversion Unit provide for a useable increment of work on
    either the tribal or non-tribal systems?
        Answer. The funding amount would provide for some increment of work
    for both the State and tribal programs, particularly on smaller
    contract items. Sponsors of larger projects such as the Northwest Area
    Water Supply System, the Southwest Pipeline, and the Standing Rock
    Sioux Tribe's new intake and water treatment plant would likely have to
    find other sources of funding to cost-share construction.
        Question. How long would it take to complete the project at this
    funding rate?
        Answer. The State and the Tribal Municipal, Rural, and Industrial
    grant programs are programs rather than singular projects. Therefore,
    completion is equal to reaching the construction ceilings established
    in the Dakota Water Resources Act.
        Question. How much higher will the cost of the Garrison MR&I
    project be due to this drawn out schedule?
        Answer. The Garrison Tribal and State MR&I are grant programs
    consisting of numerous projects. It is difficult to predict the
    ultimate cost of each project since cost is a function of both funding
    levels and inflation of construction costs. We agree and fully
    understand that total construction costs increase as schedules are
    extended. As an example, the Dakota Water Resources Act increased the
    State MR&I grant program by $200 million in the year 2000. That indexed
    amount is now approximately $260 million.
                               water for america
        Question. We have had to carry language annually for the last
    several years for the granting program that was an integral part of
    Water 2025. Will we be required to carry similar language for the Water
    for America initiative?
        Answer. The Water for America Initiative is largely being
    undertaken within Reclamation's existing authority. Additional
    authority is only needed to provide grants under the Challenge Grant
    Program and the Water Conservation Field Services Program. Reclamation
    transmitted a legislative proposal to the Congress in August 2008. As
    an interim measure, the inclusion of annual authority in the fiscal
    year 2009 appropriations act to issue grants and cooperative agreements
    may be necessary.
                               san joaquin valley
        Question. If the San Joaquin River Restoration Fund legislation is
    not enacted in fiscal year 2009, how will those receipts be allocated
    within the Central Valley Project Restoration Fund?
        Answer. If the $7,500,000 in Friant surcharge receipts are included
    in the Central Valley Project Improvement Act Restoration Fund fiscal
    year 2009 appropriations, the Department would propose that Reclamation
    use the funds to continue on going San Joaquin River Settlement
    activities, within existing authorities.
                                   title xvi
        Question. The administration consistently says it is unable to
    support title XVI projects because of funding constraints. How do you
    justify this position on authorized programs and at the same time seek
    funding for unauthorized?
        Answer. Although Reclamation supports efforts to increase local
    water supplies through increased recycled water use, title XVI projects
    must compete with other needs within Reclamation for funding priority
    in the President's budget request. The budget request for $7 million in
    fiscal year 2009 for title XVI reflects a balance of competing
    priorities.
        Question. How much of a backlog currently exists in the title XVI
    Program?
        Answer. Of the 43 title XVI projects specifically authorized and 2
    demonstration projects undertaken through the general authority, 21
    projects are actively being pursued and 4 are complete. The Federal
    cost share for the active projects, after fiscal year 2008, is nearly
    $400 million. The Federal cost share for the 12 projects currently not
    being pursued is estimated at $260 million.
        Question. Of this program backlog, how much water could be
    generated if projects were constructed and operational?
        Answer. The maximum treatment and delivery capacity for the 21
    active title XVI projects is estimated at 640,000 acre-feet per year.
                            research and development
        Question. Do you believe that research and technology
    demonstrations are important to solve our water supply needs?
        Answer. For many years, the Bureau of Reclamation has funded
    internal and external collaborative research focused on improving our
    ability to provide water and power to the American public in a cost-
    effective and environmentally sound manner.
        This research has produced great returns on the investment by:
    reducing costs of maintaining Reclamation facilities; improving water
    management and delivery; making new supplies available and affordable;
    reducing water losses; increasing power generation; reducing
    environmental impacts; and increasing the safety of workers.
        Demonstrations are an important factor in gaining confidence in new
    tools and solutions. Water users and stakeholders often employ research
    and technology as a result of a successful demonstration. The Science
    and Technology Program have funded numerous successful demonstrations
    of research products, including: innovative coatings to prevent
    corrosion on spillway gates; new water supply prediction models;
    biocontrol of salt cedar; new methods to prevent fish entrainment; use
    of ballast filters to keep invasive mussels out of water supply
    systems; application of flow deflectors to prevent stilling-basin
    erosion; and biocontrol of aquatic weeds.
        The Desalination and Water Purification Research program has funded
    external research on advanced water treatment technologies for several
    years. Reclamation provides priorities for the research and technical
    review of research proposals. More than 140 research projects and
    reports have been completed and are available to the public, covering a
    wide range of research and technology development for treatment of
    saline and brackish waters.
        Some of these research studies have been expanded into
    demonstration projects that are of sufficient size to develop more
    accurate estimates of full-scale costs. This has been especially
    helpful when the technologies being demonstrated have been studied only
    in the laboratory or have had limited ``real-world'' testing. This
    demonstration testing has also provided time to identify potential
    institutional, economic, environmental, and social issues.
        Question. Should there be cost sharing requirements these R&D
    projects?
        Answer. Nearly all of the research that Reclamation funds involve
    cost-sharing or contributions from outside partners.
        The Science and Technology Program have partnership contributions
    totaling nearly $5.6 million for fiscal year 2008. This is almost a
    one-to-one match in funding. While cost sharing is encouraged for this
    research, it is not a requirement. This enables us to fund highly
    innovative and high risk research, a special focus of Federal research
    investment.
        Both the Desalination and Water Purification Research program
    (DWPR) and the title XVI program require cost sharing. These are
    programs that provide funding to external non-Reclamation organizations
    to carry out research. The cost share helps to show the commitment of
    the recipient and provides a higher probability that the recipient will
    apply the results. One important exemption is that the DWPR program
    exempts a yearly programmatic limit of $1,000,000 from cost share for
    universities. Without this exemption, it is very difficult for
    universities to find cost share either as cash or in-kind services.
        Question. Where do you think research should be focused?
        Answer. The S&T Program focuses on the challenge that face 21st
    century water managers, specifically issues that other agencies or the
    private sector are not already researching. These include problems
    related to water supply, water delivery, infrastructure maintenance,
    hydropower production, and decision support. Some research funding is
    reserved for emerging, high-priority issues, such as climate change and
    the spread of invasive mussels into western water systems.
    Desalination Research--National Academy of Science Review
        The National Academy of Science has released their report,
    ``Desalination: A National Perspective''. The 2 year study was funded
    by Reclamation's Research and Development Office and the Policy Program
    Services Office, along with the U.S. Environmental Protection Agency,
    to examine the state-of-the-art in advanced water treatment
    technologies and recommend priorities for Federal research.
        The review panel recommended that Federal research be focused upon
    the following:
      --Assess environmental impacts of desalination intake and concentrate
            on management approaches.
      --Develop improved intake methods at coastal facilities to minimize
            impingement of larger organisms and entrainment of smaller
            ones.
      --Assess the quantity and distribution of brackish water resources
            nationwide.
      --Analyze the human health impacts of boron while considering other
            sources of boron exposure, to expedite water-quality guidance
            for desalination process design.
      --Research configurations and applications for desalination to
            utilize waste heat.
      --Understand the impact of energy pricing on desalination technology
            over time.
        These recommendations are being used to prioritize future
    Reclamation investment in desalination research.
        Research at the new Brackish Groundwater National Desalination
    Research Facility is focused on solutions for concentrate management,
    renewable energy/desalination hybrids, development of small-scale
    desalination systems for rural communities, and technologies for
    treatment of produced waters.
        Desalination and water reuse research being carried out in
    partnership with the WateReuse Foundation is focused on the following
    priority areas: policy, social sciences, and institutional issues;
    microbiology and disinfection; chemistry and toxicology; and treatment
    technologies for water reuse and desalination.
                                  desalination
        Question. Can you update us on the status of National Brackish
    Groundwater National Desalination Research Facility? Have any research
    activities been initiated at the facility?
        Answer. The testing and shakedown of systems at the new Brackish
    Groundwater National Desalination Research Facility (BGNDRF) has been
    completed and research activities have begun. Studies are being carried
    out by Sandia National Laboratory on zero discharge desalination.
    Reclamation has been developing a test system and will soon begin
    testing on a new high flux membrane developed under an Office of Naval
    Research Grant. New Mexico State University is developing an improved
    electrodialysis process that will be moved to the BGNDRF for testing.
    The Bureau of Reclamation has been in contact with several
    organizations to discuss ideas for testing.
        A cooperative agreement has been developed with New Mexico State
    University to carry out desalination research at the facility,
    beginning at the start of fiscal year 2009. This provides $1,100,000 to
    carry out research at the BGNDRF, as well as, $2,200,000 for research,
    education, and training/outreach/technology transfer.
                               middle rio grande
        Question. We made changes to the collaborative program in the
    fiscal year 2008 Energy and Water Act, to provide for all of the
    organizations involved in the Middle Rio Grande to more effectively
    work together. Are these changes working as intended? Is there anything
    that can be done to make this program work more effectively?
        Answer. The fiscal year 2008 Energy and Water Act did several
    things for the collaborative program. While all of these changes were
    intended to benefit the program, the long term benefit to the program
    is not yet known. The Act officially established the Executive
    Committee. While lack of permanent authority has not hampered
    Reclamations ability to carry out program activities, explicit
    permanent authority would provide long term stability to the program.
        The Army Corps of Engineers also received their own funding stream
    in fiscal year 2008 for implementing the 2003 Biological opinion and
    the collaborative program long term plan. They still requested program
    support funding from the collaborative program in fiscal year 2008.
        The 15 percent cap on Reclamation's administrative expenses has
    been adhered to in a transparent manner. This no longer appears to be a
    divisive issue for non-Federal program members. The hiring of a new
    program manager and a renewed program focus on fiscal responsibility
    seems to have addressed this situation for the time being.
                                executive order
        Question. I am sure you have looked at the President's Executive
    order (EO) on earmarks. Have you made any determination as to how you
    will comply with this in fiscal year 2009?
        Answer. The Department has made a determination as to how it will
    comply with the Executive order, which is based on direction issued by
    the Office of Management and Budget. OMB guidance provides direction
    relative to operations under the Continuing Resolution for 2009 that we
    are complying with.
        Question. The Executive order indicates that any funding directed
    by Congress is an earmark, but by definition, the President can propose
    the exact same thing and it is not. This is absurd. If we provide
    funding for an authorized project and the administration proposes
    funding for an authorized project, how are the two different?
        Answer. The Executive order identifies the difference in the
    following definition: earmarks are funds provided by the Congress for
    projects, programs, or grants where the congressional direction
    circumvents otherwise applicable merit-based or competitive allocation
    processes, or specifies the location or recipient, or otherwise
    curtails the ability of the executive branch to manage its
    responsibilities pertaining to the funds allocation process. The U.S.
    Supreme Court has made it clear that committee reports and other
    legislative history materials do not bind executive agencies.
        Question. The Executive order appears to have a major impact on how
    we appropriate funding to your agency. If we have to put all of the
    projects in bill language in order to ensure that you comply with
    congressional direction, we will. How will that impact the way you
    execute your fiscal year 2009 program?
        Answer. Based on the Executive order, earmarks that are in law can
    be funded. Earmarks that are not in statute may not be funded unless
    the decision to fund them is based on authorized, transparent,
    statutory criteria and merit-based decisionmaking and to the extent
    consistent with applicable law.
        Question. Can you describe the merit-based or competitive
    allocation process that you use to determine which projects are
    proposed for funding in the budget request?
        Answer. Our process begins at the regional level with a merit-
    based, competitive evaluation of projects for funding. The bureau sets
    priorities among the regional requests in order to submit a budget
    request to the Department. At the Department, the bureau's request
    competes with and is prioritized along with the other bureau budgets
    for development of a request that is submitted to the Office of
    Management and Budget. OMB conducts an evaluation and prioritization
    across the Government that leads to the development of the President's
    budget.
        Question. This is somewhat rhetorical, but why is this process
    anymore transparent than how the Congress prepares an appropriation
    bill? Is there public input into your decisions?
        Answer. As part of its Managing for Excellence initiative, the
    Bureau of Reclamation has established a policy on collaboration with
    customers and stakeholders to identify and provide opportunities for
    effective participation, where appropriate, to meet its mission.
    Reclamation meets with customers and stakeholders to develop and foster
    a participative relationship and to provide quality service. The degree
    of collaboration is largely dependent upon the complexity of the issue
    being addressed. Reclamation initiates collaboration at the earliest
    stage possible; and shares information with customers and stakeholders
    prior to key decisions being made.
                                animas-la plata
        Question. What is the status of the Animas-La Plata project? When
    do you anticipate construction to be complete?
        Answer. As of June 2008, the overall project was 62 percent
    complete. Construction work on 3 of the project's primary features;
    Ridges Basin Dam, Durango Pumping Plant, and Ridges Basin Inlet
    Conduit, is progressing well and is approximately 96 percent complete.
    Work is proceeding according to schedule with the mitigation area
    lands, including improvements being transferred into operation and
    maintenance status in October 2008. Progress on the Navajo Municipal
    Pipeline includes award of the first construction contract for
    Horizontal Directional Drilling, achieving a preliminary settlement on
    the construction of the first 7 out of 29 miles of pipeline, and
    nearing design completion on the city of Farmington Reach. Construction
    is expected to be completed in 2012.
                              yuma desalting plant
        Question. We have provided direction for the last several years
    that the Yuma Desalting Plant should be maintained and demonstrated to
    be operated at one-third capacity. What is the status of the plant?
    Will we be able to get to one-third capacity this year?
        Answer. To date, the United States has met salinity requirements,
    established in Minute 242 of the 1944 U.S.-Mexico Water Treaty of 1944
    (Treaty) with Mexico, through bypassing 108,000 acre-feet of saline
    agricultural return flows. Due to the need for more operating
    information about the Yuma Desalting Plant (YDP) and the on-going
    drought in the Southwest, Colorado River water users in the Lower Basin
    and Reclamation began discussing a jointly funded pilot run of the YDP.
    A 90-day demonstration run was completed in 2007, which provided some
    operational information to assist in planning for future operations.
    This jointly funded pilot run is for longer duration and would provide
    additional operating information needed to ascertain future plant
    operation needs and costs.
        The maximum anticipated cost of the run, including preparing the
    plant to operate, is estimated to be at $23 million. Funding partners
    include the Metropolitan Water District of Southern California,
    Southern Nevada Water Authority, and Central Arizona Water Conservation
    District. In return for funding, the partners would receive a share of
    the water produced.
        Preparations are underway for the pilot run of the YDP. The run is
    scheduled in the summer of 2009. Preparations for plant operations fall
    into three major categories: (1) readying the plant, (2) meeting
    appropriate compliance and regulatory requirements, and (3) preparing a
    funding agreement. Plant equipment is currently being inspected,
    tested, and repaired, with costs estimated at $2.6 million. These
    repairs will be completed in order to conduct the run (e.g.,
    replacement of selected piping segments and the upgrade of chlorination
    and ammonia systems).
        For the pilot run, the YDP would operate for about 12 months,
    producing an estimated quantity of 30,000 acre-feet of water.
    Operations are currently anticipated to include 1 month to stabilize
    pretreatment, 2 weeks at 10 percent of full capacity, 2 weeks at 20
    percent of full capacity, and 10 months at 33 percent of full capacity.
                                 loan guarantee
        Question. I have noticed in your budget that you are providing $1
    million to initiate implementation of the Loan Guarantee Program for
    rural water projects. As more than half of your projects are more than
    50 years old, I expect that this program has raised considerable
    interest in the West. How do you envision this program working?
        Answer. Reclamation is in the process of developing and publishing
    rules for implementation of the program. The law provides for three
    categories of projects: (a) rural water supply projects, (b) repair and
    rehabilitation of Reclamation facilities, and (c) improvements to water
    infrastructure directly related to Reclamation projects.
        Reclamation's budget request for fiscal year 2008 considered only
    category (b) projects, and was intended as a pilot year for the
    program. However, because the final rule has not been published yet, we
    expect to use the fiscal year 2008 budget request to accomplish
    necessary program outreach efforts as well as provide training for
    agency personnel in fiscal year 2009. In addition, we anticipate
    initiating a few pilot projects in fiscal year 2010. Following
    development of detailed eligibility criteria for category (a) projects,
    Reclamation's future appropriation request will include funding for
    these rural water supply projects as well.
        Generally, the steps involved in issuing loan guarantees will be as
    follows: (1) Reclamation will estimate the need and potential requests
    of eligible projects as identified in the statute, and make
    appropriations requests accordingly; (2) Reclamation will determine if
    a borrower's proposed project can be considered under the criteria
    given in the statute and the rules being developed; (3) Borrowers will
    apply for a loan from a lending institution; (4) The lender will
    determine whether the borrower meets its risk criteria; (5) Once the
    lender approves the application, the borrower and lender will meet with
    Reclamation to request consideration for a loan guarantee; (6)
    Reclamation will review the application based on prioritization
    criteria to be identified in the rules, as well as availability of
    appropriations, and approve or deny the request; (7) Following
    approval, and completion of all other requirements, such as
    environmental compliance, permits, etc. a final notice of guarantee
    will be issued to the lender and the loan funds will be disbursed.
        Question. What will be the eligibility criteria?
        Answer. Eligibility criteria are being developed through the formal
    rulemaking process, and will include factors such as financial
    capability for repayment, engineering need and feasibility, historical
    diligence in performing routine O&M, environmental impacts, and
    efficiency opportunities.
        Question. Will this solve the recapitalization problems for many of
    the older projects in the West?
        Answer. The loan guarantee program will not likely solve all of the
    recapitalization problems of older projects in the West, but it will be
    a valuable tool to assist in meeting this challenge.
                                     ______

                  Questions Submitted by Senator Patty Murray
                          odessa subarea special study
        Question. I am pleased to see that the Odessa Subarea Special Study
    is progressing on schedule and that the Bureau last month released the
    ``Appraisal-Level Investigation--Summary of Findings'' report. It is my
    understanding that this report identified the water supply and delivery
    alternatives that have been selected for further study. And I was happy
    to see that the President's budget included funding for this important
    study.
        Now that you have narrowed down the alternatives to be studied, can
    you please tell me how this better understanding of what remains to be
    done will shape your timeline?
        It is my understanding that now that the path forward has become
    more clear, an increase in the annual funding level will be needed to
    make sure that the study is completed in a timely fashion. Can we
    expect to see future requests from the Bureau to reflect this?
        Answer. An expedited study schedule has been developed at the
    request of the State of Washington to respond to commitments it has
    made to constituents to seek a solution as quickly as possible to
    address the urgency of the declining Odessa Ground Water Aquifer.
    Reclamation plans to complete feasibility-level engineering
    investigations; economic analyses; environmental compliance activities,
    including requirements for National Environmental Policy Act
    requirements under the expedited study schedule Reclamation would
    prepare a combined planning report and final environmental impact
    statement by the end of fiscal year 2011.
        Given the current budget climate it will be difficult to fund the
    study at the level needed to complete on schedule (fiscal year 2011).
    The State of Washington has been Reclamation's Study partner and has
    provided substantial funding to date for the Study which is one of its
    highest priorities in the Columbia River Basin.
            columbia basin project, potholes supplemental feed route
        Question. As you know, the Columbia Basin Project is an important
    tool for farmers in my home State of Washington. And securing a
    reliable water supply for the Potholes Reservoir is a key element to
    ensure efficient operation of the Project. I worked with my colleagues
    to include funding for the Potholes Reservoir Supplemental Feed Route
    in the fiscal year 2008 appropriations bill.
        Can you please tell me how the Bureau is currently working to carry
    out its efforts on the Supplemental Feed Route and how this fits into
    your larger list of priorities at the Project?
        Answer. The Columbia Basin Project is designed to collect return
    flows in Potholes Reservoir from irrigation in the northern half of the
    project for delivery to the southern half. Return flows do not provide
    all the water for the southern half and have to be augmented by direct
    feed from water pumped from the Columbia River at Grand Coulee Dam. The
    feed route, developed in 1980, has served well but is strained due to
    increased demand and water conservation measures that reduced returns.
    Reclamation completed a study funded by the State of Washington to
    evaluate and select a supplemental route that could supply one quarter
    of the yearly average feed need.
        With the completion of the study, the State provided funds to
    enlarge a road crossing on the Frenchman Hills Wasteway. This work was
    completed in March 2008 and will provide a supplemental feed capacity
    of approximately 25,000 acre/feet when land acquisition is completed.
    On the Crab Creek portion of the supplemental feed route, the State is
    providing funds to study sedimentation into Moses Lake. This study is
    underway and will be completed next year.
        Fiscal year 2008 funds are being used to begin the purchase of land
    rights and to design and develop specifications for several
    improvements needed to implement the supplemental route. Improvements
    include: an outlet structure on Pinto Dam and Brook Lake, Grant County
    Road 16 crossing on Crab Creek, and conceptual designs for various
    wildlife enhancements structures along the creek
        Given the current budget climate we have been unable to provide
    funding to this effort. Fortunately, the State as part of their
    Columbia River Water Management Program has been able to make
    significant contributions to assist in this effort.

                              SUBCOMMITTEE RECESS

        Senator Dorgan. The hearing is recessed.
        [Whereupon, at 11:08 a.m., Thursday, April 10, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2009

                                  ----------

                           WEDNESDAY, APRIL 16, 2008

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 1:58 p.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Byron L. Dorgan (chairman)
    presiding.
        Present: Senators Dorgan, Feinstein, Reed, Domenici,
    Bennett, Craig, and Allard.

                              DEPARTMENT OF ENERGY

                    National Nuclear Security Administration

    STATEMENT OF THE HON. THOMAS P. D'AGOSTINO,
                ADMINISTRATOR
    ACCOMPANIED BY:
            ADMIRAL KIRK DONALD, DEPUTY ADMINISTRATOR FOR NAVAL REACTORS
            MAJOR GENERAL BOB SMOLEN, DEPUTY ADMINISTRATOR FOR DEFENSE
                PROGRAMS

                  OPENING STATEMENT OF SENATOR BYRON L. DORGAN

        Senator Dorgan. We're going to call the hearing to order.
    We appreciate, very much, all of you being here, and especially
    to our witnesses, we're pleased that you've joined us.
        We're starting a couple of minutes early, we will have a
    vote that starts at 2:15 in the Senate, so the committee
    members will leave here probably at 2:20, we'll go vote, and
    come back. So, we will have a brief interruption, for which we
    apologize.
        We are here to take testimony from the National Nuclear
    Security Administration (NNSA) on the fiscal year 2009 budget
    request of three NNSA programs--weapons activities, naval
    reactors and the Office of the Administrator. We'll cover the
    budget request of the Defense Nuclear Nonproliferation Program
    in a separate hearing in 2 weeks' time.
        Today we have two panels. Administrator Tom D'Agostino will
    be our witness on the first panel. He will be joined by Admiral
    Donald--the Deputy Administrator for Naval Reactors, and by
    General Smolen, Deputy Administrator for the Defense Programs,
    to help respond to questions.
        Our second panel will consist of the three National Weapons
    Laboratory Directors--Dr. Mike Anastasio of Los Alamos, Dr.
    George Miller of Lawrence Livermore, and Dr. Tom Hunter of
    Sandia.
        The three Directors play an important role in the
    stewardship and the certification of our nuclear weapons
    stockpile, and I appreciate them being willing to respond to
    our request to come to Washington.
        The total NNSA budget request for fiscal year 2009 is
    nearly $9.1 billion, by far the largest program in the
    Department of Energy, making up about 36 percent of the
    Department of Energy's budget.
        Within that budget request, $6.6 billion is for weapons
    activities, $1.2 billion for nuclear non-proliferation
    programs, $828 million for naval reactors and $404 million for
    the Office of the Administrator.
        The naval reactors budget seeks $47 million above fiscal
    year 2008 enacted level, the primary driver of that is to
    support work in Idaho on naval spent nuclear fuel. The reactors
    program is highly respected, rarely draws much attention from
    the Congress or the public, and in many ways, that's a very
    good thing. And Admiral Donald, I commend you and your
    organization for your work, and appreciate your being here
    today.
        The Weapons Activity Programs stand in contrast to the
    Naval Reactors Program in both size, and also in the sense that
    it does draw a significant amount of attention from the
    Congress, and from the public. Given the program's focus on the
    safety, security and reliability of our nuclear weapons, that's
    a good thing. In fact, I would say Congress and the American
    people should continue to pay an even greater amount of
    attention to issues that surround nuclear weapons.
        The $6.6 billion budget for weapons activities represent
    the single largest program in this Energy and Water bill. It's
    larger than the investments in the Corps of Engineers, for
    example, the Office of Science, or the funding to clean up the
    former nuclear weapons complex.
        The $6.6 billion weapons activities request in the
    President's budget is $321 million above the fiscal year 2008
    enacted level. That is the largest proposed increase, other
    than the Office of Science.
        A small, but telling, illustration is that the Department's
    budget proposes to cut $200 million from the effort to clean up
    the former nuclear weapons complex that created the special
    nuclear material in our current stockpile. That means this
    Department will unfortunately fail to meet regulatory
    milestones to clean up radioactive-contaminated waste. We had a
    hearing about that recently.
        Yet, in the same budget, the administration creates a new
    account to fund $77 million for the NNSA to tear down non-
    contaminated buildings. And I can support the efforts to tear
    down unneeded buildings, but it's clear the administration is
    prioritizing that budget by failing to meet its legal
    obligations in the other area, on which we've held a hearing
    just recently.
        I mentioned that the Weapons Activity Program attracts
    public attention. Two areas that I want to mention are the
    Complex Transformation and the Reliable Replacement Warhead
    (RRW). NNSA currently has its Complex Transformation-preferred
    alternative out for public comment. I commend NNSA for holding
    numerous public meetings on the plan, and for extending the
    written comment period. That makes a lot of sense to me.
        Two basic comments I hear from people are that the Complex
    Transformation-preferred alternative fails to close any site-
    through consolidation, and that significant investment in
    infrastructure are being proposed that may or may not be
    needed. I hope we can explore some of those areas in
    questioning today.
        The other NNSA issue that draws considerable attention is
    the proposed Reliable Replacement Warhead. The premise behind
    RRW is that we can produce a new nuclear weapon that is, in
    many cases, smaller, safer, reliable, and less costly than the
    current stockpile. I understand that premise, but I do have
    some significant concerns about a program that is not set in a
    construct of an overall strategic defense policy, analyzing the
    impact of such a program on our international nuclear non-
    proliferation efforts.
        Last year, the Armed Services Committee, through the
    leadership of Congresswoman Tauser, in the House, created the
    Congressional Commission on Strategic Posture of the United
    States. This is a congressionally appointed panel to review the
    role of nuclear weapons in our national strategic defense.
        This subcommittee supported that effort, and also called on
    the administration to submit a comprehensive nuclear weapons
    strategy for the 21st century. The idea behind both of these
    directives is that we need to understand the role nuclear
    weapons will play in our country's future, and develop a
    national policy that is reflective of that understanding.
        The RRW, I believe, skips that step. If the RRW is pursued
    without such a broad policy review, it will have the de facto
    effect of creating that national policy.
        For that reason, I supported, ultimately, in conference,
    zeroing out the funding request for the RRW in fiscal year
    2008. Furthermore, it's not my intention to fund the
    administration's $10 million request for RRW in the fiscal year
    2009. I believe we must wait for the work of the
    congressionally appointed panel and the next administration's
    Nuclear Posture Review before we move forward with a program
    that has such significant national and international policy
    implications.
        Having said that, I want to make another comment, as well.
    In addition to recommending that we not fund, in my chairman's
    mark, the $10 million, I believe very strongly that we need to
    retain our critical skills at our national laboratories. They
    are a national treasure for a lot of reasons, but especially
    those that are engaged in programs dealing with safeguarding
    our--and making certain that--our stockpile is certifiable and
    reliable. It's very important that we retain the key personnel
    and not have our national laboratories losing the kind of
    strength--intellectual strength--that I fear would happen if we
    don't adequately fund them. The question isn't whether we
    should fund them; I believe I would join my colleague from New
    Mexico in feeling very strongly that we want to have a strong
    funding base for our national laboratories. But, I exclude from
    that, at this point, the specific funding for a program called
    RRW until other conditions are met. And they may or may not be
    met in the future.
        I want to make one additional comment, and that is, Senator
    Domenici has served on this panel for a long, long, long time,
    as chairman and ranking member, and he has been tireless in his
    efforts to promote a good number of public policies that have
    become law and have advanced the interests of this country. We
    agree on many things, disagree on a few things here and there,
    but it's been a pleasure to work with him, and this will be his
    last spring--I was going to say spring cleaning, but that
    wouldn't be the case----
        Senator Dorgan. This will be his last set of spring
    hearings that we hold for the agencies under our jurisdiction.
    And I did want to take the opportunity to say to Senator
    Domenici how much I appreciate working with him, and let me
    call on him for an opening statement.

                 OPENING STATEMENT OF SENATOR PETE V. DOMENICI

        Senator Domenici. Thank you very much, Mr. Chairman. As the
    time grows near for this terminating date, I find that there is
    more and more business that I see out--that we haven't
    finished. But I have kind of concluded that that's the way it's
    going to be any time in my life, so this is as good a time as
    any to leave it to somebody else after January or February of
    this coming year. However, there are a number of things we
    ought to try to get done.
        I'm sorry that we don't agree on the RRW, because it seems
    to me that we've made this too complicated. The truth of the
    matter is you look out in the world and, you know, in Europe,
    England, Russia, the United States--we're the countries with
    big nuclear arsenals. And all of them, except us, have already
    done their RRW, or are heavily engaged in it. They have new
    weapons, new structures, new weapons, new weapons systems. Many
    of them are already being done for 30 and 40 year out--that
    they'll be good for 30 or 40 years--meaning, to me, that they
    have already have accomplished what we might have accomplished
    with an early-on RRW.
        But, we'll get there, and in due course, the things that
    were included in it that we were going to try to do, we've got
    to hope, very much, that they will get done. Because, what we
    were talking about was not more weapons, but less. We weren't
    talking about bigger weapons, but rather smaller ones, we were
    talking about weapons that are safer, in all respects. That's
    what RRW would have done had it proceeded. That's why I say, it
    will get done, whether it's RRW or another way, let's hope, but
    within the next 3 or 4 years, we'll see our way clear to do
    that.
        Senator, I very much appreciated your opening remarks. I
    think you're going to be--this subcommittee is kind of one that
    most people didn't pay attention to for a long time. I think
    the fact that we will get you as chairman, coming from outside
    of the domain of the laboratories, I think you will bring some
    Senators into the web of trying to listen and understand the
    importance of this subcommittee. I felt, many times, that too
    few Senators cared very much about what was going on in this
    subcommittee.
        I recall, for the lab directors, when we started--now it
    seems like it should just be yesterday, but it was a long time
    ago--when we started Science-based Stockpile Stewardship. I
    told you all in New Mexico many times that I regretted that,
    when we made the change and started moving in that direction
    rapidly, and funding it, and doing the things we ought to do,
    that I found myself on the floor of the Senate with, literally,
    no one paying attention, nobody challenging the work we had
    done, and no votes occurring. We produced the bill, many times,
    without a single vote on the floor, Senator. And it was Harry
    Reid and I, and we'd go down there, and sometimes Harry would
    have to go somewhere, and I'd be alone, and we'd pass the bill.
    And we're now finding that the issues are very important
    issues, and a lot more people ought to be involved one way or
    another. I hope you can get them involved, because that will
    make for it being better for everybody.
        The past 15 years we have accomplished quite a bit in
    adapting to the 21st century security demands, and making much
    scientific investments in the laboratories. Critics of the
    weapons program have claimed that nothing has changed, that we
    have not moved beyond the cold war. It couldn't be more wrong.
        From my vantage point, a lot has changed. In 1992, the Bush
    administration initiated a moratorium on nuclear testing, after
    Congress voted, the administration implemented it, and it still
    holds today. In response, Congress and the Clinton
    administration worked in a bipartisan manner to establish a
    Science-based Stockpile Stewardship I just alluded to it. I'm
    proud to say that we accomplished our goals, and in the
    process, made the United States the world leader in high-
    performance computing--just an incidental item--but it was
    caused by Science-based Stockpile Stewardship's requirements,
    which drove and made demands upon the industry, and they
    produced.
        In terms of weapons policy, there's been a considerable
    shift. In 2004, President Bush set a goal of cutting nuclear
    stockpile in half by 2012. With support from Congress in
    dismantling efforts, that goal was met in 2007, 5 years early.
    Having reached that target, the President ordered an additional
    15 percent cut.
        Today we have the smallest deployed stockpile since the
    Eisenhower administration, and we are on-schedule to meet the
    arms reduction laid out by the Moscow Treaty in 2002, by the
    Bush administration.
        Recognizing that the cold war is over, the administration
    has also reduced the role of nuclear weapons in our strategic
    defense, consistent with the Nuclear Posture Review of 2001. I
    support the premise that we can make even further reductions in
    our stockpile, by maintaining our scientific expertise, with
    the right production capabilities to reverse course, if
    necessary. We did not need to keep a large number of warheads--
    we don't need to keep a large number in reserve.
        I also believe that so long as we must maintain our
    stockpile, we must make every effort to deploy the safest, most
    secure technology possible. In terms of production and
    handling, we should also work to eliminate hazardous material
    that possesses significant threats to our workers and to our
    environment.
        Nobody can predict how long we will need a stockpile. So
    long as we have nuclear weapons, we must manage them and the
    weapons complex responsibly. We must continue to look for ways
    to do things better, to stop doing things so we--make us
    irresponsible.
        Mr. Chairman, this budget provides a modest amount of
    funding--$10 million--for the RRW design. I've stated most of
    what I would want to say, and you have most of what you would
    say. The requested funds would pay for an analysis, not weapons
    production. I support completion of the study as soon as
    possible, to provide policy makers with the facts needed to
    make an informed decision regarding our nuclear deterrent, but
    I understand your position, and I have not yet decided whether
    I would challenge you with a vote on the floor. Perhaps after
    you have done it, we'll talk a little, and maybe I wouldn't do
    that. But at this point I feel rather strongly about it, and
    sorry that we could not reach agreement.
        As I said, France, Russia, the United Kingdom., and China--
    I didn't say before--are all in continual process of replacing
    and updating their weapons, investing in new infrastructure,
    and facilities that will operate through the middle of the
    century--I indicated that a while ago--even as our U.S.
    stockpile continues to decrease.
        I'd like to close with a comment from the--on the NNSA
    complex, the transformation effort. I have sent formal comments
    to NNSA regarding their transformation proposal. While I will
    spare the subcommittee any full review, I believe the proposal
    misses the mark on science investment for the laboratories, and
    lack of investment in high-performance computing at Sandia
    National Laboratories. This is a capability that cannot be
    taken for granted.
        I'm extraordinarily proud of what the labs and their staff
    have done in support of the United States national security
    mission, beginning with the Manhattan Project, the cold war,
    the international threat and the reduction efforts, the
    Science-based Stockpile Stewardship Program--the labs have
    always provided answers to the toughest questions facing our
    Nation, and will continue.
        In my final year, I will push NNSA to better define its
    scientific mission, and develop a strategy for investment in
    scientific excellence. Science and engineering is the lifeblood
    of the laboratories, and serves as our best recruiting tool to
    attract world-class scientists to support our national security
    needs.
        Mr. Chairman, I appreciate your providing the laboratory
    directors this opportunity. It's a rare occasion that we would
    have all three before us, and I thank you for making it happen.
        Thank you.
        Senator Dorgan. Senator Domenici, thank you very much.
        Senator Craig has agreed to waive his opening statement,
    Senator, I appreciate that very much. A vote will start
    momentarily, and we will have to recess in about 10 minutes.
        So, what I would like to do, is ask Administrator
    D'Agostino to make his statement, and then we will see whether
    we get to questions. We'll have a brief recess and come back
    and finish the hearing.
        Administrator D'Agostino, let me say that we appreciate
    your work, we know you've assumed the reins in a very
    challenging time, we appreciate the work of Admiral Donald and
    General Smolen, and appreciate your being here. You may
    proceed.

                     STATEMENT OF HON. THOMAS P. D'AGOSTINO

        Mr. D'Agostino. Thank you, Mr. Chairman. I appreciate being
    here, Senator Domenici, Senator Craig, as well. I appreciate
    the opportunity to discuss the President's fiscal year 2009
    budget request for the NNSA and your active commitment and
    engagement in our program itself.
        We have a number of fundamental national security
    responsibilities for the United States, and I'm here to discuss
    the NNSA overall mission. I'm pleased to have with me, as
    you've noted, Deputy Administrator Admiral Kirk Donald, and
    Major General Bob Smolen for Defense Programs, and particularly
    pleased that the lab directors are here. As you know, it's been
    many years since they've had an opportunity to testify, and I
    think having the lab directors--provide them an opportunity to
    talk about something so important as our stockpile, is an
    opportunity that Members of Congress ought to get firsthand.
    So, I appreciate, sir, you calling them here.
        NNSA is examining how to proceed, which addresses evolving
    national security needs in a manner that anticipates
    significant changes in the future, in how we manage our
    national security programs, our physical assets, and our
    people. The fiscal year 2009 request will go a long way towards
    making significant progress in many areas of focus, including
    those that we have embarked upon already in 2008.
        We anticipate that our request of $9.1 billion will enable
    us to accomplish the following: First, begin the process of
    changing from a cold war nuclear weapons complex, to a 21st
    century national security enterprise, which includes shrinking
    the size of the nuclear weapons complex, and consolidating
    special nuclear materials at fewer sites, increasing funding
    for critical facilities that are needed to support a nuclear
    deterrent, including funding for a chemistry and metallurgy
    research replacement facility, increasing funding for cyber-
    security by 22 percent over the amount provided in 2008,
    improving cost savings associated with supply chain
    management--building upon the already $5 million of savings
    we've documented in 2007, we anticipate having those savings
    multiply to about $30 million in 2008, and envision taking cost
    savings even further in 2009.
        Second, this program will further advance nuclear non-
    proliferation and radiological terrorism and activities to
    counter nuclear terrorism, including continuing our planned
    increases in budget requests for non-proliferation activities,
    which build upon the doubling of spending for these efforts,
    since September 11, 2001; increased funding for nuclear
    counterterrorism activities by 40 percent over the amount
    provided in 2008; increasing spending by 14 percent to secure
    highly-enriched uranium and other radiological materials, as
    part of a global threat reduction initiative; and, continue and
    completing activities under Bratislava Agreement with the
    Government of Russia.
        Third, this program will secure and maintain an aging
    stockpile, including continuing our defense programs ``Getting
    the Job Done'' initiative, by staying focused on deliverables
    to the Defense Department; increasing the number of weapons
    dismantlements by 26 percent over the number of dismantlements
    in 2007; and, addressing current and anticipated challenges
    associated with certifying the stockpile, without requiring
    underground testing.
        Fourth, ensuring the safety and reliability of the 103
    operating naval nuclear propulsion plants, and continuing
    development work on nuclear propulsion technology to support
    required capabilities, as well as meeting future threats to
    U.S. security.
        And finally, expanding our technical excellence, while
    developing the next generation of national security scientific
    and engineering talent. This effort is especially important to
    our weapons laboratories, and will require us to make important
    decisions to invest in certain programs and capabilities, and
    ensure our labs are run efficiently.
        We seek to reduce the overall size of the nuclear weapons
    complex, and we believe it will allow for an increased focus in
    the areas of non-proliferation, nuclear counterterrorism,
    nuclear forensics, and support to the intelligence community.
        Before concluding and taking your questions, I want to
    briefly mention a few items. As you know, nuclear weapons
    remain a cornerstone of our Nation's strategic defense posture,
    even as we continue to reduce the size of the stockpile. I'm
    pleased to acknowledge that, a few weeks ago, the Defense
    Department and Department of Energy submitted to Congress a
    classified white paper on the future of the nuclear weapons
    stockpile. While our current stockpile remains safe, secure and
    reliable, the supporting infrastructure has aged, with many of
    our facilities well over 50 years old. Maintaining the current
    infrastructure is not an option--it is too old, it is too
    expensive, it is too big, and it does not address all of our
    national security needs. Addressing these issues is possible,
    and can be accomplished with relatively flat budgets over the
    next 10 to 15 years.
        In addition, this administration is driven by the Defense
    Department and the combatant commanders belief that the effort
    to study replacement concepts is important to the long-term
    assurance of the stockpile. We believe this is a key ingredient
    towards reducing the size of the stockpile beyond already the
    50 percent reduction we have accomplished since 2001, and the
    further 15 percent reduction ordered by the President,
    President Bush, in December of last year.
        Finally, our ability to effectively dispose of plutonium
    metals and materials coming out of our increased dismantling
    programs, and our work to consolidate materials, is critical to
    the effort to reduce the worldwide nuclear danger. This is
    viewed by the administration as a critical national security
    non-proliferation program. Just as the global threat reduction
    program seeks to repatriate secure, highly-enriched uranium
    from around the world and convert that material into beneficial
    energy use, so does the plutonium disposition program seek to
    eliminate excess plutonium with the added benefit of energy
    production.
        We're working to comply with the direction given in the
    Fiscal Year 2008 Consolidated Appropriations Act, while
    preserving our vital national security mission focus.

                               PREPARED STATEMENT

        Thank you, Mr. Chairman, I look forward to working with you
    and members of the committee on these programs, and answering
    your questions.
        [The statement follows:]
                Prepared Statement of Hon. Thomas P. D'Agostino
        Thank you for the opportunity to discuss the President's fiscal
    year 2009 Budget Request for the National Nuclear Security
    Administration (NNSA). I want to thank all of the members for their
    strong support for our vital national security missions.
        In the 8th year of this administration, with the support of
    Congress, NNSA has achieved a level of stability that is required for
    accomplishing our long-term missions. Our fundamental national security
    responsibilities for the United States include:
      --assuring the safety, security and reliability of the U.S. nuclear
            weapons stockpile while at the same time considering options
            for transforming the stockpile and the complex infrastructure
            that supports it;
      --reducing the threat posed by proliferation of nuclear weapons,
            material and expertise; and
      --providing reliable and safe nuclear reactor propulsion systems for
            the U.S. Navy.
        NNSA is examining how to proceed into the future to address
    evolving national security needs in a manner that anticipates
    significant changes in how we manage our national security programs,
    our assets and our people. To that end, the fiscal year 2009 budget
    request for $9.1 billion, a decrease of $35 million from the fiscal
    year 2008 Consolidated Appropriations Act, supports NNSA's crucial
    national security mission.
        The fiscal year 2009 request will go a long way toward making
    significant progress in many areas of focus, including those that we
    have embarked upon in fiscal year 2008. NNSA anticipates that this
    request will enable the accomplishment of the following results:
      --moving from a nuclear weapons complex to an integrated national
            security enterprise, including:
        --making decisions regarding transformation of the nuclear weapons
                complex based on the analyses in the Complex Transformation
                Supplemental Programmatic Environmental Impact Statement
                this year;
        --shrinking the size of the nuclear weapons complex and
                consolidating special nuclear material at fewer sites;
        --increasing funding for critical facilities, including an increase
                in funding for the preliminary design of the Uranium
                Processing Facility and Chemistry and Metallurgy Research
                Replacement facility over the amount provided in fiscal
                year 2007;
        --increasing funding for cyber security by 22 percent over the
                amount provided in fiscal year 2007; and
        --improving cost-savings associated with supply chain management,
                building upon nearly $5 million in savings in fiscal year
                2007.
      --advancing nuclear nonproliferation and countering nuclear and
            radiological terrorism, including:
        --increasing the amount of funds provided directly to NNSA
                nonproliferation activities by 7 percent over the funding
                amount provided in fiscal year 2007 (not including the
                Mixed Oxide (MOX) Fuel Fabrication Facility);
        --increasing funding provided to nuclear counter terrorism
                activities by 40 percent over the amount provided in fiscal
                year 2007;
        --increasing the rate at which Highly Enriched Uranium and other
                radiological and source materials are secured as part of
                the Global Threat Reduction Initiative (GTRI) program by 14
                percent; and
        --and continuing and completing activities under the Bratislava
                agreement with the Government of Russia.
      --securing and maintaining an aging stockpile, including:
        --continuing our Defense Program's ``Getting the Job Done''
                initiative by staying focused on delivering products to
                Department of Defense in a timely and cost-efficient
                manner;
        --increasing the number of weapon dismantlements by 26 percent over
                the number of weapons dismantled in fiscal year 2007; and
        --addressing current and anticipated challenges associated with
                certifying the stockpile without requiring underground
                testing.
      ----expanding our technical excellence while developing the next
            generation of national security scientific, engineering and
            program management talent, including:
        --developing an expanded vision of the future role of our national
                laboratories in supporting NNSA's national security
                mission; and
        ----expanding NNSA's efforts in nuclear nonproliferation,
                counterterrorism, forensics, and support to the
                intelligence community.
        Our testimony today will focus on the Weapons Activities, Naval
    Reactors, and Office of the Administrator accounts.
                          weapons activities overview
        Nuclear weapons remain a cornerstone of our Nation's strategic
    defense posture and will likely remain so throughout this century, even
    as we continue to reduce the size of our stockpile. Our nuclear
    deterrent stockpile remains safe, secure and reliable. The supporting
    infrastructure, however, is aged--many of our critical facilities are
    over 50 years old. Stockpile Stewardship is working and has been
    successful to date at finding and remedying the technical challenges
    facing our aging stockpile. Additionally, we continue to reduce the
    size of the stockpile to meet the President's mandate to have the
    smallest nuclear stockpile consistent with our national security
    objectives. As a result, today the stockpile is half of what it was in
    2001, and by 2012, the United States will have the smallest stockpile
    since the 1950s. Additional reductions in the stockpile are possible,
    but these reductions will require changes to the weapons complex and
    the composition of the stockpile.
        Our national security enterprise is a national asset and our
    weapons laboratories remain unrivaled as the pinnacle of American
    scientific, engineering and technical expertise. Development and
    maintenance of our nuclear deterrent force has made possible American
    leadership in nuclear nonproliferation, nuclear counterterrorism,
    advanced computing, and high-energy density physics. None of these
    programs would be possible at its current level without technical
    advances made by the weapons program. As we continue transforming the
    infrastructure and maintaining our nuclear deterrent force into the
    21st century, our goal is to do so without jeopardizing the
    advancements in other vital NNSA national security programs made
    possible by our investment in weapon activities.
        Let there be no doubt: today's nuclear weapons stockpile is safe,
    secure and reliable and has not required post-deployment nuclear
    testing to date, nor is nuclear testing anticipated or planned.
    However, while today's stockpile remains safe, secure and reliable, the
    weapons laboratories, the Department of Defense and the NNSA are
    concerned about our future ability to maintain the stockpile in the
    future. The Stockpile Stewardship Program has worked well, so far, to
    discover and resolve problems that in the past would have required
    nuclear testing. However, the collective judgment of the Directors of
    our national weapons laboratories is that maintaining certification of
    the finely-tuned designs of the aging cold war stockpile through Life
    Extension Programs (LEPs) only, absent nuclear testing, necessarily
    entails increasing risk overtime. Although recent studies have placed
    the life of our plutonium pits at 85 to 100 years, other exotic
    materials used in our warheads degrade at different rates and many of
    their aging properties are still not well understood. The metallurgical
    and chemical issues we face with our aging warheads continue to be a
    technical challenge for our best scientists and the risk of
    catastrophic technical failure occurring as our warheads age cannot be
    ruled out absolutely. The one certainty we do know is that warhead
    certification in the absence of testing will become more difficult,
    especially as life extensions and component aging move the warhead
    further away from originally-tested designs.
        After 9/11 we realized that the security threat to our nuclear
    warheads had fundamentally changed. The security features in today's
    stockpile are commensurate with technologies that were available during
    the cold war and designed for with the threats anticipated at that
    time. Major enhancements in security are not easily available via
    retrofits in the life extension programs.
        To understand the challenges facing our stockpile, an analogy is in
    order. Today's Mustang remains a high-performance automobile, has about
    the same dimensions and weighs only a few hundred pounds more than the
    first Mustangs, and has all the modern safety and security features we
    expect today--air bags, anti-lock brakes, GPS navigation, satellite
    radio, theft deterrent and alarm systems. The 1965 version had none of
    these features, not even seat belts! We deploy warheads today that have
    1970-1980's safety, security and anti-terrorism features. It does not
    mean that these warheads are not safe and secure, but we can do better
    and we should do better. Based on our initial assessments, I believe
    that the reliable replacement warhead concepts provide opportunities to
    incorporate the latest technological advances for precluding
    unauthorized use in a post-9/11 threat environment.
        To address these challenges, the administration has proposed two
    efforts to maintain the viability of the deterrent well into the 21st
    century. The first of these is Complex Transformation. Our goal is to
    transform the large, costly and inefficient cold war nuclear weapons
    complex that cannot meet the full production requirements of our
    customer into an integrated, modern and cost effective nuclear security
    enterprise. Complex Transformation involves more than just transforming
    an aging physical infrastructure; it seeks to transform our contracting
    and procurement processes and overall management of the enterprise to
    embrace the best in business and human capital practices. Complex
    Transformation also must be accomplished in a way that continues to
    leverage our core competencies in nuclear weapons design and
    maintenance to advance the Nation's leadership in counterterrorism,
    nonproliferation, physical and cyber security, and to support the
    intelligence community. Our Complex Transformation strategy relies on
    four pillars:
      --Transform the nuclear stockpile through the Stockpile Stewardship
            Program in partnership with the Department of Defense;
      --Transform to a modernized, cost-effective nuclear weapons complex
            to support needed capabilities in our physical infrastructure;
      --Create an integrated, interdependent enterprise that employs best
            business practices to maximize efficiency and minimize costs;
            and
      --Advance the science and technology base that is the cornerstone of
            our nuclear deterrent forces and remains essential for long-
            term national security.
        Infrastructure transformation is a major part of Complex
    Transformation. Some major facilities date back to the Manhattan
    Project and cannot cost effectively meet today's safety and security
    requirements. In other cases, new facilities are needed to restore
    capabilities that have been put in standby since the end of the cold
    war but may be needed to support future life extension programs. With
    the support of Congress, we produced tritium in 2007 for the first time
    in 18 years and the Tritium Extraction Facility (TEF) at Savannah River
    is now on-line. Similarly, construction of the Highly Enriched Uranium
    Materials Facility (HEUMF) at the Y-12 National Security Complex in Oak
    Ridge will allow us to consolidate uranium storage and improve security
    with a significantly-reduced security footprint. And at Los Alamos
    National Laboratory, the Chemistry and Metallurgy Research Replacement
    (CMRR) project will allow us to continue the plutonium pit surveillance
    and actinide research vital to maintaining the stockpile and the
    Nation's nuclear deterrent. These three projects are representative of
    a Complex Transformation that has already commenced.
        Our plan for Complex Transformation, detailed in the draft
    Supplemental Programmatic Environmental Impact Statement (SPEIS), seeks
    to consolidate special nuclear material at fewer sites and locations
    within the nuclear weapons complex, close or transfer hundreds of
    buildings that are no longer required for the NNSA mission, and reduce
    NNSA's overall footprint by as much as a third over the next 10 years.
    By eliminating multi-site redundancies and consolidating both missions
    and capabilities at our sites, we expect to dramatically improve our
    efficiency and cost effectiveness.
        The second effort we believe is necessary to maintain the viability
    of the nuclear deterrent well into the 21st century involves continued
    study of reliable replacement concepts. We believe continued work on
    these concepts is necessary in order to allow the next administration
    and Congress to make informed decisions regarding the future
    composition of the stockpile. Continued study of reliable replacement
    concepts has been identified by U.S. Strategic Command, the Navy and
    the Air Force as essential to long-term maintenance of an effective
    nuclear deterrent force. These concepts, coupled with a responsive
    nuclear infrastructure, offers promise for further reductions in
    reserve warheads maintained as a hedge against technical failure. These
    concepts are specifically envisioned to address long term reliability
    issues that can affect our existing stockpile resulting from component
    aging, and refurbishment of aging components, that move us further from
    the original designs validated by underground nuclear testing. In
    short, we believe these concepts could provide a means to mitigate the
    technical risks inherent in a life extension-only approach. Moreover,
    reliable replacement concepts would not add new military capabilities
    to the stockpile, and would introduce safety, surety and antiterrorism
    features that cannot easily be retrofitted into the current stockpile.
        In our efforts to advance Complex Transformation and examine the
    potential promise of reliable replacement concepts, we have not lost
    focus on meeting our day-to-day commitments to the Department of
    Defense (DOD). Last year, we reconstituted a limited plutonium pit
    manufacturing capability and produced new pits for the W88 warhead, and
    maintained on-time delivery of the LEP B61 weapons to the Air Force. In
    fiscal year 2008, the Department will continue to manufacture W88 pits,
    maintain a limited pit manufacturing capability of six pits per year.
        Meeting the needs of DOD, maintaining the safety, security and
    reliability of the stockpile, and commencing Complex Transformation
    would not be possible without the support of our dedicated Federal and
    contractor workforce of 37,000 employees. Retaining our current
    workforce and attracting the next generation of national security
    scientific and engineering talent is challenging because the number of
    qualified university graduates continues to decrease each year.
        The scientific capabilities and infrastructure developed for the
    nuclear weapons mission are utilized by DOD, the Department of Homeland
    Security, and the intelligence community, are recognized as essential
    to fulfilling their responsibilities. NNSA laboratories have been
    participating jointly with other Government agencies in addressing a
    wide range of national security challenges--all of which leverage the
    core mission of nuclear weapons development and sustainability. Recent
    examples include:
      --Supporting war fighter needs in Iraq with improvised explosive
            device (IED) modeling and analysis;
      --Supporting DOD and the Federal Bureau of Investigation in nuclear
            weapons emergency render-safe and post-event technical
            forensics;
      --Providing solutions to the intelligence community in their nuclear
            counterterrorism and nonproliferation efforts by drawing upon
            our nuclear weapons expertise;
      --Developing and deploying integrated systems for countering
            aerosolized bioterrorist releases and bio-decontamination
            technologies; and
      --Developing and deploying portal detector technology to prevent
            smuggling of special nuclear material.
        Basic research at our national security laboratories has provided
    technology for airborne detection of toxic chemicals, critical
    infrastructure modeling for disaster response, and modeling of response
    strategies for potential influenza pandemics.
        It is important to recognize that certain major capabilities are
    needed at each of our national security laboratories if they are to
    continue to effectively contribute to national security. By leveraging
    the science that gave us the atomic bomb that helped win World War II
    and the technical innovations that helped win the cold war, today's
    national security labs are tackling tomorrow's national security
    challenges. Maintaining a core scientific and technical base at our
    labs will continue to attract outstanding talent to meet our future
    national security challenges.
        Weapons Activities also provides tangible support to nuclear
    nonproliferation objectives. A major priority within Defense Programs
    has been weapons dismantlement. The United States remains committed to
    its obligations under the Nuclear Nonproliferation Treaty (NPT). In
    2004, the President directed a 50 percent reduction in the size of the
    stockpile, and, in December 2007, he ordered an additional 15 percent
    cut. The result will be a nuclear stockpile one quarter the size it was
    at the end of the cold war and the smallest since the Eisenhower
    administration. During fiscal year 2007, DOE achieved a 146 percent
    increase in the rate of nuclear weapon dismantlement over the fiscal
    year 2006 rate, almost tripling our goal of a 49 percent rate increase.
                            naval reactors overview
        Also contributing to the Department's national security mission is
    the Naval Reactors Program, whose mission is to provide the U.S. Navy
    with safe, militarily effective nuclear propulsion plants and ensure
    their continued safe, reliable and long-lived operation. Nuclear
    propulsion enhances our warship capabilities by providing the ability
    to sprint where needed and arrive on station, ready to conduct
    sustained combat operations when America's interests are threatened.
    Nuclear propulsion plays a vital role in ensuring the Navy's forward
    presence and its ability to project power anywhere in the world.
        The Naval Reactors Program has a broad mandate, maintaining
    responsibility for nuclear propulsion from cradle to grave. Over 40
    percent of the Navy's major combatants are nuclear-powered, including
    aircraft carriers, attack submarines, guided missile submarines, and
    strategic submarines, which provide the Nation's most survivable
    deterrent force.
              fiscal year 2009 budget request programmatic detail
        The President's fiscal year 2009 budget request for NNSA totals
    $9.1 billion, a decrease of $35.0 million or 0.4 percent less than the
    fiscal year 2008 consolidated appropriations level. We are managing our
    program activities within a disciplined 5-year budget and planning
    envelope, and are successfully balancing the administration's high
    priority initiatives to reduce global nuclear danger as well as future
    planning for the Nation's nuclear weapons complex within an overall
    modest growth rate.
        The NNSA budget justification contains information for 5 years as
    required by section 3253 of Public Law 106-065, the National Defense
    Authorization Act for Fiscal Year 2000. This section, entitled Future-
    Years Nuclear Security Program, requires the Administrator to submit to
    Congress each year the estimated expenditures necessary to support the
    programs, projects and activities of the NNSA for a 5-year fiscal
    period, in a level of detail comparable to that contained in the
    budget.
        The fiscal year 2009-2013 Future Years Nuclear Security Program--
    FYNSP--projects $47.7 billion for NNSA programs though 2013. This is a
    decrease of about $2.3 billion over last year's projections. The fiscal
    year 2009 request is slightly smaller than last year's projection;
    however, the out-years increase starting in fiscal year 2010.
    Weapons Activities
                Defense Programs
        The fiscal year 2009 budget request for the programs funded within
    the Weapons Activities Appropriation is $6.62 billion, an approximately
    5.1 percent increase over the fiscal year 2008 Consolidated
    Appropriations level. It is allocated to adequately provide for the
    safety, security, and reliability of the nuclear weapons stockpile and
    supporting facilities and capabilities.
        Directed Stockpile Work (DSW) activities ensure the operational
    readiness of the nuclear weapons in the Nation's stockpile through
    maintenance, evaluation, refurbishment, reliability assessment, weapon
    dismantlement and disposal, research, development, and certification
    activities. The fiscal year 2009 request is organized by Life Extension
    Programs, Stockpile Systems, Reliable Replacement Warhead, Weapons
    Dismantlement and Disposition, and Stockpile Services. The request
    places a high priority on accomplishing the near-term workload and
    supporting technologies for the stockpile along with longterm science
    and technology investments to ensure the capability and capacity to
    support ongoing missions.
        The fiscal year 2008 Consolidated Appropriations Act did not
    contain funding for the Reliable Replacement Warhead (RRW). The
    administration believes that the characteristic features of the RRW are
    the right ones for ensuring the future of our Nation's nuclear
    deterrent force. The fiscal year 2009 request includes $10 million to
    continue the design definition and cost study. The request also
    continues efforts called out in the Explanatory Statement referenced in
    section 4 of Public Law 110-161 to address issues raised in the recent
    JASON's summer study of the feasibility of certifying RRW designs
    without nuclear testing.
        Campaigns are focused on scientific and technical efforts essential
    for the certification, maintenance and life extension of the stockpile.
    The Stockpile Stewardship Program has allowed NNSA to maintain the
    moratorium on underground testing and move to ``science-based''
    certification and assessments for stewardship by relying on
    experiments, modeling, simulation, surveillance and historical
    underground nuclear testing experience. The Science and Engineering
    Campaigns are focused to provide the basic scientific understanding and
    the technologies required for the directed stockpile workload and the
    completion of new scientific and experimental facilities. In the
    Inertial Confinement Fusion Ignition and High Yield Campaign, the
    National Ignition Facility (NIF) will focus on completing the first
    experiment on NIF with a credible chance of demonstrating laboratory-
    scale ignition in 2010. The Advanced Simulation and Computing Campaign
    will continue to improve capabilities through development of faster
    computational platforms in partnership with private industry, and with
    state of the art techniques for calculations, modeling and simulation,
    and analysis of highly complex weapons physics information. The
    Readiness Campaign consists of technology-based efforts to reestablish
    and enhance manufacturing and other capabilities needed to meet planned
    weapon component production.
        The fiscal year 2009 request makes several changes in the location
    of programs within Weapons Activities. The Pit Manufacturing and
    Certification Campaign recently concluded with the successful
    manufacturing and certification of the W88 pit. Pit manufacturing
    related activities are moved to the Direct Stockpile Work Stockpile
    Services program and pit certification activities are transferred to
    the Science Campaign. In addition, in the Science Campaign, the
    Advanced Certification program will continue efforts begun in fiscal
    year 2008 at the direction of the Congress to review, evaluate and
    implement key recommendations from the JASON's RRW study regarding
    approaches to establishing an accredited warhead certification plan
    without nuclear testing. Work being performed to understand potential
    improvised nuclear device designs and responses is being transferred to
    the nuclear weapons incident response account.
                Secure Transportation Asset
        The Secure Transportation Asset's fiscal year 2009 budget request
    is an increase of $9.5 million to $221.1 million. This funding request
    supports the increase to transportation capacity necessary for the
    dismantlement of nuclear weapons, departmental initiatives to
    consolidate and disposition nuclear material, and the implementation of
    the current operational doctrine to protect nuclear weapons and
    material in transport.
                Readiness in Technical Base and Facilities (RTBF) and
                        Facilities and Infrastructure Recapitalization
                        Program (FIRP)
        In fiscal year 2009, we are requesting $1.89 billion for the
    maintenance and operation of existing facilities, remediation and
    disposition of excess facilities, and construction of new facilities.
    Of this amount, $1.72 billion is requested for RTBF, an increase of
    $83.1 million from fiscal year 2008 operating levels, with $1.41
    billion reserved for Operations and Maintenance. The Operations and
    Maintenance portion also includes the Institutional Site Support
    program which supports facility transition and capability
    consolidation. The request includes $308.0 million for RTBF
    Construction.
        This request also includes $169.5 million for the Facilities and
    Infrastructure Recapitalization Program (FIRP), a separate and distinct
    program that is complementary to the ongoing RTBF efforts. The FIRP
    mission, which we expect to be completed in fiscal year 2013, is to
    restore, rebuild and revitalize the physical infrastructure of the
    nuclear weapons complex, in partnership with RTBF. This program assures
    that facilities and infrastructure are restored to an appropriate
    condition to support the mission, and to institutionalize responsible
    and accountable facility management practices. The Integrated
    Prioritized Project List (IPPL) is the vehicle that FIRP will rely on
    to prioritize and fund out-year projects to reduce legacy deferred
    maintenance. These projects significantly reduce the deferred
    maintenance backlog to acceptable levels and support the Stockpile
    Stewardship mission and transformation of the complex.
        This request also includes $77.4 million for the newly established
    Transformation Disposition (TD) Program. TD is NNSA's facility and
    infrastructure (F&I) retirement program for old, cold war-era
    structures. The NNSA owns over 35 million gross square feet of
    footprint and over 25 percent of the footprint may become excess as a
    result of complex transformation. TD is established with the goal of
    reducing non-process and contaminated excess F&I. This includes
    facilities that are excess to current and future NNSA mission
    requirements, including those contaminated structures which are not
    currently the responsibility of the Office of Environmental Management.
    This program supports the performance measure of reducing the total
    square feet, improves management of the NNSA facilities and
    infrastructure portfolio, and reduces long-term costs and risks. The TD
    Program will set the groundwork for a smaller complex.
        All of these activities are critical for the development of a more
    responsive infrastructure and will be guided by decisions based on the
    Complex Transformation Supplemental Programmatic Environmental Impact
    Statement (SPEIS) and other factors such as funding and national
    security requirements. Since a significant fraction of our production
    capability resides in World War II era facilities, infrastructure
    modernization, consolidation, and sizing consistent with future needs
    is essential for an economically sustainable Complex. Facilities
    designed according to modern manufacturing, safety, and security
    principles will be more cost-effective and responsive to future
    requirements. For example, a facility could be designed to support a
    low baseline capacity and preserve the option, with a limited amount of
    contingency space to augment capacity, if authorized and needed, to
    respond to future needs.
        Having a reliable plutonium capability is a major objective of NNSA
    planning and is a key requirement if the Nation is to maintain an
    effective deterrent, regardless of the composition of the stockpile.
    Options for plutonium research, surveillance, and pit production are
    being evaluated as part of the Complex Transformation NEPA process,
    with a decision anticipated in 2008. The preferred alternative in the
    draft Complex Transformation SPEIS proposes that Los Alamos National
    Laboratory facilities at Technical Area 55 (TA-55) provide plutonium
    research, surveillance and pit production capabilities. This
    alternative includes the proposed Chemistry and Metallurgy Research
    Replacement--Nuclear Facility (CMRR-NF) to achieve the objectives of
    (1) closing the aging existing Chemistry and Metallurgy Research (CMR)
    facility, (2) replacing essential plutonium surveillance and research
    capabilities currently at Lawrence Livermore National Laboratory and
    those being conducted in Plutonium Facility 4 (PF-4) in TA-55, and (3)
    achieving a net manufacturing capacity of 50-80 pits per year by
    allowing surveillance activities now occurring in PF-4 to be conducted
    in CMRR.
        Completion of the Highly Enriched Uranium Materials Facility
    (HEUMF) would allow a reduction of the overall size of the high
    security area at the Y-12 National Security Complex. If NNSA ultimately
    decides to build a Uranium Processing Facility (UPF) at Y-12, then Y-
    12's high security area would be reduced from 150 acres to 15 acres.
    This reduction combined with the engineered security features of the
    HEUMF and UPF, would allow NNSA to meet the Design Basis Threat (DBT)
    at significantly reduced costs, to lower non-security costs, and to
    provide a responsive highly enriched uranium manufacturing capability.
                Environmental Projects and Operations
        The Environmental Projects and Operations/Long-Term Stewardship
    Program is requested at $40.6 million in fiscal year 2009. This program
    serves to reduce the risks to human health and the environment at NNSA
    sites and adjacent areas by: operating and maintaining environmental
    clean-up systems; performing long-term environmental monitoring
    activities; and integrating a responsible environmental stewardship
    program with the NNSA mission activities. The increase in this program
    is necessary to continue compliance with statutory requirements and to
    provide Long-Term Stewardship activities for two additional NNSA sites.
                Nuclear Weapons Incident Response
        The Nuclear Weapons Incident Response (NWIR) Program serves as the
    United States' primary capability for responding to and mitigating
    nuclear and radiological incidents worldwide. The fiscal year 2009
    request for these activities is $221.9 million, of which $31.7 million
    is dedicated to the continued implementation of two national security
    initiatives that will strengthen the Nation's emergency response
    capabilities--the National Technical Nuclear Forensics (NTNF) and the
    Stabilization Implementation programs.
        The NTNF program will continue the development of capabilities to
    support pre- and post-detonation activities and enhance technical
    nuclear forensics capabilities. The continued development of this
    capability will facilitate the thorough analysis and characterization
    of pre- and post-detonation radiological and nuclear materials and
    devices, including devices used in nuclear detonations as well as
    interdicted devices. Developing forensic capabilities of this nature is
    crucial to the overall objective of identifying the origin and pathways
    of interdicted nuclear materials, warheads and improvised nuclear
    devices.
        Stabilization is a capability aimed at using advanced technologies
    to enhance the U.S. Government's ability to interdict, delay and/or
    prevent operation of a terrorist's radiological or nuclear device until
    national assets arrive on the scene to conduct traditional ``render
    safe'' procedures. NNSA has actively sponsored new research in this
    area and, additionally, continues to leverage emerging technologies
    that have been demonstrated successfully by the DOD in support of the
    global war on terrorism. In the implementation phase, NNSA will
    transfer these matured projects into operational testing to selected
    teams across the country, potentially followed by their transition into
    the collection of tools available to Federal response teams.
                Physical and Cyber Security
        The fiscal year 2009 budget request for Defense Nuclear Security is
    $737.3 million, a 7.7 percent decrease from the fiscal year 2008
    appropriation. The fiscal year 2009 request supports the base program
    and the program's focus on sustaining the NNSA sites 2003 Design Basis
    Threat baseline operations and implementing the 2005 DBT Policy
    upgrades with the Nevada Test Site reaching compliance in fiscal year
    2009. Starting in fiscal year 2009, there is no longer an offset in
    this account or in the departmental administration account for the
    security charges associated with reimbursable work. These activities
    will be fully funded by the programs with direct appropriations.
        During fiscal year 2009, the program will focus on eliminating or
    mitigating identified vulnerabilities across the weapons complex.
    Measures will include additional protective force training, acquiring
    updated weapons and support equipment, improving physical barrier
    systems and standoff distances, and reducing the number of locations
    with ``targets of interest.'' Physical security systems will be
    upgraded and deployed to enhance detection and assessment, add delay
    and denial capabilities, and to improve perimeter defenses at several
    key sites. There are no new construction starts.
        The fiscal year 2009 budget request for Cyber Security is $122.5
    million, an 11 percent increase from the fiscal year 2008
    appropriation. The fiscal year 2009 budget request is focused on
    sustaining the NNSA infrastructure and upgrading elements designed to
    counter cyber threats and vulnerabilities from external and internal
    attacks. This funding level will support cyber security revitalization,
    enhancements in assets and configuration management, and identify
    emerging issues, including research needs related to computer security,
    privacy, and cryptography.
        Additionally, the Cyber Security funding will provide for
    enhancement, certification, and accreditation of unclassified and
    classified computer systems to ensure the proper documentation of risks
    and justification of associated operations for systems at all sites.
    The funding within this request will also be applied to foster greater
    cyber security awareness among Federal and contractor personnel. NNSA
    will sponsor a wide range of educational initiatives to ensure that our
    workforce possesses the ever-expanding cyber security skills critical
    to safeguarding our national security information. Funding provided to
    NNSA sites will be conditioned upon their implementation of a risk-
    based approach to cyber security management and policy.
    Naval Reactors
        The Naval Reactors fiscal year 2009 budget request of $828 million
    is an increase of $20 million from the fiscal year 2008 request. Naval
    Reactor's development work ensures that nuclear propulsion technology
    provides options for maintaining and upgrading current capabilities, as
    well as for meeting future threats to U.S. security.
        The majority of funding supports Naval Reactor's number-one
    priority of ensuring the safety and reliability of the 102 operating
    naval nuclear propulsion plants. This work involves continual testing,
    analysis, and monitoring of plant and core performance, which becomes
    more critical as the reactor plants age. The nature of this business
    demands a careful, measured approach to developing and verifying
    nuclear technology, designing needed components, systems, and
    processes, and implementing them in existing and future plant designs.
    Most of this work is accomplished at Naval Reactors' DOE laboratories.
    These laboratories have made significant advancements in extending core
    lifetime, developing robust materials and components, and creating an
    array of predictive capabilities.
        Long-term program goals have been to increase core energy, to
    achieve life-of-the-ship cores, and to eliminate the need to refuel
    nuclear-powered ships. Efforts associated with this objective have
    resulted in planned core lives that are sufficient for the 30-plus year
    submarine (based on past usage rates) and an extended core life planned
    for CVN 21 (the next generation aircraft carrier). The need for nuclear
    propulsion will only increase over time as the uncertainty of fossil
    fuel cost and availability grows.
        Naval Reactors' Operations and Maintenance budget request is
    categorized into six areas: Reactor Technology and Analysis; Plant
    Technology; Materials Development and Verification; Evaluation and
    Servicing; Advanced Test Reactor (ATR) Operations and Test Support; and
    Facility Operations.
        The $204 million requested for Reactor Technology and Analysis will
    support work that ensures the operational safety and reliability of
    reactor plants in U.S. warships and extends the operational life of
    Navy nuclear propulsion plants. This work includes continued
    development of the Reactor System Protection Analysis for the next
    generation aircraft carrier, CVN 21. These efforts also support
    continued work on core design concepts for submarines.
        The increasing average age of our Navy's existing reactor plants,
    along with future extended service lives, a higher pace of operation
    and reduced maintenance periods, place a greater emphasis on our work
    in thermal-hydraulics, structural mechanics, fluid mechanics, and
    vibration analysis. These factors, along with longer-life cores, mean
    that for years to come, these reactors will be operating beyond our
    previously-proven experience base.
        The $104 million requested for Plant Technology provides funding to
    develop, test, and analyze components and systems that transfer,
    convert, control, and measure reactor power in a ship's power plant.
    Naval Reactors is developing components to address known limitations
    and to improve reliability of instrumentation and power distribution
    equipment to replace aging, technologically obsolete equipment.
    Development and application of new analytical methods, predictive
    tests, and design tools are required to identify potential concerns
    before they become actual problems. This enables preemptive actions to
    ensure the continued safe operation of reactor plants and the
    minimization of maintenance costs over the life of the ship. Additional
    technology development in the areas of chemistry, energy conversion,
    instrumentation and control, plant arrangement, and component design
    will continue to support the Navy's operational requirements.
        The $106 million requested for Materials Development and
    Verification supports material analyses and testing to provide the
    high-performance materials necessary to ensure that naval nuclear
    propulsion plants meet Navy goals for extended warship operation and
    greater power capability. These funds support the test assemblies for
    use in ATR, post irradiation examination of the materials tested at
    ATR, and destructive and non-destructive examinations of spent navy
    nuclear fuel and reactor component materials.
        The $264 million requested for Evaluation and Servicing sustains
    the operation, maintenance, and servicing of Naval Reactors' operating
    prototype reactor plants. Reactor core and reactor plant materials,
    components, and systems in these plants provide important research and
    development data and experience under actual operating conditions.
    These data aid in predicting and subsequently preventing problems that
    could develop in fleet reactors. With proper maintenance, upgrades, and
    servicing, the two prototype plants will continue to meet testing needs
    for at least the next decade.
        Evaluation and Servicing funds also support the implementation of
    the dry spent fuel storage production lines that will put naval spent
    fuel currently stored in water pools at the Idaho Nuclear Technology
    and Engineering Center (INTEC) on the Idaho National Laboratory (INL)
    and at the Expended Core Facility (ECF) on the Naval Reactors facility
    in Idaho into dry storage. Additionally, these funds support ongoing
    decontamination and decommissioning of inactive nuclear facilities at
    all Naval Reactors sites to address their ``cradle to grave''
    stewardship responsibility for these legacies and minimize the
    potential for any environmental releases.
        The $60 million requested for Advanced Test Reactor Operations and
    Test Support sustains the ongoing activities of the INL ATR facility,
    owned and operated by the Office of Nuclear Energy (NE), Science and
    Technology.
        In addition to the budget request for the important technical work
    discussed above, facilities funding is required for continued support
    of Naval Reactor's operations and infrastructure. The $32 million
    requested for facilities operations will maintain and modernize the
    program's facilities, including the Bettis and Knolls laboratories as
    well as ECF and Kesselring Site Operations (KSO), through capital
    equipment purchases and general plant projects.
        The $22 million requested for construction funds will be used to
    support the project engineering and design of KAPL infrastructure
    upgrades and ECF M290 receiving and discharge station, to support the
    design and construction of production support complex at NRF, and to
    support the construction of a materials research technology complex.
    Office of the Administrator
        This account provides for all Federal NNSA staff in Headquarters
    and field locations except those supporting Naval Reactors and the
    Office of Secure Transportation couriers. The fiscal year 2009 budget
    request is $404.1 million, essentially level with the fiscal year 2008
    appropriation reflecting a leveling of staffing growth.
        This budget request is consistent with the funding needed for
    personnel support in an account that is comprised of over 70 percent
    salaries and benefits. Staffing is projected to increase by 95 to a
    total of 1,942 FTE in fiscal year 2009, in support of new hires brought
    on-board at the end of fiscal year 2008 and beginning of fiscal year
    2009 to meet increased requirements in Defense Nuclear Nonproliferation
    and Emergency Operations program goals as well as address NNSA
    workforce planning skill mix issues. Information Technology (IT) for
    the Federal staff is also included in this account, and the fiscal year
    2009 request is level with 2008.
        The out-year budget for this account projects a 3.7 percent
    increase in fiscal year 2010, followed by about 4 percent annually in
    the ensuing years. There remain significant challenges in managing this
    account due to the essentially uncontrollable impacts of escalation on
    payroll and benefits for NNSA staff that consume such a high percentage
    of this account.
                Historically Black Colleges and Universities (HBCU) Support
        A research and education partnership program with the HBCUs and the
    Massie Chairs of Excellence was initiated by the Congress through
    Congressionally directed projects in the Office of the Administrator
    appropriation in fiscal year 2005. The NNSA has established an
    effective program to target national security research opportunities
    for these institutions to increase their participation in national
    security-related research and to train and recruit HBCU graduates for
    employment within the NNSA. The NNSA goal is a stable $10 million
    annual effort. However, the fiscal year 2008 Consolidated
    Appropriations Act (Public Law 110-161), included $22.1 million in
    congressionally directed projects in support of the HBCU programs
    within the Office of the Administrator account, for both new and
    existing projects. In fiscal year 2009, the Office of the Administrator
    appropriation will provide funding of $3.6 million in continuing
    support for HBCU activities for institutions not yet ready to engage in
    direct NNSA mission support. The Weapons Activities appropriation will
    provide up to $6 million; the Defense Nuclear Nonproliferation
    appropriation will provide up to $3 million; and the Naval Reactors
    program will fund up to $1 million of HBCU efforts in fiscal year 2009
    in multiple research partnerships directly supporting mission program
    activities.
      appropriation and program summary tables and out-year appropriation
                    summary tables--fiscal year 2009 budget

                                   NATIONAL NUCLEAR SECURITY ADMINISTRATION--OVERVIEW
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                Fiscal Year    Fiscal Year   Fiscal Year   Fiscal Year   Fiscal Year
                                               2007 Current   2008 Original      2008      2008 Current      2009
                                              Appropriations  Appropriation  Adjustments  Appropriation    Request
    ----------------------------------------------------------------------------------------------------------------
    National Nuclear Security
     Administration:
        Office of the Administrator.........        358,291        405,987        -3,850       402,137       404,081
        Weapons Activities..................      6,258,583      6,355,633       -58,167     6,297,466     6,618,079
        Defense Nuclear Nonproliferation....      1,824,202      1,673,275       -15,279     1,657,996     1,247,048
        Naval Reactors......................        781,800        781,800        -7,114       774,686       828,054
                                             -----------------------------------------------------------------------
          Total, NNSA.......................      9,222,876      9,216,695       -84,410     9,132,285     9,097,262
        Rescission of Prior Year Balances...  ..............      -322,000   ...........      -322,000   ...........
                                             -----------------------------------------------------------------------
          Total, NNSA (OMB Scoring).........      9,222,876      8,894,695       -84,410     8,810,285     9,097,262
    ----------------------------------------------------------------------------------------------------------------

                   OUT-YEAR APPROPRIATION SUMMARY--NNSA FUTURE-YEARS NUCLEAR SECURITY PROGRAM (FYNSP)
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                 Fiscal     Fiscal     Fiscal     Fiscal     Fiscal
                                                               Year 2009  Year 2010  Year 2011  Year 2012  Year 2013
    ----------------------------------------------------------------------------------------------------------------
    NNSA:
        Office of the Administrator..........................    404,081    419,848    436,266    451,771    469,173
        Weapons Activities...................................  6,618,079  6,985,695  7,197,844  7,286,912  7,460,318
        Defense Nuclear Nonproliferation.....................  1,247,048  1,082,680  1,076,578  1,111,337  1,133,982
        Naval Reactors.......................................    828,054    848,641    869,755    880,418    899,838
                                                              ------------------------------------------------------
          Total, NNSA........................................  9,097,262  9,336,864  9,580,443  9,730,438  9,963,311
    ----------------------------------------------------------------------------------------------------------------

                         OFFICE OF THE ADMINISTRATOR--OVERVIEW APPROPRIATION SUMMARY BY PROGRAM
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                     Fiscal Year    Fiscal Year   Fiscal Year   Fiscal Year   Fiscal Year
                                     2007 Current  2008 Original      2008      2008 Current      2009       Change
                                    Appropriation  Appropriation  Adjustments  Appropriation    Request
    ----------------------------------------------------------------------------------------------------------------
    Office of the Administrator...   \1\ 358,291        383,487        -3,490       379,997       404,081    +24,084
    Congressional Directed          .............        22,500          -360        22,140   ...........    -22,140
     Projects.....................
                                   ---------------------------------------------------------------------------------
          Total, Office of the           358,291        405,987    \2\ -3,850       402,137       404,081     +1,944
           Administrator..........
    ----------------------------------------------------------------------------------------------------------------
    \1\ Reflects the Congressionally approved appropriation transfer of $17,000,000 (07-D-04) from a source within
      the Weapons Activities appropriation and $1,000,000 from the fiscal year 2007 supplemental in support of the
      Defense Nuclear Nonproliferation program.
    \2\ Reflects a rescission of $3,850,000 as cited in the Fiscal Year 2008 Consolidated Appropriations Act (Public
      Law 110-161).
    Public Law Authorization: Fiscal Year 2008 Consolidated Appropriations Act (Public Law 110-161) and National
      Nuclear Security Administration Act, (Public Law 106-65), as amended.

                                             OUT-YEAR APPROPRIATION SUMMARY
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                  Fiscal Year  Fiscal Year  Fiscal Year  Fiscal Year
                                                                      2010         2011         2012         2013
    ----------------------------------------------------------------------------------------------------------------
    Office of the Administrator.................................      419,848      436,266      451,771      469,173
    ----------------------------------------------------------------------------------------------------------------

                                    WEAPONS ACTIVITIES--FUNDING PROFILE BY SUBPROGRAM
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                Fiscal Year    Fiscal Year   Fiscal Year   Fiscal Year   Fiscal Year
                                                2007 Current  2008 Original      2008      2008 Current      2009
                                               Appropriation  Appropriation  Adjustments  Appropriation    Request
    ----------------------------------------------------------------------------------------------------------------
    Directed Stockpile Work..................     1,430,192      1,413,879       -12,627     1,401,252     1,675,715
    Science Campaign.........................       267,758        290,216        -2,592       287,624       323,070
    Engineering Campaign.....................       161,736        171,075        -1,527       169,548       142,742
    Inertial Confinement Fusion Ignition and        489,706        474,442        -4,236       470,206       421,242
     High Yield Campaign.....................
    Advanced Simulation and Computing               611,253        579,714        -5,177       574,537       561,742
     Campaign................................
    Pit Manufacturing and Certification             242,392        215,758        -1,927       213,831   ...........
     Campaign................................
    Readiness Campaign.......................       201,713        159,512        -1,424       158,088       183,037
    Readiness in Technical Base and               1,613,241      1,652,132       -14,751     1,637,381     1,720,523
     Facilities..............................
    Secure Transportation Asset..............       209,537        213,428        -1,905       211,523       221,072
    Nuclear Weapons Incident Response........       133,514        160,084        -1,429       158,655       221,936
    Facilities and Infrastructure                   169,383        181,613        -1,622       179,991       169,549
     Recapitalization Program................
    Environmental Projects and Operations....  .............         8,669           -77         8,592        40,587
    Transformation Disposition...............  .............  .............  ...........  .............       77,391
    Defense Nuclear Security.................       656,653        806,434        -7,201       799,233       737,328
    Cyber Security...........................       104,505        101,191          -904       100,287       122,511
    Congressionally Directed Projects........  .............        48,000          -768        47,232   ...........
                                              ----------------------------------------------------------------------
          Subtotal, Weapons Activities.......     6,291,583      6,476,147       -58,167     6,417,980     6,618,445
    Security Charge for Reimbursable Work....       -33,000        -34,000   ...........       -34,000   ...........
    Use of Prior Year Balances...............  .............       -86,514   ...........       -86,514          -366
                                              ----------------------------------------------------------------------
          Total, Weapons Activities..........     6,258,583      6,355,633       -58,167     6,297,466     6,618,079
    ----------------------------------------------------------------------------------------------------------------
    Public Law Authorization: Fiscal Year 2008 Consolidated Appropriations Act (Public Law 110-161) and National
      Nuclear Security Administration Act, (Public Law 106-65), as amended.

                     OUT-YEAR FUNDING PROFILE BY SUBPROGRAM
                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                    Fiscal     Fiscal     Fiscal     Fiscal
                                  Year 2010  Year 2011  Year 2012  Year 2013
    ------------------------------------------------------------------------
    Weapons Activities:
        Directed Stockpile Work.  1,762,079  1,789,979  1,760,218  1,776,388
        Science Campaign........    309,091    295,192    296,662    299,902
        Engineering Campaign....    148,863    146,565    150,475    153,907
        Inertial Confinement        434,007    381,173    373,005    377,762
         Fusion Ignition and
         High Yield Campaign....
        Advanced Simulation and     526,373    510,808    514,405    520,645
         Computing Campaign.....
        Pit Manufacturing and     .........  .........  .........  .........
         Certification Campaign.
        Readiness Campaign......    170,003    161,139    161,130    164,295
        Readiness in Technical    1,904,398  2,153,557  2,275,909  2,372,916
         Base and Facilities....
        Secure Transportation       249,555    261,543    268,134    269,325
         Asset..................
        Nuclear Weapons Incident    229,661    235,211    242,425    250,947
         Response...............
        Facilities and              192,945    196,379    195,096    194,779
         Infrastructure
         Recapitalization
         Program................
        Environmental Projects       37,288     39,026     37,468     36,040
         and Operations.........
        Transformation               89,457     88,589     88,008     87,863
         Disposition............
        Defense Nuclear Security    818,285    817,809    793,856    814,928
        Cyber Security..........    113,690    120,874    130,121    140,621
                                 -------------------------------------------
          Total, Weapons          6,985,695  7,197,844  7,286,912  7,460,318
           Activities...........
    ------------------------------------------------------------------------

                                      NAVAL REACTORS--FUNDING PROFILE BY SUBPROGRAM
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                Fiscal Year    Fiscal Year   Fiscal Year   Fiscal Year   Fiscal Year
                                                2007 Current  2008 Original      2008      2008 Current      2009
                                               Appropriation  Appropriation  Adjustments  Appropriation    Request
    ----------------------------------------------------------------------------------------------------------------
    Naval Reactors Development:
        Operations and Maintenance (O&M).....       747,648        739,100        -6,726       732,374       771,600
        Program Direction....................        31,380         32,700          -297        32,403        34,454
        Construction.........................         2,772         10,000           -91         9,909        22,000
                                              ----------------------------------------------------------------------
          Total, Naval Reactors Development..       781,800        781,800        -7,114       774,686       828,054
    ----------------------------------------------------------------------------------------------------------------
    Public Law Authorizations: Public Law 83-703, ``Atomic Energy Act of 1954'';``Executive Order 12344 (42 U.S.C.
      7158), ``Naval Nuclear Propulsion Program''; Public Law 107-107, ``National Defense Authorizations Act of
      2002'', title 32, ``National Nuclear Security Administration''; John Warner National Defense Authorization Act
      for Fiscal Year 2007, (Public Law 109-364); Fiscal Year 2008 Consolidated Appropriations Act (Public Law 110-
      161); National Nuclear Security Administration Act, (Public Law 106-65), as amended.

                                         OUT-YEAR FUNDING PROFILE BY SUBPROGRAM
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                  Fiscal Year  Fiscal Year  Fiscal Year  Fiscal Year
                                                                      2010         2011         2012         2013
    ----------------------------------------------------------------------------------------------------------------
    Naval Reactors Development:
        Operations and Maintenance..............................      782,087      811,651      827,164      831,084
        Program Direction.......................................       35,754       37,054       38,354       39,754
        Construction............................................       30,800       21,050       14,900       29,000
                                                                 ---------------------------------------------------
          Total, Naval Reactors Development.....................      848,641      869,755      880,418      899,838
    ----------------------------------------------------------------------------------------------------------------

        Senator Dorgan. Administrator D'Agostino, thank you very
    much. There are about 8 minutes remaining on this vote, I think
    what we will do is recess the subcommittee for about 10
    minutes, and we will reconvene.
        We'll call the subcommittee back to order.

                  COMPLEX TRANSFORMATION PREFERRED ALTERNATIVE

        Mr. D'Agostino, again, thank you for your testimony. I will
    ask a couple of questions and then call on my colleague,
    Senator Domenici who will be here momentarily.
        Your Complex Transformation Preferred Alternative, Mr.
    D'Agostino, calls for keeping all 8 nuclear weapons complex
    facilities. Some, including myself, are surprised that there's
    not a recommended closure of at least one site, or even one
    site.
        As I understand it, OMB had the Cost Analysis Improvement
    Group do an assessment of the NNSA's Complex Modernization
    Programs, and one of the findings said that there were
    potential economic benefits from the relocation of the uranium
    operations from Y-12 to another site. The assessment
    highlighted the vulnerability of Y-12 and the fact that other
    than the HEUMF plant, virtually all other Y-12 buildings will
    require replacement.
        I understand the final decision has not been made, but I
    believe you do specify Y-12 as the uranium center for the
    weapons complex.
        Mr. D'Agostino. Right.
        Senator Dorgan. So, can you tell us--how did you come to
    this decision to retain the NNSA mission at Y-12?
        Mr. D'Agostino. Absolutely.
        Senator Dorgan. As opposed to moving it?
        Mr. D'Agostino. Yes, sir, Mr. Chairman, I'd like to do
    that.
        We did commission the Cost Analysis Improvement Group as
    well as an additional independent group--we had two independent
    teams--look at our preferred alternative, particularly from a
    cost standpoint.
        The one thing I will start off with is, most of these
    studies typically do not take into account the value of the
    workforce that's needed to operate and deal with special
    materials, and uranium and the other materials, the work that
    happens at the Tennessee area, clearly there's a set of
    material there that requires a special workforce.
        And, we actually have very good evidence, when we moved
    material out of Rocky Flats, on how difficult it is to re-
    establish a capability dealing with special materials. It took
    us much longer than expected, and cost a lot more money than we
    ever expected it to cost. I'm talking, in particular, in this
    case, about the plutonium issue.
        But, in the case of Y-12, the evidence was clear that the
    CAIG said there was no clear winner on the decision whether to
    move those capabilities out, or not. In fact, it was neck-in-
    neck, dead even. And one of the things that came out of that
    was our desire to do what we're calling a ``Phase II Cost
    Study'', which is part of the Preferred Alternative process.
        We put out a draft Preferred Alternative, and during the
    time when we're gathering public comment and input, we were
    also doing a Phase II Cost Study, to further evaluate these
    other factors, such as moving people, moving equipment, moving
    the material.
        And, from my standpoint, it was very clear to me that
    because things were even from the CAIG report, the Cost
    Analysis Improvement Group, that to err on the side of the
    people on the draft alternative, and then go evaluate, and do
    this additional study, before we get to a final position on a
    preferred alternative.
        So, we are doing those Phase II cost studies for these
    materials.
        Senator Dorgan. Are you going to keep us informed of those
    results?
        Mr. D'Agostino. Absolutely, sir.
        Senator Dorgan. Let me ask you, as well, about the Kansas
    City plant. You have already decided to build a newer and more
    efficient facility there, and you're deciding to keep the new
    facility in Kansas City, as opposed perhaps to, considering
    moving it to other existing NNSA sites. Some have said Pantex
    at Sandia might be mentioned as alternatives.
        My understanding is that the Kansas City site has done good
    work, has good people there, and I don't, with my question,
    mean to take anything away from them, but----
        Mr. D'Agostino. Right.
        Senator Dorgan [continuing]. Let me ask, how have you come
    to a decision to retain the mission in Kansas City, when you
    could build the new plant at another site, when you weigh all
    of the alternatives, can you explain that to us?
        Mr. D'Agostino. Absolutely.
        Senator Dorgan. And I understand, let me also say, you're
    seeking to have the General Services Administration (GSA)
    construct the new Kansas City plant, and then the NNSA will
    lease the facility. That means this subcommittee will never
    approve construction funds, because we won't be required to.
    Why did you pursue the GSA route for the new facility--do you
    use GSA in this manner for other large facilities as well, and
    do you have a cost analysis that would tell us whether it is
    cheaper to lease than for the NNSA to own?
        Mr. D'Agostino. Certainly. Regarding the Kansas City plant,
    one thing was clear, that we were in 3 million square feet in
    Kansas City, and we were spending $100 million more a year than
    we really needed to. So, the important thing is to deliver
    products to the Defense Department--and you're right, sir, the
    Honeywell organization out there has a tremendous reputation,
    they have a 99.99 percent quality and delivery record over many
    years.
        But what was clear is that we needed to get out of that
    World War II facility. It was just costing too much. It's
    consistent with the theme of too old, too big, too expensive,
    and we needed to right-size that facility.
        So, we're going to shrink that footprint by over 60
    percent, and save about $100 million a year.
        Senator Dorgan. I'm not questioning whether you should do
    it, I was questioning the location, and also the decision to go
    through----
        Mr. D'Agostino. Right. Through the GSA.
        Senator Dorgan [continuing]. GSA, which really bypasses our
    committee, in terms of construction funding.
        Mr. D'Agostino. So, from the standpoint of the location,
    since it's clear that I needed to get out of that current
    facility, I had the option of looking around, and you know,
    whether to put it at Pantex, at Kansas City, or at--I'm sorry,
    at Sandia--or any other site across the complex.
        And given Honeywell's--and that plant, in general's, high
    level of performance, given the quality of the workforce, I did
    not feel it was worth trying to move people--based on our
    experience of closing down Rocky Flats and closing down the
    Mound Plant--to satisfy that same mission.
        And we decided, sir, to look at ways to acquire the
    project, if you will, and the GSA does do this for the Federal
    Government, and we felt that the lease approach made the most
    sense, it delivered the product, it had the lowest life cycle
    costs for the Government, plus it allowed--in the long term--as
    we expect missions to change over the number of years, it gives
    us an opportunity to be a bit more flexible--us, the Federal
    Government--to be a bit more flexible on how we satisfy the
    requirements.
        Senator Dorgan. I'm just trying to understand where the
    approval is for doing this, if it doesn't go through an
    Appropriations subcommittee. Is there carte blanche authority
    for you to go to GSA----
        Mr. D'Agostino. No, sir.
        Senator Dorgan [continuing]. And say, ``I want to build a
    building?''
        Mr. D'Agostino. Absolutely not. We go through OMB first to
    get the facility appropriately scored, then it comes into the
    Environment and Public Works Committee, here in Congress, as
    part of a GSA package to get approval by Congress.
        Senator Dorgan. The authorizing committee has signed off on
    this? Is that correct?
        Mr. D'Agostino. I don't know if it's considered an
    authorizing committee----
        Senator Dorgan. It would be.
        All right, thank you for that answer. I have other
    questions I want to submit to you in writing.
        Mr. D'Agostino. Sure.

                             NAVAL REACTORS PROGRAM

        Senator Dorgan. Admiral Donald, there's been some
    discussion about new nuclear-powered Navy ships beyond aircraft
    carriers and submarines, most of it has been on a new class of
    cruisers. Could you comment on that, and what resources the
    Naval reactors program would need if the decision was made to
    build new nuclear-powered ships?
        Admiral Donald. Yes, sir. Thank you for the question. The
    Navy right now is in the process of what's called an Analysis
    of Alternatives for the new ship, which is the cruiser that
    would replace the Aegis-class cruisers currently in service.
    We've completed the part of the Analysis of Alternatives that
    applies to the propulsion plant. The remaining part really is
    about defining the specific mission and capabilities that the
    ship needs from a combat system and a radar system perspective.
        Once that's done, then a decision would be made as to
    whether or not that ship would be nuclear-powered, or not. And,
    again, that's under review right now by the Secretary of the
    Navy, and the Chief of Naval Operations.
        Should we--should it be chosen to be a nuclear-powered
    ship, we would--our plan would be to use existing components of
    existing designs to the greatest extent possible to help in
    cost, and get the most capability you can for the cost. But
    what it would really involve for us, was, in addition to the
    specific components that you have to buy, the reactor plant
    that you'd buy, itself, you'd also have to do some amount of
    redesign to fit those components into the ship, whatever type
    of ship they chose to buy.
        So, in addition to component purchases, and the specifics
    of the plan itself, some re-design work would have to go into
    it, and likely some facilitization of existing manufacturing
    capabilities, that would have to be considered as well, sir.
        Senator Dorgan. Admiral, thank you very much.
        Senator Domenici?

                       MATERIALS, MISSIONS, AND MANPOWER

        Senator Domenici. I was wondering if I might--you go ahead.
        Administrator D'Agostino, your testimony makes a thorough
    case of the consolidation of materials, missions and manpower.
    However, in 13 pages of written testimony, I find only--find
    that only the reference to science and a handful of examples,
    primarily focused on past scientific achievements. There's
    absolutely no mention of scientific path forward, or a strategy
    to sustain the scientific excellence of the labs.
        Could you please explain to us what this budget provides in
    terms of long-term planning to sustain science capabilities at
    the laboratory?
        Mr. D'Agostino. Certainly. We have an item in our budget--
    it's not a big item, it's about $5 million--to work on
    upgrading the accelerator at Los Alamos. But, more importantly,
    we have a number of facilities----
        Senator Domenici. What is that for, again?
        Mr. D'Agostino. For the, upgrading the accelerator, the
    LANSCE Accelerator, however, it's clearly not enough to do any
    significant work in fiscal year 2009. In order to really do
    that work, it will likely cost well over $100 million to
    upgrade that accelerator--that's done a tremendous job over the
    past decades, in getting the scientific information that we
    need.
        Our focus----
        Senator Domenici. So, you're saying--you're telling this
    committee you need LANSCE in order to round out the scientific
    capability of the lab, and all you could get out of this year
    was $5 million?
        Is that----
        Mr. D'Agostino. Well, I think there's more than that,
    Senator. I was going to add to that, if I could.
        Senator Domenici. Go ahead.
        Mr. D'Agostino. For one thing, we--with the support of this
    subcommittee--we have now finished the DARHT project. I think
    in about 2 days, or so, we will actually be signing, doing the
    formal completion of the DARHT project at Los Alamos, which as
    you know, is a tremendous technical achievement.
        We're in the mode now, sir, of actually operating all of
    these tools that have been appropriated over the last number of
    years, the NIF facility is in its final stages of construction.
    As you know, sir, the MESA Project was completed 3 years early,
    and is now an active part of supporting our stockpile,
    particularly the work on the W76, and so, the concern I have is
    consistent with what you've described, what is the long-term
    science for Los Alamos, and what's our long-term strategy
    across the complex?
        Our near-term strategy, sir, is to utilize the tools that
    we've built up over the last decade during Stockpile
    Stewardship, and there was a lot of utilization that we do need
    that is so important to do.
        The concern that we have, and Director Anastasio may get a
    chance to talk about this, is what is that particular
    capability for Los Alamos? We haven't answered that question
    yet, but we're in the process of working with the Office of
    Science to lay out that right path for the laboratory. I think
    MESA and NIF will do that Livermore and Sandia, quite well.
        Senator Domenici. Now, Administrator, we're approaching the
    2-year anniversary of the new management team's take-over of
    Los Alamos. It appears to me that things are on the right
    track, with several of the deliverabilities met in pit
    manufacturing, super computing and improved site security. What
    is your impression of the operation at LANL?
        Mr. D'Agostino. Senator, I would say, I'm very impressed
    with what has happened over the last 2 years. A lot of people
    will point to maybe one incident or two, I look at the overall
    trend, and when I look at the overall trend, I see good
    indication--from security, for example, the laboratory has
    actively reduced its amount of classified removable media from
    over 80,000 pieces, now it's less than 5,000 pieces.
        It has consolidated its vaults--we used to have 142, or 143
    vault-type rooms. We're already down to 114, and I think the
    Director is trying to get that number down to the 20 to 40
    range of vault-type rooms. We've centralized our classified
    document storage, and the accident rate has decreased by 35
    percent at the laboratory.
        From a project management standpoint, the laboratory is
    delivering on over 90 percent of its project deliverables on
    these milestones that we track in our systems--these are
    tremendous accomplishments--they've improved facility
    management by 11 percent, and all of this within a very
    difficult financial situation.
        So, Los Alamos has done this on the basis of hard
    management, and my hat's off to the Director for putting that
    through.
        We actually have similar types of changes going on at some
    of our other laboratories, and in addition to the programmatic
    accomplishments that you just described, a lot of times what
    gets ignored is the hard management part of the laboratory.
        Senator Domenici. I didn't mean to isolate this one out,
    and thereby indicate that you weren't making advances on all of
    them, I just chose Los Alamos, because it had received so much
    adverse criticism----
        Mr. D'Agostino. Right.
        Senator Domenici [continuing]. Two and three years ago, and
    had some security problems. It was bantered around up here as a
    laboratory that couldn't get things done, and I just wanted
    your observations for the first--it's only been 2 years for the
    new management, and you've told the committee what you think.
        Mr. D'Agostino. Yes, sir, thank you. I do think we have a
    bit more to go, but we're heading in the right direction, and
    I'm very encouraged by it, but conscious, as well.
        Senator Domenici. I have a lot more, but I want to yield
    after one last question.
        The budget provides $10 million advance for feasibility
    work on the RRW. You've been present when we've had an exchange
    between the chairman and myself, regarding whether or not we
    should fund that, and his view that we should not, my view that
    we should.
        Ten million--but that's not enough to complete the
    research. It is my understanding that an additional $55 million
    is needed to complete this phase of the study. Can you tell me
    what will be gained if Congress provides the full $65 million
    needed to complete the feasibility study? What would, then, be
    the next steps? And back up and tell me why we need the $10
    million, which we're going to have an argument about--somebody
    out there ought to be defending it--are you one who defends the
    $10 million?
        Mr. D'Agostino. I'm in defense of the $10 million, sir. I
    do think--I want to emphasize, I think it's important to
    emphasize--that this is a study, this is not about building a
    warhead.
        From my view, the gain and the understanding is to help
    inform future administrations of an approach to better manage
    our nuclear weapons stockpile. I'm very concerned that if we
    continue down the path of rebuilding our cold war stockpile
    exactly the way we built it in the past, that we will lock in
    very difficult materials that we have had to deal with in the
    past, that are causing us so much problems now.
        So, from that standpoint, what we would gain, in my view,
    is an opportunity for future administrations to actually
    understand what an RRW concept can actually deliver, in terms
    of driving the size of the stockpile down, and adding safety
    and security--additional safety and security--into our nuclear
    weapons stockpile. I think this is a matter of making sure
    everyone's fully informed, and making sure that it's clear,
    this is not a decision to build a warhead.
        Your last part of the question was, why the $10 million,
    sir? It was clear in the very early days of January of this
    year that we hadn't achieved a consensus, and you know, we
    needed an opportunity to make sure that we had to drive home
    what this Reliable Replacement concept was all about. The $10
    million in the budget request is there to make sure that all of
    the work that has happened over the last 2 years on this
    topic--and there has been some excellent work--did not get lost
    just because we immediately cut off funding on day one.
        We take the views of congressional appropriations
    seriously, when we got the bill, Deputy Administrator Smolen
    issued a note out to the complex saying, ``Stop work on RRW.''
    And that literally means, stop work. And, you know, there's no
    way to really tie a ribbon around the information that you have
    appropriately, but we want to be able to close off that work
    appropriately, and at least put together some information for
    future administrations.
        Senator Domenici. Thank you very much.
        Senator Dorgan. If I might--I'm going to call on Senator
    Craig, and use the early bird rule back and forth, Senator
    Craig, Senator Reed then Senator Bennett.
        My understanding is last year the administration was
    already beginning to put some amount of money in the Air Force
    budget--going beyond the Navy piece, with respect to RRW. That
    presumes, of course, that that program was going to be a
    continuum. And I, I mean, I--we have a disagreement about these
    issues----
        Mr. D'Agostino. Right, right.
        Senator Dorgan. But, I think it's very important that we
    understand, how this fits in a much broader context of nuclear
    weapons policy. I appreciate the comments of Senator Domenici.
        Senator Craig?

                        STATEMENT OF SENATOR LARRY CRAIG

        Senator Craig. Mr. Chairman, thank you.
        Gentlemen, thank you.
        And Administrator D'Agostino, before I come to you with a
    question, I want to first thank the Admiral for the work we've
    done together at the lab. As you know, Idaho's lab was not a
    nuclear--a weapons lab. However, NNSA does work at the INL,
    mainly through the Navy nuclear program, and its use of the
    Advanced Test Reactor (ATR).
        In 1967, the ATR was commissioned to support the Navy
    Nuclear Propulsion Program, tackling nuclear fuels reliability
    and material testing issues. And, of course, we know that
    history--probably one of the more successful ones, if not the
    most successful in the extension of life of our Navy's--our
    national nuclear fleet.
        Last April, DOE designated the Advanced Test Reactor, the
    ATR, as a National Scientific User Facility, and that's where
    the cooperation of the Navy came in, and this would not have
    happened without the support that you've given us, and I want
    to thank you for that.
        Today, the ATR, the National User Facility, is open for
    businesses and universities from all over the Nation, and
    they're able to use the facility for research and educational
    purposes. The INL also works on certain NNSA waste, such as
    sodium debris from Sandia National, and we also have some
    highly-enriched uranium weapons-grade materials for non-weapons
    research purposes.
        Now, my question of you, Administrator. I want to talk to
    you about Building 651, and Building 691. As you know,
    infrastructure at most of our labs continues to be a problem,
    and a top priority, it is true at the Idaho lab. Our scientists
    and engineers perform research and development in facilities
    that oftentimes back-date into the 1950s.
        These are facilities at the lab that were constructed in
    the 1990s to recycle the Navy's spent nuclear fuel. These two
    building have never been used, they're basically brand new, and
    sitting there. And I understand that for a relatively small
    investment, these facilities could be upgraded and used.
        Your office looked at these facilities in the past to find
    alternative uses, funds have been made available in 2006, and
    in the Omnibus bill last year for the required upgrades,
    however, no work has begun, or is expected to begin any time
    soon. It's my understanding, understanding is that even
    Congress has provided the funds, there is a disagreement over
    the right mission, and who will be responsible for the
    facilities. So, my question is a relatively simple one--can you
    tell me what happened to the $5 million that was appropriated
    in 2006?

                               FUNDING OVERSIGHT

        Mr. D'Agostino. As to the specifics, I can't tell you at
    this point exactly what would happen. What I can talk about are
    the two buildings and how we looked at it from a Departmental
    view----
        Senator Craig. Yes.
        Mr. D'Agostino [continuing]. If I could, Senator.
        Senator Craig. Please.
        Mr. D'Agostino. Okay.
        Those buildings, we looked at originally, a couple of years
    ago, as potential areas to store plutonium while we were trying
    to de-inventory the plutonium we have at Hanford, as a--what I
    would call--an interim storage location.
        Senator Craig. Those are the right words for Idaho, thank
    you.
        Mr. D'Agostino. Yes, thank you.
        Well, the idea was getting the material out of Washington
    State, ultimately our plan was to disposition that material
    through the mixed oxide facility in South Carolina.
        At the time, Savannah River was not in a position to accept
    plutonium in South Carolina, and we had a deep desire to try to
    reduce our security costs in Hanford, because we don't want to
    declare it a permanent site. And these buildings looked
    attractive to be studied, and in fact, they were studied.
        The end result of that study was that in order to upgrade
    one of the buildings--and I believe it was Building 651--it
    would cost in excess of $300 million just to finish the
    building and put the security features in place.
        Senator Craig. For the purpose you were looking at it for?
        Mr. D'Agostino. For the original purpose, that's right,
    sir. And we felt that that was a lot of--well, it just didn't
    make financial sense to move plutonium twice, spend $300
    million just for an interim site. It made more sense to move it
    once.
        Since that time, of course, we've started construction on a
    mixed oxide facility, and now we're in the position of shipping
    material directly to South Carolina, which is a safer and more
    secure way of doing it, and ultimately not resulting in
    material that potentially accumulates, and the emission
    associated with it. The MOX construction is underway, from that
    standpoint.
        So, when we looked, it didn't make sense to use Idaho as a
    way-station, if you will----
        Senator Craig. Right.
        Mr. D'Agostino. For plutonium. And ultimately that's what
    ended up happening. I can provide to your staff, sir, the
    analysis that was done in that case, if that makes sense.
        Senator Craig. It does. And I appreciate that, also,
    answer, and I don't mean to sound as direct, as it might--
    answer the question.
        Mr. D'Agostino. Right, the $5 million?
        Senator Craig. What happened to the 2006 appropriation of
    $5 million that was re-established in the 2007 budget, and
    somehow nothing has materialized? Because this was a general
    upgrading of the buildings for future use?
        Mr. D'Agostino. Right.
        Senator Craig. Okay, if you would do that, I would
    appreciate it.
        Mr. D'Agostino. Absolutely.
        Senator Craig. Because it's the anomaly that it's in--it
    was put in over in the House, it's in your budget in buildings
    that aren't in your responsibility, as I understand it.
        Mr. D'Agostino. That's right. And----
        Senator Craig. Thank you. So, I'm--we're just searching for
    some money.
        Mr. D'Agostino. That's right. And I think ultimately,
    because we had--there's, of course as you're probably aware,
    $14 million that was appropriated for this activity in the 2008
    Omnibus, as well. And what we want to do--you mentioned earlier
    in your question about sodium debris bed material from Los
    Alamos----
        Senator Craig. Right.
        Mr. D'Agostino. So, some of that money we would use for
    that purpose. But it would not require all of that money.
        Senator Craig. Okay.
        Mr. D'Agostino. So, we'll be coming back, ultimately, with
    a re-programming request.
        Senator Dorgan. Administrator----
        Senator Craig. Thank you.
        Senator Dorgan [continuing]. He wants to know where the $5
    million is, if you'd let us know, we'd appreciate that.
        Mr. D'Agostino. Absolutely.
        Senator Dorgan. Thank you.
        Senator Craig. Thank you.
        Senator Dorgan. Senator Reed.
        Senator Craig. Thank you, Mr. Chairman.
        Senator Dorgan. Thank you, Senator Craig.

                          RELIABLE REPLACEMENT WARHEAD

        Senator Reed. Thank you very much, Mr. Chairman.
        Mr. D'Agostino, can you tell us what the scope of work is
    in the NNSA budget for 2009 for the RRW concept? I ask that,
    because last year there was a specific RRW design line,
    attributed specifically to RRW, but then there was engineering
    and science work throughout the budget that was also attributed
    to the concept of RRW. Can you focus on what the scope of work
    is in this budget?
        Mr. D'Agostino. This budget has $10 million specifically in
    the RRW line, and the purpose of that money is to close on the
    cost and schedule and put--essentially tie the ribbon around,
    and gather in one spot, all the work that has gone into RRW.
        What you're, I believe, referring to, from previous years,
    is the fact that there is very similar elements of our program,
    for example, in the Surety Campaign, for example, that
    Campaign's responsibility is to develop Surety technologies
    that could be applied to any future system or existing nuclear
    weapons system that we have. It's not focused on RRW.
        The RRW line was focused on a particular design put forth
    by Lawrence Livermore National Laboratory, the ultimate lab
    design that was chosen.
        Senator Reed. But this work such as a Surety function, is
    that being coordinated with RRW, in the sense of, they're
    explicitly considering the possibility of moving forward with
    RRW development?
        Mr. D'Agostino. No, it's not--the Surety line is to develop
    a generic suite of Surety tools to be used, whether in RRW or
    not. But ultimately, what would have to happen, is once it's
    been decided that a Surety technology that was developed in
    this campaign was going to be used in RRW, we would have to
    stop work in that campaign, move it over to that Surety line. I
    think it's important for our laboratories to have the
    flexibility to continue to develop Surety technologies, because
    this effort is part of activities that bolster the skills that
    are so important to maintain.
        Not just to maintain the stockpile--and particularly to
    modify it as it changes and ages--but also to hone the exact
    skills that we use to understand and defeat nuclear terrorism.
    If we happen to come across an Improvised Nuclear Device, these
    are the exact same people that will be deciding which wire to
    cut--the green wire or the red wire. And they only do that
    based on developing these generic skills.
        Senator Reed. Let me continue in another aspect of this,
    for many, many years, but certainly the last 15 or so--there's
    been an investment in facilities, to improve existing
    facilities and capabilities for the Stockpile Stewardship
    Program to maintain nuclear weapons without testing. And, in
    fact, about 15 years ago, the daunting technical problems
    associated with RRW would never have been considered.
        But nevertheless, because we've been investing in the
    complex, we are now considering an RRW, and yet we're told now
    that there has to be more new investment in the complex for
    RRW. Can you talk about--comment upon that?
        Mr. D'Agostino. Absolutely, in fact, I will be very
    straightforward--we would need new investment, more new
    investment, to maintain our existing stockpile. We do not have
    the infrastructure to maintain our stockpile now. But the
    investment we need, just to maintain a nuclear deterrent
    whether it's a RRW-type future or life extension future--
    they're two different avenues.
        What we're doing right now, is making the investments that
    would not preclude, essentially, going down either track. So,
    we're making the investments that cover both options.
        A quick example would be plutonium infrastructure. My view
    is, we don't need two plutonium infrastructures in this
    country, we only need one, and so we have to look at
    maintaining one, smaller, safer, plutonium infrastructure. I
    think that plutonium infrastructure could be at Los Alamos.
    Same thing with uranium, and the like.
        So, if we said RRW is not in our future--if the Congress
    says that, I understand how those decisions get made--that
    would drive the Administrator, myself or whoever follows me, to
    say, ``Well, we absolutely need to make investments in
    facilities that we have decided to hold off making investments
    in.''
        Beryllium oxide, and beryllium metal work, for example, is
    one area that we decided 4 years ago--beryllium is bad, bad
    stuff, we don't want to work with it, we're not going to spend
    $300 million in Tennessee to reconstitute a capability we'd
    prefer never to have again in our stockpile.
        That is still an open question--if we stayed with the
    existing legacy stockpile, at some point--and it won't be this
    year--but some future Administrator will be here, in front of
    this committee saying, ``I need to build a beryllium oxide
    capability, and a beryllium metal capability.'' And it's just a
    fact of life, because our current stockpile relies upon
    beryllium.
        Senator Reed. Just a quick follow-up, but if you go the
    other pathway will a future Administrator be here saying they
    have to build some specific facilities unique to RRW?
        Mr. D'Agostino. No, because I believe, for example, one of
    the elements of RRW will simplify work on plutonium. Right now,
    we think we can simplify it and do it in a much smaller space.
    If we have to reconstitute a capability to work with plutonium,
    for the cold war stockpile, we would need much more space than
    we currently are planning for right now.
        So, RRW takes a lot of materials off of the table that
    we'll never have to use again. And that's my main focus, is to
    get rid of as much of the hazardous material as I can. Physics
    doesn't allow us to get rid of uranium and plutonium at this
    point, but about everything else, we can do.
        Senator Reed. Thank you.
        Mr. D'Agostino. Yes, sir.
        Senator Dorgan. Senator Bennett.

                           SUBTERRANEAN NUCLEAR TESTS

        Senator Bennett. Thank you very much, Mr. Chairman.
        Mr. D'Agostino, I want to thank you for the wonderful trip
    that you arranged for me to visit Sandia, Los Alamos and
    Livermore, I learned a great deal, and I'm grateful to you and
    all of those who acted as host for that. I look forward to
    learning more. All I really learned was that, I don't know very
    much and sometimes that's the beginning of wisdom.
        I'm impressed by all of the work you've done, and by your
    computer capability, and I want to just ask, for the record, do
    you foresee the need to resume underground nuclear testing at a
    time in the future--at a time in the foreseeable future?
        Mr. D'Agostino. Of course, if I could predict that far
    ahead, I probably wouldn't be in this business, but we think we
    have a handle in the near term on knowing what issues we have
    in our current stockpile. And, as you probably were aware,
    there are concerns that we have--the stockpile remain safe and
    reliable right now, but these are very complicated devices,
    they're not static, I think General Chilton called it a
    ``chemistry project in motion.'' You've got very hazardous
    materials, and radiation and exotic materials together for long
    periods of time. So, they're very complicated.
        I can't give you a definitive answer on that, but what I
    can say is we are very confident now that the tools that we
    have, and that the country's invested in over the last decade,
    can deal with most issues.
        I know I'm not giving you a direct yes or no answer, sir--
    --
        Senator Bennett. Yes, yes.
        Mr. D'Agostino. Because I can't give you one.
        Senator Bennett. Well, I left you an out, and let me repeat
    it again, with the same out--and I understand, by the way, that
    no Administrator, no one sitting in your position representing
    any administration would ever say ``never.''
        Mr. D'Agostino. Right.
        Senator Bennett. But, with the understanding--do you have
    any idea in the foreseeable future, that you might have to
    renew underground testing?
        Mr. D'Agostino. No.
        Senator Bennett. Okay.
        It's important that we have that on the record----
        Mr. D'Agostino. Yes.
        Senator Bennett [continuing]. I got it from your
    predecessor, I need it for the people in Utah, to understand
    that we keep asking that question.
        Mr. D'Agostino. Right.
        Senator Bennett. Now, I was pleased that you requested an
    increase of 22 percent over fiscal year 2008, with respect to
    cyber-security.
        Mr. D'Agostino. Right.

                                 CYBER-SECURITY

        Senator Bennett. As I mentioned to you, this is an issue
    I've been interested in now for a number of years. It may be
    difficult in this setting--which is not classified--but could
    you discuss the threat that NNSA and the other labs face from
    cyber attacks?
        Mr. D'Agostino. Absolutely. I'll discuss it in broad terms,
    if I could, and that is the laboratories and the Federal
    infrastructure that we have are literally bombarded with tens
    of thousands of attacks on a regular basis. Now, that doesn't
    mean all of them get through, because the people we have at our
    laboratories are very good at this. But, we are noticing a very
    significant increase in the amount of cyber-attacks.
        Quite frankly, we put forth a 22 percent increase in the
    cyber-security investment area in this budget request. In all
    likelihood, we're going to have to continue that kind of ramp-
    up into the future, in order to develop the tools necessary to
    counter this threat.
        A lot of the times, the security focus always is on
    physical--guns, guards, gates--because most of us can see that
    and understand that. In this case, there is the sense that the
    information that's possessed is extremely valuable, and we have
    to ramp-up on the cyber side.
        So, we've got a long road ahead of us, and we have a lot
    more to do in this area. From a detail standpoint, I don't know
    if I want to get into too much detail.
        Senator Bennett. No, I have further questions, but I don't
    think this setting is the appropriate place to ask them. I
    think we can ask--have there, has there been a significant
    increase in, say, 12 months or 18 months? Or has it been just a
    steady kind of attack?
        Mr. D'Agostino. I see an ever-increasing rate, so the
    acceleration rate is increasing----
        Senator Bennett. It's logarithmic rather than arithmetic?
        Mr. D'Agostino. Yes, sir.
        Senator Bennett. I see, okay.
        Thank you very much.
        Thank you, Mr. Chairman.
        Senator Dorgan. Senator Bennett, thank you very much.
        Senator Feinstein.

                     STATEMENT OF SENATOR DIANNE FEINSTEIN

        Senator Feinstein. Thank you very much, Mr. Chairman.
        And welcome, gentlemen, particularly you, Mr. D'Agostino,
    and I want to thank you, you know, we've talked on the RRW and
    other things, and as I've said to you privately, I'll say to
    you publicly--you have always been a straight shooter, and I
    very much appreciate that. And so you have very high
    credibility with me.
        I want you to understand that I support the chairman in his
    mark, if he does remove the $10 million for the RRW. And that's
    really based on the fact that we need to have this
    congressionally appointed bipartisan commission examine United
    States strategic posture and nuclear weapons policy. And it's
    due to report its findings and recommendations to Congress and
    the President by December 1, of this year. And the Defense
    Authorization bill also required the next President to conduct
    a nuclear posture review, and report by December 1, 2009.
        I really think the Congress--before it goes ahead with
    what, in my view, is a new nuclear warhead, should have these
    two things under its belt--should understand what's going to
    happen, how the strategic triad will or will not be changed,
    what our nuclear posture will be. And then, I think, it's
    easier to make this decision.

                      LAWRENCE LIVERMORE FINANCIAL ISSUES

        You also called me about Lawrence Livermore, and I'd like
    to ask you a couple of questions about it. You indicated to me
    that there were going to be 250 voluntary retirements, and
    about 500 involuntary retirements made. And the lab, because of
    the fact that it was an LLC, a limited liability corporation,
    the costs were higher.
        And as I began to think about that--you know, the corporate
    management was supposed to make the lab more economically
    competitive, in addition to bringing good management. I
    understand the lab has lost its tax-exempt non-profit status?
    Is that correct? It is. And that the new management has
    underestimated retirement and health benefit costs? Is that
    correct?
        Mr. D'Agostino. I don't know if that's--mis-estimated might
    be a reflection of the times, on these costs, are increasingly
    going up.
        Senator Feinstein. And, has the yearly management fee
    increased from $8 million to $46 million?
        Mr. D'Agostino. Yes, ma'am, consistent with the terms of
    the contract.
        Senator Feinstein. Who receives those fees?
        Mr. D'Agostino. The limited liability corporation, which is
    composed of the University of California, Beditel, and a few
    other contractors, Washington Group.
        I think there's one other fact----
        Senator Feinstein. I didn't know that when I talked to you,
    I've learned it since then, and it does cause me some concern.
    And so, let me ask you, what do you think about this management
    team?
        Mr. D'Agostino. Actually, I think very highly of the
    management team, and I'll say why.
        First of all, we've got 2 years under our belt using a
    limited liability approach at a similar laboratory, Los Alamos.
        And we've seen significant changes and improvements in
    management and efficiency at Los Alamos--I don't want to repeat
    an answer, but there are a series of improvements--11 percent
    improvement in maintenance of facilities, for example, at Los
    Alamos, significant reduction in the amount of security
    material that is around the laboratory, improvement in worker
    safety and worker health at the laboratory. As you may know,
    there's a term called ``days away reportable,'' and total
    reportable cases at Los Alamos, we're now heading in the right
    direction, and we're starting to see, right now at Livermore,
    the same types of trends--a shift, an improvement in the safety
    of the workforce.
        So, I have strong faith in the management team at that
    laboratory, and this approach of governance, which is a big
    difference from what it was before.
        I now have a Board of Governors at Lawrence Livermore, for
    example. Norm Patis is the chairman, and I can go to him and
    express my concerns as a shareholder--I represent all of the
    shareholders in the country that have invested in that
    laboratory. And he, as the chairman, has the ability to act to
    provide corporate resources to help the laboratory.
        We've seen it work at Los Alamos, and I'm actually excited
    about the opportunity to see it at Lawrence Livermore, as well.
        There were three main reasons why we're in the situation of
    having to do an involuntary separation.
        Senator Feinstein. Let me be clear on this. My concern is
    that the fees go up at the time you lay off people. This is a
    very hard time to lay off people. And, it's a very hard time to
    lay off these people, because I don't know what available jobs
    there are for physicists and very highly skilled personnel, if
    these are whom you are going to involuntarily lay off. And at
    the same time, the management part of it is collecting
    increased fees. I'm not sure that's the right thing.
        Mr. D'Agostino. I will admit, Senator, that it sends a very
    strange signal. My job, and ultimately the job of the lab
    director is to put the lab in the best competitive situation.
    Right now, the costs of doing work at Lawrence Livermore are
    too high. The customers that come to Dr. Miller tell him this
    is an expensive lab to work at.
        The lab has a tremendous future. It's has a future that's
    anchored by the National Ignition Facility, but also by its
    assets in intelligence, and in nuclear counterterrorism work,
    which I think are going to be very important to the country,
    whether we have a small stockpile or a large one--nuclear
    counterterrorism work is incredibly important, and we need to
    get those resources and that work into the laboratory.
        It's an incredibly difficult decision, it's one that I do
    not take lightly, I can assure you, in this whole process. But
    I will admit, it looks strange when you look at fees going up
    at the same time workforce is having to be reduced.
        Senator Feinstein. Well, I really question this. In the
    interest of full disclosure, Mr. Chairman, my husband is
    chairman of the Board of Regents of the University of
    California. And, you know, my responsibility is a little
    different. And I would really question--and I would ask you to
    look into--why the fees would go up at a time when you have to
    lay off 500 people involuntarily, let alone 250 voluntarily. It
    doesn't seem right.
        Thank you, Mr. Chairman.
        Senator Dorgan. Senator Feinstein, thank you very much.
        I'm going to submit some additional questions to all three
    witnesses.
        Senator Domenici wishes to make a final comment, and then
    I'm going to call the second panel to the witness table.
        Senator Domenici?

                          RELIABLE REPLACEMENT WARHEAD

        Senator Domenici. Thank you very much, Mr. Chairman.
        Let me say first, General, I'm sorry we didn't have any
    questions for you, but I think we'll have some, we'll submit
    them.
        I do want to say, however, that your presence and your rank
    and the fact that you are involved in very serious issues that
    confront us with reference to stockpile of the future and RTW--
    you're involved heavily in that, and you have long-term
    experience and that kind of makes me wonder what we need a
    brand-new group of people appointed by some--by the Congress to
    do the study work on this $10 million program and the future of
    it, when people like you are doing that work, in a formal way,
    and are very, very well-prepared, and prepared to tell us the
    answer to most of the questions, and we won't be using you for
    awhile, until we get that report, I guess.
        But I want you to clarify for me, Mr. Administrator, I
    think I'm confused now as to what the $10 million would be used
    for?
        Mr. D'Agostino. What it would be used for?
        Senator Domenici. Yes.
        Mr. D'Agostino. The $10 million would be used to make sure
    that past work has been adequately captured. So the money that
    we've invested over the last couple of years on this activity
    doesn't get lost.
        Additionally, the money would be used to help answer the
    questions that were asked, and put forth in the fiscal year
    2008 Omnibus Appropriations Act on advanced certification. One
    of the topics in the advanced certification omnibus line,
    talked about establishing this activity in order to address the
    JASON Report concerns about Reliable Replacement Warhead.
        In order to address those concerns, we need to further
    develop and mature, one or two aspects of the design on RRW, so
    we can do that work to answer that question posed by Congress.
    We could have put that money in the advanced certification
    line, but I think what we wanted to do is make it crystal clear
    that we weren't trying to play games. These are activities that
    are associated with maturing some of the design elements to
    answer the advanced certification questions.
        Senator Domenici. All right. So, General, you're fully
    aware with this, are you not?
        General Smolen. Yes, sir, I am. And answering some of the
    JASON questions was as part of this, but there is a
    distinction. The RRW piece does refine the data that remains,
    but it's not really incurred yet.
        Senator Domenici. Yes. Well, I'm having--now that you
    talked today with me, I'm even having more difficulty
    understanding why we wouldn't be doing it. I don't want to
    argue now with the chairman, we'll argue later, but what you
    tell me it's for, it's much--it seems to me to be almost common
    sense when you're stopping this program, and you don't know how
    long before you start it up again that, some of the things
    you've described we're going to do, we ought to do.
        It has nothing to do with pushing the program ahead, it has
    to do with just tying a ribbon around it, and making sure we
    don't lose what we've done. And I don't understand the Jason
    answers as well as that, they may very well be what is
    concerning some people about this.
        But I'd like you to help me later on, on that--I don't want
    to go out on a limb in fighting with the chairman on the floor,
    or anywhere else, if I don't understand that second part. But
    if that second part is as simple as the first part, and has so
    little to do with the future of an RRW, the program, than I
    feel like, number one, is it worth taking on? If it is worth
    taking on, it's rather easy to explain.
        And I thank you both for that, and I want to repeat for the
    record, for you, Mr. Administrator, I had a lot to do with
    forming NNSA.
        Mr. D'Agostino. Yes, sir.
        Senator Domenici. I worked closely with those who tried
    hard for a number of years to find somebody who could run the
    program. And I'm very, very disturbed that those who are
    looking for somebody to run the program--including this Senator
    who is helping--had you right in the backyard while we looked
    all over the Army, the military, the security network, and we
    put people in that didn't know how to do anything. In fact,
    they had NNSA going backward. And we found you.
        And I've got to tell you, I don't only agree with the
    Senator from California about your integrity, you've got that,
    but you're doing a terrific job with a very complex
    relationship, because these three labs are complex with
    relationship of the work you do, because they're nuclear
    deterrent laboratories.
        But we want you to pay attention to their future, too.
        Mr. D'Agostino. Yes, sir.
        Senator Domenici. Because they must be around, and we want
    you to particularly be concerned about science in these
    laboratories. That's what they're for.
        Thank you.
        Thank you, Mr. Chairman.
        Senator Dorgan. Well, Senator Domenici, you and I share a
    self-described common trait--we both lack understanding on
    this. I'm trying to understand it, as well, and you indicate
    you are.
        Senator Domenici. That's right.
        Senator Dorgan. And I would only observe, with respect to
    the RRW program, that there are a couple of things at work
    here. One is, what do we do, if anything? And number two is,
    when do we do it? And the only point I have made is there are
    larger and significant international issues that relate to our
    question about a nuclear weapons policy.
        So, we will nonetheless have a longer discussion----
        Senator Domenici. Right.
        Senator Dorgan [continuing]. Perhaps in private, perhaps in
    the subcommittee and maybe on the floor.
        Senator Domenici. And we will know what we're talking about
    before then.
        Senator Dorgan. Well, maybe not.
        But we'll enjoy it nonetheless.
        Senator Domenici. We'll try.
        Senator Dorgan. But, you know, these issues are very
    serious--very serious--and have substantial consequences, and I
    appreciate what you have said, I appreciate what Senator
    Feinstein has said, and our subcommittee will work through
    this.
        Let me thank the subcommittee--had we asked General Smolen
    a lot of questions, I know he would have answered them very
    well, he spent part of his career in Minot, North Dakota.
        General Smolen. Yes, sir.
        Senator Dorgan. So, he was fully prepared.
        We do intend to submit questions to the three of you, and
    we appreciate you being here, and ask that you would respond to
    written questions, and thank you very much.
        Mr. D'Agostino. Yes, sir.
        Senator Dorgan. I'm going to call the next panel forward--
    this is a time when we have, for the first time in a long
    time--asked the directors of the three laboratories involved in
    weapons programs to come and testify before the Senate
    subcommittee.
        I want to say that I--we have done that for a very specific
    reason. I think it is important to, for us to hear directly
    from the directors of the laboratories involved in this
    important work.
        Dr. Mike Anastasio of Los Alamos is with us, Dr. George
    Miller of Lawrence Livermore is with us, and Dr. Tom Hunter of
    Sandia.
        We have invited them all and are appreciative that they've
    taken time to come to Washington, DC to present testimony. The
    entire testimony in your submitted testimony will be made a
    part of the permanent record, I would ask the three of you to
    summarize your testimony, if you will, and we will begin with
    Dr. Anastasio.
        Dr. Anastasio, why don't you proceed with your testimony
    followed by Dr. Miller, and followed by Dr. Hunter?
        You may proceed.
    STATEMENT OF DR. MICHAEL R. ANASTASIO, DIRECTOR, LOS
                ALAMOS NATIONAL LABORATORY, LOS ALAMOS, NEW
                MEXICO
        Dr. Anastasio. Chairman Dorgan, Ranking Member Domenici,
    and other distinguished members of the subcommittee, thank you
    for the opportunity to testify about the Stockpile Stewardship
    Program. I am Michael Anastasio, the Director of the Los Alamos
    National Laboratory, and I'd like to personally thank the
    subcommittee for its strong support over very many years for
    this program that's so important to the country.
        As I look to the future, until there's a policy change, I
    must assume the Nation will continue to have a nuclear
    deterrent. And consequently, our role is to do everything we
    can to ensure that we remain confident in that deterrent for
    our national security.
        The Stockpile Stewardship Program that the country has been
    following has been the right approach. To remain confident
    while minimizing the need to ever do nuclear testing again.
        We knew this would be a hard, because the science needed
    requires advances that are well beyond anything we'd ever done
    before. And that meant new tools--experiment and computational,
    and the people who can use them.
        We've been making excellent overall progress over the last
    12 years, with many examples of remarkable accomplishments,
    even though not all of these new tools are yet in place.
        And to try to illustrate this, I thought I would just tell
    one little story as an example to illustrate. And imagine
    you're trying to understand what's going on inside a nuclear--
    or a mock--nuclear weapon. And you need to take a three-
    dimensional movie picture using x-rays.
        But unlike a medical x-ray, the object you're exploring is
    exploding in front of your eyes, and the length of the movie
    you're trying to take is only a millionth of a second long. And
    to make sure you can stop the action that you're watching, the
    exposure time of this image can only last for a few ten-
    billionths of a second. That's DARHT, the new facility we're
    bringing online at Los Alamos, where we have just recently
    demonstrated that we can meet all, in fact, exceed, the
    technical requirements to accomplish the job I just described.
        But that's not all. Once you have this image, or this
    movie, now you have to say, well, what implications does that
    have for the overall nuclear performance of this device? And
    for that we need to be able to use computer simulations to
    predict the nuclear performance instead of doing a test.
        In the summer, the roadrunner computer that we've been
    developing with IBM, we anticipate will be the first computer
    in the world to ever achieve sustained performance of the
    petaflop, that's quadrillion calculations per second. I like a
    million billion better than quadrillion, maybe that speaks
    better. But we need a computer of that kind of horsepower.
        Senator Dorgan. Doctor, is that the same as 1,000 trillion?
        Dr. Anastasio. That is 1,000 trillion, yes sir.
        Senator Feinstein. Good for you.
        Senator Dorgan. That's much simpler.
        Dr. Anastasio. Okay, thank you.
        But whatever it is, it's that level of computational power
    that we need to try to, to try to answer that predictive
    question, what nuclear performance will we get.
        So that gives a little, I think, example of what we're
    trying to do. And there are many other accomplishments of
    outstanding science, that I describe at Los Alamos or the other
    three labs--or the other two labs.
        I think that just as a momentary sideline, I think it's
    also important to understand that this very same science, the
    tools and the people, that's being used to meet other national
    challenges, from countering proliferation and terrorism to
    global climate modeling, and alternate energy sources, the
    Stockpile Stewardship Program is the program that's putting
    that science in place.
        And if I think about the progress we've made, I think the
    most important thing, on progress in Stockpile Stewardship is
    that we now understand the status of the current stockpile, and
    the technical issues that control performance, better than we
    ever have. And that's reflected in the annual assessment
    letters that each of the three laboratory directors--and our
    predecessors--have sent in over the last 12 years.
        So, with all of this, I have confidence in the stockpile
    today. But, I am concerned about the risks to success for the
    future. And let me describe two concerns--two areas of risk.
        First, the risk to the long-term vitality of science at Los
    Alamos, to support our broad national security missions. The
    confluence of an aging infrastructure, demanding increasing
    standards for safety, security and the environment, a recent
    focus on near-term deliverables, and declining operation
    budget--operating budgets--are squeezing out science at the
    laboratory.
        My second long-term concern is the continuing accumulation
    of change to the stockpile, and these changes will increase
    performance uncertainties, and pose increasing risk in a low
    margin, legacy cold war weapons stockpile. And by following a
    remanufacturing approach in a life extension program, we
    require a cold war production complex using the technologies
    and processes which are increasingly expensive, not fully
    functional, and do not provide an agile response.
        To manage these growing stockpile risks, we should be doing
    more science, by increasing the use of our advanced tools, and
    further developing them. With a constrained NNSA budget, and
    the growing infrastructure costs, we are actually doing less
    science. The basic tenants of the Stockpile Stewardship Program
    are at risk.
        The good news is that the progress we've made in
    understanding opens up alternative paths that we could go
    forward with, rather than a life-extension program. Such a path
    could include a transformed stockpile, with increased
    performance margins, hence reducing risks.
        By also eliminating difficult materials, it could remit a
    transformed complex, further transformed than the NNSA plan is
    already outlining, and further reducing infrastructure costs.

                               PREPARED STATEMENT

        So, in conclusion, it's my view that it's time for the
    Nation to set a path for the future, and provide a commensurate
    budget that will reduce and take on addressing these risks that
    I've outlined. Los Alamos remains committed to do all we can in
    our role as a national security science laboratory.
        As so with that, I thank you for the opportunity to testify
    today, and I'd be happy to answer any questions.
        [The statement follows:]
                 Prepared Statement of Dr. Michael R. Anastasio
        Chairman Dorgan, Ranking Member Domenici, and distinguished members
    of the subcommittee, thank you for the opportunity to provide a
    statement on the status and future of the Stockpile Stewardship
    Program. Today, the three directors of the national security
    laboratories are testifying before Congress about the Stockpile
    Stewardship Program for the first time since 2002 and much has happened
    in the interim.
        The Los Alamos National Laboratory remains committed to sustaining
    confidence in the United States' nuclear weapons stockpile through a
    more fundamental science-based understanding of weapons performance,
    safety, and security. I am keenly aware of the daunting technical
    challenges demanded by this mission, requiring the best science,
    engineering, and technology that we can muster. I am responsible for
    providing this set of capabilities and skills for today and, equally
    important, ensuring that they are sustainable over the long term.
        The three Department of Energy/National Nuclear Security
    Administration laboratories and their employees, working with the
    National Nuclear Security Administration production complex, are the
    basis and key driver for the successes of the Stockpile Stewardship
    Program. I personally appreciate the strong, vital support this
    subcommittee has provided over the years to enable us to execute our
    responsibilities.
        Los Alamos National Laboratory in particular has been at the
    forefront of both nuclear weapons development and the Stockpile
    Stewardship Program. As you know, beginning with its designation as
    Site Y of the Manhattan Project, Los Alamos National Laboratory's core
    mission has been to conceive, develop, and sustain the U.S. nuclear
    deterrent. Currently, 61 percent of the Laboratory's fiscal year 2008
    budget is allocated to carrying out our stockpile stewardship
    responsibilities (and associated security activities) and this mission
    is our highest priority. As a national security science laboratory, Los
    Alamos also applies this same science and engineering expertise to
    reducing threats from the proliferation of weapons of mass destruction
    and terrorism, and to provide for the Nation's energy security.
        Today, I will focus my comments on our core mission and will shape
    my remarks around three main themes:
      --A perspective on the evolution and content of the Stockpile
            Stewardship Program;
      --An evaluation of the success of the Stockpile Stewardship Program
            over its 12-year evolution; and
      --An assessment of the critical challenges and risks posed to
            retaining confidence in the Nation's nuclear stockpile as we
            look to the future.
                development of the stockpile stewardship program
        My first key theme is that the Stockpile Stewardship Program has
    been the correct program for the United States, even though it presents
    extreme technical challenges.
        With the end of the cold war, the Nation was at a crossroads with
    regard to our nuclear deterrent. Was the nuclear stockpile still
    required for the national defense? How long could the nuclear test
    moratorium, which began with a decision in 1992 by the United States to
    voluntarily cease underground tests of nuclear weapons, continue?
        In 1995, the United States embarked on an ambitious effort to
    sustain the nuclear weapons stockpile without nuclear testing, an
    effort for which we could not guarantee success. Many felt that
    maintenance of adequate confidence in the stockpile required following
    the scientific method with the ability to continue at least partial
    yield nuclear tests to address the inevitable issues that would arise.
    As one of the participants, I can tell you it was a very dynamic
    period, with much expert debate within the scientific and defense
    communities that considered a range of possible options. The policy
    decision was made for a moratorium on nuclear testing coupled with
    implementation of a science-based Stockpile Stewardship Program. This
    decision was a very significant policy shift because the scientific and
    engineering capabilities needed to confidently execute this program did
    not then exist.
        Congress, the White House, the relevant executive branch agencies,
    and the national laboratories outlined a core set of requirements that
    would be needed to take on this challenge. All involved understood that
    it would take at least a decade to bring together all the complicated
    elements of the new Stockpile Stewardship Program. It was also
    understood that success was in no way guaranteed because of the
    unprecedented scale of cutting edge science needed to accomplish this
    mission.
        The approach relies upon developing, and validating through inter-
    laboratory peer review, a more fundamental scientific and engineering
    understanding of the performance, safety, and security of weapon
    operations. This fundamental approach is based on a much more extensive
    range of non-nuclear above-ground testing and a vastly improved
    simulation capability--calculations with high resolution both in
    spatial description and in physical models. These calculations are
    necessary for addressing issues requiring extrapolation beyond tested
    regimes. The existing nuclear test database is used as a crucial
    resource for challenging the validity of these improved simulations.
    Ultimately, expert judgment and rigorous peer review assures that
    critical conclusions are drawn from the best available data,
    appropriate high-resolution simulation outputs, and results from the
    suite of evolving testing capabilities. Sound science is always at the
    core of our confidence.
        In addition, enhancements to our weapon surveillance tools to
    accurately characterize the status of the weapons and the continued
    support of the production complex to extend the life of aging weapons
    were critical. The Stockpile Stewardship Program was described not as
    something with a fixed end-point, but as a new way of maintaining the
    Nation's nuclear weapons deterrent into the future.
    Tools of Science-Based Stockpile Stewardship
        With the loss of the ability to test the integrated operation of a
    weapon, more technically sophisticated and more frequent non-nuclear
    above-ground tests were essential. We judged at the time that these
    tests should include at a minimum:
      --subcritical experiments to elucidate the dynamic behavior of
            plutonium driven by high explosives (now proceeding at the U1a
            facility at the Nevada Test Site);
      --advanced radiographic experiments with multiple images and enhanced
            spatial resolution to provide multiple sequential views of
            high-explosive implosion dynamics with very fine detail (e.g.,
            Dual Axis Radiographic Hydrotest Facility);
      --ignition experiments to explore the fusion process crucial to the
            operation of modern warheads (e.g., National Ignition
            Facility); and
      --enhanced surveillance tools for destructive and nondestructive
            testing and analysis to characterize the status of the
            stockpile.
        At the same time, we judged that our computer simulations would
    need to be enhanced at least 1 million times in order to incorporate
    the known physics and scientific resolution. We judged that this
    computational requirement was the minimum necessary to model subsystem
    behavior and predict integrated weapons safety, reliability and
    performance without underground testing.
        All of these capabilities were first-of-a-kind, requiring technical
    advances beyond the existing state of the art at the time. Because of
    technical challenges and funding limitations, all of these needed
    capabilities are still not yet fully in place 13 years later.
    Production Complex and Life Extension Programs
        Hand in hand with all the above capabilities was the need to have a
    production complex, working together with the laboratories, which could
    respond to any potential issues discovered through the weapons systems
    surveillance process. In addition, weapons would be returned for
    remanufacture to their original specifications in order to extend their
    life into the future so that they would regain their original
    characteristics. This requires the full suite of cold war production
    capabilities.
        I am convinced that the Stockpile Stewardship Program has been the
    right program for the United States. What the Nation committed to over
    a decade ago is a very challenging set of integrated scientific
    capabilities that provide a means to validate the reliability of our
    strategic deterrent. For success, a balanced funding profile, between
    near-term actions and long-term capability investment was needed. A
    compromise of any one of the Stockpile Stewardship components will have
    significant consequences on the overall program. We have been able to
    sustain confidence in the nuclear deterrent through a program whose
    elements were beyond the state of the art at the program's inception--a
    remarkable testament to the people throughout the National Nuclear
    Security Administration complex.
              the stockpile stewardship program has been a success
        My second key theme is that the Stockpile Stewardship Program has
    been extremely successful since its inception.
    Annual Assessment
        President Clinton stated on August 11, 1995, ``In this regard, I
    consider the maintenance of a safe and reliable nuclear stockpile to be
    a supreme national interest of the United States. I am assured by the
    Secretary of Energy and directors of our nuclear labs that we can meet
    the challenge of maintaining our nuclear deterrent under a CTB through
    a science-based stockpile stewardship program without nuclear
    testing.''
        For the 12th consecutive year in September 2007, the Laboratory
    Directors each signed their annual assessment letter reporting that
    there was no requirement for nuclear testing at this time to maintain
    the certification. I have had the honor to be involved each of these 12
    years, personally signing a letter on five occasions. Today, these
    letters also include the additional assessments required by section
    3141 of the Fiscal Year 2003 National Defense Authorization Act.
        My 2007 assessment was based on the following comprehensive data
    set analysis:
      --The details contained in the joint Los Alamos National Laboratory--
            Sandia National Laboratories 2007 annual assessment report
            based on the ongoing theoretical, analytical, experimental, and
            computational activities throughout the year.
      --Assessments by applicable Los Alamos National Laboratory technical
            experts and managers on the adequacy of science-based tools and
            methods, tools and methods employed by the manufacturing
            infrastructure, and nuclear test readiness.
      --An evaluation of the health of the stockpile by my Director's Red
            Team for annual assessment, an independent group of technical
            experts from Los Alamos National Laboratory, Lawrence Livermore
            National Laboratory, and Sandia National Laboratories.
      --The extensive and detailed technical reviews that I personally
            conducted of each warhead with technical experts on the Los
            Alamos National Laboratory warhead design and engineering
            teams.
        Equally important, I assessed the current status of each weapon's
    nuclear package, the health of the overall Stockpile Stewardship
    Program, and the areas of significant risk.
    Life Extension Programs
        For most stockpile issues, the application of the Stockpile
    Stewardship Program tools has allowed the laboratories to resolve
    anomalous conditions with no impact to safety, reliability, or
    performance. For other issues that cannot be resolved in a timely
    manner through the Stockpile Stewardship Program, the following options
    are available:
      --exceptions, limitations, or changes to the Military Characteristics
            or Stockpile to Target Sequence;
      --component replacement or warhead refurbishment;
      --introduction of more robust components that sustain the reliability
            of the stockpile;
      --selective retirement of individual warheads or a warhead type;
      --decertification; or
      --nuclear testing.
        In the past, all of these options have been employed. Today, we
    routinely use all options except decertification or nuclear testing to
    maintain the certification of warheads in the stockpile. In particular,
    we have completed the W87 Life Extension Program (LEP), achieved first
    production units on Alt 357 for the B61-7 and B61-11, as well as
    numerous smaller changes to gas transfer systems and non-nuclear
    components or subsystems to allow us to extend the life of these
    systems where possible. The first production unit for the W76-1 was not
    achieved on schedule as a result of a difficult materials production
    issue. Los Alamos National Laboratory is providing significant on-site
    technical assistance and coordination between the plant and Laboratory
    materials experts. The Laboratory also is working with the National
    Nuclear Security Administration to develop a recovery plan consistent
    with Department of Defense needs.
    Reestablishing Pit Capacity
        In 2007, Los Alamos National Laboratory produced the first war
    reserve pit manufactured in the United States since the Rocky Flats
    Plant was closed in 1989. By the end of fiscal year 2007, the
    Laboratory had manufactured 11 W88 pits (one more than required) and
    delivered 6 pits to the Pantex Plant for use in stockpile warheads. One
    of these has been assembled into a war reserve W88 warhead with the new
    4T Terrazzo gas transfer system. The 4T was delivered for use and
    certified over 1 year ahead of schedule, a remarkable achievement that
    reflected excellent coordination among all sites in the nuclear weapons
    complex. As W88 warheads with Los Alamos National Laboratory
    manufactured pits enter the stockpile, warheads returned for
    surveillance will be available for disassembly and inspection,
    correcting a long-standing weakness in the W88 surveillance program.
    Advanced Simulation and Computing (ACS)
        Of all of the elements of the original Stockpile Stewardship
    Program this area has shown the most progress. Los Alamos, Lawrence
    Livermore, and Sandia National Laboratories have led the way in
    developing the world's fastest supercomputers and then harnessing that
    power into tools needed to simulate our baseline weapons performance.
    This capability allows us to integrate our component level
    understanding into overall system performance. We have already enhanced
    our computing speed by more than a factor of one million with the ASC
    Purple machine at Livermore. The return on investment in this area has
    been high for the United States. For example, we are now able to
    confront the most challenging weapons physics questions that have
    plagued us for decades.
        Los Alamos National Laboratory, in a partnership with IBM, has
    completed the installation of the first phase of the Roadrunner
    supercomputer for computations in support of national security science.
    Roadrunner is expected to become the world's first system to achieve a
    sustained performance level of a petaflop--a quadrillion calculations
    per second--early this summer. All three National Nuclear Security
    Administration laboratories will use Roadrunner for advanced physics
    simulations and predictive simulations of complex scientific processes.
    Advanced Radiographic Experiments
        Beginning in December 1999, warhead designers were able to see the
    clearest views ever made of the inside of an imploding, mock-weapon,
    test object with the successful operation of the first axis of the Dual
    Axis Radiographic Hydrotest Facility (DARHT). The images helped to
    validate new descriptions of high-explosive driven physics used in
    computer simulations of weapons performance.
        With the advent of the Stockpile Stewardship Program, the decision
    was made to enhance the capability of the DARHT second axis to a 4-
    pulse machine. This enhancement required a completely new accelerator
    design that went far beyond what had ever been attempted before. Now in
    2008, DARHT has met, and in many cases far exceeded, all of its
    technical requirements and expectations. We expect that this month it
    will officially become ``dual'' with the formal completion of the
    project for the second axis, adding both new capability and higher
    energy to this unique accelerator facility. The first use of this full
    capability in an implosion test of a mock weapon will take place later
    this year. The ability to produce multiple pulses with varied
    intensities in a preset time sequence allows warhead designers to
    specify what they want to see and DARHT will be able to deliver.
    Ignition Experiments
        The National Ignition Facility (NIF) is a critical piece of the
    Stockpile Stewardship Program and, arguably, is the most complicated
    and complex part. Developing a more detailed understanding of the
    fusion reactions that take place inside a weapon system remains one of
    the great challenges in the field of weapons science. Until the
    National Ignition Facility becomes operational, significant
    uncertainties will remain. I understand how difficult this project has
    been and am also acutely aware of the immense contributions that the
    full capacity of NIF will make to the overall Stockpile Stewardship
    Program. My conversations with Director Miller lead me to believe that
    this project is tantalizingly close to fruition.
    Stockpile Surveillance
        The weapons in the stockpile are not static. The chemical and
    radiation processes inside the nuclear physics package induce material
    changes that limit weapon lifetimes. We are seeing significant changes
    that are discussed in detail in my Annual Assessment letter.
        The improvement in efficiency at Pantex helped us understand the
    present state of the stockpile and has greatly reduced our disassembly
    backlogs. This improvement allows us to get up-to-date technical
    information on the condition of weapon materials. We use the
    stewardship tools to evaluate the changes that continue within the
    stockpile. Using more detailed data from enhanced surveillance tools,
    we now have a better understanding of the major sources of stockpile
    issues:
      --Birth Defects.--Flaws introduced into the warhead resulting from
            the manner in which it was produced, manufactured, or
            assembled;
      --Design Limitations.--Warhead design decisions that were made that
            limit conditions under which a warhead can reliably operate
            because of incomplete scientific understanding of physics
            performance; and
      --Aging Effects.--Changes in the stockpile that constantly take place
            and reduce the operating ranges or reliability of the
            warheads--effects that will continue to grow as the stockpile
            ages.
        Los Alamos and the nuclear complex continue to make great strides
    in being able to both discover and correct these problems through
    advanced surveillance and nondestructive testing. As potential concerns
    are discovered, commonly referred to as SFIs or significant finding
    investigations, we are now able to use our new tools to rapidly assess,
    simulate, and model potential effects. At Los Alamos, we have
    dramatically reduced the number of open, unresolved SFIs over the last
    few years. Further, we are using our increased understanding to reduce
    the sampling rate for surveillance, while focusing on the important
    aspects for each warhead system.
    Other National Security Applications of Stockpile Stewardship Tools
        Additional important national benefits derive from these
    capabilities. Los Alamos applies this same science and engineering
    expertise to reduce threats from the proliferation of weapons of mass
    destruction and terrorism, and to provide for the Nation's energy
    security. The Laboratory works on the front lines and behind the scenes
    to prevent the use of nuclear or radiological materials as threats to
    national or international security. The Nuclear Nonproliferation
    Program and its predecessors originated nuclear safeguards and created
    most of the technology used to monitor and measure nuclear materials to
    assure their use in legitimate, peaceful purposes.
    Recent Los Alamos Threat Reduction Accomplishments
      --We delivered the fully integrated Cibola Flight Experiment space
            vehicle for launch with an orbiting computer capable of
            performing more than 1 trillion operations per second. This
            matches the performance of the best supercomputers from a
            decade ago, yet weighs only 40 pounds and requires only 80
            watts of power.
      --We rapidly and effectively supported the national response to the
            North Korean nuclear test. We provided the sole technical
            support from the Department of Energy at the Six-Party talks in
            Beijing on implementation of the North Korean denuclearization
            commitments.
      --We recovered more than 1,750 U.S.-origin radiological sources in
            fiscal year 2007, including the first-ever disposal of Radium-
            226 sealed sources.
    Recent Los Alamos Science and Energy Security Accomplishments
      --We garnered over 102 major science awards from major external
            organizations.
      --We developed the first high-resolution climate model for ocean
            circulation that allows us to better understand climate effects
            like El Nino and La Nina.
      --We completed the 100th genetic sequence for the Joint Genome
            Institute.
        These accomplishments represent a different application of the
    science underlying our core nuclear weapons mission. For example, many
    of the same people who would help us deal with potential nuclear
    terrorism incidents are our experts from the nuclear weapons program.
    Our global climate change expertise developed out of our need for
    knowledge on nuclear winter effects tied to the nuclear weapons
    program, and our supercomputer expertise was developed to simulate
    nuclear explosions. The dual-use aspects of our scientific capabilities
    allow for greater national return on investments, discovering other
    important applications for the stockpile stewardship tools. This
    broader use can often enhance their application for our core mission.
        Even though all the elements of the Stockpile Stewardship Program
    are not yet in place and there are certain science processes that we do
    not understand yet, it is clear that there have been and continues to
    be significant accomplishments emanating from the scientists and tools
    of this program. This program has allowed us to sustain the necessary
    level of confidence in the stockpile. At the same time, we have much
    greater insight into the risks we face for the future.
      increasing risks to the future success of the stockpile stewardship
                                    program
        Today I have confidence in the United States nuclear deterrent and
    believe that within the next few years we will put in place the
    essential tools we envisioned at the outset of the Stockpile
    Stewardship Program. But I have increasing concerns as I look to the
    future. The stockpile continues to change because of aging and the
    necessity to remanufacture cold war weapons through the Life Extension
    Program approach. The accumulation of these changes, whose combined
    effects are difficult to quantify, will increase our uncertainties and
    pose increasing risk.
        At the same time, there are ever-increasing standards imposed by
    environmental management, safety, and security requirements driving up
    the costs of the overall infrastructure. When coupled with a very
    constrained budget, the overall effect is exacerbated, restricting and,
    in some cases eliminating, our use of experimental tools across the
    complex. This puts at risk the fundamental premise of Stockpile
    Stewardship. At a time when our uncertainties are increasing, we should
    have a more vigorous program of non-nuclear, above-ground testing
    development and use, capabilities that allow us to validate and augment
    our developing predictive simulation tools. Regrettably, we are moving
    in the opposite direction.
             tough challenges ahead--los alamos national laboratory
        I will first address specific challenges at Los Alamos National
    Laboratory. The risks at Los Alamos are similar to those that we face
    nationally.
    Commitment to Science
        Although available science-based tools and methods, both the large-
    scale facilities discussed above and the laboratory-scale capabilities
    that are the workhorse of our programs, have been adequate to address
    current issues in the stockpile, use of these tools is particularly at
    risk.
        Los Alamos is one of the oldest sites in the nuclear complex whose
    facilities are difficult to maintain. Several of our aging facilities
    are nuclear facilities with extremely demanding standards for the
    environment, safety, and security. At the same time, the National
    Nuclear Security Administration's preferred alternative for complex
    transformation designates Los Alamos as the national center for
    plutonium R&D and production, further concentrating nuclear operations
    on our site. This increased responsibility for nuclear facilities and
    operations must be viewed in the context of a reduction in purchasing
    power of approximately half a billion dollars over the last 5 years
    Moreover, from our preliminary planning discussions with the National
    Nuclear Security Administration, we anticipate further erosion of our
    purchasing power by about $400 million over the next 5 years, assuming
    inflation and a flat level of appropriated dollars.
        The growing costs of our infrastructure in this declining budget
    environment puts science at risk, especially our ability to execute and
    develop large-scale and laboratory-scale experiments. As the questions
    arise from a stockpile that inevitably continues to undergo change, we
    will be increasingly constrained in our ability to gather the data
    essential to assess those changes and to assure the efficacy of the
    recommended actions that must be made.
        There are equally important consequences for the long term as well.
    All of the above near-term pressures constrain our ability to renew our
    aging infrastructure, which becomes more expensive to maintain the
    longer this renewal takes. Nationally, the program has become more
    focused on implementing near-term solutions at the expense of longer-
    term investments. The overall risks in the Stockpile Stewardship
    Program will be growing in the future. A balance of long-term
    investments in science and engineering with near-term actions will best
    serve the success of the program.
    Commitment to the Scientists
        Key to the ability of Los Alamos to respond to national needs over
    the long term is maintaining our technical skills--our people make us a
    premier national security science laboratory. We must be able to
    recruit and retain the best and brightest scientific talent. Los
    Alamos, like all the other national laboratories, draws and retains
    scientists because of the unique capabilities and opportunities we
    offer.
        Part of what attracts people to a science laboratory such as Los
    Alamos, are the unique capabilities that are hard to find elsewhere.
    LANSCE, our neutron accelerator, has been a prime example of such a
    capability. Part of the future that we see for this facility is to
    transform it into the world's premier materials science and test
    capability, Matter-Radiation Interaction in Extremes (MaRIE). MaRIE
    will be designed to create and exploit extreme radiation fluxes and
    probe matter to achieve transformational materials performance through
    predictive multi-scale understanding. This facility would draw
    scientists to Los Alamos because it would represent a one-of-a-kind
    user facility whose scientific and practical applications could not be
    duplicated, and it would also be a key facet to the weapons program.
    When coupled with modern facilities and equipment and our role as a
    high-performance computing center (Roadrunner is the latest example),
    this facility would help ensure our access to the best scientific
    talent well into the future.
        Because there is no advanced training program for nuclear weapons
    physics and engineering at our colleges and universities, the National
    Nuclear Security Administration laboratories need the right tools to
    attract scientists and engineers from the traditional disciplines and
    then teach them the true art of what we do. Without the continuing
    commitment to exceptional science, Los Alamos National Laboratory will
    not be able to provide the incredible diversity and depth of talent we
    require.
    Commitment to Modern Facilities
        Los Alamos is one of the oldest sites in the nuclear complex. With
    many old, high-consequence mission facilities, our Laboratory is very
    expensive to maintain. The Laboratory's main focus for infrastructure
    reinvestment priorities is replacing the Chemistry and Metallurgy
    Research building (CMR) and refurbishing our LANSCE accelerator
    facility. The CMR building was built in the late 1940s and early 1950s
    to support scientific research of plutonium and other actinide
    elements. But after more than 50 years of service, it will be very
    difficult for the CMR to continue to meet modern safety, security, and
    operational requirements. Several sections have been closed to help
    manage risk, and the remaining laboratory space is harder and more
    expensive to use. As part of the National Nuclear Security
    Administration's preferred alternative for complex transformation, the
    CMR would be replaced by a new facility called the Chemistry and
    Metallurgy Research-Replacement (CMR-R) project.
        The CMR-R project will include two buildings, one a light lab and
    administration building and the other a high-security R&D and storage
    building. Together these two structures will have a smaller footprint
    then the old CMR facility, and will be safer and more secure. The first
    phase of the CMR-R project, currently under construction, is the
    Radiological Laboratory Utility Office Building (RLUOB), a modern
    laboratory facility that will include 19,000 square feet of laboratory
    space, offices for 350 people, and a training facility. The second
    phase of the CMR-R project is the Nuclear Facility and construction
    will begin in the first quarter of 2010. The Nuclear Facility is being
    designed to provide 22,000 square feet of laboratory space, mostly
    dedicated to plutonium research, and will include a vault capable of
    storing 6 metric tons (6,000 kilograms) of plutonium. Neither the RLUOB
    nor the Nuclear Facility will manufacture pits. Regardless of whether
    the Nation elects to sustain the existing stockpile or transform it to
    a different configuration, congressional support of the CMR-R will be
    essential to conduct the fundamental research that supports the use of
    actinides in weapons and in other critical applications.
        As I mentioned earlier in my statement, the Laboratory has
    developed a plan to sustain our long-term scientific capability in
    materials science through the experimental facility MaRIE. This plan
    could realistically take about a decade to reach full completion. A
    critical first step in evolving LANSCE, a fully functional but aging
    facility, into the MaRIE capability would be to start refurbishing the
    base accelerator within the next year with the help of Congress.
    LANSCE-R, as we refer to the refurbishment project, is an immediate
    critical step if Los Alamos is to continue using this facility for our
    classified weapons research activities. LANSCE is the only facility of
    its type in the country that can support both classified weapons
    research and unclassified scientific experiments. The weapons program
    relies heavily on capabilities derived from LANSCE, such as proton
    radiography, to interrogate fundamental physics cross-sections, the
    properties of various classified subsystems, and materials under
    extreme conditions.
    Controlling Costs while Maintaining Mission Capability
        I believe it is incumbent on my management team to focus on
    aligning overall costs with the mission requirements while at the same
    time finding efficiencies for more effective use of overall
    programmatic funding. At Los Alamos, we are actively working to reduce
    our physical footprint by roughly 2 million square feet (over one-
    quarter of the reduction has been completed in the last year and a
    half). We have internally absorbed the higher operating costs
    associated with the new contract structure. At the same time, we are
    providing significant leadership in the National Nuclear Security
    Administration's effort to achieve complex integration. Los Alamos is
    also working with the National Nuclear Security Administration and the
    Department of Energy in developing a third-party financing proposal to
    build a new science complex to help further consolidate our overall
    facilities footprint. This proposed new facility would eliminate over
    450,000 square feet of existing substandard scientific space and house
    over a 1,500 scientific staff in the main Technical Area of the
    Laboratory.
        The Laboratory has also had to make tough decisions and significant
    reductions in overall staffing levels. Since the beginning of fiscal
    year 2006, the Laboratory's total headcount has been reduced by over
    2,100 individuals, about 46 percent of whom were part of the technical
    workforce. Matching the Laboratory's workforce to the size of our
    budget is my responsibility, but I am deeply concerned that with the
    loss of mission experienced scientists and engineers and the current
    budget outlook Los Alamos' ability to execute our mission is at risk
    for the future.
        In summary, it is my view that it is in the national interest that
    we continue to develop and nurture the Laboratory's scientific talent
    and to invest in and rebuild our infrastructure in order to preserve
    Los Alamos National Laboratory as a premiere scientific institution. To
    achieve these critical outcomes, we need the help of Congress to ensure
    a stable, forward-looking, balanced budget profile to plan for the
    future.
       critical crossroads for the national stockpile stewardship program
        Since the moratorium on nuclear testing began in 1992, the
    Stockpile Stewardship Program has successfully maintained the nuclear
    weapons stockpile; however, it has become increasingly difficult and
    costly to sustain our legacy stockpile, manufactured in the 1960s,
    1970s, and 1980s through refurbishment projects. The full cold war
    infrastructure required to support the older technologies and processes
    embodied in weapons developed during the cold war is expensive, not
    fully functional, and does not provide an agile response to evolving
    needs. The overall cost of the weapons complex is dominated by growing
    infrastructure costs, relatively independent of the number of weapons
    in the stockpile.
        The continuing accumulation of small changes from stockpile fixes,
    life extension activities, and aging--with combined effects that are
    difficult to quantify--will result in larger performance uncertainties
    and pose increasing risk to the certification of low-margin legacy
    warheads.
        With growing costs of the full cold war infrastructure and the
    prospects for a declining budget, it is becoming more difficult to
    maintain, use, or enhance the Stockpile Stewardship tools we have put
    in place. At the same time, there is a continued decline in the number
    of people in the complex who have direct experience with the design,
    manufacture, and testing of an actual weapon. Yet with the increasing
    risk to certification noted above, we should be moving in the opposite
    direction. To assess the impact of larger performance uncertainties
    with low-margin warheads we need a more detailed technical
    understanding of key, fundamental, technical issues to manage these
    uncertainties. This requires the more frequent use and further
    development of advanced laboratory-scale and large-scale capabilities
    and the simulation tools that can predict these results. The
    combinations of these factors cause me to conclude that the basic
    tenets of the Stockpile Stewardship Program are at risk.
        With increasing risks to certification, I urge us to implement a
    more comprehensive inter-laboratory peer review process as part of
    Annual Assessment. Only one design laboratory would have certification
    responsibility for each nuclear package, but all the information for
    each would be readily available to both design laboratories. This would
    include, for example, the original nuclear test data, and all current
    data from surveillance and non-nuclear testing. Each would then execute
    a comprehensive assessment of the current nuclear package status and
    share that with the certification responsible design laboratory that
    would inform their final assessment. This approach is a near-term step
    that could mitigate the increasing certification risks and also provide
    more opportunities to build workforce expertise at both laboratories.
    In the past 2 years, Lawrence Livermore and Los Alamos have taken a
    step in this direction where the two directors are jointly briefed on
    the status of all the nuclear packages.
        The Stockpile Stewardship Program has provided a much better
    understanding of both the stockpile status and the key technical issues
    that control performance and reliability. This insight has opened up
    the possibility of alternate paths forward beyond the current Life
    Extension Program approach. Such a path could include a transformed
    stockpile with increased performance margins, reducing risk. By also
    eliminating difficult materials it could permit a transformed complex,
    reducing infrastructure costs. It is clear to me that it is time to
    start making decisions about how to best accomplish this
    transformation.
        Los Alamos fully supports the National Nuclear Security
    Administration in the development of a more cost-effective, lower-risk,
    and more responsive nuclear weapons complex infrastructure. A
    replacement warhead strategy, such as the Reliable Replacement Warhead
    concept, would have greater margin against performance uncertainties
    and would use design options with materials and components that would
    be less complex, safer, more secure, and easier to manufacture and
    maintain. Additionally, if the Department of Defense can have greater
    confidence in the National Nuclear Security Administration complex and
    its products, then that could lead to even further reductions in the
    stockpile.
                               concluding remarks
        Los Alamos National Laboratory is committed to providing our
    technical expertise as part of the national effort to sustain
    confidence in a viable nuclear deterrent, while minimizing the risk for
    a return to nuclear testing, with the smallest number of weapons
    consistent with national policy goals.
        The Stockpile Stewardship Program has been the right approach for
    the United States. We knew at the outset that it would be a very
    challenging program as the required scientific capabilities
    necessitated advances beyond the existing state of the art. There was
    no guarantee of ultimate success.
        Over the last decade, there has been excellent overall progress
    with many examples of remarkable accomplishment. Among them is a much
    better understanding of the status of the current stockpile.
        I am concerned about the risks to success for the future. First,
    the long-term vitality of science at Los Alamos to support our national
    security missions is at risk. Second, the continuing accumulation of
    changes to the stockpile will increase performance uncertainties and
    pose increasing risk in low-margin legacy cold war designs.
        It is time for the Nation to set a path for the future that will
    address these risks.
        Thank you for this opportunity to testify. I would be pleased to
    answer any questions you may have.

        Senator Dorgan. Director Anastasio, thank you very much.
        Next, Director Miller?
    STATEMENT OF DR. GEORGE H. MILLER, DIRECTOR, LAWRENCE
                LIVERMORE NATIONAL LABORATORY, LIVERMORE,
                CALIFORNIA
        Dr. Miller. Thank you very much, Chairman Dorgan, for
    inviting me here and giving me the opportunity to give you my
    perspective of the health of the Nation's nuclear weapons
    program. I'd especially like to thank Senator Domenici, and
    personally thank him for his many years of leadership and
    service to this Nation, and importantly, for his extensive and
    exceptional stewardship of this country's science and
    technology and nuclear affairs, broadly.
        I'm also very pleased that Senator Feinstein is here, and I
    thank her very much for her continuing support of the
    laboratories broad mission.
        I'd like to summarize just a couple of points from my
    written testimony. Through Stockpile Stewardship, this Nation
    has been able to maintain an increasingly small nuclear
    deterrent, without nuclear testing. But the job's not done.
        I'm concerned that the investments that have brought us to
    this point are at risk. As you and several members of the panel
    have pointed out, the country needs to make a series of
    decisions about the overall structure of the nuclear weapons
    program, and the policies associated with it. It is my view
    that--independent of the policy that we move forward--the
    science and technology embedded in the Science-based Stockpile
    Stewardship is necessary to succeed, because it is the
    intellectual underpinning for any decision.
        I'm extremely proud of the contributions that Livermore has
    made to bringing the Stockpile Stewardship Program to this
    point. The W87 life extension program was the first life
    extension program certified without nuclear testing.
        Through the Livermore, IBM, NNSA partnership, we have
    successively produced the world's largest computers, currently
    BlueGene/L at Livermore is 500 teraflops, half a petaflop.
        Weapons simulations using these computers have shown us
    that there's much about the inner workings of a nuclear weapon
    that we do not yet understand, and they've pointed the way to
    the scientific capability that's necessary to continue to be
    able to certify the stockpile.
        The national ignition facility is already the world's
    largest and most powerful laser, and it will be completed
    within a year. It will shortly bring fusion experiments, and
    the science of the cosmos to the laboratory. It's critical to
    enabling us to answer some of the most fundamental questions
    that we have about nuclear weapons performance.
        Since the project was re-baselined about a decade ago, the
    NIF has been on-budget, on-schedule, and met all of its
    milestones. I thank the committee for its role in allowing NIF
    to move forward. I think you can take great pride in its
    accomplishments.
        But the job of Stockpile Stewardship is not complete. The
    weapons are continuing to age, and the experienced weapons
    scientists are continuing to age. Some of the tools are just
    now coming online, they have yet to be applied to the full
    spectrum of problems that need to be resolved. As Mike said,
    DARHT has just recently been completed, it needs to be applied
    to the stockpile.
        The simulations done on the BlueGene/L have pointed out
    that we need tens of petaflops sustained to be able to
    accurately understand what's going on in a nuclear weapon. NIF
    is not yet complete.
        To ensure better confidence as we move forward, I believe
    it's important that we implement a more comprehensive peer
    review, whereby Livermore and Los Alamos more fully evaluate
    the entire stockpile each year, and it's essential that we
    complete this job.
        I think we understand what the laboratories----
        Senator Domenici. Would you repeat that again, please?
        Dr. Miller. Yes, sir.
        I believe that we should implement a more comprehensive
    peer review, whereby Livermore and Los Alamos each year would
    more fully evaluate all of the stockpile, rather than just the
    systems for which they own have responsibility.
        I think our job as laboratory directors is to provide
    technical options that can inform policy goals of the United
    States. To provide a weapons complex that's sustainable into
    the future, that has the smallest number of weapons consistent
    with policy goals, has the least costly weapons complex, and
    minimizes any need to return to testing.
        As I look into the future, I'm concerned that the
    investments that have brought us to this point are not
    sustained. If they are not sustained, I believe a crisis in
    confidence will result.
        Without a fully developed science and technology program,
    we will lose confidence in the stockpile, whether we have a
    life extension program, or some other. I believe we are seeing
    the signs of this concern borne out already, the critical
    investments in the accelerated super-computing initiative have
    already begun to decline. We are not able to fully utilize the
    experimental facilities that we have built.
        The effects are already being felt at Livermore, with the
    reductions associated with last year's Federal budget, and the
    costs associated with the contract. By the end of this fiscal
    year, Livermore will have reduced its population by more than
    2,000 people from the beginning of fiscal year 2007.
        I believe that the Stockpile Stewardship Program is at a
    cusp of being able to ensure confidence in the stockpile
    without nuclear testing. I believe we can be successful if we
    push forward, I believe we can fail if we stop.
        The weapons labs are centers of big science in this
    country. The resident expertise is being applied to the
    pressing problems of this country, of securing the Nation's
    defense and energy, and environmental and economic security.
        Nuclear weapons expertise is critical to intelligence and
    understanding the problems of proliferation and terrorism.
    Nuclear weapons expertise is critical to the issue of
    understanding nuclear forensics. As a result of the scientific
    investments made by the Department of Energy and this
    subcommittee, these labs provide value to the country, well
    beyond nuclear weapons, in areas that I believe are the
    defining issues of this century.

                               PREPARED STATEMENT

        We're doing a lot, but we can do more. All that we do is
    dependent upon the vital core of the nuclear weapons program.
    As you forward through the difficult decisions ahead of you, I
    ask that you think in terms of sustainment--sustaining and
    protecting what is most critical, and applying these critical
    resources to our country's, and the globe's, most defining and
    important problems.
        [The statement follows:]
                   Prepared Statement of Dr. George H. Miller
        Mr. Chairman and members of the subcommittee, thank you for the
    opportunity to provide my perspectives on the fiscal year 2009 budget
    request as well as the health of the country's nuclear weapons
    stockpile and nonproliferation programs. I am the Director of the
    Lawrence Livermore National Laboratory (LLNL), a multidisciplinary
    national security laboratory with major responsibilities in nuclear
    weapons. My responsibility--and today's critical challenge--is to help
    enable a nuclear weapons program that is sustainable into the future
    with the smallest number of weapons and the least costly weapons
    complex consistent with policy goals and that minimizes the risk of
    needing to return to nuclear testing.
        Because this is a time of significant change for the National
    Nuclear Security Administration's (NNSA's) nuclear weapons complex and
    our Laboratory, I open my statement with my perspective of the broad
    challenges we face. I then briefly highlight Livermore's
    accomplishments in NNSA programs and specific issues related to our
    activities. I conclude with summary remarks about my future vision for
    the Laboratory.
        But first, I want to thank the Congress and especially this
    subcommittee for your continuing strong support of the Stockpile
    Stewardship Program and our important and technically demanding
    programs to reduce the dangers of proliferation of nuclear weapons. The
    Stockpile Stewardship Program continues to make excellent technical
    progress, but it is not yet complete and faces challenges in the years
    ahead. Critical decisions have to be made about the future of the U.S.
    nuclear stockpile and the weapons complex. Independent of specific
    choices made, it is clear that a strongly supported and sustained
    Stockpile Stewardship Program is necessary to ensure that this Nation
    can maintain the safety, security, and reliability of its nuclear
    deterrent over the long term. I support NNSA's goal of transforming the
    nuclear weapons complex to make it smaller, safer, more secure, and
    more cost effective. I recognize the realities that constrain the
    overall budget as we attempt to create a nuclear enterprise appropriate
    to the post-cold war era.
              challenges facing the nnsa weapons complex and llnl
        Lawrence Livermore National Laboratory serves NNSA and the Nation
    by applying multidisciplinary science, engineering, and technology to
    meet urgent challenges to national security and global stability. Since
    the Laboratory's inception in 1952, a special national security
    responsibility has been ensuring that the Nation has a safe, secure,
    and reliable nuclear weapons stockpile. In addition, Livermore provides
    advanced technologies, integrated analyses, and operational
    capabilities to prevent the spread and use of weapons of mass
    destruction and strengthen homeland security.
        Our special multidisciplinary capabilities are also applied to
    strengthen global security through research and development for
    advanced defense systems, abundant energy and environmental quality,
    biotechnology to improve human health, U.S. industrial competitiveness,
    and basic science. These activities--many directed toward finding
    innovative solutions to the great challenges of the 21st century--both
    derive from and depend on the core nuclear weapons science and
    technology and also contribute to supporting the science and technology
    required for our nuclear weapons mission.
        Livermore is an integral part of NNSA's Stockpile Stewardship
    Program and committed to helping the Nation transform the U.S. nuclear
    weapons complex and stockpile to meet 21st century deterrence needs. We
    need an affordable nuclear weapons complex; the smallest nuclear
    deterrent force consistent with policy goals; and a sustainable nuclear
    weapons program that provides confidence in the safety, security, and
    reliability of stockpile and minimizes the risk of the need for nuclear
    testing.
        The Stockpile Stewardship Program was a very ambitious undertaking
    when launched a little over a decade ago. To date it has been highly
    successful in its two major goals. First, we had to develop and use
    vastly improved tools to much better understand nuclear weapons
    performance. I am proud of our tremendous accomplishments in this area.
    Great progress has been made and even more will come with quadrillion-
    operations-per-second (petascale) computers and high-fidelity
    simulations and the capability, beginning in 2009, to conduct
    thermonuclear weapons physics experiments at the National Ignition
    Facility (NIF). These tools are critically important to maintain
    confidence in our deterrent without nuclear testing. Second, we have to
    sustain the expertise--people--to ensure that the U.S. nuclear
    stockpile remains healthy by applying our improved understanding of
    weapons performance to deal with issues that arise in aging weapon
    systems without resorting to nuclear tests. So far, we have been able
    to do that. The first weapon system to successfully complete a life-
    extension program under the Stockpile Stewardship Program without
    nuclear testing was Lawrence Livermore's and Sandia's W87 ICBM warhead.
    Although the job is not over, I remain confident that science-based
    stockpile stewardship will continue to be a technical success provided
    that the Nation continues its investments in the science-based
    programmatic activities.
        Budgets for NNSA nuclear weapons activities are tight and likely to
    remain so. As I look to the future, I am very concerned that the
    investments that have brought success to science-based stockpile
    stewardship might not be sustained. Over the longer term, failure to
    sustain investments in stockpile stewardship will result in loss of the
    expertise, capabilities, and activities that underpin the Annual
    Stockpile Assessment and certification of weapon modifications. That
    would lead to a loss in confidence in the stockpile. In some respects,
    the future is now at Livermore. The National Ignition Campaign, work
    needed to carry out the initial ignition experiments in 2010 and
    continuing research the following years, did not receive the full
    funding requested by NNSA in fiscal year 2007, fiscal year 2008, or
    fiscal year 2009, putting timely achievement of program goals at higher
    risk than would be the case otherwise. Reduced levels of funding for
    the Accelerated Simulation and Computing (ASC) program are eroding our
    capabilities to improve physics models in weapon simulation codes. Most
    tellingly, in fiscal year 2008 the Laboratory's spending power was
    reduced $280 million (compared to a $1.6 billion budget in fiscal year
    2007)--about $200 million more than anticipated. While our focus is on
    reducing support costs and preserving programmatic capabilities, it is
    noteworthy that the staff will decline from about 8,900 in October of
    2006 to under 7,000 FTEs by the end of fiscal year 2008. More than 500
    of these are highly-trained scientists and engineers.
        In a constrained budget environment, it is important to preserve
    critically needed capabilities and to stay focused on the long-term
    objectives: an affordable nuclear weapons complex supporting a smaller
    nuclear deterrent force sustained by a nuclear weapons program that
    provides confidence in the stockpile. Many details about the end state
    will have to be worked out--and depend on future nuclear weapon policy
    choices and world events--but it is clear that expertise, skills, and
    capabilities currently embodied in the NNSA national laboratories will
    be needed in the long term and can serve as useful technical resources
    to help define the path forward. In broad terms, a prudent path forward
    that would sustain science-based stockpile stewardship capabilities
    would be to:
      --Consolidate selected capabilities and facilities such as those for
            special nuclear materials to reduce costs, while preserving
            intellectual independence of key capabilities that are
            necessary for technical peer review. Fully capable, independent
            peer review is critical when nuclear testing is not available.
      --Sustain investments in capabilities at the NNSA laboratories that
            are both critical to the long-term success of stockpile
            stewardship and because of their technical leadership, provide
            a basis for expanding work for other Federal agencies and
            addressing important national priorities (e.g., at Livermore,
            NIF and ASC).
      --Apply the capabilities at the NNSA laboratories to: continuing to
            improve their understanding of weapons physics issues to reduce
            uncertainties in weapon performance; managing issues that arise
            in stockpiled weapons; and working with the NNSA production
            plants and Department of Defense to devise an optimal path
            forward for a certifiably safe, secure, and reliable stockpile
            at affordable costs.
      --Work to reduce overhead costs at the NNSA laboratories and expand
            work for other Federal agencies in a way that supports and
            augments NNSA's investments in the laboratories.
        This approach, which is fully consistent with NNSA's long-term
    objectives for complex transformation, provides an additional valuable
    service to the Nation. It secures a long-term role for the weapons
    laboratories as crown jewels of large-scale science supporting our
    Nation's defense, energy, environmental, and economic security. These
    laboratories are the largest multidisciplinary concentration of PhDs in
    the country--there are no other institutions like them. As a result of
    this investment in the scientific and technical infrastructure by DOE
    and this committee, the laboratories provide value to the country well
    beyond nuclear weapons work--in areas that are the defining problems of
    this century. And we can do even more.
             new stockpile stewardship tools and their application
        One of the greatest accomplishments of the Stockpile Stewardship
    Program to date is our tremendous progress in acquiring new tools and
    using them to better understand weapons performance. When nuclear
    testing was halted, there were significant gaps in our knowledge. Some
    nuclear test results remained unexplained and for some processes in the
    detonation of a nuclear device, our simulation codes were simply not
    adequate. Either the computers were not large and fast enough or we did
    not understand the physics--or both. For those processes, we depended
    on nuclear test data to adjust the codes.
        A key focus of stockpile stewardship has been to fill the gaps in
    our knowledge to reduce our uncertainties about nuclear weapons safety,
    security, and performance as the stockpile ages. There are four major
    areas of investment in improved capabilities: more powerful computers,
    enhanced hydrodynamic testing capabilities to experimentally study the
    performance of (mock) primaries prior to nuclear explosion, an
    experimental facility to study the high-energy-density and
    thermonuclear processes in weapons (the National Ignition Facility),
    and tools to better understand the properties of plutonium. With these
    tools, we are striving to develop a better understanding of the
    physics, improve our simulation models, and use non-nuclear experiments
    and past nuclear test data to validate those model improvements. To
    date, some of the unknowns about nuclear weapons performance have been
    resolved, others we are close to resolving, and still others will
    require more time and effort. Greater knowledge increases the
    likelihood that we can resolve with confidence a problem that arises in
    stockpiled weapons without having to resort to a nuclear test.
    Advanced Simulation and Computing (ASC)
        The ASC program continues to be a remarkable success. The goal set
    when the Stockpile Stewardship Program began was a million-fold
    increase in computing power in a decade. It was estimated at the time
    that a computer capable of 100 trillion floating point operations per
    second (100 teraflops) would provide a minimum level capability to
    model the full performance of a nuclear weapon in three dimensions with
    sufficient resolution to illuminate the physics issues where we need to
    make significant improvement. The goal was attained with the delivery
    to Livermore from IBM of the 100-teraflop ASC Purple supercomputer,
    with over 12,000 processors and 2 million gigabytes of storage.
        In April 2006, the NNSA laboratories began using ASC Purple for
    classified production runs. Soon after the machine began operating, a
    joint team of scientists from Livermore and Los Alamos performed a
    series of weapon simulations at unprecedented resolution using the most
    advanced ASC simulation software. The results gave dramatic new
    insights into weapons physics by pointing to phenomena not seen at
    lower resolution.
        ASC Purple is now running a series of 6 month campaigns as a
    national user facility--managed in a manner similar to a unique, large
    experimental facility. Each of the NNSA laboratories propose computing
    work packages to be run as campaigns. These packages, which need ASC
    Purple's size and capability, aim at achieving major stockpile-
    stewardship milestones. The proposals are reviewed and prioritized for
    relevance, importance, and technical rationale; and machine time is
    allocated accordingly. ASC Purple is the first ASC system to be managed
    in this way.
        A remarkable feature of the ASC program is its strong partnerships
    with the U.S. computer industry and major research universities to
    accelerate the development of supercomputer platforms, storage and
    operating systems, and software capable of running efficiently on
    machines with tens to hundreds of thousands of processors. An example
    of this is Livermore's partnership with IBM to develop and bring into
    operation BlueGene/L, the world's fastest computer. With its system-on-
    a-chip technology, BlueGene/L is a world apart from its predecessors.
    Compared with the previous record holder, it was 8 times faster and
    one-fourth the cost, and it required one-tenth the floor space and one-
    sixth the power consumption. In 2007, the machine was expanded from
    131,000 to 208,000 processors and now benchmarks at 478 teraflops (with
    a peak speed of 596 teraflops).
        BlueGene/L was acquired through the ASC program as a computational
    research machine for evaluating advanced architectures to help define
    an affordable path to petaflop computing (quadrillion operations per
    second). It has been remarkably successful, efficiently running
    simulation codes capable of addressing a broader range of weapons
    issues than originally envisioned. For 3 years running, simulations
    performed by researchers using BlueGene/L won the prestigious Gordon
    Bell Prize, which is awarded to innovators who advance high-performance
    computing.
        It is vital that the laboratories build on the ASC program's
    outstanding successes and sustain the momentum toward petaflop
    computing and beyond by staying on schedule for the next planned ASC
    investments, the Roadrunner machine for Los Alamos and the Sequoia
    machine for Livermore, and continuing to maintain and develop the
    extraordinary simulations code systems. These next two machines take
    different approaches to the integrated problem of the computer
    architecture and simulations that must run on them. Sequoia is an
    extension of the successful BlueGene/L approach while Roadrunner takes
    a different approach. Both entail risks. The continuing advances in
    simulation required to resolve the remaining weapons performance issues
    are too important to pursue only one approach. One needs to succeed and
    hopefully both will. The generation of machines beyond them can combine
    the two different approaches.
        Through the highly successful ASC program, we are turning
    simulation into a tool of predictive science--a full partner with
    theory and experiments. In particular, we are making key discoveries
    about physical processes in the functioning of a nuclear weapon that
    help us to improve models in codes and reduce sources of uncertainty in
    weapon performance. The more powerful Roadrunner and Sequoia computers
    are essential for implementing better physics models and as discussed
    below, the methodology we have been developing to quantify
    uncertainties in weapon assessments and certification. It is critically
    important to sustain the investments that have led to such remarkable
    successes in the ASC program.
    Hydrodynamic Testing
        Hydrodynamics testing is the most valuable experimental tool we
    have for diagnosing device performance issues for primaries in weapons
    before they enter the nuclear phase of operation. Hydrodynamics
    experiments are conducted at Livermore's Contained Firing Facility
    (CFF) at Site 300, our remote testing location, and the newly
    commissioned Dual-Axis Radiographic Hydrodynamic Test Facility (DARHT)
    at Los Alamos. Experiments are executed in accordance with a National
    Hydrotest Program, which NNSA coordinates with the laboratories. The
    plans include both Integrated Weapons Experiments--large-scale tests of
    mock weapon primaries--and smaller-scale focused experiments, performed
    to study specific physics or engineering issues. Over the last 3 years,
    Livermore researchers performed nearly 20 Integrated Weapons
    Experiments at CFF for both Livermore and Los Alamos. The Laboratory
    has also conducted a long series of Focused Experiments to study
    radiation case dynamics after high-explosive detonation. Important
    information was learned from these experiments that led to major
    improvements to weapons code physics and new insights into nuclear
    weapons performance.
        In the NNSA's preferred alternative for complex transformation,
    long-term plans call for closure of CFF when its use for hydrodynamic
    testing is no longer programmatically necessary and reduced NNSA
    support for Site 300. As these changes occur, Livermore scientists and
    engineers will carry out aspects of their important hydrodynamic
    experiments at other sites. It is critically important that sufficient
    funding be made available to fully utilize the new capabilities
    available at DARHT.
    The National Ignition Facility (NIF)
        NIF is critical to the success of the Stockpile Stewardship
    Program. It is the only facility capable of creating in a laboratory
    the conditions necessary to experimentally access all of the nuclear
    phase operations important to modern nuclear weapons. A wide range of
    precisely diagnosed experiments can be fielded at NIF. These
    experiments offer the promise of uncovering important physics details
    about the functioning of a nuclear weapon that were inaccessible or not
    examined in underground nuclear tests. NNSA scientists will gather
    necessary data to improve and validate physics models in simulation
    codes. Ignition experiments at NIF are critical to understanding fusion
    burn, a key phenomena in the performance of weapons in the stockpile.
    The design and execution of complex NIF experiments will also test the
    expertise of NNSA scientists and sustain their critical skills and
    knowledge about nuclear design.
        Major progress continues to be made on NIF and preparations for
    fusion ignition experiments with the 192-beam laser. As has been the
    case since being rebaselined in 2000, the NIF project is meeting all of
    its technical performance, cost, and schedule milestones. Current plans
    are to complete the construction project and laser commissioning in
    March 2009, and begin the first ignition experiments in fiscal year
    2010. In July 2007, Laboratory scientists, engineers, and technicians
    commissioned the first of two 96-beam laser bays, assuring that each
    beam met NIF's operational and performance qualification requirements.
    In early 2008, all 192 main laser beams were precisely aligned. As of
    the end of March 2008, testing has been completed on 144 of the 192
    beams, and installation has begun of the final optical modules that
    convert the laser light from infrared to ultraviolet. More than 3.1
    megajoules of infrared-light energy have been fired, making NIF by far
    the world's most energetic laser. The extraordinary laser energy (more
    than 1.8 megajoules of energy in ultraviolet light), the remarkable
    beam quality, and the ability to shape the pulse to meet the specific
    needs of experiments provide NIF unique and unprecedented experimental
    capabilities.
        The National Ignition Campaign (NIC), which is being managed for
    NNSA by our Laboratory, involves multiple laboratories and encompasses
    all work needed to carry out the initial ignition experiments in 2010
    and continuing research the following years. Currently, the main thrust
    of NIC is to prepare for experiments in 2009 to validate the ignition
    target's design. Using 96 beams, these experiments will help select the
    optimum radiation temperature conditions for the ignition experiments.
    Computer simulations, which have been validated by their close match
    with data gathered from the 4-beam NIF Early Light experiments
    conducted in 2003-2004, indicate that NIF's laser beams will propagate
    effectively through the hot plasma generated in fusion experiments to
    achieve ignition.
        NIC is following a well-defined technical path toward ignition on
    NIF and the transition of NIF to routine operations in 2012 as a highly
    flexible high-energy-density user facility for research for stockpile
    stewardship as well as energy security and the basic science of matter
    at extreme conditions. However, NIC did not receive the funding
    requested by NNSA in fiscal year 2007 and fiscal year 2008, putting
    timely achievement of program goals at higher risk than would be the
    case otherwise. We remain confident that ignition will be achieved soon
    after the experimental program begins in 2010. We have larger concerns
    about a shortfall in the future funding needed to sustain the
    experimental effort and achieve the full benefits of NIF's unique
    capabilities. NIF is the only source of the data about the ``nuclear
    phase'' of operation that are necessary for the long-term success of
    stockpile stewardship.
        A number of key uncertainties about nuclear weapons physics relate
    to weapons performance near the time the device ``goes nuclear'' and
    thereafter. The process of boosting the fission yield of primaries, in
    particular, is key to weapons performance and is not well understood.
    NNSA has launched a science campaign to investigate the physics of
    boost and improve the modeling of it in simulations with the goal of
    reducing uncertainties in weapon performance. Data and insights from
    NIF experiments are required to develop and validate the models.
    Ignition and thermonuclear burn is another area where NIF experiments
    will enable scientists to better understand the underlying physics and
    reduce weapon performance uncertainties.
        In addition, NIF experiments will provide critically needed
    equation-of-state, opacity, and material dynamics data to improve and
    validate weapon simulation models. NIF is unique in its capabilities
    for these types of experiments because of its ability to produce very
    high temperatures in a sufficiently large volume for a sufficiently
    long period of time and because of its excellent diagnostics. These
    same attributes make possible scaled experiments of hydrodynamic and
    radiation transport phenomena, with results that can be directly
    compared to simulation model predictions of nuclear-phase weapon
    performance. As it nears completion, it is extremely important that the
    NIF project be fully funded so that it can be completed on time and
    that NIF be fully utilized to demonstrate ignition and resolve the
    weapons physics issues critical to continuing to certify the stockpile
    without nuclear testing. At this point in the project, there is little
    flexibility to accommodate funding shortfalls without impact on
    completion.
    Plutonium Research Capabilities and Facilities
        Plutonium is an extremely complex material and understanding its
    detailed properties is a major scientific challenge. Completed in 2006,
    a concerted long-term study by Livermore and Los Alamos researchers
    concluded that the performance of plutonium pits in U.S. nuclear
    weapons will not sharply decline due to aging effects over decades.
    Because plutonium is highly radioactive, over time it damages materials
    in weapons including the pits themselves. However, the study concluded
    that the plutonium pits for most, but not all, nuclear weapons have
    minimum lifetimes of at least 85 years. These results have important
    implications in planning for the weapons production complex of the
    future.
        Still, there is much we do not know about the material and its
    properties at extreme conditions, which is important for weapon
    performance. In 2007, Livermore researchers met an important stockpile
    stewardship milestone by completing the development of a new
    description of plutonium under a variety of physical conditions--an
    ``equation of state.'' This equation of state is based on advanced
    theory and simulation, including simulations only now possible with the
    ASC Purple and BlueGene/L supercomputers, together with very accurate
    data from diamond-anvil-cell measurements at high static pressures and
    dynamic experiments using the Joint Actinide Shock Physics Experimental
    Research (JASPER) gas gun at the Nevada Test Site. Work with this
    equation of state tells us that the technical research into this
    complex material must continue if we are to meet all the needs of the
    stewardship program.
        Large-scale work with plutonium at Livermore's plutonium facility
    (Superblock), which has provided vital support to the Stockpile
    Stewardship Program, will be phased out. NNSA's plans for complex
    transformation include the consolidation of weapons-useable special
    nuclear materials to fewer sites. All Category I/II quantities of
    special nuclear materials are to be removed from Livermore by the end
    of 2012--2 years earlier than planned when the first shipment of
    plutonium left the Laboratory for Los Alamos in late 2006. Since then,
    two more shipments of material have been made to the Savannah River
    Site in South Carolina, where surplus nuclear materials are being
    consolidated.
        Livermore researchers will continue research and development
    activities to better understand plutonium, improve plutonium part
    manufacturing processes, and provide surveillance of stockpiled
    weapons. Our plutonium research breakthroughs have proved important
    over the years, and the two-laboratory approach is a vital part of
    effective peer review processes. Category III amounts of nuclear
    materials will remain on the Livermore site for small-scale
    experiments. For other activities, Laboratory scientists and engineers
    will begin using facilities elsewhere to conduct their work. To this
    end, modern plutonium-capable facilities are necessary for stockpile
    stewardship and sustaining the Nation's nuclear stockpile. It is
    essential that the Nation proceed with the Chemistry and Metallurgy
    Research (CMR) Building Replacement Project at Los Alamos.
                      managing the health of the stockpile
        Lawrence Livermore is responsible for the nuclear explosive
    packages in five nuclear weapons systems--four that were designed by
    Livermore: the W62 ICBM warhead, the W84 cruise missile warhead
    (inactive), the B83 strategic bomb, and the W87 ICBM warhead; and one
    designed by Los Alamos: the W80 cruise missile warhead. The Laboratory
    monitors the health of the weapons for which it is responsible,
    conducts stockpile stewardship activities to better understand aging
    effects on weapons materials and components, develops advanced
    technologies for weapon surveillance, evaluates issues as they arise in
    stockpiled weapons, and pursues programs to extend the stockpile life
    of weapons. In addition, Livermore scientists and engineers develop
    advanced technologies for weapons surveillance and manufacture of
    weapons parts, and the Laboratory participated in the Reliable
    Replacement Warhead Feasibility Study.
        Livermore also assists others in the nuclear weapons complex on
    production issues. Laboratory engineers are working closely with the
    Pantex and Y-12 Throughput Improvement Project teams to improve plant
    efficiencies, expedite completion of joint projects, and introduce new
    capabilities. In addition, Livermore helped with the resumption of
    weapon pit manufacturing at Los Alamos, where a team succeeded in
    fabricating and certifying new pits for the W88 submarine-launched
    ballistic missile warheads. The Laboratory supplied radiographic
    inspection capabilities, produced small-scale plutonium samples for
    testing, and provided engineering evaluations and peer reviews based on
    a wide range of independently conducted experiments and simulations.
    Comprehensive Peer Review and Advanced Certification
        Livermore is a key participant in formal review processes and
    assessments of weapon safety, security, and reliability. As part of the
    Annual Stockpile Assessment Process, Lawrence Livermore and Sandia
    prepare Annual Assessment Reports for each of the nuclear weapons
    systems for which the two laboratories are jointly responsible. As
    input to the reports, Laboratory scientists and engineers collect,
    review, and integrate all available information about each weapon
    system, including physics, engineering, chemistry, and materials
    science data. These Annual Assessments use the advanced tools developed
    by the stockpile stewardship program--such as ASC, DARHT, and soon
    NIF--as an integral part of the assessments. This work is subjected to
    rigorous, in-depth intralaboratory review and to expert external
    review, including formal use of red teams.
        With the aging of U.S. nuclear weapons, risks are growing that
    reliability issues will arise, and modifications to extend the
    stockpile lifetime of weapons are likely to become more complex and
    challenging to certify. In recognition of these issues, the JASON
    Defense Advisory Group recommended to NNSA that the weapon
    certification process be improved through expanded peer review
    mechanisms and refinement of the computational tools and methods for
    certification. To address these recommendations, NNSA was directed by
    Congress to implement a new Science Campaign called Advanced
    Certification to significantly increase the scientific rigor of
    certifying the Nation's nuclear deterrent. The campaign is focused on
    expanding and applying the Stockpile Stewardship Program methodology
    called the quantification of margins and uncertainties (QMU). By
    enhancing the scientific rigor and transparency of QMU, the Advanced
    Certification Science Campaign will improve the quality of the
    assessments and enable better peer review by external panels of
    experts. These efforts will expand the applicability and validity of
    the process, initially developed for the existing stockpile, to complex
    Life Extension Programs and reuse of previously produced components
    such as pits, and they will answer questions raised by the JASONs in
    their consideration of the Reliable Replacement Warhead.
        In conjunction with the Annual Assessment process, the laboratories
    have recommended that a more Comprehensive Peer Review process be
    implemented. In this process, responsibility for assessing a nuclear
    package in a weapon system will remain with the current responsible
    design laboratory. However, surveillance and underground test data for
    all stockpile systems will be accessible to both design laboratories,
    and each laboratory will annually carry out comprehensive independent
    analyses of all stockpile systems, thereby enabling in-depth, intensive
    laboratory technical peer review. This effort will provide the
    responsible laboratory and NNSA with more comprehensive evaluations of
    the stockpile and more efficiently apply complex-wide resources to
    address time urgent stockpile issues, such as significant finding
    investigation (SFI) resolution. I believe that adding the Comprehensive
    Peer Review process is the single most important action to take to
    improve confidence in the nuclear deterrent in the absence of nuclear
    testing.
    Life-Extension Programs (LEPs)
        The LEP that refurbished the W87 ICBM warhead was a successful
    example of stockpile stewardship. Congress authorized the W87 LEP in
    1994, the first rebuilt W87 was delivered back to the Department of
    Defense (DOD) on schedule in 1999, and Lawrence Livermore and Sandia
    completed formal certification in 2001. NNSA and DOD established an
    extensive technical review process to certify the design changes and
    production procedures. The process entailed thorough internal reviews
    at Livermore, technical reviews by NNSA (including peer review by Los
    Alamos), and reviews by DOD. Throughout the program, the Laboratory
    collaborated with the production plants, working to ensure the quality
    of the W87 refurbishment work.
        Subsequent LEPs are proving to be challenging, and future ones can
    be expected to be even more difficult because there are going to be
    more things that need to be fixed--that happens with age. Nuclear
    weapons include a variety of reactive and organic materials sealed in
    close proximity in a hostile radiation environment. In some weapon
    systems, we are beginning to see aging signs that concern us. Cold-War-
    era weapons were designed to meet stringent military characteristics
    (MCs). The limits of what was possible were often pushed in the design
    of currently-deployed weapons. Ease of manufacture or long shelf-life
    were lower design priorities. Exotic and/or environmentally unfriendly
    materials are used in a number of instances to improve performance, and
    manufacture of the weapons entailed numerous steps that are difficult
    to exactly reproduce. Furthermore, while there is a basis for high
    confidence in the performance of the stockpiled weapons as they were
    produced, some designs do not have large performance margins, which
    makes their performance less resilient to change. These factors
    increase the difficulty of certification of any modifications in
    refurbishments and the expense of rebuilding the weapons.
    Reliable Replacement Warhead Feasibility
        After authorization by Congress, the Nuclear Weapons Council
    launched the Reliable Replacement Warhead (RRW) Feasibility Study in
    2005. The goal of the RRW is to replace existing aging warhead systems
    with designs that more closely meet the requirements of the post-cold
    war era. The RRW would include advanced safety and security
    technologies, and it would be designed to have much larger performance
    margins than the system being replaced. Large performance margins make
    it easier to certify reliable performance without underground nuclear
    testing. These designs would be based on devices that were well tested
    previously, further obviating the need for nuclear testing. They would
    be manufactured from materials that are more readily available and more
    environmentally benign that those used in current designs. The
    objective is for these modified warheads to be much less costly to
    manufacture by a smaller, modernized production complex. The RRW is to
    maintain the current military capability--not to improve it.
        In early 2007, NNSA announced its decision that Livermore and
    Sandia national laboratories would provide design leadership for the
    RRW for the U.S. Navy. After the decision, NNSA and the Navy began work
    to further define and develop detailed cost estimates for the RRW
    program. This work was intended to support a future decision to seek
    congressional authorization and funding in order to proceed into system
    development and potentially subsequent production. The effort has since
    been halted. Seeking clarification on a number of related policy and
    technical issues, Congress stopped funding for RRW work in fiscal year
    2008. The Nation would benefit from a clearer view of the costs of RRWs
    versus programs to extend the life of existing warheads or a blending
    of the RRW and LEP approaches--together with the technical challenges
    and risks of the various options. Considerable technical work is needed
    to support an informed decision about the preferred options for the
    Nation's enduring nuclear deterrent and nuclear weapons complex. It is
    important that we expeditiously start to develop the needed
    information.
              support of defense nuclear nonproliferation programs
        Livermore engages in a wide range of activities for NNSA's Defense
    Nuclear Nonproliferation Program, whose important mission is to address
    the threat that hostile nations or terrorist groups may acquire
    weapons-useable material, equipment or technology, or weapons of mass
    destruction (WMD) capabilities. We contribute to almost all program
    areas because the Laboratory takes an integrated, end-to-end approach
    to its WMD nonproliferation work--from preventing proliferation at its
    sources, to detecting proliferant activities and identifying ways to
    counter those efforts, to responding to the threatened or actual use of
    WMD.
        Another feature of the Laboratory's work is that we work closely
    with end-users of our technologies and systems so that our research and
    development efforts are informed by real-world operational needs.
    Livermore, in fact, supports several sponsors with unique operational
    capabilities. For Defense Nuclear Nonproliferation these include the
    National Atmospheric Release Advisory Center (NARAC), the Nuclear
    Incident Response Program, and the Forensic Science Center, which
    supports multiple sponsors. NARAC is the source of technical
    capabilities that also support the Department of Homeland Security's
    (DHS's) Interagency Modeling and Atmospheric Assessment Center. As a
    result of our special capabilities, the Laboratory is also responsible
    for DHS's Biodefense Knowledge Center and DOD's Counterproliferation
    Analysis and Planning System and the Homeland Defense Operational
    Planning System. The uniqueness of Livermore's capabilities is borne
    out by the fact that we are one of only 12 world-wide laboratories, and
    currently the only one in the United States, certified to analyze
    samples pertaining to the Chemical Weapons Convention and the only
    certified forensics laboratory able to receive all types of forensics
    evidence--nuclear, biological, explosive, and hazardous chemicals.
        Selected examples of the Laboratory's activities in support of
    Defense Nuclear Nonproliferation include:
      --In support of the Global Threat Reduction Initiative, Livermore is
            leading the effort to secure more than 1,000 radioisotopic
            thermonuclear generators deployed across Russia. Installed in
            the 1970s as remote power sources, these devices are highly
            radioactive and largely unsecured, thus posing proliferation
            and terrorism risks.
      --In support of the Material Protection Control and Accounting
            (MPC&A) program, Livermore completed MPC&A upgrades for the
            last two Russian navy sites in the Kamchatka region in 2007.
            The Laboratory also leads the Federal Information System effort
            to establish a comprehensive national nuclear material
            accounting system for Russia.
      --In a significant breakthrough to strengthen international nuclear
            safeguards, a team of researchers from Lawrence Livermore and
            Sandia recently demonstrated that the operational status and
            thermal power of reactors can be precisely monitored over hour-
            to month-timescales using a cubic-meter-size antineutrino
            detector. The detectors could be used to ensure that nuclear
            fuel in civilian power reactors is not diverted for weapons
            purposes.
      --In support of efforts to monitor for underground nuclear
            explosions, Livermore develops tools and methodologies for
            detecting seismic events in regions of proliferation concern.
            In 2007, Laboratory scientists produced regional seismic
            calibrations for the Persian Gulf and surrounding regions, and
            they developed improved methods for distinguishing the waveform
            for earthquakes and nuclear explosions in North Korea.
      --The Laboratory works on a variety of advanced detection
            capabilities. One example is major success in 2007 in
            developing a passive technique to detect shielded highly-
            enriched uranium, an important breakthrough for homeland
            protection.
        All of these capabilities are built upon the science and technology
    infrastructure required to meet our nuclear weapons responsibilities.
                                summary remarks
        On October 1, 2007, a newly formed public-private partnership,
    Lawrence Livermore National Security, LLC (LLNS), began its contract
    with the Department of Energy to manage and operate the Laboratory.
    LLNS is honored to take on the responsibility. We see a future with
    great opportunities to apply our exceptional science and technology to
    important national problems. To this end, we have identified four top-
    level goals.
        First, we will work with NNSA to provide leadership in transforming
    the Nation's nuclear weapons complex and stockpile to meet 21st-century
    national security needs. As in NNSA's preferred alternative for complex
    transformation, we envision Livermore as a center of excellence for
    nuclear design with centers of excellence for supercomputing with
    petascale machines, high-energy-density physics with the National
    Ignition Facility (NIF), and energetic materials research and
    development with the High Explosives Applications Facility (HEAF). We
    are vigorously supporting the goal of consolidation and working toward
    eliminating Category I/II quantities of special nuclear material from
    the site by 2012.
        Second, we will carry forward Livermore's tradition of exceptional
    science and technology that anticipates, innovates, and delivers. This
    is the science and technology that brought into operation currently the
    world's most powerful computer and used it the last 3 years in a row to
    win the Gordon Bell Prize with amazing scientific simulations; that is
    finishing commissioning of NIF and preparing for experiments to achieve
    the power of the sun in a laboratory setting for national security,
    long-term energy security, and scientific exploration; that is
    developing advanced radiation detection systems as well as analysis-on-
    a-chip technologies and DNA signatures for rapid detection of pathogens
    for health and security applications; and that has provided critical
    technical support since 1990 to the Intergovernmental Panel on Climate
    Change, which was a co-winner of the Nobel Peace Prize in 2007 for its
    work.
        Third, we will aggressively make available the core scientific and
    technical capabilities of the Laboratory to meet pressing national
    needs in areas that build on and contribute to the core missions and
    strengths of the Laboratory. As I highlighted in this testimony, the
    Nation and the world face many complex challenges in the 21st century
    that require the exceptional science and technology and sustained
    multidisciplinary efforts that the Laboratory can offer.
        Four, we will enhance business and operational performance, paying
    particular attention to safe and secure operations and improving our
    operational efficiency and cost effectiveness. Public trust in our
    Laboratory depends on meeting mission goals through safe, secure,
    disciplined, and cost-efficient operations.
        LLNS' start as managing contractor at the beginning of fiscal year
    2008 coincided with the reduction of $280 million in spending power at
    the Laboratory. We have been working to dramatically reduce support
    costs and the staff will decline from about 8,900 in October 2006 to
    under 7,000 FTEs by the end of fiscal year 2008. More than 500 of these
    are highly-trained scientists and engineers. The change is painful, but
    it is my responsibility to ``right size'' the Laboratory to budget
    realities.
        It is the Nation's responsibility to ``right size'' the NNSA
    laboratories to their important, continuing missions and their broader
    responsibility to ``think ahead'' and pursue multidisciplinary science
    and technology in anticipation of emerging national needs. I urge your
    continuing support for a strong Stockpile Stewardship Program and for
    sustaining the NNSA laboratories' work on the science-based stockpile
    stewardship and NNSA nonproliferation programs as well as other
    activities to meet vital national needs.

        Senator Dorgan. Dr. Miller, thank you very much.
        Finally, Director Hunter, from Sandia.
    STATEMENT OF DR. THOMAS O. HUNTER, PRESIDENT AND
                DIRECTOR, SANDIA NATIONAL LABORATORY,
                ALBUQUERQUE, NEW MEXICO
        Dr. Hunter. Thank you, Chairman Dorgan, and Senator
    Domenici, and Senator Feinstein. It's a pleasure to be before
    you today.
        I'm Tom Hunter, President of Sandia National Laboratories.
    And our principal mission, as you know, is to provide and
    support the non-nuclear subsystems for all of the nuclear
    weapons in the stockpile. We also support a wide range of
    research and development, in other areas of national security.
        I've presented written testimony, as you've noted, I'd like
    to summarize a few points, perhaps some of the same points the
    other directors mentioned, but I'll focus on them in a little
    different way, and then be glad to answer questions.
        Let me first talk about Stockpile Stewardship. In my view,
    Science-based Stockpile Stewardship has made exceptional
    progress since its inception, over a decade ago. The Nation
    asked us to stop testing, to stop development of new weapons
    systems, and to invest in key scientific and engineering
    capabilities that would allow the continued certification of
    the stockpile. We've done that.
        Along the way, we've been leaders in the development of
    many key areas of science, in particular, advanced modern
    super-computing, high-energy density physics, advanced
    microsystems, and many areas of material science.
        One of the areas I'm most proud of, to have been associated
    with, at our laboratory is the Mesa facility, which was
    mentioned earlier by Director D'Agostino, when he said that we
    have completed on-schedule, and ahead of budget. In that
    facility, we build the small, little devices that can be put in
    nuclear weapons and I usually like to say, there we build
    little things you can't see, that do things you can't imagine.
        Today I, Dr. Anastasio, and Dr. Miller--Mike and George--
    continue to support the annual assessment of the safety and
    reliability of the stockpile. We independently provide a
    personal statement of the condition of each of the systems in
    our stockpile. I don't think I can describe in words how
    significantly we take that responsibility--it means a lot to us
    professionally and personally, we do it each year, and are in
    the process of doing it this year, as well.
        This annual assessment is a matter of both legislative
    requirement, and personal accountability. Behind it stands the
    investment of the Government, the work of many dedicated
    scientists and engineers, and our personal credibility and
    reputation, and that of our institutions. The stockpile needs,
    and will continue to need, attention. The stockpile will age.
    Issues will have to be resolved. As time progresses, we must
    maintain confidence that our deterrent is effective. As we move
    forward, it is essential to recognize the need for a vital,
    scientific foundation to support this confidence, and to make
    wise choices about the composition of the stockpile and the
    nuclear weapons complex that it supports.
        I believe it is important to continue the investigation of
    a replacement strategy for legacy, cold war era warheads. A
    right-size stockpile that is safer, more secure, has more
    inherent performance margins, and can be maintained more
    effectively, should be our mutual goal.
        The nuclear weapons complex must be transformed to be more
    effective. It must work better, operate more safely, be better
    integrated, and cost less. The NNSA's program for complex
    transformation is very important. We've already begun at our
    lab, we've already completed removal of all discrete category
    two and category three nuclear materials from our site. We've
    already achieved a reduction of 18 percent of our workforce
    since 2004, that supports nuclear weapons.
        We're working to change our work mix at our California
    site. We're re-looking at our approach to super-computing. All
    of these transitions must be managed effectively so that our
    ability to effectively support the stockpile is maintained. We
    must use the insight from our Stockpile Stewardship Program to
    chose which infrastructure investments are made, and decide
    when they will be made.
        The capabilities we have developed to support our nuclear
    tern have allowed us to make many, many contributions in other
    areas of national security--from combustion science for energy
    efficiency, to nuclear waste disposal, specialized radars for
    defense applications and many more. These applications provide
    great synergy and great vitality for our ability to support the
    stockpile. The nuclear weapons path forward is actually just
    one piece, though, of a much broader nuclear future for the
    country, and for the world.
        It is important to enhance our efforts in non-
    proliferation, and help realize the full potential of nuclear
    power as a safe, and environmentally friendly source of energy.
    The budget legislation you see before you will allow that to be
    addressed.
        Finally, I think I'd be remiss if I did not note that few
    threats to this country's future loom as large as our chronic
    lack of investment in science and engineering, and the
    education systems that support it. History will not judge our
    generation very favorably if we do not speak out, if we do not
    act, to significantly change our lack of attention and lack of
    investment in one of the clear elements that made this country
    great.

                               PREPARED STATEMENT

        You have the full commitment of my--my personal commitment,
    and that of my organization--to support you in addressing these
    important problems in the future, and I'll be glad to address
    any questions.
        [The statement follows:]
                   Prepared Statement of Dr. Thomas O. Hunter
        Mr. Chairman and distinguished members of the subcommittee, thank
    you for the opportunity to testify. I am Tom Hunter, president and
    director of Sandia National Laboratories. Sandia is a multiprogram
    national security laboratory owned by the United States Government and
    operated by Sandia Corporation \1\ for the National Nuclear Security
    Administration (NNSA).
    ---------------------------------------------------------------------------
        \1\ Sandia Corporation is a subsidiary of the Lockheed Martin
    Corporation under Department of Energy prime contract no. DE-AC04-
    94AL85000.
    ---------------------------------------------------------------------------
        Sandia's core role in the Nation's nuclear weapon program is the
    design, development, qualification, and certification of non-nuclear
    subsystems of nuclear warheads. As a multiprogram national security
    laboratory, Sandia also conducts research and development in nuclear
    nonproliferation, energy security, intelligence, defense, and homeland
    security.
        My statement today addresses the appropriation request for the
    Department of Energy (DOE) programs that fund activities at DOE
    national laboratories and specifically at Sandia National Laboratories.
    I will discuss the stockpile stewardship program and the laboratory
    capabilities at Sandia that are essential to sustain it. I will suggest
    how the NNSA laboratories can help respond to the challenges of the
    emerging global nuclear future, including nonproliferation issues. I
    will comment on programs in energy security and for the Office of
    Science. Finally, I will also bring to your attention my concern that a
    larger role for these laboratories in a broader national security
    context will be important, so that the best solutions for critical
    national needs may be achieved. My written statement includes an
    addendum of specific issues of concern that I offer for the attention
    of the subcommittee.
                           the u.s. nuclear deterrent
        The U.S. nuclear deterrent remains an essential element of the
    Nation's security. Sandia serves NNSA's long-standing mission to
    maintain and enhance the safety, security, and reliability of the U.S.
    nuclear deterrent.
    Development of Stockpile Stewardship in the Post-Cold War Era
        The end of the cold war was a pivotal moment in the history of the
    U.S. nuclear weapon program. By 1992, all in-progress and planned
    nuclear weapon programs for new systems were either canceled or
    suspended, and arms reduction initiatives signaled a smaller nuclear
    weapon program in years to come. Also in that year, the United States
    committed itself to a moratorium on nuclear testing, which had been
    fundamental to the nuclear weapon development program since its
    inception.
        It was clear that a different framework for maintaining the
    stockpile would be required. The Department of Energy implemented a new
    approach called ``science-based stockpile stewardship'' and invested in
    a comprehensive suite of capabilities and programs, which included
    experimental facilities and high-performance computers. By 2002, the
    NNSA Administrator and laboratory directors were able to report to
    Congress that science-based stockpile stewardship was meeting
    expectations.\2\
    ---------------------------------------------------------------------------
        \2\ House Armed Services Committee, Subcommittee on Military
    Procurement, Hearing on the Safety, Security, Reliability and
    Performance of the Nuclear Stockpile, 107th Cong., 2nd sess., June 12,
    2002.
    ---------------------------------------------------------------------------
        Today, ``science-based'' stockpile stewardship could be considered
    a redundant phrase. Stockpile stewardship assumes and requires the
    scientific competencies and resources that have been developed over the
    last decade.
        Since 1996 the stockpile stewardship program has performed 12
    successful annual assessments of the safety and reliability of each
    weapon type in the stockpile. The assessments include peer reviews and
    red team challenges, and they provide the basis for each of the
    laboratory directors' annual reports to the Secretaries of Energy and
    Defense as well as the Secretaries' subsequent annual report to the
    President on the condition of the stockpile. As I have reported in my
    recent assessments, numerous aging issues in nuclear weapon components
    have been discovered; to date, we have been able to provide sufficient
    confidence in the safety and reliability of our stockpile to support
    national policy requirements.
        The advanced facilities and capabilities developed in the stockpile
    stewardship program enable our successful execution of the life
    extension program for the W76 warhead. In May 2007 Sandia completed the
    design--and NNSA's Kansas City Plant initiated production of--the new
    integrated arming, fuzing, and firing subsystem for this warhead. The
    radar fuze development costs were approximately 30 percent of the cost
    of the fuze we designed and produced for the W88 warhead in the late
    1980s, while meeting similar requirements for survivability in the
    severe radiation environments of a nuclear detonation.
        Sandia's Microsystems and Engineering Sciences Applications (MESA)
    facility was essential for the design, qualification, and fabrication
    of the radiation-hardened integrated circuits used in the W76 arming,
    fuzing, and firing subsystem. Advanced computational and physical
    simulation tools were used extensively in the design and qualification
    of key components, which will enable us to confidently place this life-
    extended warhead in the stockpile without underground nuclear testing.
        In today's stockpile stewardship program, radiation tests using
    aboveground simulators provide adequate radiation effects testing for
    most spectra of concern to Sandia. We take the parameters derived from
    such tests and incorporate them into computational models that
    calculate system performance over a broader and more intense range of
    conditions. This achievement is possible using the capabilities and
    tools developed in the stockpile stewardship program.
        In my view, the stockpile stewardship program today has advanced to
    the point where the preferred approach would be to rely on numerical
    simulation and test facilities for certification of non-nuclear
    subsystems in the stockpile. This approach will, however, include some
    risk. We must maintain facilities, qualified people, and modeling and
    simulation capabilities that allow us to assess with confidence. We
    will continue to be concerned with certain issues in the stockpile for
    the indefinite future. However, I am confident that we will be able to
    perform our assessment and design responsibilities successfully if the
    national investment in a robust stockpile stewardship program is
    sustained in years ahead.
    The Stockpile Today and Future
        The Nation's nuclear weapon policy has changed significantly since
    the end of the cold war. The stockpile is smaller in total numbers and
    comprises fewer weapon types. It is natural that nuclear weapon policy
    in the post-cold war era should undergo revision to address the threats
    of the 21st century. I understand and support the need for stockpile
    transition.
        But the fact is, the legacy stockpile is composed of weapons
    tailored for the threats and strategies of the cold war. Whether the
    designs of the legacy stockpile are appropriate for the 21st century,
    and can be maintained indefinitely, is problematic. It is important
    that Congress and the Executive agree on how the nuclear deterrent
    should be sized and shaped for the future and what role it should play
    in the larger context of national security. We need to establish the
    path forward for the deterrent, recognizing the reality of a changed
    global situation and fiscal constraints. We need a commitment to a
    robust stockpile stewardship program and an infrastructure
    appropriately configured to support it.
        In looking at future options for the stockpile, I believe it is
    important to continue to investigate a replacement strategy for legacy
    cold war era warheads. Aging issues in the stockpile will require a
    measure of stockpile refurbishment as long as those systems remain in
    stockpile. In the long term, a revived Reliable Replacement Warhead
    (RRW) program would offer advantages for ease of manufacture,
    maintenance, and assessment, and especially enhanced safety and
    security. I support the NNSA's request to fund the RRW Program so that
    the laboratories can complete their feasibility studies, including cost
    estimates.
        Simply put, the current stockpile will require continued
    maintenance and a laboratory/production complex configured around the
    past, with all its cost, complexity, and inherent risk. We must balance
    modernizing the stockpile with providing assurance to the world that we
    stand for an enhanced nonproliferation regime. The desired result would
    be a right-sized stockpile that maintains a balanced deterrent but is
    smaller, safer, more secure, and can be maintained more effectively.
    Complex Transformation
        In January NNSA released its draft Supplemental Programmatic
    Environmental Impact Statement (SPEIS) for transforming the nuclear
    weapon complex. Complex Transformation is a vision for a smaller,
    safer, more secure, and less expensive nuclear weapon complex. The
    SPEIS outlines a Preferred Alternative utilizing distributed centers of
    excellence, and it would consolidate missions and facilities within the
    existing NNSA sites.
        Under the Preferred Alternative, Sandia would continue to be the
    center of excellence for science and engineering for warhead non-
    nuclear systems and components and for major non-nuclear environmental
    testing. Sandia would also cease operations at the Tonopah Test Range
    and would have a different role in NNSA's high-performance computing
    program. Sandia's California laboratory would continue to support the
    Lawrence Livermore National Laboratory with non-nuclear systems
    engineering, but would transition to a multi-agency resource. We are
    developing a plan to guide that transition.
        We have long supported and see great benefit in the Preferred
    Alternative's proposal to consolidate Category I and II special nuclear
    materials (SNM). We are so committed to that concept, and to the
    improvements in security posture and the complex-wide cost savings
    associated with it, that we recently completed the removal of all
    discrete Category I and II SNM from Sandia sites. As of the end of
    February 2008, Sandia no longer possesses SNM in quantities that
    require a Category I or II security posture. This has made it possible
    for us to implement cost savings in our security protective force,
    which we have achieved through normal attrition and a thoughtful
    program of job transitioning and retraining.
        A problem of worker displacement may arise in many job
    classifications as the Preferred Alternative is implemented. NNSA has
    set a goal of reducing the nuclear weapon complex workforce by 20 to 30
    percent over 10 years. At Sandia we have sought to do our part by
    responsibly managing our workforce size. We have reduced our direct
    nuclear weapon workforce by 18 percent since 2004, largely through
    retirements and by redirecting engineers, scientists, and technicians
    to other national security programs. It is important to recognize and
    account for the fact that those organizations that have already made
    progress toward achieving their goals should not be subject to even
    further reductions.
        We at Sandia recognize the need for changes in the nuclear weapon
    complex. We support NNSA in its effort to transform the complex into an
    efficient enterprise for stewardship of the nuclear deterrent.
    Implementation of the Preferred Alternative must be carefully managed
    so that essential capabilities remain robust and workforce impacts are
    mitigated.
                           the global nuclear future
        As the demand for energy increases in the United States and
    worldwide, nuclear energy must be part of the solution. New nuclear
    power plants are now being proposed in the United States and worldwide.
    New reactor designs are likely to be part of the expansion of nuclear
    power. There will be technical issues, safety issues, and waste
    disposal issues associated with the expansion of nuclear energy, and
    the Department of Energy national laboratories can play a useful role
    in assisting with their solution.
        The global nuclear landscape is changing significantly. The
    expansion of nuclear power generation internationally raises the
    potential for growing stockpiles of separated plutonium and spent
    nuclear fuel; and the spread of nuclear technology and material
    augments concern over smuggling and the threat of nuclear terrorism.
    Policy development and technology development have not kept pace with
    the accelerating changes in the global nuclear security landscape. The
    nonproliferation regime established by the Treaty on the Non-
    Proliferation of Nuclear Weapons has been challenged. Sandia and other
    laboratories have been very active in programs for nonproliferation,
    verification, and cooperative threat reduction for many years.
    Reclaiming U.S. Leadership
        It is in the security interests of the United States to assert
    leadership in the development of a safe and secure global nuclear
    future. We need an integrated policy framework that will provide for
    safe, secure expansion of nuclear energy while minimizing proliferation
    risks.
        The United States must reclaim the technical leadership to support
    the development of proliferation-resistant nuclear energy expansion,
    control of nuclear materials, and verification regimes for future
    international agreements. The NNSA laboratories are unique in that they
    possess competence in both military and civilian uses of nuclear
    energy. I believe an opportunity exists to engage these laboratories in
    the development and implementation of solutions that deal with the
    larger nuclear context. To address gaps that have emerged as a result
    of both changing threat conditions and lagging investment, it will be
    important to strengthen the NNSA laboratories' capabilities to address
    the security challenges related to malicious or clandestine use of
    nuclear material or facilities.
    Global Nuclear Energy Partnership (GNEP)
        Part of the approach of the United States to support safe and
    proliferation-resistant nuclear power throughout the world is the
    Global Nuclear Energy Partnership (GNEP), which is contained in the
    budget for the Department of Energy's Office of Nuclear Energy. This
    program focuses on research and development to reduce the volume and
    toxicity of high-level waste, reduce the proliferation threat posed by
    civilian inventories of plutonium in spent fuel, and provide
    proliferation-resistant technologies to recover the energy content in
    spent nuclear fuel. Sandia leads the safety, security, and regulatory
    elements of the GNEP program. We are focusing our efforts on defining
    the regulatory framework and the data requirements to support licensing
    of fast reactors and recycling facilities. We at Sandia stand ready to
    support the Department of Energy and the Congress in deployment of this
    important program.
    Nuclear Waste
        An acceptable solution for radioactive waste management is critical
    to the expansion of safe nuclear power in the United States. Yucca
    Mountain was intended to be the Nation's long-term repository for spent
    nuclear fuel and high-level radioactive waste. These materials are
    currently stored at numerous sites around the country.
        Sandia completed its portion of the Yucca Mountain license
    application early and provided it to the Department of Energy's Office
    of Civilian Radioactive Waste Management (OCRWM). As the lead
    laboratory for repository systems, Sandia managed the technical effort
    to develop much of the license application safety analysis. This work
    was accomplished despite a severely reduced budget in fiscal year 2008
    and the consequent loss of some staff. We brought together the best
    talent available from among the Department of Energy national
    laboratories, research universities, and technical contractors. We
    endeavored to produce a license application that will be credible among
    technical peers, defensible before the Nuclear Regulatory Commission,
    and respected for the integrity of its science.
        We have already begun to prepare for the license application's
    defense, which will enable the Department of Energy to respond to
    technical questions from the Nuclear Regulatory Commission and requests
    for additional information throughout 2009. Public hearings and
    evidentiary hearings before the Atomic Safety Licensing Board are
    expected to last 2 to 3 more years.
        Looking ahead, the Nation should establish a path forward that
    enables an environment where nuclear energy can realize its full
    potential as a safe, environmentally friendly source of energy.
    Confidence in a nuclear waste management solution remains a critical
    element of the nuclear fuel cycle and is critical to the expansion of
    nuclear power in the near term. Yucca Mountain could be made consistent
    with an approach that includes recycling and interim storage in a
    phased approach to nuclear waste disposal. In my view, we should seek
    ways to get the most from the investment in Yucca Mountain.
        There are many options for managing the waste from current and
    future nuclear reactors, but all options ultimately rely on geologic
    disposal. The high-level waste from defense reprocessing will also need
    such a disposal method. The policy and resulting program for waste
    disposal need to be addressed now. My organization and I stand ready to
    support the administration and the Congress in the development of a
    revitalized approach to this important national issue.
                            laboratory capabilities
        Sandia National Laboratories maintains an array of
    multidisciplinary capabilities at world-class levels to support its
    mission work for the Department of Energy and synergistic programs for
    other agencies. The research and development disciplines we require
    cover most of the physical sciences and engineering specialties
    recognized today, as well as the computational and supporting
    technologies needed for modern scientific investigation.
    Essential Capabilities for the Stockpile
        Sandia's essential capabilities for stockpile stewardship support
    our program's core products, which include engineered and integrated
    warhead systems; arming, fuzing, and firing systems; neutron
    generators; gas transfer systems; and surety systems.
        The capabilities that we recognize as essential for this program
    include systems integration, major environmental testing, radiation
    effects science, computational simulation, microsystem technologies,
    materials science, and the engineering sciences. Many of these
    capabilities are synergistic with those in industry and at research
    universities but do not exist in those sectors in the specialized or
    unique forms required for stockpile stewardship, and rarely as an
    integrated enterprise. Our essential capabilities are integrated with
    the core products that we design and support for the nuclear weapon
    stockpile.
                Microsystems and Engineering Sciences Applications (MESA)
                        Complex
        The MESA complex at Sandia's New Mexico site is the cornerstone of
    NNSA's initiative to address the need for microelectronics and
    integrated microsystems to support a certifiable stockpile for the
    future. Further, it is a unique, world-class capability for the
    integration of modeling and simulation into design and product
    realization of specialized components for national security
    applications. It is a major investment on the part of the agency to
    retain the mission capability for designing and fabricating radiation-
    hardened microsystems. MESA will meet that requirement for future
    decades.
        We have established in MESA the ability to develop, design, and
    produce if necessary, unique integrated microsystems for weapon safety
    and security. This capability includes a national ``trusted foundry''
    for radiation-hardened microelectronics. We have applied approximately
    40,000 such products to the stockpile and nonproliferation missions of
    NNSA and for other national security customers. MESA is developing many
    new nano-enabled microsystem technologies for broad national security
    applications
        The MESA facility is a landmark achievement for our laboratory. It
    is especially noteworthy as an example of project management
    excellence. MESA construction is effectively complete, 3 years ahead of
    schedule and $40 million below the original baseline. A dedication
    ceremony was held in August to celebrate the opening of MESA's Weapons
    Integration Facility, the final building of the MESA complex.
                High-Performance Computing
        Sandia's high-performance computing capabilities are vital tools
    for NNSA mission responsibilities in stockpile surveillance,
    certification, and qualification, and they have proved to be
    indispensable in our work for other agencies, especially elements of
    the Department of Defense. NNSA's decades-long investment in high-
    performance computing at Sandia revolutionized modern supercomputing
    and its application to science and engineering.
        Since 1992, Sandia has been a pioneer in massively parallel
    processing (MPP), which employs special software to control thousands
    of low-cost processors configured as a single machine. Sandia was the
    first to shatter the world computational speed record by exceeding one
    trillion floating-point operations per second (one teraflop) with MPP.
    We achieved this milestone on the ``Red'' supercomputer that we
    developed with Intel under the Department of Energy's Accelerated
    Strategic Computing Initiative in 1996.
        Sandia's current supercomputer, ``Red Storm,'' also has been highly
    successful in terms of performance, effective cost for computing
    capability, and improvements achieved after initial operation. Sandia
    led the development of the architecture and associated applications of
    this machine. Our partner, Cray, Inc., developed its XT family of
    supercomputers based on the Red Storm design and now has 36
    installations at 20 sites worldwide. Based on this significant
    heritage, Sandia claims the most cost-effective approach to
    supercomputing.
        Application of these computing capabilities has allowed Sandia to
    address technical problems--previously thought to be impossible--in
    support of nuclear weapon qualification activities. Further, in several
    cases other Federal agencies have asked us to address computational
    problems that could not be addressed by any other institution. The
    impact of these calculations is hard to overstate; they have allowed
    resolution of formidable science and engineering challenges in support
    of national security.
        Under the Preferred Alternative for complex transformation, NNSA
    plans to consolidate its high-performance computing platforms at the
    Lawrence Livermore and Los Alamos sites, principally due to the NNSA
    investments in computing facilities at those institutions. In order to
    remain a key participant in NNSA's high-performance computing program,
    Sandia has negotiated a memorandum of understanding with Los Alamos
    that will bring together the two laboratories' computer science and
    operational capabilities for high-performance computing. Under this
    agreement, Sandia will lead in providing the architecture and
    engineering expertise for capability platforms, and Los Alamos will
    lead in deployment and operations. Teams will be formed from both
    laboratories to provide an unparalleled computational resource for
    future NNSA capability platforms.
        This partnership is not without risk to both institutions. It is
    essential for NNSA to execute a platform strategy that supports the
    Sandia/Los Alamos partnership with a platform procurement in fiscal
    year 2010 and meets the established requirements for maintaining and
    refurbishing the nuclear weapon stockpile. These requirements clearly
    identify the need for replacing the existing NNSA Purple and Red Storm
    platforms by fiscal year 2010.
                Support for the Weapons Activities Engineering Campaign
        I am concerned about erosion in the Weapons Activities Engineering
    Campaign. This campaign contains much of the science and technology
    foundations supporting Sandia's ability to assess and sustain the
    stockpile. This science-based campaign advances the engineering
    competencies that are the basis for assessing components and subsystems
    and improving weapon safety and reliability. This program suffered a 40
    percent reduction between fiscal year 2004 and 2007; the fiscal year
    2008 appropriation was still 35 percent below the 2004 mark, and the
    2009 request is about the same. Chronic under-funding of this campaign
    may diminish the advanced engineering capabilities at the laboratories
    over the long term. These capabilities are essential for maintaining
    confidence in the assurance stewardship activities for the stockpile.
    Attracting and Retaining Technical Talent
        We are very deliberate about preserving critical skills in our
    workforce. Through strategic hiring and mentoring of top graduates,
    especially from key universities throughout the country, and through a
    formal knowledge preservation program, we believe we can ensure that
    the smaller workforce of tomorrow will have access to the technical
    knowledge and lessons learned that will be needed for the future.
        We have been able to attract new talent largely because of the
    diversity of missions and professional challenges at the laboratories.
    System engineering programs, technology development, and advanced
    scientific and engineering research are essential for sustaining career
    interest and commitment. The opportunity to support national security
    needs beyond the nuclear weapon program is motivating to prospective
    staff.
    NNSA Capabilities Going Forward
        My biggest concern with the long-term future of NNSA is that
    science and engineering capabilities may be relegated to a subordinate
    role as we strive to right-size the nuclear weapon complex and
    necessarily confront the fiscal realities of today. In my view, an
    essential characteristic of the cold war's resolution and a fundamental
    element of deterrence going forward is the strength and resiliency of
    the NNSA laboratories. Their scientific capabilities have deterred our
    adversaries, contributed mightily to the Nation's technological
    leadership, and seen many unparalleled applications in support of
    national security.
                                energy security
        By 2030, world energy demand and carbon emissions are expected to
    increase by 60 percent. The Nation needs a credible plan for
    transitioning from today's carbon-based energy and transportation
    infrastructure to a system that is less dependent on fossil fuels.
    Nuclear energy will be a major part of that solution, but other
    approaches to low-carbon energy generation and conversion will also be
    important.
        The Department of Energy and its national laboratories are
    exploring bold new ways of translating research into deployable
    solutions to have more impact, sooner, particularly to achieve goals
    related to reducing oil and gas imports and lowering emissions. We are
    working on a plan to leverage several key Sandia capabilities with
    academia, a few other laboratories, and industry, to dramatically
    increase the effectiveness of transformative energy research in
    transportation systems.
        Consistent with the Preferred Alternative for complex
    transformation, we are exploring a research thrust in energy security
    to be centered at Sandia's California site. The initiative would focus
    on low-net-carbon alternative fuels, accelerated electrification of
    transportation infrastructures, and combustion efficiency, which is a
    long-standing competency of the successful Combustion Research Facility
    in California. I believe a unique opportunity exists to apply existing
    facilities at Sandia's California laboratory to basic and applied
    research in support of our energy needs. This will serve to bring
    together the fundamental research efforts of the Department of Energy
    Office of Science with the applied energy programs of DOE. This will
    include university and industrial participation and draw on the
    entrepreneurial capabilities that are so strong in the San Francisco
    Bay area.
        More intensive use of modeling and simulation through high-
    performance computing can accelerate the contributions of renewable
    energy technologies. Sandia is currently working toward an agreement
    with the National Renewable Energy Laboratory (NREL) to establish a
    partnership in which Sandia would provide capacity computing for NREL
    programs. NREL and Sandia bring extensive capabilities to the
    renewables mission and are focused on meeting this challenge--from
    understanding renewable resources for energy, to the conversion of
    these resources to electricity and fuels.
                       programs for the office of science
        I am increasingly concerned that the Nation's investment in science
    and engineering is not receiving the attention the Nation requires.
    This is one of the most significant challenges that will define the
    Nation's future. While legislation like the America COMPETES Act \3\
    provides a statement of good intent, in my view it is essential for the
    Federal Government to make real investments in people, education, and
    programs across a broad spectrum of science and engineering.
    ---------------------------------------------------------------------------
        \3\ American COMPETES Act, Public Law 110-69, U.S. Statutes at
    Large 121 (2007): 572.
    ---------------------------------------------------------------------------
        The Office of Science is the steward for a significant fraction of
    the fundamental physical science research in the United States, both at
    the Department of Energy laboratories and in universities around the
    country. Its portfolio and those of a number of other agencies are
    central to American competitiveness, as argued in the ``Gathering
    Storm'' report of the National Academies.\4\ In addition, many of the
    Office of Science research directions promise revolutionary advances in
    scientific areas vital to our national security. Despite the importance
    of a strong physical science foundation for future U.S.
    competitiveness, the history of investment in the Office of Science is
    not consistent with the Department of Energy's prominent role and
    potential for the future.
    ---------------------------------------------------------------------------
        \4\ Committee on Prospering in the Global Economy of the 21st
    Century, Rising Above the Gathering Storm: Energizing and Employing
    America for a Brighter Economic Future (National Academy of Sciences,
    National Academy of Engineering, Institute of Medicine, 2007, http://
    www.nap.edu/catalog.php?record_id=11463.
    ---------------------------------------------------------------------------
        Sandia has a presence in four of the Office of Science's programs:
    Basic Energy Sciences (BES), Fusion Energy Sciences, Advanced
    Scientific Computing Research, and Biological and Environmental
    Research. BES represents the lion's share of our work and includes
    research in materials, chemical sciences, combustion, geosciences, and
    nanotechnology.
        The Office of Science's Center for Integrated Nanotechnologies
    (CINT) core facility was completed in 2006 and is jointly operated by
    Sandia and Los Alamos National Laboratories as a Department of Energy
    user facility available to university and industrial researchers. CINT
    is devoted to establishing the principles that govern the design,
    performance, and integration of nanoscale materials. Leadership in the
    science and engineering of nanotechnology will be important for U.S.
    competitiveness in the decades ahead.
        Sandia is a major partner in the Joint BioEnergy Institute (JBEI),
    a research center funded by the Biological and Environmental Research
    Program. The research focus will be on understanding how to reengineer
    biological processes to develop efficient methods for converting plant
    materials into ethanol or other biofuels. This 5-year effort may help
    make biofuels production truly cost-effective on a national scale.
        The synergy between programs in the Office of Science and other
    parts of the Department of Energy is very important. The investment
    across all of these programs must be balanced in order to assure a
    steady stream of scientific advances that can be translated into
    technologies of benefit to the American people. NNSA programs and all
    aspects of energy research and development gain from the fundamental
    science available in Office of Science programs. It would be beneficial
    for the Congress to support the funding levels contained in the fiscal
    year 2009 budget submission. This support would stimulate the kind of
    productive collaborations across programs that are so helpful. In
    addition, I am aware of efforts to strengthen the fiscal year 2008
    budget by considering a supplemental appropriation for the Office of
    Science. I would encourage your consideration of that matter.
              future of the nnsa laboratories in national security
        During the cold war, the nuclear weapon laboratories benefited from
    a designated core mission that for 50 years had furnished the rationale
    for their exceptional technical foundations. The unambiguous importance
    of that mission assured sufficient funding to sustain an effective
    technology base.
        Today, the national security challenges are more complex than they
    were during the cold war. The NNSA laboratories are uniquely positioned
    to contribute to the solutions of these complex national security
    challenges. However, the NNSA Administrator and the laboratory
    directors face a formidable problem of how to maintain technical
    competencies--especially in nuclear weapons--in an era of limited
    resources, a smaller program, fierce competition for talent, and
    widespread public and political uncertainty toward the program. In this
    new and difficult operating environment, synergistic work supporting
    other national security missions is crucial. We depend on other
    national security activities to support and stabilize our critical
    capabilities and science base. It makes sense, therefore, to encourage
    more extensive use of the NNSA laboratories by multiple agencies and
    sponsors, thereby exercising and enhancing the competencies we require
    for stockpile stewardship.
        We are working with DOE and NNSA to establish a strategy and
    approach that provides enhanced access to the unique facilities at
    these laboratories that will significantly benefit the Nation's
    responsiveness to broader national security problems.
    An Example of Multiprogram Synergy: Radar
        Sandia's capabilities for the nuclear weapon program benefit from
    synergy with other national security programs. An excellent example of
    this synergy is our work in radars.
        Competency in specialized radar applications is a required
    capability for the nuclear weapon program. As a result of initial
    investments in radar fuze capability for nuclear weapons, we began
    working on miniature radars based on synthetic aperture concepts in
    1983 for other national security applications. In 1985 we became
    involved in a special-access program for the Department of Defense to
    develop a 1-foot-resolution, real-time synthetic aperture radar (SAR)
    suitable for use in unmanned aircraft. Sandia flew the first real-time,
    1-foot-resolution, SAR prototype in 1990. Follow-on work sponsored by
    the Department of Defense reduced the size and cost of SAR systems,
    improved resolution, and significantly expanded the applications and
    military benefits of radar. Partnerships with industry have
    transitioned each generation of the technology into field-deployable
    systems. Sandia-designed airborne SAR systems have now been used for
    real-time surveillance by every U.S. military command.
        In this example, the original radar competency of the nuclear
    weapon program was improved by this work for the Department of Defense.
    The resulting advanced radar competency made it possible to apply new
    technology to the updated fuzing system for the W76-1 in the nuclear
    weapon program. This updated fuzing system would not have been possible
    without the competency that was maintained by work for the Department
    of Defense.
    Broad National Security Engagement
        Today, nuclear weapon activities constitute about 42 percent of
    Sandia's funding. Department of Energy programs in nonproliferation,
    energy security, and science provide another 20 percent, while agencies
    other than the Department of Energy furnish 38 percent of our total
    operating funds.
        The work-for-others (WFO) process that has been in place for many
    years for accepting non-DOE work into the NNSA laboratories should be
    streamlined for the future. Many agencies could benefit from a
    reimbursable system that would give them direct access to the
    Department of Energy laboratories, and DOE would benefit from the
    additional programmatic activity and institutional support. In order to
    enhance our ability to serve the Nation, it may also be useful to
    explore innovative governance options to promote shared agency
    investment.
        There are questions that naturally arise as the laboratories take
    on important national security assignments from agencies other than the
    Department of Energy. It is important to recognize that other agencies
    do contribute more than the direct program costs of their activities.
    In fact, they pay the overhead rates that all programs pay, and those
    payments help provide support for operational and infrastructure costs
    and for the Laboratory-Directed Research and Development Program. A
    portion of our overhead rates is utilized for capital improvements, and
    in some cases other agencies have paid directly for the construction of
    buildings and the purchase of capital equipment. It is important to
    recognize that while operational costs and some capital improvements
    are currently being addressed, there is still a need for more
    substantive investment in the science and engineering fabric of the
    laboratory.
        The laboratories and NNSA should be encouraged to develop a
    realistic approach for maintaining the excellence of our scientific and
    engineering foundations well into the future. I believe we can succeed
    only as national security laboratories in a broad sense, serving the
    needs of multiple agencies for mutual benefit and shared excellence in
    national service.
        Thank you, Mr. Chairman.
                          addendum--issues of concern
        The following specific issues of concern to Sandia National
    Laboratories--some of which were addressed in my statement--are
    summarized for the attention of the Committee.
    Implementation of Complex Transformation
        We support NNSA in its effort to transform the complex into an
    efficient enterprise for stewardship of the nuclear deterrent.
    Implementation of the Preferred Alternative must be carefully managed
    so that essential capabilities remain robust and workforce impacts are
    mitigated.
        High-performance computing will remain an essential competency for
    Sandia. There is significant risk that the skills acquired by Sandia's
    system computing team will be lost over time without a high-performance
    computing platform on site. Sandia is committed to cooperating with the
    implementation of complex transformation and will monitor the
    implementation process to assure that capabilities are fairly
    integrated.
        A problem of worker displacement may arise in many job
    classifications as the Preferred Alternative is implemented. NNSA has
    set a goal of reducing the nuclear weapon complex workforce by 20 to 30
    percent over 10 years. At Sandia we have sought to do our part by
    responsibly managing our workforce size. We have reduced our direct
    nuclear weapon workforce by 18 percent since 2004, largely through
    retirements and by redirecting engineers, scientists, and technicians
    to other national security programs. It is important to recognize and
    account for the fact that those organizations that have already made
    progress toward achieving their goals should not be subject to even
    further reductions. Normal attrition should allow for appropriate
    workforce restructuring, but we may need a thoughtful program for job
    transitioning and retraining for those instances in which workforce
    dislocations are acute.
    Support for the Weapons Activities Engineering Campaign
        The Weapons Activities Engineering Campaign advances the
    competencies that are the basis for assessing engineered components and
    subsystems and improving weapon safety and reliability. This program
    suffered a 40 percent reduction between fiscal year 2004 and 2007; the
    fiscal year 2008 appropriation was still 35 percent below the 2004
    mark, and the 2009 request is about the same. Chronic under-funding of
    this campaign may erode the advanced engineering capabilities at the
    laboratories over the long term. These capabilities are essential for
    maintaining confidence in the assurance stewardship activities for the
    stockpile.
    Cyber Security
        The United States relies extensively on information technology in
    the form of computers, chips embedded in all forms of products,
    communication systems, and military capabilities. There are growing
    indications that the security of our society is increasingly vulnerable
    to attacks on these systems. A national initiative in cyber security
    deserves increased attention, and that is beginning to happen. The
    Department of Energy and the NNSA laboratories have much to offer in
    assisting with solutions in this area.
        During the past several years, the NNSA laboratories have
    experienced an increase in the level, intensity, and sophistication of
    network attacks directed against computer resources. Offensive
    capabilities for cyber warfare and cyber espionage have advanced by
    leaps and bounds worldwide. Other nations have been working assiduously
    to neutralize the cyber advantages that the United States has enjoyed
    for 2 decades and to exploit weaknesses in our cyber architecture as an
    asymmetric vulnerability for U.S. national security. These developments
    cause us to worry that the sophistication of the threats is growing at
    a faster rate than we are able to respond in hardening our systems
    against intrusions.
        NNSA's request for cyber security in fiscal year 2009 is $122.5
    million, an increase of 22 percent over 2008. This increase is
    essential to help us continue to harden our infrastructures against
    cyber attacks. But it should be recognized that this is a first step
    toward the kind of comprehensive effort needed to deal with this
    growing threat. Additionally, there is a need to bring in other parts
    of the Department of Energy in a more significant way, particularly the
    Office of Science.
    Safeguards and Security Funding Offset for Reimbursable Programs
        The fiscal year 2001 appropriation for Weapons Activities created a
    direct-funded budget for safeguards and security at NNSA sites. The
    conference report directed the Department of Energy to obtain funds
    from non-DOE customers in 2002 and beyond to offset a portion of the
    security appropriation. The laboratories have been collecting that
    offset via an overhead charge applied to work-for-others (WFO)
    projects. This practice has been called into question. Accordingly, the
    fiscal year 2009 budget execution guidance provides for direct funding
    only. Thus the funds formerly collected via the WFO offset will be
    lost, which at Sandia will cause a shortfall of several million dollars
    in funds available for safeguards and security.
    Program Enhancements That Would Be Possible With Additional Funding
                Full Utilization of the Refurbished Z Pulsed Power
                        Accelerator
        The Z pulsed-power facility provides data for nuclear weapon
    primaries, secondaries, and non-nuclear components essential for
    stockpile stewardship. Experiments on Z also explore advanced concepts
    and study alternative approaches to fusion energy. Full single-shift
    utilization is the most efficient way to maximize the return on the
    value of the recent refurbishment of Z. Operations are currently funded
    jointly by NNSA's Science and Inertial Confinement Fusion (ICF)
    Campaigns.
        A new approach to creating high-current pulsed-power devices, known
    as a Linear Transformer Driver (LTD), has recently been demonstrated at
    Sandia. LTD is more than twice as efficient as traditional pulsed-power
    devices. This advance is likely to be the future of large-scale sub-
    microsecond pulsed-power devices. It is also the simplest technological
    approach to fusion energy. Additional funding would enable Sandia to
    accelerate the maturation of this game-changing technology.
                B61 Life Extension
        The B61 bomb has several versions and is one of the oldest weapon
    systems in the legacy stockpile. Many of the technologies used in the
    B61 are old, several components are reaching end-of-life, and the
    system would require upgrades to be compatible with new digital-
    interfaces for future delivery systems. Modern technologies and
    redesigned architectures would permit upgrades to this weapon without
    providing a new military capability. B61 refurbishment should be
    implemented as soon as possible to sustain the Nation's gravity-
    delivered nuclear weapon capability.
                Discovery Science and Engineering Innovation Institutes
        The America COMPETES Act passed last year authorized the
    establishment of Discovery Science and Engineering Innovation
    Institutes at Department of Energy national laboratories. Discovery
    Institutes would be catalysts for transformation by helping to develop
    the next generation of science and engineering leaders to address
    national challenges and meet industrial needs to compete globally. An
    appropriation for the Discovery Science and Engineering Innovation
    Institutes at national laboratories would enable this initiative to
    proceed.
    Nuclear Waste
        An acceptable solution for radioactive waste management is critical
    to the expansion of safe nuclear power in the United States. Sandia
    National Laboratories has developed significant waste-repository
    expertise through its work with both the Waste Isolation Pilot Plant
    and the Yucca Mountain Project. There are many options for managing the
    waste from current and future nuclear reactors, but all options
    ultimately rely on geologic disposal. The high-level waste from defense
    reprocessing will also need such a disposal method. The policy and
    resulting program for waste disposal need to be addressed now. My
    organization and I stand ready to support the administration and
    Congress in the development of a revitalized approach to this vital
    national issue.

        Senator Dorgan. Dr. Hunter, thank you very much.
        This is--as you might expect for those of us who don't work
    in this area--this is enormously complicated, complex, and
    difficult to understand.
        Dr. Hunter, when I visited Sandia, you told me something
    about a teraflop, so let me ask you to share that again. I
    think what you said is a teraflop is one trillion computer
    functions in a second.
        Dr. Hunter. That's correct.
        Senator Dorgan. Is that correct?
        Dr. Hunter. Yes.
        Senator Dorgan. You told me that we achieved the first
    teraflop in 1997.
        Dr. Hunter. That's correct, in the mid-1990s, yes.
        Senator Dorgan. And you told me the amount of space it
    required for the computers to achieve that teraflop--how large
    was that?
        Dr. Hunter. It basically required a full room, a complete
    room full of computers, and it required many thousands
    kilowatts of electricity to support it.
        Senator Dorgan. And you said 10 years later we achieve a
    teraflop with what size application?
        Dr. Hunter. Actually, today there are chips being produced
    that were one single chip--about the size of a dime--does a
    teraflop on a chip.
        Senator Dorgan. And it requires the energy of a 60-watt
    light bulb?
        Dr. Hunter. Sixty-five.
        Senator Dorgan. Sixty-five. All right. So, that's a
    teraflop--1 trillion computer functions in a second.
        Dr. Hunter. That's correct, yes.
        Senator Dorgan. You are saying that you have achieved, or
    are about to achieve next year a petaflop.
        Dr. Anastasio. We're about to achieve this summer, a
    petaflop.
        Senator Dorgan. Which is not a trillion functions per
    second, but a thousand trillion functions per second?
        Dr. Anastasio. That's correct, sir.
        Senator Dorgan. And Mr. Miller, you said that's not enough?
        Dr. Miller. Yes, sir.
        Senator Dorgan. Yes, well, okay, so----
        Senator Dorgan. I'm not sure I understand anything about
    this. I mean, I don't understand a trillion, I understand now
    what a teraflop and a petaflop is, I understand the dramatic
    advancements, I understand that weapons physics, perhaps, allow
    you to use these unbelievable, muscular, computer capabilities
    to understand things you didn't previously understand, but I
    think I speak for this subcommittee that, we don't understand
    how a scientist might use this capability. I think you tell us
    it's important, I believe that. I think that that is important.
        Let me ask a couple of questions, and Dr. Hunter, thank you
    for allowing us all to understand what these are.
        Director Miller, you said that you've lost 2,000 people--is
    that correct?

                             FUNDING AND PERSONNEL

        Dr. Miller. Yes, sir, it is.
        Senator Dorgan. Let me try to understand how that happens,
    because the nuclear weapons program has not decreased--we
    increased it, not very much--we increased it by about $50
    million last year, so it was relatively stable, just up, just a
    little bit.
        Science, we increased last year, so we increase--in this
    subcommittee--the funding for nuclear weapons and science, and
    yet you end up losing 2,000 people. Tell us how that happened,
    does it have something, perhaps, at least in small part, to do
    with the contract that Senator Feinstein talked about?
        Dr. Miller. Yes, sir. There are three fundamental elements
    that are associated with that loss of 2,000 people. The first
    is that the Federal funding for the Laboratory mostly coming
    from NNSA, went down $100 million, so the money that you
    appropriated went elsewhere.
        Senator Dorgan. That's an NNSA decision, not the decision
    of this subcommittee, is that correct?
        Dr. Miller. It is associated with the budget that was
    approved and where money was in the budget, so again, as an
    example, the money that goes into super-computing has steadily
    gone down. At its peak in 2004, it was $750 million a year, it
    is currently $545 million.
        Senator Dorgan. Where did it go? If we're increasing the
    appropriation, does it go to facilities? The only point I'm
    making is----
        Dr. Miller. Right.
        Senator Dorgan [continuing]. That doesn't--that
    responsibility doesn't necessarily rest at this table, if we're
    actually approving more money--slightly more money--for science
    and nuclear weapons. That's a decision made somewhere else in
    the bowels of NNSA. So, I'm just trying to understand it.
        Dr. Miller. So, yes, I mean, again, in a very, very
    simplistic fashion, you know, there are three elements to
    NNSA's budget. There is the science and technology, there is
    the physical infrastructure, and there is taking care of the
    stockpile that we currently have.
        Senator Dorgan. That's correct.
        Dr. Miller. And so the increases in the budgets, in fact,
    more than the increase in the budgets, are going to maintain
    the cold war stockpile that we have, and take care of the
    infrastructure that is aging and needs replacing. And where
    does that money come from? It comes out of science.
        Senator Dorgan. All right, and----
        Dr. Miller. And the rest of your question--so we lost $180
    million, I'm sorry--we lost $100 million in Federal funding.
    The cost of the contract, as a result of principally, the
    public to private sector changes, increased the costs at the
    laboratory $130 million. Of that $130 million, $40 million was
    the increase that Senator Feinstein asked about, in terms of
    the fees that go to the companies that are the management.
        The reason for those fees was the NNSA and congressional
    decision to attract industrial partners, if you want to attract
    industrial partners, it will cost. That's what it cost in the
    case of Livermore, about $40 million extra.
        Senator Dorgan. That's a pretty substantial cost. It cost
    you some, apparently, very attractive workers.
        Dr. Miller. Right. And then the other, then the third part
    is just inflation. The sum of all of that is about $280
    million, that's what drove the decrease in people.
        Senator Dorgan. Dr. Hunter, and Anastasio, tell me--since
    the implementation of the annual certification process that's
    gone back to 1997, tell me about your confidence in the
    reliability of the nuclear weapons that are currently
    deployed--you make certifications, you now come to us and say,
    ``We're doing teraflops and petaflops and 80 this, and
    quadrillion that,'' and so we're obviously muscling up in
    technology and capability. Has your confidence decreased at all
    in your certification?
        Dr. Anastasio. Well, I would say first, I am confident in
    the stockpile today. The concerns I have, the risks going
    forward to the future. It is true that as we do our annual
    assessment process, and we do our continuous work during the
    year that we find issues with the stockpile that need to get
    addressed.
        Some of those turn out to be small issues that are not
    consequential--some are very significant. And, the way we deal
    with those, that are significant, have caused us to restrict
    the scope of certification for some of the weapons systems that
    we have in the stockpile. And I can't say too much more, in
    this forum.
        And so, we're still confident in the systems, but there are
    some restrictions that are a consequence with that. And my
    biggest concern is the trend of maintaining balance across the
    three elements that George Miller talked about in the program,
    and keeping those in balance, in light of the constrained
    funding that we have, and all of the challenges the program has
    to face.
        Senator Dorgan. Director Hunter.
        Dr. Hunter. Yes, I'd break the confidence into a couple of
    pieces. The first piece is our confidence--and my personal
    confidence in being able to find and detect issues--that is up.
    That is, I feel like we can do a better job today than we did
    10 years ago, to assess and understand issues.
        We then, of course, have the question of the confidence in
    the stockpile, and we still report the stockpile as safe and
    reliable, and our confidence in that statement is quite high.
        The question, though, is are there ever cases, as Mike just
    said, where we have to put restrictions on what we say about
    the nuclear weapons, and the answer is, we see those, and
    they're well-supported by our observations and our ability to
    detect them.
        Senator Dorgan. I want to just--I'm going to call on
    Senator Domenici, but I want to say that we asked you to come
    today to talk about the weapons issues, so these are very
    important issues and your three laboratories play an important
    role. You do more than that in each of your laboratories. My
    interest is, no matter what we are doing on some of these
    programs, we're always going to have a Stockpile Stewardship
    Program as long as there are nuclear weapons, and we'll need
    that work to be done.
        My interest at the end of the day is to maintain a robust
    workforce in our national laboratories to pursue aggressive new
    science, because I think that's a significant investment in the
    future of this country--in dozens of areas, not just the issue
    of certification of nuclear weapons.
        So, I think that you should know, there's a lot of support
    on this subcommittee for the advancement of science, and for
    the work that you do in your laboratories. I think the national
    laboratories are jewels, and produce significant opportunities
    for this country's future.
        I see this--you know, we do a lot of spending. We spend
    money. Some of it we invest. And a portion of what you do is a
    significant investment into the future of this country. We have
    to continue to lead the world in science, and that's part of
    the decision of this committee, as well.
        Senator Domenici.
        Senator Domenici. Mr. Chairman, I'm so pleased to hear your
    comments so early in your chairmanship, that it makes me feel
    very happy and, about having to leave here. I'll get back to
    the worry about the future.
        But first I would like to make a deal with you, Mr. George
    Miller.
        And I want to ask Senator Feinstein--have you ever visited
    the laboratories in New Mexico, Senator?
        Senator Feinstein. No, not in New Mexico. I've visited
    Lawrence Livermore, not----
        Senator Domenici. Well, I want to make a deal with you. I
    have never been to Livermore to see the great big machine that
    costs $4.5 billion, and that I wasn't for, and that gave him
    and his predecessor gray hair, because we're all--big shot
    Domenici was going to kill that machine, and frankly I didn't,
    in the end, I gave into my most natural tendency to be a sucker
    for big science. And I have been that, for my whole career. I
    am a sucker for big science. I've missed on a couple, but on a
    couple that are very important, I've not missed.
        And the theory that permeates me, my bones, because of
    that, has caused me to continue to be worried about our
    country, in terms of its greatness having been built around
    science and technology and we were the best. And I'm very
    worried about the fact that we're losing out, because that
    seems to be too hard for a lot of our young people--math,
    science, physics and engineering.
        But George, I haven't been there, and if you will promise
    to appropriately welcome me, and to be happy about my visit,
    and to be----
        Dr. Miller. We would be honored to have you visit, anytime,
    Senator. And we will make sure that it is a joyous occasion.
        Senator Feinstein. Yes, I'll bet.
        Senator Domenici. We want him to be joyous, too.
        I'll try to do it before I leave, okay? And I was just
    going to suggest that maybe the--in return, maybe I could take
    the distinguished California Senator to New Mexico, we could
    make a swap, she could come and see our labs, and I go to see
    your big lab.
        Senator Feinstein. I would be delighted, thank you.

                           NATIONAL IGNITION FACILITY

        Senator Domenici. I think you should know--I do think you
    should know, Senator, that I was fully aware when we funded the
    NIF, the National Ignition Facility, as part of Stockpile
    Stewardship, and it hasn't been functioning yet, in that
    capacity, unless it is in the last few months, because it
    wasn't ready. So a big addition to our Stockpile Stewardship
    awaits implementation when we open NIF, if it works. And it'll
    work in some respects, for sure, but will it work in all
    respects, in all the ways or not? We don't know.
        But, I knew fully that Lawrence Livermore, without that
    machine, might be a Lawrence Livermore with a short life. The
    people of California should know that--it might have died on
    the vine. That's given it a new breath of scientific prowess
    that will bring many thousands of people there to use that
    machine, and they won't be part of Science-based Stockpile
    Stewardship, they'll be part of a pushing America yet further
    to the cutting edges of science, as they use the machine.
        Los Alamos got a machine out of it, and it's finished and
    it's finished and it's doing a great job, and they also got
    great computers out of it, and other things. And Sandia got a
    number of things, the last, clearly, is a fantastic Mesa
    facility which we've both seen, which specializes in small
    things--when you go there you will thoroughly amazed at--and
    not so worried about--whether our country's going to lose out
    in nano and technology, and the manufacture of small things.
        Small machines--so small that you can put all kinds of
    machines on little--machines, literally--on a little piece of
    metal. And those machines worked, in there pumping their little
    brains out, and we can't even see them, and we're wondering
    what to do with them, and that's what they're doing there, so--
    we've got those done.
        So, a lot of things have been accomplished. I worry about
    our country on science and technology training, physics,
    engineering, math and whether we have good teachers, and
    whether we're producing students. One way I could find out
    would be to ask the three of you who are--you are a demand
    source for the best scientists that we can produce, you want
    them, right? You're out there hiring them. So, let's ask you--
    are you noticing a substantial decrease in the number of
    talented Americans that seek complicated science jobs at your
    laboratory?
        Dr. Anastasio. Senator, and by the way, Senator Feinstein,
    we'd be honored to have you come visit any time you were able.
        Senator Feinstein. Thank you.
        Dr. Anastasio. And I'd love to see you again, in that
    context.
        Senator Feinstein. Thank you very much, thank you.
        Dr. Anastasio. Senator Domenici--I do see a drop off in the
    number of U.S. citizens who are at the top of their field in a
    number of key areas that are important to the laboratory. But I
    am encouraged that we're still able, at these laboratories, to
    attract some of the best and brightest people that are still
    available--whether they be U.S. citizens, or not. And I think
    that's important, that we can still attract very high-quality
    staff, but the ability or the success of this country in
    generating all of those folks, we are seeing a drop-off.
        Senator Domenici. George? Excuse me, Mr. Miller?
        Dr. Miller. Yes, sir. I would agree with what Mike said, we
    have a very prestigious post-doc called a Lawrence Fellow,
    that's basically at the top of the line in terms of post-docs.
    Generally, 60 percent of the people who win those post-docs are
    not U.S. citizens.
        So, it is a concern. The good news is we still get the very
    best and the very brightest at the laboratories, because of the
    science investments that we've talked about, because the
    science is so exciting, because the mission is so compelling.
    And quite frankly, even though our core mission is nuclear
    weapons, about 80 percent of what we do is actually publishable
    in peer-reviewed scientific journals, and so all of that is
    essential.
        Senator Domenici. Dr. Hunter.
        Dr. Hunter. Yes, Senator Domenici--I'd like to add my
    welcome to Senator Feinstein, please come.
        Nationally, we have a problem. We are not seeing enough
    students going into the fields of science and engineering and
    we're not seeing enough people coming out, the way we'd like to
    see them.
        One thing we find about these laboratories is, they not
    only have places of excitement because of the work, but they're
    also places of values and character, and they support the
    national interests, and that brings a lot of the right people
    to our laboratories. So I can report, basically, that we're
    able to get the people we generally need, but the national
    problem is one of--very significant--and one I think all of us
    can do more to try to help.
        Senator Domenici. I'm going to submit some questions for
    you to answer in writing, but we were--we've kind of gone over
    our stay here, today. And we still, perhaps, will want to go
    another round, I don't know.
        But, I want to suggest to--here, and for all of you to hear
    it and the subcommittee to hear it--we cannot continue to want
    so much of these laboratories, as we're here today describing,
    expect them to do so much, if we don't spend more money on the
    science part of the laboratories. No question in my mind that
    we are getting squeezed out, science is getting squeezed out,
    especially math, science--math, physics, engineering, and the
    like--in our national picture, too, in terms of what's going on
    in our schools. And I'm very worried about it, and hope you
    will keep your laboratories exciting, because that's what young
    people are looking for, and I think we're giving you enough
    equipment to do that.
        One question--while we have praised NIF, we should talk a
    minute about the little brother, or little sister to NIF, the
    one you have at your place that's got a funny name, called the
    Z Machine, ZA Machine or something.
        Would you tell the chairman and Senator Feinstein what that
    is, and----
        Dr. Hunter. Sure.
        The Z Machine is a very complementary facility to the NIF
    facility, it is working now, we have just refurbished it.
        It is another approach to providing very high-density,
    high-energy density environments which uses what we call pulse
    power--lots of big transformers dumped into a very small space.
    And so we've just finished refurbishing that, we're doing
    experiments today looking at implosion of fusion capsules, and
    experiments today looking at materials under very high
    pressures, and very high temperatures. And it's operating--it
    can operate as often as once a day, and we use it routinely and
    we work day in and day out with the other two laboratories to
    support experiments that they do.
        Senator Domenici. Okay. Now, will you please tell us about
    why you're worried about your laboratories--availability of
    appropriate computers?
        Dr. Hunter. Sure, I think it's the same general issue that
    Mike and George commented, because as we look at the balance of
    the investment, or the resources that go into the stockpile
    itself, or the other parts of the complex infrastructure, and
    ask them, what is the remaining amount that's spent on science?
    We find a normal and natural competition there, and that
    science piece, and the application on G, on Z, has been reduced
    over time to where we're barely able to operate at the one
    shift a day level.
        Senator Domenici. Thank you.
        Thank you, Mr. Chairman.
        Senator Dorgan. Senator Domenici, thank you very much.
        I'm going to call on Senator Feinstein, but I want to
    observe, relative to this question of funding, I just came down
    the hall--as I think did Senator Domenici--from another hearing
    today, Senator Feinstein was at the hearing--in which the
    administration's requesting $196 billion as an emergency piece
    this year for Iraq and Afghanistan.
        So, the result is, because we have that war going on, it's
    very expensive--that's $16 billion a month, $4 billion a week,
    just for that emergency piece, in this year. And the result is,
    we get a domestic discretionary request in the budget in this
    subcommittee that says, ``Okay, we need to fund the nuclear
    weapons programs, the laboratories, science, and by the way we
    want you to cut $1 billion our of water projects,'' the Corps
    of Engineers, lost $800 million, the Bureau of Reclamation cut
    $200 million, roughly. The fact is, it doesn't add up.
        And so, this subcommittee, you know, unless we find some
    additional funding, is left with a Hobbesian choice. And so,
    last year we found some additional funding to try to fix some
    of these problems in the President's budget, but it is--it's a
    difficult problem, and no one here wants to short science.
    Nobody on this panel wants to do that. It's just that the
    President has given us a budget that, we've got to fix it,
    because it doesn't work.
        Senator Feinstein.

                          NATIONAL LABORATORY FUNDING

        Senator Feinstein. Thank you very much, Mr. Chairman.
        First of all, it's very fine to see the three of you here,
    thank you very much--I have great respect for each of you. I
    have respect for what you do, I don't have respect for the
    product. I'm not a friend of nuclear weapons, and you have to
    know that up front.
        I am a product of Nagasaki and Hiroshima, I grew up, I saw
    what 14 kilotons can do. I saw what 7 kilotons can do. I have
    not seen what 100 kilotons can do, and I've not seen what 400
    kilotons can do, but I know they're out there, and I am very
    concerned.
        I am not for a nuclear bunker-buster of 100 kilotons. To
    me, it was immoral. I am not for an Advanced Weapons Concept
    Program of building under 5 kiloton tactical battlefield
    nuclear weapons. I am not for 450 new plutonium pits.
        So, I'm at a very different position. And I want to see the
    United States move away from nuclear weapons. I want to see us
    do it in a way that protects our national security. I want to
    see us take a real leadership role in non-proliferation. I want
    us to work with nations so they don't become nuclear weapons
    nations, and that's my heart, and that's my vision, and that's
    why I'm here today.
        With respect to the budget in 2008, it was $1.091 billion,
    as passed. The President's budget is $1.036 billion--that's $55
    million less than last year. So, it's the President's budget
    that we are essentially working from, in this subcommittee.
        I am concerned about putting 500 highly trained scientists
    and engineers into the job market at this stage--I must tell
    you that right up. I'm concerned about it from a national
    security perspective.
        And Dr. Miller, I don't know if there's anything we can do
    about that, I don't know if they can be employed at Sandia, or
    at Los Alamos, but I worry about it. Do you have any comments?
        Dr. Miller. Thank you, Senator Feinstein. I worry about it
    a lot. These are my colleagues, many of them I've known for 35
    years, which is how long I've been at the laboratory, so this
    is an extraordinarily difficult time for the laboratory, and
    for the entire complex.
        The fact of the matter is as Director of the laboratory, I
    have a fiscal responsibility to deal with the realities that
    the Federal Government gives me. And that's the reality of this
    particular situation. As you know very well, it's occurring at
    laboratories across the Nation. Mike has also lost 2,000 people
    over the last 18 months. There are layoffs anticipated at the
    Stanford Linear Accelerator, at Argon, at Oak Ridge. The fact
    of the matter is, as we have all said, in different ways, and
    from different origins, the investment in science and
    technology for the Nation's benefit is under siege.
        So, I worry a lot about it, I do have responsibilities to
    maintain fiscal responsibility, and that's what has to happen.
        Senator Feinstein. Well, let me ask you something
    precisely, it's my understanding that the lab had expected
    about $80 million in increased costs, but the actual number
    spiraled to $280 million? What was the difference? What took up
    that difference?
        Dr. Miller. The $80 million went to $130 million, the extra
    $50 million is just inflation, which we knew about all along.
    The principal changes were--as I said before--the change from a
    public sector to a private sector.
        Senator Feinstein. How much is that?
        Dr. Miller. That's about $100 million.
        Senator Feinstein. In----
        Dr. Miller. Of the $130 million.
        Senator Feinstein. In what?
        Dr. Miller. Okay, so it is the fact that we are no longer
    tax-exempt, so we have certain taxes we have to pay. The
    healthcare, as a University of California employee, the
    healthcare benefits that the University offers are amortized
    over the entire State. Livermore has to deal with the
    healthcare in Northern California. The healthcare costs for the
    same benefits went up 47 percent.
        Senator Feinstein. How much in dollars?
        Dr. Miller. Sixty-five million.
        Senator Feinstein. So, in other words----
        Dr. Miller. We chose, we chose not use----
        Senator Feinstein [continuing]. Healthcare costs, equal to
    UC's increase cost $47 million, wow.
        Dr. Miller. Right. And the third was that, in the decisions
    that individual employees took about what kind of a retirement
    system to choose, they were given two options--one, a defined
    benefit plan like, identical to the University of California,
    one is a defined contribution plan. The defined contribution
    plan requires that the laboratory put money up front. We used
    an assumption that the same fraction of employees as took the
    defined benefit at Los Alamos, would take it at Livermore. That
    was not the case. More people picked the defined contribution
    plan, which again, increased the up-front costs for the
    laboratory.
        Senator Dorgan. Senator Feinstein, might I interrupt for a
    moment?
        Senator Feinstein. Certainly.
        Senator Dorgan. I'm--would you submit a report to this
    subcommittee on that $200 million--you said that it was a $200
    million difference?
        Dr. Miller. Yes, it's about $280 million total, including
    Federal funding. But yes, I'll be happy to.
        Senator Dorgan. Could you submit a report that outlines
    those costs, those added costs, so that we understand it?
        Dr. Miller. Yes, sir.
        Senator Dorgan. And let me ask one other question, if I
    might. What--is any of this applied overhead that is----
        Dr. Miller. Let's see--those costs are collected through
    overhead so that it makes it look like the laboratory is more
    expensive in an overhead, even though we actually haven't added
    in the overhead people, and the fact of the 2,000 people,
    roughly two-thirds, are being reduced out of the overhead, or
    support side of the laboratory. So, we're actually reducing the
    number of people in the overhead, but the overhead costs are
    going up.
        Senator Dorgan. The reason I ask the question is there's a
    lot of overhead expenditures applied--or overhead charges
    applied--to various Federal money that moves out, and so----
        Senator Feinstein. Well, but I think there were a lot of
    unintended consequences of this. And that's what concerns me. I
    don't think the people that made these decisions really
    understood that if they did this, there would be $47 million in
    additional costs for healthcare, that there would be fees that
    would go up, and the way these fees went up, and that the tax-
    exempt status of the University was going to change, so that it
    is a very hefty tax burden that's put in there now.
        Dr. Miller. And Mike could give you a similar story for Los
    Alamos.
        Senator Feinstein. See, this concerns me. And the problem
    was, as I understood it, from what I overhear, is the concerns
    over security at Los Alamos, in order to compete for the
    contract, you had to provide a different management structure
    from what had existed in the past--stop me if anybody thinks
    I'm wrong.
        Senator Domenici. You're right.
        Senator Feinstein. Therefore, you took on all of these
    added costs by bringing in the private sector in a joint
    venture, which may or may not have been a good idea, I can't
    pass judgment on it. But one thing we know is there certainly
    are greater costs.
        Senator Dorgan. Senator Feinstein, I'm going to ask Los
    Alamos to submit the same report that I've asked of Lawrence
    Livermore, with respect to----
        Dr. Anastasio. Yes, sir, we'll be happy to do that, Mr.
    Chairman.
        Senator Feinstein. So, that when the President actually
    gave us a budget that was $55 million less--less than last
    year--just for, that's just for Lawrence Livermore, right?
        Senator Domenici. Yes.
        Senator Feinstein. Just for Lawrence Livermore, that really
    put them behind the 8-ball with these other costs. Is that a
    correct interpretation?
        Dr. Miller. Yes, ma'am, that's exactly right.
        Senator Feinstein. And it seems to me that the
    administration has to take into consideration that when we go
    this way, it's going to cost more, and those costs have to be
    met. And that we also have to know that it's going to cost
    more.
        So, the result is, I don't know whether these are senior
    scientists, whether they're junior people--but to quote you,
    they are highly trained scientists and engineers, that are now
    thrown into a job market--so let me ask you, between the three
    institutions, how many highly trained scientists and engineers
    are now being thrown into the job market? Being involuntarily--
        Senator Domenici. Over what period of time? Three years?
        Senator Feinstein. Well, this--no, this last year.
        Senator Domenici. Oh.
        Dr. Anastasio. Yes, at Los Alamos, we've reduced the
    workforce by a little over 2,000 people over the last 18
    months, and I would say, a little less than half of that number
    are technical people.
        We were able to do that through an involuntary--a voluntary
    program. We did not have to do an involuntary, as George is
    doing, and in other, other turnover--managing the turnover, the
    normal turnover, without replacing people that leave, but
    year--I would say close to 1,000 people----
        Senator Feinstein. Okay.
        Dr. Anastasio [continuing]. With a technical background,
    over the last 18 months.
        Senator Feinstein. And, Mr. Miller, could you comment--
    answer that same question?
        Dr. Miller. Yes, again, we have lost--by the end of this
    fiscal year, relative to the beginning of 2007, so again,
    roughly 2-year period, we will have lost 2,000, of whom about
    500 are highly skilled engineers and scientists.
        Senator Feinstein. Mr. Hunter.
        Dr. Hunter. Thank you, Senator.
        In the weapons program, we've actually reduced the
    workforce by about 500 or 600 people. The net number that
    exited the laboratory was more like 200 or 300, and of that,
    about half were scientists and engineers. The reason our
    numbers are smaller is because we added a lot of other work
    from other agencies to make up for some of the downfall in
    nuclear weapons.
        Senator Feinstein. All right, so now we have thousands of
    people floating around, when we know there's cyber warfare
    going on, there are all kinds of intrusions, there are all
    kinds of efforts to capture these scientific secrets. And I
    think it's really problematic.
        Senator Dorgan. Dr. Hunter.
        Dr. Hunter. I may have been--I should clarify. In our case,
    we handled that reduction by normal attrition and limited
    hiring, as opposed to laying people off.
        Senator Feinstein. So, you didn't lay anybody off?
        Dr. Hunter. We did not lay anybody----
        Senator Feinstein. Okay.
        Dr. Hunter. This year we've laid off a few tens. I wanted
    to clarify that, thank you.
        Senator Feinstein. Thank you.
        Senator Dorgan. Senator Domenici.
        Senator Domenici. Yes.
        Senator Dorgan. Thank you.
        Senator Domenici. I wondered if Tom D'Agostino--I know
    you're not at the witness stand, but do you have any
    observations about this last 10 minutes of testimony?
        Mr. D'Agostino. Absolutely.
        Senator Domenici. That might be helpful to us?

                     SCIENCE AND TECHNOLOGY FUNDING TRENDS

        Mr. D'Agostino. I think there's at least a sense after this
    discussion that the administration is not interested in science
    and technology--I want to clarify that right off the bat. Going
    back----
        Senator Feinstein. Who said that?
        Mr. D'Agostino. Well----
        Senator Feinstein. We didn't say that.
        Mr. D'Agostino. We do have a problem in science and
    technology, there's no question about it. I think it has to do
    with the levels of resources that ultimately end up at the
    institutions. And what we're seeing here, and I think maybe Tom
    Hunter alluded to it, it's the natural tension between
    maintaining a 50-year-old nuclear weapons infrastructure and
    dealing with flat budgets. This year is an exception--we
    requested about $9.1 billion or so for the NNSA. In prior
    years, we were fairly consistent asking for money at about the
    $9.3 billion range.
        And this subcommittee's been very supportive of, there's no
    question about it, the science and technology program. But when
    things get through, we've had a year-long continuing resolution
    in fiscal year 2007, we had an Omnibus last year, and the $9.3
    billion typically gets reduced to the $9.1 billion range.
    That's been the trend over the last 2 years.
        And so now we have a flat budget over the last few years.
    And as our facilities get more expensive to maintain, there is
    going to be reductions elsewhere.
        What we're trying to do is aggressively reduce our fixed
    costs--those costs that are kind of below the radar, and George
    alluded to it when he talked about a two-thirds reduction in
    the workforce.
        Since it's typically unpopular to ask for more money in
    nuclear areas--and we've seen 3 years worth of relatively flat
    budgets--we're trying to aggressively go after and reduce those
    fixed costs, so we can reinvest our resources into this
    infrastructure. And it's a hard management problem, there's no
    question about it.
        I think we all agree that we want to reduce the costs of
    this program, without dropping the ball on the science and
    technology side. And what you're hearing, I believe, are those
    challenges we face.
        Senator Dorgan. Yes, well, but let me just also say, as I
    said before, this subcommittee doesn't just deal with you, this
    subcommittee deals with a range of other things, and we have a
    budget that is sent to us without a lot of forethought, in my
    judgment, on another large area, and that is water. It's not
    nearly as large as nuclear. But the implication that this
    subcommittee should take a look at this country's water needs,
    and cut $1 billion out of water investment is preposterous.
        Mr. D'Agostino. Right.
        Senator Dorgan. We're not going to do that. So, we also
    have a balancing problem, and it's because we've gotten a
    budget submitted to us that does not meet this country's needs.
        And so, I think this subcommittee is very strongly in
    support of science.
        Mr. D'Agostino. Absolutely.
        Senator Dorgan. And will be. But, we are also confronted
    with a budget that, in many ways, I think, is playing a game.
    We know what the water projects are, we know which ones have
    been started, we know which ones have to be invested in to be
    completed. And yet there's a bit of game being played, I think,
    in budget--Senator Domenici was chairman of the Budget
    Committee for many years, so he will recognize these issues.
        This is not our only responsibility, but it's a very
    important one. And I just want to make a point, that we're put
    in a bad position by extraneous events, when the President
    sends us a budget and says, ``Let's cut water projects by $1
    billion,'' and that will not happen. This subcommittee's not
    going to do that.
        So, we're going to try to do everything we can to make sure
    that we provide sound funding for science, and I've already
    made a statement on how I feel about the national laboratories.
    Senator Domenici, do you want to make final comment?
        Senator Domenici. Yes, I just want to say, it does bother
    me that we end up testimony, seemingly, on a low note. But I
    don't think things are really on a low note. I think the
    laboratories have done quite well, considering that we really
    are going from a cold war to a non-cold war situation, you
    know, looking back at history, when America had giant projects
    that were good for war, and then the war ended, we just got rid
    of them, we didn't have anything left over. We've done that
    before with giant science projects that helped the government--
    the war ended, and we dismantled everything.
        I think we've done quite well, building this down, and only
    in the last few years has it caught up with us.
        But, I do want to say that I think you're telling us
    something, and just my interpretation--you know, if we're going
    to alter, change, or change the nuclear stockpile
    substantially--and I think you all are suggesting that we're
    probably going to--it's not going to look like it is today, in
    15 years. It's going to look considerably different. It's going
    to be much smaller--smaller numbers, smaller weapons--we're
    hoping that that also will mean that we can--it'll cost less to
    maintain them and keep them, and make sure they're reliable.
        But we're not moving head on that yet, we've solved the
    problem of not doing underground testing, and then we started
    Stockpile Stewardship out on a limb--nobody knew anything about
    it. When it was presented to me, I couldn't remember the three
    words, Science-based Stockpile Stewardship. I had to write them
    down, because they were so funny.
        Now, they've just--it's pretty obvious, what we've done,
    we've accomplished a great deal. In the meantime, we need these
    laboratories living laboratories for the future, as I see it.
    And we spent a lot of money doing that.
        But there are better laboratories for Science-based
    Stockpile Stewardship, wouldn't you think, Mr. Miller? They're
    better for it, than without it?
        Dr. Miller. Absolutely, sir. You said it very well.
        Senator Domenici. I think that's right, and I think that's
    good for the country. And we'll try our best, and we hope the
    new management teams--which were the decision of the
    administration--and I don't blame them, that was their
    prerogative, that we were going to go with the new system--I
    hope it works.
        Director Anastasio, I hope you all dedicated yourself to
    better management at Los Alamos, and I think it's gotten a
    little better. I don't have to say that about Director Hunter,
    you've always had the best management, you didn't even have to
    lay off any people--that comes with good management,
    incidentally.
        And Director Miller, I'll find out more about you when I
    come to see you, okay?
        Thank you all, very much.
        Senator Dorgan. The interesting thing, Senator Domenici, is
    that we have a lot of nuclear weapons, we talk a lot about
    them, we can't possibly use one, ever, without catastrophic
    results for our planet.
        Senator Domenici. Right.
        Senator Dorgan. We've signed up, as a country, to go to
    zero nuclear weapons at some point in the future. We will not
    do that, of course, until it is--if ever--it is determined to
    be safe and secure for our country to do that.
        But, I think the other side of this subcommittee is nuclear
    non-proliferation, which is very important, and we will be
    talking more about that at a later time, as well.

                         ADDITIONAL COMMITTEE QUESTIONS

        At this time I would ask the subcommittee members to please
    submit any questions they have for the record.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                Questions Submitted to Hon. Thomas P. D'Agostino
                Questions Submitted by Senator Pete V. Domenici
        Question. Two months ago you named Dr. David Crandall as NNSA's
    Chief Scientist. In your announcement of his promotion, you stated that
    you ``outlined your expectations for Dave in this new challenging
    assignment.''
        What are your expectations and can you please tell me how you
    intend to measure his success in implementing a comprehensive science
    strategy for the labs?
        Answer. Dr. Crandall will advise me and represent the NNSA on
    science and technology issues for national security. He will work with
    NNSA program managers and with our national laboratories to define the
    nature of science and technology that NNSA can advance for national
    security and how to do that in collaboration with other parts of DOE
    and other agencies that have synergistic mission needs to those of
    NNSA. Measures of success will include defining strategic documents
    with more specifics on science and technology and agreements with other
    agencies on how to share resources to advance our respective mission
    needs.
                               advanced computing
        Question. When we faced the decision to proceed with the science-
    based Stockpile Stewardship program, it was decided that the labs would
    need to develop advanced computing capabilities that didn't exist at
    that time. I recall there was significant discussion regarding the
    potential to develop this capacity.
        Fifteen years after we initiated this effort can you tell me if we
    have met or exceeded our computing goals at the time? What has this
    meant to Stockpile Stewardship?
        Answer. NNSA has exceeded its computing goals in terms of both the
    platforms and the codes. In 1996, the Accelerated Strategic Computing
    Initiative, or ASCI, originally planned for a 100 Tera-Flop (TF) entry
    level system to support a high-resolution, end-to-end, 3D simulations.
    The original goal of 100TF was achieved in fiscal year 2005 with
    delivery of the ASC Purple machine. We also acquired the BlueGene/L
    machine clocked at 360TF for science applications.
        Additionally, in 1996, the 100TF goal centered around performing a
    single calculation that was highly resolved enough to distinguish
    physical error from numerical error. The realization of Purple was
    accompanied by detailed simulations that revealed physics not
    previously seen in the 50-plus years of computational science. Today,
    we not only have the capability increase the physics basis in our
    simulations for annual assessments and other production work, but also
    have begun to adopt the codes for broader national security
    applications (i.e. threat reduction, secure transportation).
        Question. What has this meant to U.S. leadership in computing?
        Answer. To illustrate the program's impact on computing at the
    high-end: on the latest (Nov., 2007) Top 500 list of supercomputers
    around the world, the top 12 platforms shown have directly benefited
    from ASC-funded architectures. Of those 12, 9 are located in the United
    States. The United States has the top slot, with BlueGene/L at 478.2
    teraflops (as measured on the Top500 benchmark), almost three times
    faster than the second-place machine. Of the entire top 500, fully 38
    percent have major components that derived from ASC investments, and 25
    percent employ internal networks developed through ASC collaborations
    and projects.
        Your Advanced Computing and Simulation budget fails to provide any
    specifics regarding the proposed computer acquisition budget, including
    any mention of the Roadrunner platform and the status of the Sequoia
    platforms.
        Question. Can you provide the specific details as to how much you
    have budgeted for each system and the status of each platform? What are
    the out year acquisition needs and how will this budget support the
    preferred alternative you have proposed?
        Answer. The program has budgeted $25.9 million in fiscal year 2009
    to cover the final payments for Roadrunner. Since the Sequoia
    procurement is about to release a Request for Proposals, a final
    payment schedule has not been negotiated. However, the funding profile
    for fiscal year 2009-fiscal year 2012 totals about $220.0 million. In
    addition, the program has a need to replace the Purple platform that
    supports the current National User Facility and has directed the LANL-
    SNL Alliance for Computing at Extreme Scales (ACES) team to begin the
    procurement process that will result in a platform, currently referred
    to as Zia, to be delivered in fiscal year 2010. While the program set
    an initial funding target of about $66.0 million for Zia, we are
    reevaluating the ability for that budget level to meet mission needs.
        It is my understanding that the NNSA intends to acquire a third
    computer known as ``Sequoia'' for Livermore to support the Blue Gene/L
    and Purple platforms. Your budget is silent on this point as far as I
    can tell.
        Question. Did the NNSA ever conduct a competitive solicitation for
    this new acquisition for Livermore?
        Answer. The program documented a mission need in March 2008 for a
    petascale platform to address uncertainty quantification. That led to a
    decision to procure a system, code-named Sequoia, to be hosted at LLNL.
    While being housed at LLNL, it is not a follow-on to BlueGene/L or
    Purple. Sequoia is being acquired via a competitive process where the
    selection will be based on best value, determined by a combination of
    price and technical features related to NNSA workload. The release of
    the Request for Proposals is imminent and five major vendors have
    expressed interest in bidding.
        Question. Did the laboratory or the NNSA consider any other
    vendors, other than IBM, regarding other technology or cost scenarios
    for this acquisition?
        Answer. LLNL will evaluate all proposals received in response to
    the Request for Proposals and negotiate a contract with the winning
    bidder based on best value to the government.
        Question. All of the most recent computing platform acquisitions
    are IBM products. What is your plan to consider alternative vendors or
    platforms to ensure we are considering the best alternatives in the
    business?
        Answer. NNSA has directed LLNL to conduct a competitive
    solicitation for Sequoia, and to employ the traditional process of
    commissioning a tri-lab committee to advise the source selection
    authority on technical responsiveness of the bids.
        Question. In the fiscal year 2008 Omnibus, language was included
    directing both the NNSA and the Office of Science to establish a joint
    advanced computing and algorithm R&D program. The objective of this
    language was to restore a world leading R&D capability in high
    performance computing architectures. The United States won't maintain
    its world leading role, if we don't continue to support research.
        What is the Department doing to establish this capability and what
    goals have been set? Also, what is the strategy for achieving these
    goals?
        Answer. The Department has established the Institute for Advanced
    Architectures and Algorithms (IAA). The goals of IAA have been set to:
      --Undertake focused research and development in partnership with
            industry and academia on key impediments to high-performance
            computing;
      --Promote the integrated co-design of architectures and algorithms;
      --Develop and simulate prototypes to demonstrate advantages that
            allow application developers and algorithm researchers to
            explore advanced architectures; and
      --Train future generations of computer engineers, computer scientists
            and computational scientists.
        Both the DOE Advanced Scientific Computing Research (ASCR) and the
    NNSA Advanced Simulation and Computing (ASC) offices have approved the
    goals, structure and management of the IAA, including the requirement
    for every proposed IAA project to be submitted to ASCR and ASC for
    joint peer review and approval. Currently there are two technical
    workshops on memory and interconnect technologies being planned for the
    summer and the third on algorithms in the fall.
        Question. As you know, I have had great concern about NNSA's high
    performance computing strategy. In your effort to reduce the computing
    investment at our national labs, you have directed that Sandia and Los
    Alamos form a partnership in computing. The Labs have completed the
    negotiations and codified this deal in a Memorandum of Agreement.
        Since your budget request for computing is extraordinarily vague
    can you explain what your plans are for this joint computing effort,
    how the NNSA will utilize it, what type of investments will be made and
    how this is an improvement over the existing three lab strategy?
        Answer. The joint LANL-SNL MOU, formally establishing the Alliance
    for Computing at Extreme Scales (ACES), was undertaken to capitalize on
    each labs strengths as the preferred alternative was implemented and
    present an icon and entry point into the labs for academia and industry
    working with the ASC program at the New Mexico labs. The most immediate
    and visible impact will be that ACES will host the next National User
    Facility for ASC capability computing with the design team being
    directed by SNL and the operations team being led by LANL. The program
    expects a similar division of labor as future systems are acquired by
    ACES. As the program works to identify efficiencies we look to preserve
    and accentuate our strengths. ACES emphasizes the strengths resident in
    the New Mexico labs for current and future national security
    applications.
        Question. As you are well aware I believe the NNSA has made a
    serious mistake in not pursuing a trilab advanced computing strategy to
    ensure that each lab works to develop cutting edge architectures as
    well as to support the world's best computer simulation capabilities.
        Despite the fact that the NNSA has proposed to reduce computing
    investment as part of the preferred alternative, are you willing to
    keep an open mind to alternative approaches recognizing that computing
    has opened up significant modeling capabilities for the labs?
        Answer. The NNSA labs are world leaders in designing, acquiring and
    operating supercomputers. Our approach for ensuring cost-effective,
    efficient, and sustainable operations that still met the needs of the
    Stockpile Stewardship program has led us to make some tough decisions.
    We have sought, and will continue to seek, technical advice from
    outside the headquarters as we develop strategic guidance and direct
    laboratory investments.
                      bush administration--weapons policy
        Question. Mr. D'Agostino in your statement, you said that in 2004
    the Bush administration ordered the nuclear weapons stockpile to be cut
    in half and then ordered an additional 15 percent cut just this past
    December. I believe critics of the President forget these facts. Many
    also have forgotten, or were never aware of the fact that this
    President recommended a shift in the role of the deterrent in the 2001
    Nuclear Posture Review.
        Can you explain to the subcommittee what this shift has been and
    the significance of this policy?
        Answer. The 2001 Nuclear Posture Review addressed ``strategic
    capabilities'' not just nuclear forces. Its basic findings were:
      --Russia is no longer an immediate threat--this fact itself has led
            to dramatically reduced U.S. reliance on nuclear weapons, and
            enabled very substantial reductions both in deployed forces and
            the overall nuclear stockpile.
      --Precision conventional strike and missile defenses will further
            reduce reliance on nuclear forces.
      --But nuclear weapons are still an important element of national
            security strategy.
      --Substantial nuclear arsenals remain, and proliferation concerns
            grow--we can no longer predict when and where major new threats
            will emerge.
      --Nuclear force planning is thus no longer threat-based (i.e., on
            cold war nuclear targeting model) but on broader concerns of
            defense policy.
      --The defense R&D and manufacturing base, including the nuclear
            weapons infrastructure represented by NNSA's national
            laboratories and production facilities must be able to respond
            on needed timescale to emerging threats.
        The ideas reflected in the 2001 NPR reflect a major
    reconceptualization of how strategic capabilities including nuclear and
    conventional strike forces, the supporting defense infrastructure and
    missile defenses interrelate in advancing the security interests of the
    United States and its allies.
        Question. Consistent with the fiscal year 2008 Omnibus, the NNSA
    has adopted the congressionally directed level of 50-80 pits per year
    production capacity as the preferred alternative. Can you please
    explain the significance of this shift and the budgetary impact that
    will result?
        Answer. The significance of the shift to 50 to 80 pits per year
    production capacity is acknowledgement by NNSA and the Department of
    Defense that any future requirements, to include transformation of the
    nuclear weapons stockpile or life extensions of warheads, can be
    managed within the production levels that the capacity can support over
    a specific time period. The reduced capacity requirement also opens up
    the potential for upgrading/modifying the plutonium facility at the Los
    Alamos National Laboratory instead of building a completely new
    facility. The cost difference (savings) between building a new
    plutonium facility for pit production and upgrading/modifying the
    existing plutonium facility (PF-4) at LANL is estimated to be more than
    $1 billion. Either option requires a new capability for chemical and
    metallurgical activities to support pit manufacturing and other
    plutonium operations. The shift, however, comes with additional risk of
    both making the required improvements within an operating nuclear
    facility and meeting any future unknown stockpile requirements where
    time may be critical in sustaining the nuclear deterrent due to
    capacity constraints.
         chemistry and metallurgy research replacement (cmr-r) project
        Question. The NNSA's preferred alternative has proposed to build
    all three phases of the CMR-R facility at Los Alamos. There is a lot of
    misinformation being spread about this facility and its role as a
    production facility.
        Can you tell me whether or not the CMR-Replacement facility will be
    used to manufacture pits? If not, where will pits be manufactured?
        Answer. The CMR-R Nuclear facility will not be used to manufacture
    pits, but will support pit production through the availability of a
    vault to hold material and pits and through the required analytical
    chemistry and metallurgical analysis that ensures specification of
    material during production is being met. Pits will be manufactured
    within the Technical Area 55 (TA-55) plutonium facility (PF-4).
        Question. What is the proposed role of the CMR-R and why can't the
    existing facility be used? Also, why is it important that CMR-R include
    a Category II nuclear facility behind the security fence?
        Answer. The proposed role of the CMR-R is to provide analytical
    chemistry support currently conducted in CMR and add a vault for
    storage of material to support pit manufacturing and consolidation of
    plutonium missions. The existing CMR facility was built over 50 years
    ago and has significant facility infrastructure issues that impact
    personnel and safety. In addition, since its construction, further
    seismic analysis has revealed a seismic fault running under the
    building which has caused significant reduction in activities to
    maintain the safety basis. Upgrading the facility to meet modern
    seismic standards for nuclear facilities has been assessed as not being
    cost effective.
        A Category II security facility is required due to the security
    requirements for a facility operating with the amount of special
    nuclear material required to accomplish the NNSA mission. The amount of
    activities using and handling special nuclear material and the required
    load of material within the vault necessitate this security. The
    Radiological Laboratory and Utility Office Building (RLUOB), the other
    facility within the CMR-R project, is only capable by design of
    handling very small gram quantities of special nuclear material.
        Question. The budget request states that the CMR-R project total
    cost is estimated to be $2 billion, which is an increase from the
    initial estimates of $1 billion. The budget doesn't provide a specific
    justification for this increase.
        Can you please explain why this estimate has increased?
        Answer. The basis for the cost the CMR-R is being developed
    presently; NNSA does not envision having a validated cost baseline
    until fiscal year 2010. Specific quantification of the overall costs
    escalation cannot be performed now, but the factors that drive the
    increasing cost of CMR-R, especially for the Nuclear Facility, can be
    identified. These factors include: building commodity and construction
    support cost escalation in the marketplace (e.g., rapid increasing
    costs for steel, concrete, glass, formed shapes, like equipment and
    pipe, and fuel); facility structural design changes to accommodate
    higher seismic loads and enhanced security threats (``the design basis
    threat'') recognized since Critical Decision-1 in May 2005; additional
    analysis of the detailed, specific quality assurance, safety, and
    security requirements for building nuclear facilities (e.g., the
    interactions associated with fire protection and ventilation systems,
    subject to severe seismic criteria); and continued schedule delays,
    which add carrying costs and future escalation.
               economics of the proposed uranium process facility
        Question. Administrator D'Agostino, as you are well aware the CMR-R
    facility has come under intense scrutiny with Congress even prescribing
    the range of production in the fiscal year 2008 bill, which was
    included in your preferred alternative. I am quite confident that at
    the end of the day, the project will be better served by the intense
    scrutiny and review.
        I am concerned, however, that the Uranium Process Facility and the
    new Kansas City Plant has not received the same level of review as the
    CMR-R Facility.
        It is my understanding that the UPF Facility will cost between $1.4
    billion and $3.5 billion and will support uranium mission of the
    complex. Also, I understand the Cost Analysis Improvement Group
    suggested that an alternative site other than Y-12 might improve the
    economics of this project.
        Has the Department considered the precise throughput that will be
    required for the UPF to support the LEP or RRW mission and has this
    been vetted within other relevant Federal agencies.
        Answer. The UPF is being designed with a throughput to support the
    most likely range of stockpile alternatives being considered jointly by
    the NNSA and DOD at this time. This throughput capacity supports future
    nuclear weapons stockpile requirements for either an LEP or an RRW
    strategy. The NNSA has worked closely with appropriate offices in the
    Department of Defense to properly define stockpile requirements
    affecting UPF throughput.
        Question. What other sites are being considered and how will this
    impact the mission?
        Answer. Uranium operations are currently accomplished at the Y-12
    National Security Complex (Y-12) in Oak Ridge, TN. While Y-12 is
    designated as the preferred uranium center alternative in the Draft
    Complex Transformation Supplemental Programmatic Environmental Impact
    Statement, NNSA continues to evaluate two alternative sites as the
    potential locations for the uranium mission. These alternative sites
    are the Pantex Plant (PX) in Amarillo, Texas, and the Savannah River
    Site (SRS) in Aiken, South Carolina. If uranium operations were moved
    from Y-12 to either PX or SRS, the primary impacts on the NNSA mission
    are the potential risks and added costs of relying on aging Y-12
    facilities during an extended transition period, and the loss of
    workforce expertise that occurs when experienced staff choose not to
    relocate. Current planning schedules show that moving the uranium
    mission from Y-12 to either SRS or PX requires an additional 5 to 7
    years of transition operations of existing Y-12 facilities while
    replacement facilities are completed. After the transition, regardless
    of which site is chosen, the uranium processes required to support the
    NNSA mission would be qualified and fully functional.
                                enhanced surety
        Question. For the past several years, Congress has provided
    additional funding in the Engineering Campaign to support advanced
    surety research in an effort to encourage the Department to pursue
    state of the art use control technology to prevent the unauthorized use
    of our weapons.
        This is the first year that the administration has included funding
    to support advanced surety research in its request. How will this
    funding be spent and what is your goal and timetable for developing and
    deploying this state-of-the-art technology?
        Answer. The administration has developed advanced surety
    technologies for several years through the Engineering Campaign. The
    W76-1 life extension program (LEP) incorporates improved safety
    features, modern weak-links and strong-links, that were developed in
    the Campaign. Currently funded advanced surety activities include a
    laser-based advanced initiation system that, when fielded, will
    eliminate a safety concern for certain weapons in the existing
    stockpile. Additionally supported work includes security-related
    technologies that will improve the Department's response to current
    terrorist threat scenarios. The surety technologies included in the
    reliable replacement design would have provided greater performance
    margin against these postulated threats. All of these advanced surety
    technologies are fielded based on their technological maturity, and
    while some require an LEP to implement, others can be fielded without
    the need of a major refurbishment of a weapon platform.
        Question. Are you aware of any statutory prohibitions to prevent
    the NNSA from integrating use control technology into our existing LEP
    program?
        Answer. The current statutory definition of a Life Extension
    Program implies use of, or modification of, an existing pit or
    secondary (50 U.S.C. sec. 2529). Therefore, if a potential use control
    technology would require the manufacture of a new pit or secondary,
    that technology would not be allowed in a Life Extension Program. Any
    other use control technologies that can be used in concert with an
    existing pit or secondary would be allowed under the Life Extension
    Programs.
        Question. Knowing that our present warheads are going to be in the
    stockpile for many years, maybe decades more, and with the growing
    threat of terrorist extremists, are we doing enough to implement modern
    surety technologies to keep these warheads secure?
        Answer. Weapon security will always be met through a combination of
    engineered features within the weapons and the appropriate physical
    security measures, and, therefore, future surety improvements must
    balance the tradeoffs between long-term and short-term costs, time to
    implement and overall effectiveness. In addition, before any surety
    improvements can be implemented, the nuclear weapons laboratories must
    ensure that the weapon can be certified without the need of future
    underground nuclear testing. External technologies can provide surety
    improvements in a relatively short time and at a low cost compared to
    either an LEP or replacement weapons but may have significant
    operational impacts and limited effectiveness. An LEP or replacement
    designs provide the opportunity for the greatest surety improvement but
    with a longer development time and additional work required to certify
    the nuclear package without underground nuclear testing. While we have
    made progress in fielding technologies to enhance the surety of the
    stockpile, some of the opportunities for greatest improvement have not
    made it into the stockpile to include the W80 LEP and the Reliable
    Replacement Warhead. The surety of the stockpile is only as good as the
    weakest link. Therefore, to ensure the security of the enduring
    stockpile, we maintain a program to evaluate the stockpile, system-by-
    system, and implement the appropriate level of surety for each system,
    accounting for all other aspects of weapon security for the system
    being evaluated.
                      lanl performance--on the right track
        Question. Administrator D'Agostino, we are approaching the 2 year
    anniversary of the new management team's take over of Los Alamos. It
    appears to me that things are on the right track with several
    deliverables met in pit manufacturing, supercomputing, and improved
    site security.
        What is your impression of the operations at LANL?
        Answer. I agree that there has been progress in meeting goals at
    Los Alamos in the areas that you cite. LANL has continued to meet
    mission deliverables and, in particular, is up-to-date in meeting their
    deliverables in pit manufacturing. The supercomputing deliverables for
    the Roadrunner computer system are being met, and LANL is working with
    us to understand the upgraded power and cooling needs of their
    computing facility. Their site security objectives have been largely
    met, including a balanced inventory of special nuclear material and the
    reduction of the amount of CREM (Classified Removable Electronic Media)
    as well as its improved management. LANL, by all measures, continues
    its tradition of outstanding science and technology. Recent positive
    progress has been made in the management of their LDRD (Laboratory
    Directed Research and Development) program to ensure that it is better
    aligned with strategic directions. There are some areas that still need
    improvement. Management costs have gone up since the new team has taken
    over and have added to the cost of doing business. Hiring is a crucial
    area to ensure future scientific success but has been slow because of
    budget difficulties. Overall, there has been steady improvement in most
    operational areas since the management transition.
                   los alamos neutron science center (lansce)
        Question. Administrator D'Agostino, as you are aware, I have sent
    you a letter encouraging you to better define the long term science
    strategy and investment in the our national labs as part of the Complex
    Transformation effort. I believe strongly that the NNSA must identify a
    long term science strategy for the NNSA labs. More specifically, I also
    suggested you develop a refurbishment strategy for LANSCE.
        Do you agree that the NNSA must have a long term science
    infrastructure investment plan?
        Answer. Yes, we agree that a long term science infrastructure plan
    is required. The success of the stockpile stewardship program is a
    testament to the execution of the science investment strategies that
    were crafted in the 1990s. These strategies brought us the modern
    computational systems and experimental facilities that can be
    integrated to allow us to maintain the stockpile without underground
    testing. We are also seeing the closure of Significant Finding
    Investigations that had been open for many years because the tools were
    not available or capable. Now they are. In the immediate future we see
    the fruition of many more of the investments such as DARHT second axis,
    ZR, Omega EP, and NIF. Along with LANSCE and smaller facilities, these
    science tools will significantly advance our capability to certify and
    assess the stockpile. Presently, we are engaged in developing science,
    technology and engineering roadmaps. Many of these have pointed to the
    need for LANSCE during the next 10 years or so to address key nuclear
    physics, hydrodynamic and material issues. Science facility needs
    beyond the next 10 years is being studied but will require more results
    from the planned work in the next 5 years that may identify gaps. Other
    national missions may also be weighed in defining new science
    facilities at laboratories.
        Question. Do you believe LANL needs a new science facility to
    continue supporting the ongoing stockpile stewardship mission as well
    as support non-weapons scientific research?
        Answer. The NNNA needs LANSCE for the future to support critical
    stockpile stewardship missions; however, we have not yet determined a
    driving need within NNSA for a new science facility at LANL. LANL has
    discussed ideas that could provide benefit to other science missions
    and also to NNSA. LANL plan some major technical workshops to refine
    their ideas, and they will continue to bring these forward to the
    Department of Energy and NNSA. NNSA believes that LANL will continue to
    have exciting science missions within NNSA either with or without a new
    facility.
        Question. When will NNSA pursue a CD-0 for the LANSCE project?
        Answer. NNSA granted CD-0 for the LANSCE refurbishment project in
    December 2006, and is working to complete CD-1 by the first quarter of
    2009.
                          materials consolidation--mox
        Question. Can you please summarize for the subcommittee where the
    NNSA is in terms of consolidating special nuclear material and what the
    Department will gain as a result?
        I strongly believe that if the NNSA is going to consolidate the
    special nuclear material, it must also develop a final disposition
    strategy for the excess plutonium. Today, the current disposition
    pathway is the MOX plant at Savannah River.
        Question. The MOX plant serves as our only plutonium disposition
    path forward. Is the Department considering any other alternatives?
    Alternative paths were considered, both by the Department of Energy and
    outside experts, and ultimately rejected as not the most cost effective
    approaches.
        Answer. No, the Department is not considering any other alternative
    plutonium disposition paths for the approximately 43 metric tons (MT)
    of surplus weapon-grade plutonium planned to be processed at the MOX
    facility. While the Department is planning to use the Savannah River
    Site's H-Canyon Complex to dispose of up to 5 MT of impure, non-pit
    plutonium, the H-Canyon Complex is not suitable to dispose of large
    quantities of pure plutonium.
        Question. If Congress were to cancel the MOX project, how much
    longer would it take to develop and implement another disposition
    pathway?
        Answer. If the MOX project were cancelled, the Department would
    have to reevaluate viable alternatives for the disposition of surplus
    weapon-grade plutonium. The Department has previously considered
    immobilization to be a possible alternative and would likely reconsider
    it as a disposition path for the approximately 43 MT of weapon-grade
    plutonium currently planned for the MOX facility. Research and
    development of a ceramic immobilization process was halted 7 years ago
    and restarting such a program now would require at least 10-12 years to
    complete the necessary R&D, repository licensing, design and
    construction before such a facility were able to become operational in
    the 2018-2020 timeframe, assuming essentially unconstrained funding
    were available to support such an aggressive schedule. (Total project
    costs for MOX immobilization were estimated to be roughly equal, there
    is much more technical and financial risk associated with
    immobilization because the technology is less mature.) The amount of
    time necessary to immobilize this large quantity of weapon-grade
    plutonium would extend beyond the planned operating life of the Defense
    Waste Processing Facility (DWPF) at the Savannah River Site and an
    insufficient quantity of high-activity waste remains at DWPF to
    immobilize this quantity of plutonium. This would force consideration
    of shipping surplus plutonium to the State of Washington and performing
    some, if not all, of the can-in-canister immobilization operations at
    the Waste Treatment Plant (WTP) at Hanford.
        Question. What is the earliest you believe it could be operational?
    How much more would it cost?
        Answer. As I mentioned, it would take a minimum of 10-12 years to
    complete the necessary R&D, repository licensing, design and
    construction before an immobilization facility could become
    operational.
        Cost estimates for immobilization are highly uncertain since the
    technology supporting the immobilization of plutonium is still in the
    R&D stage and the immobilized waste form has yet to be qualified for
    acceptance in the planned geologic repository. It is likewise
    impossible to estimate, with any reasonable accuracy, the cost of
    shipping surplus plutonium to the State of Washington and performing
    some, if not all, of the immobilization operations at the Waste
    Treatment Plant at Hanford. Moreover, if the Department were to change
    its disposition program midstream and cancel the MOX project, the cost
    implications would be significant. With construction already
    significantly underway, there would be some physical stabilization of
    the construction site to bring an orderly close to the ongoing work at
    the site. An immobilization facility would still require some form of
    pit disassembly capability. Canceling the MOX program would also
    complicate the Department's proposed nuclear materials consolidation
    strategy, potentially forcing the Department to complete expensive
    security upgrades at the Hanford Site (about $200 million) and Pantex
    (about $27 million), and requiring the Department to continue to pay
    storage costs for plutonium estimated to be hundreds of millions of
    dollars per year, in addition to the possible payment of economic and
    impact assistance of up to $100 million per year to the State of South
    Carolina for failure to meet the MOX production objective as defined by
    section 4306 of the Atomic Energy Defense Act.
                             nnsa science strategy
        Question. Administrator D'Agostino, your testimony makes a thorough
    case for the consolidation of materials, mission and manpower. However,
    in the 13 pages of written testimony, I only find the reference to
    science in a handful of examples, primarily focused on past scientific
    achievements. There is absolutely no mention of a scientific path
    forward or a strategy to sustain the scientific excellence at the labs.
        Could you please explain to the subcommittee, what this budget
    provides in terms of long term planning to sustain the science
    capabilities at the laboratory?
        Answer. With respect to Science and Technology at the NNSA
    Laboratories, my most important new initiative is Special Focus Area 4:
    Future Vision and Mission for the NNSA and its Laboratories. I believe
    that the NNSA laboratories can play a central role in national security
    R&D, and complimentary to the transformation of the weapons complex, I
    would like to transform the science and technology base from one
    primarily focused on nuclear weapons, to one which also meets the
    broader national security needs of the Nation. I expect a more detailed
    discussion of this vision in the budget formulation we are currently
    preparing. We expect that this exciting new direction will attract new
    talent to the laboratories, thus allowing us to execute our core
    mission at the same time bring scientific innovation to solving
    emerging national security issues.
                          reliable replacement warhead
        Question. Administrator D'Agostino, this budget provides $10
    million to advance the feasibility work on the RRW study, but not
    enough to complete the research. It is my understanding that an
    additional $55 million is needed to complete this phase of study.
        Can you tell me what will be gained if Congress provides the full
    $65 million needed to complete the feasibility study? What would then
    be the next steps?
        Answer. The purpose of the joint Department of Defense and National
    Nuclear Security Administration Reliable Replacement Warhead Phase 2A
    study is to develop the detailed cost, scope and schedule baseline for
    a Navy Submarine Launched Ballistic Missile warhead application. This
    information is needed by the National Nuclear Security Administration,
    the Department of Defense, and the Congress in order to make informed
    decisions on whether and how to proceed with development and
    production.
        Question. Please clarify for the subcommittee whether or not you
    have the authority to expend funds to support the engineering phase of
    the RRW. Under existing authorities can the NNSA build a RRW system if
    it desired at this point?
        Answer. For refurbishments which use the Phase 6.X process, the
    Nuclear Weapons Council approves entry into the development engineering
    phase and the NNSA informs Congress. However for a new weapon
    development project, there are explicitly identified Congressional
    approval points. In the case of the Reliable Replacement Warhead, the
    National Nuclear Security Administration does not have authority to
    expend funds to support the engineering development phase, nor to build
    a Reliable Replacement Warhead.
        Question. Mr. D'Agostino it is my understanding that the existing
    nuclear nations are all making modifications to their nuclear weapons
    programs and we know that both Iran and North Korea have pursued a
    clandestine nuclear program for years.
        Do you believe that the completion of the RRW feasibility study
    would encourage any other nation to change their nuclear weapons
    policy?
        Answer. No, there is not one shred of evidence that U.S. nuclear
    weapons activities including our contemplation of replacement warheads
    has had any impact on either horizontal or vertical proliferation. With
    the end of the cold war came the cessation of the nuclear arms
    competition between the United States and Soviet Union in which one
    side's weapons modernization cycle generated a reaction in the other.
    Today, there is no coupling between Russian and U.S. nuclear weapons
    programs--indeed, the Russians are modernizing their nuclear arsenal
    and we are not.
        U.S. nuclear programs will not increase incentives for terrorists
    to acquire WMD--those incentives are already high and are unrelated to
    U.S. nuclear (or conventional) defense capabilities. Nor are such
    programs likely to have any impact on rogue state proliferation, which
    marches forward independently of the U.S. nuclear program. Indeed,
    there is no indication at all that very significant reductions in the
    numbers of U.S. (and Russian) nuclear weapons, and in the alert levels
    of nuclear forces, over the past two decades, coupled with no U.S.
    nuclear testing and very little U.S. nuclear modernization, has caused
    North Korea or Iran to slow down covert programs to acquire
    capabilities to produce nuclear weapons. On the contrary, these
    programs have accelerated during this period. Nor did such U.S.
    restraint convince India and Pakistan not to test in 1998, or North
    Korea in 2005. Rather, North Korea and Iran appear to seek WMD in
    response to their own perceived security needs, in part, to deter the
    United States from taking steps to protect itself and allies in each of
    these regions.
        But even more importantly, the credibility of the U.S. extended
    nuclear umbrella is a significant restraint on proliferation. Continued
    U.S. engagement in security cooperation with allies including a
    military presence, modern and flexible U.S. military forces, and the
    extension of a smaller but safe, reliable and capable nuclear deterrent
    to allies are key elements in assuring allies that they can count on
    the United States, and do not need their own nuclear forces.
        Question. Last year, Congress directed the Department to answer
    several critical questions posed by the JASON report regarding the RRW
    program and the subcommittee provided $20 million to provide answers to
    their questions.
        Does this work have application to warheads other than the RRW?
        Answer. Many of the issues raised during the JASON review of RRW
    are directly applicable to Life Extension Programs of existing systems
    and annual assessments of existing systems. The advanced certification
    sub-program as outlined in the two reports to Congress is focusing on
    those issues that are relevant to all systems that may be changed from
    the tested designs by the use of new materials, enhanced surety
    features, and component modifications.
        Question. Has the NNSA used these funds to secretly fund or
    subsidize the RRW feasibility study?
        Answer. No. The advanced certification sub-program will look at the
    certification issues raised by the JASON regarding RRW but it will
    address a sub-set of those issues that are common to legacy systems as
    well. The RRW funding line that is in the fiscal year 2009 budget is
    intended to address specific JASON issues that pertain specifically to
    the WR1 design.
                          university robotics program
        Question. What is your out year budget plan for the University
    Robotics Program.
        Answer. The University Research Program in Robotics (URPR) was
    placed in the Enhanced Surveillance sub-program of the Engineering
    Campaign. Based on funding priorities within this sub-program, it is
    the intent of NNSA to fund the URPR at about $1.8 million for the out-
    years.
        Question. Do you believe this research initiative adds value to
    this program or would it be better suited with another office?
        Answer. Although the URPR has produced some worthwhile ideas and
    concepts for sensors and control systems, the weapon program does not
    consider this work to be priority.
                                   z machine
        Question. Administrator D'Agostino, you have recently completed the
    $90 million refurbishment of the Z machine making it more efficient and
    with a greater research potential. I have heard that the out year
    budget requests could reduce the budget for this facility by 50
    percent.
        Is this NNSA planning to shut this facility down in the near future
    and how can you justify spending all this funding, but not operating
    the facilities?
        Answer. The Z machine at Sandia National Laboratories is an
    important part of the Stockpile Stewardship Program and has made
    important contributions to the program in materials properties, weapons
    effects, pulsed power fusion, and other areas. In the 2008 President's
    budget request, NNSA asked for $63.9 million for the Z machine, and in
    the 2009 President's budget request, NNSA asked for $64.0 million. In
    both of these years, there were additional funds requested for targets.
    In future years, the NNSA intends to request adequate funding to make
    effective use of the Z machine and meet Stockpile Stewardship Program
    requirements. There are no plans to shut down this unique, world-
    leading facility.
                    z machine and national ignition facility
        Question. NNSA has made a major investment in the construction of
    laboratory facilities to support the Stockpile Stewardship Program
    including the NIF at LLNL, the OMEGA at the University of Rochester and
    the refurbishment of the Z facility at Sandia. However, NNSA budget
    requests are below what is needed to fully utilize these facilities.
        Does this year's request and the out year budgets support the full
    utilization of these facilities? If not, what process has the
    Department used to prioritize the value and funding for these
    facilities?
        Answer. The NNSA is requesting adequate funding to meet Stockpile
    Stewardship Program goals in accordance with a balanced, technically-
    based prioritization. Our responsibility is to adjust our budgets to
    meet the needs of the program according to our assessment of national
    priorities that Defense Programs must satisfy.
        The level of facility funding is determined through a rigorous
    process involving the weapons laboratories, the Science Campaigns, and
    the Directed Stockpile Work program. Weapons science priorities are set
    by a process that considers where the advancement of scientific
    knowledge can make the most impact on weapons confidence synchronized
    with the development of experimental and computing capabilities.
    Funding for experimental facilities follows from the weapons science
    priorities and consideration of costs, benefits, and customer
    commitments.
        Question. Given the progress and the opportunities provided by
    pulse power, the subcommittee also expressed their expectation that the
    Department will provide adequate funding for the full utilization of
    the Z machine in the out-year budgets.
        What has the Department done to follow these directions?
        Answer. NNSA recognizes the promise and progress of pulsed power
    and the important contributions to stockpile stewardship that the Z
    facility has been making and will make in the future. In fiscal year
    2009, NNSA is requesting $64.0 million for operation and use of the Z
    facility. This amount will enable a strong program of over 180 shots
    which will meet all 2009 requirements for stockpile stewardship.
    Additional funding is requested for targets for the Z facility. In
    future years, the NNSA intends to request adequate funding to make
    effective use of the Z machine and meet Stockpile Stewardship Program
    requirements.
        Question. The baseline ignition approach on the NIF is x-ray or
    indirect drive. This approach was chosen after detailed review of its
    maturity and value to the weapons program. Significant challenges
    remain for this approach as independent reviews have concluded and even
    now there appears to be uncertainty in the baseline target, requiring
    several different approaches to be funded. In the 2008 budget process
    this subcommittee expressed this concern and again asks the Department
    to justify why it does not defer the direct drive approach to ignition
    on NIF until after achievement of x-ray driven ignition or after
    experiments have shown that the baseline approach will not succeed.
        Given the present and future budgetary pressures on the Stewardship
    Program, why does the Department continue using significant resources
    on other approaches to ignition such as direct drive?
        Answer. In response to the present and future budgetary pressures
    on the National Ignition Campaign and the Stockpile Stewardship
    Program, resources have been shifted to maintain the indirect drive
    program. Those portions of the direct drive physics program that
    directly support the indirect drive effort are funded, along with a
    small polar direct drive program.
        As confirmed by independent reviews, success in inertial fusion and
    an ignition demonstration depend on a detailed technical understanding
    of the implosion process. Many of the key scientific and technical
    challenges associated with ignition are independent of the drive
    method--direct or indirect drive. The OMEGA laser system is flexible
    and is used to study implosion physics with direct and indirect drive.
    The choice of direct or indirect drive is a technical decision based on
    experimental capabilities and requirements.
        Studies at OMEGA examine physics and technology issues required for
    the success of indirect drive, including aspects of implosions using
    direct drive that are currently inaccessible with indirect drive.
    Implosion target physics is an integral part of the National Ignition
    Campaign. An important recent example is the achievement of record
    compressed densities in cryogenic deuterium-tritium capsules using
    direct drive on the OMEGA laser. This critically important result
    provided new knowledge regarding capsule physics and the operation of
    cryogenic systems--information directly applicable to indirect drive.
        Since its inception, the National Ignition Campaign has included
    direct drive as a risk mitigation strategy (contained in the approved
    NIC Execution Plan). Polar direct drive remains the only near-term
    back-up strategy for indirect drive ignition on the NIF. The mainline
    strategy remains indirect drive, and the bulk of NIF resources are
    devoted to it. Only if major unforeseen problems arise with indirect
    drive will a change to direct drive be considered.
        Question. Has the Department conducted an external and independent
    review of the direct drive approach on NIF taking into account the non-
    ideal geometry on this facility? Has the Department considered any
    other approaches other than direct drive as the back-up to indirect
    drive on NIF? If so, what process was employed in this decision?
        Answer. Yes. The polar direct drive approach for achieving ignition
    on the NIF was reviewed by an external and independent committee as
    part of the larger program review in 2005. It was recommended that
    direct drive research be continued as a risk mitigation strategy for
    achieving ignition. Polar direct drive is optimized for the initial NIF
    geometry. An NNSA Level-1 milestone in fiscal year 2009 provides a
    decision point for moving forward with development of polar direct
    drive for the NIF. The mainline strategy remains indirect drive and
    polar direct drive is the only current back-up. The committee also
    recommended that risk mitigation include planning for the use of green
    (2-v) instead of blue (3-v) light. Other approaches to ignition on the
    NIF, such as fast ignition and shock ignition, are primarily supported
    through multi-institutional grants by the Department of Energy's Office
    of Fusion Energy Sciences and by Laboratory Directed Research and
    Development (LDRD) at the national laboratories.
        Please describe how the additional funding provided in the 2008
    budget was used in accordance with the language of Congress. In
    particular was an additional $13 million provided to Sandia National
    Laboratory to fully fund single shift operation of Z, and how many
    ``additional shots to support the goal of an ignition demonstration at
    the National Ignition Facility (NIF) in 2010'' are being performed for
    the $9 million extra that University of Rochester received in fiscal
    year 2008?
        Answer. For the Z facility for fiscal year 2008, the NNSA requested
    a total of $63.9 million for its operation and use. There were
    additional funds requested to fabricate targets for Z. In the Energy
    and Water Appropriations Act of 2008, the Congress added $13.0 million
    to fully fund single shift operations. Of the $13.0 million in
    additional funding, $7.9 million was provided directly to the Z
    facility and $2 million was provided to General Atomics Corporation to
    meet target needs for Z. The remaining $3.1 million was used for the
    Congressional rescission and the program's share of Defense Programs
    site infrastructure charges.
        In addition, the Congress provided $62.0 million for the Laboratory
    for Laser Energetics operations, an increase of $9.0 million over the
    budget request, to provide additional shots to support the goal of an
    ignition demonstration at the National Ignition Facility in 2010. After
    the Congressionally mandated rescission and $1.0 million for the
    program's share of Defense Programs site infrastructure charges, the
    amount of funding provided to the University of Rochester over the
    fiscal year 2008 President's budget was $7.4 million. This funding has
    provided 262 additional shots on the OMEGA laser system and 115 shots
    on the OMEGA Extended Performance laser system in support of achieving
    ignition at the National Ignition Facility.
                                     ______

                     Questions Submitted to Dr. Tom Hunter
                 Questions Submitted by Senator Byron L. Dorgan
                               advanced computing
        Question. The fiscal year 2008 Omnibus language directed both the
    NNSA and the Office of Science to establish a joint advanced computing
    and algorithm R&D program at Sandia. The objective of this language was
    to restore a world leading R&D capability in high performance computing
    architecture. The United States won't maintain its world leading role
    if we don't continue to support research.
        What has the Department been doing to establish this capability and
    what goals have been set and how will Sandia contribute to this
    research program?
        Answer. The Institute for Advanced Architectures and Algorithms
    (IAA) has been established with centers of excellence at Sandia (SNL)
    and Oak Ridge (ORNL) National Laboratories. A joint SNL-ORNL management
    structure along with strategic directions have been established. These
    strategic directions are aligned to the known technical gaps that must
    be closed for the United States to retain its leadership in high
    performance computing (HPC). However, the pacing elements in closing
    these gaps will be Federal funding and engagement by the both the U.S.
    semiconductor and HPC industry.
        Working with Federal Program Managers in DOE Office of Science
    Advanced Scientific Computing Research (ASCR) and NNSA Advanced
    Simulation and Computing (ASC), a competitive proposal and external
    review process has been developed for deployment of the initial $7.5
    million fiscal year 2008 funding. We expect the selection of winning
    proposals will be completed in Q4 fiscal year 2008 with most of the
    research activity occurring in fiscal year 2009. Although this has
    taken longer than we originally anticipated, we believe having
    concurrence from all parties on the funding process is placing IAA on
    solid footing for the future.
        As you are aware, the appropriations language instructed both DOE
    OS and NNSA to establish the IAA. This language has been interpreted to
    require that ASCR fund ORNL while ASC funds SNL. It our belief that a
    very successful IAA briefing to ASCR and ASC management in January 2008
    lead to Dr. Orbach inserting language at the last moment into the
    fiscal year 2009 President's budget requesting the continuation of IAA.
    However, no funding stream was identified. It is our understanding that
    ASCR plans to ask for additional appropriations in the fiscal year 2010
    Presidents budget request. NNSA is supportive of the creation of IAA at
    SNL but has asked SNL to prioritize their future ASC computer science
    funding to support the NNSA contribution to IAA. Evidence of NNSA's
    support can be found in stability of SNL computer science FYNSP funding
    during a period of significant declines in the ASC budget. However as
    pressures increase in the overall NNSA budget, we are concerned that
    there is significant risk in SNL IAA FYNSP funding.
        Question. The Complex Transformation Preferred Alternative proposes
    to eliminate future investment in a super computing platform at Sandia,
    despite a very strong track record in developing the first massively
    parallel computing architecture, which has become the standard for high
    speed computers.
        How will this impact the laboratory in the future and what will you
    do with the experienced staff without this mission responsibility?
        Answer. Our response to NNSA's decision to reduce capability
    platform sitting to LLNL and LANL has been to develop a strong
    partnership with LANL called the Alliance for Computing at Extreme
    Scales (ACES). On March 7, 2008, Tom Hunter and Mike Anastasio signed a
    Memorandum of Understanding (MOU) creating ACES. In this MOU, SNL has
    the leadership for architecting and engineering platforms to be sited
    at the Metropolis center at LANL while LANL has the leadership for
    deploying and operating the platforms. Although this might appear like
    a handoff, both labs have equal representation on creating and
    operating the next generation of capability computers. Other than NNSA
    reversing its decision, we believe this partnership provides the lowest
    risk path to retaining the SNL experience staff that developed and
    deployed the most successful HPC platform to-date, RedStorm.
        For ACES to be successful, NNSA must assign a near-future tri-lab
    platform to the partnership. The NNSA ASC computing strategy calls for
    a replacement for the Purple platform in fiscal year 2010. SNL and LANL
    were lead to believe that once the MOU was signed, NNSA would announce
    that ACES would provide the ``purple replacement''. SNL remains
    concerned that after almost 3 months, NNSA has not made an
    announcement.
        The MOU does not preclude SNL from developing, procuring and
    operating HPC capability platform for non-DP missions. For example with
    NNSA's support, SNL is developing a strategy for supplying HPC
    computing for the enormous challenges associated in turning information
    into knowledge through computational analysis (informatics). An example
    of informatics for national security would be the discovery of
    terrorist networks. We believe that moving in this direction provides
    new opportunities for SNL staff to make significant impacts in the U.S.
    national security through the development of new HPC architectures and
    state-of-the-art algorithms for informatics.
                            sandia funding diversity
        Question. Dr. Hunter, your lab has been the most successful of the
    three labs in diversifying your budget. However, it is my understanding
    that investment from other Federal agencies in limited and generally
    doesn't provide sufficient resources to make long term investments.
        Can you explain to the subcommittee the challenges in seeking
    outside Federal customers?
        As a result of your funding diversity, do you believe that NNSA
    uses this as an excuse for cutting corners and not making the same
    level of investment as the other?
        Answer. Our Nation is facing a diverse set of emerging threats
    ranging from traditional strategic nuclear threats to threats from
    other nation states, terrorists, natural disasters, and threats from
    technological surprise. As the Nation interacts with a changed world in
    which monolithic threats no longer dominate, the means to disrupt an
    increasingly technology-based society are rapidly multiplying. In my
    role as President and Director of Sandia National Laboratories, I view
    the NNSA's national security laboratories, with their world-class
    scientists and engineers and many one-of-a-kind facilities, as national
    assets and as a unique resource for the Nation in anticipating and
    responding to hostile actors and actions.
        I'd like to address three basic challenges, however, that currently
    limit the NNSA laboratories' ability to fully engage with other Federal
    agencies (OFAs), including: a long-term commitment to funding the
    foundational capabilities and resources of the NNSA Complex; enabling
    easier access to the NNSA's resources by OFAs; and a shared commitment
    through strategic partnerships between the NNSA complex and OFAs to
    ensure the Nation's security.
        At Sandia, our Work for Other's (WFO) program has existed for more
    than 50 years and has expanded significantly over the past two decades.
    There are many examples where the nuclear weapons program has benefited
    from WFO program activities, including radar, safety and risk
    assessment, and improved modeling and simulation capabilities.
    Likewise, various WFO customers have benefited from the long history of
    DOE investment in capabilities at the national laboratories. It is
    becoming increasingly difficult, however, for any one funding source to
    maintain the needed foundational capabilities of the laboratories.
        As we go forward, it will be essential to maintain the science,
    technology and engineering foundation of the Labs and define its vital
    role in responding to the Nation's security. This foundation,
    historically highly leveraged by other agencies with national security
    interests, faces dramatic reductions consistent with the down-sizing of
    the nuclear weapons mission. We must find a way to sustain this
    foundation so that the statutory nuclear weapons mission and the
    broader national security commitments are effectively met.
        In addition, it is imperative that OFAs should be provided easier
    access to the NNSA Complex's science, technology, and engineering
    capabilities. Commensurate with this, the NNSA and it laboratories are
    examining the existing NNSA Work for Others (WFO) program regulatory,
    policy, and procedural framework in order to identify improvements to
    current roles, responsibilities, policies, processes and requirements.
    Collectively, changes in these areas have the potential to provide
    easier access to the NNSA Complex's capabilities and allow NNSA sites
    more responsibility and accountability for meeting national security
    needs while still meeting statutory requirements.
        Overall, the common missions and shared interests of a number of
    Federal agencies with a stake in the Nation's security provide a strong
    basis for collaborative activities, mutual prioritizing of resources,
    and enduring partnerships. Such mutual missions and interests have the
    potential to develop into true strategic partnerships and enhance the
    Nation's approach to meeting national security challenges. Building
    trust among such Federal agencies is difficult, and open and consistent
    communication will be essential. Relationship development among Federal
    organization is time consuming and requires resources. However, I
    believe that we can better leverage these shared missions and interests
    of Federal agencies with the NNSA laboratories.
        Much of Sandia's work is sponsored by DOE's National Nuclear
    Security Administration (NNSA), but we also work for other Federal
    agencies, including the Department of Defense and Department of
    Homeland Security. And we work cooperatively with a number of
    government, U.S. industry, and academic partners to accomplish our
    missions and to help ensure the Nation's security. Many recognize that
    the threats the Nation faces are more diverse than ever. From my
    position at Sandia, I believe that the NNSA national security
    laboratories and my own lab are well positioned to offer the new
    science, technology, and engineering solutions to address these
    threats.
                                   z machine
        Question. Dr. Hunter, we have struggled to keep full funding of the
    Z machine, which has turned out to be a fantastic research facility at
    a fraction of the cost of many of the other facilities. I recall, with
    the recent refurbishment, this facility cost less that $200 million to
    construct.
        Is the Z machine continuing to deliver important scientific data?
    How much more funding will you need above the fiscal year 2009 request
    to restore full operation?
        Answer. First of all, your recollection on the facility cost is
    correct. Over the past 25 years, the capital investment in the
    facility, including the addition of major diagnostic systems such as
    the Z-Beamlet and Z-Petawatt lasers and the recently completed Z
    refurbishment project, is less than $200 million. (Major capital
    investments over the past 25 years have included: Particle Beam Fusion
    Accelerator II (1985) $45 million; Z Conversion (1996) $12 million;
    Beamlet Laser (2001) $13 million; Z Refurbishment (2007) $90 million;
    and Z Petawatt Laser (2007) $30 million; Total $190 million)
        Today the Z machine is the most powerful and energetic laboratory
    x-ray source in the world. Z's strength is its ability to produce
    copious x-rays, large plasma environments, and controlled high
    pressures to evaluate weapons science phenomena. Z provides critical
    data for weapons primaries, secondaries, and non-nuclear components as
    part of NNSA's Stockpile Stewardship program. Achieving high energy
    density conditions is critical to develop and validate advanced
    theoretical models and codes and to characterize weapons component
    performance.
        Z provides essential data on the effects of soft x-rays on weapon
    components that cannot be obtained with any other laboratory source.
    Z's material property capability is unique, produces the most accurate
    weapons material data available in high energy density pressure
    regimes, and is required to validate new physics models of the response
    of weapons materials, such as plutonium. Z is also essential for
    evaluating the feasibility of achieving thermonuclear fusion ignition
    with pulsed power. Pulsed-power-driven fusion has the potential to be a
    very efficient and low cost approach to producing high fusion yields in
    the laboratory for weapon science and over the long term energy.
        At present, Z is funded to operate at 75 percent of full capacity
    to meet the essential requirements of NNSA's stockpile stewardship
    program. This partial capacity permits about 170-180 shots per year
    allocated as: 60 shots for material properties, 50 shots related to
    magnetically-driven Z-pinch implosions for fusion, 25 shots testing
    radiation effects, 25 shots supporting weapon secondary assessment, and
    about 10-20 pulsed power shots associated with facility operations and
    enhancements. An additional $12 million in funding is required to
    restore full single-shift operations, which would enable many other
    important opportunities to be pursued in the areas of weapon science,
    inertial confinement fusion, and fundamental science. Included in these
    additional tests are those in support of weapon primary and secondary
    assessment, nuclear survivability, and university science for the joint
    NNSA/OS High Energy Density Laboratory Plasma program. Allowing
    necessary ramp up time for training of new staff to support the full
    mission, the full single shift operations will support about 240 shots
    annually.
        Question. For several years, I have pressed the Department to
    establish a joint High Energy Density Plasma research program utilizing
    NNSA facilities to support non weapons research. Finally, the fiscal
    year 2008 budget request provided $24 million to support this research.
        Is this joint program utilizing the Z machine and do you believe
    more could be done to expand its use by the DOE Office of Science?
        Answer. The joint High Energy Density Laboratory Plasma research
    program is still being formulated by the Defense Science Division
    within NNSA and the Office of Fusion Energy Science within the DOE
    Office of Science. We believe that the Z facility as well as the Z-
    Beamlet and Z-Petawatt laser capabilities should be a significant
    component of this program. These facilities can also provide
    experimental environments for the basic research needs for materials
    under extreme environments.
        At the proposed funding level it is not likely that the new joint
    program will include a large effort in utilizing the Z facility and the
    other excellent high-energy-density science facilities at the NNSA
    laboratories. There are tremendous opportunities for university and
    national laboratory researchers to use NNSA's high-energy-density
    science facilities to access experimental conditions of interest for
    fundamental science in the areas of planetary physics, material
    properties at extreme temperatures and pressures, and laboratory
    astrophysics. A basic science program on high energy density laboratory
    plasmas would be a strong component of full utilization of the Z
    facility.

                              SUBCOMMITTEE RECESS

        Senator Dorgan. We invited the three laboratory Directors,
    and I'm really pleased we did. I'm pleased you've come, and I
    hope we will be able to do this again next year.
        And thank you for your work.
        Director.
        Dr. Anastasio. Thank you very much.
        Senator Dorgan. This subcommittee's recessed.
        [Whereupon, at 4:40 p.m., Wednesday, April 16, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2009

                                  ----------

                           WEDNESDAY, APRIL 30, 2008

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:32 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Byron L. Dorgan (chairman)
    presiding.
        Present: Senators Dorgan, Feinstein, Domenici, and Allard.

                              DEPARTMENT OF ENERGY

                    National Nuclear Security Administration

    STATEMENT OF WILLIAM H. TOBEY, DEPUTY ADMINISTRATOR FOR
                DEFENSE NUCLEAR NONPROLIFERATION

                  OPENING STATEMENT OF SENATOR BYRON L. DORGAN

        Senator Dorgan. The hearing will come to order. We thank
    all of you for being here today.
        This is the Senate Appropriations Committee Subcommittee on
    Energy and Water Development. We are here to take testimony
    today of the National Nuclear Security Administration's fiscal
    year 2009 budget request for defense nuclear nonproliferation
    activities.
        Today we have two panels. First we will hear from Deputy
    Administrator Will Tobey. He will be the first witness. The
    second panel will consist of two prominent nonproliferation
    experts. Dr. Siegfried Hecker is co-director at the Center for
    International Security and Cooperation at Stanford University
    and Dr. Matthew Bunn, senior research associate, Project on
    Managing the Atom at the John F. Kennedy School of Government
    at Harvard University. I thank all three for taking time out of
    their schedules to be with us.
        The administration's budget request for the National
    Nuclear Security Administration's nonproliferation activities
    is $1.25 billion for fiscal year 2009. The request is $88
    million less than the new budget authority provided in fiscal
    year 2008, but it is $410 million less than the directed
    programmatic funding provided in the 2008 bill. If that sounds
    complicated, it is. The difference is due to the fact that in
    fiscal year 2008, we redirected the use of $322 million in
    prior year balances. This fact in some ways distorts the year-
    to-year comparisons, but it is important to understand.
        Further, in fiscal year 2008, we moved funding for the MOX
    facility over to the nuclear energy account and funding for the
    pit disassembly and conversion facility to the weapons
    activities. All of this makes getting adequate comparisons
    very, very difficult. Regardless, it is safe to say that we
    should have greater funding for these activities if we have the
    resources to do so.
        In his written testimony today, Deputy Administrator Will
    Tobey says that the possibility that a rogue state or a
    terrorist will acquire nuclear or other weapons of mass
    destruction poses one of the most serious threats to the United
    States and to international security. President Bush has made
    the same point.
        Today, Dr. Hecker and Dr. Bunn will also indicate that the
    threat is real and that greater financial resources are needed
    to be committed to the NNSA nonproliferation activities.
        If there is a consensus about the threat of nuclear or
    other weapons of mass destruction, then the question is are we
    doing enough? Are we doing it well? What else should we be
    doing? Today we will review the budget request with the Deputy
    Administrator with those questions in mind.
        Dr. Hecker and Dr. Bunn will discuss the adequacy of the
    budget request, but we will also ask their views on an array of
    nonproliferation policy and diplomatic challenges facing us
    here today. I have reviewed their testimony and they will cover
    some of that in their testimony.
        North Korea, Iran, Syria are front-page reminders that
    proliferation concerns are real and immediate. And the
    questions arise as to whether the international community has
    the commitment and the appropriate means of dealing with
    countries which ignore international sentiment. Sanctions
    failed to stop India's development of a nuclear weapons
    program, and now we are considering nuclear cooperation
    agreements with that country. Agreements, I think, are unwise,
    by the way.
        The 2005 Nuclear Nonproliferation Treaty review conference
    was a failure. Some argue that the administration contributed
    to that failure. I will ask about that today.
        Renewed interest in civilian nuclear power use is on the
    rise around the world, and as we see in Iran, concern about
    enrichment capability has significant proliferation concerns
    regardless if it is claimed to be purely for civilian purposes.
        These are just a few of the very significant
    nonproliferation policy and diplomatic challenges facing our
    country.
        Obviously, the White House and the State Department drive
    the nonproliferation program policy, but NNSA provides the
    technical knowledge and capability to implement and verify.
        We have a lot to cover in this hearing, and I want to make
    one point about this issue of nonproliferation. I think we have
    tried to do well as a country focusing on this, but in many
    ways it has become an orphan to so many other programs that
    have greater priority. And yet, some day we may well look in
    the rear view mirror and have seen a nuclear weapon exploded in
    a major city in this world and wonder what we could have done
    differently to stop the proliferation of nuclear weapons. There
    is not much more we do that exceeds in importance than the
    determination of this country to be a leader in
    nonproliferation. Some of our policies confound me. Some of
    them worry me. Others I am pleased with. But I think the
    purpose of this hearing is to evaluate this issue of
    nonproliferation. Are we doing enough? What more should we be
    doing? Will we 5 and 10 years from now determine that we funded
    other things less important than this and short-funded this
    program? Let us hope not.
        At any rate, we appreciate all three witnesses being here
    today, and let me call on the ranking member, Senator Domenici.

                 OPENING STATEMENT OF SENATOR PETE V. DOMENICI

        Senator Domenici. Thank you very much, Mr. Chairman.
        I have always looked forward to this hearing because the
    issue of nuclear nonproliferation is near and dear to my heart
    and of such great importance to our national security.
        I am also pleased to welcome a former constituent, former
    Los Alamos Director Sig Hecker. Sig is an old and dear friend
    who I have relied on for advice for decades. I know that sounds
    funny--``decades''--because he is so young looking and it
    hardly seems like it could be decades, but it has been.
        Mr. Chairman, I strongly encourage you to seek Dr. Hecker's
    advice and wisdom on matters of nonproliferation just as I
    have, and I guarantee that you will not be sorry if you do
    that.
        Dr. Hecker, you have returned from your fifth trip to North
    Korea, as well as a recent trip to India. We look forward to
    hearing about your impressions of both countries.
        Mr. Tobey and Dr. Bunn, I also appreciate your attendance
    and look forward to discussions with you involving the
    challenge of nuclear proliferation and what our priorities
    should be in response.
        Mr. Chairman, I noted earlier that I have a strong passion
    for these accounts, and I believe that the United States must
    maintain its determination to keep the world's most dangerous
    weapons out of the hands of terrorists and the world's most
    dangerous regimes. This means doing more of what has been
    successful in the past and fixing known shortcomings. We cannot
    rely on luck to keep us safe. Preventing nuclear terrorism must
    remain a high priority. I have seen firsthand the challenges of
    reducing the enormous and sometimes poorly protected stockpile
    of the Soviet Union at the end of the cold war. Sig Hecker
    showed us many of those shortly after the cold war as they
    existed on the ground in places in the former Soviet Union.
        Since 1991 when the Soviet Union collapsed, our Nation has
    invested nearly $10 billion to lock up or destroy thousands of
    nuclear weapons and their delivery systems and hundreds of tons
    of nuclear material. The Department is now nearing completion
    of the security upgrades in Russia and the former Soviet
    republics. Just last week, one of the three remaining plutonium
    production reactors was shut down in Russia with U.S.
    assistance. In 2 years, we will complete the construction of
    coal plants in Russia necessary to enable the shutdown of two
    remaining production reactors.
        The completion of these projects coincides with the new
    phase of our relationship with Russia. Russia is the leading
    exporter of natural gas, second leading oil producer in the
    world behind Saudi Arabia. With oil prices over $100 per
    barrel, the Russian Government is no longer strapped for cash.
    This is a quite different situation than we initiated in the
    MPC&A program. Our cooperation should reflect this reality. We
    must pursue projects on the basis of shared benefits and shared
    contributions.
        Our major project of mutual benefit has been the blend-down
    of Russian highly enriched uranium. In 5 years, we will come to
    an end of the HEU purchase agreement. At that time, 500 metric
    tons of HEU from dismantled Russian weapons will have been
    eliminated, the equivalent of 20,000 warheads' worth of
    material. This weapons material is being turned into commercial
    nuclear fuel, and today supplies 50 percent of the U.S. reactor
    requirements. This program is considered by many to be the most
    successful nonproliferation program ever implemented.
        I believe we can and must do even more. When the HEU
    agreement ends in 2013, it is estimated that there will be
    hundreds of tons of excess HEU remaining in Russia. With the
    right commercial incentives, this can be an economic win for
    Russia and a security win for the world, just as the current
    agreement has been.
        I am somewhat frustrated with the Russian suspension
    agreement signed by the administration in February. It provides
    20 percent, Mr. Chairman, of the U.S. enrichment market,
    without any requirement for additional HEU down-blending,
    meaning they can sell to us without delivering any HEU, highly
    enriched uranium. That is what we should be talking about.
        I have legislation that I shared with you which will
    correct this problem. The legislation would provide Russia in
    excess of 25 percent of the U.S. market if it continues the
    down-blend of HEU. At its current rate of 30 tons per year, it
    does not blend down any additional HEU, and access will be
    limited to 15 percent of our market. This legislation provides
    a clear economic incentive for Russia to eliminate an
    additional 300 tons of HEU.
        Looking forward, we must do more to prevent states from
    acquiring nuclear weapons, and you are fully aware of that and
    I think we are in accord. We must also not allow the
    proliferative states like North Korea to help other states
    develop weapons, but it seems like there is little we can do.
    They are doing it. We find out while they are doing it or after
    they are doing it, and so goes the world.
        Addressing these issues will require sustained investment.
    I am not sure we are investing enough, but you and I have found
    that this budget is profoundly difficult and it is not getting
    any easier year by year.
        Thank you very much, Mr. Chairman.
        Senator Dorgan. Senator Domenici, thank you very much.
        Administrator Tobey, thank you very much for being with us,
    you may proceed and the statements that you and the other two
    witnesses provide today will be inserted into the record in
    full, and you may summarize. Thank you very much.

                         STATEMENT OF WILLIAM H. TOBEY

        Mr. Tobey. Chairman Dorgan, Senator Domenici, thank you for
    the opportunity to discuss the President's fiscal year 2009
    budget request for the National Nuclear Security
    Administration's Office of Defense Nuclear Nonproliferation.
        At what may be my last opportunity to speak before this
    subcommittee, I would particularly like to thank Senator
    Domenici for his leadership on nonproliferation. You have been
    a great champion of the NNSA, and we are all deeply
    appreciative of that.
        I would also like to recognize the men and women of the
    NNSA who work so hard to detect, secure, and dispose of
    dangerous nuclear material around the world. They have braved
    freezing conditions in Siberia, Hezbollah rocket attacks at
    Haifa, very difficult conditions at Yongbyon in North Korea,
    and through it all, they have never failed to accomplish their
    missions. And I feel honored to work with them.
        The fiscal year 2009 budget request for the Office of
    Defense Nuclear Nonproliferation totals $1.247 billion. This
    amount will allow us to continue our mission to detect, secure,
    and dispose of dangerous nuclear and radiological materials,
    strengthen the international nonproliferation partnerships, and
    meet evolving proliferation and international security threats.
        Specifically, this funding will advance our priorities to,
    one, enhance national capabilities to detect and interdict
    nuclear and radiological materials at key seaports and border
    crossings; two, reduce and eliminate stores of highly enriched
    uranium, weapon-grade plutonium, and vulnerable radiological
    materials across the globe; and three, work to ensure the
    sustainability of nuclear security upgrades in Russia and the
    international nonproliferation system.
        As was recognized, last week we announced the shutdown of a
    plutonium production reactor at Seversk, something that we have
    been working with the Russians on for years now, and this is an
    important achievement and shows tangible results in our
    efforts.
        We recognize that the best way to reduce the threat of
    proliferation or terrorist acquisition of nuclear weapons or
    devices is by denying them access to the necessary nuclear and
    radiological materials in the first place. To that end, our
    fiscal year 2009 request will allow us to accelerate our work,
    including installation of radiation detection systems at nine
    additional ports under our Megaports program for a total of 32
    Megaport sites worldwide, helping to secure 49 border crossings
    and other high-risk points of entry under our Second Line of
    Defense Program and expanding export control and commodity
    identification training activities with more than 50 countries.
        Additionally, in fiscal year 2009, we will undertake a new
    initiative to strengthen international safeguards to prevent
    the diversion of nuclear material from peaceful uses. This Next
    Generation Safeguards Initiative will develop the safeguards
    technologies and human resources needed to sustain our
    nonproliferation efforts while promoting international
    partnerships and meeting the challenges of growing nuclear
    energy demand.
        Underpinning all these efforts is our nonproliferation
    research and development work through which we will continue
    our leadership as the principal Federal sponsor of long-term
    proliferation-related R&D on nuclear detection and
    characterization.
        Our fiscal year 2009 request will allow us to accelerate
    our efforts under the Global Threat Reduction Initiative to
    convert HEU-fueled research reactors around the globe to the
    use of less proliferation-sensitive, low enriched uranium. We
    will also continue to repatriate U.S.- and Russian-origin
    highly enriched uranium to secure sites, secure high priority
    nuclear and radiological sites globally, and secure and remove
    orphan radiological sources that could be used in dirty bombs.
    To date, we have removed enough nuclear material for nearly 70
    nuclear weapons and secured more than enough radiological
    sources for over 8,000 dirty bombs. In fiscal year 2009, we
    will convert an additional 8 HEU reactors to LEU, remove an
    additional 700 kilograms of HEU, and secure an additional 125
    radiological sites across the globe.
        Last year I updated you on our progress under the 2005
    Bratislava joint statement on nuclear security in which we have
    partnered with Russia to secure its nuclear weapons and sites
    of highest concern. I am pleased to report that we have
    completed 85 percent of these upgrades to date and are on track
    to complete our work under the Bratislava Agreement by the end
    of calendar year 2008. In fiscal year 2009, should Congress
    grant our request for resources, our focus will be on
    completing additional high priority security work beyond the
    Bratislava Agreement.
        Additionally, our fiscal year 2009 budget request also
    includes funding to ensure the shutdown of the last remaining
    Russian plutonium production reactor by 2010, which will
    prevent the production of about one-half ton of weapons-grade
    plutonium annually. We will continue our efforts to facilitate
    Russia's commitment to dispose of 34 metric tons of surplus
    Russian weapons-grade plutonium and to disposition excess
    Russian and U.S. highly enriched uranium.
        Just last week, we were pleased to announce that the United
    States and Russia have eliminated 10 metric tons of Russian
    weapons-usable nuclear material. This material, equivalent to
    400 nuclear weapons, was successfully converted by down-
    blending highly enriched uranium to low enriched uranium under
    a joint U.S.-Russian program. These material security efforts
    enhance our work to strengthen the nonproliferation regime and
    the multilateral partnerships supporting it.
        In this regard, we will continue to support the work plan
    of the Global Initiative to Combat Nuclear Terrorism and to
    advance the objectives of the United Nations Security Council
    resolution 1540, which mandate effective export controls,
    criminalize proliferation of WMD by non-state actors, and
    require states to secure proliferation-sensitive materials.
        We will likewise continue our technical and diplomatic
    support of U.S. efforts on the Nuclear Nonproliferation Treaty
    within the Nuclear Suppliers Group and on multilateral
    initiatives such as international fuel assurances and
    disablement of North Korean nuclear facilities. We recognize
    that just as today's proliferation and terrorism threats are
    global in scope, so too must be the responses we undertake to
    address them.
        I am mindful of the comments that were made at the outset
    of the hearing about the importance and urgency of our work. I
    would note that we have worked hard to accelerate our efforts
    across the board, including accelerating the conversion of
    reactors from highly enriched uranium to low enriched uranium,
    increasing nuclear material security under the Bratislava
    Initiative which advanced the completion of work in Russia by
    about 2 years, signing an agreement with Russia on the Second
    Line of Defense Program which advanced the completion of
    securing Russia's borders by about 6 years, and in fact, even
    advancing our work under the elimination of weapons-grade
    plutonium production reactors such that we have shut down one
    of the reactors months early and we are still optimistic that
    we can shut down the last remaining reactor perhaps even a year
    early.
        I am also quite mindful of the need, given the importance
    of our work, of listening to others about this work. I have
    appreciated the advice that we have gotten from this committee,
    both members and staff. We have worked hard to try and take it
    into account as we proceeded with our work.

                               PREPARED STATEMENT

        I am also grateful to the advice that we have received from
    the members of the second panel. Even before I had been
    confirmed, I sought the advice of other experts on what our job
    should be and how we should execute it, and frankly, the advice
    that I found most comprehensive and useful was that of Dr.
    Hecker. We also speak frequently with Dr. Bunn, and his advice
    and his report that he completes on securing the bomb has been
    helpful in setting forth our priorities. We have tried to
    reflect that, as well as our own thinking, in how we execute
    these programs and I am grateful for all of that help.
        Thank you.
        [The statement follows:]
                     Prepared Statement of William H. Tobey
        Thank you for the opportunity to discuss the President's fiscal
    year 2009 budget request for the National Nuclear Security
    Administration (NNSA). I want to thank all of the members for their
    strong support for our vital national security missions.
        In the 8th year of this administration, with the support of
    Congress, NNSA has achieved a level of stability that is required for
    accomplishing our long-term missions. Our fundamental national security
    responsibilities for the United States include:
      --Assuring the safety, security and reliability of the U.S. nuclear
            weapons stockpile while at the same time considering options
            for transforming the stockpile and the complex infrastructure
            that supports it;
      --Reducing the threat posed by proliferation of nuclear weapons,
            material and expertise; and
      --Providing reliable and safe nuclear reactor propulsion systems for
            the U.S. Navy.
        NNSA is examining how to proceed into the future to address
    evolving national security needs in a manner that anticipates
    significant changes in how we manage our national security programs,
    our assets and our people. To that end, the fiscal year 2009 budget
    request for $9.1 billion, a decrease of $35 million from the fiscal
    year 2008 Consolidated Appropriations Act, supports NNSA's crucial
    national security mission. My testimony today will focus on NNSA's
    Defense Nuclear Nonproliferation budget request for fiscal year 2009.
                        defense nuclear nonproliferation
        The possibility that rogue states or terrorists might acquire
    nuclear and other weapons of mass destruction (WMD) and their related
    technologies, equipment and expertise, poses one of the most serious
    threats to the United States and international security. The continued
    pursuit of nuclear weapons by terrorists and states of concern
    underscores the urgency of NNSA's efforts to secure vulnerable nuclear
    weapons and weapons-usable nuclear material, to detect and interdict
    nuclear and radiological materials and WMD-related equipment, to halt
    the production of fissile material for weapons, to dispose of surplus
    weapons-usable material, and to contain the proliferation of WMD
    technical expertise. The fiscal year 2009 budget request will enable
    NNSA to continue these critical activities that support threat
    reduction initiatives vital to U.S. national security.
        Preventing access to nuclear weapons and fissile material has many
    dimensions. Our highest priority is to keep these dangerous materials
    out of the hands of the world's most dangerous actors. Absent access to
    a sufficient quantity of essential fissile materials, there can be no
    nuclear weapon. The most direct way to prevent acquisition of nuclear
    weapons is by denying access to fissile material. Historically, much of
    our materials security emphasis focused on Russia because that is where
    most of the poorly secured material was located. We have made
    remarkable progress cooperating with Russia to strengthen protection,
    control, and accounting of its nuclear weapons and materials. We
    recently completed security upgrades at 25 Russian Strategic Rocket
    Force sites and will meet our commitment to conclude agreed-to security
    upgrade activities at Russian nuclear sites by the end of this year, as
    provided for under the Bratislava Joint Statement signed by Presidents
    Bush and Putin. Although these direct upgrade efforts are largely
    drawing to a close after over a decade of work, we will continue
    security upgrade work at some sites added to our work scope after the
    Bratislava summit, and will continue to work cooperatively with Russia
    to ensure the long-term sustainability of the systems and procedures
    already implemented. We recently reached agreement with Russia on a
    sustainability plan that identifies the requirements for long-term
    Russian maintenance and infrastructure of security upgrades under our
    cooperative program.
        However, not all nuclear material of proliferation concern is
    located in Russia. We are also working with other partners to secure
    weapons-usable nuclear materials in other parts of the world, and to
    strengthen security at civil nuclear and radiological facilities. One
    area of particular concern is research reactors, which often use highly
    enriched uranium (HEU) fuel otherwise suitable for bombs. Our Global
    Threat Reduction Initiative (GTRI) converts research reactors around
    the world from HEU to low enriched uranium (LEU) fuel. The GTRI
    program, and its antecedents, have removed approximately 68 nuclear
    bombs' worth of highly enriched uranium and secured more than 600
    radiological sites around the world, collectively containing over 9
    million curies, enough radiation for approximately 8,500 dirty bombs.
    In the United States the GTRI program has removed over 16,000 at-risk
    radiological sources, totaling more than 175,000 curies--enough for
    more than 370 dirty bombs.
        An additional nuclear security challenge concerns the effectiveness
    and credibility of international nuclear safeguards. Against the
    backdrop of growing nuclear energy demand, concerns over the diffusion
    of sensitive nuclear technologies, and the challenges posed by Iran and
    North Korea, international safeguards are coming under increasing
    strain. To address this challenge, NNSA has launched the Next
    Generation Safeguards Initiative (NGSI), which will ensure U.S.
    leadership and investment in our technologies and experts in the
    service of nuclear nonproliferation. Enhanced and revitalized
    international safeguards will also help ensure the sustainability of
    the gains made by our associated threat reduction efforts.
        Additionally, in fiscal year 2009, we will continue to lead the
    U.S. Government efforts to oversee the disablement and dismantlement of
    North Korea's nuclear program. However, in order to continue our
    support for these critical disablement and dismantlement activities, we
    will require a waiver of the Glenn Amendment restrictions that were
    triggered by North Korea's 2006 nuclear test, as well as more
    substantial funding. The Glenn Amendment prohibits the Department of
    Energy, which would otherwise fund denuclearization activities, from
    providing any financial assistance to North Korea. Without this waiver,
    the Department will be unable to complete Phase Three denuclearization
    activities. NNSA and the administration have been working to insert
    language into the fiscal year 2008 Iraq War Supplemental, or any other
    appropriate legislative vehicle, to provide such a waiver.
        We are also taking aggressive steps to interdict illicit transfers
    of weapons-usable nuclear materials and equipment, and to prevent
    dissemination of related sensitive nuclear technology via strengthened
    export controls and cooperation. We currently provide export control
    and commodity identification training to over 50 countries across the
    globe, in order to improve nations' capabilities to deter and interdict
    illicit WMD-related technology transfers. As an important complement to
    physical security improvements, the Second Line of Defense Program
    enhances our foreign partners' ability to interdict illicit trafficking
    in nuclear materials through the deployment of radiation detection
    systems at high-risk land-border crossings, airports and seaports.
    These efforts increase the likelihood of interdicting illicit nuclear
    materials entering or leaving the country. To date, 117 Russian border
    crossings have been equipped with radiation detection equipment under
    this program.
        As part of the Second Line of Defense, the Megaports Initiative,
    established in 2003, responds to concerns that terrorists could use the
    global maritime shipping network to smuggle fissile materials or
    warheads. By installing radiation detection systems at major seaports
    throughout the world, this initiative strengthens the detection and
    interdiction capabilities of our partner countries. At the end of 2007,
    the Megaports program was operational in 12 countries and being
    implemented at 17 additional ports. In addition, we continue to carry
    out nonproliferation research and development activities, developing,
    demonstrating and delivering novel nuclear material and nuclear
    detonation detection technologies for nonproliferation and homeland
    security applications.
        Since the end of the cold war, the Nation's adversaries have been
    quick to adapt to technological improvements. Staying ahead of the R&D
    curve is critically important to keeping our Nation safe and secure. As
    the principal Federal sponsor of long-term nuclear nonproliferation-
    related research and development, NNSA focuses its R&D investments on
    leading-edge, early stage basic and applied R&D programs, including
    testing and evaluation, which lead to prototype development and
    improvements in nuclear detection and characterization systems. By
    concentrating on these key R&D components, NNSA helps strengthen the
    U.S. response to current and projected WMD threats.
        These critical steps are only part of a comprehensive
    nonproliferation program. In addition to these efforts to secure,
    detect, and interdict weapons-usable materials, we also work to
    eliminate weapons-usable material. Indeed, there remains enough fissile
    material in the world today for tens of thousands of weapons. An
    integral part of our strategy, therefore, has been to encourage other
    states to stop producing materials for nuclear weapons, as the United
    States itself did many years ago. For example, Russia still produces
    weapons-grade plutonium, not because it needs it for weapons, but
    because the reactors that produce it also supply heat and electricity
    to local communities. We are helping to replace these non-commercial
    style reactors with fossil fuel plants, thereby eliminating their
    production of plutonium. We had the goal this year of shutting down two
    of the remaining three plutonium-producing reactors in Russia
    permanently. Last week we announced the elimination of the production
    of nuclear weapons-grade plutonium at the Seversk site. This is a
    historic nonproliferation milestone. The third at Zheleznogorsk will
    shut down in December 2010, if not, as we hope, sooner.
        As previously indicated, there are a number of effective synergies
    between NNSA's defense activities and our nuclear nonproliferation
    objectives. For example, we are disposing of the substantial quantities
    of surplus weapons grade HEU that has resulted from the thousands of
    warheads we have dismantled, by downblending it to lower enrichment
    levels suitable for use in commercial reactors. This past February
    marked the 15th anniversary of the U.S.-Russia HEU Purchase Agreement--
    one of the most successful nonproliferation programs ever conceived.
    Under the HEU Purchase Agreement, over 322 metric tons of uranium from
    Russia's dismantled nuclear weapons--enough material for more than
    12,000 nuclear weapons--has been downblended for use in commercial
    power reactors in the United States. Nuclear power generates 20 percent
    of all American electricity, and half of that is generated by fuel
    derived from Russian HEU. As a result, one-tenth of U.S. electricity is
    made possible by material removed from former Soviet nuclear weapons.
        Similarly, disposition of surplus U.S. HEU through downblending to
    low-enriched uranium has been proceeding for nearly a decade and
    progress is continuing. As of the end of December 2007, approximately
    92 metric tons of HEU, equivalent to over 3,500 nuclear weapons, have
    been downblended and converted to power or research reactor fuel, and
    an additional 13 metric tons have been delivered to disposition
    facilities for near-term downblending. This HEU disposition progress
    has already contributed substantially to nuclear material consolidation
    efforts in the Department of Energy complex, eliminating the necessity
    for high security storage at two sites, and greatly reducing it at
    several others.
        In addition to the efforts on HEU, the United States and Russia
    have each committed to dispose of 34 metric tons of surplus weapon-
    grade plutonium. In November 2007, we signed a joint statement with
    Russia that represents a technically and financially credible plan to
    dispose of 34 metric tons of Russia's surplus plutonium in fast
    reactors. Under this approach, Russia will pay for the majority of
    costs and begin disposing of its surplus plutonium in the 2012
    timeframe. Last year, the Department of Energy began construction of a
    Mixed Oxide Fuel Fabrication Facility at the Savannah River Site. The
    facility originally planned to dispose of 34 metric tons of surplus
    weapon-grade plutonium by converting it into mixed oxide (MOX) fuel to
    be irradiated in commercial nuclear reactors, producing electricity and
    rendering the plutonium undesirable for weapons use. Last September, at
    the IAEA General Conference in Vienna, Secretary Bodman announced that
    an additional 9 metric tons of plutonium, enough to make approximately
    1,100 nuclear weapons would be removed from such use and eliminated by
    conversion to mixed oxide fuel. The MOX facility is a critical
    component of the Department's surplus plutonium consolidation efforts
    and is essential to the goal of transforming the complex.
        Our efforts at home are not enough, in and of themselves. We need
    cooperation from our international partners as well, and if we are to
    encourage responsible international actions, the United States must set
    the example. We have dramatically improved physical security of U.S.
    nuclear weapons and weapons-usable materials in the years since the
    September 11, attacks. We have made substantial reductions in our
    stockpile and made additional plutonium available for conversion into
    civilian reactor fuel. Additionally our Complex Transformation will
    further reduce the number of sites and locations where we store special
    nuclear materials, providing for improved security of these materials.
        The risk of nuclear terrorism is not limited to the United States.
    The success of our efforts to deny access to nuclear weapons and
    material is very much dependent on whether our foreign partners
    similarly recognize the threat and help us to combat it. To this end,
    we undertake efforts to strengthen the nonproliferation regime and
    expand international nonproliferation efforts. We continue to provide
    technical and policy support to U.S. efforts within the
    nonproliferation regime, including support to the Nuclear
    Nonproliferation Treaty, the Nuclear Suppliers Group, the International
    Atomic Energy Agency and a wide range of U.S. diplomatic initiatives,
    including the efforts in North Korea. We also have strengthened
    international collaboration and dialogue on nonproliferation efforts,
    including developing an international mechanism through which seven
    countries have pledged some $45 million in contributions to our
    nonproliferation programs.
        In July 2006, Presidents Bush and Putin announced the Global
    Initiative to Combat Nuclear Terrorism to strengthen cooperation
    worldwide on nuclear materials security and to prevent terrorist acts
    involving nuclear or radioactive substances. By the end of 2007, 64
    nations had joined this Global Initiative, and a number of subject
    matter expert conferences and training activities have been conducted.
    Most recently in December 2007, representatives from 15 nations
    participated in Global Initiative to Combat Nuclear Terrorism Radiation
    Emergency Response workshop held in China by the NNSA. Paired with U.N.
    Security Council Resolution 1540 and working closely with our overseas
    partners, we now have both the legal mandate and the practical means
    necessary for concrete actions to secure nuclear material against the
    threat of diversion.
              fiscal year 2009 budget request programmatic detail
        The President's fiscal year 2009 budget request for NNSA totals
    $9.1 billion, a decrease of $35.0 million or 0.4 percent less than the
    fiscal year 2008 Consolidated Appropriations level. We are managing our
    program activities within a disciplined 5-year budget and planning
    envelope, and are successfully balancing the administration's high
    priority initiatives to reduce global nuclear danger as well as future
    planning for the Nation's nuclear weapons complex within an overall
    modest growth rate.
        The NNSA budget justification contains information for 5 years as
    required by sec. 3253 of Public Law 106-065, the National Defense
    Authorization Act for Fiscal Year 2000. This section, entitled Future-
    Years Nuclear Security Program, requires the Administrator to submit to
    Congress each year the estimated expenditures necessary to support the
    programs, projects and activities of the NNSA for a 5-year fiscal
    period, in a level of detail comparable to that contained in the
    budget.
        The fiscal year 2009-2020 13 Future Years Nuclear Security
    Program--FYNSP--projects $47.7 billion for NNSA programs though 2013.
    This is a decrease of about $2.3 billion over last year's projections.
    The fiscal year 2009 request is slightly smaller than last year's
    projection; however, the outyears increase starting in fiscal year
    2010.
    Defense Nuclear Nonproliferation Budget Summary
        The Defense Nuclear Nonproliferation Program mission is to detect,
    prevent, and reverse the proliferation of weapons of mass destruction
    (WMD). Our nonproliferation programs address the threat that hostile
    nations or terrorist groups may acquire weapons-usable material,
    equipment or technology, or WMD capabilities. The administration's
    fiscal year 2009 request totals $1.247 billion for this program,
    reflecting a return to measured growth from the fiscal year 2007
    appropriation level, but a decrease from the final fiscal year 2008
    appropriation, which included a large Congressional plus-up over the
    President's request. The decrease also reflects Congressional action to
    transfer funding for some construction projects to other budget
    accounts, and the anticipated decrease of other major construction
    activities under the Elimination of Weapons Grade Plutonium Production
    Program in 2008, following completion of major elements of that
    program's work scope.
                       global threat reduction initiative
        The fiscal year 2009 request of $220 million for the Global Threat
    Reduction Initiative (GTRI) is an increase of $27 million over the
    fiscal year 2008 operating plan. This funding will support GTRI's
    mission to reduce and protect vulnerable nuclear and radiological
    materials at civilian sites worldwide by converting reactors from HEU
    to LEU, removing excess nuclear/radiological materials, and protecting
    high priority nuclear/radiological material from theft and sabotage.
    Specific increases in the GTRI budget reflect an acceleration of (1)
    Bratislava efforts to repatriate Russian-origin HEU and convert HEU
    reactors to LEU; (2) efforts to develop a new ultra-high density LEU
    fuel needed to convert 28 high performance reactors around the world;
    (3) the removal of nuclear materials not covered under other existing
    programs; and (4) security upgrades on high priority HEU and
    radioactive materials located in the United States.
               international material protection and cooperation
        NNSA's International Material Protection and Cooperation fiscal
    year 2009 budget request of $429.7 million represents a decrease of
    $194.8 million from the fiscal year 2008 appropriated level. This large
    decrease reflects: (1) the anticipated completion of major elements of
    nuclear security upgrade work performed under the Bratislava Agreement;
    (2) completion of the majority of nuclear security upgrades in
    countries outside of Russia; and (3) large Congressional increases for
    this work over the President's fiscal year 2008 budget request. During
    the past 15 years, the Material Protection Control and Accounting
    (MPC&A) program has secured 85 percent of Russian nuclear weapons sites
    of concern, and work is underway to complete this work by the end of
    fiscal year 2008. To maintain this progress, MPC&A and Rosatom have
    developed a new joint plan identifying elements required for Rosatom's
    long-term sustainability of U.S.-installed security enhancements. In
    fiscal year 2009, international material protection activities will
    focus on the continued enhancement of Russia's capability to operate
    and maintain U.S.-funded security improvements in the long-term. The
    MPC&A Program is also focused on reducing proliferation risks by
    converting Russian HEU to LEU and by consolidating weapons-usable
    nuclear material into fewer, more secure locations. In fiscal year
    2009, we will eliminate an additional 1.4 metric tons of Russian HEU
    for a cumulative total of 12.4 metric tons.
        Our Second Line of Defense (SLD) Program installs radiation
    detection equipment at key transit and border crossings, airports and
    major seaports to deter, detect and interdict illicit trafficking in
    nuclear and radioactive materials. The SLD Core Program, which installs
    radiation detection equipment at borders, airports, and strategic
    feeder ports, has equipped 117 sites in Russia. The United States and
    Russia have agreed to jointly fund work to equip all of Russia's border
    crossings with radiation detection equipment by the end of 2011, 6
    years ahead of schedule. The Core Program has also equipped 33 sites
    outside of Russia with radiation detection systems. The SLD Megaports
    Initiative has deployed radiation detection and cargo scanning
    equipment at 12 ports to date in the Netherlands, Greece, Bahamas, Sri
    Lanka, Singapore, Spain, the Philippines, Belgium, Honduras, Pakistan,
    the United Kingdom, and Israel. Various stages of implementation are
    underway at ports in 16 other locations.
        During fiscal year 2009, the SLD Core Program is planning to
    complete an additional 49 sites. The SLD Megaports Initiative plans to
    complete work at nine key ports in fiscal year 2009 in Israel, Jordan,
    Spain, Mexico, China, the United Arab Emirates, Saudi Arabia, Oman, and
    Taiwan. We will continue progress on separate ports in Spain and
    Mexico, and will initiate new work in fiscal year 2009 at ports in
    Argentina, Brazil, and Malaysia. The Megaports program is also pursuing
    outreach activities in northeastern Africa and other key regions of
    concern. Fiscal year 2009 funding will also support the procurement of
    Advanced Spectroscopic Portals (ASP) and mobile detection systems,
    including Mobile Radiation Detection & Identification Systems (MRDIS)
    and Radiation Detection Straddle Carriers (RDSC). The Megaports
    Initiative also works closely with the U.S. Department of Homeland
    Security's Bureau of U.S. Customs and Border Protection (CBP) by making
    technical resources available to complement the Container
        Security Initiative (CSI) and the Secure Freight Initiative (SFI)
    at international ports. Under SFI, all U.S.-bound containers are being
    scanned at three ports in Pakistan, Honduras, and the United Kingdom,
    fulfilling the 2006 SAFE Ports Act to couple non-intrusive imaging
    equipment and radiation detection equipment in order to demonstrate the
    effectiveness of 100 percent scanning of U.S.-bound containers. SLD
    Megaports has also partnered with CBP at four, limited capacity SFI
    locations in Hong Kong, Oman, Korea, and Singapore. The Megaports
    Initiative is installing radiation detection equipment at all CSI ports
    and has worked with CBP to pursue, where feasible, joint agreements
    with host nations to implement both the Megaports and SFI programs.
                  nonproliferation and international security
        The Nonproliferation and International Security (NIS) mission is to
    prevent, mitigate, and reverse WMD proliferation by providing policy
    and technical support to strengthen international nonproliferation
    regimes, institutions, and arrangements; promote foreign compliance
    with nonproliferation norms and commitments; and eliminate or reduce
    proliferation programs and stockpiles. Major NIS strategic priorities
    in fiscal year 2009 include supporting the safe and secure expansion of
    nuclear energy use and disablement, dismantlement, and verification of
    nuclear programs in North Korea. NIS will also support the Next
    Generation Safeguards Initiative (NGSI) to strengthen international
    safeguards, revitalize the U.S. technical and human resource base that
    supports them, and develop the tools, approaches, and authorities
    needed by the International Atomic Energy Agency to fulfill its mandate
    far into the future.
        In fiscal year 2009, NIS also will confirm the permanent
    elimination from the Russian weapons stockpile of 30 metric tons of
    HEU; control the export of items and technology useful for WMD
    programs; continue an augmented export control cooperation program
    involving emerging suppliers and high-traffic transit states; break up
    proliferation networks and improve multilateral export control
    guidelines; develop and implement policy in support of global
    nonproliferation regimes; train 2,500 international and domestic
    experts in nonproliferation; provide technical expertise to the USG to
    support various WMD interdiction activities; develop and implement
    transparency measures to ensure that nuclear materials are secure;
    transition 300 Russian and FSU WMD experts to long-term private sector
    jobs; and make the preparations necessary for the USG's $50 million
    contribution to the International Atomic Energy Agency for the
    establishment of the International Nuclear Fuel Bank--an international
    effort to establish a back-up nuclear fuel supply for peaceful uses.
               elimination of weapons grade plutonium production
        Turning to programs that focus on halting the production of nuclear
    materials, the Elimination of Weapons Grade Plutonium Production
    (EWGPP) Program is working towards completing the permanent shutdown of
    the three remaining weapons-grade plutonium production reactors in
    Seversk and Zheleznogorsk, Russia. The fiscal year 2009 budget request
    of $141 million reflects a decrease of $38 million from the fiscal year
    2008 level due to the successful shutdown at Seversk last week. The
    budget profile provides the funding required to replace the heat and
    electricity these reactors would otherwise supply to local communities
    with energy generated by fossil fuel, permitting the Russians to
    permanently shut down these reactors. The reactor at Zheleznogorsk will
    be shut down by December 2010, if not sooner. This construction
    activity thus leads to the elimination of more than 1 metric ton of
    weapons-grade plutonium production per year.
                         fissile materials disposition
        The Fissile Materials Disposition program request for fiscal year
    2009 is $41.8 million. The program retains three principal elements:
    efforts to dispose of U.S. highly enriched uranium (HEU) declared
    surplus to defense needs primarily by down-blending it into low
    enriched uranium; technical analyses and support to negotiations
    involving the United States, Russia, and the International Atomic
    Energy Agency (IAEA) on monitoring and inspection procedures under the
    2000 U.S.-Russia plutonium disposition agreement; and limited support
    for the early disposition of Russia's plutonium in that country's BN-
    600 fast reactor including U.S. technical support for work in Russia
    for disposition of Russian weapon-grade plutonium in fast reactors
    generally.
        The fiscal year 2008 Consolidated Appropriations Act (Public Law
    110-161) appropriated funding for the Mixed Oxide Fuel (MOX)
    Fabrication Facility Project in South Carolina in the Department of
    Energy's Office of Nuclear Energy account and funding for the related
    Pit Disassembly and Conversion Facility/Waste Solidification Building
    projects in the NNSA Weapons Activities account. These projects remain
    important components of the Nation's nuclear nonproliferation efforts.
    In total, the funding commitment to the Department of Energy's
    nonproliferation activities is $1.853 billion in 2009. The MOX project
    is a key component of the U.S. strategy for plutonium disposition. It
    is the centerpiece of a comprehensive approach for disposing of surplus
    weapons-usable plutonium by fabricating it into mixed-oxide fuel for
    irradiation in existing nuclear reactors. This meets key national
    security and nonproliferation objectives by converting the plutonium
    into forms not readily usable for weapons and supports efforts to
    consolidate nuclear materials throughout the weapons complex.
        In addition to its role in the disposition of excess nuclear
    materials at home, the U.S. views the MOX project as a key component of
    U.S. global nuclear nonproliferation efforts in which fissile material
    disposition is the final step in a balanced nuclear nonproliferation
    strategy aimed at employing measures necessary to detect, secure, and
    dispose of dangerous nuclear material. In 2007, the U.S. and Russian
    governments agreed on a framework for a technically and financially
    credible Russian plutonium disposition program based on the irradiation
    of plutonium as MOX fuel in fast reactors. When all required steps have
    taken for implementation, it will enable the United States and Russia
    to meet their commitments under a 2000 agreement to dispose of a
    combined total of 68 metric tons of surplus weapon-grade plutonium--
    enough material for approximately over 8,000 nuclear weapons.
        This budget request also seeks funding to dispose of surplus U.S.
    HEU, including downblending 17.4 metric tons of HEU to establish the
    Reliable Fuel Supply, which would be available to countries with good
    nonproliferation credentials that face a disruption in supply that
    cannot be corrected through normal commercial means. This initiative
    marks an important first step creating a reliable nuclear fuel
    mechanism that could provide countries a strong incentive to refrain
    from acquiring their own enrichment and reprocessing capabilities.
           nonproliferation and verification research and development
        The fiscal year 2009 budget requests $275 million for
    Nonproliferation and Verification Research and Development. This effort
    encompasses two primary programs that make unique contributions to
    national security by conducting research and development into new
    technical capabilities to detect illicit foreign production, diversion
    or detonation of nuclear materials. The Proliferation Detection Program
    conducts research across a spectrum of technical disciplines that
    supports the NNSA mission, national and homeland security agencies and
    the counterterrorism community. Specifically, this program develops the
    tools, technologies, techniques, and expertise required for the
    identification, location, and analysis of facilities, materials, and
    processes of undeclared and proliferant nuclear programs. The Nuclear
    Detonation Detection Program produces the Nation's space-based
    operational sensors that monitor the entire planet to detect and report
    surface, atmospheric, or space nuclear detonations. This program also
    produces and updates regional geophysical datasets that enable and
    enhance operation of the Nation's seismic nuclear detonation detection
    network.
       appropriation and program summary tables--out-year appropriation
                 summary tables--fiscal year 2009 budget tables

                                   NATIONAL NUCLEAR SECURITY ADMINISTRATION--OVERVIEW
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                        Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
                                       2007 Current    2008 Original       2008        2008 Current     Fiscal Year
                                      Appropriations   Appropriation    Adjustments    Appropriation   2009 Request
    ----------------------------------------------------------------------------------------------------------------
    National Nuclear Security
     Administration:
        Office of the Administrator.         358,291         405,987          -3,850         402,137         404,081
        Weapons Activities..........       6,258,583       6,355,633         -58,167       6,297,466       6,618,079
        Defense Nuclear                    1,824,202       1,673,275         -15,279       1,657,996       1,247,048
         Nonproliferation...........
        Naval Reactors..............         781,800         781,800          -7,114         774,686         828,054
                                     -------------------------------------------------------------------------------
          Total, NNSA...............       9,222,876       9,216,695         -84,410       9,132,285       9,097,262
        Rescission of Prior Year      ..............        -322,000  ..............        -322,000  ..............
         Balances...................
                                     -------------------------------------------------------------------------------
          Total, NNSA (OMB Scoring).       9,222,876       8,894,695         -84,410       8,810,285       9,097,262
    ----------------------------------------------------------------------------------------------------------------

                   OUT-YEAR APPROPRIATION SUMMARY--NNSA FUTURE-YEARS NUCLEAR SECURITY PROGRAM (FYNSP)
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                        Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
                                           2009            2010            2011            2012            2013
    ----------------------------------------------------------------------------------------------------------------
    NNSA:
        Office of the Administrator.         404,081         419,848         436,266         451,771         469,173
        Weapons Activities..........       6,618,079       6,985,695       7,197,844       7,286,912       7,460,318
        Defense Nuclear                    1,247,048       1,082,680       1,076,578       1,111,337       1,133,982
         Nonproliferation...........
        Naval Reactors..............         828,054         848,641         869,755         880,418         899,838
                                     -------------------------------------------------------------------------------
          Total, NNSA...............       9,097,262       9,336,864       9,580,443       9,730,438       9,963,311
    ----------------------------------------------------------------------------------------------------------------

                                            DEFENSE NUCLEAR NONPROLIFERATION
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                        Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
      Funding Profile by Subprogram    2007 Current    2008 Original       2008        2008 Current     Fiscal Year
                                       Appropriation   Appropriation    Adjustments    Appropriation   2009 Request
    ----------------------------------------------------------------------------------------------------------------
    Defense Nuclear
     Nonproliferation:
        Nonproliferation and                 265,197         390,752          -3,556         387,196         275,091
         Verification Research and
         Development................
        Nonproliferation and                 128,911         151,370          -1,377         149,993         140,467
         International Security.....
        International Nuclear                597,646         630,217          -5,735         624,482         429,694
         Materials Protection and
         Cooperation................
        Elimination of Weapons-Grade         231,152         181,593          -1,653         179,940         141,299
         Plutonium Production.......
        Fissile Materials                    470,062          66,843            -608          66,235          41,774
         Disposition................
        Global Threat Reduction              131,234         195,000          -1,775         193,225         219,641
         Initiative.................
        International Nuclear Fuel    ..............          50,000            -455          49,545  ..............
         Bank.......................
        Congressional Directed        ..............           7,500            -120           7,380  ..............
         Projects...................
                                     -------------------------------------------------------------------------------
            Subtotal, Defense              1,824,202       1,673,275         -15,279       1,657,996       1,247,966
             Nuclear Nonprolifera-
             tion...................
    Use of Prior Year Balances......  ..............  ..............  ..............  ..............            -918
                                     -------------------------------------------------------------------------------
          Total, Defense Nuclear           1,824,202       1,673,275         -15,279       1,657,996       1,247,048
           Nonproliferation.........
    Rescission of Prior Year          ..............        -322,000  ..............        -322,000  ..............
     Balances.......................
                                     -------------------------------------------------------------------------------
          Total, Defense Nuclear           1,824,202       1,351,275         -15,279       1,335,996       1,247,048
           Nonproliferation (OMB
           Scoring).................
    ----------------------------------------------------------------------------------------------------------------
    NOTES: The fiscal year 2007 Current Appropriation column includes additions for international contributions to
      the Elimination of Weapons-Grade Plutonium Production Program in the amount of $5,397,964; to the
      International Nuclear Materials Protection and Cooperation Program in the amount of $4,916,044 and to the
      Global Threat Reduction Initiative Program in the amount of $1,738,800. Fiscal year 2008 adjustments reflect a
      rescission of $15,279,000 as cited in the fiscal year 2008 Consolidated Appropriations Act (Public Law 110-
      161).

                            public law authorization
        Fiscal Year 2008 Consolidated Appropriations Act (Public Law 110-
    161)
        National Nuclear Security Administration Act, (Public Law 106-65),
    as Amended

                                         OUT-YEAR FUNDING PROFILE BY SUBPROGRAM
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                        Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
                                                           2010            2011            2012            2013
    ----------------------------------------------------------------------------------------------------------------
    Defense Nuclear Nonproliferation:
        Nonproliferation and Verification Research           318,620         334,182         343,397         351,098
         and Development............................
        Nonproliferation and International Security.         151,052         158,711         171,108         175,368
        International Nuclear Materials Protection           400,511         394,626         395,225         404,064
         and Cooperation............................
        Elimination of Weapons Grade Plutonium                24,507  ..............  ..............  ..............
         Production.................................
        Fissile Materials Disposition...............          37,691          27,985          28,435          26,000
        Global Threat Reduction Initiative..........         150,299         161,074         173,172         177,452
                                                     ---------------------------------------------------------------
          Total, Defense Nuclear Nonproliferation...       1,082,680       1,076,578       1,111,337       1,133,982
    ----------------------------------------------------------------------------------------------------------------

        Senator Dorgan. Mr. Tobey, thank you very much. I did not
    indicate, and I should have at the outset, that we appreciate
    the aggressive initiatives you have undertaken. You have been
    able, when initiatives are presented, to move very quickly and
    be aggressive in those, and we appreciate that.
        I want to ask a few questions and then call on my
    colleagues to inquire.
        In your statement, Administrator Tobey, you say the
    possibility that rogue states or terrorists might acquire
    nuclear and other weapons of mass destruction and their related
    technologies, equipment, and expertise poses one of the most
    serious threats to the United States and international
    security. You say the continued pursuit of nuclear weapons by
    terrorists and states of concern underscores the urgency of
    NNSA's efforts to secure vulnerable weapons, et cetera.
        First of all, I agree with that. I think there is an
    unbelievable danger out there in this world where a lot of
    rogue states and others wish to acquire nuclear weapons, and
    there is a lot of danger of someone acquiring one. You make the
    point that in order to do so you have got to have access to
    fissile material.
        The urgency expressed in this paragraph I think is at odds
    with the budget request by the administration. And let me ask
    the question specifically. You will be spending less money this
    coming year than you did this current year if we agree with the
    President's budget request, substantially less money, frankly,
    hundreds of millions of dollars. And yet, you describe to us
    the urgency of this mission.
        Now, I understand you come here as a requirement to support
    the President's request, but is there not a disconnect here
    with respect to the urgency and the request for less funding?
        Mr. Tobey. Mr. Chairman, I guess I would note, to some
    extent, some context which you actually noted at the start of
    your statement.
        First of all, since September 11, our budget has roughly
    doubled for nonproliferation work. Given that initial ramp-up,
    which was quite steep and allowed us to accelerate our efforts,
    we have continued to try and put the budget on a generally
    upward slope, despite the fact that some of our efforts are
    actually shutting down. They are coming to completion because
    our work is done.
        As you noted, if in fact you take into account what, as you
    also said was a complicated situation, whereby last year's
    congressional action actually took money that had been
    previously appropriated to our funds and took it away from a
    nonproliferation program, the Fissile Material Disposition
    program, it appeared to plus-up our budget when actually what
    it did was take money that had already been given to us and
    reprogram it for a different purpose.
        If you take that into account, and the fact that money
    requested for the elimination of weapons-grade plutonium
    production is going down because our work is being completed as
    we shut down these reactors, and then also take out the one-
    time appropriation for the $50 million for the IAEA nuclear
    fuel bank, our request is actually about flat with last year.
    That flat request I think does not reflect an indifference to
    the urgency of our work. I think it actually allows us to
    accelerate our work in our priority areas even as our work is
    coming to completion in areas like the elimination of weapons-
    grade plutonium production and the Bratislava Initiative.
        Senator Dorgan. Mr. Tobey, that is a very deft answer. But
    I look at the proposal for future year appropriations--and it
    is true we had a jump after 9/11, but as I look at 2010, 2011,
    2012, and 2013, the proposal here is essentially flat-funding.
    In fact, from 2009 to 2010, there would be a reduction; 2010 to
    2011, a reduction. And my only point is that if there is
    urgency here, I do not think that funding request by the
    President squares with the urgency.
        I note that Dr. Hecker and Dr. Bunn both point out in their
    written testimony that since the early to mid-1990s, the
    investment by DOE in nonproliferation safeguards, security
    technology experts, facilities, and so on has declined.
        So this is not your budget. You are here to support the
    budget that you have been sent up here to support. But as one
    member of this subcommittee, I observe that I think there is
    not much that we do at this moment in the history of this
    country and what we face in the world than to attempt to stop
    the proliferation of nuclear weapons, keep them out of the
    hands of rogue nations and terrorists--there is not much more
    important than that because the detonation of one nuclear
    weapon in a major city anywhere in this world will have
    cataclysmic effects on life on this planet. So I just make that
    point that I think there is a disconnect here between the
    urgency and the funding.
        A quick question, in your testimony, you referenced your
    office's work in overseeing the disablement and dismantlement
    of North Korea's nuclear weapons program. You mentioned the
    need for a legislative waiver of the Glenn Amendment
    restrictions that exist, as well as more substantial funding
    for that. Can you explain the Glenn Amendment restriction to us
    and your need for a waiver? And when must you have the waiver
    in place?
        Mr. Tobey. Sure. The Glenn Amendment prevents us from
    spending money in states that have conducted a nuclear test
    after a certain date. So, therefore, we are restricted from
    spending our funds to oversee the dismantlement or disablement
    of North Korean nuclear facilities.
        We have been able to undertake that work through funding
    from the State Department, which does not have such
    restrictions. Because our DOE personnel have the expertise to
    oversee that, the State Department has essentially contracted
    with us to do that. But those funds are quite limited relative
    to the actual costs that would be necessary with the
    disablement and dismantlement of the North Korean nuclear
    facilities.
        I must admit that it is somewhat uncertain what the exact
    time lines would be for that work. As you probably know, we
    have been waiting now for a period of months for North Korea's
    declaration, which I think would be a signal that we were
    actually going to move ahead. And as a consequence, we have not
    submitted, within our budget, those numbers because I could not
    guarantee that we would spend them.
        What I can tell you is that our estimate, if we were to
    move ahead as fast as we could with disablement, in fiscal year
    2008, our requirements would be roughly $50 million, and in
    fiscal year 2009, it would be about $360 million.
        Now, I think it is also an open question as to exactly how
    those costs might be borne, and I would expect that we would be
    interested in seeing that perhaps some of the other of the six
    parties would be willing to pay for some of those costs. But I
    wanted to lay out, at least as we see it, what the objective
    facts are.
        Senator Dorgan. I would be interested if you could give us
    some analysis. When you say $360 million, how does that break
    down? I do not need it at the moment, but if you would just
    submit it to us, I would appreciate that.
        Mr. Tobey. Okay.
        [The information follows:]

                             DPRK FUNDING BREAKDOWN
                            [In millions of dollars]
    ------------------------------------------------------------------------
                                          Fiscal Year 2008  Fiscal Year 2009
    ------------------------------------------------------------------------
    By Office:
        NA-21...........................              30               260
        NA-24...........................              20               100
                                         -----------------------------------
            Total.......................              50               360
                                         ===================================
    By Function:
        Material Packaging Preparation..              30                95
        Material Packaging and Transport  ................             165
        Disablement and Dismantlement...              12                43
        Verification....................               4.5              44.5
        Health, Safety, and the IAEA....               3.5              12.5
    ------------------------------------------------------------------------

        Senator Dorgan. Senator Domenici?
        Senator Domenici. Thank you very much, Mr. Chairman.
        Mr. Tobey, my memory slips me. What are the countries that
    are involved in the North Korean action?
        Mr. Tobey. The Six Parties are North Korea, China, Russia,
    Japan, the Republic of Korea, and the United States.
        Senator Domenici. Well, there is not any question with this
    Senator that we should not be bearing the entire monetary
    costs. It looks to me like Japan and even South Korea--they are
    not party to it. Are they? Is South Korea a party to it? Is
    South Korea one of the six countries?
        Mr. Tobey. Yes.
        Senator Domenici. They can well afford and it is very
    important to them. So I hope we hear from those in the position
    of working on this that the United States is at least trying in
    these difficult budget days to ask others to pay some of it.
        Despite occasional problems, the dismantling of the North
    Korean plutonium production infrastructure continues under
    these six party talks. If a breakthrough occurred and all the
    expected facilities decommissioned and materials were removed
    and verification activities were implemented, is that a
    definition of the project that would cost that $300 million-
    plus?
        Mr. Tobey. No. That would apply simply to the disablement
    of the facilities at Yongbyon. There may well be other
    facilities that would require dismantlement.
        Senator Domenici. And that would just be more money.
        Mr. Tobey. Correct.
        Senator Domenici. You would assume the same kind of
    imposition on others of partial costs would be the order of the
    day.
        Mr. Tobey. We have undertaken this diplomatic effort as a
    partnership with other countries. It would make sense to me
    that other countries would bear a part of those costs. And
    certainly that has been the case with respect to, for example,
    shipments of heavy fuel oil that have gone to North Korea.
        Senator Domenici. Last week the Intelligence Committee
    received briefings, and some of us received them also as
    members of Armed Services or otherwise on North Korea's nuclear
    assistance to Syria. Apparently North Korea was helping Syria
    build a clandestine nuclear reactor until Israel destroyed the
    facility in the arid desert. Have we obtained any assurance
    from North Korea that it will stop exporting nuclear
    technology?
        Mr. Tobey. I am unaware of an assurance at this point.
    Obviously, that would be a priority of ours within the talks.
        Senator Domenici. Well, it seems to me kind of strange that
    we would be thinking that their talks with us were reliable,
    while at the same time they were reaching the spirit of
    everything by helping Syria directly. Does this create any kind
    of concern on your part as an American representative that that
    is going on?
        Mr. Tobey. Absolutely, sir.
        Senator Domenici. And nothing can be done about it I
    assume.
        Mr. Tobey. I think it is a matter of very serious concern,
    and I think it is an issue that will need to be resolved before
    we can be confident that the North Korean nuclear matter has
    been resolved.
        Senator Domenici. Did North Korea violate any agreements in
    providing this assistance that you know of?
        Mr. Tobey. I should caveat this with the notion that I am
    not a lawyer, and we are only beginning to look at some of
    these issues. But my understanding is that North Korea has
    withdrawn from the NPT. What may have gone on in Syria could
    well be a legal issue with respect to the NPT and Syria, and
    there are, of course, United Nations Security Council
    resolutions that were enacted with respect to North Korea in
    the wake of their nuclear test, essentially prohibiting certain
    forms of trade to include nuclear trade.
        Senator Domenici. I am going to leave that area and ask the
    chairman--I have some questions regarding Russia's
    participation and how much they should pay these days.
        Would you like to hear from some other Senators first? That
    would be all right with me.
        Senator Dorgan. We will come back.
        Senator Feinstein?
        Senator Feinstein. Thank you very much, Mr. Chairman.
        Mr. Tobey, you and I both heard Dr. Hecker speak last
    evening at the Nuclear Threat Initiative where he pointed out
    in his five trips to look at the reactors in North Korea, that
    Yongbyon had been effectively disabled and two other reactors
    dismantled. He also indicated that the North Koreans had sent
    several signals through him to us that they were interested in
    cooperating.
        How do you assess the level of North Korean cooperation at
    this point with the remaining dismantlement issue?
        Mr. Tobey. In terms of the narrow question of disablement
    which, as you have noted, there are DOE people at Yongbyon
    overseeing, the cooperation has generally been good, but has
    slowed recently from what it could be. But Yongbyon, of course,
    is not the whole story. The North Korean declaration would
    necessarily deal with facilities beyond Yongbyon, facilities
    and activities beyond what goes on at Yongbyon. And so far we
    have not seen a lot of progress in that regard.
        Senator Feinstein. Are you, in essence, saying that they
    are not cooperative with respect to--I do not know if you want
    to put forward in this setting what the remaining complications
    are, but if you do, I think it would be useful for the
    committee to hear them.
        Mr. Tobey. I think it is yet to be seen. I think we will
    need to see a North Korean declaration to know how serious they
    are about their September 19, 2005 commitment to abandon all
    their nuclear weapons and existing nuclear programs.
        Senator Feinstein. So you are saying then that there are
    other facilities in addition to these that are up and
    functioning, in other words, with fissile materials?
        Mr. Tobey. Well, I am inferring, to some extent. We know,
    for example, that they conducted a nuclear test. That test was
    not conducted at the Yongbyon site. They have, I think, talked
    in the past about uranium production facilities, mining, et
    cetera, which also would not be at the Yongbyon site. Clearly,
    there were some efforts at weaponization, which likely were not
    at the Yongbyon site.
        Senator Feinstein. Thank you very much.
        Let me go to the International Atomic Energy Agency. I
    strongly support the IAEA. I support its mission. I think it is
    important. I think in the world of the future it is only going
    to grow more important.
        My question is why are we behind on paying our dues?
        Mr. Tobey. Well, we are a strong supporter of the IAEA as
    well, and as you probably know, we are the largest single
    contributor to the IAEA. The dues, I think, are largely paid
    from--although there are some DOE funds that go to the IAEA--
    the dues are largely paid by the State Department.
        Senator Feinstein. So do you know why we are behind?
        Mr. Tobey. I am sorry, Senator. I do not know.
        Senator Feinstein. Thank you.
        The third question--I still have some time--is Pakistan.
    Pakistan possesses nuclear weapons. It has an unstable
    government and a dramatic rise of Islamic fundamentalism. Many
    people have called it Ground Zero as far as terror is
    concerned. If you ask some of us what is the most threatening
    nuclear situation, we would have to say it is Pakistan in terms
    of those nuclear facilities.
        The question I have is what steps can we take to confront
    this challenge to see that the weapons remain secure and to
    actually improve the situation in terms of stability of
    government and therefore stability of the nuclear weapons
    program.
        Mr. Tobey. We have extended an invitation to Pakistan to
    join the Global Initiative to Combat Nuclear Terrorism, which
    they have done. They have participated in a Global Initiative
    exercise in China. That initiative is aimed at drawing together
    nations to share best practices, essentially throughout the
    possible prevention and response cycle for, for example,
    security practices to prevent the loss of fissile material,
    emergency response actions to try and recover it, customs and
    border guards, et cetera. And we are hopeful that Pakistan will
    avail itself of this opportunity to ensure that they have the
    best practices possible.
        I regard their military as both professional and committed
    to nuclear security.
        Senator Feinstein. My time is up. Thank you very much, Mr.
    Chairman.
        Senator Dorgan. Senator Allard?
        Senator Allard. Thank you, Mr. Chairman. I would like to
    start off with a question on the nuclear detonation detection
    program. We rely heavily on our space assets to implement that
    program, and we are getting a greater concern, I think, from a
    number of agencies about the risk that our space assets are
    being placed in, particularly in light of the fact that China
    had demonstrated their ability to knock out a satellite. They
    did their own.
        What kind of effort are you making sure to try and protect
    those assets that we rely so much on our nuclear detonation?
        Mr. Tobey. Senator, as you might imagine, the details of
    how we might protect such systems pretty quickly get into
    classified material.
        Senator Allard. What I need to know is; are you working
    with other agencies to look at that problem?
        Mr. Tobey. Yes, sir. I would note that diversifying, if you
    will, proliferating our ability to detect such detonations is
    an important response. If we have redundancy in our ability, it
    makes it more difficult for another nation to eliminate that
    capability.
        Senator Allard. I just wanted to have some assurance that
    you were looking at this risk.
        Mr. Tobey. We regard this as a very high priority.
        Senator Allard. I realize that the details of it would be
    something that we would not want to talk about in a setting
    like this, but just your assurance that you have looked at it.
    I think it does not hurt to let people know that we have some
    vulnerability out there and they do affect our ability to
    determine whether other countries are keeping their agreement
    as far as nuclear weapons agreements are concerned at least.
        My understanding is that the language on the Glenn
    amendment--attempts are being made to put that in the
    supplemental bill. Is that correct?
        Mr. Tobey. That is my understanding, Senator.
        Senator Allard. And why are we selecting the supplemental
    bill as opposed to the regular appropriation bill? Does it have
    to do with timing or does it have to do with sort of an
    aversion to the regular appropriation process?
        Mr. Tobey. I confess that that decision was not mine. I am
    not an expert in legislative procedure. I think it was done in
    consultation with people on the Hill. I think that was chosen
    as the most immediate and likely vehicle to pass.
        Senator Allard. It is important that we deal with this
    language, the sooner, the better.
        Mr. Tobey. I think in terms of minimizing risk, we would
    not be able to go forward if there is not diplomatic progress,
    so the sooner, the better. But I cannot say to you that
    tomorrow we will be able to do all that we would wish to do in
    North Korea. It is difficult to predict.
        Senator Allard. Now, let us just assume that we grant the
    waiver in a supplemental appropriation bill, and phase 3 work
    begins as quickly as possible. When would you anticipate
    completion of phase 3 in a best case scenario?
        Mr. Tobey. Completion of phase 3 would probably be a period
    of years. Even the completion of phase 2 would----
        Senator Allard. Five years, 10 years, decades?
        Mr. Tobey. I would say about 5 years would be fair. Much
    depends on the level of cooperation with North Korea, and it is
    difficult to predict.
        Senator Allard. Yes, I understand.
        Mr. Tobey. The canning campaign and even the work that we
    have undertaken now has varied significantly according to the
    level of cooperation that the North Koreans have--but even the
    current phase, in terms of the fuel that is in the reactor now
    and dealing with that, would likely take the balance of this
    year.
        Senator Allard. Now, I would like to move on to the fissile
    materials deposition. That is irradiation of plutonium. It was
    in the 2000 agreement. How far along are we in reaching the
    2000 agreement, and what percentage is the United States
    responsible for disposing of? Can you share that with us?
        Mr. Tobey. As you know, I am sure, sir, the 2000 Plutonium
    Management and Disposition Agreement provided for the
    disposition of 34 metric tons each by the United States and
    Russia.
        Senator Allard. Right.
        Mr. Tobey. Frankly, not a lot of progress had been made up
    until a couple of years ago. Neither the United States nor
    Russia seemed to have set on a disposition path.
        About a year ago, some Members of Congress had asked us to
    undertake three activities. One, make sure that our baseline
    was credible and defensible for the facility that we are
    building in South Carolina. I believe that we have done that.
    We have set a baseline. We brought in the preconstruction
    activities under that baseline and slightly ahead of time.
        Senator Allard. This is the MOX-plus?
        Mr. Tobey. The MOX facility, exactly.
        And we have significant contingency and reserves. 90
    percent of the design is complete, which is very, very high for
    a facility of this size at this stage of construction.
    Construction began on August 1. So it is well underway. I think
    our path is pretty clear.
        The second thing that I understood Congress to ask us to do
    was to look at additional missions for the facility. We found
    three potential additional missions, and we are in a position
    to execute those missions if there is a decision to do so. We
    do not need to make that decision today, even under optimal
    circumstances. But they would add substantially to the mission
    of the facility, disposing of perhaps 50 percent, maybe even
    more, additional material; making it a much more cost effective
    project.
        And then third, they asked us to try and get the Russian
    program in order. Secretary Bodman and Rosatom Director
    Kiriyenko signed a joint statement several months ago that
    provides for what we believe is a technically and financially
    credible path for the Russian disposition of plutonium, using
    fast reactors. I think it is key to understand that the Russian
    path is consistent with their own energy plans and, therefore,
    is more likely to be pursued, not out of a sense of obligation
    or because we blindly trust what they are doing, but out of
    Russian self-interest.
        Senator Allard. Thank you. My time is expired.
        Senator Dorgan. Senator Domenici, do you have some
    additional questions about Russia?
        Senator Domenici. Yes, I do.
        I did not understand your answer when you talked about
    additional work or missions for the MOX facility. What are you
    talking about?
        Mr. Tobey. The Department will use the U.S. MOX facility to
    dispose of at least 34 metric tons of surplus weapon-grade
    plutonium oxide, which includes both nuclear weapons pits and
    certain other non-pit plutonium metal and oxide material. As
    described in a technical report that the Department submitted
    to Congress in July 2007, the Department is also considering
    sending additional plutonium from nuclear weapons pits declared
    surplus to national security needs, and additional amounts of
    non-pit plutonium, pending further environmental and technical
    analysis and final decisions by the Department. Also, as
    described in the July 2007 technical report, the facility may
    provide an option to fabricate initial core loads for fast
    reactors to support the Global Nuclear Energy Partnership,
    depending on analysis and decisions which could optimally be
    made well into the future.
        Senator Domenici. I am glad to hear that there are other
    missions, and we are very fortunate that we struck a deal with
    the Russians. Even though they did not live up to their side,
    it got us off our duff and we started the MOX program, about 25
    years late or 30, but that is pretty good.
        Let me ask you on the Russian assistance. Since 1992, the
    U.S. Government has spent nearly $10 billion on the Nunn-Lugar-
    Domenici program on efforts to improve controls on nuclear
    weapons materials and expertise. Most of it has been spent in
    Russia. As security upgrades are completed and material
    returned or eliminated, where does the program go from here?
        Russia now has a budget surplus as a result of oil and gas
    exports. What is NNSA doing to try to see that Russia pays its
    share of the nonproliferation costs for securing its material?
    And I will ask Dr. Bunn some questions on that subject. Could
    you answer that part?
        Mr. Tobey. Certainly, sir, I will try. We have made clear
    to the Russians that Congress has directed that our work will
    end in 2012. So they are on fair warning that in 2012, U.S.
    nuclear material security efforts in Russia will end. And we
    expect them to sustain the efforts that we have put into place.
    As you noted, our investments have been substantial. NNSA's
    will be about $2 billion.
        We have begun to compare with the Russians budgets for the
    first time, to my knowledge anyway. When I sat down with our
    Russian counterpart who works for the 12th GUMO, Lieutenant
    General Verkhovtsev, he told us about his budget request for
    sustaining nuclear material security upgrades. He assured us
    that he had gotten what he had requested. I think that level
    will have to go up if it is going to truly be sustained, but
    for the first time, we are beginning to compare our budgets so
    that as we draw down toward that 2012 mark, they recognize they
    will need to step up in order to ensure that the investment
    that we have made in nuclear security is sustained.
        I would also note that we are making some progress on cost
    sharing in other ways, so for example, the agreement that we
    signed with them to accelerate radiation detectors at Russian
    border crossings provides for Russia bearing half the costs of
    those installations.
        Senator Domenici. Well, I just would like--since you
    indicated I have been very active in this whole area--it is
    correct. I do want to express my thoughts even though I have
    only about 8 months left here. I believe that insisting that
    Russia pay the maximum amount as their share on these programs
    seems to me to be important if we are going to maintain the
    programs because I think with us having very unbalanced
    budgets, borrowing money in huge quantities to keep our
    Government going and Russia being very solvent, I think a
    couple of these programs would die on the floor of the Senate
    if somebody brought that subject up and said this is no longer
    fair. So I just urge that wherever we can, the Russians be
    asked to pay their share.
        It was not the case when we started. We paid for all of it,
    the early programs that Sig Hecker is aware of, the cameras
    that were purchased for them and the facilities so they would
    have doors that were reliable instead of open, hanging things.
    You remember that? We paid for all that. And I guess that was
    right. It was probably good money spent.
        Mr. Tobey. Senator, I certainly agree with all of that, and
    we are working in that direction. I would note though that just
    because a Russian oil company is flush with cash--and they
    are--does not necessarily mean that nuclear institutes in the
    Urals are flush with cash. And we spend the money there because
    it is in our interest.
        Senator Domenici. I understand.
        Mr. Tobey. I know you know this. I just wanted to make
    absolutely clear for others that we do this because it is in
    our interest that Russian nuclear weapons material be secured.
        Senator Domenici. Well, there is no question it is in our
    interest. We know that. I have been a staunch advocate.
    Sometimes nobody objected. Sometimes they did not even ask a
    question on the floor about us using this money.
        But I am just telling you what I think on the future, and I
    think the Russians understand. And I know they have budgets
    that come from the big central headquarters and they do not
    always get what they need, but that is really not an excuse for
    an adequate match and adequate payment because they would pay
    it from central headquarters if they knew we were not, if they
    were serious about nonproliferation.
        Last year Congress approved an increase of $125 million
    above the request for nonproliferation and verification
    research and directed you to invest $20 million toward the
    building of a laboratory scientific capability. It appears that
    this direction has not been followed. How was the money spent
    and what long-term capability has NNSA invested in at the labs?
        Mr. Tobey. Sir, we have paid close attention to that
    direction, and I actually do have a list of investments. I have
    talked to your staff about this, and I admit that we had not
    provided the level of detail that would make this clear. But I
    brought with me today that level of detail, and I would be
    happy to provide it.
        Senator Domenici. Will you please furnish it?
        [The information follows:]
     Nonproliferation and Verification R&D--Fiscal Year 2008--$133 Million
                               Plus-Up Spend Plan
      --$25.0 million PNNL Area 300 (subject to 1 percent rescission)--
            spent on balance of construction (PSF) and completion of the
            Foundation/Steel contract.
      --$20.5 million.--``an additional $20.5 million is provided for
            nuclear explosion monitoring'' (subject to 1 percent
            rescission).
        --$5 million.--``The Department is directed to conduct a
                competitive solicitation open to all Federal and non-
                Federal entities toward an integrated suite of research,
                technology development and demonstration areas including
                infrasound, hydro acoustics for ground based systems treaty
                monitoring activities. The competitive process should award
                not less than $5 million of the additional funding for
                nuclear explosion monitoring for research and development
                for ground-based treaty monitoring.''
        --$2.5 million.--For national laboratory seismic calibrations of
                threat regions and radionuclide system activities.
        --$2.0 million.--Detonation forensics technology and related base
                science activities.
        --$11.0 million.--Space-based nuclear detonation detection system
                R&D.
      --$20.0 million ``for the implementation of a sustained research and
            development capability in nuclear detection and nuclear
            materials security'' (subject to 1 percent rescission).
        --$10.0 million Radiation Detection R&D.
        --$5.0 million Radiation Detection Materials R&D.
        --$5.0 million Nuclear Material Security R&D (supporting nuclear
                safeguards (NA-24) and alternate source development (NA-
                21)).
      --$60.0 million ``in proliferation detection to expand research in
            critical research and development for high-risk, high return
            nuclear detection capabilities'' (subject to 1 percent
            rescission).
        --$5.0 million, Small Business Innovation Research taxes.
        --$1.0 million, foreign nuclear weaponization detection R&D
                program, Goals, Objectives and Requirements and technology
                road-mapping process.
        --$0.5 million Hf-178 project at request of SASC.
        --$20 million University basic research.
        --$9 million Testing and Evaluation, including upgrade of
                infrastructure at Nevada Test Site.
        --$22.26 million, fully fund fiscal year 2008 projects/re-
                capitalization and equipment purchases at National Labs.
      --$7.5 million Earmarks (subject to 1.6 percent rescission).
        --$3.0 million GMU.
        --$1.5 million New England Research.
        --$2.0 million TAMU/NSSPI.
        --$1.0 million ODIS.

        Mr. Tobey. Mr. Chairman, I would like to put in the record,
    for purposes of the committee's use, a chart on
    nonproliferation funding just because I want it to be noted
    that we moved the MOX program, which is about $500 million. We
    moved it from nonproliferation to another part of our budget,
    and that did change the congressional funding line
    substantially. But it does not mean we did less. It is just
    that we did not put MOX in the nonproliferation category. Maybe
    it belongs there but we took it out and put it somewhere else.
        Senator Domenici. That is my last question. I will submit
    some in writing.
        I want to thank you for all the work you have done, and I
    wish you well especially in the North Korean situation. I just
    cannot believe, with everything everyone knows about what they
    are doing and the fact that they are going to have to do
    something in their self-interest soon to get help--and I am
    sure of that. We have to keep the pressure on some way and get
    it done. Thank you.
        Mr. Tobey. Thank you, sir.
        Senator Domenici. Thank you, Mr. Chairman.
        Senator Dorgan. Senator Domenici, thank you.
        I believe Senator Feinstein has one additional question?
        Senator Feinstein. One additional question.
        Mr. Tobey, Dr. Bunn in his statement states a goal that I
    think is a very good one, and he says, ``Our goal should be to
    remove all nuclear material from the world's most vulnerable
    sites and ensure effective security wherever material must
    remain within 4 years.'' Now, that is a quote, but I think it
    is a worthy goal.
        How does this budget help us achieve that? I can ask this
    in writing too. What more needs to be done? What additional
    resources are necessary in what areas, and how would a
    verifiable global treaty ending production of nuclear materials
    for weapons complement this effort?
        If you can answer any of it offhand, that would be great. I
    would like to send this to you in writing.
        Mr. Tobey. I would be happy to give you a fuller answer.
        Senator Feinstein. Good.
        Mr. Tobey. I can offer an answer to at least some of that.
        First of all, as I mentioned earlier, we are mindful of the
    suggestions that Matt Bunn makes and we will certainly take a
    hard look at whether or not we can achieve that goal. I would
    argue that we actually do take significant steps toward it with
    this budget in several ways.
        First of all, we continue our acceleration of the
    conversion of HEU reactors to LEU and the repatriation of fuel.
    I know that has been a concern of his, and over the last year
    or two, we have picked up the pace, in part in response to some
    of the suggestions that he has made.
        We also will continue our work to secure nuclear weapons
    material in Russia, completing the security upgrades under the
    Bratislava Initiative, and extending actually beyond that to a
    few sites that we have received since then. I regard that as,
    frankly, further evidence of success because it shows that the
    cooperation in Russia is even more extensive than it had been
    in the past.
        And then we will also be working in other ways to minimize
    the use of highly enriched uranium. So, for example, we are
    looking at development of new fuels that will allow the
    conversion of the final set of reactors that will require a
    somewhat different type of fuel.
        Senator Feinstein. Thank you. That is very helpful. We will
    put it in writing too in any event. Thank you.
        Thank you, Mr. Chairman.
        Senator Dorgan. Administrator Tobey, thank you very much
    for your work and thank you for being with us today. We
    appreciate your testimony.
        Mr. Tobey. Thank you, Mr. Chairman.
        Senator Dorgan. We look forward to continuing to work with
    you.
                           NONDEPARTMENTAL WITNESSES

    STATEMENT OF DR. SIEGFRIED S. HECKER, CO-DIRECTOR,
                CENTER FOR INTERNATIONAL SECURITY AND
                COOPERATION, STANFORD UNIVERSITY
        Senator Dorgan. Next we will ask our other two panelists to
    come forward, Dr. Matthew Bunn, who is a senior research
    associate at the Belfer Center for Science and International
    Affairs at the John K. Kennedy School of Government at Harvard
    University. He will be joined by Dr. Siegfried Hecker, the co-
    director of the Center for International Security and
    Cooperation at Stanford University.
        This committee appreciates the work that both of you do,
    and we will ask you to proceed. Dr. Hecker, would you proceed
    first and then Dr. Bunn? And then we will inquire. As I
    indicated previously, your entire statement will be made a part
    of the permanent record and you may summarize.
        Dr. Hecker. Thank you, Chairman Dorgan, Senator Domenici,
    Senator Feinstein, and Senator Allard. It is a great pleasure
    to be here, and thank you for inviting me to comment on the
    National Nuclear Security Administration's defense nuclear
    nonproliferation program and its 2009 budget.
        Thank you for admitting my written statement. What I will
    do is to briefly summarize the three main points that I have in
    my statement.
        But let me first say that my opinions have been shaped by
    34 years at the Los Alamos National Laboratory and nearly 20
    years of practicing nonproliferation with my feet on the ground
    in places like Russia, China, India, and North Korea and
    Kazakhstan. And I must say that much of this I have done with
    the strong encouragement and support of Senator Domenici, and I
    thank him for that over the years.
        My first point is that--and this has really been covered in
    great detail by all of your statements, but just to reiterate
    my point--the proliferation of nuclear weapons and weapons
    capability is growing. Today, as you have indicated, we face
    the threat from North Korea, nuclear ambitions in Iran, the
    nuclear puzzle in Syria, and the recently nuclear-armed states
    in Pakistan and India. We have an improved but not satisfactory
    nuclear security situation in Russia and the other states of
    the former Soviet Union. The danger of nuclear terrorism is
    real.
        But this is not a fight that the United States can win
    alone. We cannot simply push back the dangers beyond our own
    borders. It is imperative that we forge effective global
    partnerships to combat the threat of nuclear terrorism and the
    proliferation of nuclear weapons. And meeting these challenges
    requires diplomatic initiative and technical cooperation. The
    United States must lead in that diplomacy and the DOE/NNSA must
    provide the technical leadership and capabilities.
        The NNSA has done a commendable job in nuclear threat
    reduction and in combating nuclear proliferation. However, as
    you have also indicated, my own sense is that these activities
    are not commensurate with the magnitude of the urgency of the
    threat that we face today. So I very much agree with the
    sentiment that you have expressed.
        A second point is cooperative threat reduction, as was
    already indicated, began with Nunn-Lugar, followed by Nunn-
    Lugar-Domenici legislation, directed at the aftermath of the
    breakup of the Soviet Union. We must stay engaged with Russia
    and the other states of the Soviet Union. Much progress has
    been made, but more needs to be done. We have to change the
    nature of the relationship to one in which Russia carries more
    of the burden. So, Senator Domenici, I very much agree with
    your comment. However, we must also make sure that we continue
    to have a seat at the table, and to do that requires some
    investments of our fund to do so to make certain that the
    Russians actually work in the areas that are also still very
    much in our common interests.
        We should also expand the cooperative reduction programs
    aggressively to countries that require technical or financial
    assistance. The nuclear threat exists wherever nuclear
    materials exist. These materials cannot be eliminated, but they
    can be secured and they can be safeguarded. We should more
    strongly support the IAEA and provide support for countries,
    for example, that try to implement the U.N. Security Council
    Resolution 1540 to prevent nuclear terrorism.
        But mostly, Mr. Chairman, in the spirit of what you said in
    your opening statement, as we look back in the future to what
    should we have done today, I look back to the early 1990s when
    we at the laboratory and the nonproliferation communities had
    an enormous number of ideas as to what to do when the Soviet
    Union breaks up. And similarly now, we must be equally creative
    in looking out and seeing what should we be doing. The ideas
    are out there, and it is a matter of making sure that we
    encourage them.
        But we must also enlist the other nations such as China,
    India, and for that matter, Russia to build a strong global
    partnership to prevent proliferation and nuclear terrorism.
    India and China have, for the most part, sat on the sidelines
    while the United States has led this fight. And Russia has not
    engaged commensurate internationally with its nuclear status.
    And these efforts are particularly important today as we look
    at the potential renaissance of global nuclear power.
        And the third point that I want to make is that the
    hallmark of all of these efforts of global cooperation must be
    technology partnership and an in-country presence. The DOE/NNSA
    has the principal expertise in this country in its laboratories
    across the complex. It should be applauded for sending its
    technical experts around the world, often in very difficult
    situations. And I must tell you just this past February, in
    fact, on Valentine's Day, I ran into the DOE contingent in
    North Korea in Yongbyon on a bitterly cold day. They were not
    out there for a party.
        However, there are both structural reasons and budgetary
    shortfalls that we find today that that talent that we rely on
    is actually fading away. And the issue that I want to make sure
    that I put on the table is that, of course, budgets are
    extremely important, but budgets are not everything. We do not
    have in place today the necessary personnel recruitment. We
    have no longer the working environment in the laboratories or
    the pipeline of students from the universities to replenish the
    talent to do that job. So the working environment, the research
    environment of these laboratories is also crucial, along with
    appropriate budgetary support. So I strongly support the NNSA
    Next Generation Safeguards Initiative which is aimed at
    tackling this problem as to what does one do about the
    capabilities in our laboratory system.
        Mr. Chairman, when I first visited Russia's secret cities
    in 1992, shortly after the fall of the Soviet Union, I feared
    that its collapse may trigger a nuclear catastrophe. The fact
    that nothing really terrible has happened in the intervening 16
    years is in great part due to the DOE/NNSA programs that you
    are considering here today. And we must be just as innovative
    now, as I had indicated, and just as creative to deal with the
    threat that has changed dramatically since 1992.

                               PREPARED STATEMENT

        Now, since I see my time is up, in my statement I also
    mention the implications of recent trips to North Korea. As has
    been pointed out, I have been there five times over the past 4
    years, and I was also recently in India. But since I am out of
    time, I will leave those for your questions.
        Thank you for your attention.
        [The statement follows:]
                 Prepared Statement of Dr. Siegfried S. Hecker
        Thank you Chairman Dorgan, Senator Domenici and distinguished
    members of the committee for giving me the opportunity to comment on
    the National Nuclear Security Administration's Defense Nuclear
    Nonproliferation programs and 2009 budget request.
        Today I would like to make three points:
      --Nuclear threat reduction continues to be one of the highest U.S.
            national security priorities. Unfortunately, the threat has
            become more complex and challenging since threat reduction
            programs began in 1992 with Russia and other states of the
            former Soviet Union. Today, we face a nuclear threat in North
            Korea, nuclear ambitions in Iran, a nuclear puzzle in Syria,
            recently nuclear-armed states in Pakistan and India, and an
            improved, but not satisfactory, nuclear security situation in
            Russia and other states of the former Soviet Union. Moreover,
            global energy and climate forces have brought about a
            resurgence of interest in commercial nuclear power that places
            additional demands on the threat reduction agenda. I favor a
            significant expansion of DOE/NNSA's programs in these areas
            beyond the President's budget request.
      --The greatest threats we face today are a breakdown of the
            nonproliferation regime and the possibility that terrorists may
            acquire nuclear weapons or fissile materials. To keep the most
            dangerous materials out of the hands of the world's most
            dangerous people requires a global network of nations that are
            committed to and capable of securing their own nuclear
            materials, preventing export, and are committed to
            nonproliferation. We must aggressively expand cooperative
            threat reduction programs to nations that require either
            technical or financial assistance and enlist those countries
            that have the technical and financial resources, but have
            historically played either a limited or no role in
            international nonproliferation efforts--namely, Russia, China
            and India. The hallmark of such cooperation must be
            partnership, technology and in-country presence.
      --Nuclear threat reduction and nonproliferation efforts must have
            strong technical underpinnings and participation. The close
            interplay of technology and diplomacy is crucial to effective
            policy and implementation. The NNSA and its laboratories
            represent the primary technical talent in these areas.
            Unfortunately, financial support and the nuclear research
            environment are insufficient to meet the challenges confronting
            us. I strongly support the DOE/NNSA Next Generation Safeguards
            Initiative and other efforts aimed at attracting more technical
            talent to these important areas.
        Mr. Chairman, you requested that I comment on the adequacy of the
    President's fiscal year 2009 budget request for the National Nuclear
    Security Administration nuclear weapon nonproliferation efforts as well
    as the sufficiency of those efforts generally. The committee staff also
    requested that I comment on the broader policy issues, including on my
    recent visits to North Korea and India and what we should be doing to
    secure fissile materials around the world. I will touch on those
    subjects briefly and attach two articles that deal with some of these
    issues in greater detail.
        the budget and adequacy of the defense nonproliferation programs
        I will restrict my comments to the big budgetary picture. The
    overall budget request is modest compared to the importance and impact
    of NNSA's nonproliferation efforts. I recognize the demands on the
    Federal budget, yet the amount of money spent on these programs is
    small compared to dealing with the consequences of failure in any of
    its elements.
        I strongly support NNSA's comprehensive effort to deal with nuclear
    threats and steps that it has taken to tailor its programs to the
    changing nature of the threats. Nevertheless, I believe we need a
    greater sense of urgency in completing some of the ongoing efforts and
    in launching new ones with adequate budgetary support.
        The greatest threats we face today are a breakdown of the
    nonproliferation regime and the possibility that terrorists may acquire
    nuclear weapons or fissile materials. The most immediate challenges are
    North Korea and Iran. However, the recent developments in Syria
    demonstrate that efforts to acquire the bomb are more widespread than
    believed. The importance of keeping fissile materials out of the hands
    of terrorists is generally appreciated; the technical difficulty of
    doing so is not. I describe the technical challenges in detail in
    Attachment I. In addition, the resurgence of nuclear power, necessary
    to combat the world's energy and environmental crisis, must be
    supported by enhanced nonproliferation efforts if it is to succeed.
                        changing partnership with russia
        The nuclear threat changed dramatically with the end of the Cold
    War and the breakup of the Soviet Union. We came to be threatened more
    by Russia's weakness than its strength. Nunn-Lugar legislation followed
    by Nunn-Lugar-Domenici legislation established the Cooperative Threat
    Reduction program aimed primarily at Russia and the other states of the
    former Soviet Union. This innovative approach of working cooperatively
    with these nations helped them deal with the unprecedented situation of
    how to provide security for an enormous arsenal of nuclear weapons and
    an equally huge stockpile of fissile (bomb-grade) material in states
    that changed their political and economic systems dramatically, and
    whose centrally-controlled institutions collapsed almost overnight.
    Much progress has been made in helping Russia and the other states
    improve the security of their nuclear weapons and materials. Most
    importantly, nothing really terrible has happened in the Russian
    nuclear complex in the 16 years since the breakup of the Soviet Union.
        However, much remains to be done. My colleague, Dr. Matthew Bunn,
    who is also testifying today, has provided detailed annual status
    reports of accomplishments and challenges. I want to provide a
    perspective based on my many visits to the Russian nuclear complex
    since 1992. As director of the Los Alamos National Laboratory at the
    time, I visited the closed and formerly secret cities housing Russia's
    nuclear weapons laboratories in February 1992. The nuclear facilities
    and materials that were previously protected by guns and guards were
    now vulnerable. We developed scientific collaborations to build trust,
    which allowed us, 2 years later, to sign the first contracts with three
    Russian institutions for materials protection, control and accounting
    (MPC&A) cooperation. This lab-to-lab program helped Russia begin to
    develop a modern system of protection and safeguards to secure its
    nuclear materials. Our focus was always that it is in their best
    interest to secure their own materials. The responsibility is theirs;
    all we can do is help. We helped them expand this program to the
    Russian nuclear navy and the civilian sector. We then also expanded the
    program to some of the other states of the former Soviet Union. With
    Senator Domenici's help, we tackled the problem of helping Russia
    secure its nuclear knowledge by engaging Russian technical specialists
    in various civilian research and industrial projects to help in the
    massive worker reorientation challenge the Russian nuclear complex
    faced. These programs have recently come under unjust criticism by the
    Government Accountability Office. It was critical to augment the
    hardware-oriented technology programs with people-oriented efforts to
    enhance nuclear security.
        Much of the focus on the MPC&A program with Russia has been to
    complete physical security upgrades. This phase of the program is
    nearing completion. Together with the general tightening of security
    during the Putin administration, these efforts have greatly improved
    the current nuclear security situation in Russia. The focus of U.S.
    efforts must now shift to the much more difficult problem of having the
    Russian complex sustain these security improvements and to develop
    better practices in the control and accounting of nuclear materials.
    Progress has been slow, partially because Russia has reverted to the
    Soviet practice of relying mostly on physical security and secrecy, and
    partly because Russia has a very different view of its vulnerabilities
    than we do. Russian practices reflect the belief that the Chechen
    rebels pose the greatest threat. Much less attention is paid to a
    potential insider threat.
        A different approach to cooperative threat reduction will be
    required to make additional progress with the Russian nuclear complex.
    Money will be less important, but not irrelevant. In the 1990s, U.S.
    financial support was imperative. Today, thanks to oil prices of nearly
    $120 a barrel, Russia has a large budget surplus. Yet, if the United
    States is to continue to influence Russian security and
    nonproliferation practices, it will need to continue to invest some
    funds to have such influence. Once Russia completes the current round
    of facility security upgrades with NNSA support, then I recommend that
    NNSA support its laboratories to conduct a broad range of cooperative
    programs with the Russian nuclear complex. Some programs will have
    direct security implications--for example, continued work on best
    practices for MPC&A (especially control and accounting), promoting a
    security culture, eliminating the use of highly enriched uranium (HEU)
    in civilian applications, instrumentation development for nuclear
    detection and forensics, nuclear attribution, nuclear materials
    registries and databases, regulations and practices to protect
    radiation sources, emergency response to nuclear incidents, and
    proliferation resistant reactors and fuel cycle research. Other
    programs will have indirect, but still important, benefits--for
    example, nuclear energy R&D, environmental R&D, fundamental research in
    nuclear materials, radiochemistry and analytical chemistry techniques.
    We must also continue to encourage Russia to eliminate much of its
    surplus stock of fissile materials and to consolidate its still massive
    nuclear complex. In summary, we should strengthen and broaden our
    nonproliferation collaboration with Russia by supporting our own
    technical specialists to work with Russian technical counterparts. We
    should phase out direct financial support to Russia except in those
    cases where the investment is necessary to keep it meaningfully
    engaged.
              expanding cooperative threat reduction beyond russia
        I applaud the NNSA efforts to expand its nonproliferation
    activities and threat reduction programs beyond Russia. These programs
    in the other states of the former Soviet Union have significantly
    reduced the global nuclear threat. The breakup of the Soviet Union
    created four nuclear weapons states out of one. The CTR program
    reversed that dangerous situation by getting Ukraine, Kazakhstan and
    Belarus to return Soviet nuclear weapons to Russia by 1996. However,
    these states also had considerable inventories of nuclear materials and
    a robust nuclear infrastructure that was largely left in place.
    Similarly, other states such as Uzbekistan and Georgia had nuclear
    materials and nuclear facilities. The former Soviet satellite states in
    Eastern Europe also had vulnerable nuclear materials and facilities.
    NNSA cooperative programs in these countries have reduced, but not
    eliminated, the threat. These programs should be expanded and molded
    into longer-term partnerships with these states to help them manage
    their nuclear dangers while also getting the benefits of civilian
    nuclear applications.
        The NNSA also correctly assessed the need for cooperative nuclear
    threat reduction beyond the borders of the former Soviet Union. To keep
    the most dangerous materials out of the hands of the world's most
    dangerous people requires a global network of nations that are
    committed to and capable of securing their own nuclear materials and
    preventing export. There are approximately 40 countries that possess
    either nuclear materials or the necessary nuclear infrastructure to
    produce nuclear materials. There are more than 100 countries that use
    ionizing radiation sources (for medicine, industry, agriculture or
    research) that could fuel a radiological dispersal device; the so-
    called dirty bomb. Whereas the importance of securing nuclear materials
    is generally appreciated today, the technical difficulty is not. In
    Attachment I to this testimony I detail why this is much more difficult
    than simply locking up these materials the way we guard gold at Fort
    Knox.
        The technical components of global security initiatives are
    crucial. To secure nuclear materials requires global partnerships and
    global reach. The DOE/NNSA and its laboratories are in the best
    position to develop such partnerships. I recommend a two-pronged
    approach: (1) Aggressively expand cooperative threat reduction to
    countries that require either technical or financial assistance; and
    (2) Enlist those countries that have the technical and financial
    resources; but have historically played either a limited or no role in
    international nonproliferation efforts. In both cases, cooperation with
    the International Atomic Energy Agency (IAEA) is imperative.
        Aggressively Expand Cooperative Nuclear Threat Reduction
    Globally.--The NNSA Global Threat Reduction Initiative has made
    significant gains in securing or removing highly enriched uranium from
    research reactors and research facilities in countries that had
    difficulty securing it. For example, partnerships between host
    countries, the United States, Russia and the IAEA resulted in the
    repatriation of HEU from Romania, Bulgaria, Uzbekistan and other
    countries to Russia. In many cases, the NNSA has helped to convert
    research reactors to operate with low enriched uranium to remove the
    proliferation risk and allow the removal of HEU. Similar partnerships
    have helped countries to better manage and secure their radiation
    sources. The financial requirements for these efforts have been modest.
    These programs should be expanded and expedited.
        Countries such as Pakistan, Libya and Kazakhstan pose special
    challenges. In my view, Pakistan represents the greatest nuclear
    security challenge. It has all the technical prerequisites: HEU and
    plutonium; enrichment, reactor and reprocessing facilities; a complete
    infrastructure for nuclear technologies and nuclear weapons; largely
    unknown, but questionable, nuclear materials security; and missiles and
    other delivery systems. It views itself as threatened by a nuclear
    India. It has a history of political instability; the presence of
    fundamental Islamic terrorists in the country and in the region;
    uncertain loyalties of some civilian (including scientific) and
    military officials; and it is home to A.Q. Khan, the world's most
    notorious nuclear black marketeer. Helping Pakistan secure its nuclear
    materials during these challenging times is made difficult by the
    precarious position of its leadership and the anti-American sentiments
    of much of its populace. Yet, such cooperation is imperative.
        Libya presented a very special case that required technical
    cooperation. Once Libya decided it was in its interest to eliminate its
    covert nuclear program, it was crucial to do so effectively and
    completely, and to learn as much as possible about nonproliferation
    patterns and practices from Libya's nuclear program history. NNSA
    technical specialists did a superb job in both cases.
        Kazakhstan also presented a special challenge. It possessed nuclear
    materials and nuclear reactors when it achieved independence from the
    Soviet Union. Next to Russia, it had the most extensive and
    sophisticated nuclear infrastructure, including the sprawling
    Semipalatinsk nuclear test site. Much progress has been made thanks to
    NNSA cooperative programs, those of the Department of State and the
    Department of Defense, and the non-governmental efforts of the Nuclear
    Threat Initiative. Yet, several serious challenges remain, such as the
    final disposition of the spent fuel from its fast reactor at Aktau,
    remain.
        I recommend that the NNSA extend its technical reach even further.
    By working closely with the IAEA, it can help countries effectively
    meet their obligations under the United Nation's Security Council
    Resolution 1540. Resolution 1540 requires states establish and enforce
    legal barriers to acquisition of weapons of mass destruction whether by
    terrorists or by states. It requires states to ensure that they have
    the infrastructure in place to address the threat posed by non-state
    actor involvement in any aspect of the proliferation of weapons of mass
    destruction. The United States was instrumental in developing this
    resolution and in getting it adopted. Now, it must take the next step
    and help provide technical assistance to countries that are struggling
    to meet its requirements.
        Enlist the Developed Nuclear Countries to More Effectively Secure
    Nuclear Materials and Prevent Nuclear Proliferation.--During the Cold
    War, the United States and Soviet Union cooperated to prevent nuclear
    proliferation. After the break up of the Soviet Union, U.S. efforts
    focused on helping Russia deal with its risks. As indicated above,
    these risks have been reduced considerably through U.S.-Russian
    cooperation. However, Russia has not re-engaged effectively to
    strengthen international efforts. Although it has cooperated with the
    United States in repatriating some weapons-usable nuclear material from
    the former states of the Soviet Union or its former satellites, its
    leadership on the global scene is not commensurate with its nuclear
    status. Although it has promoted international cooperation in reactor
    technology, providing nuclear fuel services, and storing nuclear waste,
    it has promoted global export of its own nuclear technologies without
    sufficient consideration of nuclear proliferation consequences. It has
    not contributed much to the resolution of North Korea's nuclear crisis
    and has been less than helpful in resolving the Iranian nuclear
    dilemma.
        Historically, China has not played a constructive role in limiting
    nuclear proliferation. Its past and current relationship with Pakistan
    remains troublesome. However, in recent years China has shown an
    interest in becoming constructive. Its 2005 nonproliferation policy
    paper represents a step in the right direction. China is tightening its
    export controls and has joined the Nuclear Suppliers Group (NSG). It
    has begun to engage constructively with the United States to improve
    the security of its nuclear materials in the civilian sector. The two
    countries have also begun to cooperate to improve the management and
    security of radiation sources in China. China has chosen not to engage
    more fully with the United States to cover its defense nuclear sector
    because its grievances over the Cox Report have not been addressed. In
    the past few years, China has also played a constructive role in trying
    to resolve the North Korean nuclear crisis by hosting the Six-Party
    Talks, although its approach differs from that of the United States
    because its strategic interests in North Korea differ. The bottom line
    is that China can and must do more to work effectively on global
    nuclear proliferation challenges. Although China will be guided by its
    own interests, the United States will play a pivotal role in how and
    when China engages.
        India has, not surprisingly, been missing from the global
    nonproliferation effort. Since India is outside the nonproliferation
    regime because it did not sign the NPT, it is viewed by many as a
    proliferator. It views itself as a legitimate nuclear weapon state with
    a commendable nonproliferation record. India's nuclear program has been
    shaped largely by the international sanctions that followed its first
    nuclear test in 1974. The sanctions appeared to have done little to
    limit India's nuclear weapon program, but they have limited its nuclear
    energy program and prevented cooperation in nonproliferation. Some
    welcome progress has been made recently in the area of nuclear reactor
    safety through cooperative efforts between the U.S. Nuclear Regulatory
    Commission and the Indian Atomic Energy Regulatory Board. There is much
    that should be done to work with India on its domestic safeguards and
    on its international nonproliferation support.
        The European Union has been a constructive member of the
    international nonproliferation effort. Several of its members have
    promoted global nuclear security and combating nuclear terrorism
    through G-8 initiatives with the United States. The EU-3 (Germany,
    France and the United Kingdom) have led the frustrating nuclear
    negotiations with Iran over the past few years.
        In recent years, the United States has carried the brunt of the
    international burden in preventing nuclear proliferation and combating
    the potential of global nuclear terrorism. It played the leading role
    in helping Russia cope with the nuclear dangers inherent in the breakup
    of the Soviet Union. We have turned our attention to focus on the
    global nature of the threat but, despite U.S. efforts, we appear to be
    losing ground. It is critical to enlist the full participation of the
    other major players in the nuclear arena. They should be enlisted in
    partnerships that span a broad spectrum of nuclear cooperation: This
    should include, for example, best practices in nuclear materials
    security, development of nuclear materials data bases, nuclear
    detection technologies, proliferation risk analysis, emergency
    response, nuclear forensics and attribution.
        The IAEA's role should be strengthened. The international
    safeguards effort is under enormous strain. The special inspection in
    North Korea and Iran require significant effort. The IAEA's overall
    workload has increased dramatically over the past 25 years. The number
    of safeguarded facilities has increased more than three-fold and the
    amount of HEU and separated plutonium has increased six-fold. The
    Additional Protocol has increased the number and complexity of
    inspections. Yet, the overall budget of the agency has remained
    relatively flat. The expansion of commercial nuclear power will tax the
    IAEA beyond its current capacity.
     strengthening the nonproliferation regime and expanding nuclear power
        The nonproliferation regime is under stress. North Korea's nuclear
    program and Iran's determined drive to uranium enrichment demonstrate
    how some nations use the NPT's promotion of civilian nuclear programs
    clandestinely to develop nuclear weapons or develop the nuclear weapon
    option. This problem is compounded by the fact that Article X allows
    nations to withdraw from the treaty without penalty. The recent
    revelations about Syria's clandestine nuclear program are especially
    troublesome because it was generally believed that national technical
    means would detect such a massive effort long before it entered such an
    advanced stage. The nonnuclear weapons states express an additional
    concern. They contend that the nuclear weapon states have not met their
    Article VI obligations toward nuclear disarmament. These differences
    contributed to the disastrous outcome of the 2005 NPT review
    conference. Prospects for the 2010 conference look just as grim unless
    progress is made on the North Korean and Iranian problems and on
    Article VI obligations.
        All of these concerns have surfaced just when commercial nuclear
    power is poised to take off globally because of worldwide energy demand
    and concerns about global climate change. An expansion of nuclear power
    will bring additional challenges to secure more nuclear material in
    more countries and to prevent additional states from turning their
    nuclear energy capabilities into nuclear weapons programs. The DOE's
    Global Nuclear Energy Partnership is a step in the right direction, but
    it needs better definition domestically and must become truly global to
    take into account the needs of the principal partners as well as those
    interested in future nuclear power.
     strengthening u.s. technical capabilities to combat proliferation and
                               nuclear terrorism
        The proliferation of nuclear weapons and weapons capability is
    growing. The danger of nuclear terrorism is real. This is not a fight
    the United States can win alone. We cannot simply push the dangers
    beyond our borders. It is imperative to forge effective partnerships to
    combat the dangers of nuclear terrorism and the proliferation of
    nuclear weapons. Meeting these challenges will require diplomatic
    initiative and technical cooperation. The United States must lead
    international diplomacy and DOE/NNSA must provide technical leadership
    and capabilities.
        Unfortunately, the technical talent and facilities at the DOE/NNSA
    laboratories are steadily eroding. The technology base for
    nonproliferation and counter-terrorism activities rested on robust
    research programs in nuclear weapons and nuclear energy. Nuclear energy
    programs in the United States are just re-emerging from a couple of
    decades of inactivity. Nuclear weapons research has declined and has
    increasingly restricted its breadth of research. Moreover, facilities
    that were previously available for safeguards research are more
    difficult and costly to access. Consequently, more of the burden has
    fallen on the nonproliferation and verification budget of the NNSA. It
    has not kept up with the increased need for technical innovation in
    these areas.
        In addition, much of the safeguards technology developed and
    deployed around the world was typically demonstrated and refined
    domestically in U.S. nuclear facilities. These domestic safeguards
    technology development programs provided the foundation for measurement
    technologies, systems analysis and modeling in safeguards. For example,
    in the mid-1990's the Los Alamos National Laboratory had over $7
    million in domestic safeguards funding primarily focused on advancing
    the state of the art in nondestructive analysis. Today, it is
    approximately $250,000. Most of the domestic funds are expended for
    physical protection--guns, bullets and concrete to repel external
    threats based on the design basis threat. Consequently, we are falling
    behind in applying modern technologies to safeguard our domestic
    facilities and our technology base for safeguards is at risk. Moreover,
    it has become increasingly difficult to operate domestic nuclear
    facilities productively. The regulatory environment combined with a
    risk-averse operating environment has made it difficult to get work
    done, consequently losing the interest of some of the talent necessary
    for such programs. Recruitment of new talent in safeguards and other
    areas important in safeguards and verification has been difficult. A
    recent study by the American Physical Society and the American
    Association for the Advancement of Science \1\ pointed out the great
    difficulty in educating and training scientific talent in nuclear
    forensics and disciplines such as radiochemistry.
    ---------------------------------------------------------------------------
        \1\ Michael May, Chair, ``Nuclear Forensics Role, State of the Art,
    and Program Needs,'' Joint Working Group of, AAAS, APS Physics, 2007.
    ---------------------------------------------------------------------------
        The DOE/NNSA leadership has recognized these problems and recently
    launched the Next Generation Safeguards Initiative. This initiative
    would strengthen domestic capabilities by launching a generational
    improvement in safeguards technologies. It would greatly enhance the
    application of modern information technologies to safeguards. Other
    priorities include advanced safeguards approaches and proliferation
    risk assessments; enhanced modeling and simulation tools to better
    integrate safeguards into the design of new facilities; improved
    automation and automated process monitoring systems with real-time data
    transmission; better measurement technologies; and portable and
    multifunctional detectors. The Initiative recognizes the need to
    transfer these improvements to the IAEA so that it can deploy them in
    the field to meet the demand for greater and more sophisticated
    inspections. It also recognizes the need to build university-laboratory
    partnerships to provide educational support and training opportunities
    for the next generation of safeguards specialists. The Initiative also
    properly recognizes the need to leverage the nuclear capabilities of
    other nations to strengthen domestic and international safeguards
    capabilities. I strongly encourage the DOE/NNSA to develop this
    initiative and Congress to provide adequate funds.
        I want to make some final comments on the importance of having our
    technical specialists on the ground in country. The NNSA technical
    teams in Russia have been crucial in assessing the risks in the Russian
    nuclear complex, in comparing technologies and approaches to nuclear
    security and to learn from Russia's practices and experience. My recent
    trip to India's nuclear centers underscored the importance of an in-
    country presence. I gained a much better appreciation for their
    domestic safeguards and security practices. I learned just how strongly
    the Indian nuclear energy program is geared to self-reliance. I learned
    how international sanctions over more than 30 years have slowed India's
    drive toward nuclear energy, but most likely not done much to slow its
    nuclear weapon progress. I found that whereas sanctions slowed progress
    in nuclear energy, they made India self-sufficient in nuclear
    technologies and world leaders in fast reactor technologies. While much
    of the world's approach to India has been to limit its access to
    nuclear technology, it may well be that today we limit ourselves by not
    having full access to India's nuclear technology developments. Such
    technical views should help to advise the diplomatic efforts with
    India.
        I have been in North Korea five times in the past 4 years and
    visited the Yongbyon Nuclear Center three times, including this past
    February 14. I have had sufficient access to make a reasonable
    technical assessment of North Korea's nuclear capabilities. North Korea
    has the bomb, but not much of a nuclear arsenal. It has most likely
    produced and separated between 40 and 50 kilograms of plutonium,
    sufficient for about six to eight bombs. I believe that North Korea is
    seriously disabling its Yongbyon nuclear facilities and that
    elimination of plutonium production is within reach. I was able to
    witness the activities of the DOE/NNSA technical teams on the ground in
    Yongbyon. They have done a superb job supervising the disablement of
    the Yongbyon facilities and they have very ably advised and supported
    the diplomatic process. I provide a detailed report of my observations
    and conclusions in Attachment II.

        Senator Dorgan. Dr. Hecker, thank you very much.
        Dr. Bunn, you may proceed.
        Senator Domenici. Dr. Bunn, would you wait a minute?
        Before Mr. Tobey leaves, I wonder if I could tell him that
    I want to ask a question for the record. I am going to leave
    it.
        Senator Dorgan. Yes.
        Senator Domenici. I am you going to leave a question about
    the 123 agreement and what we can expect from it. So that will
    be here for you before you leave.
        Thank you, Mr. Chairman.
        Thank you very much, Dr. Bunn.
    STATEMENT OF DR. MATTHEW BUNN, BELFER CENTER FOR
                SCIENCE AND INTERNATIONAL AFFAIRS, JOHN F.
                KENNEDY SCHOOL OF GOVERNMENT, HARVARD
                UNIVERSITY
        Dr. Bunn. Thank you. It is an honor to be here today to
    talk about preventing nuclear terrorism and nuclear
    proliferation, which are critical issues for our national
    security.
        Money is probably not the most important constraint on our
    ability to reduce these risks, but there are several areas
    where bigger budgets could mean faster progress.
        NNSA's nonproliferation programs are excellent investments
    in our national security and they are making substantial
    progress, as we have already heard. But the next President will
    find that much more still remains to be done, and with this
    year's budget, Congress should really focus on making sure that
    the next team has the resources and the flexibility to hit the
    ground running when they take office in January.
        I urge Congress to complete a budget this year. Operating
    on continuing resolutions for months into the fiscal year can
    be crippling for some of these fast-changing programs that have
    to respond to rapidly changing opportunities.
        So let me outline a few priorities.
        The first priority is preventing nuclear terrorism, and our
    most effective tool for doing that is to secure nuclear weapons
    and materials at their source so they cannot be stolen and fall
    into terrorist hands. We urgently need a global campaign to
    ensure that all the caches of nuclear weapons and materials,
    not just the ones in Russia, are secure and accounted for to
    standards sufficient to defeat the kinds of threats that
    terrorists and criminals have shown they can pose in ways that
    will work and in ways that will last after our assistance
    phases out. There are many obstacles to achieving that
    objective. It is going to take sustained leadership from the
    highest levels of the Government.
        The International Nuclear Materials Protection and
    Cooperation Program face costs in Russia that have shot up
    since their budget was put together. More expensive estimated
    costs to help Russian sites prepare to sustain security on
    their own and new opportunities in both Russia and South Asia.
    And I recommend an increase of about $60 million to $70 million
    in their budget.
        In the case of the Global Threat Reduction Initiative, more
    money is needed to further accelerate the conversion of highly
    enriched uranium-fueled research reactors to proliferation-
    resistant LEU fuel, to accelerate the pace of removing nuclear
    material, to broaden that removal to cover a larger fraction of
    the world's HEU and a broader set of policy tools for
    convincing sites to give it up, and to secure radiological
    sources in research reactors around the world. All told, I
    think that they might need as much as an additional $200
    million or more to move forward as rapidly as they can in
    reducing these security risks.
        We also need additional steps to establish effective global
    standards for nuclear security, building on Security Council
    Resolution 1540 that requires every state to have effective
    nuclear security in place.
        I believe we also need a larger investment in nuclear
    forensics where, at least at some of our labs, they have
    actually had to lay off some of their people working on nuclear
    forensics in recent times.
        Next, it is critical that the next President engage with
    the governments of North Korea and Iran to put together a
    package, an international package, of carrots and sticks big
    enough and credible enough to convince them to give up their
    nuclear weapons ambitions and allow the verification that we
    would require. That will be mostly a White House and State
    Department effort, but Congress should be prepared to provide
    supplemental funding as needed for NNSA to take part in the
    verification of packaging of nuclear material, the
    dismantlement of nuclear facilities, and so on.
        Third, we need to reduce the demand for nuclear weapons, an
    effort that has been much more successful than many people
    realize. Here again, the White House, the State Department, and
    the Defense Department will be taking the lead, but things that
    NNSA does make a difference as well. When we send a signal that
    despite having the world's most powerful conventional forces,
    we are going to need a large arsenal of nuclear weapons
    essentially forever, that we need new nuclear weapons and we
    need a complex that can rapidly build more nuclear weapons, we
    strengthen the arguments of nuclear hawks in other countries
    arguing that their own countries need nuclear weapons as well.
        Moreover, it is very difficult to get the votes of non-
    nuclear weapons states, even our closest allies, for stronger
    safeguards, tougher export controls, better enforcement, all of
    which mean more constraints on them if we are not willing to
    accept constraints ourselves and live up to our NPT obligation
    to move toward disarmament. The next President is going to have
    to hit the ground running to reestablish our disarmament
    credentials, given that the next NPT review is coming up in
    2010.
        I believe that we need, given the experience of the A.Q.
    Khan network, a dramatically improved ability worldwide to stop
    black market nuclear trafficking. This will involve stepped-up
    police and intelligence cooperation, but we also need at NNSA,
    I think, an expanded effort to help countries around the world
    put effective export controls, border controls, transshipment
    controls in place, as required by UNSC 1540. And I recommend an
    increase of about $10 million to $15 million for that effort.
        As we look at the growth and spread of nuclear energy
    around the world, we need to make sure that that does not
    contribute to the spread of nuclear weapons. Congress took an
    important step last year in providing $50 million for a fuel
    bank that will give countries additional assurance that they
    can rely on international supplies of fuel rather than building
    their own enrichment plants. And I am hopeful, although there
    are still some issues in play, that we can reach agreement to
    establish one or more fuel banks by the end of this year.
        At the same time, we need to pursue even stronger
    incentives to convince states not to build their own enrichment
    and reprocessing plants. I think in that context, building a
    reprocessing plant of our own in the near term in my view would
    be a step in the wrong direction. I think that the Congress
    provided about the right amount of money for GNEP last year. I
    would encourage you to provide a similar budget this year and
    to provide the kind of direction that this subcommittee did
    last year for GNEP.
        As we have heard already, NNSA is launching a Next
    Generation Safeguards Initiative designed to reinvest in both
    the technology and the people for strong safeguards, which we
    urgently need, and I would recommend an increase of $10 million
    to $15 million for that initiative as well beyond the budget
    request.
        Now, with respect to the programs to redirect weapons
    expertise in the former Soviet Union and elsewhere, there has
    been a lot of criticism of those programs recently, much of
    which I believe is unjustified. I do believe that those
    programs, despite the improving Russian economy, do still have
    a value that is worth the small investment that we make in
    them.
        Finally, we need information to support all of these
    policies. We need good intelligence and we need good analysis.
    I commend Congress for supporting increases in DOE's
    intelligence budget in recent years, and those increases have
    supported important new programs like the Nuclear Materials
    Information Program.
        But it is my understanding that at some of the
    laboratories, some of the critical intelligence capabilities,
    such as Livermore's Z Division, have been substantially cut
    back in the last year or so, and I would urge Congress to take
    action to reverse that because those capabilities are really
    some of the most important nuclear intelligence capabilities
    our Government has.
        I also recommend that Congress provide roughly $10 million
    so that NNSA can start taking a page from the play book of the
    Department of Homeland Security in establishing centers of
    excellence and other ways that they can draw on expertise from
    academia and from other non-government institutions to help
    them do their job better.

                               PREPARED STATEMENT

        In my prepared statement, I also talk about the issues of
    reducing plutonium and HEU stockpiles which remain troublesome
    problems, as Senator Domenici mentioned, but in the interest of
    time, I will leave that to questions.
        Thank you very much, Mr. Chairman, members of the
    committee.
        [The statement follows:]
                     Prepared Statement of Dr. Matthew Bunn
        Mr. Chairman and members of the committee: It is an honor to be
    here today to talk about critical issues for U.S. and world security--
    nuclear terrorism and nuclear proliferation, and what more the National
    Nuclear Security Administration (NNSA) can do to prevent them.
        My basic message today is simple: while money is not the most
    important constraint on progress for most of the Nation's efforts to
    prevent nuclear proliferation and terrorism, there are several areas
    where additional funds could help reduce major dangers to our national
    security.
        NNSA's nonproliferation programs are critical tools in our Nation's
    nonproliferation toolbox. There can be no doubt that America and the
    world face a far lower risk of nuclear terrorism today than they would
    have had these efforts never been begun. These programs are excellent
    investments in U.S. and world security, deserving strong support;
    Americans and the world owe a substantial debt of gratitude to the
    dedicated U.S., Russian, and international experts who have been
    carrying them out.
        With this year's budget, Congress should focus on making sure a new
    team has the resources and flexibility to hit the ground running in
    reducing proliferation threats when they take office in January. I
    would urge Congress to complete a budget despite the pressures of an
    election year; operating on continuing resolutions until many months
    into a new fiscal year can be crippling for fast-changing programs such
    as these, making it very difficult to seize opportunities as they
    arise.
        These programs are making substantial progress in reducing
    proliferation threats. But in many areas, there will still be much more
    to do when a new team takes office. While many of the programs in
    Russia are nearing completion, and their budgets will decline, efforts
    elsewhere around the world must expand to address the global threat,
    taking up the slack. Clear indicators of the global nature of the
    threat are everywhere--from the nuclear programs in North Korea and
    Iran, to the global attacks by al Qaeda and their repeated efforts to
    get the materials and expertise needed to make a bomb, to roughly 20
    countries where the A.Q. Khan black-market nuclear network succeeded in
    operating for the more than 20 years before finally being disrupted, to
    the break-in at the Pelindaba site in South Africa last November, when
    four armed men penetrated the security fence without setting off any
    alarm at a site with hundreds of kilograms of weapon-grade highly-
    enriched uranium (HEU), and spent 45 minutes inside the facility
    without ever being engaged by the site's security forces.
        I will not attempt to assess every element of NNSA's
    nonproliferation budget. Rather, I will outline several key
    nonproliferation priorities, and make recommendations for further steps
    NNSA or other parts of DOE can take to address them. Many of the needed
    actions to strengthen the global nonproliferation regime must be taken
    by the White House or the State Department; NNSA's critical role is in
    providing the technical expertise needed to back up nonproliferation
    initiatives, particularly in the management of nuclear weapons and
    materials.\1\ Most of these programs are constrained more by limited
    cooperation (resulting from secrecy, complacency about the threat,
    concerns over national sovereignty, and bureaucratic impediments) than
    they are by limited budgets; sustained high-level leadership focused on
    overcoming the obstacles to cooperation is the most important
    requirement for success.\2\ But in some cases, programs could move more
    quickly to seize risk reduction opportunities that already exist if
    their budgets were increased--and in still more cases, more money would
    be needed to implement a faster and broader effort if the other
    obstacles could be overcome.
    ---------------------------------------------------------------------------
        \1\ Most of that expertise resides at the national laboratories,
    not at DOE headquarters. This requires a continuing effort to build
    effective headquarters-laboratory partnerships, giving the labs the
    freedom to do what they do best, while keeping the policy-making
    functions with Federal officials.
        \2\ For an in-depth assessment of the programs focused on security
    for nuclear weapons and materials, see Matthew Bunn, Securing the Bomb
    2007 (Cambridge, Mass.: Nuclear Threat Initiative and Project on
    Managing the Atom, Harvard University, September 2007). The 2008
    edition is forthcoming.
    ---------------------------------------------------------------------------
                          preventing nuclear terrorism
        The first priority is to prevent terrorists from incinerating the
    heart of a major city with a nuclear bomb--as al Qaeda have made clear
    they hope to do. This remains a real danger, though no one can
    calculate the probability of such a catastrophe.\3\
    ---------------------------------------------------------------------------
        \3\ See, for example, testimony of Charles Allen, Rolf Mowatt-
    Larsen, Matthew Bunn, and Gary Ackerman to the Senate Committee on
    Homeland Security and Governmental Affairs, hearing on ``Nuclear
    Terrorism: Assessing the Threat to the Homeland,'' 2 April 2008.
    ---------------------------------------------------------------------------
        The step we can take that most reduces this danger is securing
    nuclear weapons and materials at their source--for making plutonium or
    HEU is beyond the plausible capability of terrorist groups, and if we
    can keep these materials and nuclear weapons themselves out of
    terrorist hands, we can keep terrorists from ever getting a nuclear
    bomb. NNSA's programs are in the process of completing the security
    upgrades in Russia planned as part of the Bratislava initiative, and
    those upgrades are dramatically reducing critical risks. But the
    problem of inadequately secured nuclear stockpiles is not just a
    Russian problem, it is a global problem. Hundreds of buildings in more
    than 30 countries contain enough of the essential ingredients of
    nuclear weapons to require the highest standards of security. The world
    urgently needs a global campaign to ensure that all the caches of
    nuclear weapons and the materials needed to make them worldwide are
    secure and accounted for, to standards sufficient to defeat the threats
    terrorists and criminals have shown the can pose, in ways that will
    work, and in ways that will last. Overcoming the many obstacles to
    achieving this objective will require sustained political leadership
    from the highest levels of our Government.
                      budget increases for mpc&a and gtri
        But getting the job done as fast as it can be done will also
    require more money. In the case of the International Nuclear Materials
    Protection and Cooperation program (more commonly known as Materials
    Protection, Control, and Accounting, or MPC&A), construction costs in
    Russia have shot up since the administration prepared its budget
    request; helping Russian sites to prepare to sustain high levels of
    security is proving more expensive than expected; and new
    understandings have opened new opportunities for nuclear security
    cooperation in both Russia and South Asia. All told, I recommend an
    increase of $60-$70 million over the requested budget for the MPC&A
    effort.
        In the case of the Global Threat Reduction Initiative (GTRI), there
    are now 45 HEU-fueled research reactors that could convert to low-
    enriched uranium (LEU) that cannot power a nuclear bomb with LEU fuels
    already available; GTRI has already accelerated the pace of these
    conversions, but with more money, these reactors could be converted
    faster. There will also be a need to build a fabrication plant for the
    higher-density LEU fuels now in development, in order to convert
    additional reactors, and GTRI will likely have to play a role in that--
    either by paying to build the plant or by guaranteeing fabrication
    contracts to give private firms sufficient incentives to pay for
    building their own own facilities. Additional funds could also
    accelerate the pace of removing nuclear material from vulnerable sites
    around the world (in part because here, too, prices are escalating).
    And more money is also needed to secure radiological sources and
    research reactors around the world--including here in the United
    States, where upgrades are needed for some 1,800 locations with sources
    of 1,000 curies or more, and for the Nation's 32 domestic research
    reactors. Moreover, GTRI is so far planning to return only a small
    fraction of the U.S.-origin HEU abroad; while most of the remainder is
    in developed countries, in many cases there is good reason to bring
    this material back as well, and more funds would be required to give
    these facilities incentives to give up their HEU. Finally, NNSA does
    not yet have a program focused on giving underutilized HEU-fueled
    reactors incentives to shut down--in many cases likely to be a quicker
    and easier approach than conversion. All told, I believe that an
    additional $200 million or more is needed for GTRI to move forward as
    rapidly as possible in reducing these risks.\4\
    ---------------------------------------------------------------------------
        \4\ This does not include the potential cost of packaging and
    removing plutonium and plutonium-bearing spent fuel from North Korea,
    if an agreement to take those steps is reached. That substantial cost
    would likely have to be funded through a supplemental request.
    ---------------------------------------------------------------------------
                      other needed nuclear security steps
        Several additional steps could significantly contribute to efforts
    to secure nuclear stockpiles worldwide.
        Building the Sense of Urgency.--The fundamental key to success in
    these efforts is convincing political leaders and nuclear managers
    around the world that nuclear theft and terrorism are real threats to
    their countries' security, worthy of a major investment of their
    attention and resources. If they are convinced of this, they will take
    the needed actions to prevent nuclear terrorism; if they remain
    complacent about the threat and how much it could affect them, they
    will not take those actions. Congress should consider making funds
    available for activities to build this sense of urgency and commitment,
    including joint briefings on the nuclear terrorist threat, nuclear
    terrorism exercises and simulations, helping states perform realistic
    ``red team'' tests of their nuclear security systems, and more.\5\ Such
    efforts might be implemented under the rubric of the Global Initiative
    to Combat Nuclear Terrorism--which has the potential to become the kind
    of global campaign to improve nuclear security that is urgently needed,
    though to date it has focused more on matters such as police training
    and emergency preparedness than on nuclear security upgrades.
    ---------------------------------------------------------------------------
        \5\ For a list of suggestions, see Bunn, Securing the Bomb 2007,
    pp. xxx.
    ---------------------------------------------------------------------------
        Forging Effective Global Nuclear Security Standards.--As nuclear
    security is only as strong as its weakest link, the world urgently
    needs effective global nuclear security standards that will ensure that
    all nuclear weapons and weapons-usable materials are protected against
    the kinds of threats terrorists and criminals have shown they can
    pose--at a bare minimum, against two small teams of well-trained, well-
    armed attackers, possibly with inside help, as occurred at Pelindaba.
    (In some countries, protection against even more capable threats is
    required.) U.N. Security Council Resolution 1540 legally requires all
    countries to provide ``appropriate effective'' security and accounting
    for all their nuclear stockpiles. The time has come to build on that
    requirement by reaching a political-level agreement with other leading
    States on what the essential elements of appropriate effective security
    and accounting systems are, and then working to ensure that all States
    put those essential elements in place. In last year's defense
    authorization act, Congress called on the administration to seek to
    develop such effective global standards; Congress should now act to
    ensure that the administration is taking this step, and provide funding
    to support such efforts if needed. Ultimately, effective security and
    accounting for weapons-usable nuclear material should become part of
    the ``price of admission'' for doing business in the international
    nuclear market.
        Achieving Sustainability.--UIf the upgraded security equipment the
    United States is helping countries put in place is all broken and
    unused in 5 years, U.S. security objectives will not be accomplished.
    NNSA is working closely with Russia to try to ensure that Russia puts
    in place the resources, incentives, and organizations needed to sustain
    high levels of security for the long haul--but there is much left to
    do, and similar efforts will be needed wherever nuclear security
    upgrades are undertaken. As most nuclear managers only invest in
    expensive security measures when the government tells them they have
    to, strong regulation is essential to achieving and maintaining
    stringent standards of nuclear security, and there is far more to do to
    get effective nuclear security and accounting regulations in place
    around the world.
        Strengthening security culture.--As Gen. Eugene Habiger, former DOE
    ``security czar'' and former commander of U.S. strategic forces, has
    remarked: ``good security is 20 percent equipment and 80 percent
    culture.'' We need to increase efforts to build security cultures that
    will put an end to guards patrolling without ammunition or staff
    propping open security doors for convenience. NNSA is working this
    problem hard, but changing the day-to-day attitudes and practices at
    scores of facilities in dozens of countries with many different
    national cultures, where we have only very limited influence, is an
    extraordinarily difficult policy problem. Convincing nuclear managers
    and staff that the threats of nuclear theft and sabotage are real will
    be fundamental, and many of the steps needed to build high-level
    commitment to nuclear security will also help in building strong
    security cultures. Efforts similar to those now being undertaken in
    Russia need to be undertaken wherever nuclear weapons and the materials
    to make them exist. We also need more effort to learn from cases where
    facilities or organizations have succeeded in transforming their
    security or safety cultures--and from cases where they have failed to
    do so.
        Consolidating Nuclear Stockpiles.--We need to do everything we can
    to reduce the number of buildings and bunkers worldwide where nuclear
    weapons and the materials needed to make them are located, achieving
    more security at lower cost. Our goal should be to remove all nuclear
    material from the world's most vulnerable sites and ensure effective
    security wherever material must remain within 4 years or less. Over
    time, the United States should seek an end to all civil use of HEU. And
    we should not encourage commercial reprocessing and recycling of
    plutonium, as proposed in the Global Nuclear Energy Partnership (GNEP);
    even the proposed GNEP processes that do not separate ``pure
    plutonium'' would tend to increase, rather than decreasing, nuclear
    theft and nuclear proliferation risks compared to not reprocessing this
    fuel.\6\ We should also work to reduce the total stockpiles of weapons
    and materials that must be guarded, including by ending production of
    more. NNSA's recent success in enabling Russia to shut down one of its
    three remaining plutonium production reactors--and the shut-down of the
    remaining two, planned in the next 2 years--is a major milestone. But
    there is more to be done. It is time to get serious about negotiating a
    verifiable global treaty ending production of nuclear materials for
    weapons forever, to stop the production of highly enriched uranium for
    any purpose, and to stop piling up ever larger stockpiles of separated
    civilian plutonium. In particular, Congress should direct NNSA to
    return to the negotiation of a 20-year moratorium on separating
    plutonium in the United States and Russia that was nearly completed at
    the end of the Clinton administration. The troubled plutonium
    disposition effort and opportunities for expanded disposition of HEU
    are important topics treated in more detail at the end of this
    statement. Over the longer term, if properly managed, serious pursuit
    of the steps toward a nuclear weapon free world advocated by
    Secretaries Shultz, Kissinger, and Perry and Senator Nunn could make a
    significant long-term contribution to reducing nuclear terrorism
    risks.\7\
    ---------------------------------------------------------------------------
        \6\ See discussion in Matthew Bunn, ``Risks of GNEP's Focus on
    Near-Term Reprocessing,'' testimony before the Committee on Energy and
    National Resources, U.S. Senate, 14 November 2007, available as of 28
    March 2008 at http://belfercenter.ksg.harvard.edu/files/bunn-GNEP-
    testimony-07.pdf. The radioactivity of the plutonium-bearing materials
    that would be recovered in proposed GNEP processes is not remotely
    enough to deter theft by determined terrorists. See Jungmin Kang and
    Frank Von Hippel, ``Limited Proliferation-Resistance Benefits from
    Recycling Unseparated Transuranics and Lanthanides from Light-Water
    Reactor Spent Fuel,'' Science and Global Security 13, no. 3 (2005).
        \7\ See George P. Shultz, William J. Perry, Henry A. Kissinger, and
    Sam Nunn, ``Toward a Nuclear-Free World,'' Wall Street Journal, 15
    January 2008, and Matthew Bunn, ``Securing Nuclear Stockpiles
    Worldwide,'' in Reykjavik Revisited: Steps Toward a World Free of
    Nuclear Weapons (Palo Alto: Hoover Institution, forthcoming). For
    recent discussions of steps to reduce existing stockpiles of HEU and
    separated plutonium, see Matthew Bunn and Anatoli Diakov, ``Disposition
    of Excess Highly Enriched Uranium,'' and ``Disposition of Excess
    Plutonium,'' in Global Fissile Materials Report 2007 (Princeton, NJ:
    International Panel on Fissile Materials, October 2007, available as of
    28 March 2008 at http://www.fissilematerials.org), pp. 24-32 and 33-42.
    ---------------------------------------------------------------------------
        Strengthening International Approaches.--The International Atomic
    Energy Agency (IAEA) has a key role to play in improving nuclear
    security--helping to develop standards and recommendations, providing
    international peer reviews of nuclear security arrangements,
    coordinating efforts among different donors contributing to nuclear
    security improvements, and more. Some countries trust the IAEA in a way
    that they will never trust the United States, and the Agency is
    uniquely positioned to develop international security recommendations
    that will be broadly accepted around the world. But the IAEA's Office
    of Nuclear Security is constantly hampered by its very limited budget,
    which is tightly constrained by earmarks for donors' favored projects.
    While U.S. contributions to the IAEA largely flow through the State
    Department, NNSA has made substantial contributions to the Office of
    Nuclear Security in the past. I recommend that Congress direct an
    additional $5-$10 million contribution to the IAEA's Office of Nuclear
    Security, to strengthen its efforts to contribute to nuclear security
    worldwide.
        Sharing Nuclear Security Best Practices.--Just as the nuclear
    industry created the World Association of Nuclear Operators (WANO)
    after the Chernobyl accident, to bring the worst performers on safety
    up to the level of the best performers, the world needs a World
    Institute of Nuclear Security (WINS), to provide a focus for exchanging
    best practices in nuclear security and material control and accounting.
    The Nuclear Threat Initiative (NTI) and the Institute for Nuclear
    Materials Management are working with the nuclear community to
    establish such an institution. To be effective, this should ultimately
    be led by those with direct responsibility for managing nuclear
    material and facilities. But it may be necessary for NNSA and others to
    provide initial seed money to get it going; Congress should consider
    appropriating a few million dollars for that purpose.
        Building Genuine Partnerships.--To be successful, all of these
    efforts must be pursued in a spirit of genuine partnership, serving
    both our interests and those of the partner states, with ideas from
    each side's experts incorporated into the approach; the experts in each
    country know their materials, their facilities, their regulations and
    bureaucracies, and their culture better than we do, and we need to
    listen to them to get the ``buy-in'' essential to long-term
    sustainability. In particular, while these programs must look beyond
    Russia to the world, there is a special need for partnership with
    Russia, as Russia and the United States bear a special responsibility,
    with some 95 percent of the world's nuclear weapons and more than 80
    percent of its stocks of weapons-usable nuclear material. The shift to
    a true partnership approach should include establishing joint teams
    that would help other states around the world upgrade security. The
    Global Initiative to Combat Nuclear Terrorism, co-led by the United
    States and Russia, is an important step in the right direction. But as
    the President and Congress consider actions which strongly affect
    Russian interests, from missile defense in Europe to the expansion of
    NATO to Russia's borders, they need to consider the potential impact on
    the prospects for effective nuclear security partnership as well.
                            beyond nuclear security
        While securing nuclear weapons and materials at their source is the
    most effective tool to reduce the risk, we cannot expect it to be
    perfect. We urgently need a substantially stepped-up effort to build
    police and intelligence cooperation focused on stopping nuclear
    smuggling and the other elements of nuclear plots in countries all over
    the world, including additional sting operations and well-publicized
    incentives for informers to report on such plots. This will make it
    even more difficult for potential nuclear thieves and those who would
    like to buy stolen material to connect, and to put together the people,
    equipment, expertise, and financing for a nuclear bomb conspiracy
    without detection.
        The United States should also work with key states around the world
    to ensure that they put in place laws making any participation in real
    or attempted theft or smuggling of nuclear weapons or weapons-usable
    materials, or nuclear terrorism, crimes with penalties comparable to
    those for murder or treason.
        The Real, But Limited, Role of Radiation Detection.--Radiation
    detection at ports, border crossings, and elsewhere will play a role in
    these later lines of defense, but its contribution to reducing the risk
    of nuclear terrorism will inevitably be limited. The length of national
    borders, the diversity of means of transport, the vast scale of
    legitimate traffic across these borders, the small size of the
    materials needed for a nuclear bomb, and the ease of shielding the
    radiation from plutonium or especially from HEU all operate in favor of
    the terrorists. Neither the detectors now being put in place nor the
    Advanced Spectroscopic Portals planned for the future would have much
    chance of detecting and identifying HEU metal with modest shielding--
    though they likely would be effective in detecting plutonium or strong
    gamma emitters such as Cs-137 that might be used in a so-called ``dirty
    bomb.'' \8\ Most of the past successes in seizing stolen nuclear
    material have come from conspirators informing on each other and from
    good police and intelligence work, not from radiation detectors.
    ---------------------------------------------------------------------------
        \8\ See, for example, Thomas B. Cochran and Matthew G. McKinzie,
    ``Detecting Nuclear Smuggling,'' Scientific American, March 2008,
    available as of 28 April 2008 at http://www.sciam.com/
    article.cfm?id=detecting-nuclear-smuggling.
    ---------------------------------------------------------------------------
        Hence, while it is worth making some investment in radiation
    detection, we should not place undue reliance on this line of defense.
    That being said, NNSA's Second Line of Defense program has been
    successful in cooperating with many countries to put radiation
    detection in place at key ports and border crossings, and to take
    advantage of all the opportunities for cooperation with key countries
    that it now has before it would require $50-$60 million beyond the
    budget request.
        A Modified Approach to Cargo Scanning.--Beyond the budget, Congress
    should act to modify the approach to radiation scanning of cargo
    containers approved last year. By requiring 100 percent of containers
    coming into the United States to be scanned (an extraordinarily
    difficult target to meet), offering the possibility of a waiver, and
    setting no requirements for the quality of the scanning or for what
    should be done with the information from the scans, Congress may have
    inadvertently created a situation where the requirement will repeatedly
    be waived and the scanning put in place will be of low quality and lead
    to little action. Congress should approve a revised approach in which
    terrorists would know that each container had a high chance of being
    scanned; the scans were done with the best available scanning
    technology; and the scans would be linked to immediate further search
    and other action in the event of unexplained detections. This would do
    more to keep terrorists from using containers to smuggle nuclear
    weapons and materials. At the same time, Congress should insist that
    the Department of Homeland Security provide a detailed assessment of
    the vulnerability posed by the countless potential pathways for nuclear
    smuggling between official points of entry, and should mandate an
    independent assessment of the cost-effectiveness of large investments
    in radiation detection at official points of entry when intelligent
    adversaries have options for going around them.\9\
    ---------------------------------------------------------------------------
        \9\ For a more optimistic view on this part of the problem, see
    Levi, On Nuclear Terrorism, pp. 87-96.
    ---------------------------------------------------------------------------
        A strengthened nuclear forensics effort. Congress should also act
    to strengthen U.S. and international efforts in nuclear forensics (the
    science of examining characteristics of seized nuclear material or
    nuclear material collected after a nuclear blast for clues to where it
    came from). I recommend that Congress increase funding for nuclear
    forensics R&D by at least $10 million and direct that a robust portion
    of available funding be spent to maintain and expand the technical
    capabilities at the U.S. laboratories (currently so much of the funding
    is staying at the Department of Homeland Security that U.S.
    laboratories working on forensics of seized materials have had to lay
    off some of their staff). In addition, I recommend that Congress direct
    the administration to pursue expanded efforts to put together an
    international database of material characteristics. Congress should
    understand, however, that nuclear material has no DNA that can provide
    an absolute match: nuclear forensics will provide a useful but limited
    source of information to combine with other police and intelligence
    information, but will rarely allow us to know where material came from
    by itself.\10\
    ---------------------------------------------------------------------------
        \10\ See Nuclear Forensics Working Group (Michael May, chair),
    Nuclear Forensics: Role, State of the Art, Program Needs (Washington,
    DC: American Physical Society and American Association for the
    Advancement of Science, February 2008).
    ---------------------------------------------------------------------------
                        coping with north korea and iran
        The next priority is to cope with the nuclear programs of North
    Korea and Iran. If both North Korea and Iran become established nuclear
    weapon States, this will be a dramatic blow to the entire global effort
    to stem the spread of nuclear weapons, and will put significant
    pressure on some of their neighbors to follow suit. The Bush
    administration's no-engagement approach to Iran has clearly failed,
    allowing Iran to move forward unimpeded with a substantial enrichment
    capability, just as the administration's earlier ``threaten and watch''
    approach to North Korea failed utterly, leaving North Korea with a
    tested nuclear bomb and enough plutonium to make 5-12 nuclear weapons.
    The next president needs to take a new tack, putting together
    international packages of incentives and disincentives large enough and
    credible enough to convince the North Korean and Iranian governments
    that it is in their national interests to agree to arrangements that
    would put a wide and verifiable gap between them and a nuclear weapons
    capability. If we want these governments to address our concerns, the
    U.S. Government will have to address some of their key concerns--which
    may in the end require difficult choices, such as providing Iran with a
    security assurance as part of such an agreement, and acknowledging that
    at this point, a ban on all enrichment in Iran, however desirable, can
    no longer be achieved.\11\ It is primarily the White House and the
    State Department that need to take action, but Congress should be
    prepared to provide supplemental funding as needed for NNSA support to
    verification, packaging and removing nuclear materials and equipment,
    and helping to decommission nuclear facilities and redirect nuclear
    experts.
    ---------------------------------------------------------------------------
        \11\ For a discussion of the risks to U.S. national security of
    continuing to insist on zero enrichment in Iran, see Matthew Bunn,
    ``Constraining Iran's Nuclear Program: Assessing Options and Risks,''
    presentation at Oak Ridge National Laboratory, 15 November 2007,
    available as of 28 April 2008 at http://belfercenter.ksg.harvard.edu/
    files/Matthew_Bunn_Oak_Ridge.pdf. For an imaginative proposal for a
    multilaterally owned and staffed enrichment facility in Iran, designed
    so that it can be easily and permanently disabled if Iran ever takes
    action to turn it to weapons use, see Geoffrey Forden and John
    Thompson, Iran as a Pioneer Case for Multilateral Nuclear Arrangements
    (Cambridge Mass.: Science, Technology, and Global Security Working
    Group, Massachusetts Institute of Technology, 2006 (revised 2007),
    available as of 28 April 2008 at http://mit.edu/stgs/irancrisis.html.
    For a discussion of the current issues, and of a proposal similar to
    the Forden-Thompson proposal, see William Luers, Thomas R. Pickering,
    and Jim Walsh, ``A Solution for the U.S.-Iran Nuclear Standoff,'' New
    York Review of Books, 20 March 2008, available as of 28 April 2008 at
    http://www.nybooks.com/articles/21112.
    ---------------------------------------------------------------------------
                      reducing demand for nuclear weapons
        The third priority is to reduce the demand for nuclear weapons
    around the world. Efforts to reduce demand have been more successful
    than is usually recognized. Today, there are more countries that
    started nuclear weapons programs and then decided to give them up and
    accept international inspections than there are states with nuclear
    weapons--meaning that even once states start nuclear weapons programs,
    efforts to convince them that nuclear weapons are not in their interest
    succeed more often than they fail.
        Here, too, many of the needed steps require White House, State
    Department, or Defense Department action. But NNSA's programs can have
    an important effect on the demand for nuclear weapons as well. When the
    country with the most powerful conventional forces on earth insists
    that large numbers of nuclear weapons are essential to its security,
    that they will remain essential forever, that new nuclear weapons are
    needed, and that a transformed complex that is ``responsive'' in the
    sense that it could rebuild a larger nuclear arsenal if need be is also
    essential, this strengthens the arguments of those in other countries
    arguing that their country also needs nuclear weapons. Perhaps even
    more important, it will be far more difficult to get political support
    from non-nuclear-weapon states for stronger safeguards, more stringent
    export controls, tougher enforcement, and the other measures urgently
    needed to strengthen the global nonproliferation regime--all of which
    involve more constraints and costs for them--if the United States and
    the other NPT weapon states are seen as failing to live up their legal
    obligation, under Article VI of the Nonproliferation Treaty (NPT), to
    move in good faith toward nuclear disarmament.
        I believe that the case has not been made that the claimed benefits
    of the Reliable Replacement Warhead (RRW) outweigh these and other
    potential downsides. I recommend that the Congress continue to refuse
    to fund that program, and direct NNSA to focus on a smaller, cheaper
    complex designed only to support a much smaller nuclear stockpile for
    the future. The next president should recommit the United States to the
    Comprehensive Test Ban Treaty, and work to build the support in the
    Senate that will be necessary for ratification.
        More broadly, the United States and Russia, as the states with the
    world's largest nuclear stockpiles, should agree to reduce their total
    stockpiles of nuclear weapons to a small fraction of those they hold
    today, and to declare all their HEU and plutonium beyond the small
    stockpiles needed to support the remaining agreed nuclear weapon
    stockpiles (and modest set-asides for naval fuel) as excess to their
    military needs. Both countries should put this excess material in
    secure storage sites subject to international monitoring, and reduce
    these stocks through use or disposal as quickly as that can safely,
    securely, and cost-effectively be done.\12\
    ---------------------------------------------------------------------------
        \12\ In the Trilateral Initiative, the United States, Russia, and
    the IAEA developed technologies, procedures, and legal agreements that
    would make it possible for excess material to be placed under
    international monitoring irrevocably, without revealing classified
    information. I will address the issue of disposition of excess material
    in more detail at the end of this testimony. For visionary discussions
    of the need for both near-term steps to reduce nuclear danger and a
    broad vision of a world without nuclear weapons, see George P. Shultz,
    William J. Perry, Henry A. Kissinger, and Sam Nunn, ``A World Free of
    Nuclear Weapons,'' Wall Street Journal, 4 January 2007, and ``Toward a
    Nuclear-Free World,'' Wall Street Journal, 15 January 2008.
    ---------------------------------------------------------------------------
        Toward these ends, I recommend that Congress provide funding and
    direction for NNSA to:
      --Further increase the rate of dismantlement of nuclear weapons and
            HEU components;
      --Establish international monitoring of HEU and plutonium declared
            excess to date; and
      --Participate in the British initiative to develop approaches to
            international verification of nuclear disarmament.
        These steps are particularly important in the lead-up to the NPT
    Review Conference in 2010. In 2005, at a moment when the world needed
    to build consensus on steps to strengthen the global effort to stem the
    spread of nuclear weapons, the NPT Review Conference collapsed in
    disarray, in substantial part because the Bush administration refused
    to even discuss the steps toward disarmament the United States and all
    the other NPT parties had committed to at the previous review. We
    cannot afford a similar failure at the upcoming review in 2010. The
    next president will have to move quickly to re-establish U.S.
    credibility on nuclear disarmament.
        I fear that the recent U.S.-India nuclear cooperation agreement,
    modifying long-standing nonproliferation rules, may also add to the
    arguments of nuclear weapons advocates in other countries. Already,
    Iranian colleagues tell me that nuclear hawks in Tehran have pointed to
    this accord, arguing that while much of the international community
    sanctioned India after the 1998 tests, the United States was soon back,
    looking for a strengthened relationship and expanded trade, and has now
    said, in effect, ``all is forgiven''--and that in much the same way,
    sanctions on oil-rich Iran would never last long, however far it might
    push its nuclear program. Congress should carefully consider whether
    the benefits of this agreement are worth these risks.
                     stopping black-market nuclear networks
        The experience of the global black-market nuclear network led by
    Pakistan's A.Q. Khan--which operated in some 20 countries for over 20
    years before it was finally disrupted, at least in part--makes clear
    that urgent steps are needed to strengthen the world's ability to
    detect and stop such black-market networks, and to strengthen global
    export controls. Unfortunately, it is clear that black-market nuclear
    networks continue to operate, and to pose serious dangers to the global
    future.
        As with stopping smuggling of nuclear materials, stopping nuclear
    technology networks will require stepped-up international police and
    intelligence cooperation; the police and intelligence response must be
    just as global as these networks are.
        It will also require a radical improvement in global controls over
    exports and transshipments of sensitive technologies. In addition to
    requiring ``appropriate effective'' nuclear security and accounting,
    UNSC 1540 requires every U.N. member state to put in place
    ``appropriate effective'' export controls, border controls, and trans-
    shipment controls. We should be making greater use of this new
    nonproliferation tool, helping to define what essential elements must
    be in place for states' controls in these areas to be considered
    appropriate and effective, and helping states put those essential
    elements in place. Today, important export control assistance programs
    are in place which are making a real difference--but they remain
    limited to a handful of key countries, despite the Khan network's
    demonstration that countries that no one thought of as having sensitive
    technology may provide key nodes for a black-market network. I
    recommend that Congress increase the budget for NNSA's export control
    assistance program by at least $10-$15 million, and direct the
    administration to develop a plan for making sure all countries fulfill
    their UNSC 1540 obligation to put effective controls in place.
               reducing the proliferation risks of nuclear energy
        Today, demand for nuclear energy is growing, in response to
    concerns over fossil fuel prices and availability and over climate
    change. It is crucial to take steps today to ensure that the spread of
    nuclear energy does not contribute to the spread of nuclear
    weapons.\13\
    ---------------------------------------------------------------------------
        \13\ For a discussion, see Matthew Bunn, ``Proliferation-Resistance
    (and Terror-Resistance) of Nuclear Energy Systems,'' presentation to
    ``Systems Analysis of the Nuclear Fuel Cycle,'' Massachusetts Institute
    of Technology, 20 November 2007, available as of 28 April 2008 at
    http://belfercenter.ksg.harvard.edu/files/
    bunn_proliferation_resistance_lecture.pdf.
    ---------------------------------------------------------------------------
        The most critical technologies of concern are enrichment and
    reprocessing, either of which can be used to support a civilian nuclear
    fuel cycle or to produce material for nuclear weapons. Every State that
    establishes an enrichment plant or a reprocessing plant is in a
    position, should it ever choose to do so, to withdraw from the NPT and
    quickly produce nuclear material for nuclear weapons. Restraining the
    spread of these technologies is a critical nonproliferation goal.
        There is no prospect, however, for an effective agreement that
    would ban additional states from developing enrichment and reprocessing
    technology; states simply will not agree to forswear this possibility
    indefinitely. The United States should eliminate ``forswear'' ``forgo''
    and similar ``f words'' from our vocabulary in discussing these topics.
    The best that can be done is to convince suppliers to limit exports of
    these technologies to additional countries--which they have been doing
    since the mid-1970s--and, just as important, to give states strong
    incentives to rely on international suppliers for these services rather
    than making the large investments required to build enrichment and
    reprocessing plants of their own.
        Congress took an important step in this direction last year in
    providing $50 million for an international fuel bank, which would
    increase states' confidence that international supply would not be
    disrupted. The IAEA is still struggling to reach agreement on the terms
    and conditions for this bank, and to recruit additional donors. If all
    goes well, however, agreement on one or more fuel banks could be
    reached this calendar year.
        A fuel bank will be a useful step--but as the commercial market
    already provides strong assurance of fuel supply for most states, a
    fuel bank alone will only create a modest additional incentive to rely
    on international supply. The United States, Russia, and other nuclear
    suppliers are now working together to put together other incentives--
    including help with infrastructure for nuclear energy, financing, and
    the like. ``Fuel-leasing''--fresh fuel supply combined with a promise
    to take the spent fuel away--could be a particularly powerful incentive
    for states to rely on international supply, since it could potentially
    allow more states to use nuclear energy without having to establish
    their own geologic repositories. I do not believe that take-back of
    spent fuel from foreign countries will be politically tenable in the
    United States in the near term, whether the reprocessing and
    transmutation technologies proposed for the Global Nuclear Energy
    Partnership (GNEP) are under active development or not; but Russia has
    legislation in place that allows it to enter into such contracts, and
    others may decide to enter the market for taking back spent fuel in the
    future.\14\
    ---------------------------------------------------------------------------
        \14\ Countries can already contract to send their spent fuel to
    France, the United Kingdom, or Russia for reprocessing, but France and
    the United Kingdom require that the high-level waste be returned, so
    countries still need a geologic repository.
    ---------------------------------------------------------------------------
        One step the United States should not take is to build a
    reprocessing plant ourselves in the near-term.\15\ Sending the message
    that the United States, with the world's largest reactor fleet,
    considers reprocessing essential to the future of nuclear energy will
    make it more difficult to convince other countries not to pursue their
    own reprocessing facilities. This, like RRW and the weapons complex, is
    an area where there would be nonproliferation benefits from spending
    less than the administration's request. I recommend that Congress
    provide a fiscal 2009 budget for GNEP similar to the fiscal 2008 budget
    provided in the omnibus appropriation, with program direction similar
    to that this subcommittee provided in its bill last year. Within that
    overall budget, spending on development of small sealed-core reactors
    with high degrees of inherent safety and security should be increased,
    to roughly $10 million. Such reactors--sometimes known as ``nuclear
    batteries''--might be factory-built, transported to where they would be
    used with a lifetime core of fuel already inside, and then transported
    back intact after 10-20 years of electricity generation, with little
    access to plutonium-bearing fuel and little build-up of weapons-
    relevant nuclear expertise, potentially making nuclear energy widely
    available with reduced proliferation risks.
    ---------------------------------------------------------------------------
        \15\ For a more extended discussion, see Matthew Bunn, ``Risks of
    GNEP's Focus on Near-Term Reprocessing,'' testimony before the
    Committee on Energy and National Resources, U.S. Senate, 14 November
    2007, available as of 28 April 2008 at http://
    belfercenter.ksg.harvard.edu/files/bunn-GNEP-testimony-07.pdf. See also
    Edwin Lyman and Frank N. von Hippel, ``Reprocessing Revisited: The
    International Dimensions of the Global Nuclear Energy Partnership,''
    Arms Control Today, April 2008, available as of 28 April 2008 at http:/
    /www.armscontrol.org/act/2008_04/LymanVonHippel.asp.
    ---------------------------------------------------------------------------
                            strengthening safeguards
        Events in Iran, Libya, and elsewhere make clear that the world
    needs a stronger nuclear safeguards system. The U.S. Government needs
    to do more to ensure that the International Atomic Energy Agency has
    the resources, authority, personnel, and technology it needs to do its
    job. In particular, the United States is behind on its assessed dues to
    the IAEA, and Congress should provide funding to pay the back dues and
    direct that the United States pay its dues on time each year. Congress
    should also provide increased funding for the United States voluntary
    contribution to the IAEA, in particular to ensure that funding is
    available for needed upgrades to the Safeguards Analytical Laboratory.
        That funding largely flows through the State Department. NNSA's
    role has traditionally been focused more on technical support for
    safeguards. But the U.S. investment in safeguards technology and
    safeguards experts at the national laboratories has declined
    dramatically since the early 1990s. Neither the IAEA nor the U.S.
    programs to support it have the resources needed to adapt the most
    modern technologies being developed in the commercial sector to the
    needs of safeguards, or to pursue longer-term safeguards R&D. NNSA has
    undertaken a very thoughtful ``Fundamental Safeguards Review,'' and as
    a result of that has launched a ``Next Generation Safeguards
    Initiative.'' Within nuclear energy R&D, more focus is also needed on
    ``safeguards by design''--building effective safeguards and security in
    from the outset in design and construction of new facilities, just as
    is done with safety today. I recommend an increase of $10-$15 million
    in the funding for this critical effort, to finance both expanded R&D
    and expanded efforts to recruit, train, deploy, and retain the next
    generation of safeguards experts.\16\
    ---------------------------------------------------------------------------
        \16\ For a similar recommendation for reinvestment in safeguards,,
    see American Physical Society Panel on Public Affairs, Nuclear Energy
    Study Group, Nuclear Power and Proliferation Resistance: Securing
    Benefits, Limiting Risks (Washington, DC: APS, May 2005, available as
    of 28 April 2008 at http://www.aps.org/policy/reports/popa-reports/
    proliferation-resistance/upload/proliferation.pdf).
    ---------------------------------------------------------------------------
     limiting proliferation of nuclear, chemical, and biological expertise
        Despite the recent improvements in the Russian economy, I believe
    that NNSA's scientist-redirection programs continue to offer benefits
    to U.S. security worth the modest investments the U.S. Government makes
    in them. Contrary to recent newspaper reports,\17\ the fact that some
    institutes that have received NNSA funds also have some experts who
    have worked on a safeguarded power reactor in Iran does not in any way
    mean that NNSA programs have somehow contributed to Iran's nuclear
    program. Moreover, while a substantial fraction of the long-term jobs
    these programs have created have gone to people who are not weapons
    scientists,\18\ that is hardly a surprise. It is hard to think of a new
    business in the United States or elsewhere that has former weapons
    scientists for 100 percent, or even 80 percent, of its employees.
    ---------------------------------------------------------------------------
        \17\ Matthew Wald, ``U.S.-Backed Russian Institutes Help Iran Build
    Reactor,'' New York Times, 7 February 2008.
        \18\ See U.S. Government Accountability Office, Nuclear
    Nonproliferation: DOE's Program to Assist Weapons Scientists in Russia
    and Other Countries Needs to be Reassessed (Washington, DC: December
    2007).
    ---------------------------------------------------------------------------
        At the same time, there is clearly a need to reform these efforts
    to match today's threats. The dramatically changed Russian economy
    creates a very different threat environment. The experience of the A.Q.
    Khan network suggests that dramatic leakage of proliferation-sensitive
    expertise may come from well-to-do experts motivated by ideology and
    greed, and not only from desperate, underemployed experts. For a
    terrorist group, a physicist skilled in modeling the most advanced
    weapons designs--the kind of person who has often been the focus of
    these programs in the past--may be much less interesting than a
    machinist experienced in making bomb parts from HEU metal, or a guard
    in a position to let thieves into a building undetected. Experts who
    are no longer employed by weapons institutes, but whose pensions may be
    inadequate or whose private ventures may have failed, could pose
    particularly high risks, but they are not addressed by current programs
    focused on redirecting weapons expertise. We need to find ways to
    address all of the highest-priority risks--but we are not likely to
    have either the access or the resources to do everything ourselves. The
    solution is likely to require working in partnership with Russia and
    other countries, to get them to do most of what needs to be done. I
    recommend that Congress provide roughly $30 million (comparable to the
    fiscal 2008 appropriation) for the Global Initiatives for Proliferation
    Prevention program, with direction to provide an in-depth analysis of
    what the most urgent risks of proliferation of weapons expertise are,
    and how they might best be addressed.
                  intelligence and analysis to support policy
        Good information and analysis is critical to implementing
    successful nonproliferation policies. I recommend increases in two
    areas.
        First, the increased budgets for DOE intelligence that Congress has
    supported in recent years have supported a number of important new
    initiatives, such as the Nuclear Material Information Program (NMIP),
    intended to compile key information on nuclear stockpiles, their
    security, and the threats to them around the world. But this may have
    left too little remaining to support the critical capabilities at the
    national laboratories. It is my understanding that there have been
    drastic cuts in the budget for Livermore's Z Division, for example--
    which for decades has provided some of the highest-quality nuclear
    intelligence analyses available to the U.S. Government (including
    having been correct about Iraq's aluminum tubes). I recommend that
    Congress act to ensure that these critical capabilities are maintained
    and expanded, while also ensuring that efforts like NMIP have the
    funding they need.
        Second, many important ideas for preventing proliferation come from
    independent analysts outside the Government. Yet U.S. nonproliferation
    programs rely much less on work by universities and non-government
    organizations than many other parts of the U.S. Government do. The U.S.
    Department of Homeland Security, for example, despite being a
    relatively new department operating in areas that are often shrouded in
    secrecy, has established several ``centers of excellence'' for
    university-based analysis of particular categories of homeland security
    problems, along with other programs focused on bringing in academic
    expertise to contribute to improving homeland security. NNSA should do
    more to do the same. I believe that each of the largest and most
    important nonproliferation programs would benefit from having a
    standing advisory group of outside experts regularly reviewing its
    efforts and suggesting ideas for improvement. In addition, I believe
    that NNSA could benefit greatly from a small investment in non-
    government analyses of key proliferation risks and how they might be
    reduced more effectively. I recommend that Congress provide $10 million
    specifically directed for NNSA to support such non-government analyses
    of effective approaches reducing proliferation risks--and to additional
    training of the next generation of nonproliferation experts. Depending
    on the degree of success of this effort, appropriate levels of funding
    might increase in later years.
                     reducing plutonium and heu stockpiles
        Finally, disposition of the large excess stockpiles of plutonium
    and highly enriched uranium (HEU) in the United States and Russia
    continues to pose an important but difficult policy problem.\19\ As
    suggested above, the United States and Russia should agree to reduce
    their nuclear weapon stockpiles to very low levels and to eliminate all
    stocks of separated plutonium and HEU beyond those needed to support
    those low, agreed warhead stockpiles. This would mean disposition of
    far larger stocks of material in both Russia and the United States than
    have been declared excess so far. Since this will take many years, in
    the near term the United States and Russia should move to legally
    commit their excess material to peaceful use or disposal and place it
    under international monitoring to confirm that commitment--sending an
    important signal to the world that the United States and Russia are
    serious about their arms reduction obligations, at relatively minor
    cost.
    ---------------------------------------------------------------------------
        \19\ For more detailed discussions, see Bunn and Diakov,
    ``Disposition of Excess Highly Enriched Uranium,'' and ``Disposition of
    Excess Plutonium.''
    ---------------------------------------------------------------------------
    Disposition of Excess Plutonium
        Last year, Congress rescinded the remaining unobligated balances
    for U.S. and Russian plutonium disposition, and moved the U.S.
    plutonium disposition program to the Office of Nuclear Energy. This
    year, the requested funds are in Other Defense Activities.
        The cost of the U.S. MOX program has skyrocketed over the years.
    DOE's latest published estimates indicate a life-cycle cost for the MOX
    facility of some $7.2 billion (not counting the substantial cost of the
    pit disassembly and conversion facility). DOE has never adequately
    explained why this facility is costing many times what comparable
    facilities in Europe with more capability cost to build. Even once the
    expected $2 billion in expected revenue from MOX sales is subtracted,
    this still comes to over $120 million per ton of excess plutonium.\20\
    ---------------------------------------------------------------------------
        \20\ Total project cost for construction is $4.8 billion.
    Operations and maintenance is estimated at $2.4 billion. See U.S.
    Department of Energy, fiscal year 2009 Congressional Budget Request:
    Other Defense Activities (Washington, DC: DOE, February 2008), pp. The
    per-ton calculation assumes, over-generously, that the 9 tons of excess
    plutonium announced in 2007 is entirely additional to the 34 tons
    covered under the 2000 disposition agreement and costs nothing to
    process.
    ---------------------------------------------------------------------------
        Something has to be done with this plutonium, but it would be
    surprising if no effective approach could be found that would manage
    this material securely for less than $120 million per ton. If judged
    solely as a nuclear energy initiative, building such a plant would
    certainly not be worthwhile; it would demonstrate nothing except the
    ability to replicate in the United States an expensive fuel cycle
    approach with significant proliferation risks that is already routinely
    done in Europe, and even if a demonstration fast reactor were built for
    GNEP in the near term (which I believe would be unwise), the initial
    core could be fabricated elsewhere at lower cost.
        I recommend that Congress approve funding to proceed with the MOX
    plant for this year, while simultaneously directing DOE to carry out an
    in-depth study of potentially lower-cost alternatives. In particular,
    Congress should provide funding for DOE to restart development of
    plutonium immobilization technology, and direct DOE to outline the
    lowest-cost practicable immobilization option for the entire excess
    plutonium stockpile; Congress should also direct DOE to include, in its
    options assessment, the option of transporting the excess plutonium to
    Europe for fabrication and irradiation in existing facilities there.
    If, for example, the French were willing to take the United States
    excess plutonium for $1 billion, the U.S. Government would have saved
    billions compared to other approaches; if not, that would certainly
    make clear that even with high uranium prices, plutonium is a costly
    liability, not an asset.\21\
    ---------------------------------------------------------------------------
        \21\ Areva officials indicate that there are now trades among
    utilities in which some utilities agree to burn MOX fabricated from
    other utilities' plutonium, suggesting that if the price were right, it
    might be possible to convince utilities to burn this MOX in Europe.
    ---------------------------------------------------------------------------
        On the Russian side, critics have raised legitimate concerns about
    using excess plutonium in the BN-800 fast-neutron reactor, since it
    creates roughly as much plutonium as it burns. While DOE is working
    with Russia to modify the reactor from a plutonium ``breeder'' to a
    plutonium ``burner,'' consuming more plutonium than it produces, this
    is largely a distinction without a difference, as the baseline design
    for the BN-800 produces only slightly more plutonium than it consumes,
    and the revised design produces only slightly less. More important is
    the fact that under the 2000 Plutonium Management and Disposition
    Agreement, spent fuel from plutonium disposition will not be
    reprocessed until decades from now, when disposition of all the
    plutonium covered by the agreement has been completed. Thus, a large
    stockpile of weapons-grade separated plutonium will be transformed into
    a stockpile of plutonium embedded in radioactive spent fuel--at least
    for some time to come.
        The United States and Russia should agree that (a) the highest
    practicable standards of security and accounting will be maintained
    throughout the disposition process; and (b) all separated plutonium
    beyond the amount needed to support low, agreed numbers of warheads
    will be subject to disposition. If the United States and Russia agreed
    on those points, and also agreed that spent fuel from plutonium
    disposition (a) would not be reprocessed except when the plutonium was
    immediately going to be reused as fuel, and then under heavy guard,
    with stringent accounting measures, and (b) would only be reprocessed
    in ways that did not separate weapons-grade plutonium from fission
    products, and in which plutonium would never be separated into a form
    that could be used in a bomb without extensive chemical processing
    behind heavy shielding, then this disposition approach would deserve
    U.S. financial support. This is particularly the case as the BN-800
    approach fits in to Russia's own plans for the nuclear energy future,
    unlike previous plans that focused on MOX in VVER-1000 reactors. If the
    United States does not provide promised financial support for
    disposition in Russia, Russia may conclude that it is free to use the
    BN-800 to breed more plutonium from this weapons plutonium, and to
    reprocess the spent fuel immediately, adding to Russia's huge
    stockpiles of separated plutonium. Congress should provide sufficient
    funding for DOE to explore such approaches, and support them if
    agreement can be reached.
    Disposition of Excess HEU
        The current 500-ton HEU Purchase Agreement expires in 2013. Russia
    is likely to have hundreds of tons of additional HEU at that time that
    are not needed either to support its nuclear weapons stockpile or for
    naval and icebreaker fuel. Russia has made clear that it has no
    interest in extending the current implementing arrangements for the HEU
    Purchase Agreement, under which Russia faces higher costs and lower
    prices than it would marketing new-production commercial LEU. But a
    variety of other arrangements are possible that could create
    substantial incentives for Russia to blend down additional HEU.
    Congress should direct DOE to enter into discussions with Russia
    concerning a broad range of possible incentives the United States might
    be willing to provide to help convince Russia to blend down additional
    HEU--and should consider setting aside a conditional appropriation in
    the range of $200 million to finance such incentives if an agreement is
    reached that requires such funding.
        Similarly, the United States can and should expand and accelerate
    the blend-down of its own excess HEU, beyond the roughly 3 tons per
    year now planned. Congress should provide additional funding targeted
    to accelerating the effort to get the HEU out of the canned sub-
    assemblies and blended down to LEU.
                                  conclusions
        Mr. Chairman, from al Qaeda to North Korea to Iran to global black-
    market nuclear networks, the world today faces serious dangers from
    nuclear terrorism and nuclear proliferation. But there is no reason for
    despair. Indeed, the global effort to stem the spread of nuclear
    weapons has been far more successful than many people realize. Today,
    there are nine states with nuclear weapons; 20 years ago, there were
    nine states with nuclear weapons. (South Africa dropped off the list,
    became the first case of real nuclear disarmament, while North Korea
    joined the list.) That there has been no net increase during a period
    that saw the chaos following the collapse of the Soviet Union; secret
    nuclear weapons programs in Iraq, Iran, Libya, and, apparently, Syria;
    the entire period of the A.Q. Khan network's export operations; and the
    nuclear efforts of al Qaeda and Aum Shinrikyo is an amazing public
    policy success.
        But if we hope to maintain that success into the future, there is a
    great deal to be done--and substantial parts of the work will need to
    be done by NNSA. For the coming year, I recommend additional funding
    and direction to:
      --Move toward securing and consolidating all stocks of nuclear
            weapons and materials worldwide, to standards sufficient to
            defeat the threats terrorists and criminals have shown they can
            pose, in ways that will work, and in ways that will last.
      --Build effective global standards for nuclear security, in part by
            building on the foundation provided by UNSC 1540's legal
            requirement that all countries provide ``appropriate
            effective'' security for whatever stockpiles they may have.
      --Expand global police and intelligence cooperation focused on
            stopping nuclear smuggling and terrorist nuclear plots, while
            modifying our approach to radiation detection and cargo
            scanning.
      --Expand R&D on nuclear forensics.
      --Engage with North Korea and Iran to verifiably end their nuclear
            weapons programs.
      --Eliminate funding for RRW; scale back funding for complex
            transformation to focus on a smaller, cheaper complex to
            support a smaller stockpile; and increase funding for
            dismantlement, placing excess materials under international
            monitoring, and developing international approaches to
            verifying nuclear disarmament.
      --Expand global police and intelligence cooperation to stop black-
            market nuclear networks, and increase efforts to help countries
            around the world implement the UNSC 1540 obligations to put in
            place appropriate effective export controls, border controls,
            and transshipment controls.
      --Provide incentives for states not to build their own enrichment and
            reprocessing facilities, while reducing the emphasis on near-
            term reprocessing in GNEP, reducing GNEP's requested budget,
            and increasing funding for development of small sealed-core
            reactors with low proliferation risks.
      --Reinvest in the people and technology needed for advanced
            safeguards.
      --Continue a modest investment in reducing the risk of proliferation
            of weapons expertise, while undertaking a fundamental review of
            the highest-priority risks and the best means to address them.
      --Continue to support disposition of excess plutonium in the United
            States and Russia, while reviewing cost-effective alternatives
            and seeking new agreements to expand the amount of plutonium
            subject to disposition and ensure that disposition will be
            permanent and secure.
      --Offer new incentives for Russia to blend far more of its HEU to
            LEU, and accelerate the blend-down of United States excess HEU.
        This is an ambitious agenda. Implementing it will require sustained
    leadership from the next president, who must move quickly to pursue
    these and other steps to reduce the threat. I believe that it is
    critical that the next president appoint a senior White House official
    with full-time responsibility for leading these efforts and keeping
    them on the front burner at the White House every day--as Congress
    directed last year.
        Implementing this agenda will also require sustained Congressional
    support. Congress has a responsibility and an opportunity to exercise
    in-depth and informed oversight of these efforts, through hearings such
    as this one and legislation. Congress should give the administration
    the funding and authority to get the job done, while holding the
    administration responsible for demonstrable results. In this year in
    particular, Congress should focus on laying the foundation of policy
    and authority that will allow the next president to hit the ground
    running. With a sensible strategy, adequate resources, and sustained
    leadership, the risks of nuclear terrorism and nuclear proliferation
    can be substantially reduced. American security demands no less.

        Senator Dorgan. Dr. Bunn, thank you very much. We
    appreciate the comments both of you have made.
        Your testimony shows substantial agreement.
        By the way, Dr. Bunn, you recommended increased funding in
    a number of areas. Did you aggregate your request? I noticed
    you made about three or four in various parts of your
    testimony.
        Dr. Bunn. I have not aggregated them partly because in
    several areas I do not specify the amount required, and most of
    those are small ones. I think the total is of the order--it
    depends on whether you count a conditional appropriation for
    blending down HEU, but the total is of the order of $600
    million or $700 million additional, I believe.
        Senator Dorgan. That is a 50 percent increase in the
    budget.
        Dr. Bunn. That is a large number.
        Senator Dorgan. You have heard the testimony from Mr. Tobey
    that the amount requested in the President's budget is
    sufficient. You disagree with that?
        Dr. Bunn. I believe that they are doing excellent work and
    that they will continue to do excellent work with the budget
    that they have requested, but I think there are additional
    opportunities to reduce risks faster and more broadly than they
    can be reduced with the budget that has been requested.
        Senator Dorgan. My question was not whether they are doing
    excellent work. I made the same observation, of course.
        But the question really is what kind of resources are we
    going to devote to this issue. What is the priority with
    respect to this issue of nonproliferation? The amount we invest
    in it tells us a little something about how important we
    believe it is.
        Let me ask a couple of other questions. Dr. Hecker, in your
    testimony, you write that international efforts have been
    focused on limiting India's access to nuclear technology, but
    they have become self-sufficient. So we now do not have access
    to India's technology developments. You say this should advise
    our diplomatic efforts.
        It seems to me that the message that India and other
    countries should take from all of this is just ignore the
    responsibilities, do not sign anything, do not be a part of the
    international community on nonproliferation, and some day you
    will get a reward for it because that is, in my judgment, what
    this agreement with India says. Tell me why that is an
    inappropriate conclusion.
        Dr. Hecker. On the basis of my recent visit to India and in
    talking with the Indian nuclear establishment, if you are
    asking why do they stay outside of the nonproliferation arena--
    is that correct? I am not sure I understood your question
    correctly.
        Senator Dorgan. My question is, why would India and other
    countries not take as a lesson from this that if they just say
    we are not interested in the Nonproliferation Treaty, we do not
    have any intention of being part of this international
    agreement, and by the way, if we just wait long enough, you
    will come to us, there will not only be no penalty for it, we
    will be rewarded for it because we will reach an agreement with
    the United States on a nuclear agreement? And that agreement
    will allow us to have certain nuclear facilities behind the
    curtain with which we can produce the material to build
    additional nuclear weapons. It seems to me that is the message
    of this agreement with India. Why would other countries and
    India not receive that very message? And that message in my
    judgment is destructive.
        Dr. Hecker. That is a reasonable United States point of
    view.
        Let me just, if I may, give you the Indian point of view,
    as I talked to the Indian nuclear complex people. And they view
    it very differently. They do not view themselves as a
    proliferator. They view themselves as a legitimate nuclear
    weapons state.
        They happen to be caught on the wrong side of the divide
    when the decision was made in 1968, that those five countries
    that tested before 1968 would now be allowed to keep their
    nuclear weapons for some time, as article VI states, and others
    would not be allowed to acquire them. And the way the Indians
    view this is they did not test before 1968 in spite of the fact
    that they had substantial nuclear capabilities indigenously,
    much more so than China. But they, in essence, decided to
    refrain from nuclear testing. Their reward for refraining from
    nuclear testing is that they were now caught outside of the
    nuclear proliferation regime.
        They view that as having been discriminatory from the word
    go. They will never then abide to it. They will never get rid
    of the nuclear weapons they have now until there is global
    disarmament. And so they view it and say, well, look, if you in
    the United States and the other four so-called parties of the
    permanent five get rid of your nuclear weapons, so will we. So
    it is not surprising that the Indians take a very different
    point of view.
        To me now the issue is do you recognize the fact that India
    will not give up its weapons, and as I indicated in my
    testimony, I do not think our sanctions have particularly
    stopped its nuclear weapons program. What our sanctions have
    done, however, is slowed down their nuclear energy programs. In
    turn, they have made the Indians actually significantly more
    capable in nuclear energy technology to where today it may
    actually, I believe, be much in our benefit to have nuclear
    cooperation for nuclear energy with India. And so one has to do
    this tradeoff and in the end make the decision as to whether
    the risks are worth the benefits.
        Senator Dorgan. But it is curious, it seems to me, when we
    talk about nonproliferation, that we are reaching an agreement
    with a country that will allow them to produce additional
    nuclear weapons outside of what has been the established
    normative here, that is, the Nonproliferation Treaty. But I
    understand your answer from the perspective of India.
        I certainly believe the message we are sending to the world
    is hang in there. This country will recognize your right to
    build additional nuclear weapons. A lot of other countries
    would say, well, they are left outside of the effective date as
    well. That exclusive club that had nuclear weapons--what makes
    them so exclusive?
        But let me go beyond this and ask. The renewed calls these
    days from some quarters for the reconsideration and
    ratification of the Comprehensive Test Ban Treaty--a treaty I
    support, by the way, a treaty unfortunately which the Senate
    rejected some years ago. Could you give your opinions on the
    issue? And as a former national laboratory director, Dr.
    Hecker, could you talk about the certifications and the
    scientific challenges with CTBT, and has progress been made in
    those areas? Because some have alleged that the capability does
    not exist to provide certification.
        Dr. Hecker. I was there as director of record in 1996 when
    that decision was made by President Clinton, and I have
    reflected often on the overall decision of the Comprehensive
    Test Ban.
        What I would like to say, particularly still being close to
    having had the responsibility at Los Alamos to certify the
    safety and the reliability of nuclear weapons, that test ban
    comes with a price. And there is no question today that, as I
    look back since 1996, the last 12 years, because of the test
    ban, it has taken us longer. It has cost us more to recertify
    nuclear weapons fabrication. That was particularly for the
    plutonium component that was moved from Rocky Flats to Los
    Alamos.
        It is costing us from the standpoint of understanding the
    effects of aging in the nuclear stockpile, and slowly our
    confidence erodes, which could be boosted by nuclear testing.
    And so there is no question there is some risk associated with
    that. However, annually the laboratory directors must assess
    that risk and certify it to the President that the stockpile is
    still safe and reliable without nuclear testing. And I did so
    for several years and my colleagues have done so since then.
        So now what I have to do is trade that off versus the
    benefits of a nuclear test ban, and there I say today that the
    greatest risk of going back to nuclear testing is that the
    Chinese would go back to testing and the Indians would go back
    to testing, the Pakistanis would go back to testing. And as I
    personally today weigh those risks, I definitely come out in
    favor that it is in our Nation's and the world's interest to
    actually ratify the Comprehensive Test Ban Treaty.
        Senator Dorgan. Dr. Bunn?
        Dr. Bunn. Well, I completely agree that it is in our
    Nation's interest to move forward with the comprehensive test
    ban. I think that as we look toward trying to strengthen the
    nonproliferation regime and get other countries to accept
    stronger safeguards, more export controls, tougher enforcement,
    and more restraints on fuel cycle facilities, that we will not
    be able to get that unless we are seen to be living up to our
    obligations under article VI of the Nonproliferation Treaty.
    And the most important single thing that the non-nuclear
    weapons states see as central to that is the Comprehensive Test
    Ban. And so that is a political factor, in addition to the
    technical factors that Dr. Hecker was mentioning.
        On the technical side, I should also mention--I am sure Sig
    would agree--that the investments that we have made in the
    experimental facilities at the DOE facilities, the NNSA
    facilities, and the supercomputing and simulation capabilities
    have dramatically improved our understanding of the processes
    that take place in nuclear explosions compared to what they
    were before. There is a lot more that we know and there is a
    lot more that we know on the verification front as well.
    Seismology has moved forward very significantly since the
    Senate voted some years ago.
        As you know, under General Shalikashvili, the National
    Academy of Sciences produced a report that looked at all of the
    technical issues that were raised in the Senate debate on the
    Comprehensive Test Ban and argued that all of them could be
    successfully addressed.
        So I believe it is very important that the next President,
    first of all, recommit the United States to the Comprehensive
    Test Ban and then begin the process that will be necessary to
    build support over time in the Senate because the last thing we
    want to do is bring it to the floor again in the Senate and
    have it voted down again. That would be, I think, a major
    mistake.
        Senator Dorgan. It is sort of counter-intuitive when we
    talk about nuclear weapons and risks. I was just thinking, Dr.
    Hecker, you described the risk of them not working, but we have
    always built nuclear weapons with the understanding we are
    building them so that they can never be used. And the risk is
    not so much that they would not work. The risk is that they
    would be used and would work. So it is sort of counter-
    intuitive even to discuss a weapon that, in my judgment, can
    never again be used on this planet because we have got tens of
    thousands of nuclear weapons.
        I am going to submit questions on RRW and some other issues
    because I have taken more time than I wished.
        Dr. Hecker. Mr. Chairman, if I may just say, I respectfully
    disagree with that, and that is, that yes, indeed, we expect
    and hope those weapons will never be used. However, if we have
    them in the stockpile, first of all, we must assure that they
    are safe--that is a huge, huge job--and that if our Nation's
    defense rests on that, that they do work, to both assure our
    own leaders and also to assure our allies. So I think it is no
    good to have a deterrent in the stockpile that is deteriorating
    that we lose confidence in. We must have confidence in spite of
    the fact that we hope to never use it.
        Senator Dorgan. Yes. Our Nation's defense, in my judgment,
    rests on the notion that they can never be used because there
    is no defense that provides any assurance for any life in this
    country if we have exchanges of nuclear weapons on this planet.
        The point you make is a scientific point and an
    understandable point to me, that as long as weapons exist, you
    want some assurance that they will detonate if used. I think
    any potential adversary on this planet would be just nuts to
    believe that our nuclear stockpile somehow is something that
    does not work.
        Having said all that, we have nuclear weapons. First, we
    have to protect them to make sure they are not in the wrong
    hands, and when I speak this way about nuclear weapons, people
    call.
        But at any rate, I think both of you have an unbelievable
    amount of information to provide the Congress and have done so
    over the years, and I deeply appreciate the work and your
    testimony today.
        I am going to submit questions, as I said on RRW, on and a
    couple of other things, if you would be kind enough to respond
    to them.
        Senator Dorgan. Let me call on my colleague, Senator
    Domenici.
        Senator Domenici. Thank you very much.
        Let me just say I am not a scientist like Dr. Hecker. I do
    not think his answer disagrees with you, it was a scientific
    answer. But without a lot of words, I want to say that I would
    put my marbles on your side of the argument, Dr. Hecker. I
    appreciate your being here to give us your expertise.
        Let me talk with you a minute about North Korea, Dr.
    Hecker. I was privileged a number of years ago, maybe seven.
    Five Senators and their wives were permitted to land the first
    American airplane in North Korea at their capital city. We
    stayed there 2 days. They have an encampment for visitors that
    is much like Russia had when they had a communist state. It was
    off on the side and it is beautifully built, and you would
    never know that poverty abides everywhere because it is a very
    nice, beautiful looking place. But the visit truly pointed out
    what an abominable place it was to live.
        I assume in your trips you have been permitted to see more
    of North Korea than just the place where we put guests. You
    have visited some cities. You have seen something of their
    infrastructure and how they live. Is that a fair statement?
        Dr. Hecker. Yes. I have been able to see more of North
    Korea than, let us say, just the inside of the ministry of
    foreign affairs and Yongbyon. However, everything that they
    show us, of course, is heavily scripted. But, nevertheless, on
    the drive out to Yongbyon you see a lot of the countryside, and
    I had occasion in August 2007 to be going out there when they
    had the heavy floods that caused the enormous damages. I got a
    chance personally to view what their infrastructure is like,
    and quite frankly, for the most part, they have a difficult
    time getting things together. But when you get into the nuclear
    complex, they have clearly put their capabilities there.
        But the place is changing. Over the five trips that I have
    taken, I have seen Pyongyang change. I would say, in spite of
    everything we think, the place is not about to fall apart.
        Senator Domenici. So you think the government is truly in
    control.
        Dr. Hecker. Yes. You mean the nuclear weapons and the
    nuclear materials?
        Senator Domenici. The nuclear weapons and the nuclear
    materials are in very good shape and controlled adequately by
    the government. Is that correct?
        Dr. Hecker. Right. And I have had that discussion directly
    with the people at Yongbyon to express our concern, your
    general concern, about nuclear material security, and what they
    say, of course, is not to worry. We know how to protect our
    materials. My assessment in North Korea is that, yes, the
    government controls those materials. What you have to worry
    about is making sure that the government itself does not export
    those materials.
        Senator Domenici. I think what I am going to do, Dr. Bunn--
    I have a number of questions. I think I am just going to submit
    them, but I would just end this conversation with you with a
    little discussion of Iran. In fact, both of you are free to
    discuss with me what you like on Iran.
        We happen to be talking about two of the most difficult
    situations when we speak of North Korea and Iran. Could I ask
    both of you to talk about your concerns with reference to where
    Iran is today and where you think they are going to go? And are
    we handling the situation correctly in terms of trying to
    inhibit them from getting a nuclear weapon at this point? Let
    us start with you, Dr. Hecker.
        Dr. Hecker. My view is that Iran is putting in place all
    the pieces for what I call the nuclear weapons option, and it
    is not only the highly publicized facilities at Natanz for
    uranium enrichment which is one path to the bomb, that is, to
    enrich uranium to bomb-grade. They are clearly doing that under
    the umbrella of saying they are doing this for nuclear energy,
    and it turns out that is legitimate. But, of course, the
    concern is if they keep going, they can make bomb-grade
    material. That is what worries us, and we have no assurance at
    this point that they will not keep going.
        But they also have a program that is much less publicized
    and that is, they are building a small reactor. And it is the
    type of reactor that would make good bomb-grade plutonium the
    same way that North Korea is making bomb-grade plutonium. It is
    a little different design, but it makes just as good bomb-grade
    plutonium. And they are continuing with that project although
    at a reasonably slow pace, but they are continuing. And
    associated with that, they have developed a heavy water plant
    that supplies that reactor which is necessary for eventually
    making bomb-grade plutonium.
        The fact that they have all those pieces in place worries
    me significantly. And yet, as to whether they have made the
    decision to go to nuclear weapons, I cannot tell that, but the
    capabilities are such that they could do so in the future.
        In terms of what we are doing currently, I guess much like
    in North Korea, I feel in the end that you are best off if you
    have an in-country presence, if you have a dialogue regardless
    as to how distasteful you might find that dialogue. I think we
    missed a significant opportunity in 2003 with Iran, as we
    missed a significant opportunity in late 2002 with North Korea.
    Now it is more difficult to get back in the game.
        I still favor the dialogue, but somehow we still also need
    to look at plan B, what if all of this fails. The most
    important way that I could see at this point to get Iran to
    take a somewhat different tack is you have to enlist China and
    Russia to put a serious squeeze on Iran to make sure that they
    understand that developing that complete nuclear weapon option
    cannot be done for free.
        Senator Domenici. Dr. Bunn?
        Dr. Bunn. I think, unfortunately, that our--I agree
    completely with Sig that we missed a major opportunity in 2003
    and also some other opportunities with Iran. I think that our
    policy of refusing to talk, while the Iranians kept building,
    essentially just gave the Iranians the opportunity to keep
    building. And so now we are where we are today with more than
    3,000 centrifuges in place in Natanz, and unfortunately, we
    have to cope with that reality.
        I think that the next President is going to have to engage
    if we are going to get any kind of restraint on the Iranian
    program, and we are going to have to put together a package of
    carrots and sticks that is big enough and credible enough. And
    I think it has to have some significant carrots and not just
    the sticks to convince the Iranian Government that it is in
    their interest to reach an agreement that deals with at least
    some of our security concerns, and if we are going to convince
    them of that, it has to be something that the advocates of
    compromise in Tehran can go to the Supreme Leader Khamenei and
    make the case and win the debate with the hawks in Tehran. And
    that means we are going to have to address some of the Iranian
    concerns if we want them to address some of our concerns, and
    it is going to be a difficult discussion. It is going to
    involve some hard choices.
        I had the opportunity--a couple of years ago, we had in our
    research group at Harvard a former deputy foreign minister of
    Iran, and shortly after his arrival, he had said to us that,
    while he would come, he would not actually write about nuclear
    matters while he was in the United States because it was too
    sensitive back home. A week after he arrived, he sat down in my
    office and said let us write a joint proposal for how to solve
    the Iranian nuclear problem. I said, surely, you must be
    kidding. There is no way that you and I could possibly come to
    an agreement on what ought to be done with Iran's nuclear
    program. And in the course of a day, we actually did and then
    published a piece that was a joint proposal on how to address
    the Iranian nuclear problem.
        So the experience that there are people who remain well
    placed within the Iranian regime who are willing to compromise
    made me at least a little more optimistic, but it is going to
    be a hard problem.
        Senator Domenici. Thank you very much.
        Senator Dorgan. Senator Feinstein?
        Senator Feinstein. Thank you very much.
        You both are very respected, and it is a very fine thing
    for us to be able to listen to your views.
        Dr. Bunn, I have been reading your statement, and I want to
    ask you about one part of it in a moment. But could you please
    send the committee your recommendations as they relate to the
    numbers, the dollars, for each of the areas in writing? We
    would appreciate that very much.
        But I wanted to express my concern, Mr. Chairman, because I
    very much agree with your views on this issue, the fact that we
    have cut out the money for new nuclear programs.
        And I do want to raise an issue of the labs. I am very
    concerned because I am really not sure where this is going. All
    of the labs are taking cutbacks. I know in some detail about
    Lawrence Livermore. I do not know about the other two.
        However, at Lawrence Livermore, there is a $280 million
    shortfall. They are terminating 750 people, 250 voluntarily,
    500 not voluntarily. Pink slips will go out in May. Three
    hundred and fifty of them are senior scientists and engineers.
    That should be a real national security danger point. I have
    had two discussions with Mr. D'Agostino, whom I respect
    greatly, who has pointed out to me that the labs now need to
    become more competitive and they are going into
    nonproliferation areas. I do not know what this means with
    specificity. I am very concerned about it.
        I am also very concerned about when you add up the cutbacks
    at Los Alamos, Sandia, and Lawrence you are going to have many,
    many senior scientists and engineers without employment. I
    think this is a national security danger point.
        I also think that we ought to know exactly where these labs
    are going. As they have associated themselves with a private
    contractor, they lose their exempt status. They become LLC's.
    They have to pay taxes, and there is a fee associated with them
    which, in the case of Lawrence Livermore, is $44 million this
    year for Bechtel. So where are these labs going to go long-term
    now? And what are they going to sell? To whom are they going to
    sell it? I think we ought to begin to take a good look at that.
        Senator Domenici. I am with her.
        Senator Feinstein. Now, let me go, Dr. Bunn, to your
    statement, particularly on the limited role of radiation
    detection. You point out that neither the detectors being put
    in place nor the advanced spectroscopic portals planned for the
    future would have much chance of detecting and identifying
    uranium metal with modest shielding, although they might be
    effective in detecting plutonium or strong gamma-emitters used
    in a so-called dirty bomb.
        This is a big area of concern for many of us. You say that
    it is worth making some investment in radiation detection but
    not putting undue reliance on this line of defense. The NNSA's
    second line of defense has been successful in cooperating with
    many countries to put radiation detection in place at key ports
    and border crossings. You go on then to describe a modified
    approach to cargo scanning.
        Could you please verbally share this with this
    subcommittee? This is one of our big concerns. I can speak as
    somebody on the Intelligence Committee, a big concern about a
    dirty bomb coming into this country in some way. What do you
    believe is the most effective way we have of detection?
        Dr. Bunn. Well, I think, first of all, that we really need
    to look at it from a systems point of view and not just does
    this detector at this particular border crossing work. You have
    to think about, okay, if I am the bad guy, am I going to see
    that that detector is in place and go around that border
    crossing and go somewhere else. So you need to look at it from
    the point of view of the effectiveness of the total system, not
    just the effectiveness of a particular detector at a particular
    point.
        Now, I think the detectors we are putting in place now will
    work very well in detecting the kinds of things that would
    typically be used in a dirty bomb except in the case of alpha-
    emitters, like americium 241 that would be hard for them to
    detect because alphas are not very penetrating. But I think
    overall the dirty bomb threats are bigger from the big gamma-
    emitters like cesium and cobalt and things of that kind.
        Now, I do believe that in my view Congress made a mistake
    in insisting on scanning of 100 percent of the containers
    coming to the United States. I think that is going to be very
    expensive. I think it is probably not going to be doable
    because in some cases, for example, a container gets shipped
    out of one port, heading for another point, and then it gets
    shifted from one boat to another without ever getting to the
    other port, and then comes to the United States when you did
    not know it was headed for the United States when it left the
    first port. That is just some of the realities of global
    shipping today.
        So I believe what we need to focus on is what would we need
    to do to deter the terrorists from using those containers, and
    that means we need to make sure that the terrorists think there
    is a big risk that that container will be scanned, think that
    there is some significant risk that what they have put in it
    will be found if it is scanned, and think that we will take
    some significant action if it is scanned.
        The way the law is written now, there are no standards for
    how good those scans should be, what actions should be taken if
    something is found, and I think it creates an incentive to put
    in a lot of shoddy scanning, frankly. You know, a country
    claims, oh, yes, I scanned that, but there is no good scanning.
        Again, you have to look at the total system. What if you
    scan a container and then you put a seal on it, but it is a
    crappy seal and anybody could open the thing after you have
    scanned it and put something in there and put the seal back on,
    and nobody would be the wiser? So you have to look at the whole
    system to understand how effective it is going to be and where
    the vulnerabilities are because, frankly, the bad guys we are
    dealing with are intelligent folks, and they are going to be
    watching what we are doing and trying to figure out what the
    weaknesses are, just as they noticed that we were not looking
    for box cutters on airplanes before 9/11.
        Senator Feinstein. Thank you very much. I think my time is
    up. So let me stop now. Thank you.
        Senator Dorgan. Senator Allard?
        Senator Allard. Thank you. I just have one area that I
    wanted to inquire about and that is the additional dollars to
    put into the International Atomic Energy Commission. I think
    the request for $5 million to $10 million. What is the basis
    for this specific request, and how did you arrive at that
    particular amount?
        Dr. Bunn. Well, this is specifically for the IAEA Office of
    Nuclear Security. This is something that existed in sort of
    embryonic form before 9/11, but it really grew substantially
    after 9/11.
        They spend about $20 million a year today. They provide, I
    think, critical services in providing international peer
    reviews of nuclear security arrangements, not only physical
    protection but also control of radiological sources, border
    radiation detection, and the like, development of international
    recommendations of standards for different aspects of nuclear
    security, and also tracking of nuclear smuggling for the entire
    world community, not just for the U.S. Government. A lot of
    these things are things that we cannot do as well ourselves
    because the IAEA has the sort of international legitimacy of
    being an unbiased international institution.
        Another $5 million or so would allow them to significantly
    increase the pace at which they can meet member state demands
    for peer reviews of nuclear security and other nuclear security
    assistance. I think it would make a significant difference in
    the effectiveness of that operation. This goes into what is now
    called the nuclear security fund, which is almost entirely
    voluntary contributions by states. I think ultimately we need
    to move security into the regular budget of the IAEA so that
    states do not have to keep coughing up these voluntary
    contributions.
        Senator Allard. How would you evaluate their job? Do you
    think that they have strengthened nuclear security worldwide?
        Dr. Bunn. I think they have contributed significantly. I
    think there are weaknesses. Some of the weaknesses are their
    fault. Some of the weaknesses are imposed on them. For example,
    they are constantly struggling with not having enough money and
    almost all the money they do get is earmarked by the various
    donor states that provide the money. And so they frequently
    come up--you know, they send a team out somewhere and they come
    up with some urgent priority that needs doing and they have not
    got any money to do it.
        Now, as I mentioned, I think they do have a tendency to be
    a tad on the bureaucratic side and to focus perhaps more on the
    legal niceties than on getting the job done in some cases. But
    I think overall they are doing as well as we can generally
    expect these international institutions to do, and I think that
    money would be well spent and well invested.
        Senator Allard. And you are confident that--the $5 million
    to $10 million that we would put in there--does it go with
    strings attached, or is it flexible money?
        Dr. Bunn. It depends on what Congress tells the NNSA to do.
    I am sure that if Congress simply said it needs to go to the
    IAEA and let NNSA decide how, that NNSA would attach strings.
    There is no doubt in my mind about that. So I think that is up
    to Congress to say either give it as money that they can spend
    on their own priorities or allow NNSA to make sure that they
    spend it on NNSA priorities.
        I personally would prefer that at least a significant
    portion be available to the office without strings so that when
    they do encounter these unexpected opportunities to reduce
    risk, that they will have some money available to do that.
        Senator Allard. Thank you, Mr. Chairman.
        Senator Dorgan. Thank you very much, Senator Allard.
        Senator Domenici, did you have any additional inquiry?
        Senator Domenici. Thank you, Mr. Chairman. If you do not
    mind, just a couple, I will not take long.
        Maybe I could ask Sig this question regarding North Korea.
    What do you make of the current reports of North Korea's
    nuclear cooperation with Syria? And then Israel bombed the
    major facilities. I have been briefed and seen what I am
    permitted to see that I cannot bring here, but I know Israel
    did wipe out a major facility that was shown before its being
    bombed and the evidence indicating that it was a nuclear bomb
    facility.
        What do we do about and what is your thinking about North
    Korea doing these kinds of things while we are working with
    them? Would it be credible that they would negotiate something
    honestly while they are doing this kind of thing with Syria?
        Dr. Hecker. My opinion is that the CIA in its revelations a
    week ago made a very credible case that the facility in Syria
    was a nuclear reactor. They made a credible case that most
    likely North Korea built that reactor with Syria. So I
    personally believe there was a very strong connection between
    North Korea and Syria. It is a collaboration that had been
    ongoing at least for the last half a dozen years or so and
    perhaps planned for the last dozen years or so. And it went on
    at least until the time that Israel bombed it.
        In terms of the immediate risk, of course, it turns out
    Israel took care of the immediate risk because Syria itself
    does not appear to have the capabilities to have done much with
    that, and that is why it, in essence, needed the turnkey
    operation.
        This to me, in terms of our relationship with North Korea,
    is the most troubling. And my own sense with North Korea has
    been sort of a two-pronged approach, all of it based on making
    certain that the actions we take with North Korea actually
    reduce the risks to us. And that is, first, make sure that they
    make no more plutonium, and that is where disabling and
    dismantling the Yongbyon facilities come in. And that has to
    remain first priority. No Yongbyon, no more plutonium, no more
    bombs, and no better bombs. That is key.
        The second is no export. The key thing is the export of the
    plutonium. There cannot be export of plutonium. I personally
    believe that there was not because North Korea had so little.
    Again, if they make no more, the chance of exporting plutonium
    goes down.
        However, then the next risk is exporting the nuclear
    technologies such as building the reactor. And quite frankly,
    to me what is of much greater concern is that export occurred
    to Iran rather than Syria. Syria in the end cannot do much with
    it, but Iran could do much with it.
        And so that has to be the next point to press with North
    Korea in our negotiations. I do not believe that all of that is
    going to be forthcoming right now in the declaration. I think
    it is more important to go ahead and eliminate Yongbyon and
    then make certain that we walk down the path because what Syria
    has demonstrated is that in spite of the fact that we have been
    watching so closely--we think our technical national means are
    so good--they built a whole reactor under both ours and the
    Israelis' watchful eyes. How did they do it? What does that
    mean in terms of international proliferation rings? These are
    very serious issues to all of the questions that you have put
    on the table. North Korea could actually now help us unravel
    that, and that is the place where we have to press them. But
    let us shut down Yongbyon first. That is my view.
        Dr. Bunn. Let me just add that in one respect the Bush
    administration has done a better job than Will Tobey admitted
    in that the October 3, agreed statement does, in fact, commit
    the North Koreans not to export any nuclear technology or
    materials. Now, our ability to verify that, of course, is
    another question, but there is the commitment in place signed
    by the North Koreans. And the North Koreans have repeatedly
    reiterated that commitment, including in Sig's most recent
    trip. So I think that is very critical. The North Koreans have
    heard the message that that is a red line for us and they have
    committed not to cross that red line.
        Senator Domenici. What is going on that makes North Korea,
    in your opinion, willing to make any agreements with our world
    versus theirs? Why do you think they would do this?
        Dr. Hecker. I am sorry, Senator.
        Senator Domenici. Why will they enter into agreements and
    carry them out with the United States and others? Are we giving
    them something that they need? Are we going to help them feed
    their people? Why would they do this?
        Dr. Hecker. I am best at evaluating their capabilities, not
    necessarily their intent. But having been there a number of
    times, I actually believe that they recognize that their
    economy is in serious trouble. They have to do something to
    feed their people. They actually do view, in my opinion, the
    United States as the key to that. The United States holds the
    key to international commerce, and even though the Chinese and
    the South Koreans are helping to feed the North Koreans now, in
    the end, the North Koreans recognize unless they strike some
    sort of a deal with the United States, they are not going to be
    able to get out of the economic hole that they are in. I
    personally believe that is why they are trying to make the deal
    with the United States.
        Senator Domenici. Well, let us hope we remain economically
    strong enough for their belief in us to be a reality. I am not
    sure of that.
        Senator Feinstein, since you talked about something a
    moment ago, might I say that on the Los Alamos layoffs, there
    is a very different flow of those people leaving and what were
    the people leaving doing--it is much different than Lawrence
    Livermore. Nonetheless, it is a serious problem, and I would
    say your willingness to try to do something about it--I will
    join you. I have talked to the chairman enough about it. I
    think he would.
        The problem is we do not have anyone that understands this
    problem that is in the business of allocating the money that
    goes to the various subcommittees. If somebody allocating knew
    that we cannot take care of the laboratories and the water
    programs, the Corps of Engineers programs on the money that is
    being given to us--we have to trade off water programs for the
    laboratories. God only knows, nobody would ever have thought we
    would be doing that, but that is the budget we have got. The
    big, giant Corps of Engineers--and everybody wants that, and
    that is to be matched up with the most vital science part of
    the national budget that there is, the national laboratories.
    It is kind of a crazy thing.
        I managed to get by for about 12 years doing it, but it is
    coming to a head as the squeeze is put on the discretionary
    domestic programs. We get knocked in the head on that on our
    side. So do you. So I do not know how to solve it, but I am
    willing to try with the chairman who knows our allocation must
    go up or we will have the same problem again.
        Senator Dorgan. Well, if I might say, our allocation is a
    serious problem. As you know, last year we went through--this
    is very destructive, this process that we are in, where we do
    not even get appropriations out until December or perhaps
    January because then you are 4 months into a fiscal year
    running a laboratory without any notion of what kind of
    resources are going to come your way.
        But the fact is--there is lots of responsibility on all
    sides for this. We get an executive budget that cuts to the
    bone domestic discretionary, and our subcommittee cuts $1
    billion out of water projects in the Corps and the Bureau in
    this year. We are not going to do that, but that is what the
    executive budget does.
        Then the President says I want $196 billion in this fiscal
    year as an emergency for Iraq and Afghanistan, and then we add
    in the appropriations process for this fiscal year $21 billion
    on domestic discretionary. The President says I am going to
    veto all those bills. So we are at a standoff.
        Now, Senator Domenici is correct that within the confines
    of the resources we have available, trying to negotiate with a
    President that last year said I do not intend to negotiate, it
    is going to be my way on domestic discretionary--within the
    construct of that, as Senator Domenici is talking about, what
    kind of allocation do we get in this subcommittee versus other
    subcommittees? But frankly, the whole system is broken at this
    point.
        And I just want to make a point that I think that if we
    continue down this road, we are going to dramatically weaken
    and injure all of our national laboratories, and I have said
    before these are national treasures. These are repositories of
    investment--they are investments in the future, repositories of
    vast amount of knowledge and talent. And if we lose that, we
    will lose a lot more than just a few layoffs or even thousands
    of layoffs, as the Senator from California indicated. We need
    to find a way, even outside of the discussion about should
    there or should there not be an RRW, even outside of those
    issues, to stabilize the employment levels at our national
    laboratories so that they can continue to attract our best and
    brightest and continue to do the work that gives us the
    innovation for the future. We are going to try to do that.
        But boy, I am telling you, I think the entire system is
    broken. It starts at the White House and continues on through
    here. I think the President and the Congress have to understand
    what we are going to lose if we continue down this road.
        Senator Feinstein. If I may, Mr. Chairman. I agree with
    what both of you said, what Senator Domenici said. After
    listening to Mr. Anastasio talking to the head of the nuclear
    agency, what they are doing is accommodating the people to the
    budget, which is dropping dramatically. That also changes the
    mission.
        What we do not know is how the mission of the labs is going
    to be changed by this, and I think we ought to know it. Now
    that there is competition and privatization in these labs, how
    exactly is that mission going to change? I do not want to get 5
    years down the pike and find out that something dreadful is
    really happening at the labs that we did not know about, and
    this worries me greatly. So I would hope that we can get the
    actual figures. We can talk with people who know.
        Mr. D'Agostino tells me, well, they are going more into
    nonproliferation. What exactly does that mean? What do they do?
    Are they selling? What are they selling? So I think we need to
    know the answers to these questions, and I look forward to
    working with you.
        Senator Dorgan. Let me just say that I consider this a
    priority, and I think our staffs will work with us to try to
    determine, within the confines of the rather broken system we
    are working in at the moment--we need to find a way to
    strengthen and try to provide some stability for our national
    laboratories. So that will be a priority for this subcommittee.
        As you know, we probably will mark up sometime in late May
    or early June in a subcommittee, and then go to a full
    committee markup. And I guess the question this year is going
    to be will there be negotiations with the White House--if so,
    when--on domestic discretionary. But we have taken a pretty
    good whack on the domestic discretionary recommendations in the
    President's budget. Last year he did the same and said I am not
    going to negotiate from that point really. Again, there is lots
    of responsibility on all sides for this. We have to try to get
    this right.
        Dr. Hecker, you wanted to comment?
        Dr. Hecker. Yes, Mr. Chairman, Senator Domenici, Senator
    Feinstein. Senator Feinstein, you raise a question that is very
    near and dear to my heart. For 34 years, I worried precisely
    about that and especially the 12 years as director at Los
    Alamos.
        Just to briefly comment. To me it takes three things that
    we need to sort out. One you have mentioned is the mission.
    Quite frankly, as Senator Domenici knows, in 1992 when the
    Soviet Union collapsed, we had to struggle with that, but we
    found a mission. We decided what the laboratories needed to do
    from a national interest. I think the mission can also be
    redefined, but obviously, somebody has to do it. The mission is
    still there. So, first, mission.
        Second, budget and you have mentioned that. Clearly, the
    budget is important. I will not need to elaborate on that.
        But third no one has mentioned, and it is actually in my
    opinion the most important, and that is the environment at
    these laboratories. When we went the direction of
    contractorization, we made a grievous error of pushing these
    laboratories in a direction that simply is not right for this
    country, and we have suffered from that. The whole environment
    at these laboratories has changed.
        Second, over the last, I would say, now 16 years, the
    regulatory environment at these laboratories has become so
    risk-averse that we essentially cannot get work done anymore.
    In 1965, I came to Los Alamos as a young student because it was
    the best place to go work. Unfortunately, these laboratories
    today are not the best places to go work anymore, and we need
    to make them such. And just more money does not do the trick.
    We have to change the working environment to allow people to
    get their work done. These places nowadays look more like
    prisons than they look like university campuses or something in
    between, which is what we tried to make them. Attract the best,
    protect the most important. We have lost the sense of all of
    that. That is one of the reasons why these laboratories are
    suffering today.
        So, Mr. Chairman, when you say the system is broken, it is
    broken in many different ways, and we should fix. I agree.
        Senator Domenici. What did you say? When we moved toward
    what? Privatization you said?
        Dr. Hecker. I am sorry.
        Dr. Bunn. He said contractorization.
        Dr. Hecker. Oh, I am sorry. The contractorization to
    actually move the system, as Senator Feinstein has pointed out,
    to limited liability corporations, companies that are for-
    profit companies where we are paying enormous amounts to have
    these laboratories run. These laboratories used to be run as a
    public service for the United States of America. They should
    not be run for profit. What we do in essence is a semi-
    government function.
        Senator Feinstein. The University of California did this as
    a public service to the country.
        Dr. Hecker. Correct.
        Senator Feinstein. And now essentially they are replaced by
    private companies that charge substantial fees.
        Senator Dorgan. At a recent hearing, we developed that
    point, that there is a substantial increase in costs as well.
    And I think there is a difference in culture I think is what
    you are referring to.

                             CONCLUSION OF HEARING

        Let me thank both of you for being here and contributing to
    the subcommittee.
        This hearing is recessed.
        [Whereupon, at 11:39 a.m., Wednesday, April 30, the subcom
    mittee was recessed, to reconvene subject to the call of the
    Chair.]

        ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR FISCAL YEAR 2009

                                  ----------

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

                           NONDEPARTMENTAL WITNESSES

        [Clerk's note.--At the direction of the subcommittee
    chairman, the following statements received by the subcommittee
    are made part of the hearing record on the Fiscal Year 2009
    Energy and Water Development Appropriations Act.]

                          DEPARTMENT OF DEFENSE--CIVIL

                             Department of the Army

                           Corps of Engineers--Civil

       Prepared Statement of the National Corn Growers Association (NCGA)
        The National Corn Growers Association (NCGA) appreciates the
    opportunity to share with the subcommittee our Energy and Water
    Development Appropriations priorities for fiscal year 2009. In general,
    our appropriations priorities include an overall increase in U.S. Army
    Corps of Engineers' funding to address the needs of our failing inland
    waterways system; securing $50 million in the Fiscal Year 2009 Energy
    and Water Development Appropriations bill for the Upper Mississippi
    River System (UMRS)--Navigation Ecosystem Sustainability Program (NESP)
    authorized by H.R. 1495, the Water Resources Development Act 2007,
    title VIII, secs. 8001-8005; and continued support for the Department
    of Energy's Biomass Technologies Program.
        NCGA's mission is to create and increase opportunities for corn
    growers. NCGA represents more than 33,000 members and 48 affiliated
    State organizations and hundreds of thousands of growers who contribute
    to State checkoff programs.
                          u.s. army corps of engineers
        Our country's inland navigation system plays a critical role in our
    Nation's economy, moving more than a billion tons of domestic commerce
    valued at more than $300 billion. Each year, more than 1 billion
    bushels of grain (over 60 percent of all grain exports) move to export
    markets via the inland waterways system. Inland waterways relieve
    congestion on our already over-crowded highways and railways that run
    through cities. One jumbo barge has the same capacity as 58 trucks or
    15 rail cars. A typical 15-barge tow on our Nation's rivers is
    equivalent to 870 trucks.
        Additionally, navigation offers transportation with unparalleled
    environmental benefits. Barges operate at 10 percent of the cost of
    trucks and 40 percent of the cost of trains, while releasing 20 times
    less nitrous oxide, 9 times less carbon monoxide, 7 times less
    hydrocarbons, and burning 10 times less high-price fuel.
        Unfortunately, investment in the inland waterways system has not
    kept pace with its needs and is deteriorating. In 2006, more than half
    of the 240 operational Corps-funded lock chambers in the United
    States--which handle over 625 million tons of freight each year--are
    over 50 years old and have exceeded their economic design lives. Many
    locks currently in use are too small for today's larger tows,
    susceptible to closures and long delays for repairs and unable to
    effectively deal with lines and wait times that result from their
    obsolescence. In recent years, several high-profile closures have
    raised reliability concerns among shippers, carriers, the U.S. Army
    Corps of Engineers, and ultimately consumers who pay increased costs
    for expensive transportation delays.
        Funding (in constant dollars) for Operations and Maintenance (O&M)
    on America's inland navigation system has remained flat for more than 2
    decades. During this period, an increasing amount of routine
    maintenance on waterways infrastructure has been deferred. This
    deferred maintenance has become unfunded maintenance, and the aging
    waterways infrastructure, combined with the growing O&M backlog, has
    created today's average of 30 unscheduled lock shutdowns per year.
        Tight O&M funding and the resultant ``fix-as-fail'' policy have led
    to a self-defeating cycle where routine maintenance dollars are now
    needed for emergency repairs. As critical maintenance needs grow, they
    become candidates for major rehabilitation--a trend that is not good
    for the waterways industry or for the Nation.
        NCGA is appreciative of the successful efforts made by this
    subcommittee in recent years to increase the budget for the U.S. Army
    Corps of Engineers. NCGA strongly supports continuing this trend with a
    significant increase over last year's funding levels to address the
    critically needed repairs and delayed construction schedules facing the
    Corps. It's important to get our inland waterways infrastructure back
    on track so we can meet the ever-increasing demands of the global
    marketplace.
               navigation ecosystem sustainability program (nesp)
        The Upper Mississippi River System (UMRS) includes the Upper
    Mississippi River and Illinois Waterway and tributary rivers, with 38
    lock and dam sites stretching from Minneapolis, Minnesota, and Chicago,
    Illinois, to just south of St. Louis, Missouri. The Upper Mississippi
    has 29 locks and 858 miles of commercially navigable waterway, and the
    Illinois Waterway has 8 locks and is navigable for 291 miles. Also part
    of the UMRS is the Missouri River, which has no locks along its 735
    navigable miles from Sioux City, Iowa, to St. Louis. There is one lock
    along the 26 navigable miles of the Kaskaskia River in southern
    Illinois.
        In 1986, Congress declared the UMRS ``a nationally significant
    ecosystem and a nationally significant commercial navigation system.''
    The same waters that transport more than 60 percent of America's corn
    and soybeans are home to 25 percent of North America's fish species and
    are globally important as a flyway for 60 percent of North America's
    bird species. However, both the river transportation system and the
    river ecosystem are deteriorating. The locks that help tows to navigate
    the river are antiquated--increasing cost, safety risks and lost market
    opportunities. And from an ecological perspective, the floodplain is
    degraded, islands eroded, backwaters filled in and the river's natural
    flows disrupted.
        With enactment of the Water Resources Development Act 2007,
    Congress created a historic opportunity for the UMRS. Congress
    recognized the economic and ecological importance of what truly is
    America's River by giving the U.S. Army Corps of Engineers a new, dual-
    purpose authority to integrate management of the river's habitats and
    navigation system in an unprecedented way. Corn growers are asking
    Congress to invest in the future of the UMRS by funding implementation
    of this new program.
        We request your support in securing $50 million in the Fiscal Year
    2009 Energy and Water Development Appropriations bill for the Upper
    Mississippi River System (UMRS)--Navigation Ecosystem Sustainability
    Program (NESP). Now is the time to build on the promise of the new
    authority for NESP by including funding for the program in the Corps'
    fiscal year 2009 construction general account. Congress has authorized
    NESP at $2.2 billion for navigation improvements; half of which is
    funded by the Inland Waterway Trust Fund, and $1.72 billion for
    ecosystem restoration, with an additional $10 million per year for
    monitoring. This will permit the Corps to begin implementing specific
    projects. NESP is a long-term vision, with the current authority
    providing for the first increment of that vision.
        Over approximately the next 15 years, NESP will improve navigation
    efficiency by constructing new 1,200-foot locks at Locks & Dams 20, 21,
    22, 24, and 25 on the Upper Mississippi River, and at LaGrange and
    Peoria on the Illinois Waterway. The plan also includes small-scale
    measures such as mooring facilities and switchboats and mitigation for
    the environmental effects of the lock construction and increased river
    traffic.
        Concurrently, NESP will also work to restore and preserve more than
    100,000 acres of habitat in a manner that is entirely compatible with
    current navigation practices. Restoration projects will range in size
    and complexity but will focus on restoring system-wide natural
    processes vital to the river's health. Examples include mimicking
    natural flow regimes by drawing down pools in the summer and restoring
    floodplain habitat in cooperation with willing landowners. Because the
    UMRS is a vast and ecologically complex system, NESP includes an
    adaptive management strategy, in which sound science, learning and
    monitoring guide the most efficient and effective allocation of
    resources.
        We appreciate this subcommittee's help in securing Pre-Construction
    Engineering and Design in years passed prior to authorization in the
    2007 Water Resources Development Act. Congress has provided for $13.5
    million in fiscal year 2005, $10 million in fiscal year 2006, $10
    million in fiscal year 2007 and $8.85 million in fiscal year 2008.
    Capability levels for PED were identified as $24 million for each
    fiscal year to achieve a 3-4 year pre-construction engineering and
    design phase.
        For continued success, U.S. farmers need efficient transportation
    networks, which is why we have been long-time advocates for
    improvements to our inland waterway system. Meeting future
    international demand for corn, soybean, and other grains will be
    impossible without a modernized river infrastructure.
        You have an opportunity to impact economic growth in our Nation.
    Your help in securing funds for NESP will allow the Nation to achieve
    the benefits of river infrastructure and ecosystem improvements as soon
    as possible.
                          biomass technologies program
        The United States needs to displace imported petroleum with
    domestically produced ethanol. Grain ethanol is the only economically
    viable solution today to reduce our reliance on foreign sources of
    energy. In order to achieve energy independence, the United States must
    capitalize on an abundance of domestic resources. Using starch from
    corn grain to produce ethanol is a proven, efficient way to reduce oil
    imports. Ethanol reduces green house gases, continues to spur economic
    development in rural communities, provides for a high-value co-product
    and stabilizes farm income. In 2007, strong commodity prices reduced
    Government spending by $6 billion. Over the next decade, corn grain
    will continue to meet the growing demands from livestock feed, human
    food, export sectors, and ethanol fuel.
        The current Federal biomass technologies program is focused on
    long-term cellulose research. Cellulose research will not have any
    meaningful economic impact for a decade or more. A successful research
    and development (R&D) portfolio always balances near-, mid- and long-
    term goals, and biomass research should use a similar strategy.
        In the near term, R&D investments in corn grain ethanol production
    technology could have a strongly positive economic impact while
    immediately decreasing dependence on imported oil. Examples of R&D
    investment opportunities include improving production and utilization
    of animal feed (DDGS), co-production of biobased chemicals, utilization
    of corn kernel fiber, repowering ethanol facilities with biomass, water
    utilization, and decreasing natural gas use in ethanol plants. A
    sufficient supply of affordable ethanol will ensure the markets and
    infrastructure will be poised for the larger impacts coming in the mid
    to long-term.
        NCGA recommends the subcommittee commit at least 25 percent of the
    fiscal year 2009 allocation for the biomass technologies program
    towards near-term research of corn grain. A strong corn ethanol
    industry is the foundation for an expanding renewable fuels market.
    Agricultural residues, cobs, and fiber will serve as the bridge
    technologies to a second generation of renewable fuels.
        Thank you for the support and assistance you have provided to corn
    growers over the years.
                                     ______

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

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                              PROJECT                              REQUEST
    ------------------------------------------------------------------------
    MURRIETA CREEK FLOOD CONTROL PROJECT: Construction General.  $13,000,000
    HEACOCK AND CACTUS CHANNELS: Special Authorization under      28,400,000
     WRDA......................................................
    FUNDING FOR CERTIFICATION OF CORPS LEVEES: Inspection of       3,000,000
     Completed Works...........................................
    SAN JACINTO & UPPER SANTA MARGARITA RIVER WATERSHEDS             355,000
     SPECIAL AREA MANAGEMENT PLAN (SAMP): General
     Investigations............................................
    SANTA ANA RIVER--MAINSTEM: Construction General............  108,600,000
    ------------------------------------------------------------------------

    murrieta creek flood control, environmental restoration and recreation
                                    project
        Murrieta Creek continues to pose a severe flood threat to the
    cities of Murrieta and Temecula. Overflow flooding from the undersized
    creek with a tributary watershed area of over 220 square miles
    continues to periodically wreak havoc on the communities. The winter
    storms in 1993 cost nearly $20 million in damages to the public and
    private sectors. Almost on a yearly basis, small to moderate storms
    cause localized damages at numerous locations requiring ongoing
    repairs. As the area continues to develop, the potential for damages
    (direct and indirect) continues to increase.
        In 1997 the U.S. Army Corps of Engineers initiated studies on the
    Creek. The final outcome of this endeavor was Congressional
    authorization in 2000 of the $90 million, multi faceted project known
    as the Murrieta Creek Flood Control, Environmental Restoration and
    Recreation Project. This project is being designed and will be
    constructed in four distinct phases. Phases 1 and 2 include channel
    improvements through the city of Temecula. Phase 3 involves the
    construction of a 250-acre detention basin, including the establishment
    of about 160 acres of new environmental habitat and over 50 acres of
    recreational facilities. Phase 4 will include channel improvements
    through the city of Murrieta. Equestrian, bicycle and hiking trails, as
    well as a continuous vegetated habitat corridor for wildlife are
    components of the entire 7.5 mile long project.
        The Omnibus Appropriations bill for fiscal year 2003 provided $1
    million for a new construction start for this critical public safety
    project and construction activities commenced in the Fall of 2003 on
    Phase 1. Appropriations for fiscal year 2004 and additional funds
    allocated allowed the Corps to continue construction on Phase 1, which
    was completed in December 2004. Phase 2 traverses Old Town Temecula,
    one of the hardest hit areas during the flooding of 1993. The Corps
    anticipates having a Phase 2 construction contract ready to award in
    the Winter of 2008. The District, therefore, respectfully requests the
    subcommittee's support of a $13 million appropriation in fiscal year
    2009 to allow the Corps to complete the Design Documentation Report,
    and initiate construction on Phase 2 of the long awaited Murrieta Creek
    Flood Control, Environmental Restoration and Recreation Project.
        heacock and cactus channels protection of march air reserve base
        Heacock and Cactus Channels are undersized, earthen channels that
    border the eastern and northern boundary of the March Air Reserve Base
    (MARB) located adjacent to the city of Moreno Valley, Riverside County,
    California. Substantial vegetation becomes established within both
    channels and impedes the conveyance of tributary storm flows to the
    existing ultimate outlet located downstream. Storm flows overtop Cactus
    Channel and traverse MARB causing major disruption of the Base's
    operation, including the fueling of airplanes and the transport of
    troops and supplies. The record rainfall of 2004/2005 also caused
    extensive erosion along Heacock Avenue jeopardizing existing utilities
    within the road right of way and cutting off access to about 700
    residences within the city of Moreno Valley.
        Under section 205 of the Continuing Authorities Program (CAP), the
    Corps received $100,000 in fiscal year 2005 and completed an Initial
    Appraisal Report which determined the feasibility of proceeding with a
    project to provide flood protection to this sensitive area. With the
    $546,000 received in fiscal year 2006 the Corps completed a Project
    Management Plan, executed a Feasibility Cost Sharing Agreement and is
    nearing completion of the Feasibility Study. However, this study found
    that MARB would receive approximately 75 percent of the benefits from
    constructing this project making the use of section 205 funds
    inappropriate. Therefore, the project will require Special Authorizing
    Language to approve and an appropriation of $28.4 million to provide
    flood protection to MARB.
        The District requests support from the subcommittee for Special
    Authorization approving the project and authorizing appropriations of
    $28.4 million to complete the design and construct the project
    providing this critical military installation flood protection.
                   certification of corps constructed levees
        As part of the Federal Emergency Management Agency's (FEMA) Map
    Modernization Program, the District, as well as all other agencies,
    cities and counties in the Nation are being required to provide
    certification of the reliability of all levee structures providing
    flood protection to our citizens. Many of these projects were
    constructed by the U.S. Army Corps of Engineers and in these cases,
    FEMA is requesting that the certification be provided by the Corps.
    Certification involves an extensive amount of geotechnical analysis,
    including field and lab material testing, slope stability and seepage
    checks, hydrologic and hydraulic verification, and other costly and
    time consuming activities, as well as the review of operation and
    maintenance records. These projects have an established Federal
    interest. Therefore, a National Policy needs to be established
    addressing the need for these federally constructed projects to be
    certified by the Corps and authorizing the Corps to perform the
    required analysis. Furthermore, the Corps should also be authorized to
    provide Federal assistance for design and construction costs associated
    with any necessary rehabilitation, repair or reconstruction of projects
    that are found not to meet the CFR 65.10 FEMA and/or Risk and
    Uncertainty analysis criteria. Non-conforming levees put the public at
    risk and should be a Federal priority. Within our District, there are
    three Corps constructed levees requiring this Federal certification:
    Santa Ana River Levees constructed in 1958, Chino Canyon Levee
    constructed in 1972 and San Jacinto River Levee constructed in 1982.
        The District requests support from the subcommittee for the
    establishment of a National Policy addressing this issue and the
    authorization and funding needed for the Corps to meet its obligations
    to the numerous local sponsors of federally constructed levees
    throughout the country. The Los Angeles District needs an appropriation
    of $3.0 million for fiscal year 2009 under the Inspection of Completed
    Works--CA Operations and Maintenance Appropriation 3123 to accomplish
    the needed certification work.
      san jacinto and upper santa margarita river watersheds special area
                                management plan
        In 2001 the Corps began development of a Special Area Management
    Plan (SAMP) for both the San Jacinto and Upper Santa Margarita
    Watersheds to address regional conservation and develop plans that
    protect the environment while allowing for compatible economic
    development. The final product of the SAMP will be the establishment of
    an abbreviated or expedited regulatory permitting process by the Corps
    under section 404 of the Clean Water Act to assist Federal, State and
    local agencies with their decisionmaking and permitting authority to
    protect, restore and enhance aquatic resources, while accommodating
    various types of development activities. This process will increase
    regulatory efficiency and promote predictability to the regulated
    public. The plan will also build on the protection of high value
    resource areas, as envisioned in the MSHCP. The District requests
    support from the subcommittee for a fiscal year 2009 appropriation of
    $355,000 to complete the work on the Nation's largest SAMP for the San
    Jacinto and Upper Santa Margarita Watersheds.
                           santa ana river--mainstem
        The Water Resources Development Act of 1986 (Public Law 99-662)
    authorized the Santa Ana River-All River project that includes
    improvements and various mitigation features as set forth in the Chief
    of Engineers Report to the Secretary of the Army. The Boards of
    Supervisors of Orange and San Bernardino Counties as well as the Board
    for the Riverside County Flood Control and Water Conservation District
    continue to support this critical project as stated in past resolutions
    to Congress.
        For fiscal year 2009, an appropriation of $108.6 million, is
    necessary to provide funding for Reach 9 of the Santa Ana River
    immediately downstream of Prado Dam, continue the construction of Prado
    Dam features and provide mitigation for the construction of Seven Oaks
    Dam. The District respectfully requests that the subcommittee support
    an overall $108.6 million appropriation of Federal funding for fiscal
    year 2009 for the Santa Ana River Mainstem Project.
                                     ______

          Prepared Statements of the Santa Clara Valley Water District
               statement of support--coyote creek watershed study
        Background.--Coyote Creek drains Santa Clara County's largest
    watershed, an area of more than 320 square miles encompassing most of
    the eastern foothills, the city of Milpitas, and portions of the cities
    of San Jose and Morgan Hill. It flows northward from Anderson Reservoir
    through more than 40 miles of rural and heavily urbanized areas and
    empties into south San Francisco Bay.
        Prior to construction of Coyote and Anderson Reservoirs, flooding
    occurred in 1903, 1906, 1909, 1911, 1917, 1922, 1923, 1926, 1927, 1930
    and 1931. Since 1950, the operation of the reservoirs has reduced the
    magnitude of flooding, although flooding is still a threat and did
    cause damages in 1982, 1983, 1986, 1995, and 1997. Significant areas of
    older homes in downtown San Jose and some major transportation
    corridors remain susceptible to extensive flooding. The federally-
    supported lower Coyote Creek Project (San Francisco Bay to Montague
    Expressway), which was completed in 1996, protected homes and
    businesses from storms which generated record runoff in the northern
    parts of San Jose and Milpitas.
        The proposed Reconnaissance Study would evaluate the reaches
    upstream of the completed Federal flood protection works on lower
    Coyote Creek.
        Objective of Study.--The objectives of the Reconnaissance Study are
    to investigate flood damages within the Coyote Creek Watershed; to
    identify potential alternatives for alleviating those damages which
    also minimize impacts on fishery and wildlife resources, provide
    opportunities for ecosystem restoration, provide for recreational
    opportunities; and to determine whether there is a Federal interest to
    proceed into the Feasibility Study Phase.
        Study Authorization.--In May 2002, the House of Representatives
    Committee on Transportation and Infrastructure passed a resolution
    directing the Corps to ``. . . review the report of the Chief of
    Engineers on Coyote and Berryessa Creeks . . . and other pertinent
    reports, to determine whether modifications of the recommendations
    contained therein are advisable in the interest of flood damage
    reduction, environmental restoration and protection, water conservation
    and supply, recreation, and other allied purposes . . .''.
        Fiscal Year 2006 Administration Budget Request and Funding.--The
    Coyote Watershed Study was one of only three ``new start'' studies
    proposed for funding nationwide in the administration fiscal year 2006
    budget request. Congress did not include funding for the study in the
    final fiscal year 2006 appropriations bill.
        Fiscal Year 2008 Funding.--Congress did not appropriate any funding
    to the project in fiscal year 2008.
        Fiscal Year 2009 Funding Recommendation.--It is requested that the
    congressional committee support an appropriation add-on of $100,000 to
    initiate a multi-purpose Reconnaissance Study within the Coyote Creek
    Watershed.
     statement of support--upper penitencia creek flood protection project
        Background.--The Upper Penitencia Creek Watershed is located in
    northeast Santa Clara County, California, near the southern end of the
    San Francisco Bay. In the last two decades, the creek has flooded in
    1980, 1982, 1983, 1986, 1995, and 1998. The January 1995 flood damaged
    a commercial nursery, a condominium complex, and a business park. The
    February 1998 flood also damaged many homes, businesses, and surface
    streets.
        The proposed project on Upper Penitencia Creek, from the Coyote
    Creek confluence to Dorel Drive, will protect portions of the cities of
    San Jose and Milpitas. The floodplain is completely urbanized;
    undeveloped land is limited to a few scattered agricultural parcels and
    a corridor along Upper Penitencia Creek. Based on an August 2004 U.S.
    Army Corps of Engineers' (Corps) Economics Analysis, over 5,000 homes
    and businesses in the cities of San Jose and Milpitas are located in
    the 1 percent or 100-year flood area. Flood damages were estimated at
    $455 million. Benefit to cost ratios for the nine project alternatives
    range from 2:1 to 3.1:1.
        Study Synopsis.--Under authority of the Watershed Protection and
    Flood Prevention Act (Public Law 83-566), the Natural Resources
    Conservation Service (formerly the Soil Conservation Service) completed
    an economic feasibility study (watershed plan) for constructing flood
    damage reduction facilities on Upper Penitencia Creek. Following the
    1990 U.S. Department of Agriculture Farm bill, the Natural Resources
    Conservation Service watershed plan stalled due to the very high ratio
    of potential urban development flood damage compared to agricultural
    damage in the project area.
        In January 1993, the Santa Clara Valley Water District (District)
    requested the Corps proceed with a reconnaissance study in the 1994
    fiscal year while the Natural Resources Conservation Service plan was
    on hold. Funds were appropriated by Congress for fiscal year 1995 and
    the Corps started the reconnaissance study in October 1994. The
    reconnaissance report was completed in July 1995, with the
    recommendation to proceed with the feasibility study phase. The
    feasibility study, initiated in February 1998, is currently scheduled
    for completion in 2009.
        Advance Construction.--To accelerate project implementation, the
    District submitted a section 104 application to the Corps for approval
    to construct a portion of the project. The application was approved in
    December 2000. The advance construction is for a 2,600-foot long
    section of bypass channel between Coyote Creek and King Road. However,
    due to funding constraints at the District and concerns raised by
    regulatory agencies, the design was stopped and turned over to the
    Corps to complete.
        Fiscal Year 2008 Funding.--Congress appropriated $229,000 to the
    project in fiscal year 2008.
        Fiscal Year 2009 Funding Recommendation.--It is requested that the
    congressional committee support an appropriation add-on of $171,000, in
    addition to the $191,000 in the administration's fiscal year 2009
    budget request, for a total of $362,000 for the Upper Penitencia Creek
    Flood Protection Project to continue the Feasibility Study.
    statement of support--san francisquito creek flood damage reduction and
                         ecosystem restoration project
        Background.--The San Francisquito Creek watershed comprises 45
    square miles and 70 miles of creek system. The creek mainstem flows
    through five cities and two counties, from Searsville Lake, belonging
    to Stanford University, to the San Francisco Bay at the boundary of
    East Palo Alto and Palo Alto. Here it forms the boundary between Santa
    Clara and San Mateo counties, California and separates the cities of
    Palo Alto from East Palo Alto and Menlo Park. The upper watershed
    tributaries are within the boundaries of Portola Valley and Woodside
    townships. The creek flows through residential and commercial
    properties, a biological preserve, and Stanford University campus. It
    interfaces with regional and State transportation systems by flowing
    under two freeways and the regional commuter rail system. San
    Francisquito Creek is one of the last natural continuous riparian
    corridors on the San Francisco Peninsula and home to one of the last
    remaining viable steelhead trout runs. The riparian habitat and urban
    setting offer unique opportunities for a multi objective flood
    protection and ecosystem restoration project.
        Flooding History.--The creeks mainstem has a flooding frequency of
    approximately once in 11 years. It is estimated that over $155 million
    in damages could occur in Santa Clara and San Mateo counties from a 1-
    percent flood, affecting 4,850 home and businesses. Significant areas
    of Palo Alto flooded in December 1955, inundating about 1,200 acres of
    commercial and residential property and about 70 acres of agricultural
    land. April 1958 storms caused a levee failure downstream of Highway
    101, flooding Palo Alto Airport, the city landfill, and the golf course
    up to 4 feet deep. Overflow in 1982 caused extensive damage to private
    and public property. The flood of record occurred on February 3, 1998,
    when overflow from numerous locations caused severe, record
    consequences with more than $28 million in damages. More than 1,100
    homes were flooded in Palo Alto, 500 people were evacuated in East Palo
    Alto, and the major commute and transportation artery, Highway 101, was
    closed.
        Status.--Active citizenry are anxious to avoid a repeat of February
    1998 flood. Numerous watershed based studies have been conducted by the
    Corps, the Santa Clara Valley Water District, Stanford University, and
    the San Mateo County Flood Control District. A grassroots, consensus-
    based organization, called the San Francisquito Watershed Council, has
    united stakeholders including local and State agencies, citizens, flood
    victims, developers, and environmental activists for over 10 years. The
    San Francisquito Creek Joint Powers Authority was formed in 1999 to
    coordinate creek activities with five member agencies and two associate
    members. The Authority Board has agreed to be the local sponsor for a
    Corps project and received congressional authorization for a Corps
    reconnaissance study in May 2002. The Reconnaissance Study was
    completed in March 2005 and the Feasibility Study was initiated in
    November 2005.
        Fiscal Year 2008 Funding.--Congress did not appropriate any funding
    to the project in fiscal year 2008.
        Fiscal Year 2009 Funding Recommendation.--It is requested the
    congressional committee support an appropriation add-on of $700,000 to
    continue the Feasibility Study.
     statement of support--coyote/berryessa creek project, berryessa creek
                                project element
        Background.--The Berryessa Creek Watershed is located in northeast
    Santa Clara County, California, near the southern end of the San
    Francisco Bay. A major tributary of Coyote Creek, Berryessa Creek
    drains 22 square miles in the city of Milpitas and a portion of San
    Jose.
        On average, Berryessa Creek floods once every 4 years. The most
    recent flood in 1998 resulted in significant damage to homes and
    automobiles. The proposed project on Berryessa Creek, from Calaveras
    Boulevard to upstream of Old Piedmont Road, will protect portions of
    the cities of San Jose and Milpitas. The flood plain is largely
    urbanized with a mix of residential and commercial development. Based
    on the U.S. Army Corps of Engineers (Corps) 2005 report, a 1-percent or
    100-year flood could potentially result in damages exceeding $179
    million. Benefit-to-cost ratios for the six project alternatives being
    evaluated range from 2:1 to 7.3:1.
        Study Synopsis.--In January 1981, the Santa Clara Valley Water
    District (District) applied for Federal assistance for flood protection
    projects under section 205 of the 1948 Flood Control Act. The Water
    Resources Development Act of 1990 authorized construction on the
    Berryessa Creek Flood Protection Project as part of a combined Coyote/
    Berryessa Creek Project to protect portions of the cities of Milpitas
    and San Jose.
        The Coyote Creek element of the project was completed in 1996. The
    Berryessa Creek Project element proposed in the Corps' 1987 feasibility
    report consisted primarily of a trapezoidal concrete lining. This was
    not acceptable to the local community. The Corps and the District are
    currently preparing a General Reevaluation Report which involves
    reformulating a project which is more acceptable to the local community
    and more environmentally sensitive. Project features will include
    setback levees and floodwalls to preserve sensitive areas (minimizing
    the use of concrete), appropriate aquatic and riparian habitat
    restoration and fish passage, and sediment control structures to limit
    turbidity and protect water quality. The project will also accommodate
    the city of Milpitas' adopted trail master plan. Estimated total costs
    of the General Reevaluation Report work are $6.5 million, and should be
    completed in 2009.
        Fiscal Year 2008 Funding.--Congress appropriated $1.147 million to
    the project in fiscal year 2008.
        Fiscal Year 2009 Funding Recommendation.--Based on the continuing
    threat of significant flood damage from Berryessa Creek and the need to
    continue with the General Reevaluation Report, it is requested that the
    congressional committee support an appropriation add-on of $650,000, in
    addition to the $950,000 in the administration's fiscal year 2009
    budget request, for a total of $1.6 million for the Berryessa Creek
    Flood Protection Project element of the Coyote/Berryessa Creek Project.
         statement of support--south san francisco bay shoreline study
        Background.--Congressional passage of the Water Resources
    Development Act of 1976, originally authorized the San Francisco Bay
    Shoreline Study, and Santa Clara Valley Water District (District) was
    one of the project sponsors. In 1990, the U.S. Army Corps of Engineers
    (Corps) concluded that levee failure potential was low because the
    existing non-Federal, non-engineered levees, which were routinely
    maintained by Leslie Salt Company (subsequently Cargill Salt) to
    protect their industrial interests, had historically withstood
    overtopping without failure. As a result, the project was suspended
    until adequate economic benefits could be demonstrated.
        Since the project's suspension in 1990, many changes have occurred
    in the South Bay. The State and Federal acquisition of approximately
    15,000 acres of South Bay salt ponds was completed in early March 2003.
    The proposed restoration of these ponds to tidal marsh will
    significantly alter the hydrologic regime and levee maintenance
    activities, which were assumed to be constant in the Corps' 1990 study.
    In addition to the proposed restoration project, considerable
    development has occurred in the project area. Many major corporations
    are now located within Silicon Valley's Golden Triangle, lying within
    and adjacent to the tidal flood zone. Damages from a 1-percent high
    tide are anticipated to far exceed the $34.5 million estimated in 1981,
    disrupting business operations, infrastructure, and residences. Also,
    historical land subsidence of up to 6 feet near Alviso, as well as the
    structural uncertainty of existing salt pond levees, increases the
    potential for tidal flooding in Santa Clara County.
        In July 2002, Congress authorized a review of the Final 1992 Letter
    Report for the San Francisco Bay Shoreline Study. The final fiscal year
    2004 appropriation for the Corps included funding for a new start
    Reconnaissance Study.
        Project Synopsis.--At present, large areas of Santa Clara, Alameda
    and San Mateo Counties would be impacted by flooding during a 1-percent
    high tide. The proposed restoration of the South San Francisco Bay salt
    ponds will result in the largest restored wetland on the west coast of
    the United States, and also significantly alter the hydrologic regime
    adjacent to South Bay urban areas. The success of the proposed
    restoration is therefore dependent upon adequate tidal flood
    protection, and so this project provides an opportunity for multi-
    objective watershed planning in partnership with the California Coastal
    Conservancy, the lead agency on the restoration project. Project
    objectives include: restoration and enhancement of a diverse array of
    habitats, especially several special status species; tidal flood
    protection; and provision of wildlife-oriented public access. A Corps
    Reconnaissance Study was completed in September 2004 and the
    Feasibility Study was initiated in September 2005.
        Fiscal Year 2008 Funding.--Congress appropriated $785,000 to the
    project in fiscal year 2008.
        Fiscal Year 2009 Funding Request.--It is requested that the
    congressional committee support an appropriation add-on of $2.8 million
    to continue the Feasibility Study to evaluate integrated flood
    protection and environmental restoration.
                   statement of support--llagas creek project
        Background.--The Llagas Creek Watershed is located in southern
    Santa Clara County, California, serving the communities of Gilroy,
    Morgan Hill and San Martin. Historically, Llagas Creek has flooded in
    1937, 1955, 1958, 1962, 1963, 1969, 1982, 1986, 1996, 1997, 1998, 2002,
    and 2008. The 1997, 1998, and 2002 floods damaged many homes,
    businesses, and a recreational vehicle park located in areas of Morgan
    Hill and San Martin. These are areas where flood protection is
    proposed. Overall, the proposed project will protect the floodplain
    from a 1 percent flood affecting more than 1,100 residential buildings,
    500 commercial buildings, and 1,300 acres of agricultural land.
        Project Synopsis.--Under authority of the Watershed Protection and
    Flood Prevention Act (Public Law 566), the Natural Resources
    Conservation Service completed an economic feasibility study in 1982
    for constructing flood damage reduction facilities on Llagas Creek. The
    Natural Resources Conservation Service completed construction of the
    last segment of the channel for Lower Llagas Creek in 1994, providing
    protection to the project area in Gilroy. The U.S. Army Corps of
    Engineers (Corps) is currently updating the 1982 environmental
    assessment work and the engineering design for the project areas in
    Morgan Hill and San Martin. The engineering design is being updated to
    protect and improve creek water quality and to preserve and enhance the
    creek's habitat, fish, and wildlife while satisfying current
    environmental and regulatory requirement. Significant issues include
    the presence of additional endangered species including red-legged frog
    and steelhead, listing of the area as probable critical habitat for
    steelhead, and more extensive riparian habitat than were considered in
    1982.
        Until 1996, the Llagas Creek Project was funded through the
    traditional Public Law 566 Federal project funding agreement with the
    Natural Resources Conservation Service paying for channel improvements
    and the District paying local costs including utility relocation,
    bridge construction, and right of way acquisition. Due to the steady
    decrease in annual appropriations for the Public Law 566 construction
    program since 1990, the Llagas Creek Project had not received adequate
    funding to complete the Public Law 566 project. To remedy this
    situation, the District worked with congressional representatives to
    transfer the construction authority from the Department of Agriculture
    to the Corps under the Water Resources Development Act of 1999 (section
    501). Since the transfer of responsibility to the Corps, the District
    has been working with the Corps to complete the project. In November
    2007, Congress passed the Water Resources Development Act of 2007
    (Public Law 110-114, section 3022) revising the estimated total project
    cost for the remaining reaches of the project to $105 million with a
    Federal share of $65 million and a local share of $40 million. The bill
    language also directs the Corps to complete the construction of the
    project.
        Fiscal Year 2008 Funding.--Congress did not appropriate any funding
    to the project in fiscal year 2008.
        Fiscal Year 2009 Funding Recommendation.--Based upon the high risk
    of flood damage from Llagas Creek, it is requested that the
    congressional committee support an appropriation add-on of $1.8 million
    in fiscal year 2009 for planning, design, and environmental updates for
    the Llagas Creek Project.
                 statement of support--guadalupe river project
        Background.--The Guadalupe River is a major waterway flowing
    through a highly developed area of San Jose, in Santa Clara County,
    California. A major flood would damage homes and businesses in the
    heart of Silicon Valley. Historically, the river has flooded downtown
    San Jose and the community of Alviso. According to the U.S. Army Corps
    of Engineers (Corps) 2000 Final General Reevaluation & Environmental
    Report for Proposed Project Modifications, estimated damages from a 1
    percent flood in the urban center of San Jose are over $576 million.
    The Guadalupe River overflowed in February 1986, January 1995, and
    March 1995, damaging homes and businesses in the St. John and Pleasant
    Street areas of downtown San Jose. In March 1995, heavy rains resulted
    in breakouts along the river that flooded approximately 300 homes and
    business.
        Project Synopsis.--In 1971, the local community requested that the
    Corps reactivate its earlier study. Since 1972, substantial technical
    and financial assistance have been provided by the local community
    through the Santa Clara Valley Water District in an effort to
    accelerate the project's completion. To date, more than $85.8 million
    in local funds have been spent on planning, design, land purchases, and
    construction in the Corps' project reach.
        The Guadalupe River Project received authorization for construction
    under the Water Resources Development Act of 1986; the General Design
    Memorandum was completed in 1992, the local cooperative agreement was
    executed in March 1992, the General Design Memorandum was revised in
    1993, construction of the first phase of the project was completed in
    August 1994, construction of the second phase was completed in August
    1996. Project construction was temporarily halted due to environmental
    concerns.
        To achieve a successful, long-term resolution to the issues of
    flood protection, environmental mitigation, avoidance of environmental
    effects, and project monitoring and maintenance costs, a multi-agency
    ``Guadalupe Flood Control Project Collaborative'' was created in 1997.
    A key outcome of the collaborative process was the signing of the
    Dispute Resolution Memorandum in 1998, which modified the project to
    resolve major mitigation issues and allowed the project to proceed. The
    Energy and Water Development Appropriations Act of 2002 was signed into
    law on November 12, 2001. This authorized the modified Guadalupe River
    Project at a total cost of $226.8 million. Subsequent to the
    authorization, the project cost has been raised to $251 million.
    Construction of the last phase of flood protection was completed
    December 2004 and a completion celebration held in January 2005. The
    remaining construction consists of railroad bridge replacements and
    mitigation plantings. The overall construction of the project including
    the river park and the recreation elements is scheduled for completion
    in 2008.
        Fiscal Year 2008 Funding.--Congress appropriated $1.783 million for
    the project in fiscal year 2008.
        Fiscal Year 2009 Funding Recommendation.--It is requested that the
    congressional committee support an appropriation add-on of $10 million
    to continue construction of the final phase of the Guadalupe River
    Flood Protection Project.
              statement of support--upper guadalupe river project
        Background.--The Guadalupe River is one of two major waterways
    flowing through a highly urbanized area of Santa Clara County,
    California, the heart of Silicon Valley. Historically, the river has
    flooded the central district and southern areas of San Jose. According
    to the U.S. Army Corps of Engineers (Corps) 1998 feasibility study,
    severe flooding would result from a 100-year flooding event and
    potentially cause $280 million in damages.
        The probability of a large flood occurring before implementation of
    flood prevention measures is high. The upper Guadalupe River overflowed
    in March 1982, January 1983, February 1986, January 1995, March 1995,
    and February 1998, causing damage to several residences and businesses
    in the Alma Avenue and Willow Street areas. The 1995 floods in January
    and March, as well as in February 1998, closed Highway 87 and the
    parallel light-rail line, a major commute artery.
        Project Synopsis.--In 1971, the Santa Clara Valley Water District
    (District) requested the Corps reactivate an earlier study of the
    Guadalupe River. From 1971 to 1980, the Corps established the economic
    feasibility and Federal interest in the Guadalupe River only between
    Interstate 880 and Interstate 280. Following the 1982 and 1983 floods,
    the District requested that the Corps reopen its study of the upper
    Guadalupe River upstream of Interstate 280. The Corps completed a
    reconnaissance study in November 1989, which established an
    economically justifiable solution for flood protection in this reach.
    The report recommended proceeding to the feasibility study phase, which
    began in 1990 and was completed in 1998. Preconstruction Engineering
    and Design commenced in 1999 and currently several reaches are ready
    for construction.
        The Upper Guadalupe River Flood Protection Project was first
    authorized for Federal construction in the Water Resources Development
    Act of 1999 (section 101). This authorization was for a project cost of
    $140 million with an unfavorable cost-sharing formula. In November
    2007, Congress passed the Water Resources Development Act of 2007
    (Public Law 110-114, section 3037) for an estimated revised project
    cost of $256 million with a Federal share of $136.7 million and local
    share of $119.3 million.
        The project cooperation agreement was signed on July 21, 2007, and
    construction is planned to commence in July 2008.
        Fiscal Year 2008 Funding.--Congress appropriated $439,000 to the
    project in the fiscal year 2008.
        Fiscal Year 2009 Funding Recommendation.--It is requested that the
    congressional committee support an appropriation add-on of $12.5
    million in fiscal year 2009 to continue construction on the Upper
    Guadalupe River Flood Protection Project.
                                     ______

         Prepared Statement of the City of Los Angeles Board of Harbor
                                 Commissioners
        Chairman Dorgan and members of the subcommittee, thank you for the
    opportunity to submit testimony in support of full funding of the
    Channel Deepening Project at the Port of Los Angeles/Los Angeles
    Harbor, the largest and busiest container seaport in the United States
    and tenth largest in the world. Our testimony speaks in support of an
    fiscal year 2009 appropriation of $1.33 million for the final Federal
    share that will complete construction of the Channel Deepening Project.
    Proposed funding for the Channel Deepening Project was not included in
    the President's fiscal year 2009 budget. Construction of our Federal
    deep-draft navigation channels and ship berths is approximately 85
    percent complete. Your full appropriation of the requested $1.33
    million will enable the Army Corps of Engineers to finish construction
    of the remainder of the Project; the Corps has stated that it has the
    capability to fully obligate and spend this amount in fiscal year 2009.
    Dredging for the project began in early 2003 with construction
    originally scheduled for completion in 2006.
        The Port of Los Angeles is America's busiest seaport with record
    volumes of cargo moving through the 7,500-acre harbor. Its strong
    performance is attributed to a solid U.S. economy and the recovering
    Asian economies with a renewed manufacturing demand for American
    exports. The Port itself is a major reason for the remarkable cargo
    volumes. Its world-class facilities and infrastructure maximize the
    ``one-stop shopping'' concept of cargo transportation and delivery
    favored by most shipping lines. Ocean carriers can send the majority of
    their west coast-bound cargo to Los Angeles with full confidence in the
    Port's modern cargo terminals and efficient train/truck intermodal
    network. The Channel Deepening Project is a critical Federal navigation
    improvement project, and is the underpinning of the ongoing confidence
    that shipping lines have in the Port of Los Angeles.
        In the fiscal year 2006 Energy and Water Development Appropriations
    Act, Congress authorized an increase in the total project cost to $222
    million from $194 million, representing a Federal share of $60.7
    million and a local share of $161.3 million in accordance with the Army
    Corps of Engineers' revision. This revision accounts for credits for
    in-kind services provided by the Port and other required project
    modifications, including adjustments for construction contract changes,
    adjustments to the disposal costs for the dredged material, and project
    administration costs. The cost-share amounts for the Channel Deepening
    Project is currently under review, as well as a Supplemental EIS/EIR
    that will evaluate and determine the best alternative for increased
    disposal capacity. Under consideration for placement of the remaining
    dredge material are the formation of additional lands for future Port
    development and environmental enhancements through the creation of
    improved submerged marine habitats. Upon completion of both reviews,
    the new cost-sharing amounts and the additional costs for disposal at
    the recommended site(s) will be established. The need for a
    Supplemental EIS/EIR has moved project completion to fiscal year 2009.
                            port navigation demands
        The evolving international shipping industry prompted a
    collaborative effort by the Port of Los Angeles and the Corps of
    Engineers to implement the Channel Deepening Project in the early
    1980s. With this project, the Port will deepen its main Federal channel
    and tributary channels by 8 feet, from -45 to -53 feet Mean Lower Low
    Water (MLLW), to accommodate the industry's shift to larger container
    vessels. The first of these deeper-draft ships began calling at the
    Port of Los Angeles in August of 2004, carrying 8,000 20-foot
    equivalent units of containers (TEUs) and drafting at -50 feet.
    Carriers are continuing to order these larger, post-Panamax vessels
    that range in size from 7,500 TEUs to 10,000 TEUs. These vessels are
    now in service in the international shipping trade and will continue to
    be delivered to shipping lines at a steady pace for the foreseeable
    future, which means that ports unable to accommodate the bigger ships
    will be left out of the surge in trade if they are unable to
    accommodate these vessels.
        As we have testified before, cargo throughput for the San Pedro Bay
    port complex, comprising the Ports of Los Angels and Long Beach--and
    the Port of Los Angeles in particular--has a tremendous impact on the
    U.S. economy. We at the Port of Los Angeles cannot overemphasize this
    fact. The ability of the Port to meet the spiraling demands of the
    steady growth in international trade is dependent upon the speedy
    construction of sufficiently deep navigation channels to accommodate
    the new containerships. These new ships provide greater efficiencies in
    cargo transportation, carrying one-third more cargo than most of the
    current fleet, and making more product inventory of imported goods
    available to American consumers at lower prices. In addition, exports
    from the United States have become more competitive in foreign markets.
    However, for American seaports to keep up, they must immediately make
    the necessary infrastructure improvements that will enable them to
    participate in this rapidly changing global trading arena.
        Mr. Chairman, as we have said before, these state-of-the-art
    container ships represent the new competitive requirements for
    international container shipping efficiencies in the 21st century, as
    evidenced by the increased volume of international commerce. As such,
    we ask your subcommittee to fully appropriate the $1.33 million for
    fiscal year 2009 that will enable the Army Corps of Engineers to
    complete construction of the Channel Deepening Project in fiscal year
    2009.
                               economic benefits
        The Port of Los Angeles is one of the world's largest trade
    gateways, and the scope of its economic contributions to the Southern
    California regional economy--and to the U.S. economy--is critically
    important. Currently, nearly 45 percent of containerized cargo entering
    the United States is handled at the San Pedro Bay port complex with the
    Port of Los Angeles, alone, handling a record 8.5 million TEUs just
    last year. This represents significant continued growth for any
    American seaport. The national economics of trade through the Port of
    Los Angeles is significant, touching every Congressional district in
    the country. Some 190 million metric revenue tons of cargo, valued at
    more than $238 billion, were handled at the Port in 2007, with $223
    billion in trade benefiting the national economy based on the $5.1
    billion it generated in State and local tax revenues.
        Locally, the Port is connected, directly or indirectly, with tens
    of billions of dollars in industry sales each year in Southern
    California. Those sales translate into hundreds of thousands of local
    jobs representing billions in wages, salaries, and tax revenues.
    Regional benefits from Port of Los Angeles trade include:
      --1.1 million jobs in California;
      --3.3 million permanent, well-paying jobs in the United States;
      --$89.2 billion in California trade value;
      --$223 billion in U.S. trade value;
      --$5.1 billion in State tax revenue; and
      --$21.5 billion in Federal tax revenue.
        This economic impact is a direct result of international waterborne
    trade flowing through the Port of Los Angeles. Clearly, the Channel
    Deepening Project is a commercial, Federal navigation project of
    tremendous national economic significance, and one that will yield
    exponential economic and environmental returns to the United States
    annually. Furthermore, the U.S. Customs Service reports that more than
    $12 million a day in customs duties are taken from the Port. The Los
    Angeles Customs District leads the Nation in total duties collected for
    maritime activities, collecting more than $6 billion in 2005 alone. The
    return on the Federal investment at the Port of Los Angeles is real and
    quantifiable, and we expect it to continue to surpass the cost-benefit
    ratio--as determined by the Army Corps of Engineers' project
    Feasibility Study--many times over.
        In closing, Federal investment in the Channel Deepening Project
    will ensure that the Port of Los Angeles, the Nation's busiest
    container seaport, remains at the forefront of the new international
    trade network well into this century. The Channel Deepening Project
    marks the second phase of the 2020 Infrastructure Development Plan that
    began with the Pier 400 Deep-Draft Navigation and Landfill Project. The
    Port of Los Angeles is moving forward with the 2020 Plan designed to
    meet the extraordinary infrastructure demands placed on it in the face
    of the continued high volume of international trade.
        Chairman Dorgan, the Port of Los Angeles respectfully urges your
    subcommittee to appropriate the full $1.33 million request for fiscal
    year 2009 that will enable the Army Corps of Engineers to complete
    construction of the Channel Deepening Project in fiscal year 2009.
        Thank you, Mr. Chairman, for the opportunity to submit this
    testimony for continued Congressional support of the Channel Deepening
    Project at the Port of Los Angeles. The Port has long valued the
    support of your subcommittee and its appreciation of the role the Port
    of Los Angeles plays in this country's economic strength and vitality.

                                     ______

                           DEPARTMENT OF THE INTERIOR

                             Bureau of Reclamation

       Prepared Statement of the Garrison Diversion Conservancy District
        Mr. Chairman, members of the subcommittee, my name is Dave Koland;
    I serve as the general manager of the Garrison Diversion Conservancy
    District. This is a request for a $102 million appropriation for the
    Pick-Sloan Missouri Basin Program/Garrison Diversion Unit, Bureau of
    Reclamation, Water and Related Resources, Department of the Interior.
    The mission of Garrison Diversion is to provide a reliable, high
    quality and affordable water supply to the areas of need in North
    Dakota. Over 77 percent of our State residents live within the
    boundaries of the district.
        The President's fiscal year 2009 budget request was pitifully
    inadequate in meeting the commitments the Federal Government has made
    to North Dakota. In return for accepting a permanent flood on 500,000
    acres of prime North Dakota river valley, the Federal Government
    promised the State and tribes that they would be compensated as the
    dams were built. The dams were completed over 50 years ago and still we
    wait for the promised compensation. At the rate of payment the
    President's budget proposes, the Federal Government will not even stay
    current with the indexing applied by law on their commitment to North
    Dakota.
        The Municipal Rural & Industrial (MR&I) program was started in 1986
    after the Garrison Diversion Unit (GDU) was reformulated from a
    million-acre irrigation project into a multipurpose project with
    emphasis on the development and delivery of municipal and rural water
    supplies. The statewide MR&I program has focused on providing grant
    funds for water systems that provide water service to previously
    unserved areas of the State. The State has followed a policy of
    developing a network of regional water systems throughout the State.
                          north dakota's success story
        Rural water systems are being constructed using a unique blend of
    local expertise, State financing, rural development loans and MR&I
    grant funds to provide an affordable rate structure; and the expertise
    of the Bureau of Reclamation (BOR) to deal with design and
    environmental issues. The projects are successful because they are
    driven by a local need to solve a water quantity or quality problem.
    The solution to the local problem is devised by the community being
    affected by the problem. The early, local buy-in helps propel the
    project through the tortuous pre-construction stages.
        The desperate need for clean, safe water is evidenced by the
    willingness of North Dakota's rural residents to pay water rates well
    above the rates EPA considers affordable. The EPA Economic Guidance
    Workbook states that rates greater than 1.5 percent of the median
    household income (MHI) are not only unaffordable, but also ``may be
    unreasonable''.
        The average monthly bill on a rural water system for 6,000 gallons
    of water is currently $59.21. The water rates in rural North Dakota
    would soar to astronomical levels without the 75 percent grant dollars
    provided by the MR&I program. For instance, current rates would have to
    average a truly unaffordable $134.19/month or a whopping 3.8 percent of
    the MHI. Rates would have ranged as high as $190.80/month or a
    prohibitive 5.3 percent of MHI without the assistance of the MR&I
    program.
                   budget impacts on garrison diversion unit
        Let me begin by reviewing the various elements within the current
    budget request and then discuss the impacts that the current level of
    funding will have on the program.
        The President's budget request for fiscal year 2009 is $22.11
    million. This year, Garrison Diversion Conservancy District is asking
    Congress to appropriate a total of $102 million for the GDU. Attachment
    1 is a breakdown of the elements in Garrison Diversion's request. To
    discuss this in more detail, I must first explain that the GDU budget
    consists of several different program items. For ease of discussion, I
    would like to simplify the breakdown into three major categories. The
    first I would call the base operations portion of the budget request.
    This amount is nominally $18 million annually. However, as more Indian
    MR&I projects are completed, the operation and maintenance costs for
    these projects will increase and create a need that will need to be
    addressed.
        The second category of the budget is the MR&I program. This
    consists of both Indian and non-Indian funding. The Dakota Water
    Resources Act of 2000 authorized an additional $200 million for each of
    these MR&I programs. It is our intent that each program reaches the
    conclusion of the funding authorization at the same time. We believe
    this is only fair and have worked with the tribes toward this goal.
        The MR&I program consists of a number of projects that are
    independent of one another. They are generally in the $20 million
    category. Some are, of course, smaller and others somewhat larger; one
    that is considerably larger at $150 million is the Northwest Area Water
    Supply Project (NAWS). The first phase of that project is under
    construction. Several other projects have been approved for future
    funding and numerous projects on the reservations are ready to begin
    construction. These requests will all compete with one another for
    funding. It will be a delicate challenge to balance these projects.
    Nevertheless, we believe that once a project is started, it needs to be
    pursued vigorously to completion. If it is not, we simply run the cost
    up and increase the risk of incompatibility among the working parts.
        The third category of the budget is the Red River Valley Water
    Supply Project (RRVWSP) construction phase. The Dakota Water Resources
    Act of 2000 authorized $200 million for the construction of facilities
    to meet the water quality and quantity needs of the Red River Valley
    communities. Over 42 percent of North Dakota's citizens rely on the
    drought-prone Red River of the North as their primary or sole source of
    water. It is my belief that the final plans and authorizations could be
    expected in approximately 2 to 3 years. This will create a need for
    greater construction funding.
        This major project, once started, should also be pursued vigorously
    to completion. The reasons are the same as for the NAWS project and
    relate to good engineering and construction management. Although
    difficult to predict at this time, it is reasonable to plan that the
    RRVWSP features, once started, should be completed in approximately 3
    years. This creates the need for additional funding of $30 million/year
    starting in fiscal year 2011.
        Using these two projects as examples frames the argument for a
    steadily increasing budget. There is a need to accelerate the MR&I
    program now to assure the timely completion of the NAWS project and
    then to accommodate the need for additional construction funds when the
    RRVWSP construction is underway.
        It is simply good management to blend these needs to avoid drastic
    hills and valleys in the budget requests. By accelerating the
    construction of NAWS and tribal projects which are ready for
    construction during the next few years, some of the pressure will be
    off when the RRVWSP construction funding is needed. A smoother, more
    efficient construction funding program over time will be the result.
        It began with a $67 million budget in fiscal year 2008 and needs to
    gradually build to about $200 million when the RRVWSP construction
    could be in full swing (fiscal year 2011). Mr. Chairman, this is why we
    have supported a budget resolution that recognizes that a robust
    increase in the budget allocation is needed for the Bureau of
    Reclamation, Water and Related Resources Account in fiscal year 2009.
        The Bureau of Reclamation, Rural Development, Garrison Diversion
    Conservancy District, North Dakota State Water Commission and local
    rural water districts have formed a formidable alliance to deal with
    the lack of a high quality, reliable water source throughout much of
    North Dakota. This cost-effective partnership of local control, state-
    wide guidance and Federal support has provided safe, clean, potable
    water to hundreds of communities and thousands of homes across North
    Dakota.
                  attachment 1.--garrison diversion unit (gdu)
    Justification for $102 million appropriation fiscal year 2009
        North Dakota's Municipal, Rural and Industrial (MR&I) water supply
    program funds construction projects State-wide under the joint
    administration of the Garrison Diversion Conservancy District (GDCD)
    and the State Water Commission (SWC).
        Northwest Area Water Supply Project (NAWS) is under construction
    after 18 years of study and diplomatic delay. Construction costs are
    estimated to be $150 million.
        Indian MR&I programs on four reservations are also under
    construction. Tribal and State leaders have agreed to split the MR&I
    allocation on a 50/50 basis.
        The SWC has advanced the MR&I program $21 million to allow
    construction to continue on several critical projects. One project is
    the $85 million South Central Regional Water District system currently
    under construction.

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                                      Amount
    ------------------------------------------------------------------------
    OPERATION AND MAINTENANCE OF INDIAN MR&I SYSTEMS AND JAMESTOWN      5.61
     DAM (Provides for the O&M of the Tribal water systems and the
     Jamestown Dam.)...............................................
    BREAKDOWN OF $96.39 MILLION CONSTRUCTION REQUEST:
        Operation and Maintenance of existing GDU system (Provides      5.24
         for the O&M of the Snake Creek Pumping Plant, McClusky and
         New Rockford Canals.).....................................
        Wildlife Mitigation & Natural Resources Trust (Provides for     3.96
         O&M of Arrowwood, Audubon, Kraft Slough, Lonetree and
         Canalside Lands.).........................................
        Red River Valley Water Supply (Provides for the work on the     0.22
         RRVWSP.)..................................................
        Indian and non-Indian MR&I (Provides funding for the State     84.00
         and tribal MR&I programs. Funding is split  50/50 between
         the two programs.)........................................
        Oakes Test Area and Miscellaneous (Provides for the O&M of      1.09
         the Oakes Test Area, Recreation Facilities, work for 28K
         unidentified acres.)......................................
        Standing Rock Irrigation (Provides for development on           1.88
         Standing Rock Reservation.)...............................
                                                                    --------
          Total for Construction...................................    96.39
              Grand Total..........................................   102.00
    ------------------------------------------------------------------------

                                     ______

         Prepared Statement of the Irrigation and Electrical Districts
                             Association of Arizona
        The Irrigation and Electrical Districts Association of Arizona
    (IEDA) is pleased to present written testimony regarding the fiscal
    year 2009 proposed budgets for the Bureau of Reclamation (Reclamation)
    and the Western Area Power Administration (Western).
        IEDA is an Arizona nonprofit association whose 25 members and
    associate members receive water from the Colorado River directly or
    through the facilities of the Central Arizona Project (CAP) and
    purchase hydropower from Federal facilities on the Colorado River
    either directly from Western or, in the case of the Boulder Canyon
    Project, from the Arizona Power Authority, the State agency that
    markets Arizona's share of power from Hoover Dam. IEDA was founded in
    1962 and continues to represent water and power interests of Arizona
    political subdivisions and their consumers.
                             bureau of reclamation
        IEDA has reviewed the testimony submitted by Susan Bitter Smith,
    the President of the Board of Directors of the Central Arizona Water
    Conservation District (CAWCD), the Arizona three-county special
    district charged with operation of the CAP. We support that testimony
    and urge the subcommittee to actively consider the suggestions made by
    President Smith. We are especially mindful that the Yuma Desalting
    Plant continues to remain underfunded and therefore not able to conduct
    the water conservation, water quality and water supply mission for
    which it was designed. The Yuma Desalting Plant is an integral element
    of the problem solving mechanisms being put in place for the Colorado
    River and especially the Lower Colorado River. Problem solving on the
    Lower Colorado River will be substantially impaired as long as the
    plant remains idle.
        We also wish to call to the subcommittee's attention the issue
    concerning increased security costs at Reclamation facilities post-9/
    11. Legislation is pending before Congress addressing that issue and a
    budget approved for Reclamation for fiscal year 2009 should reflect the
    possibility that this legislation will become law and affect
    Reclamation operations in the next fiscal year.
                       western area power administration
        IEDA has reviewed the testimony submitted by Western's
    administrator, Tim Meeks. We note that both this subcommittee and the
    Senate Energy and Natural Resources Committee Water and Power
    Subcommittee have a concern, as did Administrator Meeks, over the $74
    million shortfall in construction funding proposed for fiscal year
    2009. We believe this shortfall is irresponsible. Western has over
    15,000 miles of transmission line for which it is responsible. It has
    on the order of 14,000 megawatts of generation being considered for
    construction that would depend on that Federal network. The existing
    transmission facilities cannot handle all of these proposals yet the
    region is projected, by all utilities operating in the region, to be
    short of available generation in the 10-year planning window utilities,
    including Western, use.
        Moreover, the $1,881,000 proposed for appropriation in this
    category cannot come even close to keeping existing transmission
    construction going. Repairs and replacements will have to be postponed
    and, considerable hardships to local utilities that depend on the
    Federal network are bound to occur. In Western's Desert Southwest
    Region, our region, over $20 million in work necessary just to maintain
    system reliability will have to be postponed.
        We would be the first to support additional customer financing of
    Federal facilities and expenses through the Contributed Funds Act
    authority under Reclamation law that is available to Western. However,
    programs utilizing non-Federal capital formation require years to
    develop. One such program being proposed by the Arizona Power Authority
    in a partnership with Western has been stuck in bureaucratic red tape
    at the Department of Energy for over 2 years. There is no way that
    Western customers can develop contracts, have them reviewed, gain
    approval of these contracts from Western and their governing bodies,
    find financing on Wall Street and have monies available for the next
    fiscal year. It is just impossible.
        There are impediments to using existing Federal laws in
    facilitating non-Federal financing of Federal facilities and repairs to
    Federal facilities and Congress should examine them. But dropping this
    bomb on us 9 months before the beginning of the fiscal year, when there
    just is not the time necessary to develop alternative capital
    formation, is bad public policy and should not be countenanced. We urge
    the subcommittee to restore a reasonable amount of construction funding
    to Western so it can continue to do its job in keeping its transmission
    systems functioning and completing the tasks that it has in the
    pipeline that are critical to its customers throughout the West.
                                   conclusion
        Thank you for the opportunity to submit this written testimony. If
    we can provide any additional information or be of any other service to
    the subcommittee, please do not hesitate to get in touch with us.
                                     ______

    Prepared Statement of the Oglala Sioux Rural Water Supply System, West
     River/Lyman Jones Rural Water System, Rosebud Rural Water System, and
                       the Lower Brule Rural Water System
                               mni wiconi project
    Fiscal Year 2009 Request
        The Mni Wiconi Project beneficiaries respectfully request
    appropriations of $38.378 million for construction ($28.196 million)
    and operation and maintenance (OMR) activities ($10.182 million) for
    fiscal year 2009:

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                                Fiscal Year
                                                               2009 Request
    ------------------------------------------------------------------------
    Construction............................................          28.196
    OMR.....................................................          10.182
                                                             ---------------
          Total.............................................          38.378
    ------------------------------------------------------------------------

    Construction Funds
        Construction funds would be utilized as follows:

    ------------------------------------------------------------------------
                          Project Area                            Amount
    ------------------------------------------------------------------------
    Oglala Sioux Rural Water Supply System:
        Core................................................      $1,115,000
        Distribution........................................      14,775,000
    West River/Lyman-Jones RWS..............................       5,133,000
    Rosebud RWS.............................................       7,173,000
                                                             ---------------
          Total.............................................      28,196,000
    ------------------------------------------------------------------------

        As shown in the table below, the project will be 81 percent
    complete at the end of fiscal year 2008. Construction funds remaining
    to be spent after fiscal year 2008 will total $87.691 million within
    the current authorization (in October 2007 dollars). Extension of the
    project authorization from fiscal year 2008 through fiscal year 2013
    was accomplished by Public Law 110-161. Additional administrative and
    overhead costs of extending the project, additional construction costs,
    and accelerated inflation over the next 5 years are expected to
    increase project costs to $137.167 million after fiscal year 2008.

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

    ------------------------------------------------------------------------
    Total Federal Construction Funding (Oct. 2007 dollars)..    $451,707,000
    Estimated Federal Spent Through Fiscal Year 2008........    $364,016,000
    Percent Spent through Fiscal Year 2008..................           80.59
    Amount Remaining After 2008:
        Total Authorized (Oct. 2007 dollars)................     $87,691,000
        Overhead Adjustment for Extension to Fiscal Year        $109,851,000
         2013 and Other.....................................
        Adjustment for Annual Inflation.....................    $137,167,000
    Completion Fiscal Year (Statutory Fiscal Year 2013;                 2013
     Public Law 110-161)....................................
    Years to Complete.......................................               5
    Average Annual Required for Finish......................     $27,433,000
    ------------------------------------------------------------------------

        Cost indexing over the last 5 years has averaged 7.89 percent for
    pipelines. Pipelines are the principal components yet to be completed
    (see chart below). Assuming an average 7.89 percent inflation in
    construction costs in the remaining 5 years to complete the project,
    average funding of $27.433 million is required. The President's budget
    of $16.24 million is grossly inadequate, departs significantly from
    recent budgets and threatens an undetermined delay in completing the
    project by 2013, the new date established by Congress in Public Law
    110-161 last year.

    Oglala Sioux Rural Water Supply System (OSRWSS)
                Core System
        The funding request will provide $1,115,000 for the OSRWSS core
    system. These funds will complete the project's transmission system
    that serves all sub-projects managed by separate entities, including
    the Pine Ridge Indian Reservation, Rosebud Indian Reservation, Lower
    Brule Indian Reservation and the 8-county service area of West River/
    Lyman-Jones. Funds will be used to connect the northern portion with
    the southern portion of the transmission system and permit water
    delivery in either direction to accommodate a shutdown in the western
    part of the water transmission system.
        The completion of the OSRWSS core system is an historic milestone
    and permits greater focus in the remaining years of the project
    authorization on completion of the distribution systems.
                Distribution System
        The Pine Ridge Indian Reservation has not received water from the
    OSRWSS core system prior to fiscal year 2008. Over 40 percent of the
    project's population resides on the Pine Ridge Indian Reservation. The
    Reservation public has awaited delivery of project water from the
    Missouri River since 1994. Project funds in fiscal year 2009 will
    permit the completion of the on-Reservation transmission system between
    the connection with the OSRWSS core system (see discussion above) and
    the community of Kyle in the central portion of the Pine Ridge Indian
    Reservation. Delivery of Missouri River water at this location will
    allow distribution to OSRWSS project pipelines built earlier that serve
    the communities of Kyle, Sharps Corner, Rocky Ford, Red Shirt,
    Manderson, Evergreen and Porcupine and the large number of rural homes
    between the communities along these pipelines.
        The fiscal year 2009 request also funds additional on-Reservation
    transmission system that will advance the delivery of Missouri River
    water toward the largest community on the Reservation, Pine Ridge
    Village. Connection to Pine Ridge Village is scheduled in fiscal year
    2010. The request will connect the transmission system from Porcupine
    Butte to the community of Wounded Knee and serve rural homes south of
    Manderson. The request will fund an additional transmission system
    beyond Pine Ridge Village toward the community of Oglala and will
    connect with OSRWSS pipelines built in the early years of the project.
        As set forth above, the focus on the Pine Ridge Indian Reservation
    in fiscal year 2009 is to construct the transmission system that serves
    as the ``backbone'' of the project on the Reservation. This
    distribution system is now reliant upon groundwater exclusively.
    Groundwater will be retained where adequate and safe. Missouri River
    water will serve as a backup to groundwater supplies and as the sole
    supply in areas where groundwater is deficient.
        The Oglala Sioux Tribe is supportive of the funding request of
    other sponsors.
    West River/Lyman-Jones Rural Water System
        Priority projects for the WR/LJ system include the Powell Area
    Project, service to new members within the system and distribution
    system storage. The Powell area, from Midland to Philip and from the
    Bad River to the Elbon service area, continues to be impacted by
    drought conditions that have persisted since 2001. Powell area users
    have patiently waited as the OSRWSS North Core pipeline was constructed
    through their area. With its completion their project area has a supply
    source from which distribution lines can be constructed.
        Projects in the Reliance area and Eastern Mellette County were
    constructed with emphasis on pipeline. Needed storage structures were
    deferred until additional funds were made available. Water use has
    increased each year since completion of these projects. Providing
    storage within those service areas increases system capability to meet
    peak demands and improves system reliability.
        The WR/LJ system receives new requests for service in completed
    project areas as stock ponds and wells go dry and as people move into
    those areas. Further additions are required as existing members request
    added connections to serve livestock in other locations. These
    additions are a demonstration of the need for this important project.
    Rosebud Rural Water System (Sicangu Mni Wiconi)
        In fiscal year 2009 the Rosebud Sioux Tribe will complete the
    necessary infrastructure to supply surface water to portions of Todd
    County, which will reduce the need for summertime water restrictions
    that have resulted from overextending the interim groundwater supply.
    Work began on this series of projects in the summer of 2007 and the
    primary pipeline and pump stations will be completed in the summer of
    2008. The receiving reservoir at the end of this pipeline is partially
    funded with fiscal year 2008 funds as is the large diameter pipeline
    that will connect the town of Mission and eastern Todd County to the
    surface water supply. However, both of these projects require fiscal
    year 2009 funding for completion.
        Two additional projects are also scheduled for 2009. Phase I of the
    Old Rosebud project will replace corroded iron pipelines in the older
    portion of the Rosebud community with modern plastic pipe. This project
    is designed and ready to bid; however, to reduce costs and improve
    effectiveness, it is being bid and managed in conjunction with a Bureau
    of Indian Affairs street replacement project and an Indian Health
    Service sewer replacement project. Rural Development is also assisting
    with funding for the sewer work. By completing water, sewer and street
    improvements at the same time, the cost of excavation and reclamation
    for the water portion of the work is significantly reduced. Upgrading
    water and sewer lines concurrently with the paving project also
    prolongs the useful life of the new streets because the new pavement
    will not need to be disturbed (and then patched) to repair water main
    breaks.
        The other major project scheduled for 2009 will serve the rapidly
    growing Sicangu Village area. The existing wells and aquifer in this
    area are not capable of supplying the growing demands. A pipeline will
    connect the community to the existing well field several miles south of
    the town of Mission. Adequate capacity will be available in that well
    field after the Mission area is connected to the surface water supply.
        Other projects include a new well for the well field near St.
    Francis and the ongoing service line and connections installed by the
    tribal construction crew. The new well near St. Francis is needed
    because two of the existing wells currently run 24 hours a day during
    periods of peak demand in summer months. The third existing well does
    not have sufficient capacity to allow either of the two primary wells
    to recover. The St. Francis well field also supplies the Spring Creek
    and Grass Mountain areas.
    Operation, Maintenance and Replacement Budget
        The sponsors have and will continue to work with Reclamation to
    ensure that their budgets are adequate to properly operate, maintain
    and replace (OMR) respective portions of the core and distribution
    systems. The sponsors will also continue to manage OMR expenses in a
    manner ensuring that the limited funds can best be balanced between
    construction and OMR. The project has been treating and delivering more
    water each year from the OSRWSS Water Treatment Plant near Fort Pierre.
    Completion of significant core and distribution pipelines has resulted
    in more deliveries to more communities and rural users. The need for
    sufficient funds to properly operate and maintain the functioning
    system throughout the project has grown as the project has now reached
    73 percent completion. The OMR budget must be adequate to keep pace
    with the system that is placed in operation. The administration's
    request for fiscal year 2009 is $9.374 million less than the
    administration's fiscal year 2008 request of $9.526 million despite the
    acknowledged increasing need for OMR funds.
        The supporting documentation for the Great Plains Region budget
    request prioritizes the OMR of the Tribal features of Mni Wiconi.
    However, it should be noted that the tribal features of Mni Wiconi do
    not participate in Reclamation's Replacement, Additions and
    Extraordinary (RAX) program for which $9.8 million has been requested
    by Reclamation for their non-tribal projects in the Great Plains
    Region. The tribal systems also have RAX needs.
        The Mni Wiconi Project tribal beneficiaries (as listed below)
    respectfully request appropriations for OMR in fiscal year 2009 in the
    amount of $10,182,000:

    ------------------------------------------------------------------------
                          Project Area                          OMR Amount
    ------------------------------------------------------------------------
    Oglala Sioux Rural Water Supply System:
        Core................................................      $2,376,000
        Distribution........................................       2,808,000
    Lower Brule.............................................       1,485,000
    Rosebud RWS.............................................       2,121,000
    Reclamation.............................................       1,392,000
                                                             ---------------
          Total.............................................      10,182,000
    ------------------------------------------------------------------------

                                     ______

                              DEPARTMENT OF ENERGY

        Prepared Statement of the National Congress of American Indians
        On behalf of the National Congress of American Indians, we are
    pleased to present testimony on the administration's fiscal year 2009
    budget request for transportation energy and water development
    programs. We look forward to working with this subcommittee to ensure
    that the critical programs and initiatives are funded at levels that
    will ensure their long term effectiveness.
                      tribal energy access and production
        The lack of access to energy resources and to participation in the
    energy market is still a persistent problem among Indian communities.
    According to the U.S. Census Bureau, 14.2 percent of reservation homes
    lack access to electricity, compared to the national average of less
    than 2 percent.\1\ When provided with innovative energy solutions,
    tribes are embracing them. For example, 350 Navajo Nation members
    recently began renting renewable energy units, which provide them with
    energy for the first time. Using wind technologies, members can power
    their televisions and a few lights. These improvements, while humble,
    can drastically improve the quality of life for Indian people.
    ---------------------------------------------------------------------------
        \1\ Energy Information Administration, Energy Use and Renewable
    Energy Development Potential on Indian Lands, 2000.
    ---------------------------------------------------------------------------
                         tribal water access and rights
        Water resources are, perhaps, the single most important natural
    resource that is at risk for tribes. Climate change and population
    growth forecasts place a large burden on rivers and reservoirs,
    especially in the west, and tribes play a key role in future management
    of these bodies of water. Tribes usually have priority water rights,
    but typically have not exercised their full rights. As water demands
    grow, more tribes will need to exercise their rights and work on
    developing water infrastructure for their communities. The current
    posture of requiring offsets in other Department of Interior programs
    to fund water settlements and projects is potentially harmful to tribal
    programs, and other sources must be utilized.
    Specific Tribal Appropriations Requests; Energy & Water--Department of
            Energy
        Title V--Indian Tribal Energy Development and Self-Determination
    Act Grants.--The Energy Policy Act of 2005 (Public Law 109-058)
    included Title V--Indian Tribal Energy Development and Self-
    Determination Act of 2005, which authorized a competitive grant in the
    amount of $20 million from fiscal year 2006 to 2016 to assist Indian
    tribes in energy education, research and development, planning and
    management needs; and to provide a loan guarantee program to any Indian
    tribes for energy development. These initiatives have yet to be funded
    and again are not included in the President's request budget for the
    Department of Energy's fiscal year 2009.
      --NCAI recommends that the title V grants to Indian tribes be fully
            funded in the amount of $20 million.
        Weatherization Assistance Programs.--The President proposed a
    significant decrease in funding for Indian programs in the Department
    of Energy. The administration proposes the elimination of the
    Weatherization Assistance Programs that provides weatherization
    assistance grants to Indian tribes for low-income and rural homes, and
    the training and technical assistance.
      --NCAI recommends that $22.7 million be made available in fiscal year
            2009 for the Weatherization Assistance Programs, the same
            amount appropriated for fiscal year 2008.
        Office of Indian Energy Policy and Programs.--The President
    requested a substantial decrease for tribal energy activities for
    fiscal year 2009, which would be funded at $1 million compared with
    $5.9 million in fiscal year 2008. The President also proposes no
    resources for the Office of Indian Energy Policy and Programs, which
    was authorized under the Energy Policy Act of 2005 but has never been
    funded. The Energy Policy Act of 2005 authorized this office to
    implement tribal energy initiatives and funding opportunities for
    Indian energy development and tribes have been fighting for even the
    most basic funding each year.
      --NCAI recommends that level funding of $5.9 million be made
            available for fiscal year 2009 for the Office of Indian Energy
            Policy and Programs (OIEPP).
        Renewable Energy Production Incentives.--Another program proposed
    for termination in the fiscal year 2009 President's budget is the
    Renewable Energy Production Incentive (REPI), which provides financial
    incentive payments to publicly owned utilities, not-for-profit electric
    cooperatives, and tribal governments and native corporations that own
    and operate qualifying facilities generating renewable energy. The
    justification for the elimination of REPI by the administration is the
    importance of this program has diminished over time due to reduced cost
    and competitiveness of renewable energy technology.
      --NCAI recommends that $8.5 million be made available for the
            renewable energy and conservation programs and activities for
            fiscal year 2009.
    Bureau of Reclamation (Department of Interior)
        General--Tribal Water Projects and Settlements.--The Bureau of
    Reclamation (BOR) has a significant role in shaping the future of
    tribal water resources. Water rights settlements are often funded
    through BOR, as well as negotiated and implemented. However, the
    process is cumbersome and very tenuous as funding is often difficult to
    obtain. There are nearly 25 settlements nearing implementation that
    will need funding, and the current position of pushing it further down
    the timeline only increases the price. The budget committee needs to
    raise the ceiling.
      --NCAI recommends that the Bureau of Reclamation prioritize funds for
            Indian water projects and water rights settlements.
        Reclamation Fund.--Tribes passed a resolution at the 2007 Annual
    NCAI Conference (No. DEN 07-069) that identifies the Reclamation Fund
    (Fund) as an appropriate vehicle for funding tribal water rights
    settlements. The Fund could be utilized as the primary source for
    funding settlements, which is desperately needed. The Fund was
    established in 1902 to fund water projects in the 17 western States,
    including on tribal lands. The Fund continues to have a growing
    balance, over $7 billion estimated in fiscal year 2007, with mineral
    development providing most of the increase.
      --NCAI recommends that the BOR Reclamation Fund be utilized as a
            substantial source for tribal water projects and settlements.
    Army Corps of Engineers (Department of Defense)
        Army Corps of Engineer projects can provide substantial
    opportunities for water infrastructure development in Indian Country.
    Specifically, the Water Resources Development Act authorizes municipal
    water supply and wastewater treatment projects. These projects are
    crucial for tribes, and funding needs to be increased to tribal
    projects. In the earlier part of this century when Congress invested
    heavily in Corps projects and WPA projects, Indian Country was often
    overlooked. Therefore, our infrastructure, particularly water
    infrastructure has usually never had even the most basic investment.
      --NCAI recommends a minimum of 10 percent of the civil works projects
            that provide environmental infrastructure be set aside for
            tribal specific projects.
                                     ______

      Prepared Statement of the Consortium for Fossil Fuel Science (CFFS)
    production of transportation fuels from coal plus biomass with reduced
                            carbon dioxide emissions
        Chairman Dorgan and members of the subcommittee, we request
    $2,000,000 in funding for a congressionally directed project in the
    budget of the Department of Energy in the Fuels Program of the Office
    of Fossil Energy, to continue a program of research to produce
    transportation fuels from coal plus biomass. This program, which was
    recently initiated with a $750,000 contract from the U.S. Department of
    Energy in fiscal year 2008, will focus on the conversion of coal plus
    waste biomass into ultra-clean transportation fuels by gasification and
    Fischer-Tropsch synthesis. This approach has the potential to minimize
    the amount of carbon dioxide emitted by the fuel conversion process to
    less than that produced by the production of similar transportation
    fuels from petroleum. Additionally, combustion of the biomass component
    of the carbon during fuel utilization in vehicles or planes will be
    carbon dioxide neutral.
    Overview
        Traditional petroleum-derived fuels will continue to dominate
    transportation by vehicles and planes for at least the next 20 years.
    The United States currently imports over 10 million barrels of oil per
    day at a cost exceeding $470 billion/year, most of it from unstable
    regions of the world. Not only is this the biggest item in the U.S.
    trade deficit, it is also a serious threat to our national security.
    Increasing global demand, coupled with an expected peaking in the world
    oil supply, will undoubtedly cause shortages and markedly increased
    prices, possibly deepening the current economic recession and leading
    to more severe recessions in the future.
        It is therefore essential that we begin to produce transportation
    fuels from our own national resources, particularly our most abundant
    energy resource, coal. It is equally essential, however, that we do so
    without harming the environment. The Consortium for Fossil Fuel Science
    (CFFS), a research center of the University of Kentucky, has formed an
    integrated team of fossil fuel scientists from five universities
    (University of Kentucky, West Virginia University, Auburn University,
    University of Utah, and University of Pittsburgh) to conduct a basic
    research program focused on producing Fischer-Tropsch fuels using
    mixtures of coal and biomass as the feedstock. We believe that costs
    can be reduced, a superior transportation fuel can be produced, and
    carbon dioxide emissions can be minimized through such research.
        The CFFS has extensive experience and broad expertise in research
    on the conversion of coal into clean liquid transportation fuels and
    the conversion of coal into hydrogen. We have made significant
    breakthroughs in such areas as:
      --Catalysis of coal conversion reactions.
      --C1 chemistry processes, including Fischer-Tropsch (F-T) synthesis,
            to produce transportation fuels from coal-derived syngas.
      --Conversion of coal and waste materials, including plastic, rubber,
            and cellulose (biomass) into high value oil products.
      --Development of novel processes to produce hydrogen from fossil
            fuels.
      --Environmental research focused on a number of pollutants derived
            from coal (fine particulate matter (PM), toxic trace metals
            (arsenic, chromium, mercury, etc.) and SOX).
        We are now focusing on a research program to develop processes that
    use biomass as a co-feed with coal for the production of clean
    transportation fuels with reduced carbon emissions. In this program,
    lignocellulosic waste materials will be used because they are not food
    feedstocks. Wood wastes and agricultural wastes (sawdust, bark, corn
    stover, etc.) will be emphasized because they reflect the lumber,
    paper, and farming industries in the CFFS States.
    Goals
        Some of the research goals of the CFFS coal + biomass program are
    summarized below.
      --A pilot scale (3-30 lbs/hr) gasifier is under construction that
            will be used to gasify coal + biomass feeds. It will be coupled
            with a supercritical fluid (SCF) F-T synthesis reactor.
      --Biomass feedstocks (lignin, cellulose, hemicellulose, etc.) will be
            reformed in supercritical water (SCW) to produce hydrogen for
            F-T synthesis and fuel upgrading with no net carbon dioxide
            emissions.
      --Iron-alloy nanoparticle catalysts will be used to dehydrogenate
            gaseous alkanes produced by F-T synthesis, yielding pure
            hydrogen to recycle to the coal + biomass syngas stream,
            raising its hydrogen content to avoid carbon dioxide emissions
            from the water-gas shift reaction.
      --A laboratory-scale fluid-bed gasifier will be designed and built to
            convert coal + biomass into syngas with an adjustable
            composition. Potassium and calcium will be tested as catalysts.
      --Novel catalysts (dual function catalysts, metallic nanoparticles on
            carbon nanotube supports, xerogels, etc.) will be developed for
            F-T synthesis using syngas typical of coal + biomass.
      --Systems engineering modeling will be used to optimize fuels
            production from coal + biomass with regard to both economics
            and carbon dioxide emissions.
    Summary
        We request your support for $2,000,000 in funding for this program
    from the Fossil Energy budget for fiscal year 2009. This funding will
    be shared between the CFFS universities to support the second year of a
    3-year research program for the production of liquid transportation
    fuels from coal and biomass. The CFFS will provide $500,000 in cost-
    sharing to support this important research on a topic that is critical
    to both our States and our Nation.
                                     ______

    Prepared Statement of the National Research Center for Coal and Energy,
                            West Virginia University
                fossil energy research and development programs
    Summary
        The National Research Center for Coal and Energy submits this
    testimony in support of the Fossil Energy program and recommends the
    following modifications to the administration's budget request:
      --Carbon Capture and Storage (+$6 million for the Focus Area for
            Carbon Sequestration Science)
      --Fuels Program (+$20 million for continuation of the coal, synthetic
            natural gas, and coal-biomass liquid fuels programs)
      --Advanced Research (+$10 million to initiate a Focus Area for
            Materials Science and +$5 million for the Focus Area for
            Computational Energy Science)
      --Innovations for Existing Plants (+$10 million for criteria
            pollutants and water programs)
      --Oil and Natural Gas Programs (+$30 million to restore programs for
            small producers)
        We recommend a dual program strategy to Congress which includes
    supporting fundamental research for developing new concepts and also
    supporting larger scale projects to prove out and hasten the deployment
    of advanced technologies. A robust coal, oil, and natural gas research
    program is necessary if we are to meet our national energy needs.
    Introduction
        Coal will continue to play a leading role in electrical power
    generation in the United States well into the future. Transforming coal
    into liquid fuels, synthetic natural gas, and/or chemicals can help to
    reduce petroleum imports, bring associated positive effects on our
    international balance of payments, and preserve jobs in this country.
    Concerns about the effect of greenhouse gases on global climate will
    require reducing emissions of CO2 from all fossil fuel use.
    The successful deployment of cost-effective carbon capture and storage
    (CCS) technologies will ensure that America can continue to use its
    abundant domestic fossil fuel resources into the future. Given the
    projected global use of coal and other fossil fuels, leadership by the
    United States to implement low carbon emission technologies will set a
    positive example for the rest of the world. Deployment of U.S. owned
    low-carbon technologies would be an economic stimulus for developing
    new products that can be sold in global markets.
        Advanced low carbon fossil energy technologies will enable the
    world community to meet pressing environmental challenges driven by
    growing economies as both established and emerging nations are faced
    with diminishing resources. We recommend strong congressional support
    for fossil energy research, development, and technology deployment. We
    also call the subcommittee's attention to the critical shortage of
    energy technologists at all levels. We urge your support in particular
    for basic research in fossil energy that supports academic programs
    under which we can both develop breakthrough discoveries and also
    educate our future workforce of scientists and engineers to meet the
    challenges which face the energy sector.
    Carbon Capture and Storage
        We recommend strong support for carbon storage research for
    injecting CO2 into geologic formations. Given the variety of
    potential sinks, multiple projects are needed to prove out technologies
    such as injection into saline aquifers, depleted oil and natural gas
    reservoirs, and coal seams. States like West Virginia offer
    possibilities for demonstrating and deploying capture and storage
    technologies while offering opportunities for our State's coal
    resources to help meet electrical demands of the East Coast. We
    recommend congressional support for a diverse portfolio of investments
    in the National Energy Technology Laboratory (NETL) as the national
    center for carbon management research. NETL should also expand its
    programs on developing pre-and post-combustion CO2 capture
    technology. Continued support for the collaborative research program
    with NETL and the Zero Emissions Technology Center is also recommended.
    Another promising area of research is to explore ways to utilize
    CO2 in processes which do not require storage but result in
    useful products. In addition to supporting the base administration
    request, we recommend restoring the Focus Area for Carbon Sequestration
    Science to its fiscal year 2007 level of $13 million (+$6 million to
    administration request).
    Fuels Program
        The administration request for fuels research includes only $10
    million for the development of hydrogen from coal. This program
    contributes to developing a national hydrogen economy. However, the
    administration program should also support projects which address the
    deployment of hydrogen technologies and the associated critical
    infrastructure issues. We need to demonstrate to the general public
    that hydrogen (from coal) is both economically viable and safe.
        We are also concerned that little attention is paid to developing
    transportation fuels, synthetic natural gas, and/or chemicals from
    alternative energy sources such as coal and coal-biomass blends. We
    recommend adding $20 million for continuation of the fuels programs
    added by Congress in fiscal year 2008. These funds would permit
    investments in fuels research to support programs such as the
    Consortium for Fossil Fuel Science and the Center for Advanced
    Separation Technology. These fundamental research programs educate coal
    chemistry and coal materials technologists who will be needed in the
    energy industry of the future as our aging scientists and engineers
    from the Synfuels Corporation era complete their careers. Other
    worthwhile investments which should be supported from these funds
    include the program conducted by the United States and China under
    Annex II of the Fossil Energy Collaborative Research Protocol to study
    the development of large scale coal liquefaction/carbon sequestration
    plants in China. Of the increased funding recommended, $1 million
    should be designated to continue the China program. Modest investments
    in the China program pay back big dividends in access to commercial-
    scale results at a fraction of the cost of building such plants in the
    United States.
        We support the position that CCS must be integrated with the fuel
    production aspects of coal conversion technologies. Fundamental
    programs of research conducted with the additional funds recommended
    would develop new technologies that are cost effective with respect to
    both fuels production and CO2 capture. Computational
    modeling, especially for polygeneration systems, should be an integral
    part of the work conducted under these programs.
    Advanced Research
        Materials Research.--Advanced materials are needed in a variety of
    applications such as ultra supercritical power plants, high temperature
    gas-fired and hydrogen-fired turbines, sensor technology, catalysts for
    fuel conversion, high temperature materials for fuel cells, and new
    processes for carbon capture. We recommend the addition of $10 million
    to the Advanced Research account for the creation of a Focus Area for
    Materials Research at NETL to develop advanced materials for energy
    applications.
        Focus Area for Computational Energy Sciences.--Advanced computing
    capability enabled by newer, high speed computers and developments in
    computing science permit modeling of energy systems in scale ranges
    from molecular interactions to integrated operation of complex power
    plants. Given the high cost of testing and building large scale energy
    systems, computational modeling offers inexpensive advantages to design
    energy systems which will/must be deployed in the future. We are
    disappointed that the administration has again neglected this important
    area of research and recommend additional funding of $5 million for
    this account for fiscal year 2009.
    Innovations for Existing Plants Program
        We support the request of the administration to provide increased
    funding to the Innovations for Existing Plants (IEP) program for CCS
    technologies. We are concerned however, that the administration request
    neglects other important areas such as particulate control, air toxics,
    combustion byproduct utilization, and research in technologies which
    minimize the use of water in energy systems. Continued research is
    needed in these areas in view of the new CAMR ruling calling for more
    stringent studies on mercury emissions. National concerns have arisen
    about the scarcity of water in many regions where electric power
    demands are increasing. We recommend an additional $10 million for the
    IEP program for these applications.
    Oil and Natural Gas Programs
        The administration request zeros out funding for both the Oil and
    Natural Gas programs again this year. The core oil and natural gas
    programs under Fossil Energy are specifically authorized in Public Law
    109-58 (EPAct 2005). This authorization includes programs such as the
    Stripper Well Consortium, the Petroleum Technology Transfer Council,
    and the Enhanced Oil Recovery in Marginal Fields programs. All three of
    these programs are of major interest to areas such as Appalachia where
    small producers do not have sufficient funding or expertise to conduct
    research to recover the valuable resources remaining in the ground.
    These programs also support research which educates our geologists and
    petroleum engineers needed in the future to produce our existing
    resources and to manage our carbon storage programs for CO2.
    We recommend restoration of the Oil and Natural Gas program at NETL to
    a level of $30 million, which is considerably less than Congress
    provided in earlier times when we were not facing national economic
    challenges such as $118 per barrel oil and $4 dollar per gallon
    gasoline.
        Thank you for considering our testimony.
        Note.--Specific recommendations for the Consortium for Fossil Fuel
    Science ($2 million) were made in testimony submitted by Gerald
    Huffman. Roe-Hoan Yoon submitted testimony requesting support for the
    Center for Advanced Separations Technology ($3 million).
                                     ______

      Prepared Statement of the American Council for an Energy-Efficient
                                Economy (ACEEE)
        The American Council for an Energy-Efficient Economy is an
    independent, non-profit organization dedicated to advancing energy
    efficiency to increase economic prosperity, enhance national security,
    and improve environmental quality. Founded in 1980, we are a leading
    source of unbiased information and policy analysis on energy
    efficiency.
        DOE's fiscal year 2009 budget request reflects a continuing decline
    in support for important energy efficiency programs at a time when
    expanded support for energy efficiency is needed more than ever to
    protect national energy security, save American jobs, control rising
    consumer bills, and stem air pollution and greenhouse gas emissions.
    For fiscal year 2009, the administration proposes to cut $204 million
    (29 percent) relative to the fiscal year 2008 appropriation. In order
    to better address many of America's energy needs, we recommend that the
    subcommittee increase funding for 11 especially high-priority programs
    for a total of $302 million above the administration's request but only
    $71 million above the fiscal year 2008 appropriation. These programs
    include several of DOE's most successful programs as well as a few new
    programs authorized in the Energy Independence and Security Act of 2007
    (EISA). Specific recommendations are described in the sections below.
                             buildings technologies
        Commercial Building Initiative.--CBI is a major new initiative
    established in EISA. The goal of the initiative is for all new
    commercial buildings to use zero energy on net by 2030 (i.e. they
    produce as much energy as they use) and all existing buildings to meet
    the same goal by 2050. These are very large savings that can have many
    positive impacts on the U.S. economy and environment. CBI combines
    research, development, and deployment, and will be run by DOE with
    input from an industry consortium. We recommend that funding of at
    least $20 million be appropriated for this important new program, an
    increase of $7 million relative to the Commercial Buildings Integration
    budget in DOE's request.
        Lighting and Appliance Standards.--DOE standards produce the
    greatest energy savings of any DOE program. DOE's analysis estimates
    that 12 standards to date have saved consumers about $25 billion, from
    a Federal investment of less than $10 million a year. DOE is under
    court order to complete many rulemakings that are years behind
    schedule, and also needs additional funding to address requirements
    added by EISA. The DOE request does not appear to address the new EISA
    requirements which include several new rulemakings, as well as new
    mandates to review and update existing test procedures and standards
    every 6 to 8 years. In order to address both old and new requirements,
    we recommend funding of $24 million for the standards program, an
    increase of $4 million relative to the fiscal year 2009 budget request
    but an increase of only $2 million relative to the fiscal year 2008
    appropriation. DOE should be permitted to spend a portion of this
    increase on staffing, as more DOE staff are needed to supervise
    increased contractor budgets made possible by the fiscal year 2008
    budget.
        Building Codes, Energy Star, and Residential Building
    Integration.--These are three of the most important programs at DOE and
    all three received significant funding increases in the fiscal year
    2009 request. We support these increases.
      --Many States are interested in revising their building codes as part
            of efforts to save energy and address climate change. The DOE
            codes program is an important source of funding for these
            efforts. DOE is also supporting efforts by ASHRAE to reduce
            permitted energy use in its model commercial building code by
            30 percent.
      --The Energy Star program is probably the administration's most
            effective climate change response program. Increased funding
            will allow DOE to update existing specifications, expand the
            program to several new products, and actively promote these
            specifications in regions without significant State or utility
            programs.
      --The Residential Building Integration program is the home of the
            Building America program, a successful partnership with private
            firms that is developing and promoting cost-effective design
            approaches for reducing energy use of new homes by 40 percent
            or more.
                            industrial technologies
        The 2009 request would cut the Industrial Technologies Program by
    $2.3 million, relative to fiscal year 2008, but much larger cuts in
    several very important programs are hidden in the budget details as is
    discussed below. The overall program activities are divided into two
    broad groupings: industry specific and cross cutting. We have
    identified several priorities in each of these areas.
        Industrial Assessment Centers.--The IAC is part of the cross-
    cutting program budget. The IAC program helps small and medium
    industries identify and implement energy saving measures, while also
    helping to train the next generation of industrial energy engineers.
    The program operates centers at 31 universities nationwide and produces
    several hundred trained engineers annually while helping to reduce
    industrial energy use in small- and medium-sized facilities. This is
    one of DOE's most effective programs, and is presently saving more than
    $1 billion per year (including measures implemented in earlier years).
    The program should be substantially expanded in order to meet future
    needs for trained energy engineers--there is presently a shortage of
    skilled energy efficiency engineers. We recommend that the program be
    restored to fiscal year 2006 funding levels of $6.435 million in fiscal
    year 2009.
        Industries of the Future (Specific).--This program does cost-shared
    research with industry at major research institutions. The program
    focuses on key, energy-intensive manufacturing industries such as
    steel, aluminum, wood products, glass and metal casting. The most
    recent National Academy review found this to be among the most
    successful of Federal R&D efforts.\1\ In spite of this success, the
    program has seen its budget drop from $63 million in fiscal year 2002
    to $11 million in fiscal year 2008. DOE is proposing $11.4 million in
    fiscal year 2009, which may appear to be level funding, but in reality
    represents a further cut since most of the research funding is multi-
    year, and funding from earlier years is now no longer being replaced
    and the pipeline is running dry. In EISA, Congress authorized an
    expanded Energy-Intensive Industries program (sec. 452), with an
    emphasis on industry-specific research in energy-intensive industries.
    This provision specifically authorized the successful industry-focused
    program format that has proven effective because it responds to the
    targeted needs of individual industries rather than to the more general
    and less focused topics covered under the cross-cutting program. To
    start implementing this new provision, we recommend fiscal year 2009
    funding of at least $24.2 million (which was the appropriation in
    fiscal year 2006), an increase of $12.8 million relative to the budget
    request.
    ---------------------------------------------------------------------------
        \1\ In 2005 the National Research Council reviewed DOE's Industrial
    Technology Program in their report Decreasing Energy Intensity in
    Manufacturing. The study characterized the program (at that point) as
    being ``well-managed and effective.'' In particular they indicated that
    the ``program's scope and depth of analysis and reporting are
    impressive. The ITP significantly leverages its resources through a
    large and growing number of partnerships with industry, industry
    associations, and academic institutions.'' Unfortunately, funding has
    been dramatically reduced since this evaluation, and a subsequent
    National Research Council report on DOE R&D, Prospective Evaluation of
    Applied Energy Research and Development at DOE (Phase Two) (2007),
    noted with respect to Chemical Industry research activities ``the
    budget decreased to $9 million in fiscal year 2005 and $7 million in
    fiscal year 2006. There is a clearly apparent contradiction between the
    ambitious goals of the program and the dwindling resources available to
    pursue them.''
    ---------------------------------------------------------------------------
        Distributed Energy (DE).--Over the past decade these efforts have
    played a key role in the development of high-efficiency clean
    technologies like combined heat and power (CHP) and technologies to
    recycle waste energy. Over the past few years these efforts have been
    shuffled between EERE and the Office of Electricity, and the program
    has received no funding for the past year. For fiscal year 2008,
    Congress provided $14.5 million, but DOE's fiscal year 2009 request is
    for only $1.5 million. The program is now part of the cross-cutting
    effort in the Industry program. We recommend the DE activities be
    funded at an overall level of no less than $20 million, an increase of
    $5.5 million relative to the fiscal year 2008 appropriation.
        Industries of the Future (Cross-Cutting).--The remainder of the
    industrial program budget request falls within the category of cross-
    cutting programs. This includes the Industrial Assessment Centers and
    the Distributed Generation program discussed above. In addition, this
    program includes Best Practices and cross-cutting R&D, each of which we
    discus below.
      --Best Practices.--The OMB request proposes to increase the best
            practices area from $8.8 to $15.5 million, though this
            represents only a partial restoration of funding that was $19.8
            million in fiscal year 2007. This increased funding will allow
            the expansion of the successful Save Energy Now program, one of
            the most successful energy savings programs undertaken at the
            Federal level (e.g. savings underway of approximately $288
            million since program inception in 2006). We recommend that the
            program be funded at the requested level of $15.5 million.
      --Cross Cutting RD&D.--These activities are primarily for R&D on
            technologies that benefit many industrial sectors, such as work
            on sensors and controls. In addition, DOE is now proposing a
            number of new efforts in energy-intensive process R&D, feed
            stock flexibility and nanomanufacturing, and expanding the
            industry focus to include datacenters and food processing.
            While these are potentially worthy areas of efforts, DOE is
            essentially proposing to fund these efforts by further cuts to
            the successful industry-specific IOF efforts. In addition, EPA
            has already been running a datacenter program for several
            years, and a new DOE effort is potentially duplicative. If
            budgets are tight, funding for these cross-cutting RD&D can be
            reduced to fiscal year 2008 levels in order to free up funds
            for our higher priorities discussed above.
                              vehicle technologies
        Despite the nominal increase of $8 million in the Vehicle
    Technologies Program budget, proposed funding for this work has
    actually declined because elements of the Hydrogen Technology budget
    have been moved into Vehicle Technologies. In fiscal year 2008, Vehicle
    and Hydrogen Technologies together received $424.1 million. The fiscal
    year 2009 request cuts these combined budgets by $56.7 million. The
    proposed transferal, elimination or postponement of certain activities
    in the Hydrogen Technology Program appears reasonable in many cases,
    and in particular begins to rectify disproportionate allocations in
    prior years to hydrogen and fuel cells relative to other vehicle and
    fuel technologies. However, given the great opportunities and needs at
    present in the area of vehicle efficiency and greenhouse gas reduction,
    it is imprudent to simply eliminate funds from this program, rather
    than transferring some of the funds to underfunded areas in Vehicle
    Technologies. In the fiscal year 2009, DOE proposes to cut a variety of
    important vehicle programs: Hybrid Electric Systems declines by $5.8
    million (6 percent, net of the Technology Validation activity
    transferred from the Hydrogen Technology Program), Technology
    Integration by $2.2 million (13 percent), Advanced Combustion loses $11
    million (25 percent), Materials Technology loses $2.7 million (7
    percent), and Fuels Technology loses $1.7 million (10 percent),
    relative to fiscal year 2008 appropriations. Also, funding for the 21st
    Century Truck Partnership declines in the budget proposal, for a total
    40 percent reduction since fiscal year 2007. We recommend that some of
    these cuts be restored by adding $37 million to the fiscal year 2009
    request, which is still a cut of about $20 million relative to the
    combined fiscal year 2008 Vehicle and Hydrogen budgets.
        Hybrid Electric Systems.--The proposed reduction in the Vehicle and
    Systems Simulation and Testing activity relates in part to heavy
    vehicle systems optimization R&D, which warrants greater attention. We
    recommend that $7.1 million be restored to Vehicle and Systems
    Simulation and Testing, bringing funding for this activity back to
    $28.2 million. Furthermore, energy storage efforts need to be
    accelerated. We recommend that the Energy Storage R&D activity be
    funded at $59.5 million, an increase of $10 million above the proposed
    budget.
        Advanced Combustion Engine R&D.--The explanation offered for the
    proposed cut, namely that resources should go to ``R&D that has a
    higher potential for oil savings'' is not persuasive given the
    considerable remaining opportunities in this area for both light- and
    heavy-duty engines. We recommend that Combustion and Emissions Control
    be funded at $38.8 million, restoring $10 million to this activity.
        Materials Technology.--Reaching DOE's stated goal of a 50 percent
    reduction in the weight of body and chassis for a passenger vehicle
    will require a sustained effort, including continued exploration of
    ``high-risk concepts'', as referenced in DOE's budget explanation. We
    recommend funding of $30 million for Lightweight Materials Technology,
    which restores $2.9 million cut in the budget and adds a further $7.7
    million.
                                other priorities
        Weatherization Assistance Program.--This program has steadily
    improved, and according to the last nationwide evaluation of the
    program, is reducing energy use in participating homes by about 20
    percent. DOE has proposed to eliminate this program, in order to save
    money. With the economy heading into a recession, this is a
    particularly bad time to cut our country's safety net. We recommend
    funding this program at least at the fiscal year 2008 level of $227
    million.
        Energy Information Administration Energy Consumption Surveys.--
    EIA's Energy Consumption surveys are an important resource for energy
    analysis and energy program planning. These three surveys (residential,
    commercial and manufacturing) are widely used and provide important
    information for accurate forecasting and planning. Unfortunately, due
    to declining funding, sample sizes are smaller (making regional data
    less precise) and the surveys are now every 4 years, instead of the
    every 3 years called for in the Energy Policy Act of 1992. In fiscal
    year 2008, the consumption surveys have a $3.6 million budget. We
    recommend that $2 million be added to the EIA request in order to
    return to the every 3 year schedule, increase sample sizes and speed up
    processing of surveys so they can be released more quickly.
                                     ______

     Prepared Statement of the Next Generation Nuclear Plant Working Group
        The United States must successfully compete in today's global
    marketplace to provide opportunities for all of its citizens and future
    generations. Two of the major issues affecting our competitiveness are
    the lack of energy security and our major contributions to the global
    greenhouse gas (GHG) inventory. The first issue is economic and costs
    the U.S. taxpayers several billion USD daily. Additionally, innumerable
    jobs in industries that depend on reasonably priced and abundant fossil
    feedstock continue to move offshore. The second is more subtle. Our GHG
    emissions cost us in terms of international reputation and accelerate
    the adverse effects of global climate change. We must become much more
    efficient in our use of energy, but this step is not sufficient to
    address the critical issues to keep our economy strong. We must
    aggressively pursue technological solutions that provide energy for all
    sectors of our economy in an environmentally responsible manner. One of
    the technologies that can address both of these critical issues
    utilizes a proven energy source, nuclear fission, for a broad range of
    applications beyond its traditional role of generating electricity.
        The Next Generation Nuclear Plant (NGNP) Project provides the basis
    for the commercialization of this technology in the form of a new
    generation of advanced, passively safe, modular nuclear plants that use
    High Temperature Gas-Cooled Reactor (HTGR) technology. This technology
    offers enhanced safety plus improved reliability, higher efficiency
    (requiring less fuel and cooling water), proliferation resistance,
    security and waste management capabilities. Further, at current and
    projected natural gas prices and costs for CO2 management,
    the HTGR will be competitive for a broad range of applications,
    including:
      --High efficiency electricity generation for small to medium markets,
            particularly if suitable for cogeneration with water
            desalination or dry cooling;
      --High quality steam for use in heavy oil recovery, including tar
            sands, or the broad range of process steam/cogeneration based
            industries;
      --High temperature process heat for industrial chemical and
            petrochemical facilities, preserving natural gas for feedstock;
            and
      --High temperature process heat for hydrogen production and
            cogeneration for the petrochemical and refinery industries plus
            the clean conversion of coal to liquid and gaseous fuels or the
            direct use of hydrogen transportation fuel in the future.
        Advanced HTGR plants can help improve U.S. industrial
    competitiveness, promote the utilization of indigenous coal and
    uranium, and eventually, our oil shale resources. Their use will extend
    domestic oil and gas resources and preserve them for feedstock for
    products that would otherwise be unattainable, thereby reducing costs
    and risks associated with imported oil and natural gas.
        The NGNP Project is essential to demonstrate the commercial
    potential of the HTGR and support timely NRC Design Certification and
    commercialization. An industry based Consortium is being created to
    support the public/private partnership with the Department of Energy to
    focus the development and deployment of the NGNP and help provide the
    infrastructure for follow-on commercialization. A cost/risk sharing
    model between the U.S. Government and industry will assure a new
    commercialization phase for nuclear energy for production of process
    heat and cogeneration without carbon emissions--at the lowest costs and
    risks for the U.S. taxpayers.
        With a balanced approach to risk management and timeliness to
    attract end-user support, the recommended NGNP Project schedule targets
    startup of the demonstration plant in the 2018-2019 timeframe. Near-
    term priorities in support of this date follow:
      --Establish reference design and baseline costs
      --Advance licensing strategy and pre-application program with the NRC
      --Advance critical-path enabling technology development and testing
      --Establish Public-Private Partnership and costs/risks sharing
            concept
      --Establish Project plan, vendor team and international cooperation
            frameworks
        During the past year significant technical progress and milestones
    have been achieved in the following key areas of the NGNP Project:
    preliminary design evaluations for the competing concepts, including
    trade-off studies to resolve critical issues and establish technology
    development needs; licensing strategy development, technology
    development including fuel manufacturing process development and
    testing; and, bounding cost estimates.
        For fiscal year 2009, the NGNP Alliance recommends a NGNP Project
    budget of $210 million (versus the DOE budget of $59.5 million) plus a
    $28 million budget for the related Nuclear Hydrogen Initiative (versus
    the DOE budget of $16 million). The working group also recommends a
    budget of $10 million for NRC licensing and required R&D activities
    related to the NGNP Project. A licensing framework and a process
    appropriate for the enhanced safety features of the HTGR is essential
    and is a critical path to the deployment of the NGNP Project.
                                     ______

         Prepared Statement of the New York State Energy Research and
     Development Authority and the New York State Division of Housing and
                               Community Renewal
        The New York State Energy Research and Development Authority
    (NYSERDA) and the New York State Division of Housing and Community
    Renewal (NYSDHCR) welcome the opportunity to present this testimony to
    the Subcommittee on Energy and Water Development, and look forward to
    working with the subcommittee to ensure the most appropriate and
    effective Federal funding of essential programs and operations. This
    testimony will address proposed funding of two Department of Energy
    programs which are issues of concern to NYSERDA, namely funding for the
    West Valley Demonstration Project (West Valley, Project), identified
    for funding from the Non-Defense Environmental Cleanup Program at $57
    million, and the State Energy Program (SEP), identified for funding at
    $59 million. In addition, this testimony addresses one program of
    particular importance to NYSDHCR, the Weatherization Assistance Program
    (WAP), funding for which was cut completely in the President's proposed
    fiscal year 2009 budget proposal. NYSDHCR asks that funding for this
    program be restored to at least fiscal year 2008 levels of $243
    million.
                                  west valley
        The State of New York and NYSERDA are extremely concerned about the
    proposed cut in Federal funding to the West Valley Demonstration
    Project, a radioactive waste cleanup project located near Buffalo, New
    York. The President's budget for fiscal year 2009 would provide only
    $57 million for activities of the Department of Energy at West Valley.
    The State strongly urges full funding of the West Valley Demonstration
    Project at the level of $95 million.
        Federal funding had been more than $100 million as recently as
    2004, but had been reduced to $75 million in recent years. The proposed
    cuts will result in lengthening the term of the cleanup and ultimately
    only increase the total project costs. Moreover, as will be discussed
    below, important risk reduction work that has been agreed upon between
    the State and Federal governments will not be funded in 2009 and as
    many as 50 trained workers will have to be laid off.
        The Federal funding responsibility for this project was established
    in 1980, when Congress passed the West Valley Demonstration Project
    Act, Public Law 96-368. The West Valley Demonstration Project Act
    directed the U.S. Department of Energy to carry out a high-level
    radioactive waste (HLW) management demonstration project at the Western
    New York Nuclear Service Center in West Valley, New York. The WVDP Act
    directs the Department of Energy to:
      --Solidify the 600,000+ gallons of liquid high-level radioactive
            waste.
      --Develop containers for permanent disposal of the solidified HLW.
      --Transport the solidified HLW to a Federal repository for permanent
            disposal.
      --Decontaminate and decommission:
        --the tanks and other facilities in which the HLW were stored,
        --the facilities used in carrying out solidification, and
        --the material and hardware used in connection with the Project.
      --Dispose of the low-level radioactive waste and transuranic waste
            produced in conducting the Project.
        The West Valley Demonstration Project Act requires the Secretary of
    Energy to enter into an agreement with New York State for carrying out
    the Project. Under the requirements of the act, New York State pays 10
    percent of the Project costs and the Federal Government pays 90
    percent, making New York the only State that has contributed to the
    cleanup of HLW. New York State has provided approximately $242 million
    toward completion of the Project to date.
        Decontamination and decommissioning of the West Valley site is
    necessary to protect public health and safety. The Department of Energy
    has solidified the bulk of the liquid high-level nuclear waste that was
    stored in underground tanks. A total of 275 HLW glass-filled canisters
    are in storage at West Valley awaiting disposal at the Federal
    repository. However, much cleanup work remains to be done on the site's
    contaminated facilities and property, including the decommissioning of
    the four underground HLW storage tanks, the Main Plant Process
    Building, an unlined lagoon system, a radioactive groundwater
    contamination plume, and a radioactive waste disposal area. The
    Department of Energy must also dispose of the low-level waste, the
    transuranic waste, and the vitrified High-Level Waste.
        Until recently, progress on significant aspects of the West Valley
    cleanup had stalled. The Department of Energy ceased efforts to contain
    a radioactive groundwater plume and refused to take steps to halt the
    spread of liquids leaking from a radioactive waste disposal area under
    its control. The Environmental Impact Statement that is essential for
    decisions on the future of the cleanup was also stalled. In the past
    year, there have been some substantial and encouraging changes at West
    Valley. Agreements have been reached on steps to control the
    groundwater plume and disposal area leaks, and the involved Federal and
    State agencies have agreed on an approach to complete the Environmental
    Impact Statement.
        Unfortunately, this progress is threatened by the lack of adequate
    funding. For fiscal year 2009, Federal funding at about $95 million is
    necessary to continue decontamination work on the highly radioactive
    Main Plant Process Building, remove liquid from the underground high-
    level radioactive waste tanks, mitigate radioactive groundwater
    contamination that is spreading toward the Project boundary, and ship
    waste for offsite disposal. In the absence of this level of funding,
    important work to reduce risk from radioactive materials at the site
    will not get done this year and up to 50 members of the highly trained
    workforce at the site will have to be laid off. For each year that work
    is delayed, the time until completion and the total cost of the Project
    are increased.
        For the reasons stated above, New York State and NYSERDA request a
    restoration of funding for West Valley to $95 million to permit the
    important work at the Project to continue at an optimal pace.
                              state energy program
        The State of New York and NYSERDA are concerned about the proposed
    level of Federal funding for the State Energy Program, at $59 million,
    and request that a funding level of $75 million for fiscal year 2009 is
    provided to support this essential program. This funding level request
    is made in support of the request of the Coalition of Northeastern
    Governors (CONEG), which is also submitted to the subcommittee. The $75
    million level will help to restore a funding level for SEP which has
    experienced significant cuts in program budgets in the past. As noted
    in both the CONEG testimony, and by the Department of Energy itself,
    every Federal dollar invested by the SEP returns $7.23 in energy cost
    savings. In addition, every Federal dollar invested by the SEP also
    leverages $10.71 in State, local and private resources, providing
    significant additional economic benefit.
        In New York, SEP program dollars are used by NYSERDA to support the
    deployment of various energy efficiency programs and services. NYSERDA
    leverages SEP funds with the State ratepayer-supported System Benefits
    Charge and other private sector funds. Most importantly, SEP provides
    essential funding for programs which reach across the spectrum of fuel
    sectors, helps to fill program gaps, and expands the reach of critical
    energy efficiency activities to customer sectors which may otherwise be
    limited from full program participation. In addition to reducing
    overall energy use in New York, the SEP supports activities that
    improve productivity, stimulate private investment, retain and create
    jobs, displace petroleum use, reduce electric peak load, and improve
    air quality, among other benefits.
        Activities supported by SEP dollars include:
      --NYSERDA's award-winning Flexible Technical Assistance Program,
            which provides onsite energy engineering services through
            competitively retained energy service providers.
      --Multifamily Residential energy efficiency program which provides
            energy audits, evaluations and access to loan fund dollars
            which reduces the cost to building owners to implement energy
            efficient technologies.
      --Agricultural Initiatives.
      --Green Building Projects.
      --Alternative Fuel Vehicles and Alternative Fuel Infrastructure.
      --Industrial Improvements.
      --Expansion of the Home Energy Assistance Program heating oil
            purchasing program, providing participating low-income energy
            consumers with discounts on heating oil purchases.
        Obtaining an optimal level of SEP funding will help to ensure the
    continuation of these critical program activities.
        For the reasons stated above, New York State and NYSERDA request a
    restoration of funding for SEP to $75 million to permit the important
    energy efficiency programs in New York to continue and expand at a pace
    needed to meet energy consumer needs.
                       weatherization assistance program
        The Weatherization Assistance Program (WAP) improves the energy
    efficiency of low-income homes every year, helping to reduce the home
    energy bills of the Nation's most vulnerable citizens by 25 percent or
    more. The New York State Division of Housing and Community Renewal
    (NYSDHCR) is very concerned about President Bush's decision to
    eliminate funding for the program for fiscal year 2009. If the
    President's cut is sustained, the State program will lose $21.8
    million. The State of New York relies on this funding to help assist
    its low-income families. With oil prices at record levels, and cuts to
    LIHEAP proposed, these cuts would be devastating to low-income families
    and seniors in New York. Currently, we have waiting lists for this
    assistance in excess of 18 months. NYSDHCR asks that Congress work
    toward funding this program at its fully authorized level.
        In conclusion, and as stated herein, NYSERDA and NYSDHCR
    respectfully requests that the Senate provide, for fiscal year 2009,
    $95 million for West Valley, $75 million for SEP, and at least $243
    million for WAP. NYSERDA and NYSDHCR look forward to working with the
    subcommittee to ensure that these program funding levels are provided
    to ensure that essential energy projects are maintained.
                                     ______

         Prepared Statement of the Biomass Energy Research Association
                                    summary
        This testimony pertains to the fiscal year 2009 appropriations for
    biomass energy research, development, and demonstration (RD&D)
    conducted by the Department of Energy's (DOE) Office of Energy
    Efficiency and Renewable Energy (EERE), Biomass Program. This RD&D is
    funded by the Energy and Water Development bill and performed under the
    heading of Energy Supply and Conservation, Energy Efficiency and
    Renewable Energy.
        BERA recommends a total appropriation of $275 million in fiscal
    year 2009 under Biomass and Biorefinery Systems R&D (Energy Supply and
    Energy Conservation), exclusive of earmarks. This is an increase of
    about $50 million over the Department of Energy request for fiscal year
    2009 for this programmatic area.
        We feel this increase is necessary to meet goals for production of
    fuels from cellulosic biomass as stipulated under the Energy
    Independence and Security Act (EISA) of 2007. While the proposed DOE
    Bioenergy budget is an increase of $27 million over the
    administration's fiscal year 2008 proposed budget, it reflects a
    decrease of $49 million from the DOE Biomass Program's authorized level
    of (sec. 932) $274 million, and reducing funds available for important
    Integrated Biorefinery Demonstration Projects (sec. 932(d)). Technology
    demonstrations reduce technical and economic risk and accelerate the
    potential for private investment. They are critical for reaching goals
    for biofuels production for 2022 and beyond.
        Specific lines items for the DOE biomass RD&D budget are as
    follows:
      --$20 million for Feedstock Infrastructure development (regional
            partnerships, harvesting and storage technology)
      --$35 million for Biochemical Conversion Platform Technology
            (conversion of agricultural residues, wood, forest residues and
            perennial crops to various fuels)
      --$35 million for Thermochemical Conversion Platform Technology
            (conversion of plants, oil crops, energy crops, wood and forest
            resources to oils, long chain hydrocarbons, or other fuels/
            intermediates)
      --$175 million for Integrated Biorefinery Technologies demonstrations
      --$10 million for Utilization of Platform Outputs: Bioproducts
            (chemicals and materials as co-products)
                                   background
        On behalf of BERA's members, we would like to thank you, Mr.
    Chairman, for the opportunity to present the recommendations of BERA's
    Board of Directors for the high-priority programs that we strongly urge
    be continued or started. BERA is a non-profit association based in the
    Washington, DC area. It was founded in 1982 by researchers and private
    organizations conducting biomass research. Our objectives are to
    promote education and research on the economic production of energy and
    fuels from freshly harvested and waste biomass, and to serve as a
    source of information on biomass RD&D policies and programs. BERA does
    not solicit or accept Federal funding.
        There is a growing realization in our country that we need to
    diversify our energy supply, develop technologies to utilize indigenous
    and renewable resources, reduce reliance on imported oil, and mitigate
    the impacts of energy on climate. Economic growth is fueling increasing
    energy demand worldwide and placing considerable pressure on already
    burdened energy supplies and the environment. The import of oil and
    other fuels into the United States is growing steadily and shows no
    sign of abating. Industry and consumers alike are faced with rapidly
    rising and volatile costs for fossil fuels, especially petroleum and
    natural gas. A diversified, sustainable energy supply is critical to
    meeting our energy challenges and maintaining a healthy economy with a
    competitive edge in global markets.
        Biomass is the single renewable resource with the ability to
    directly replace liquid transportation fuels. It can also be used as a
    feedstock to supplement the production of chemicals, plastics, and
    other materials that are now produced from crude oil. In addition,
    gasification of biomass produces a syngas that can be utilized to
    supplement the natural gas supply and electricity from fossil fuels.
    Production of power from biomass co-products for use in biorefinery
    processes greatly reduces the life cycle carbon footprint of biofuels.
    Fuels, chemicals, and power are already being produced from biomass,
    but on a small scale compared to the potential markets. While biomass
    will not solve all our energy challenges, it can certainly contribute
    to the diversity of our supply, and do so in a sustainable way, while
    minimizing impacts to the environment or climate.
        The Energy Policy Act of 2005 created various incentives for
    diversifying our energy supply via the use of biofuels. In addition,
    the Energy Independence and Security Act (EISA) of 2007 put forth a
    mandate to increase use of alternative fuels for transportation, with a
    substantial portion to come from cellulosic biomass. To meet the
    ambitious goals of EISA will require aggressive support for RD&D to
    move technology forward and reduce technical and economic risk.
    Incentives are also needed to accelerate commercialization and
    deployment.
                 bera recommendations for u.s. doe biomass rd&d
        BERA's recommendations support a balanced program of RD&D,
    including projects to develop and demonstrate advanced biochemical and
    thermochemical biomass conversion processes, a diverse slate of liquid
    transportation fuels, and co-production of fuels, chemicals, and power
    in integrated biorefineries. Our overarching recommendations are to:
      --Invest in demonstration of technology (as progress is made) to
            reduce risk (e.g., through loan guarantees, cost-shared
            projects, other mechanisms) and encourage private sector
            investment and commercialization.
      --Explore a variety of fuels beyond ethanol, including green diesel,
            green gasoline, jet fuels, algae diesel, pyrolysis oils, mixed
            alcohols, and others. Include fuels that can be easily
            integrated into existing infrastructure, and revolutionary
            fuels or feedstocks (algae). This will diversify options for
            different transport markets that depend heavily on petroleum.
      --Fund a variety of conversion technologies, both biochemical and
            thermochemical.
      --Integrate sustainability throughout RD&D to promote the use of
            biomass technologies that improve environmental performance and
            minimize impacts to land, water and air.
        BERA's recommendations for funding for DOE biomass RD&D are shown
    in Table 1 and outlined below. Note that recommended budgets for
    demonstration projects do not include industry cost-share, which should
    be 50 percent or more.

                      TABLE 1.--BIOMASS/BIOREFINERY SYSTEMS R&D, ENERGY SUPPLY & CONSERVATION, EERE
                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                   Program Area                     Description of RD&D          R&D      Demonstration     Total
    ----------------------------------------------------------------------------------------------------------------
    Feedstock Infrastructure.................  Regional feedstock                   15.0           5.0          20.0
                                                partnerships, joint
                                                development of storage and
                                                harvesting technology.
    Biochemical Conversion Platform R&D......  Conversion of cellulosic             20.0          15.0          35.0
                                                biomass--agricultural
                                                residues, wood/forest
                                                residues, perennial grasses.
    Thermochemical Conversion Platform R&D...  Conversion of wood/forest            20.0          15.0          35.0
                                                residues to pyrolysis oils
                                                or syngas.
    Platform Outputs: Integrated               Developing/validating                10.0         165.0         175.0
     Biorefineries.                             biochemical and
                                                thermochemical conversion
                                                technologies in integrated
                                                biorefineries (e.g., 932
                                                projects) and small scale
                                                biorefineries.
    Platform Outputs: Bioprod- ucts..........  Co-production of chemicals            5.0           5.0          10.0
                                                and other products from
                                                biochemical and
                                                thermochemical output
                                                streams.
                                                                            ----------------------------------------
          TOTAL..............................  ............................         70.0         205.0         275.0
    ----------------------------------------------------------------------------------------------------------------

        Feedstock Infrastructure.--Continue support for regional feedstock
    partnerships to ensure the optimal and sustainable production of
    feedstocks to meet demand on a regional basis. The Departments of
    Energy and Agriculture, in partnership with the Sun Grant Initiative
    universities and the members of the National Biomass State and Regional
    Partnership, established the Regional Biomass Energy Feedstock
    Partnership. Funding should be continued for these important
    partnerships, as they will help ensure that cost competitive biomass
    feedstocks are widely available in sufficient quantity and at an
    acceptable market cost. Increase funding for cost-shared activities
    with USDA on critical harvesting, storage and transport technologies to
    ensure a feedstock delivery infrastructure is available to meet the
    larger demand.
        Platform Outputs: Support Development/Demonstration of Integrated
    Biorefineries.--Activities should address promising biochemical and
    thermochemical processes in integrated biorefineries producing fuels,
    high-value products where possible, and potentially heat and power to
    meet processing demands. A diversity of technologies and feedstocks
    should be considered, as well as new fuel options (green diesel, jet
    fuel, algae, etc.). The object is to improve process efficiency and
    reduce cost, taking into consideration design, financing, permitting,
    environmental controls, waste processing, and sustained operations;
    feedstock acquisition, transport, storage, and delivery; and storage
    and delivery of products to market.
        Conversion: Fund Both Biochemical and Thermochemical Conversion
    Platforms as Foundations for Integrated Biorefineries.--The biochemical
    and thermochemical platforms are both important and could provide
    viable technologies for production of fuels and chemicals. BERA urges
    that both be funded to accelerate the development and demonstration of
    large-scale, synergistic integrated biorefinery systems. BERA urges
    that biochemical conversion research be funded at the amounts shown in
    Table 1, and that thermochemical conversion R&D for biomass
    gasification, pyrolysis, and synthesis of alternate liquid fuels be
    given equal priority. Both should focus on the use of cellulosic
    biomass, waste biomass, or novel concepts for feedstocks.
        Platform Outputs: Invest in R&D to Develop Bioproducts That Enhance
    the Economic Viability of the Integrated Biorefinery.--BERA urges that
    funding be provided for R&D to enable economic production of commodity
    organic and high value chemicals as co-products in biorefineries.
    Biomass-derived fuels and chemicals combined would increase the product
    slate and provide greater opportunity for reducing fossil fuels
    consumption, while increasing the economic viability of the
    biorefinery. BERA urges that this effort include research on sugar
    intermediates, but that it be expanded to include direct conversion of
    other intermediates (such as those derived from gasification and
    pyrolysis) to fuels and commodity organic chemicals.
        Reduce or Eliminate Earmarks.--The level of earmarks in the last
    few years has limited new initiatives and led to premature reductions
    of scheduled programs by EERE. BERA respectfully asks the subcommittee
    to carefully consider the impacts of all earmarks on EERE's biomass
    energy RD&D.
                                     ______

     Prepared Statement of the Center for Advanced Separation Technologies
        Chairman Dorgan and Ranking Member Domenici, and members of the
    subcommittee, I represent the Center for Advanced Separation
    Technologies (CAST), which is a consortium of seven universities. I
    appreciate the opportunity to submit this testimony requesting that
    your subcommittee add $3 million to the 2008 Fuels Program budget,
    Fossil Energy Research and Development, U.S. Department of Energy, for
    advanced separations research. Research in Advanced Separations
    Technology Development is authorized by the Energy Policy Act of 2005,
    title IX, subtitle F, sec. 962. I am joined in this statement by my
    colleagues from the consortium: Richard A. Bajura, West Virginia
    University; Peter H. Knudsen, Montana Tech of the University of
    Montana; Rick Q. Honaker, University of Kentucky; Jan D. Miller,
    University of Utah; Ibrahim H. Gundiler, New Mexico Tech; and Maurice
    C. Fuerstenau, University of Nevada-Reno.
        funding request for center for advanced separation technologies
        CAST was formed initially as a partnership between Virginia Tech
    and West Virginia University in 2001 to address the needs of the U.S.
    coal industry. In 2002, five other universities (University of
    Kentucky, Montana Tech, University of Utah, University of Nevada-Reno,
    and New Mexico Tech) joined to form a consortium, with Virginia Tech as
    the lead institution. The objective of the consortium is to develop
    Advanced Separation Technologies that can be used to produce cleaner
    fuels from domestic resources with minimal environmental impact.
                                 proposed work
        The United States faces an energy crisis created by an imbalance
    between domestic supply and demand. While the United States makes up
    only 4.6 percent of the world's population, it consumes 24 percent of
    the world's energy resources, 25 percent of the oil, and 44 percent of
    the motor gasoline, while its domestic energy production lags behind.
    As a result, the United States imported 30 percent of its energy needs
    in 2006, a number expected to grow in the future. On the other hand,
    the United States is fortunate to have large amounts of untapped energy
    resources within its borders, which include 271 billion tons of
    recoverable coal, 2.6 trillion barrels of oil in the form of oil shale,
    and 20 billion barrels of oil in oil sands. In addition, the United
    States has 200,000 trillion cubic feet (Tcf) of methane deposited in
    the form of hydrates in ocean floors and permafrost. The amount of
    energy deposited as methane hydrates far exceeds the amounts of all
    fossil energy resources combined. The advanced separation technologies
    developed by CAST will be useful for developing these resources in an
    environmentally acceptable manner and help the United States achieve
    its energy independence.
        A major concern in developing these domestic resources is the
    greenhouse gases (GHG) emitted from the utilization of fossil energies,
    which account for 85 percent of the total energy consumed in the United
    States. Therefore, the country is seeking to increase energy
    efficiencies and develop renewable energies. However, the renewable
    energies account for only 7 percent of the total, including
    hydroelectric power (2.9 percent), bio-fuels (0.8 percent) and others.
    Recognizing that the crux of the energy crisis lies in the shortages of
    transportation fuel liquids, the country is striving to increase the
    production of bio-fuels. In 2005, the United States produced about 4
    billion gallons; however, the United States consumed 180 billion
    gallons of gasoline and diesel fuel combined in the same year. Thus,
    ethanol accounts for only a small percentage of the transportation fuel
    need. According to a publication by the National Academies, the energy
    from biomass will likely increase by 60 percent, and those from wind,
    solar and other renewable resources are likely to nearly triple by
    2030. But the net effect of all these activities will probably raise
    the total renewables from 7 percent of the total energy consumed in the
    United States to about 8 percent in 2030. Thus, the United States will
    have to rely on fossil energy resources for the foreseeable future.
        On the other hand, the scientific debate on global warming seems to
    be over, and the country is prepared to reduce CO2 emissions
    by legislation. But Congress recognizes that the United States cannot
    stop global warming single-handedly. Developing countries, such as
    China and India, should also participate in limiting their own
    CO2 emissions. If the United States reduced the emissions
    unilaterally, the cost of producing American goods would increase
    relative to those manufactured in countries without emission limits,
    resulting in the relocation of U.S. industry and manufacturing jobs.
        It is projected that developing countries will account for more
    than three-quarters of the increase in global CO2 emissions
    between 2005 and 2030, and these countries' overall shares in world
    emissions are expected to rise from 40 percent in 2005 to nearly 55
    percent by 2030. In 2006, China and India alone produced 3.1 billion
    tons of coal, representing 46.2 percent of the world production, while
    the United States produced 1.16 billion tons of coal accounting for
    19.3 percent of the world production. In the near term, the major focus
    of these countries is on economic development and reducing poverty.
    Therefore, it would be desirable for the United States to develop
    affordable clean coal technologies (CCT) that can be used in these
    countries.
        A serious problem in China and India is that much of the coal is
    burned as mined without cleaning, causing low thermal efficiencies. The
    thermal efficiencies for power generation are 29 percent in these two
    countries as compared to 38 percent in the United States. By improving
    the quality of coal used for power generation, China can increase the
    efficiency to 33 percent and reduce CO2 emissions by 20
    percent. Currently, only 12 percent of the coal burned in China for
    electricity generation is cleaned coal. Thus, increased use of advanced
    coal cleaning technologies, representing the most affordable CCTs,
    should help China reduce CO2 emissions substantially.
    According to a recent IEA report, India could reduce CO2
    emissions by 55 percent using state-of-the-art technologies relating to
    coal quality, boiler/generator design, instrumentation and control, and
    high voltage distribution systems. Unfortunately, much of the coals
    burned in India for power generation are of low quality, assaying 35-42
    percent ash.
        It is, therefore, an objective of CAST research to develop advanced
    technologies that can be used to separate various impurities such as
    ash, sulfur, and mercury from coal so that they can be burned more
    cleanly and efficiently. The Chinese Government considers pre-
    combustion coal cleaning an important element in their strategy to
    increase energy supply and improve energy transportation systems, as
    stressed in their plan to implement CCTs. Recently, India passed a law
    requiring coals to be cleaned if they are to be transported more than
    1,000 km.
                           summary of accomplishment
        Thanks to your support, CAST has become the world leader in
    developing advanced separation technologies for the coal industry. Many
    of the solid-solid and solid-liquid separation technologies developed
    by CAST are marketed commercially worldwide under license agreements.
    For example, the Microcel flotation technology is used to remove ash,
    sulfur, mercury, and other impurities from coal in the United States,
    Australia, and China. In addition, an advanced fine coal dewatering
    technology has been tested successfully in full-scale tests, and is
    marketed commercially. More recently, another fine coal dewatering
    technology has been tested successfully at pilot-scale and is expected
    to be commercialized before the end of this year. With the
    commercialization of these advanced separation technologies, the U.S.
    coal industry will no longer have to discard fine coal due to the lack
    of appropriate separation technologies. These new technologies will
    help coal companies produce cleaner solid fuels without causing
    environment damage.
        The advanced separation technologies developed at CAST will soon be
    implemented in India. As part of the Asia-Pacific Partnership on Clean
    Development and Climate (APP) program, the U.S. Department of State
    (DoS) provided major funding for CAST through a competitive
    solicitation process to implement advanced separation technologies in
    India. Also, CAST has submitted a proposal to Coal India Limited (CIL),
    which produces 86 percent of the coal in the country, to implement the
    advanced fine coal beneficiation technologies developed by CAST in a
    demonstration plant.
        Some of the advanced separation technologies developed for cleaning
    coal have cross-cutting applications. For example, the methods of
    separating fine particles are used for producing potash (KCl) from
    previously unminable resources in New Mexico. For another, methods of
    separating coarse particles are used for producing phosphate
    fertilizers in Florida.
                                new intitiatives
        Coal is the most abundant energy resource the United States has,
    and it is difficult to displace it with renewable energy resources in a
    relatively short timeframe. Therefore, it is imperative to develop
    methods of utilizing coal with minimal CO2 emissions. To
    meet this objective, it is proposed to develop advanced gas-gas
    separation methods which will have crosscutting applications for many
    ongoing programs such as Carbon Capture and Sequestration (CCS),
    Innovation of Existing Plants, Gasification, and Hydrogen from Coal.
        During the course of studying the basic sciences involved in a
    solid-solid separation process (i.e., froth flotation), CAST has
    developed a new understanding of the behavior of hydrophobic species in
    water. Based on both experimental and theoretical studies, it has been
    found that hydrophobic surfaces attract each other via hydrophobic
    force, which originates from the tendency for water molecules to
    reorganize themselves around hydrophobic entities. These studies have
    lead to an improved understanding of how ice (or hydrate) is formed
    around hydrophobic molecules (e.g., methane on ocean floors), and why
    different gases (e.g., CO2, nitrogen, and hydrogen) form
    hydrates under different conditions, which in turn provide a basis for
    separating one type of gas from another.
        It is, therefore, proposed to separate different types of gases
    from each other by forming hydrates selectively. At present, cryogenic
    distillation is the only commercially viable method of separating
    oxygen and nitrogen, and this new method can potentially reduce the
    cost of producing oxygen substantially. The same method can also be
    used to separate other gases. For example, CO2 and nitrogen
    present in combustion gases can be readily separated from each other as
    shown by thermodynamic calculations and in experiment. It is also found
    that the kinetics of hydrate formation and, hence, the separation
    process can be improved in the presence of appropriate additives. The
    gas-gas separation process based on selective hydrate formation can
    have higher capacity and lower cost than the methods of using
    membranes. The new gas-gas separation method can also be used for
    producing ultra-pure hydrogen for fuel cell applications, which is a
    major objective of the Fuels Program.
        The proposed research can also lead to the development of efficient
    methods of extracting hydrates from permafrost and ocean floors, while,
    at the same time, allowing CO2 to be sequestered in place.
    The Blake Ridge deposit off the Carolina shores alone has 1,300 Tcf of
    methane, which is about six-times larger than the amount of the
    conventional natural gas resource in the United States. Thus, the
    proposed work offers a new approach for separating gases for CCS and
    for the production of clean fuels such as methane and hydrogen from
    coal.
                                funding request
        It is requested that $3 million of research funding for CAST be
    added to the fiscal year 2009 Fuels Program budget, Fossil Energy R&D,
    the U.S. Department of Energy. Continued funding will allow CAST to
    develop advanced technologies that can be used to exploit domestic
    energy resources and help developing countries reduce their
    CO2 emissions. In addition, the new gas-gas separations
    technologies to be developed at CAST will have crosscutting
    applications for a wide spectrum of the Fossil Energy R&D programs.
                                     ______

          Prepared Statement of the National Mining Association (NMA)
                              nma recommendations
    Department of Energy (DOE)
        $156 million for the FutureGen project at Mattoon, Illinois; $382.7
    million for base coal research and development programs; $200 million
    for the Clean Coal Power Initiative (CCPI); $38.5 billion for the loan
    guarantee office to support deployment of advanced coal technologies;
    and $7.5 million for DOE's participation in the Asia-Pacific
    Partnership on Clean Development and Climate.
    U.S. Army Corps of Engineers
        Civil Works Program.--$180 million for the Regulatory Program. See
    the table below for NMA's list of priority lock and dam projects and
    recommendations for levels of funding required for their completion.
    NMA opposes the Corps' proposed concept of a new inland waterways
    ``lockage fee/tax'' to fund improvements to the Nation's inland
    waterways system.
                                   background
    Office of Fossil Energy
        NMA strongly supports: $156 million for the FutureGen project at
    Mattoon, Illinois and opposes the administration's proposal to cancel
    the project and use the funding for smaller carbon, capture and
    sequestration projects. In addition, NMA supports the $382.7 million in
    the administration's budget request for base coal research and
    development programs. However, NMA recommends that CCPI be funded at a
    level of $200 million, which would enable DOE to conduct a third
    solicitation targeting advanced technology systems that capture carbon
    dioxide for sequestration.
        While the NMA applauds the administration's commitment to
    accelerating research, development and deployment of technologies that
    will allow the management of carbon emissions at coal-fueled power
    plants, the NMA questions the efficacy of DOE's proposal to cancel the
    FutureGen project as originally configured. Tremendous progress has
    been made since the FutureGen project was announced in 2003 and the NMA
    urges the subcommittee to reject the administration's proposal and to
    fund the FutureGen project as originally configured with the $156
    million requested.
        Technological advancements achieved in the base coal research and
    demonstration programs such as gasification, advanced turbines, and
    carbon sequestration, provide the component technologies that will
    ultimately be integrated into the FutureGen project as currently
    configured. NMA believes these programs should be funded at a level of
    at least the President's request of $382.7 million. In addition, the
    advanced turbine program should be funded at $55 million instead of the
    requested level of $28 million. The increase in funding for these and
    other programs will ensure the FutureGen project meets the intended
    goals outlined in the DOE's 2004 report to Congress, ``FutureGen,
    Integrated Sequestration and Hydrogen Research Intiative--Energy
    Independence through Carbon Sequestration and Hydrogen from Coal.''
        The Coal Utilization Research Council and the Electric Power
    Research Institute estimate that by 2025, combustion and gasification-
    based power generation options can be available commercially--with the
    ability to capture and sequester CO2--at a cost of
    electricity comparable to the cost of new power generation (with
    CO2 capture) today. This includes the current work on
    FutureGen. In order to achieve this goal, a Federal investment of $10
    billion through 2025 is necessary while the industry investment is
    expected to be $7 billion over that same time.
        In addition, NMA recommends $3 million of funding for the Center
    for Advanced Separation Technologies (CAST), which is a consortium of
    seven universities lead by Virginia Tech. CAST has developed many
    advanced technologies that are used in industry to produce cleaner
    fuels in an environmentally acceptable manner, while some of them have
    crosscutting applications in the minerals industry. Further development
    of advanced separation technologies will help encourage developing
    countries, such as China and India, to deploy affordable clean coal
    technologies (ACCT) and reduce CO2 emissions. Research in
    Advanced Separations is mandated by the 2005 Energy Policy Act, section
    962.
    Asia-Pacific Partnership on Clean Development and Climate (APP)
        NMA supports the administration's total request of $52 million for
    this partnership and specifically, the request of $7.5 million to fund
    the DOE's participation.
        The APP will spur development of cutting edge technologies and
    practices that support economic growth while reducing emissions,
    including greenhouse gas emissions. It will result in expansion of
    market opportunities for U.S. mining and equipment companies and other
    U.S. businesses.
        The APP, involving the United States, Australia, Canada, China,
    India, Japan and South Korea, is important for a number of reasons:
      --It Will Result in Real Emissions Reductions.--With the
            participation by China and India, APP is the only international
            agreement addressing rapid emissions growth in the developing
            world, which is forecast to surpass emissions of industrialized
            nations in 2010. APP is a voluntary, technology-based approach
            to emissions reduction geared towards future economic growth
            and energy security and will be more effective than unrealistic
            mandates or treaties.
      --It Builds on Methane-to-Markets and Other Successful Programs That
            Reduce Greenhouse Gas Emissions.--The U.S. coal industry has
            captured and re-used 308 billion cubic feet of coal mine
            methane--the equivalent of removing 40 million automobiles per
            year from the roads. APP, working with the EPA's Methane-to-
            Markets program will use U.S. experience and expertise to
            accelerate large-scale capture and recycling of methane in
            China and India.
      --It Helps Preserve Coal as an Important Energy Source.--The United
            States, China, India and Japan will be at the center of a
            significant rise in population, economic activity and energy
            use in the next 50 years. Coal is essential to sustaining
            America's competitiveness and vitality in a changing world, as
            it is in China and India. APP supports improvements in
            efficiency in both coal mining and use through the acceleration
            of clean coal technologies, industrial technology strategic
            planning and energy efficiency best practices.
      --It creates new markets for U.S. companies in the emerging economies
            of China and India.
    U.S. Army Corps of Engineers
        Regulatory Program.--NMA supports the administration's request of
    $180 million for administering the Corps' Clean Water Act (CWA),
    section 404 permit program and for implementing the Memorandum of
    Understanding (MOU).
        The Corps' Regulatory Branch plays a key role in the U.S. economy
    since the Corps currently authorizes approximately $200 billion of
    economic activity through its regulatory program annually. NMA
    recommends that a portion of the Corps' regulatory program funding be
    used for implementing the MOU issued on February 10, 2005, by the
    Corps, the U.S. Office of Surface Mining (OSM), EPA and the U.S. Fish
    and Wildlife Service. The MOU encourages a coordinated review and
    processing of surface coal mining applications requiring CWA section
    404 permits.
        The ability to plan and finance mining operations depends on the
    ability to obtain CWA section 404 permits issued by the Corps within a
    predictable timeframe. In this regard, the NMA appreciates the
    subcommittee including language in the fiscal year 2008 Omnibus
    appropriations bill directing the Corps to work with OSM to develop a
    more efficient process for expediting permit decisions associated with
    surface coal mining operations; in addition to directing the Corps to
    dedicate sufficient personnel and financial resources needed to support
    an efficient permit review process.
        Civil Works Programs.--The NMA understands the Corps intends to
    provide Congress with a legislative proposal to replace the diesel fuel
    tax that has been in place since 1986, with a ``lockage fee/tax'' that
    would more than double the taxes paid by the towing industry. The coal
    industry ships approximately 185 million short tons of coal annually on
    the inland waterways systems. Therefore, the increase in this tax will
    ultimately be borne by the consumers of coal-fired electricity. NMA
    opposes such a tax increase and urges Congress to reject this proposal
    and instead maintain the current diesel fuel tax and change the Inland
    Waterways Trust Fund cost-sharing formula from 50/50 to 75/25 (Federal/
    non-Federal) to ensure predictable, consistent, and adequate funding
    for key inland waterways infrastructure projects. Below is a table
    indicating NMA's fiscal year 2009 priority navigation projects.

                                    NMA FISCAL YEAR 2009 PRIORITY NAVIGATION PROJECTS
    ----------------------------------------------------------------------------------------------------------------
                                                                       Fiscal Year     Fiscal Year         NMA
                              Construction                            2008 Enacted    2009 Request   Recommendations
    ----------------------------------------------------------------------------------------------------------------
    Robert C. Byrd Lock and Dams Ohio River, OH/WV.................        $905,000      $1,000,000       $1,000,000
    Kentucky River Lock Addition, Tennessee River, KY..............      51,168,000      22,330,000       34,500,000
    Marmet Lock and Dam, Kanawha River, WV.........................      29,520,000       9,000,000        9,000,000
    McAlpine Locks and Dams, Ohio River, IN/KY.....................      44,280,000       6,270,000        6,270,000
    Locks and Dams 2, 3, 4, Monongahela River, PA..................      69,175,000      40,806,000       40,806,000
    J.T. Myers Locks and Dams, Ohio River, IN/KY...................         984,000  ..............       14,624,000
    Olmsted Locks and Dams, Ohio River, IL/KY......................     102,336,000     114,000,000      114,000,000
    Emsworth Dam, Ohio River, PA...................................      42,312,000      25,800,000       25,800,000
    Greenup Lock and Dam, Ohio River, KY/OH........................  ..............  ..............       12,100,000
    ----------------------------------------------------------------------------------------------------------------

        The National Mining Association (NMA) represents producers of over
    80 percent of the coal mined in the United States. Coal continues to be
    the most reliable and affordable domestic fuel used to generate over 50
    percent of the Nation's electricity. NMA members also include producers
    of uranium--the basis for 20 percent of U.S. electricity supply. NMA
    represents producers of metals and minerals that are critical to a
    modern economy and our national security. Finally, NMA includes
    manufacturers of processing equipment, mining machinery and supplies,
    transporters, and engineering, consulting, and financial institutions
    serving the mining industry.
                                     ______

               Prepared Statement of the Gas Technology Institute
    increase the combustion budget to $4.2 million in the fiscal year 2009
               energy and water appropriations bill for doe, eere
        Dear Chairman Dorgan and Senator Domenici, we write today because
    we are concerned about the Department of Energy budget request for the
    Industrial Technologies Program within the Energy Efficiency and
    Renewable Energy budget. In particular, we are disappointed to see the
    essential elimination of the Combustion program within the Crosscutting
    Industries of the Future area.
        The combustion focus at the Department has been on development of
    next generation boiler technology, applicable to a variety of
    industrial processes, that is both much more efficient and
    environmentally friendly than existing technology. The Gas Technology
    Institute, Cleaver Brooks, a boiler manufacturer, and a number of gas
    utilities have been working with the DOE, California Air Resources
    Board, California Energy Commission, South Coast Air Quality Management
    District, and others to develop next generation ``Super Boiler''
    technology.
        Developing a clean, efficient natural gas steam boiler will be a
    boon to the U.S. economy. Increasing energy costs and stringent local
    emissions standards are two reasons why America's industrial facilities
    are re-locating overseas. With 31 percent of industrial energy used for
    steam generation, widespread adoption of Super Boiler technology can
    significantly reduce costs and emissions.
        The Super Boiler system is 94 percent efficient compared to current
    technologies which are around 80 percent efficient. This increase in
    efficiency will provide a 15-20 percent fuel savings, corresponding to
    a 15-20 percent reduction in greenhouse gas emissions, and a 90 percent
    reduction in NOX emissions. Technological development
    efforts for the coming year include fuel flexibility and the use of
    alternative fuels for the boiler, scale up, extensive testing and
    improvements to the heat recovery system that will both further boost
    efficiency and reduce emissions.
        We urge you to fund the DOE Combustion budget at $4.2 million in
    the fiscal year 2009 Energy and Water Appropriations bill for the
    Department of Energy, Energy Efficiency and Renewable Energy
    (Industrial Technologies Program, Industries of the Future
    Crosscutting) for continued development and deployment on Super Boiler
    technology.
        Thank you for considering this request.
                                     ______

        Prepared Statement of the Alliance for Materials Manufacturing
                               Excellence (AMMEX)
        The Alliance for Materials Manufacturing Excellence (AMMEX)
    welcomes this opportunity to provide its input to the subcommittee on
    the proposed budget for fiscal year 2009 for the Industrial
    Technologies Program (ITP) at the Department of Energy. AMMEX
    organizations include the basic materials manufacturing sector
    (aluminum, chemicals, forest products, glass, metal casting, steel) in
    the U.S. economy along with several stakeholders in materials
    manufacturing, such as the Northeast-Midwest Institute, the National
    Association of State Energy Officials and the American Council for an
    Energy-Efficient Economy. We are writing to urge Congress to restore
    funding to the ITP to the level of $125 million and to restore the
    structure of the program to one that emphasizes new process development
    in all six materials industries as opposed to cross-cutting research.
        This request would align the program with the authorized funding
    levels and intent of both section 452 (Energy Intensive Industries
    Program) of the Energy Independence and Security Act of 2007, which was
    signed into law on December 19, 2007, as well as the Energy Efficiency
    and Renewable Energy Act of 2007, which passed the House unanimously on
    October 22, 2007.
        U.S. materials manufacturing continues to face challenges resulting
    from increased cost and decreased availability of traditional energy
    supply resources. These challenges have stimulated innovation in the
    materials manufacturing sector in order to create significant energy
    improvements and to diversify the energy supplies. While the
    innovations of the past have brought the materials manufacturing sector
    a long way, the sector cannot go further without new innovations. In
    order to do this, the materials manufacturing processes must be
    transformed, i.e. new processes and new innovations must be developed
    which will use much less energy and which will be able to utilize
    diverse forms of energy.
        The member organizations of AMMEX have been partners with the
    Department of Energy's Industrial Technology Program since its
    inception. ITP is a true public-private partnership. DOE and materials
    manufacturers jointly fund cutting-edge research that addresses the
    needs of the Nation and materials manufacturers. All projects have the
    shared goals of reducing energy consumption, reducing environmental
    impact, increasing competitive advantage of U.S. materials
    manufacturers, and enhancing our national security. The program is
    unique because we select only projects with ``dual benefits''--a public
    benefit such as reduced emissions or petroleum use, justifying the
    Federal funding; and an industry benefit such as a more efficient
    process, justifying the industrial funding. Substantial energy
    reductions have occurred as shown below.

      Figure 1.--Materials Manufacturers have greatly reduced energy use
               since 1990 because of their co-investment with DOE

        To accomplish these goals, the Federal Government and industry will
    need to embark upon a co-funded effort to broaden and accelerate
    inherently high-risk research, development, and deployment of new
    materials manufacturing processes that utilize diverse energy sources.
    This effort will also allow the materials manufacturing sector to
    lessen dependence on natural gas and oil resources and conventional
    electricity sources--thus benefiting consumers through contribution to
    a stable energy market.
        Furthermore, it is critical to recognize the important
    contributions of ITP to efforts to combat climate change. The
    development of new technology is an extremely important facet to
    dealing with climate change. Most, if not all AMMEX industries have
    voluntarily reduced energy intensity by 25 percent since 1990 in
    partnerships with DOE and only very small gains in energy use are still
    possible for today's processes [red area in above chart].
        Most of the legislative options being considered to reduce
    CO2 and other greenhouse gases employ a target of at least a
    50 percent reduction in CO2 emissions by 2050 over a 2000
    baseline. It is important to acknowledge that achieving such a goal
    with today's manufacturing processes will be very challenging. Thus, we
    are confronted with the ideal opportunity for ITP and AMMEX
    industries--collaboration to accelerate the development and deployment
    of new, transformational technologies to help our country reach its
    CO2 mitigation goals. We would argue there is not a more
    appropriate public-private partnership than one focused on our
    environment. It is the method of choice employed by our competitors in
    Europe and Asia.
        The infrastructure already exists to create such a program--only a
    slight re-focusing of the ITP program and a return to historical budget
    levels is all that is needed for the Federal Government and materials
    industries to embark upon a co-funded effort to broaden and accelerate
    inherently high-risk research, development, and deployment of new
    materials manufacturing processes that utilize diverse energy sources.
        Consequently, our request for funding in fiscal year 2009 for ITP
    entails two parts:
      --A return to a total program level of $125 million, bringing the
            funding amount closer to the level authorized in the Energy
            Independence and Security Act of 2007.
      --A re-structuring of the program so as to return to the structure
            that was so successful from 1990-2003--a balanced portfolio of
            industry-specific research from the point of view of research
            impact, i.e., that 50 percent or more of the funding go to
            industry specific new process development [where the energy
            savings potential in industry is highest].
        AMMEX members have identified their top new process development
    concepts [not in priority order] which would be pursued at the funding
    levels and structure defined above:
    Aluminum
      --Improved, energy-efficient burners and furnaces for aluminum
            melting
      --Improved energy efficiency and recovery rates for recycling
            technologies
    Chemicals
      --Development of alternative feedstocks for the chemical industry to
            reduce dependence on petroleum and natural gas derived
            feedstocks
      --Nano-manufacturing scale-up methodologies for key unit operations:
            synthesis, separation, purification, stabilization, and
            assembly
      --Development of low-energy, low-capital membrane or hybrid
            separations technology
    Glass
      --Complete development and deployment to multiple industries of
            Submerged Combustion Melter
      --Waste Heat Recovery and Use as Electrical or Chemical Energy
      --Low Residence Time Glass Refining Technologies
    Forest Products
      --Advanced water removal and high efficiency pulping
      --Gasification of Spent Pulping Liquors and Biomass Residuals
    Metal Casting
      --Simulation of Dimensional Changes and Hot Tears
      --Engineered Coatings for Aluminum Pressure Dies
      --Developing a lightweight production cast aluminum metal matrix
            composite alloy
    Steel
      --Ironmaking by Molten Oxide Electrolysis
      --Ironmaking by Flash Smelting using Hydrogen
      --Demonstration of the Paired Straight Hearth Furnace Process
        The United States also faces serious shortages in the science and
    engineering manpower that is needed to keep America's competitive edge
    in world markets through technology innovation and timely application.
    From the President's recent State of the Union Addresses to recent
    legislation passed by Congress, the Nation is awakening to the need for
    a re-energizing of our commitment to technology education. Our proposal
    to the subcommittee is an effort to both rebuild America's materials
    manufacturing industries and meet shared national energy and
    environmental goals.
        On behalf of the AMMEX coalition, we thank you for the opportunity
    to submit this statement. We look forward to continuing to work with
    the subcommittee as you move forward on the fiscal year 2009
    appropriations legislation for the Department of Energy.
                                     ______

        Prepared Statement of the American Forest and Paper Association
                        agenda 2020 technology alliance
        The Agenda 2020 Technology Alliance, a Special Project of the
    American Forest & Paper Association (AF&PA) welcomes this opportunity
    to provide the subcommittee with our views on the industry's key
    public-private partnerships within the Office of Energy Efficiency and
    Renewable Energy (EERE) and to urge increased funding to adequately
    address industry's challenges in fiscal year 2009. The EERE Industrial
    Technologies Program (ITP) and Office of Biomass Programs (OBP) provide
    vital funding for research, development, and demonstration (RD&D) of
    technologies that dramatically reduce the forest products industry's
    energy intensity and transforms our industry into producers of carbon-
    neutral biofuels--thus addressing strategic national needs associated
    with energy efficiency, energy security, diversified energy supply, and
    environmental performance. We recommend increasing the industry
    specific funding for the forest products industry in ITP to $6 million.
    We support the President's request for $225 million for Biomass and
    Biorefinery Systems R&D in OBP and ask that the subcommittee work to
    maintain eligibility of forest biorefineries in these programs and keep
    the appropriations unencumbered to allow for full funding of
    competitive biomass systems and biorefinery RD&D grants.
        The Agenda 2020 Technology Alliance is an industry-led partnership
    with government and academia that holds the promise of reinventing the
    forest products industry through innovation in processes, materials and
    markets. The collaborative, pre-competitive research, development, and
    deployment supported through Agenda 2020 provide the foundation for new
    technology-driven business models that will enable our industry to
    address market demands for materials from renewable sources, while also
    contributing solutions to strategic national needs including energy
    reduction and sustainability. The technology approaches developed
    through Agenda 2020 are aligned to provide solutions to the competitive
    challenges faced by the U.S. forest products industry, which accounts
    for approximately 6 percent of the total U.S. manufacturing output,
    employs more than a million people, and ranks among the top 10
    manufacturing employers in 42 states with an estimated payroll
    exceeding $50 billion.
        As is the case with many U.S. manufacturing industries, we face
    serious domestic and international challenges. Since early 1997, more
    than 145 pulp and paper mills have closed in the United States,
    contributing to a loss of 86,000 jobs, or 40 percent of our workforce.
    An additional 80,000 jobs have been lost in the wood products industry
    since 1997. New capacity growth is now taking place in other countries,
    where forestry, labor, and environmental practices may not be as
    responsible as those in the United States. Several drivers have
    heightened the need to develop new energy efficiency technologies: the
    recent volatility of energy markets, especially for natural gas;
    renewed national focus on climate change and environmental performance;
    and aging process infrastructure. Global competition, coupled with
    massive industry restructuring due to financial performance pressures
    from Wall Street, continue to hinder the ability of U.S. companies to
    make new investments. Each year without new investments, new
    technologies and new revenue streams, we lose ground to our overseas
    competitors.
        Currently, energy is the third largest manufacturing cost for the
    forest and paper industry at 18 percent for pulp and paper mills--up
    from 12 percent just several years ago. For some of our mills, the cost
    of energy is about to eclipse employee compensation.
        Since 1994, the forest products industry has been one of DOE's
    ``Industries of the Future,'' partnering with ITP through the Agenda
    2020 Technology Alliance in RD&D that has yielded successful advances
    towards our national energy and environmental goals. Agenda 2020 stands
    as an example of successful industry-government collaboration to
    develop technologies that hold the promise of reinventing industry,
    while providing real solutions for strategic national energy needs.
    Every Federal $1 spent on ITP saves $7.06 in annual energy costs and
    1.3 million in annual source BTUs (2004 estimates). As recently as
    2003, the ITP/Agenda 2020 portfolio included a total shared DOE and
    industry investment of almost $48 million, with nearly 55 percent
    coming from direct project cost shares by industry.
        Today, after several years of continuous and substantial cuts, the
    ITP/Agenda 2020 budget has been reduced by over 80 percent since fiscal
    year 2002. This undermines our progress in achieving crucial energy
    efficiencies at a time when energy and response to climate change are
    major factors in the survival of the U.S. forest products industry.
    Projects rescoped or cut in recent years due to budget shortfalls
    resulted in a lost energy savings potential of 5 trillion BTUs/yr.
    Recent reductions make us unable to pursue projects in key priority
    areas such as advanced water removal and high efficiency pulping, which
    represents a lost savings potential of 100-200 trillion BTUs/yr. In
    fiscal year 2009, a further funding reduction is proposed and emphasis
    shifted from industry specific funding. Unfortunately, the types of
    technologies that cross all industries are not those from which we can
    achieve the maximum savings for energy and environmental emissions.
    Furthermore, the proposed funding of $1.448 million is barely
    sufficient to fund ongoing projects, let alone address the high
    priority R&D needs specific to the forest products industry that have
    been jointly identified by industry with the DOE.
        This comes at a crucial time when the forest products industry,
    like many energy-intensive industries, is facing unprecedented
    pressures due to the rising costs of energy and potential climate
    change mandates. Although we are nearly 60 percent self-sufficient
    (using biomass), it is imperative that we seek solutions as diverse as
    fuel switching, finding new energy sources, and options for reducing
    energy consumption. Thus we are in greater need than ever for the
    technology-based energy efficiency solutions that could be provided
    through our Agenda 2020 partnership with ITP. AF&PA's recommended ITP
    funding for forest products research ($6 million) would help our
    industry partially recover its capacity to develop and deploy vital
    energy efficiency technologies. Restoring Agenda 2020 funding to pre-
    fiscal year 2005 levels will not only help the competitive position of
    American industry, but will also serve national strategic goals for
    reduced dependence on foreign oil.
        Second, the Integrated Forest Products Biorefinery (IFPB) is a key
    Agenda 2020 technology platform and a top technical and economic
    priority for our industry. The objective is to develop and deploy core
    technologies that can be integrated into existing processing
    infrastructure, which would be transformed into geographically
    distributed production centers of renewable ``green'' bioenergy and
    bioproducts. This can be done while co-producing existing product
    lines, creating higher skilled and better paying jobs, strengthening
    rural communities, and opening new domestic and international markets
    for U.S. forest products companies.
        The IFPB technology has the potential to integrate agricultural
    wastes, agricultural producers, forest landowners, agricultural
    landowners, forest product producers, and the petrochemical industry to
    produce clean renewable bio-fuels to support our local economies and
    the Nation. Widespread application of this technology would not only
    reduce the environmental impact of burning fossil fuels, it would also
    increase the viability of agricultural, forest products, and other
    industries that use waste heat. It will create new high paying jobs,
    both direct and indirect, increasing tax revenue. From an energy
    perspective, the IFPB has the benefit of making the forest products
    industry even more energy self-sufficient, serving the DOE strategic
    goal of reduced energy intensity in industry by reducing fossil energy
    consumption. In addition, the IFPB would permit the industry to become
    a producer of renewable, carbon-positive bioenergy and biofuels,
    contributing to DOE strategic goals to dramatically reduce dependence
    on foreign oil and to create a new domestic bioindustry.
        In light of these realities, AF&PA and Agenda 2020 also support the
    administration's announced $225 million budget initiative in fiscal
    year 2009 for biorefinery research and demonstration in OBP. This
    initiative provides much needed funding to advance core enabling IFPB
    technologies, as well as providing major capital cost-share for
    commercial scale biorefinery demonstration. The forest products
    industry is an ideal partner to develop and commercialize integrated
    biorefineries. We have much of the infrastructure and expertise--wood
    harvesting, transportation and storage, manufacturing and conversion
    infrastructure, waste handling and recovery--needed to achieve the
    goals of integrated biorefineries. By and large, they are located in
    rural communities where they can help realize important synergies
    between agricultural and forest-based feedstocks.
        Recent estimates from Princeton University show significant
    potential for net environmental benefits of IFPBs, inclusive of
    offsetting other fossil fuel consumption in the mill. The industrywide
    potential is to reduce nearly 100 million tons of carbon emissions
    annually from IFPBs. The study also estimates the cumulative value of
    savings due to reduced CO2, SO2, and
    NOX emissions is $6 million to $40 billion. A core enabling
    technology for part of the IFPB is black liquor gasification (BLG),
    which converts the by-product of the chemical pulping process into a
    synthetic gas. The synthetic gas can subsequently be burned to directly
    produce clean, efficient energy, or converted to other fuels such as
    hydrogen, renewable transportation fuels, and/or other high value
    chemicals. If fully developed and commercialized, a biorefinery based
    on BLG can produce up to 10 billion gallons of other renewable
    transportation fuels, and as much as 20,000 MW of biomass power.
        However, private/public investments in RD&D are critical to bring
    IFPB technologies into full commercial use. Co-investment for RD&D can
    help mitigate the technical risks (especially integration with capital-
    intensive, legacy infrastructure) of early adopters of emerging IFPB
    technologies. Risk mitigation is an important factor in achieving the
    benefits of IFPBs, especially for integrating biorefinery technologies
    with existing manufacturing infrastructure. Federal support through
    research funding and other investments, such as loan guarantees and tax
    credits, is critical.
        In order to achieve the promise of IFPB technologies for the
    industry and for the Nation, we need greater stability and availability
    of funds provided through the OBP budget. We urge the subcommittee to
    preserve the proposed $225 million funding of the Biomass and
    Biorefinery Systems R&D program, so that there will be sufficient
    appropriations to fund biorefinery demonstration and commercialization
    projects. We also urge the subcommittee to ensure that forest-based
    materials are eligible for this and future biorefinery research and
    demonstration funding. Forest-based materials can sustainably produce
    enough biofuels to displace up to 10 percent of the country's petroleum
    production. They are a vital feedstock for achieving reduced dependence
    on foreign oil and facilitating bioindustries domestically and should
    be included in programs for biomass and biorefinery RD&D.
        The Agenda 2020 Technology Alliance appreciate the subcommittee's
    interest in ensuring sustained and adequate funding for RD&D
    partnerships and look forward to working with you to advance industry
    and national interests.
                                     ______

      Prepared Statement of the Vision2020 Technology Partnership, Glass
       Manufacturing Industrial Council, Copper Development Association,
      International Copper Association, Hydraulic Institute, Pump Systems
          Matter, and the Vanadium Producers & Reclaimers Association
        Mr. Chairman, we respectfully request that the subcommittee grant
    restoration of appropriations funding in the fiscal year 2009
    Department of Energy Appropriations bill to match the $190 million
    authorized for the Industrial Technology Program (ITP) within the
    Energy Efficiency and Renewable Energy Act of 2007.
        The submitting coalition represents a broad range of energy
    intensive sectors including chemical and chemical allied industries,
    the copper industry including mining, producer and fabricating
    companies, organizations focused on hydraulic and pump system
    technology, the domestic glass industry sectors including flat,
    container, fiber and specialty glass and the domestic vanadium
    producers and reclaiming companies. We believe that the Industrial
    Technologies Program is critical to boost Federal and corporate R&D
    investments into novel applications that will help move our industries
    towards higher energy efficiency.
        Environmental quality, economic vitality and national security are
    all at risk due to the inability of the United States to effectively
    conserve energy as the country continues to grow and expand the
    national standard of living. Energy conservation is now a national
    goal. While renewable energy processes are one part of the solution,
    undertaking energy efficiency is as necessary as ever before. Both
    President Bush and the Congress have recognized that technology is the
    key to both energy efficiency and renewable energy.
        In the United States, industry accounts for over one-third of all
    energy consumption. Of that, the majority is consumed by several heavy
    industries including chemical, glass and metals production, aluminum,
    mining, petroleum refining, forest and paper products, and supporting
    industries. These groups all consume high amounts of energy per unit of
    production, making them a prime target for energy efficiency efforts.
    In addition, the rising cost of energy has the potential to put these
    industries at a competitive disadvantage with other nations.
        While the President and Congress have continually supported
    industrial energy efficiency efforts, the funding provided has not
    matched the problem. Funding has dropped from $175 million in fiscal
    year 2000 to $57 million in fiscal year 2007. The House Committee on
    Science and Technology noted on September 25, 2007 that ``these funding
    levels reflect a dramatic shift in priorities away from industrial
    efficiency R&D.'' Fortunately, Congress recognizes the need to increase
    funding levels through its own authorization of $190 million in fiscal
    year 2008 for the Industrial Technology Program.
        The Industrial Technology Program (ITP) is a competitive, public-
    private partnership program which works to utilize research and
    development in cutting edge, high-value cost sharing methods to improve
    the energy efficiency of America's industrial sector. The ITP operates
    through coordinated research and development, validation, and
    dissemination of energy-efficiency technologies and operating
    practices. ITP projects have already won dozens of ``R&D 100 Awards''
    and have generated over 150 patents on exciting new technologies. Dual
    use benefits for both public and industrial uses are required by the
    ITP. Nearly 200 technologies have reached the commercial market
    assisting over 13,000 U.S. manufacturing plants and leading to $23
    billion worth of energy savings.
        All programs which are awarded competitive funding must meet the
    shared goal of reducing energy consumption, reducing environmental
    impacts and increasing the competitive advantage of U.S. material
    manufacturers. In addition, while cross-cutting technologies are
    valuable, the application of ITP technologies to individual industries
    is critical and needs to be strengthened with additional funding. It is
    in this application at the factory level where the vast majority of the
    actual energy savings and environmental protection will be recognized.
        In order to fully recognize the potential benefits of the ITP, it
    is imperative that Congress fully fund the ITP at the level of $190
    million. This is the level seen as necessary by the authorizing
    committees with jurisdiction and rightly so, given the environmental
    benefits, national security needs for energy independence, and economic
    productivity gains which can be realized in energy efficiency efforts
    aimed at the U.S. industrial sector. A national imperative focused on
    the ITP will help get us there.
                                     ______

            Prepared Statement of the American Geological Institute
        To the chairman and members of the subcommittee, thank you for this
    opportunity to provide the American Geological Institute's perspective
    on fiscal year 2009 appropriations for geoscience programs within the
    subcommittee's jurisdiction. The President's budget request for
    Department of Energy (DOE) research programs provides no funding for
    oil and gas research and development (R&D), eliminates mandated direct
    spending of $50 million for unconventional onshore and ultra deep water
    offshore natural gas R&D, includes a decimating cut to hydropower R&D
    and does not fulfill some of the geothermal and carbon sequestration
    R&D funding authorized in the Energy Independence and Security Act of
    2007.
        Given the interest of the administration and Congress to reduce the
    Nation's foreign oil dependence, reduce prices on fossil fuels and
    mitigate carbon emissions from fossil fuels, it seems like an
    inopportune time to eliminate or under fund programs that could help
    with these objectives. We hope that Congress will support wise
    investments for all energy resource programs and carbon sequestration
    R&D. AGI applauds the requested 18 percent increase for the largest
    supporter of physical science research in the United States, DOE's
    Office of Science, and encourages the subcommittee's full support for
    this increase. We applaud the request of $30 million for geothermal R&D
    and an increase of about $35 million for carbon sequestration R&D, both
    of which partially fulfill the Energy Act of 2007. We ask for the
    subcommittee's continued support for oil and gas, unconventional
    natural gas, geothermal, hydropower and carbon sequestration R&D so the
    Nation can develop a diverse portfolio of energy resources while
    enhancing carbon mitigation strategies to secure clean, affordable and
    secure energy supplies for now and the future.
        AGI is a nonprofit federation of 44 geoscientific and professional
    associations that represent more than 100,000 geologists,
    geophysicists, and other earth scientists. The institute serves as a
    voice for shared interests in our profession, plays a major role in
    strengthening geoscience education, and strives to increase public
    awareness of the vital role that the geosciences play in society's use
    of resources and interaction with the environment.
                             doe office of science
        The DOE Office of Science is the single largest supporter of basic
    research in the physical sciences in the United States, providing more
    than 40 percent of total funding for this vital area of national
    importance. The Office of Science manages fundamental research programs
    in basic energy sciences, biological and environmental sciences, and
    computational science and, under the President's budget request, would
    grow by about 15 percent from about $3.9 billion last year to $4.7
    billion. AGI asks that you support this much needed increase.
        Within the Office of Science, the Basic Energy Sciences (BES)
    program supports fundamental research in focused areas of the natural
    sciences in order to expand the scientific foundations for new and
    improved energy technologies and for understanding and mitigating the
    environmental impacts of energy use. BES also discovers knowledge and
    develops tools to strengthen national security.
        The Basic Energy Sciences (BES) would remain the largest program in
    the office with an increase of 24 percent from $1.27 billion in fiscal
    year 2008 to $1.57 billion in fiscal year 2009 in the President's
    request. Within the BES, Chemical Sciences, Geosciences and Biosciences
    would receive a $75 million increase over their fiscal year 2008 budget
    for a total of $297 million. The Geoscience program provides peer-
    reviewed grants to universities and DOE national laboratories for
    fundamental Earth science research in geochemistry, hydrology, rock
    mechanics, and geophysical imaging. The $7.5 million increase
    specifically for the Geoscience research program is focused on solid
    earth geophysics and geochemistry to understand the stability and
    transformation of deep carbon sequestration, nanoscale geochemistry,
    chemical imaging, experimental and theoretical studies of complex
    subsurface fluids and mid-scale instrumentation.
        The President's request for the Office of Science only partially
    fulfills the carbon sequestration R&D and large-scale demonstration
    project, which was authorized to receive $240 million in fiscal year
    2009 and the carbon sequestration university-based R&D which was
    authorized to receive $10 million in fiscal year 2009. An additional
    $30 million is requested for carbon sequestration R&D and demonstration
    within the Office of Fossil Energy to partially satisfy the wise
    investments called for in the Energy Act of 2007. AGI requests that
    funding for carbon sequestration R&D in the Office of Science and the
    Office of Fossil Energy be increased to fulfill the intent of the
    Energy Act of 2007.
                   doe energy efficiency and renewable energy
        Within DOE Energy Efficiency and Renewable Energy, the President's
    fiscal year 2009 budget request would cut funding by 27 percent or $467
    million. We are concerned about the cuts to alternative energy R&D
    programs, in particular the reduction of more than 70 percent (a cut of
    almost $7 million) for hydropower R&D which would decimate the program.
    A balanced portfolio of R&D across many promising energy resources
    should be maintained with steady funding to help ensure energy supplies
    in a changing world.
        AGI applauds the $30 million requested for geothermal R&D and
    greatly appreciates previous support from Congress for this key
    alternative energy resource. The geothermal research program within the
    Renewable Energy account, which funds Earth science research in
    materials, geofluids, geochemistry, geophysics, rock properties,
    reservoir modeling, and seismic mapping, would receive an increase of
    51 percent from fiscal year 2008 enacted levels only one year after the
    administration slated the program for termination. The new funds for
    geothermal satisfy in part an authorization in the Energy Independence
    and Security Act of 2007, which calls for $90 million for geothermal
    R&D in fiscal year 2009.
                   doe fossil energy research and development
        AGI urges you to take a critical look at the Department of Energy's
    Fossil Energy Research and Development (R&D) portfolio as you prepare
    to craft the fiscal year 2009 Energy and Water Development
    Appropriations bill. Over the past 8 years, Members of Congress have
    strongly emphasized the need for a responsible, diversified and
    comprehensive energy policy for the Nation. The growing global
    competition for fossil fuels has led to a repeated and concerted
    request by Congress to ensure the Nation's energy security. On February
    28, 2007 this subcommittee held a hearing on the ``10-Year Energy
    Research and Development Outlook'' in which the Energy Information
    Administrator Guy Caruso noted the Nation's need for fossil fuels over
    the next 30 years and the other expert witnesses noted the critical
    need to continue R&D on fossil fuels and all other energy resources.
    The President's proposal, which provides no funding for oil and gas
    R&D, is short sighted and inconsistent with congressional concerns and
    expert testimony presented to your subcommittee. No funding for oil and
    gas R&D will hinder our ability to achieve energy stability and
    security.
        The research dollars spent by Fossil Energy R&D go primarily to
    universities, State geological surveys and research consortia to
    address critical issues like enhanced recovery from known fields and
    unconventional sources that are the future of our natural gas supply.
    This money does not go into corporate coffers, but it helps American
    businesses remain competitive by giving them a technological edge over
    foreign companies. All major advances in oil and gas production can be
    tied to research and technology. AGI strongly encourages the
    subcommittee to ensure a balanced and diversified energy research
    portfolio that does not ignore the Nation's primary sources of energy,
    fossil fuels, for at least the next 30 years.
        Today's domestic industry has independent producers at its core.
    With fewer and fewer major producing companies and their concentration
    on adding more expensive reserves from outside of the contiguous United
    States, it is the smaller independent producers developing new
    technologies concentrated on our domestic resources. However, without
    Federal contributions to basic research that drives innovation, small
    producers cannot develop new technologies as fast, or as well, as they
    do today. The program has produced many key successes among the typical
    short-term (1 to 5 years) projects usually chosen by the DOE. And even
    failed projects have proven beneficial, because they've often resulted
    in redirection of effort toward more practical exploration and
    production solutions.
        In 2003, at the request of the Interior Appropriations
    Subcommittee, the National Academies released a report entitled Energy
    Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy
    Research 1978 to 2000. This report found that Fossil Energy R&D was
    beneficial because the industry snapped up the new technologies created
    by the R&D program, developed other technologies that were waiting for
    market forces to bring about conditions favorable to commercializing
    them and otherwise made new discoveries. In real dollars from 1986-2000
    the Government invested $4.5 billion into Fossil Energy R&D. During
    that time, realized economic benefits totaled $7.4 billion. This
    program is not only paying for itself, it has brought in $2.9 billion
    in revenue.
        Unfortunately, despite this success, the President's fiscal year
    2009 budget request continues the alarming reduction of energy R&D
    funding by eliminating all funding for our primary energy resources,
    oil and gas. Federal funding for renewable, fossil and nuclear R&D has
    decreased dramatically from $5.5 billion in 1978 to $793 million in
    2005 according to a Government Accountability Office (GAO) report
    entitled Key Challenges Remain for Developing and Deploying Advanced
    Energy Technologies to Meet Future Needs. Such significant under-
    investment in energy R&D over many decades hinders progress on cost-
    effective and environmentally-sound exploration and extraction of raw
    energy resources and clean and efficient development, production and
    use of energy products.
        The Federal investment in energy R&D is particularly important when
    it comes to longer-range research with diversified benefits. In today's
    competitive markets, the private sector focuses dwindling research
    dollars on shorter-term results in highly applied areas such as
    technical services. In this context, DOE's support of fossil energy
    research, where the focus is truly on research, is very significant in
    magnitude and impact compared to that done in the private sector, where
    the focus is mainly on development. Without more emphasis on research,
    we risk losing our technological edge in the highly competitive global
    market place.
        Perhaps one of the most promising areas of R&D for domestic oil
    supplies are in the ultra deep waters where drilling is allowed in the
    Gulf of Mexico. The Energy Policy Act of 2005, set aside $50 million
    annually from collected offshore royalties for ultra deep water and
    other unconventional oil and gas R&D to support clean and efficient
    exploration and extraction in the Gulf. The President's budget request
    would repeal this program and provide no funding for ultra deep water
    and other unconventional oil and gas R&D. AGI asks that you consider
    R&D spending or other incentives to encourage the private sector to
    invest in clean and efficient technological advances to enhance our
    unconventional fossil fuel supply in offshore regions where drilling is
    allowed and significant infrastructure already exists.
        The research funded by DOE leads to new technologies that improve
    the efficiency and productivity of the domestic energy industry.
    Continued research on fossil energy is critical to America's future and
    should be a key component of any national energy strategy. The societal
    benefits of fossil energy R&D extend to such areas as economic and
    national security, job creation, capital investment, and reduction of
    the trade deficit. The Nation will remain dependent on petroleum as its
    principal transportation fuel for the foreseeable future and natural
    gas is growing in importance. It is critical that domestic production
    not be allowed to prematurely decline at a time when tremendous
    advances are being made in improving the technology with which these
    resources are extracted. The recent spike in oil and natural gas prices
    is a reminder of the need to retain a vibrant domestic industry in the
    face of uncertain sources overseas. Technological advances are
    necessary to maintaining our resource base and ensuring this country's
    future energy security.
        Thank you for the opportunity to present this testimony to the
    subcommittee.
                                     ______

     Prepared Statement of the American Society of Agronomy, Crop Science
          Society of America, and the Soil Science Society of America
        Dear Chairman Dorgan, Ranking Member Domenici and members of the
    subcommittee, the American Society of Agronomy, Crop Science Society of
    America, and Soil Science Society of America (ASA-CSSA-SSSA) are
    pleased to submit the following funding recommendations for the
    Department of Energy for fiscal year 2009. For the Office of Science,
    ASA-CSSA-SSSA recommend a funding level of $4.722 billion, an 18
    percent increase over fiscal year 2008 ($3.973 billion). For the Office
    of Energy Efficiency and Renewable Energy, we recommend a funding level
    of $1.843 billion, a 7 percent increase over fiscal year 2008. We
    recommend a funding level of $6.094 billion, a 7 percent increase, for
    the Office of Environmental Management. Specifics for each of these and
    other budget areas follow below.
        With more than 25,000 members and practicing professionals, ASA-
    CSSA-SSSA are the largest life science professional societies in the
    United States dedicated to the agronomic, crop and soil sciences. ASA-
    CSSA-SSSA play a major role in promoting progress in these sciences
    through the publication of quality journals and books, convening
    meetings and workshops, developing educational, training, and public
    information programs, providing scientific advice to inform public
    policy, and promoting ethical conduct among practitioners of agronomy
    and crop and soil sciences.
                     department of energy office of science
        The American Society of Agronomy, Crop Science Society of America,
    and Soil Science Society of America (ASA-CSSA-SSSA) understand the
    challenges the House Energy and Water Appropriations Subcommittee faces
    with the tight budget for fiscal year 2009. We also recognize that the
    Energy and Water Appropriations bill has many valuable and necessary
    components, and we applaud the subcommittee for funding the DOE Office
    of Science in the fiscal year 2008 Omnibus Appropriations bill at
    $3.973 billion. Under the Energy Policy Act of 2005 (Public Law 109-
    58), the Office of Science is authorized to receive $5.2 billion in
    fiscal year 2009. Congress approved the America COMPETES Act of 2007
    (Public Law 110-69), recognizing that an investment in basic
    (discovery) scientific research is essential to providing America the
    brainpower necessary to maintain a competitive advantage in the global
    economy and keep U.S. jobs from being shipped overseas. The President's
    request of $4.722 billion is consistent with the America COMPETES Act,
    which authorizes the doubling of the Office of Science's budget over a
    7-year period. Such an investment is needed to keep U.S. science and
    engineering at the forefront of global research and development in the
    biological sciences and geosciences, computing and many other critical
    scientific fields. The Office of Science supports graduate students and
    postdoctoral researchers early in their careers. Nearly one-third of
    its research funding goes to support research at more than 300 colleges
    and universities nationwide. Moreover, approximately half the users at
    Office of Science user facilities are from colleges and universities,
    providing further support to their researchers. The Office of Science
    also reaches out to America's youth in grades K-12 and their teachers
    to help improve students' knowledge of science and mathematics and
    their understanding of global energy and environmental challenges. This
    recommended funding level of $4.722 billion is critical to ensuring our
    future energy self-sufficiency and as a means to address major
    environmental challenges including global climate change. Finally, a
    funding level of $4.722 billion will allow the Office of Science to:
    maintain and strengthen DOE's core research programs at both the DOE
    national laboratories and at universities; provide support for 1,000 of
    PhD's, postdoctoral associates, and graduate students in fiscal year
    2009; ensure maximum utilization of DOE research facilities; allow the
    Office of Science to develop and construct the next-generation
    facilities necessary to maintain U.S. preeminence in scientific
    research; and enable DOE to continue to pursue the tremendous
    scientific opportunities outlined in the Office of Science Strategic
    Plan and in its 20 Year Scientific Facilities Plan.
                             basic energy sciences
        Within the Office of Science, the Basic Energy Sciences (BES)
    Program is a multipurpose, scientific research effort that fosters and
    supports fundamental research to expand the scientific foundations for
    new and improved energy technologies and for understanding and
    mitigating the environmental impacts of energy use. ASA-CSSA-SSSA
    support the President's fiscal year 2009 request of $1.568 billion, a
    23 percent increase over fiscal year 2008, for BES. The portfolio of
    programs at BES supports research in the natural sciences by focusing
    basic (discovery) research on, among other disciplines, biosciences,
    chemistry and geosciences. Practically every element of energy
    resources, production, conversion and waste mitigation is addressed in
    basic research supported by BES programs. Research in chemistry has
    lead to the development of new solar photoconversion processes and new
    tools for environmental remediation and waste management. Research in
    geosciences leads to advanced monitoring and measurement techniques for
    reservoir definition. Research in the molecular and biochemical nature
    of photosynthesis aids the development of solar photo-energy
    conversion.
        Within the Basic Energy Sciences Program, the Chemical Sciences,
    Geosciences, and Energy Biosciences subprogram supports fundamental
    research in geochemistry, geophysics and biosciences. The Geosciences
    Research Program supports research focused at developing an
    understanding of fundamental Earth processes that can be used as a
    foundation for efficient, effective, and environmentally sound use of
    energy resources, and provide an improved scientific basis for advanced
    energy and environmental technologies. The Biosciences Research Program
    supports basic research in molecular-level studies on solar energy
    capture through natural photosynthesis; the mechanisms and regulation
    of carbon fixation and carbon energy storage; the synthesis,
    degradation, and molecular interconversions of complex hydrocarbons and
    carbohydrates; and the study of novel biosystems and their potential
    for materials synthesis, chemical catalysis, and materials synthesized
    at the nanoscale.
                     biological and environmental research
        Within the Office of Science, the Biological and Environmental
    Research (BER) Program, for more than five decades, has advanced
    environmental and biological knowledge that supports national security
    through improved energy production, development, and use; international
    scientific leadership that underpins our Nation's technological
    advances; and research that improves the quality of life for all
    Americans. BER supports these vital national missions through
    competitive and peer-reviewed research at national laboratories,
    universities, and private institutions. In addition, BER develops and
    delivers the knowledge needed to support the President's National
    Energy Plan. ASA-CSSA-SSSA support a 7 percent increase for BER which
    would bring the funding level to $582,504,790 for fiscal year 2009.
    ASA-CSSA-SSSA support a variety of programs within BER including the
    Life Sciences subprogram which supports Carbon Sequestration Research
    (we recommend a 7 percent increase, bringing the funding level to
    $7,625,890), and the Genomes to Life (GTL) program (we also recommend a
    7 percent increase to bring funding to $163,422,170). Within Genomes to
    Life (GTL) are programs supportive of bioenergy development including
    GTL Foundation Research, GTL Sequencing, GTL Bioethanol Research, and
    GTL Bioenergy Research Centers, all playing an important role in
    achieving energy independence for America. Also within BER is the
    Environmental Remediation subprogram and its Environmental Remediation
    Sciences Research program, both critical programs to advancing tools
    needed to clean up contaminated sites. ASA-CSSA-SSSA support the
    President's budget request for the Climate Change Research subprogram
    in BER which calls for a 13 percent increase bringing the funding level
    to $154,927,000. This subprogram supports many important areas of
    climate change research including: Climate Forcing which supports the
    Terrestrial Carbon Processes program and supports the Ameriflux network
    of research sites (which should receive a 7 percent increase, bringing
    funding to $14,379,730), as understanding the role that terrestrial
    ecosystems play in capturing and storing carbon is essential to
    developing strategies to mitigate global climate change. An additional
    program of high importance within the Climate Change Research
    subprogram is the Climate Change Response and its associated programs--
    Ecosystem Function and Response, and Education. Finally, also under the
    Climate Change Research subprogram is the Climate Change Mitigation
    program, part of BER's support to the Climate Change Technology
    Program, which will continue to focus only on terrestrial carbon
    sequestration.
     department of energy office of energy efficiency and renewable energy
        Biomass is currently the only clean, renewable energy source that
    can help to significantly diversify transportation fuels in the U.S.
    DOE's Energy Efficiency and Renewable Energy Biomass Program is helping
    transform the Nation's renewable and abundant biomass resources into
    cost competitive, high performance biofuels, bioproducts, and biopower.
    The Office of Energy Efficiency and Renewable Energy (EERE) manages
    America's investment in the research and development (RD&D) of DOE's
    diverse energy efficiency and renewable energy applied science
    portfolio. For the Office of Energy Efficiency and Renewable Energy, we
    recommend a funding level of $1.843 billion, a 7 percent increase over
    fiscal year 2008. The fiscal year 2009 EERE budget maintains focus on
    key components of the AEI and Twenty in Ten including the Biofuels
    Initiative to develop affordable, bio-based transportation fuels from a
    wider variety of feedstocks and agricultural waste products.
        Note: ASA-CSSA-SSSA strongly oppose the use by the Department of
    the term ``agricultural wastes''. Crop residues, e.g., corn stover,
    play a very important role in nutrient cycling, erosion control and
    organic matter development. Recent studies have shown that excessive
    removal of crop residues from agricultural lands can lead to a decline
    in soil quality. By no means should they ever be referred to as
    ``wastes''.
                        biomass and biorefinery systems
        Within EERE, the Biomass and Biorefinery Systems plays an important
    role providing support for Regional Biomass Feedstock Development
    Partnerships and Infrastructure Core R&D programs, both within
    Feedstock Infrastructure. Activities included within this program are
    resource assessment, education, sustainable agronomic systems
    development, and biomass crop development. The mission of the Biomass
    Program is to develop and transform our domestic, renewable, and
    abundant biomass resources into cost-competitive, high performance
    biofuels, bioproducts and biopower through targeted RD&D leveraged by
    public and private partnerships. ASA-CSSA-SSSA support the President's
    request for a 25 percent increase for the Feedstock Infrastructure
    program which would bring the funding level to $15,500,000.
            department of energy office of environmental management
        ASA-CSSA-SSSA urge the subcommittee to provide the Office of
    Environmental Management (EM) a 7 percent increase for fiscal year 2009
    which would bring total funding for EM to $6.094 billion. EM supports
    high-priority soil and ground water remediation and excess D&D at
    Portsmouth, Paducah, Los Alamos, Savannah River, Oak Ridge, Idaho,
    Hanford, and other sites. Technology Development and Deployment
    supports tank waste, soil and groundwater, and facility D&D.
                            climate change research
        ASA-CSSA-SSSA urge the subcommittee to continue to provide strong
    support for Climate Change Research to the following programs as
    follows: Climate Change Science Program (CCSP), $145,940,000; Climate
    Change Research Initiative (CCRI), $23,672,000; and Climate Change
    Technology Program (CCTP), $833,301,000. These three programs together
    will increase our understanding of the impacts of global climate change
    and also develop tools and technologies to mitigate these impacts.
                       basic and applied r&d coordination
        The Office of Science continues to coordinate basic research
    efforts in many areas with the Department's applied technology offices.
    Within this area is Carbon Dioxide Capture and Storage R&D (we
    recommend a 7 percent increase, bringing total funding to $18,055,000).
    The BER research includes understanding, modeling, and predicting the
    processes that control the fate of carbon dioxide injected into
    geologic formations, subsurface carbon storage, and the role of
    microbes and plants in carbon sequestration in both marine and
    terrestrial environments.
                             national laboratories
        The Office of Science manages 10 world-class laboratories, which
    often are called the ``crown jewels'' of our national research
    infrastructure. The national laboratory system, created over a half-
    century ago, is the most comprehensive research system of its kind in
    the world. Five are multi-program facilities including the Oak Ridge
    National Laboratory. In the 2007 fiscal year, these facilities were
    used by more than 21,000 researchers from universities, national
    laboratories, private industry, and other Federal science agencies.
                  national energy technology laboratory (netl)
        NETL's Carbon Sequestration Program is helping to develop
    technologies to capture, purify, and store carbon dioxide
    (CO2) in order to reduce greenhouse gas emissions without
    adversely influencing energy use or hindering economic growth.
    Terrestrial sequestration requires the development of technologies to
    quantify with a high degree of precision and reliability the amount of
    carbon stored in a given ecosystem. Program efforts in this area are
    focused on increasing carbon uptake on mined lands and evaluation of
    no-till agriculture, reforestation, rangeland improvement, wetlands
    recovery, and riparian restoration. ASA-CSSA-SSSA urge the subcommittee
    to direct the Department to increase funding for its terrestrial carbon
    sequestration program, specifically The Regional Carbon Sequestration
    Partnerships, which are collaborations between Government, industry,
    universities, and international organizations funded by DOE to
    determine the most suitable technologies, regulations, and
    infrastructure needs for carbon capture and sequestration.
                      oak ridge national laboratory (ornl)
        ORNL is one of the world's premier centers for R&D on energy
    production, distribution, and use and on the effects of energy
    technologies and decisions on society. Clean, efficient, safe
    production and use of energy have long been our goals in research and
    development. At ORNL, unique facilities for energy-related R&D are used
    both for technology development and for fundamental investigations in
    the basic energy sciences that underpin the technology work.
        Thank you for your thoughtful consideration of our requests.
                                     ______

      Prepared Statement of the Friends Committee on National Legislation
                                   (Quakers)
        The Friends Committee on National Legislation (Quakers) makes the
    following recommendations on budget request of the National Nuclear
    Security Administration for fiscal year 2009 (fiscal year 2009):
      --Reliable Replacement Warhead.--Under the Weapons Activities/
            Directed Stockpile Work program, delete all funding from the
            $10 million requested. Include in the committee report the same
            language that was in the Consolidated Appropriations Act, 2008:
            ``No funding is provided for the Reliable Replacement
            Warhead.''
      --International Nuclear Materials Protection and Cooperation.--Under
            the Defense Nuclear Nonproliferation program, increase funding
            by $195 million, from the requested $430 million to $625
            million for fiscal year 2009. This would be the same amount as
            was appropriated for fiscal year 2008.
      --Nonproliferation and Verification R&D.--Under the Defense Nuclear
            Nonproliferation program, we oppose the administration's
            proposed budget cut of $112 million and support a funding level
            closer to the fiscal year 2008 level of $387 million, but make
            no specific suggestion.
      --Global Threat Reduction Initiative.--Under the Defense Nuclear
            Nonproliferation program, we strongly support the
            administration's proposed increase of $26 million for fiscal
            year 2009, to $220 million.
        Reliable Replacement Warhead.--Congress wisely rejected the
    administration's request for the Reliable Replacement Warhead for
    fiscal year 2008. The arguments have not changed since last year.
        The Joint Explanatory Statement to the Consolidated Appropriations
    Act for fiscal year 2008 explains:

        ``As stated in both the House and Senate reports, Congress believes
    a new strategic nuclear deterrent mission assessment for the 21st
    century is required to define the associated stockpile requirements and
    determine the scope of the weapons complex modernization plans. The
    NNSA is directed to develop a long-term scientific capability roadmap
    for the national laboratories to be submitted to the Committee on
    Appropriations.''

        FCNL agrees. The United States still has no 21st century nuclear
    weapons policy in place. Until the reports mandated by the fiscal year
    2008 defense authorization bill are completed, there is no framework to
    base long-term nuclear stockpile decisions on.
        The nuclear stockpile continues to be annually certified as safe
    and reliable by the Secretaries of Defense and Energy. There remains no
    need to rush to replace the plutonium pits in warheads, which have been
    found to have lifetimes of a century or more.
        Additionally, further development of RRW could have serious adverse
    international security consequences. Proceeding with RRW would send the
    wrong message to would-be proliferators, and undermine ongoing efforts
    to curb the nuclear programs of Iran and North Korea. Development of a
    new U.S. warhead would also provide nuclear weapons advocates in Russia
    with effective material to lobby for more aggressive Russian nuclear
    weapons modernization programs. Senator Sam Nunn's 2007 testimony
    before your House Subcommittee counterpart remains as relevant today:

        ``[I]f Congress gives a green light to this [RRW] program in our
    current world environment, I believe that this will be: misunderstood
    by our allies; exploited by our adversaries; and complicate our work to
    prevent the spread and use of nuclear weapons.''

        Finally, FCNL rejects the Energy Department (DOE) assertion that
    pursuing the RRW program is the only way to elicit the data needed to
    address stockpile certification concerns raised by the September 7,
    2007 review of RRW by the JASON Defense Advisory Group.
        We believe DOE can address the stockpile certification concerns
    raised by the JASONs review without developing RRW. The Joint
    Explanatory Statement to the Consolidated Appropriations Act for fiscal
    year 2008 also reaches this conclusion. By creating the Advanced
    Certification campaign to address these certification issues and
    simultaneously zeroing out the RRW program, the subcommittee (in
    conjunction with your House counterpart) determined that these issues
    could be pursued without advancement of the RRW program.
        Nuclear Nonproliferation Programs.--Hundreds of tons of nuclear
    weapons materials are stored at inadequately secured facilities in
    Russia and perhaps 20 other countries. One hundred and ten pounds of
    highly enriched uranium could be fashioned into a crude nuclear weapon
    by a committed group of violent extremists. Such a weapon would destroy
    downtown New York, killing more than half-a-million people from the
    immediate effects of the explosion. The cost would be well over $1
    trillion from the staggering economic disruption. A nuclear detonation
    in any U.S. city would cause devastation that would make the 9/11
    attack and the Katrina hurricane pale in comparison.
        These programs continue to enjoy strong support across the
    political spectrum, as evidenced by these statements from the past few
    months (emphasis added):

        ``. . . the Department of Defense's Cooperative Threat Reduction
    program and the Department of Energy's nuclear nonproliferation
    programs . . . address perhaps the single biggest threat to the U.S.
    homeland, the threat of nuclear terrorism and other weapons of mass
    destruction.'' Rep. Ike Skelton, Chairman, House Armed Service
    Committee, press release, December 7, 2007.

        ``Nuclear nonproliferation programs such as the NNSA's Global
    Threat Reduction Initiative, GTRI, are some of the most important tools
    we have to curb the threat of nuclear material being acquired by those
    who wish to do us harm.'' Sen. Pete V. Domenici, Ranking Member, Senate
    Appropriations Subcommittee on Energy and Water Development,
    Congressional Record, December 12, 2007, p. S15228.

        ``The proliferation of weapons of mass destruction remains the
    number one national security threat facing the United States and the
    international community.'' Sen. Richard G. Lugar, Ranking Member,
    Senate Foreign Relations Committee, ``Remarks at the Defense in Depth
    against WMD CPC Conference,'' Chantilly, VA, January 30, 2008.

        The House Budget Resolution for fiscal year 2009 also reaches the
    same conclusions:

        ``It is the policy of this resolution that . . . implementing the
    recommendation of the National Commission on Terrorist Attacks Upon the
    United States (commonly referred to as the 9/11 Commission) to
    adequately fund cooperative threat reduction and nuclear
    nonproliferation programs (securing `loose nukes') is a high priority
    and should receive far greater emphasis than the President's budget
    provides;'' H. Con. Res. 312, sec. 502, March 7, 2008 (emphasis added).

        Even the administration's budget request agrees:

        ``The convergence of heightened terrorist activities and the ease
    of moving materials, technology and information across borders have
    made the potential for terrorism involving weapons of mass destruction
    (WMD) the most serious threat facing the Nation. Preventing WMD from
    falling into the hands of terrorists is the top national security
    priority of this administration.'' Department of Energy, Fiscal Year
    2009 Congressional Budget Request, vol. 1, p. 453, February 2009
    (emphasis added).

        However, the administration's budget request does not match its
    rhetoric. We ask the subcommittee to increase the nuclear
    nonproliferation programs to at least last year's levels.
        We greatly appreciate the termination of the Reliable Replacement
    Warhead program in the Consolidated Appropriations Act for Fiscal Year
    2008. We also appreciate the additional funds the subcommittee provided
    for nuclear nonproliferation programs in the Continuing Resolution, the
    Supplemental Appropriations Act, and the Consolidated Appropriations
    Act. We believe the country is more secure because of your actions. We
    urge you again to apply those priorities to your fiscal year 2009 bill.
        Thank you for your consideration.
                                     ______

                 Prepared Statement of the US Fuel Cell Council
        Chairman Dorgan, Ranking Member Domenici, and distinguished members
    of the subcommittee, on behalf of the 110 organizations of the US Fuel
    Cell Council (USFCC), I want to thank this subcommittee for supporting
    fuel cell funding over the years. We are writing to urge strong support
    for fuel cell and hydrogen programs managed by the Department of
    Energy. Specifically, we request the subcommittee to consider the
    following:
      --Provide $20 million to establish a Market Transformation program.
      --Restore $39 million to continue Hydrogen Production and Delivery
            R&D.
      --Add $15 million to Technology Validation (managed by Vehicle
            Technologies--Hybrid Electric Systems).
      --Add $5 million to restore EERE Manufacturing R&D.
      --Add $10 million to Fossil Energy's SECA program.
      --Add $4 million to Safety Codes and Standards, and maintain current
            jurisdiction.
      --Maintain Education jurisdiction under the Hydrogen Technology
            Program and fund at $4 million.
      --Restore $2 million to continue Fuel Processor R&D.
        Fuel cells are a family of technologies that are being developed
    for portable, stationary and transportation applications.
        These technologies offer a unique combination of benefits. And
    while our industry has invested billions to develop fuel cells for
    portable, stationary and transportation applications, we view our
    partnership with the Federal Government as vital. Funding for other
    worthwhile technologies must not come at the expense of the hydrogen
    program, as we feel this would impede efforts to become more energy
    independent.
        Establishing a Market Transformation program is a top priority for
    industry. Last year the Senate Energy and Water Appropriations
    Subcommittee provided funding for this endeavor; however, the measure
    was not included in the final appropriations bill. The program, when
    funded, will fulfill congressional intent as outlined in sections 782
    and 783 of the Energy Policy Act of 2005.
        The Market Transformation program will allow the Department of
    Energy to assist other agencies to purchase portable, stationary and
    transportation fuel cell systems. The program, which is voluntary, is
    seen by industry as a key component to commercialization as it would
    also help fuel cell manufacturers increase output, thereby reducing
    costs and creating economies of scale. It would also allow more Federal
    agencies to comply with new energy efficiency guidelines as directed by
    Executive Order.
        Unfortunately, the President's fiscal year 2009 request cuts or
    changes a number of critical path programs, including Hydrogen
    Production and Delivery R&D; Fuel Processor R&D; and Manufacturing R&D.
    These programs are designed to maximize availability of fuel cells and
    hydrogen at an affordable price.
        With regard to Hydrogen Production R&D and Delivery, the
    administration justifies the elimination of the program by stating that
    the ``core technology readiness goals established for 2015 can be met
    with the technologies for producing hydrogen from natural gas that were
    developed in prior years, so . . . near-term hydrogen production is no
    longer a critical-path barrier.'' We disagree. Cost-effective and
    environmentally benign methods of reforming hydrocarbons are still not
    commercially feasible. Several technical challenges remain, including
    low cost desulfurization methods. Current refining methods often
    produce flammable and/or hazardous waste. While alternative
    desulfurization materials can avoid these problems, they are
    prohibitively expensive--as much as 10 times the current cost. If
    reinstated by Congress, the Department should be instructed to fund
    improvements in removing sulfur-containing odorants from natural gas
    and liquefied petroleum gas. In addition, a coordinated, nationwide (or
    even international) effort to replace sulfur-containing odorants with
    non-sulfur-containing odorants should be initiated.
        In the transportation arena, there is growing support for ethanol
    and other biofuels, and for hybrid vehicles as responses to our energy
    challenge. These programs would not, by themselves, solve our problem.
    They would, however buy us time to make the transition to hydrogen.
    Automakers still view hydrogen as the ultimate transportation fuel as
    it allows long range driving, short fueling time with little to zero-
    emissions. The public/private partnership in fuel cells is working, and
    more development and demonstration is needed.
        Work performed by the Technology Validation program is designed to
    demonstrate the performance of hydrogen infrastructure and fuel cell
    systems under real world operating conditions. If development work were
    to stop due to lack of funding it could take years or even decades to
    revive the effort. By restoring funding to fiscal year 2008 levels, the
    Department and private industry will continue to collect necessary data
    to continue development of fuel cells for vehicles
        Manufacturing R&D was also eliminated in the fiscal year 2009
    request. Last year, the administration put significant focus on this
    program as it was critical to ``cultivate a robust domestic
    manufacturing capability in evolving hydrogen infrastructure and fuel
    cell technologies, vital to establishing U.S. economic leadership in
    emerging hydrogen and fuel cell industries.'' After 1 year and a single
    round of solicitations awarded, the administration now feels the
    program is not a critical-path barrier to achieving the programs core
    technology readiness goals for 2015.
        Once again, we disagree with the President's plan. The Department,
    in cooperation with private industry, has made great strides in
    reducing the high-volume cost of fuel cells. Eliminating this program
    in its infancy will only delay efforts to bring the cost of fuel cells
    down.
        With regard to the Fossil Energy (FE) activities, we request $70
    million for fuel cell activities, which includes funding for the Solid
    State Energy Conversion Alliance (SECA). The SECA program is designed
    to develop high-efficiency fuel cells that are capable of utilizing a
    variety of domestically available fuel, including coal gas, ethanol and
    other biofuels.
        Proposed program cuts aside, we feel that most of the program
    reorganizations suggested are unnecessary. For example, a proposal to
    move hydrogen Education and Codes and Standards staff from the hydrogen
    program to the vehicle technologies program, in the name of
    consolidation, is misguided. Department leadership describes these as
    ``complementary'' activities, however we strongly disagree.
        If altered, we fear the Department will not be able to accomplish
    its stated mission to educate the public, code and safety officials,
    and support DOE Market Transformation activities. Given the
    transformational nature of hydrogen, we believe these positions
    properly should remain within the hydrogen program for maximum
    effectiveness, and in any event reorganization ought to be left to the
    next administration.
        Supporting the remainder of the Presidents fiscal year 2009 plan--
    Hydrogen Storage R&D, Fuel Cell Stack Component R&D, and Distributed
    Energy Fuel Cells Systems--will maintain the integrity of the
    competitively awarded projects administered by the Department of Energy
    and continue our public/private partnership designed to fully
    commercialize fuel cell and hydrogen technologies.
        Over the past 4 years, shortfalls in fuel cell and hydrogen core
    program funds have slowed and in some cases stopped high-priority
    research and development. Full funding can restore program momentum,
    and give the country some hope that we can break the cycle of energy
    dependence. Competition for energy supply and security of supply are
    both urgent concerns, and the Nation's investment, we believe, ought to
    match that urgency.
        Thank you for considering our requests.
                                     ______

        Prepared Statement of the National Association of State Energy
                                   Officials
        Mr. Chairman and members of the subcommittee, I am Dub Taylor of
    Texas and chair of the National Association of State Energy Officials
    (NASEO). NASEO is submitting this testimony in support of funding for a
    variety of U.S. Department of Energy programs. Specifically, we are
    testifying in support of no less than $75 million for the State Energy
    Program (SEP). SEP is the most successful program operated by DOE in
    this area. Within a $75 million funding level for SEP we would support
    the administration's proposed $10 million competitive program, but we
    do not support such an effort at the proposed funding level of $25
    million for the core SEP activities and $25 million for the competitive
    program. SEP is focused on direct energy project development, where
    most of the resources are expended. SEP has set a standard for State-
    Federal cooperation and matching funds to achieve critical Federal and
    State energy goals. We also support $300 million for the Weatherization
    Assistance Program (WAP). These programs are successful and have a
    strong record of delivering savings to low-income Americans,
    homeowners, businesses, and industry. We also support an increase in
    the budget for the Energy Information Administration (EIA) to $120
    million, including an increase of $600,000 for EIA's State Heating Oil
    and Propane Program, in order to cover the added costs of increasing
    the frequency of information collection (to weekly), the addition of
    natural gas, and increasing the number of State participants. EIA's new
    State-by-State data is very helpful. EIA funding is a critical piece of
    energy emergency preparedness and response. NASEO continues to support
    funding for a variety of critical deployment programs, including
    Building Codes Training and Assistance ($10 million), Rebuild America
    ($5 million), Energy Star ($10 million) and Clean Cities (Vehicle
    Technologies Deployment) ($12.5 million). NASEO supports funding for
    the Office of Electricity Delivery and Energy Reliability, at least at
    the fiscal year 2006 request of $161.9 million, with specific funding
    for the Division of Infrastructure Security and Energy Restoration of
    $18 million, which funds critical energy assurance activities. We also
    strongly support the R&D function and Operations and Analysis function.
    The industries program should be funded at a $74.8 million level, equal
    to the fiscal year 2005 levels, to promote efficiency efforts and to
    maintain U.S. manufacturing jobs, especially in light of the loss of
    millions of these jobs in recent years. Proposed cuts in these programs
    are counter-productive and are detrimental to a balanced national
    energy policy. The Energy Independence and Security Act of 2007 (EISA)
    also has a number of exemplary provisions which should also receive
    funding, including the new commercial buildings initiative. EISA also
    reauthorized SEP (section 531) and Weatherization (section 411) through
    fiscal year 2012. We remain concerned that a number of programs
    authorized in the Energy Policy Act of 2005 (EPACT 2005) have received
    no direct funding. Of special interest are sections 124, 125, 126, 128
    and 140 of EPACT 2005.
        Over the past 7 years, both oil and natural gas prices have been
    rising in response to expanded Chinese and Indian use, other
    international events, increased domestic use, the falling dollar and
    the result of the 2005 hurricanes. We expect $100+ oil to continue for
    an extended period of time, with an expanded problem as summer
    approaches. Gasoline prices may spike to $4/gallon. Diesel prices are
    already over $4/gallon. In addition, we now have quantifiable evidence
    of the success of the SEP program, which demonstrates the unparalleled
    savings and return on investment to the Federal taxpayer of SEP. Every
    State gets an SEP grant and all States, the District of Columbia and
    territories support the program.
        In January 2003, Oak Ridge National Laboratory (ORNL) completed a
    study and concluded, ``The impressive savings and emissions reductions
    numbers, ratios of savings to funding, and payback periods . . .
    indicate that the State Energy Program is operating effectively and is
    having a substantial positive impact on the Nation's energy
    situation.'' ORNL updated that study and found that $1 in SEP funding
    yields: (1) $7.22 in annual energy cost savings; (2) $10.71 in
    leveraged funding from the States and private sector in 18 types of
    project areas; (3) annual energy savings of 47,593,409 million source
    BTUs; and (4) annual cost savings of $333,623,619. The annual cost-
    effective emissions reductions associated with the energy savings are
    equally significant: (1) Carbon--826,049 metric tons; (2) VOCs--135.8
    metric tons; (3) NOX--6,211 metric tons; (4) fine
    particulate matter (PM10)--160 metric tons; (5) SO2--8,491
    metric tons; and (6) CO--1,000 metric tons. The energy cost savings is
    much higher today, in light of higher prices. State monitoring and
    verification has confirmed SEP's effectiveness.
        State Energy Program Special Projects and Other Deployment
    Programs.--Through fiscal year 2005, SEP Special Projects provided
    matching grants to States to conduct innovative project development. It
    had been operated for 10 years and has produced significant results in
    every State in the United States. We support funding of DOE's new,
    proposed SEP competitive program, but only above a minimum $55 million
    SEP appropriation for the base SEP program. The States with lower
    populations are disadvantaged by this program.
        EISA authorized a new Energy Efficiency and Conservation Block
    Grants program (section 541-548). We look forward to working with
    Congress and the administration to make this program a reality. We hope
    start-up funding can be provided in fiscal year 2009. However, we
    remain concerned that a structure that requires DOE to review and
    process thousands of local government grant applications each year will
    be unworkable. With the elimination of the DOE/EERE Regional Offices,
    DOE contracting processes have become slower. There is now a more
    attenuated connection between State and local governments with DOE. We
    look forward to working with Congress, local governments and DOE to
    correct this situation. Joint planning needs to occur immediately.
    State energy offices have partnered with local governments for decades.
    This program should allow us to supplement and enhance those
    activities.
        Industrial Energy Program.--A funding increase to a level of $74.8
    million for the Industrial Technologies Program (ITP) is warranted.
    This is a public-private partnership in which industry and the States
    work with DOE to jointly fund cutting-edge research in the energy area.
    The results have been reduced energy consumption, reduced environmental
    impacts and increased competitive advantage of manufacturers (which is
    more than one-third of U.S. energy use). The States play a major role
    working with industry and DOE in the program to ensure economic
    development in our States and to try to ensure that domestic jobs are
    preserved. State energy offices are working effectively with DOE on the
    ``Save Energy Now'' campaign. Funding for distributed generation should
    be included above these amounts.
        Examples of Successful State Energy Program Activities.--The States
    have implemented thousands of projects. Here are a few representative
    examples.
        California.--The California Energy Commission has operated energy
    programs in virtually every sector of the economy. The State has
    upgraded residential and non-residential building codes (including
    major 2008 upgrades), developed a school energy efficiency financing
    program (including $100 million for high performance schools), and
    instituted a new replacement program for school buses utilizing the
    newest natural gas, advanced diesel and hybrid technologies. The
    buildings program has reduced consumption by enormous amounts over the
    past few years, through alternative financing programs and outreach.
    California's greenhouse gas mitigation plans and a new solar initiative
    are moving forward.
        Colorado.--The State is conducting training to implement the new
    statewide energy code. The energy office is pushing hard to promote the
    use of biofuels and create infrastructure for the dispensing of the
    fuel. The Colorado Carbon Fund has been developed to help individuals
    and businesses develop and purchase offsets. In addition, the State is
    working promoting community-based small wind projects, geothermal
    energy, commercial buildings energy efficiency and a variety of solar
    energy programs.
        Hawaii.--After enacting significant legislation (``Energy for
    Tomorrow''), the State is focused on implementing a plan to diversify
    the energy sources utilized in the State. Distributed generation and
    utility scale solar projects are being installed. An aggressive
    hydrogen promotion program is ongoing. The State has a variety of
    energy performance contracting projects. They have upgraded their
    tropical energy building code. Extensive utilization of bioenergy and
    biofuels is a priority and has been expanded.
        Kentucky.--The energy office has been working on Energy Star
    promotion activities and high performance energy programs for schools.
    They are working to promote energy efficiency programs in the
    agricultural sector as well, including the Kentucky Rural Energy
    Consortium activities. They have been executing energy performance
    contracts for a variety of State facilities.
        Louisiana.--The State recently upgraded building energy codes. Now
    they are embarked on an extensive training program to ensure that the
    code will be followed and understood. In the alternative fuels area the
    State has instituted projects including CNG fueling, hybrid electric
    buses and bio-diesel promotions. Significant attention has been paid to
    energy efficient reconstruction after Hurricane Katrina.
        Mississippi.--The energy office has been working on an extensive
    energy education program, ranging from school children to higher
    education initiatives. The State has also been active in promoting
    alternative motor fuels, rural business opportunities with the
    agricultural sector, energy efficiency in State buildings and Energy
    Star product promotions.
        Missouri.--The energy office in Missouri has been operating a low-
    interest energy efficiency loan program for school districts, colleges,
    universities and local governments. Thus far, public entities have
    saved more than $93 million, with more than 400 projects. The State
    energy office has also worked with the Public Utility Commission and
    the utilities within the State to get $20 million invested in
    residential and commercial energy efficiency programs, with a
    significant incremental increase to $20 million in investments in 2008
    alone. A new revolving loan for biodiesel has also been initiated. The
    energy office and the air agency have developed a program to set-aside
    NOX allowances for energy efficiency and renewable energy.
        New Jersey.--The State's Clean Energy Program expended
    approximately $171 million in 2006 alone, with the expected electricity
    and natural gas bill reductions for the life of these projects expected
    to be over $2.3 billion. New Jersey has an extremely aggressive solar
    energy program. Recent innovative projects have included a pilot
    photovoltaics power systems program in Phillipsburg, a wireless energy
    management demonstration project, an alternative fuel vehicle and a
    bio-diesel vehicle rebate program, etc.
        New Mexico.--After adoption of new energy legislation in 2007, the
    State is pushing for new renewable energy transmission projects, the
    implementation of the Renewable Portfolio Standard, expanded promotion
    of the sustainable buildings tax credits, use of energy bonds,
    promotion of ``solar roofs,'' and encouraging manufacturers to utilize
    the alternative energy product tax credit. They have been training
    green building professionals and promoting clean fuels and efficient
    transportation options.
        North Dakota.--The energy office in North Dakota has focused on
    promotion of alternative fuels, wind energy projects (including a wind-
    to-hydrogen demonstration), biomass gasification (with the EERC Center
    for Renewable Energy in Grand Forks), energy efficiency for schools and
    local governments and deployment of renewable technology.
        South Dakota.--The energy office has instituted a energy efficient
    grants program for higher education projects, including a 50 percent
    match. Recent projects have included lighting, energy recovery and
    heating and controls upgrades. The energy conservation loan program is
    focused on State agencies and recent projects have included a biomass
    boiler conversion. These projects have been instituted throughout the
    State.
        Texas.--The Texas Energy Office's Loan Star program has long
    produced great success by reducing building energy consumption and
    taxpayers' energy costs through efficient operation of public
    buildings. This saved taxpayers more than $224 million through energy
    efficiency projects. In another example, the State promoted the use of
    ``sleep'' software for computers, which is now used on 136,000 school
    computers, saving 42 million kWh and reducing energy costs by $3
    million annually. This is part of a broader energy efficiency program
    that has helped 3,500 schools and local governments thus far. The State
    has initiated the Texas Emissions Reduction Plan/Texas Energy
    Partnership in 41 urban counties to reduce emissions through cost-
    effective energy efficiency projects.
        Utah.--The State has recently upgraded their building codes and
    they have been pushing to train builders, local code officials,
    architects and engineers. They also developed a zero-interest loan
    program for school districts. A State renewable energy tax credit has
    been utilized for large projects. The Governor has instituted a new
    renewable energy initiative.
        Washington.--The energy agency has been working on promoting energy
    efficiency and renewable energy tax incentives, net metering and
    biofuels development. The State is also working on promoting Energy
    Star products and they are working regionally on building energy
    efficiency activities. They have also instituted a regional energy
    planning process.
        West Virginia.--The Energy Division is focused on promotion of
    energy efficiency in the industries of West Virginia, including work in
    the steel, aluminum, chemical/polymer, glass, metal-casting, wood
    products and mining industries. They are also promoting Energy Star
    products, especially in the residential sector. The recently developed
    State energy plan is being utilized to promote a diverse energy future
    for the State.
                                     ______

         Prepared Statement of the American Society of Plant Biologists
        The American Society of Plant Biologists (ASPB) urges the
    subcommittee to approve the Department of Energy (DOE) fiscal year 2009
    budget request for the Office of Science of $4.7 billion. Please
    support the Office of Basic Energy Sciences request for $1.568 billion.
    Included with the Department's budget request for Basic Energy Sciences
    is $297,113,000 for leading research in the Chemical Sciences,
    Geosciences and Energy Biosciences Division. We urge you to support the
    Department's budget request for the division, including $35.6 million
    for Energy Biosciences research. ASPB supports the DOE budget request
    of $568.5 million for the Office of Biological and Environmental
    Research.
        Research the subcommittee supported within the Energy Biosciences
    program has led to many breakthroughs including increased understanding
    of the composition of the cell wall. These findings help allow
    scientists and the Department to project further research advances
    leading to cost-competitive production of cellulosic ethanol. Many
    years of basic research supported in Energy Biosciences led to these
    cell wall findings. The highly regarded Energy Biosciences program also
    funded basic research leading to the landmark discovery of an enzyme
    that can convert cellulose into sugar for facile ethanol production.
        Sunlight is the ultimate energy source for the earth. Harnessing
    even a fraction of this sunlight would provide us sufficient energy for
    years to come. Plants do this naturally through photosynthesis, also an
    area of research that has garnered continuous support from the DOE
    Energy Biosciences program. The burning of fossil fuels releases stored
    carbon dioxide into the atmosphere, contributing to global warming.
    Photosynthesis has the ability to recapture carbon dioxide, making
    plants a carbon neutral contribution to our energy needs.
        We credit the subcommittee, the Office of Basic Energy Sciences
    Director and Under Secretary for the Office of Science for maintaining
    each year standards for peer-review selection based on the highest
    merit of science proposals submitted to the Energy Biosciences program
    and other programs within the Office.
        These findings on the cell wall and enzymes are being built upon in
    a mission-related basic research effort by the Office of Biological and
    Environmental Research aimed at achieving advances that make possible
    cost-competitive production of cellulosic ethanol and other biofuels.
    The three Bioenergy Research Centers awarded by BER will increase
    understanding of cell wall and enzyme modifications needed to more
    cost-effectively capture sugars in the cellulose and hemicellulose in
    plant cell walls. We urge continued support for the three Bioenergy
    Research Centers. The Centers will also make possible advances in
    converting sugars to ethanol, biobutanol and other biofuels for the
    Nation's motorists. Cellulose is the most abundant biological material
    on earth. What was once only a dream of capturing and converting this
    abundant, renewable and sustainable resource into transportation fuels
    will become a reality thanks to continuing advances in plant and
    microbial science that the subcommittee is making possible. Advances in
    the fundamental understanding of oil crops such as soybean will
    contribute to increased biodiesel fuel production.
        We urge support for the $100 million initiative in Energy Frontier
    Research Centers (EFRCs). Under this initiative, universities, national
    laboratories, nonprofit organizations, and for-profit firms will be
    invited to compete, singly or in partnerships, to establish an EFRC.
    Centers will be selected by scientific peer review and funded at $2-5
    million per year over a 5-year period. These integrated, multi-
    investigator Centers will conduct fundamental research focusing on one
    of more of several ``grand challenges'' recently identified in major
    strategic planning efforts by the scientific community. The purpose of
    these centers will be to integrate the talents and expertise of leading
    scientists in a setting designed to accelerate research toward meeting
    our critical energy challenges.
        One of our most pressing energy challenges is in transportation
    fuels. I wrote a letter to the editor on the exciting next generation
    of biofuels that was published in The Washington Times on March 6,
    2008. Following is the commentary:

                   [From The Washington Times, Mar. 6, 2008]

                        the next generation of biofuels
        Oil closed at $100 a barrel February 19, for the first time. The
    Washington Times reported on February 20, (``Oil tops $100 on refinery,
    OPEC,'' Business) that fears that the Organization of the Petroleum
    Exporting Countries may cut production contributed to the price
    increase.
        Some analysts see this $100 mark as just a stop on the way to $200-
    per-barrel oil, possibly by the end of this decade. The reason cited is
    similar to newspaper reports on the bump to $100 per barrel--OPEC's
    control of supply.
        In addition to the economic and political challenges imposed by our
    reliance on foreign oil, we also need to be concerned that greenhouse
    gas (GHG) emissions associated with the use of fossil fuel contribute
    significantly to global warming, evident from observed increases in
    global air and ocean temperatures, widespread melting of snow and ice
    and a rising global average sea level. Is there a large-volume
    alternative to the use of increasingly costly oil with its high GHG
    emissions? There will be.
        We are at the early stages of research on the next generation of
    biofuels using plant cellulose. Plant stems, stalks and leaves will
    become low-cost feedstocks for biofuels. A 2005 report from the U.S.
    Department of Agriculture and the U.S. Department of Energy projects
    that there will be enough biomass (cellulose) to meet more than one-
    third of the current U.S. demand in transportation fuels.
        At the same time, next-generation biofuels will greatly lower
    emissions of stored carbon compared to gasoline. Biofuels will be
    better for Americans' pocketbooks and the environment.
        The President and Congress are to be commended for initiating
    needed investments in new-generation biofuels research. Additional
    investment is needed in all phases of plant research. This will help
    hasten the day when biofuels make up 33 percent instead of 3 percent of
    the transportation fuels used in the United States.

                                          C. Robertson McClung,
           President, American Society of Plant Biologists, Professor,
                                                     Dartmouth College.

        Understanding plant growth and development at a systems level feeds
    into increasing biomass, as does understanding basic mechanisms of
    abiotic and biotic stress tolerance. Understanding how cell walls are
    synthesized and their composition determined is not only fundamental to
    our knowledge of basic plant biology, but also is a central issue in
    biomass production and conversion. The same can be said of
    understanding how plants synthesize and regulate the production of
    lipids and oils as well as many other plant constituents and processes.
        Please support increases in fiscal year 2009 for the Office of
    Biological and Environmental Research Program for Ecosystem Research
    (PER). PER sponsors experimental research to develop a better
    scientific understanding of potential effects of climatic change on
    U.S. terrestrial ecosystems and their component organisms. Field or
    laboratory studies are directed at understanding cause-and-effect
    relationships between temperature change and the abundance or
    geographic distribution of terrestrial vascular plants or animals in
    the United States. During the last decade there have been significant
    advances in the mechanistic understanding of how the component elements
    of terrestrial ecosystems are responding to elements of global change.
    These include changes in: atmospheric carbon dioxide levels,
    precipitation amount and seasonal distribution, and in daily and
    seasonal temperature cycles. As the primary producers of terrestrial
    ecosystems, the response of plants to multiple and interactive effects
    of global change drive the overall ecosystem response. This mechanistic
    research involving state-of-the-art physiological, biochemical,
    molecular, and genomic approaches has been almost exclusively conducted
    on individual plants exposed to global change scenarios under
    controlled environment conditions. Over the same period of time there
    have been tremendous strides made in the phenomenological
    characterization of the response of terrestrial ecosystems to
    interactive effects of global change. Again this research effort has
    centered on plants as the drivers of the central ecosystem processes of
    carbon, nitrogen, and water cycling. Plants also support the major
    biotic and trophic interactions within ecosystems and there has been
    intense interest to characterize the response of these interactions to
    global change.
        The emergent research frontier where breakthroughs are most needed
    is in bridging mechanism and phenomenology to understand the systems
    biology of a functioning ecosystem under realistic global change
    treatments.
        ASPB is a non-profit society of 5,000 scientists based primarily at
    universities. ASPB publishes the most frequently cited plant science
    journal in the world, Plant Physiology and the plant science journal
    with the highest impact factor, The Plant Cell. Thank you again for the
    opportunity to submit these comments to the subcommittee. Please let us
    know if we could provide any additional information.
                                     ______

      Prepared Statement of the Electric Drive Transportation Association
        In the Nation's two newest comprehensive energy laws, the Energy
    Independence and Security Act of 2007 (EISA), and the Energy Policy Act
    of 2005 (EPAct05), Congress recognized the need to invest in
    technologies and policies that will result in greater energy
    independence. Those bills authorize research and development,
    demonstration and deployment and manufacturing innovation programs to
    promote electric drive technologies, which use electricity to displace
    oil.
        The Electric Drive Transportation Association (EDTA) applauds the
    Senate's support for electric drive technologies, which reduce
    petroleum consumption and decrease emissions of greenhouse gases and of
    air pollutants. Using electricity, by itself or in conjunction with
    another fuel, electric drive technologies power the wheels of vehicles
    in use today and numerous others in development. These vehicles can be
    passenger vehicles, trucks, tractors, locomotives or ground support
    equipment. Electric drive also powers transportation infrastructure,
    such as truck auxiliary power units and truck stop electrification
    facilities, which allow idled trucks to power with clean, alternative
    electricity.
        Multiple fuel and vehicle technologies, including hybrids, battery
    electric vehicles, fuel cell vehicles, and plug-in versions of these
    electric drive vehicles, will be needed to end our unsustainable
    dependence on oil. The Department of Energy's Office of Energy
    Efficiency and Renewable Energy programs to accelerate development of
    electric drive vehicle technologies are pivotal to the effort to reduce
    oil consumption.
        The Senate's budget resolution provides $2 billion over the
    President's request for these programs. As you allocate fiscal year
    2009 funding for the important programs in the Office of Renewable
    Energy and Energy Efficiency, we respectfully request that you provide
    the resources necessary to realize the electric drive advances outlined
    in EISA and EPAct05.
                    energy storage research and development
        Specifically, we support expanded funding for energy storage
    research and development at the Department of Energy's Office of Energy
    Efficiency and Renewable Energy (EERE), in particular, in the Vehicle
    Technologies program.
        Advanced batteries and other energy storage innovations are the key
    to commercialization of plug-in electric drive and will accelerate
    advances in all electric drive vehicles. The administration's request
    for the existing DOE program is essentially level with fiscal year 2008
    funding and does not reflect the intent of Congress as detailed in
    EISA.
        Fiscal year 2009 funding in the Hybrid Electric Systems account
    should be expanded to include resources for the EISA section 641 energy
    storage competitiveness program. This program, which is authorized at
    $295 million, includes basic and applied research, development and
    demonstration programs to support U.S. competitiveness in energy
    storage for electric drive vehicles and stationary applications.
                             fuel cell technologies
        We also urge you to ensure that the national effort to develop
    hydrogen fuel cell options is able to advance toward its goals. The
    fiscal year 2009 request for the Hydrogen and Fuel Cell Technologies
    program is $33 million, a reduction from fiscal year 2008 levels. The
    Department's proposed program realignment should not undermine the
    ongoing work that is yielding technology breakthroughs and will
    ultimately yield necessary longer term transportation options.
        For instance, the request for the Technology Validation program
    cuts funding to $15 million, half of the fiscal year 2008 level. In
    this program, hydrogen infrastructure and fuel cell systems are
    certified under real world conditions. This work guides research
    agendas and helps establish the ``real world'' data collection
    necessary to develop fuel cell vehicles. Consequently, we believe this
    program should be funded at least at the fiscal year 2008 level of $30
    million.
        Other programs necessary to the push toward commercialization are
    also cut or unfunded entirely, including a $3.5 million reduction in
    Safety Codes and Standards and a complete elimination of funding for
    Manufacturing R&D (which received $5 million in fiscal year 2008).
        Section 782 of EPAct05 authorizes Federal and State Procurement
    program funding to help government fleets acquire fuel cells vehicles.
    The program is designed to reduce the initial market barriers for
    advanced technology vehicles by covering the cost premium of the early
    Federal and State fleets of fuel cell vehicles. Congress should provide
    the $25 million authorized by EPAct05.
        The Department of Energy should not abandon its hydrogen production
    and delivery activities, as the administration requests, and funding
    for the Transportation Fuel Cell Systems Account should be restored to
    at least the fiscal year 2008 level of $8 million.
                          deployment and demonstration
        Other new and existing demonstration and deployment programs have
    the potential to accelerate commercial deployment of electric drive
    technologies, with the appropriate resources.
        Specifically, the EISA section 131 Transportation Electrification
    (b) Plug in Electric Drive Vehicle Program and (c) Near Term
    Transportation Electrification Program can help industry partners to
    work together to put on-road and non-road electric drive vehicles in
    use, enabling manufacturers and consumers to identify real world
    performance and establish initial market opportunities. The programs
    are authorized at a total of $185 million. We ask that you provide
    substantial funding to allow rapid ramp-up of these programs in their
    initial year.
        The Clean Cities program is another example of a successful,
    ongoing effort to deploy advanced vehicle technologies. The Clean
    Cities program consists of voluntary local and regional coalitions
    working to build clean and efficient private and municipal fleets, with
    advanced technology and alternative fuel vehicles. We appreciate the
    Congress' history of support for the program and request that you
    provide the technology- and fuel-neutral fund at the fiscal year 2008
    enacted level, $12.5 million.
        Another important activity at DOE in fiscal year 2009 will be the
    rulemaking that will be required to implement new EPAct fleet
    requirements. EISA's section 508 amends the existing fleet requirements
    to finally, explicitly include electric drive (fuel cell, hybrid, plug-
    in hybrid, medium and heavy duty hybrid electric vehicles and
    neighborhood electric vehicles) and investments in alternative fuel
    infrastructure. The $1.8 million in the request is insufficient to
    ensure an expeditious and effective rule making process, and will delay
    the ability of covered fleets to comply with hybrid and other electric
    drive vehicles.
                            manufacturing innovation
        We also support building domestic capacity for advanced batteries
    and vehicles as envisioned by EISA 2007. The Senate Budget resolution
    also endorses the effort, explicitly providing an additional $2.7
    billion for green jobs initiatives, including ``loan guarantee and
    grant programs'' for ``. . . production of fuel efficient vehicles.''
        We respectfully ask that you direct the maximum available funds
    toward programs authorized in the EISA that will help new and existing
    manufacturers to produce advanced batteries and vehicles in the United
    States and expand employment in these fields.
        Specifically, we are referring to the section 136 Advanced
    Technology Vehicle Manufacturing Incentive Program, which provides
    grants for up to 30 percent of the cost of re-equipping or establishing
    advanced vehicle and component manufacturing facilities, equipment
    investment and engineering integration, and section 132: Domestic
    Manufacturing Conversion, which authorizes grants to manufacturers of
    fuel efficient vehicles and component suppliers to modernize production
    facilities.
        In addition, we recommend that additional funds be allocated to the
    existing Loan Guarantee Program to include the battery and component
    manufacturing guarantees activities authorized in EISA's section 134
    Loan Guarantees for Fuel Efficient Automobile Parts Manufacturers and
    section 135 Advanced Battery Loan Guarantee Programs. The
    administration request includes $10 billion of $38.5 billion for
    advanced and innovative energy; that amount should be increased with
    funds directed to the EISA-authorized manufacturing activities.
        EDTA appreciates the subcommittee's support for electric drive and
    for EERE's Vehicle and Hydrogen and Fuel Cell Technology programs. We
    respectfully ask that the subcommittee use the funds available in the
    fiscal year 2009 budget resolution to build on that support and
    establish the electric drive programs authorized in energy legislation
    and to ensure the continuing advancement of electric drive technology.
                                     ______

                        Prepared Statement of GE Energy
        The following testimony is submitted on behalf of GE Energy (GE)
    for the consideration of the subcommittee during its deliberations
    regarding the fiscal year 2009 budget requests for the Department of
    Energy (DOE). Among GE's key recommendations are: (1) support for the
    $241.6 million funding request for the Nuclear Power 2010 program to
    develop new U.S. nuclear generation; (2) $40 million in added funding
    for the GNEP program, for total funding of $341 million, to start the
    necessary activities for technology demonstration and to help industry
    provide DOE with the information necessary to support the 2008
    Secretarial Record of Decision; and (3) $27 million additional for the
    Advanced Turbines program, DOE's major research effort focusing on gas
    turbines for electricity production which also addresses key needs for
    hydrogen turbines. Investments in these and the other important
    programs discussed below will help to meet the challenges of assuring a
    diverse portfolio of domestic power generation resources for the
    future.
                                 nuclear energy
        Nuclear Power 2010.--The NP2010 Program provides vital funding in
    three areas that are essential to the development of new nuclear
    generation capacity in this country. The program provides support for:
    (1) certification of new reactor designs, such as GE's advanced light
    water reactor technology (ESBWR); (2) advancement of detailed design
    and deployment planning to support new nuclear plant construction; and
    (3) preparation, submittal and NRC approval of two Combined
    Construction and Operating Licenses (COL). These activities are
    currently advancing with co-funding support from GE-Hitachi Nuclear
    Energy (GEH) and Westinghouse. Adequate DOE funding in fiscal year 2009
    is necessary to maintain the schedules supporting certification, COL
    license approval and construction initiation.
        The administration has requested $241.6 million for fiscal year
    2009 to support the NP2010 Program. GEH supports this funding level,
    which reflects the additional funding needed above initial estimates to
    facilitate continued ESBWR detailed design and deployment activities at
    levels that support industry expectations.
        Among other things, funding is needed to support critical detailed
    design activities including piping and instrumentation diagrams
    development, process flow diagrams, system design spec development, 3D
    pipe routing and pipe stress calculations and the development of
    procurement specifications for long lead and highly engineered
    equipment. These detailed design activities are required for advanced
    module design, simulation assisted engineering, and critical path
    construction activities. Moreover, these detailed engineering
    activities are critical to the refinement of the ESBWR capital cost
    estimate. Deployment planning activities include the development of
    site utilization plans, crane lift plans, construction execution plans,
    procurement strategies, warehousing strategies and craft labor
    planning. These are required to allow the ESBWR to be successfully
    deployed in the desired timeframe well within the next decade.
        The costs to complete these activities have escalated due to a
    number of contributing factors that have changed versus baseline
    assumptions made in 2005. These factors include, but are not limited
    to, NRC rate increases, large volume of additional NRC RAI's (Request
    for Additional Information), recent changes in regulatory position
    related to aircraft impact and Human Factors Engineering design
    process, customer expectations of increased design and COL
    standardization, and performance of COL compliance reviews.
    Additionally, higher resource demands from increased industry activity
    as well as the FOAKE nature of the effort have placed a substantial
    cost burden on the project. These and other factors have led to
    significant additional program cost above baseline assumptions. The
    fiscal year 2009 funding requested by the administration will help
    offset some of these cost escalations.
        The Advanced Fuel Cycle Initiative and the Global Nuclear Energy
    Partnership (GNEP).--The Global Nuclear Energy Partnership (GNEP),
    initiated in early 2006, benefits from DOE's research and development
    work currently conducted under the Advanced Fuel Cycle Initiative
    (AFCI) and previously conducted in the Advanced Liquid Metal Reactor
    program (circa 1985 to 1995). GNEP seeks to expand the use of nuclear
    power in a proliferation-resistant manner, and to use nuclear waste by
    reducing the long-term radiotoxicity of spent nuclear fuel. The key
    emphases are on solutions for proliferation resistant fuel separations
    and long-term nuclear waste reduction.
        In support of the broad GNEP goals and to help the DOE prepare for
    the 2008 Secretarial Record of Decision, DOE in October 2007 issued
    awards to four commercial teams, including the team led by GEH, for
    technical and conceptual design studies to provide information on
    commercial methods that are available to close the fuel cycle. The GEH
    team has explored the technical and business parameters that could
    support a viable system in a four-part submittal. The submittal
    included drafts of a Business Plan, a Technology Development Roadmap, a
    Conceptual Design and a Communication Plan. The Business Plan explored
    the current market, examined the financial viability of the Advanced
    Recycling Center and proposed policy direction for solutions to spent
    nuclear fuel. The cost and schedule report, a part of the Conceptual
    Design, served as the bridge between the technical details from the
    conceptual design and provided key financial input to the Business
    Plan. The Conceptual Design submittal (approximately 4,000 pages long)
    demonstrated in-depth knowledge developed during the Advanced Liquid
    Metal Reactor program, GE-funded programs and our current experience.
    The Technology Development Roadmap recommended direction on a future
    research and development program that could be started in fiscal year
    2009 to engage U.S. universities and national laboratories that would
    allow the United States to lead within the GNEP policy framework as
    well as have better collaborations with foreign governments. Finally,
    the Communication Plan provided guidance on how the DOE may communicate
    scientific, technical and practical information related to closing the
    nuclear fuel cycle.
        For fiscal year 2009, an additional $40 million above the
    administration's budget request, for total GNEP funding of $341
    million, is needed. The recommended additional funding should be used
    to help industry conduct technology demonstration projects, such as the
    manufacture and demonstration of: (1) key reactor components (e.g.,
    reactor vessel); (2) electrometallurgical based fuel separation; and
    (3) a reactor and fuel separation simulator. GEH further recommends
    that adequate funding through the GNEP program be provided to both the
    U.S. industry and the laboratories for electrometallurgical separations
    and the PRISM reactor in support of the GNEP policy goals.
                                 fossil energy
        Coal is facing a challenging landscape. In anticipation of carbon
    constraints, coal will require carbon capture and sequestration (CCS)
    if it is to continue serving as a major national energy resource. It is
    therefore necessary that the viability and efficacy of CCS be proven at
    large scale, for multiple projects and over a range of geologic
    settings. Only a major initiative and investment will provide the
    necessary confidence for the commercial and public acceptance of CCS.
    Meeting this challenge will require the combined resources of industry
    and government at all levels working in partnership.
        Financial incentives alone will not be sufficient to achieve the
    goal of validated and commercially robust CCS. Reducing the risk and
    time required to identify and characterize potential storage sites, to
    obtain Federal, State and local government commitments related to long-
    term liability issues, to conduct the necessary reviews and to complete
    permitting will also require a substantial effort by all levels of
    government. The DOE must acknowledge this challenge in all programs
    related to CCS and provide specific assistance in addressing these
    issues. For this reason, the commitment of government to assume long-
    term liability for monitoring and safety of the stored CO2
    should be sought in forthcoming solicitations for CCS development.
    Without such assurances it is not likely that industry participation
    will be forthcoming.
        FutureGen.--DOE's decision to restructure the FutureGen program
    correctly targets the deployment of CCS technology at a commercial
    scale. The proposed restructuring recognizes that carbon capture ready
    IGCC can be commercially supplied today; GE's commercial 630 MW IGCC
    plant already is carbon capture ready. To be successful, FutureGen's
    restructuring must address two overarching needs: (1) validation of
    CO2 sequestration at a large scale; (2) in multiple
    geological settings and (3) demonstration that utility powerplants with
    carbon capture can be successfully integrated with sequestration. DOE's
    proposed restructuring can provide the platform to satisfy these needs
    and thus be a major step forward toward assuring a strong future for
    coal-based power generation. As the Department further develops the
    restructured FutureGen program, care must be taken, however, to avoid
    burdening large-scale CCS projects with unneeded additional complexity
    and cost. Nothing in the program's new structure should be allowed to
    divert attention from the central objective of proving that the most
    challenging goal can be met: that large-scale sequestration is viable
    and safe.
        Clean Coal Power Initiative.--GE supports CCPI and its role in
    validating and testing advanced technology. With the potential
    refocusing of FutureGen, that program's function as a platform for
    introduction and validation of advanced IGCC carbon capture
    technologies will not be available. CCPI must be ready to serve a
    larger role in the validation and deployment of those technology
    advancements that are needed to meet DOE's goal of no more than 10
    percent additional cost for CCS. However, mounting multiple projects
    within the overall anticipated funding of $250 million for Round 3 of
    CCPI will be challenging. Front-end-engineering and detailed site
    characterization for a CCS project alone could account for $40-$50
    million. After capital expenses for carbon capture equipment and
    sequestration pipeline and site development, there will be little if
    any funding remaining for the additional costs of CCS operation needed
    to validate sequestration capacity. For example, for a single 300 MW
    IGCC train equipped with carbon capture, the minimum 50 percent capture
    requirement of CCPI will result in over 1 million tons/year of captured
    CO2 with potential annual incremental operating costs as
    high as $40-$50 million. In recognition of these cost challenges, the
    expectation for multiple project awards within the available CCPI
    funding needs to be reassessed.
        IGCC.--With its pre-combustion carbon capture, IGCC provides a
    significant advantage over combustion technology. Despite its current
    20 percent cost premium over pulverized coal combustion, IGCC can
    provide a lower cost of electricity with carbon capture. However, it
    should be recognized that IGCC is still in an early phase of commercial
    deployment and at the very beginning of a steep cost learning curve.
    Investment in technology development promises to have a high return.
        DOE's goal of a maximum 10 percent premium in cost of electricity
    for IGCC with carbon capture will not be met with current technology.
    It will require technology advancements. Key technology areas that can
    significantly lower cost and improve performance are advanced carbon
    shift, CO2 capture and separations, overall process
    efficiency plus advancing IGCC's capability for subituminous coals.
    Therefore we strongly endorse the administration's request to increase
    fiscal year 2009 funding for IGCC by $15.5 million over the fiscal year
    2008 level to $69 million.
        In addition, cost reduction must be pursued vigorously for IGCC to
    realize its potential in maintaining coal competitiveness in a carbon-
    constrained environment. From this perspective, the clearest and
    quickest path to reducing the cost of carbon capture is the accelerated
    deployment of IGCC and elimination of its cost premium. In order to
    achieve this, we recommend a continuation and broadening of the
    investment tax credits under the Energy Policy Act of 2005 from 6 to 12
    IGCC projects and covering a scope that helps to offset both the cost
    premium of IGCC as well as the incremental cost of carbon capture.
        Carbon Sequestration.--GE also endorses the administration's
    requested technology funding increase of $30 million from fiscal year
    2008 levels to $149 million for carbon sequestration. Research in
    sequestration needs to move forward as rapidly as possible. A primary
    focus needs to be the development of science-based requirements for
    site characterization, monitoring and CO2 quality.
    Advancements in these areas are necessary to guide commercial-scale
    sequestration. The DOE also needs to quickly move forward with the
    demonstration programs authorized under section 702 of the Energy
    Independence and Security Act of 2007 in order to apply and gain
    experience with modeling, monitoring and rapid sequestration site
    characterization.
        Advanced Turbines.--GE recommends that funding be increased by $27
    million to a total of $55 million for the Advanced Turbines Program.
    This program represents the Department's high priority research effort
    focusing on the development of enabling technologies for high
    efficiency hydrogen turbines for advanced gasification systems. Gas
    turbine R&D is focused on advanced combustion and high temperature
    turbine technology for syngas/hydrogen fuels that will result from IGCC
    and carbon capture type power plants. The program addresses those gas
    turbine elements where the technology required for the use of syngas/
    hydrogen fuels differs from the requirements for natural gas fueled gas
    turbines. Development of these technologies will help offset some of
    the efficiency and output penalties associated with CO2
    capture. Unless the fiscal year 2009 budget for the Advanced Turbines
    program is increased, funding will be inadequate for this promising
    high priority work, and the progress and benefits of this research will
    be delayed accordingly.
                                     ______

        Prepared Statement of the Energy Committee of ASME's Technical
                                  Communities
        Mr. Chairman and members of the subcommittee, the ASME Energy
    Committee is pleased to provide this testimony on the fiscal year 2009
    budget request for research and development programs in the Department
    of Energy (DOE).
               introduction to asme and the asme energy committee
        The 127,000-member ASME is a nonprofit, worldwide professional,
    educational and technical Society. The Energy Committee of ASME's
    Technical Communities comprises 30 members from 17 divisions of ASME,
    representing approximately 40,000 of ASME's members.
        ASME has long advocated a balanced energy supply mix to meet the
    Nation's energy needs, including advanced coal, petroleum, nuclear,
    natural gas, biomass, solar, wind, hydroelectric power, and energy
    efficient building and transportation technologies. Sustained growth
    will also require stability in licensing and permitting processes not
    only for power stations but also for transmission and transportation
    systems.
        Over the past few years, concerns have been growing among
    policymakers and the general public about adverse security and
    environmental impacts resulting from America's dependence on foreign
    sources of oil and gas. As a result, the current administration and
    Members of Congress have made calls to diversify our energy supply and
    increase R&D on advanced energy technologies. The Energy Committee
    fully supports their efforts.
        A forward-looking energy policy will require enhanced, sustained
    levels of funding for R&D as well as Government policies that encourage
    deployment and commercialization. The Energy Committee supports much of
    the fiscal year 2009 budget request, especially the increases in funds
    for fundamental scientific research. We wish to emphasize that
    increased funding in all areas is essential to meeting our national
    energy needs.
                                critical issues
        The Energy Committee would like to point out some critical energy
    issues:
      --There is a critical worldwide shortage of trained persons in the
            work force at all levels. This includes persons in the building
            trades, persons in the manufacturing industry, persons who will
            be available to operate and maintain the energy systems, and
            engineers and scientists at all levels who will perform the R&D
            and design functions for all energy systems.
      --International programs in energy are growing and will continue to
            do so in order to make use of shared resources. The
            International Thermonuclear Experimental Reactor (ITER) and the
            Global Nuclear Energy Partnership (GNEP) programs are examples
            of this. The ITER program includes seven international partners
            and the GNEP program now includes 21 countries. Consistent and
            sustained funding is required to demonstrate that the United
            States is a reliable partner in these efforts.
      --Investment guarantees for construction of new renewable and nuclear
            facilities were enacted in previous energy legislation. These
            guarantees will enable lower financing costs for a variety of
            energy technologies leading to lower energy costs for the
            American public. Extending these programs further into the
            future will allow a reasoned rate of increase in construction
            and application of these technologies for electric generation.
                                 fossil energy
        The fiscal year 2009 budget request of $754 million for fossil
    energy represents an increase of $11 million over the fiscal year 2008
    appropriation. The Energy Committee supports the increase in coal
    research programs to $624 million. The effective use of coal in today's
    environment demands an increase in efficiency and a decrease in release
    of environmentally harmful emissions. The Energy Committee agrees with
    the DOE in its efforts to build IGCC plants by providing funding for
    the addition of CCS technology to multiple plants that will be
    operational by 2015. This approach builds on technological R&D
    advancements in IGCC and CCS technology achieved over the past 5 years.
        The use of advanced integrated gasification combined cycle
    technology and carbon sequestration may allow the United States to
    utilize its coal resources in a more environmentally sound and cost
    effective manner. We encourage strong and consistent funding for these
    programs now and in future years.
                            advanced fuels research
        The Energy Committee agrees that the advanced fuels research should
    be aimed at fuels used in the transportation system. We believe that
    the development of transportation fuel systems that are not petroleum
    based is a critical part of our future national energy policy. The
    fiscal year 2009 budget for biomass and bio-refinery systems R&D is
    increased by $27 million to $225 million. The Energy Committee
    encourages Congress to ensure that these research programs continue to
    receive adequate funding. We are also pleased to see the increase to
    $221 million in the effort related to vehicle technologies with a
    program emphasis on plug-in hybrid electric vehicles.
                                 nuclear energy
        The Energy Committee is encouraged to see the increase in the DOE
    Nuclear Energy budget to $1.4 billion in fiscal year 2009. Nuclear
    power, as a non-greenhouse gas-emitting resource, is a critical
    component of a diverse U.S. power generation mix and should play a
    larger role in the Nation's base power supply.
        Proposed increases in the Nuclear Energy Budget are most evident in
    the Nuclear Power 2010 program with an increase of $108 million and the
    Advanced Fuel Cycle Initiative with an increase of $122 million over
    the fiscal year 2008 Appropriation. The Energy Committee believes that
    nuclear generated electricity is important to the Nation, especially in
    a more carbon conscious environment. Therefore continued R&D looking at
    advanced nuclear systems is critical.
        The GNEP program is vital to the international future of nuclear
    energy. Agreements are already in place to establish cooperative
    efforts. The U.S. based R&D elements of this program are now part of
    the Advanced Fuel Cycle Initiative. The Energy Committee concurs with
    the DOE goal to establish a full scale demonstration of the required
    facilities, including a burner reactor and fuel recycle plant that will
    not produce a pure plutonium product stream. The successful
    implementation of the GNEP initiative will lead to a minimization of
    high level nuclear waste, enhance the safeguarding of nuclear materials
    by keeping them in the reactor fuel cycle, lead to an effective and
    efficient use of all the potential energy contained in uranium and
    allow cost effective generation of electricity.
        The university reactor assistance and education assistance program
    has been successfully integrated into other programs within the Nuclear
    Energy budget. The Energy Committee supports the continuation of this
    change.
                     energy efficiency and renewable energy
        The Office of Energy Efficiency and Renewable Energy (EERE) manages
    America's investment in research, development and deployment of the
    Department of Energy's (DOE) diverse energy efficiency and renewable
    energy applied science portfolio. The fiscal year 2009 request of $1.25
    billion provides a balanced and diverse portfolio of solutions to
    address the urgent energy and environmental challenges currently facing
    our Nation. Most of the key EERE programs, including Biomass, Building
    Technologies, Geothermal Energy, Vehicle Technologies, and Wind Energy,
    have received increases in funding to support the growth of renewable
    energy that the United States needs. The potential to meet the growing
    need for domestically produced energy justifies sustained and increased
    support for these programs.
        The Hydrogen Program is reduced $65 million; however, $32 million
    has been added to hydrogen related activities and funding in the
    Vehicle Technologies Program. The Energy Committee encourages fully
    funding the Hydrogen Program as requested and recommends restoring a
    minimum level of $2 million in funding to the Hydrogen Production and
    Delivery R&D activity to coordinate efforts with other Hydrogen
    Production R&D activities in other DOE offices.
        The funding to the Water Power Program reflects increasing interest
    in ocean energy resource characterizations but it neglects the need for
    sustained support for conventional hydropower R&D. Hydropower is our
    Nation's largest renewable energy source. This includes pumped storage
    hydro and repowering existing hydropower facilities with advanced,
    environmentally benign equipment. The Energy Committee recommends
    increasing the fiscal year 2009 funding level of the Water Power
    Program to $10 million to continue supporting development and
    deployment of advanced conventional hydropower and ocean energy
    technologies.
        The integration of renewable electric generating systems into the
    operation of the electricity distribution system is critical to
    economic operation of these systems. The Energy Committee believes that
    R&D related to the integration of the electric grid and its control as
    a national system is imperative to the growth of renewable energy
    generating technologies and we encourage full funding for such
    research.
                 science and advanced energy research programs
        The Energy Committee is pleased by the increased request for the
    Office of Science (OS), $4.72 billion or $749 million over the fiscal
    year 2008 appropriated amount, which attempts to restore the funding
    trajectory mandated in the America Competes Act of 2007 (Public Law
    110-69). OS programs in high energy physics, nuclear physics,
    biological and environmental research, basic energy sciences, and
    advanced scientific computing, serves every student in the country.
    These funds support research at the DOE Laboratories and at a large
    number of universities and colleges. We believe that basic energy
    research will also improve U.S. energy security over the long term,
    through its support for R&D on cellulosic ethanol, advanced battery
    systems, and fusion.
        Of the fiscal year 2009 requested increase, $214 million is for the
    ITER fusion energy international agreement taking place in Cadarache,
    France. This program did not receive funding in fiscal year 2008. The
    Energy Committee is encouraged by this cooperative agreement and the
    enormous potential it holds.
        The Energy Committee would like to impress upon the members of this
    subcommittee and their colleagues that high energy physics and nuclear
    physics programs are very important to all branches of engineering. The
    information gathered allows the development of data related to material
    formation and failure which guides the selection of materials for many
    day to day applications.
                               other doe programs
        DOE is also very active in areas outside of R&D. The environmental
    remediation program that funds the decommissioning and decontamination
    of old DOE facilities is one such program. The Energy Committee
    questions the advisability of the budget decreases in this program.
    Congress should appropriate the budget to ensure that this work is
    accomplished in an expeditious manner.
                                   conclusion
        Members of the Energy Committee consider the issues related to
    energy to be one of the most important issues facing our Nation. The
    need for a strong and coherent energy policy is apparent. We applaud
    the administration and Congress for their understanding of the
    important role that scientific and engineering breakthroughs will play
    in meeting our energy challenges. In order to promote such innovation,
    strong support for energy research will be necessary across a broad
    portfolio of technology options. DOE research can play a critical role
    in allowing the United States to use our current resources more
    effectively and to create more advanced energy technologies.
        Thank you for the opportunity to offer testimony regarding both the
    R&D and other parts of the proposed budget for the DOE. The ASME Energy
    Committee is pleased to respond to additional requests for additional
    information or perspectives on other aspects of our Nation's energy
    programs.
                                     ______

        Prepared Statement of the State of Alaska Department of Natural
                                   Resources
        Dear Chairman Dorgan and Subcommittee on Energy and Water
    Development, I appreciate this opportunity to provide testimony
    outlining the urgent need for energy-related research and resource
    assessment in Alaska. Specifically, scientific work performed and
    funded in Alaska through the U.S. Department of Energy provides an
    invaluable service to the Nation by helping address energy security and
    development of technologies for the challenges unique to the Arctic.
    Alaska is one of the few places in the United States where the
    scientific unknowns are so ubiquitous, and the task so daunting, that
    Federal and State agencies seldom compete for the most high profile
    projects; there are too many to go around. In fact, we compliment each
    other's efforts in an attempt to tackle the many challenges that face
    us all. The Office of Fossil Energy, National Energy Technology
    Laboratory (NETL) Arctic Energy Office, plays a critical role in this
    collaborative effort.
        Federal land-management responsibility in Alaska is significant.
    Although final conveyances are not complete, the current Federal land
    allotment stands at 243 million acres, or about 64 percent of the total
    Alaska land surface. The State of Alaska manages about 24 percent, or
    90 million acres, and the Native corporations about 10 percent.
    Additionally, the energy potential in offshore Alaska Federal waters
    dwarfs nearly all other areas in North America. Those regions are now
    becoming the next global exploration frontiers of major international
    oil and gas companies. For example, the most recent lease sale, in the
    Chukchi Sea, astounded even the most optimistic of explorationists by
    the bonus bids that were recorded ($2.6 billion). Many of the geologic
    attributes that were targeted by the bidding extend onshore to the east
    into the National Petroleum Reserve Alaska (NPRA). Additionally, the
    formidable challenges that will be faced to safely bring any discovered
    commodities to market will require the collaboration of many entities.
        Arguably, Alaska has the greatest potential for undiscovered
    conventional resources of any area in the United States. Current mean-
    case technically recoverable resource estimates (calculated by the U.S.
    Geological Survey for on-shore basins and Minerals Management Service
    for offshore Alaska basins) stand at 200 trillion cubic feet of natural
    gas potential, and 46 billion barrels of oil. These probabilistic
    estimates are for undiscovered conventional resources only, and do not
    include the vast amount of natural gas in unconventional reservoirs
    such as gas hydrates, coalbed methane, shale-bed gas, and low
    permeability reservoirs. Additionally, Alaska contains the largest
    reserves of coal in all of the United States. Given that fossil energy
    will realistically play a key role in the energy portfolio of America
    for the foreseeable future, it is imperative that ``all hands remain on
    deck'' and agencies like the NETL Arctic Energy Office remain in full
    functional operation. The alternative will only put us farther behind
    and even more dependent on the volatilities of the global energy
    market.
        The many important projects being managed from the NETL Arctic
    Energy Office attest to the critical role they play. Programs that
    collaborate with other agencies and address key aspects of national
    energy supply, Arctic engineering, environmentally sensitive
    exploration and development technologies, and rural energy supply will
    not be fully realized without committed and long-term participation by
    the Federal Government. The State of Alaska is rightfully spending
    hundreds of millions of dollars on these efforts, but we cannot do it
    alone.
        Many changes are needed in the national energy policy, including a
    focus on and facilitation of dramatic conservation efforts, development
    of non-fossil energy sources that make environmental and economic
    sense, technological development for better use of fossil fuels, and
    continued pursuit of new conventional and unconventional reserves.
    Nevertheless, whether or not we stand ready, energy demand in the
    United States is forecast to increase by 19 percent by the year 2030.
    Even more alarming, global demand for energy is forecast to increase by
    57 percent in that same time period. We shall either prepare for the
    inevitability of dwindling resources, shrinking supply and shortfall,
    and increasing dependence on foreign energy resources, or pray this
    calamity is not upon us and continue to cut budgets and hope that a
    miracle is ``just around the corner.'' I believe we should spend the
    capital to prepare now.
        Thank you for your consideration of this important issue.
                                     ______

      Prepared Statement of the Association of State Energy Research and
                   Technology Transfer Institutions (ASERTTI)
        Mr. Chairman and members of the subcommittee, I am David Terry,
    Executive Director of the Association of State Energy Research and
    Technology Transfer Institutions (ASERTTI). ASERTTI is submitting this
    testimony in support of funding for a variety of U.S. Department of
    Energy programs. State and local governments host a wide range of
    public interest energy organizations, including State research and
    technology transfer institutions, municipal energy organizations, land
    grant colleges, universities, and others. The members of ASERTTI focus
    on State- and local-level public interest, applied clean energy
    research and technology transfer. Our work aims to develop and improve
    clean energy technologies, rapidly transfer those technologies to the
    private sector, and aid in the transformation of markets. ASERTTI
    promotes and facilitates communication and collaboration in the above-
    mentioned areas among its State and local members, as well as with
    other organizations, such as the U.S. Department of Energy (DOE)
    National Laboratories. Each year, our members invest hundreds of
    millions of dollars in State and local energy funds. We believe
    improved collaboration with our Federal partners would significantly
    leverage our efforts and State funds--improving our Nation's energy
    future. In this regard, ASERTTI wishes to highlight a number of funding
    priorities, as follow, within DOE's Office of Energy Efficiency and
    Renewable Energy (EERE) programs for the Industrial, Building, and
    Vehicle Efficiency Technologies, as well as for the Biomass, Solar, and
    Weatherization Assistance Programs.
                            industrial technologies
        The administration's fiscal year 2009 budget request would cut the
    Industrial Technologies Program by $2.3 million, compared with fiscal
    year 2008, and contains cuts in several very important programs.
    Following are ASERTTI's priorities within the Industrial Technologies
    Program.
        Industrial Assessment Centers (IAC).--The IACs are part of the
    industrial program's crosscutting budget. The IAC program is unique in
    that it trains university engineering students in conducting energy
    audits of small- and medium-sized facilities and, in so doing, helps
    the facilities identify and implement energy saving measures. We
    recommend that the program be restored to fiscal year 2006 funding
    levels of $6.4 million in fiscal year 2009, with additional increases
    in funding and in the number of centers in future years. This is $2.4
    million above the fiscal year 2008 funding level.
        Distributed Generation (DG/Distributed Energy).--Over the past
    decade, this program area has played a key role in the development of
    high-efficiency clean technologies like combined heat and power (CHP).
    These activities were moved around within DOE between EERE and the
    Office of Electricity. For fiscal year 2008, Congress appropriated
    $14.5 million for these activities. However, the administration's
    fiscal year 2009 request is only $1.5 million. The program is now part
    of the crosscutting piece of the Industrial Technologies Program.
    ASERTTI recommends a robust funding increase over the fiscal year 2008
    appropriated level for Industrial DG.
        Within this DG (or DE) program, it is especially important to
    restore critical Centers that have become the cornerstone for regional
    DG activities, providing technical assistance and becoming involved in
    State and local interconnection and emissions issues--greatly
    leveraging Federal, State, and private resources. Section 451 of the
    recently enacted Energy Independence and Security Act of 2007 expands
    these Clean Energy Application Centers (formerly Regional Application
    Centers) and authorizes $10 million for fiscal year 2009. ASERTTI
    strongly supports this authorization level. These Centers also would
    support market transformation activities to facilitate deployment and
    help reduce regulatory and institutional barriers. The Centers also
    would encourage public private partnerships to achieve these goals.
    Efficiency can be as high as 85 percent in CHP applications when
    compared to central station power generation efficiencies of 30-55
    percent. These activities are estimated to contribute as much as 11
    trillion BTUs of displaced energy and 0.2 MMTCE in carbon savings in
    2020.
        Industrial Best Practices.--This is one of DOE's most effective
    industrial energy programs. ASERTTI urges strong support for this
    program and recommends funding it at the administration's fiscal year
    2009 request level of $15.5 million.
        Industries of the Future (specific).--This valued program enables
    cost-shared research with industry at major State and local research
    institutions. The program focuses on energy-intensive industries such
    as steel, aluminum, glass and metal casting. This program was reduced
    from $63 million in fiscal year 2002 to $11 million in fiscal year
    2008. The administration's fiscal year 2009 request of $11.4 million
    represents a cut over the previous year, since most research funding is
    multi-year, and funding from earlier years is not being replaced.
    Moreover the glass portion of the program has been eliminated. Congress
    authorized an expanded Energy-Intensive Industries program under the
    Energy Independence and Security Act focused on industry-specific
    research. This program authorized a focused approach that responds to
    the needs of individual industries and requires their long-term
    commitment. To begin implementing this approach, ASERTTI recommends
    fiscal year 2009 funding of $24.2 million--$12.8 million above the
    administration's $11.4 million request.
                             building technologies
        Zero Energy Commercial Buildings Initiative.--The buildings sector
    in the U.S. accounts for about 40 percent of total energy consumption
    and 40 percent of carbon dioxide emissions, and nearly half of those
    emissions and of that consumption comes from commercial buildings. A
    large multi-year initiative is critical to achieve deep savings
    throughout the commercial buildings sector. This public-private
    collaboration will combine RDD&D, as well as better tracking of real
    energy performance, strategic research, and a market transformation
    plan. This newly-authorized program will be run by DOE with input from
    an industry consortium and is a priority for ASERTTI. Thus, ASERTTI
    recommends $20 million in fiscal year 2009 to fund this new Initiative,
    in addition to the administration's request of $13 million for the
    existing Commercial Buildings Integration program, for a total of $33
    million for these activities.
        Building Application Centers.--It is critical to ensure that
    technologies developed under various building research programs make it
    into the marketplace. This important initiative within Building
    Technologies consists of a regional approach to transferring
    technologies to the marketplace by providing hands-on, cost-shared
    technical assistance to builders, communities, and others. This
    approach has substantial State, local, and private support and is
    delivering results. To date, only two regions have been provided
    funding to move emerging technologies from the laboratory into the
    marketplace. ASERTTI urges the subcommittee to encourage DOE to expand
    and support these Centers in each region of the Nation.
                              vehicle technologies
        In the fiscal year 2009 budget request, the administration has
    proposed a variety of cuts to important vehicle programs--relative to
    fiscal year 2008 levels for the combined Vehicle and Hydrogen budgets--
    that would help save energy at a time of record-high gasoline prices
    and would help reduce greenhouse gas emissions. ASERTTI's priorities
    are as follows:
        Hybrid Electric Systems.--The Vehicle and Systems Simulation and
    Testing activity relates in part to heavy vehicle systems optimization
    R&D, which warrants greater attention. The administration's proposed
    reduction in funding for this activity is a concern. ASERTTI recommends
    that $7.1 million be restored to Vehicle and Systems Simulation and
    Testing, which would restore funding for this effort to $28.2 million.
    Furthermore--and quite critically--energy storage efforts must be
    accelerated. ASERTTI therefore recommends that the Energy Storage R&D
    activity be funded at $59.5 million, an increase of $10 million above
    the administration's request for R&D efforts focused on electric,
    hybrid, and plug-in hybrid vehicle battery storage capabilities.
        Following on from these activities, State and local energy
    institutions together with DOE created the Nation's first demonstration
    fleet of plug-in hybrid electric school buses. More than one dozen of
    these buses are now transporting students to and from schools around
    the Nation. ASERTTI urges the subcommittee to provide plug-in hybrid
    deployment funds for heavy duty vehicles to both expand the early
    adoption of these breakthrough vehicles and to support ongoing
    incremental improvements that will create a self-sustaining market for
    these ``lead by example'' buses. The market for plug-in hybrid school
    buses offers a means to reduce harmful air and greenhouse gas
    emissions, and the opportunity to create niche markets in the public
    sector that can grow into commercial opportunities that transform the
    market. These heavy duty plug-in hybrid applications are critical to
    meeting the Nation's energy and climate goals.
                                biomass program
        ASERTTI Supports the Administration's Fiscal Year 2009 Request of
    $225 Million.--To this end, ASERTTI urges the subcommittee to support
    funding that targets regional coordination of biomass research,
    demonstration, and technology transfer programs that emphasize the
    alignment of State and Federal resources. Currently, little attention
    or funding is provided to achieve joint State-Federal coordination in
    this critical research area. We believe the Nation could reach the goal
    of cost-competitive cellulosic-derived biofuels more rapidly if State
    and Federal research and demonstration resources were better aligned.
    ASERTTI also encourages Congress to fund analysis and communication
    activities that better inform the public about the value of biofuels.
    ASERTTI urges DOE to substantially increase the RDD&D under this
    program area for stationary applications, including the development of
    bio-based products and renewable, pipeline-quality biogas. Energy
    innovations resulting from ongoing cellulosic RD&D should be leveraged
    to address stationary application challenges, such as the need to
    increase yield from anaerobic digesters, improve thermochemical
    gasifiers, refine renewable gas cleanup for use in both power
    generation and direct use applications. These stationary applications
    also have the ability to improve the economics, and further reduce the
    carbon footprint, of biofuels production.
                              solar energy program
        The solar thermal research program is dominated by water-intensive
    technologies for cooling. It is critical, particularly as water
    resources are already scarce in some areas, and becoming more so
    throughout the United States, to focus additional RDD&D efforts on dry
    cooling systems. ASERTTI urges Congress to restore the Solar Energy
    Program to at least the fiscal year 2008 appropriated level of $168.5
    million, which is $12.4 million above the administration's fiscal year
    2009 request of $156.1 million. ASERTTI also strongly recommends that
    there be a particular emphasis going forward on dry cooling systems.
                       weatherization assistance program
        ASERTTI supports the Weatherization Assistance Program (WAP), as it
    helps low-income households, the elderly, and the disabled by improving
    the energy efficiency of low-income housing. Each year the program has
    exceeded its target and has weatherized approximately 100,000 homes.
    The program also is reducing energy consumption in participating homes
    by about 20 percent. Increased funding would allow WAP to expand
    quickly to reduce energy usage by approximately 25 percent in each
    assisted home. This represents savings that families can use to pay for
    other critical needs, while reducing the Nation's energy demand by the
    equivalent of 18 million barrels of oil every year. The
    administration's request to eliminate funding for the program should be
    rejected, and ASERTTI urges the subcommittee to fund WAP at no less
    than $300 million.
                                     ______

       Prepared Statement of the University Corporation for Atmospheric
                                Research (UCAR)
        On behalf of the University Corporation for Atmospheric Research
    (UCAR) and the university community involved in weather and climate
    research and related education, training and support activities, I
    submit this written testimony for the record of the Senate Committee on
    Appropriations, Subcommittee on Energy and Water Development. We urge
    you to fund the DOE Office of Science at the requested level of $4.7
    billion or higher as authorized by the America COMPETES Act.
        UCAR is a 71-university member consortium that manages and operates
    the National Center for Atmospheric Research (NCAR) and additional
    programs that support and extend the country's scientific research and
    education capabilities. In addition to its member research
    universities, UCAR has formal relationships with approximately 100
    additional undergraduate and graduate schools including several
    historically black and minority-serving institutions, and over 50
    international universities and laboratories. UCAR's principal support
    is from the National Science Foundation with additional support from
    other Federal agencies including the Department of Energy (DOE).
                             doe office of science
        The atmospheric and related sciences community is concerned about
    the final outcome for basic research in many areas of the fiscal year
    2008 Consolidated Appropriations Act, including the DOE Office of
    Science. We do understand that appropriators were faced with extremely
    difficult funding choices, but the negative consequences of not
    investing now in science that contributes to our economy, standard of
    living, and safety and security, will only multiply in the future as
    this country's global competitors invest on a broader scale than ever
    before. We appreciate your support for last year's America COMPETES Act
    and urge you to reinstate the doubling track for the Office of Science
    with the fiscal year 2009 budget, and/or with a supplement to the
    fiscal year 2008 budget.
        There will surely be immense budget pressures facing you again in
    your deliberations this year, but we ask that you focus on science as a
    national priority. We urge you to fund the DOE Office of Science at the
    requested level of $4.7 billion or higher as authorized by the America
    COMPETES Act, ask that you make the Office a national priority when
    difficult choices have to be made at the end of the budget process, and
    that you enable the agency to apply the entire appropriation toward
    planned agency research priorities.
    Biological and Environmental Research (BER)
        Within the Office of Science, the Biological and Environmental
    Research (BER) program has as a key goal, the development of knowledge
    necessary to identify, understand, and anticipate the potential health
    and environmental consequences of energy production and use. These are
    goals that are essential to our country's well being and security.
    Peer-reviewed research programs at universities, national laboratories,
    and private institutions play a critical role in the BER program by
    involving the best researchers the Nation has to offer, and by
    developing the next generation of researchers. All BER research
    projects, other than those that have been in the ``extra projects''
    category, undergo regular peer review and evaluation.
        I urge the subcommittee to fund Biological and Environmental
    Research at the level of the fiscal year 2009 budget request, $568.9, a
    4 percent increase over the fiscal year 2008 level, and to enable BER
    to apply that entire amount toward planned agency research priorities
    that are peer-reviewed and that involve the best researchers to be
    found within the Nation's university research community as well as the
    DOE labs.
    BER's Climate Change Research Program
        Within BER, the Climate Change Research subprogram addresses some
    of the most critical research priorities facing the world today
    including developing the ability to predict climate change and its
    impacts on global and regional scales, exploring the impacts of high
    levels of CO2 on the Earth system, and providing the
    scientific foundation necessary to help mitigate those impacts.
        One example of the compelling work being done is a BER contribution
    to the International Polar Year (IPY) utilizing the Community Climate
    System Model to simulate eight future emission scenarios. The results
    projected a decline in sea ice, with one scenario showing the Arctic
    becoming ice-free in summer at the end of this century--an occurrence
    that could change sea level, economies, world trade, and political
    stability. Such advanced modeling activities supported by the BER
    Climate Change Research are obviously critical to our understanding of
    the current global climate and areas that are being transformed by
    rapid change, but they are also critical to our understanding of what a
    changed world may look like in the very near future.
        In 2009, Climate Change Research funded work will continue to focus
    on resolving the role of clouds and aerosols in climate change and
    their interaction with solar radiation. While great progress has been
    made in recent years, this remains one of the greatest scientific
    uncertainties in climate change prediction. As we learn more about
    climate change and the anthropogenic influences that are forcing change
    at an unnatural rate, those results must be made accessible to
    researchers working to understand the regional and local impacts that
    climate change will produce. A new Climate Change Research effort is
    strengthening the connections between the climate modeling research
    communities and those that address integrated assessment of impacts in
    addition to exploring adaptation methods. To be of use at regional
    scales (where details make tremendous differences at local ecosystem
    levels where we all live), models must be resolved at ever higher
    resolutions to project local impacts with any reasonable certainly.
    Running models at these resolutions presents complex problems of data
    retrieval, archiving, analysis, and dissemination for which BER is
    developing the tools and capabilities necessary.
        The Climate Change Research goal to deliver improved regional
    climate data and models is critical to the ability of policy makers and
    stakeholders to provide stewardship resulting in a healthy planet--and
    it is particularly important as signs of increasingly dramatic change
    in our climate and environment continue to appear.
        The Climate Change Research Request of $154.9 million for fiscal
    year 2009 is a 13.2 percent increase over fiscal year 2008 which will
    make up some of the ground lost in previous years. Within this amount,
    Climate Change Modeling receives $45.4 million--a critical 46 percent
    increase over fiscal year 2008. These additional resources are
    absolutely necessary for the work that must be accelerated at the
    regional level. I urge the subcommittee to fund Climate Change Research
    at the fiscal year 2009 requested level of $154.9 million, and to
    enable DOE to apply the entire amount toward planned national research
    priorities.
    Advanced Scientific Computing Research (ASCR)
        Within DOE's Office of Science, Advanced Scientific Computing
    Research (ASCR) delivers leading edge computational and networking
    capabilities to scientists nationwide, enabling advances in computer
    science and the development of specialized software tools that are
    necessary to research the major scientific questions being addressed by
    the Office of Science. Development of this capacity is a key component
    of DOE's strategy to succeed in its science, energy, environmental
    quality, and national security missions.
        ASCR's continued progress is of particular importance to
    atmospheric scientists involved with complex climate model development,
    research that takes enormous amounts of computing power to address the
    interaction of the earth's systems and global climate change. ASCR is
    one of the most important resources supporting climate work in this
    country.
        Within ASCR, several programs are of particular importance to
    climate change computer modeling work, particularly through the
    development of complex software. The Leadership Computing Facility
    (LCF) at Oak Ridge National Laboratory (ORNL) provides a high
    performance computing resource and, in 2009, will continue the
    development of its world class facility with over 80 percent of its
    resources being made available to unclassified scientific research. In
    addition, the National Energy Research Scientific Computing Center
    (NERSC) operated by Lawrence Berkeley National Laboratory, and the
    Energy Sciences Network (ESnet) are also important enablers for climate
    research, as is Argonne National Laboratory (ALCF) which is
    strengthening its infrastructure to prepare for future computing
    capacity. These computational and networking resources play a vital
    role in the progress of U.S. climate research.
        The high performance computing facilities for the Office of Science
    serve thousands of scientists throughout the country at laboratories,
    universities, and other Federal agencies. Computing time is awarded to
    research groups based on peer review of submitted proposals. Basic
    research accomplished at these facilities covers a wide range of
    disciplines including climate modeling. ESnet enables researchers at
    laboratories, universities and other institutions to communicate with
    each other using collaborative capabilities that are unparalleled. This
    high-speed network enables geographically distributed research teams to
    collaborate effectively on some of the world's most complex problems.
    Researchers from industry, academia and national labs, through this
    program, share access to unique DOE research facilities, support the
    frequent interactions needed to address complex problems, and speed up
    discovery and innovation.
        LCF, NERSC, and ESnet play complementary roles in advancing the
    complex and challenging science of climate change and other scientific
    areas of extreme importance to the security and quality of life of our
    citizens. I urge the subcommittee to support the President's fiscal
    year 2009 request of $368.82 million for DOE Advanced Scientific
    Computing Research, a 5 percent increase over fiscal year 2008, and to
    enable DOE to apply the entire amount toward planned national
    priorities.
    Scientific Discovery Through Advanced Computing (SciDAC)
        BER and ASCR (through its Computational Partnerships program)
    partner to support Scientific Discovery Through Advanced Computing
    (SciDAC), a progressive program that provides the innovations in
    computational research and development for petascale computational and
    data management endeavors, including climate research. Along with very
    broad scientific applications, a current SciDAC goal is to break
    through the uncertainty still challenging researchers concerning the
    role of clouds and aerosols in climate change. Additional SciDAC
    investments address the role of land-ice in the climate system,
    improved representation of ice sheets in global circulation models, and
    understanding of climate extremes in a changing climate. Much of the
    research is designed to provide global community access to the data for
    impact studies as well as national and international assessments (e.g.,
    the Intergovernmental Panel on Climate Change) concerning the
    consequences of global warming. This work is becoming increasingly
    critical as evidence mounts that regions of Earth are warming at an
    alarming rate. SciDAC research activities are competed through a merit
    review process and carried out via a synthesis of talent drawn from
    universities, national laboratories, and private institutions.
        BER funding for SciDAC is requested at $7.7 million for fiscal year
    2009 with ACSR supporting SciDAC Computational Partnerships at $52.0
    million. I urge the subcommittee to support the President's fiscal year
    2008 requests within BER and ASCR for overall SciDAC funding.
                                     ______

                    Prepared Statement of RTI International
        I am writing in support of the following subprogram in the fiscal
    year 2009 Energy and Water appropriations measure: Department of
    Energy--Fossil Energy Research and Development: Coal, Fuels and Power
    Systems, Advanced Integrated Gasification Combined Cycle.
        I respectfully request that the President's $69 million request for
    the Advanced Integrated Gasification Combined Cycle subprogram be fully
    funded.
        Congress and the administration have highlighted energy as critical
    to America's economic future and national security. It is all too clear
    that the United States requires cost-effective technologies for clean
    use of coal to generate electricity and fuel vehicles, to save jobs,
    and enable domestic growth in critical industries such as chemicals,
    fertilizer, pulp and paper, metals, and glass.
        Funded by Congress, the Advanced Integrated Gasification Combined
    Cycle subprogram has a historic opportunity to enable such benefits to
    be achieved in a manner that is environmentally responsible.
        DOE's plans for 2009 include scaling up a new technology that
    greatly reduces the cost and improves the performance of a crucial step
    in any clean use of coal: cleaning the synthetic gas--``syngas''--that
    is made from coal. In every opportunity for clean use of coal, the
    first steps are to make and then clean the syngas. The new technology,
    called ``warm-gas clean-up,'' has lower capital and operating costs
    than existing technologies, and does a better job of removing
    pollutants. This technology meets or exceeds requirements in the Energy
    Policy Act of 2005 for reduced sulfur and mercury emissions,
    contributes to meeting the EPACT's requirements for efficiency, and
    enhances the opportunity for carbon capture. Furthermore, this
    technology provides 10 percent greater efficiency compared with current
    technologies for generating electricity from coal, which causes a 10
    percent reduction in carbon dioxide emissions without additional costs
    or equipment.
        The administration has included sufficient funds for DOE's plans to
    scale up this syngas-cleaning technology. DOE's plans are well-timed,
    because there is substantial industry interest in scaling up the
    technology.
        Time is of the essence to lower the costs of gasification.
    Worldwide, electric utilities, chemical companies, and other industries
    are making decisions today about how they will use coal in the near
    future. Better technology at lower costs will enable expanded use of
    gasification, with all of its environmental benefits, instead of
    conventional approaches. For example, gasification for generating
    electricity emits less carbon dioxide than conventional power plants.
    Warm-gas clean-up prevents acid-forming pollutants without the solid
    waste and carbon dioxide problems that come with scrubbing sulfur from
    power plants' emissions. Further, warm-gas clean-up enables a cleaner
    syngas, which means cleaner exhaust gas from the electric generating
    turbine at greater thermal efficiency. That in turn yields benefits
    such as significantly reduced cost to capture carbon (and the EPA
    already notes that carbon capture will be much less costly with
    gasification than with conventional power plants).
        To realize the environmental and economic benefits of gasification,
    DOE must have sufficient funds to implement the bipartisan intent of
    Congress expressed in the Energy Policy Act of 2005.
        I recognize the constraints by which the subcommittee is bound. I
    appreciate your consideration of my request that the Advanced
    Integrated Gasification Combined Cycle subprogram in DOE's Fossil
    Energy Research and Development be funded at or above the President's
    $69 million request for fiscal year 2009.
        If you have any questions or require additional information, please
    feel free to contact me. I look forward to working with you as the
    fiscal year 2009 Energy and Water appropriations bill takes shape.
                                     ______

                 Prepared Statement of Florida State University
        Florida State University is seeking $4,000,000 from the U.S.
    Department of Energy (Electricity Transmission and Distribution) for
    our Electric Power Infrastructure, Security R&D Program.
        Mr. Chairman, I would like to thank you and the members of the
    subcommittee for this opportunity to present testimony before this
    subcommittee. I would like to take a moment to briefly acquaint you
    with Florida State University.
        Located in Tallahassee, Florida's capitol, FSU is a comprehensive
    Research university with a rapidly growing research base. The
    University serves as a center for advanced graduate and professional
    studies, exemplary research, and top-quality undergraduate programs.
    Faculty members at FSU maintain a strong commitment to quality in
    teaching, to performance of research and creative activities, and have
    a strong commitment to public service. Among the current or former
    faculty are numerous recipients of national and international honors
    including Nobel laureates, Pulitzer Prize winners, and several members
    of the National Academy of Science. Our scientists and engineers do
    excellent research, have strong interdisciplinary interests, and often
    work closely with industrial partners in the commercialization of the
    results of their research. Florida State University had over $190
    million this past year in sponsored research awards.
        Florida State University attracts students from every State in the
    Nation and more than 100 foreign countries. The University is committed
    to high admission standards that ensure quality in its student body,
    which currently includes National Merit and National Achievement
    Scholars, as well as students with superior creative talent. Since
    2005, FSU students have won more than 30 nationally competitive
    scholarships and fellowships including 2 Rhodes Scholarships, 2 Truman
    Scholarships, Goldwater, Jack Kent Cooke and 18 Fulbright Fellowships.
        At Florida State University, we are very proud of our successes as
    well as our emerging reputation as one of the Nation's top public
    research universities.
        Mr. Chairman, let me summarize our primary interest today.
        The electric power system is critical as a fundamental enabling
    infrastructure for every aspect of the economy, national security, and
    defense. Large-scale failures in the electrical grid systems of North
    America and Europe have made us aware of the critical nature of our
    dependence on the availability of electrical power. A contributing
    factor to these failures was a lack of detailed understanding of the
    system response to an initial minor disturbance. Lack of investment in
    power systems grids over the last 20-30 years has eroded the redundancy
    traditionally built into the system. Over time, this lack of investment
    in R&D resulted in the loss of many power engineering educational
    programs. The Nation is now facing an acute shortage of power
    engineers.
        This multi-university project will build on existing expertise at
    FSU, other Florida universities, and several of DOE's National
    Laboratories. The research conduced will focus on critical issues
    associated with modernizing the U.S. electric grid to improve
    reliability, security, and efficiency and to support new technologies.
    Much of the research will include industrial partners, thereby ensuring
    rapid technology transfer from research-to-practice. These activities
    include:
      --Employing the real time digital simulator capability at FSU to
            simulate real-time behavior of regional and local power systems
            and interconnections and to examine areas of vulnerability to
            major outages and cascading failures. We plan that this will
            become a national user facility with remote access capability
            over high-speed connections.
      --Use of the real-time digital simulator through comparisons of
            concurrent real time modeling and an actual system to assess
            new technologies.
      --Investigation into technology needs for enabling wide area
            measurement, communications, and control advances for improved
            coordination over large areas.
      --Advanced materials R&D for superconductivity applications in power
            systems.
        Through coordinated efforts across multiple universities, FSU will
    lead the initiative to address future needs to assure reliable energy.
    We are seeking $4,000,000 in fiscal year 2009 for this important
    project.
                                     ______

           Prepared Statement of the Ground Water Protection Council
        Honorable Chairman Dorgan and members of the subcommittee, the
    following request by the Ground Water Protection Council (GWPC) is for
    continued funding in fiscal year 2009, of the U.S. Dept of Energy's Oil
    Technologies-Effective Environmental Protection: Risked Based Data
    Management (RBDMS) and Cost Effective Regulatory Approaches (CERA)
    programs. The request for fiscal year 2009 is at the fiscal year 2008
    enacted level of $1.2 million (RBDMS) and $500,000 (Energy Efficiency).
      --RBDMS ACCOMPLISHMENTS.--Data utilities from the Risk Based Data
            Management System are installed and under use in 25 States and
            1 Indian Nation. The use of RBDMS streamlines State oil and gas
            permit and response times, enhances ground water protection,
            provides improved public and industry joint access to data and
            records, saves money for State and Federal agencies, reduces
            paper reporting, increases production for small independent
            domestic operators, and creates real time efficiencies in State
            and Federal domestic oil and gas programs. Over the life of
            this successful program, the States have matched Federal
            funding with their own funds at a 3:1 ratio. If state in-kind
            contributions are added, the State-to-Federal participation
            ratio increases substantially. This has been, and continues to
            be, a sound investment of Federal funds.
        Fiscal year 2009 funding would provide:
        E-Commerce.--The development of new RBDMS e-commerce applications
    in fiscal year 2009 will increase environmental monitoring and
    compliance and at the same time decrease both cost and time allocation
    for small oil and gas producers. The result is money saved by State
    governments, Federal agencies and increased domestic oil and gas
    production.
      --Cost Effective Regulatory Approaches.--The GWPC will focus on three
            cost effective priorities: (1) reducing the costs of
            information exchange between the oil and gas and mining
            industries and regulatory agencies, (2) eliminating duplicative
            reporting requirements across State and Federal jurisdictions,
            while (3) providing the reference data needed to make informed
            decisions about environmental protection and resource
            development.
      --Energy-Water Sustainability.--The USDOE has a goal of minimizing
            water consumption by energy producing industries. The GWPC will
            develop applications that will aid State agencies in tracking
            water quality and quantity data related to oil and gas
            production. This will assist States in the analysis of related
            water consumption. Public education efforts through our Ground
            Water Report to the Nation series will emphasize ground water
            availability facts and realistic short and long term
            conservation efforts that can be made locally.
      --CO2 Geo-Sequestration.--Capture of CO2 from
            power plants is one potential tool for decreasing the release
            of this gas to the atmosphere. However, storage or
            sequestration of its liquid form in geologic formations must be
            done with protection of underground sources of drinking water
            in mind. The GWPC will continue to work in cooperation with
            State and Federal agencies to apply sound science in the
            development of effective regulations, policy and technical
            guidance, with a focus on protecting the Nation's invaluable
            ground water resources. With additional funds we would be able
            to develop a geo-sequestration volume information tracking
            system.
        THE GWPC.--GWPC is a respected national organization of State
    ground water, UIC, and oil and gas regulatory agencies with a
    successful track record of providing solutions to ground water
    protection related issues that are environmentally protective,
    scientifically based, cost effective and publicly accepted. We are the
    proud recipient of the Secretary of Energy's ``Energy 100 Award''--
    given to the top 100 most successful and publicly beneficial projects
    (RBDMS) in the last 30 years of USDOE. We hope the subcommittee will
    continue to support these efforts in fiscal year 2009 at the fiscal
    year 2008 level of $1.2 million (RBDMS) and $500,000 (Energy
    Efficiency).
        We are grateful for your past support and would like to also
    request that the subcommittee continue to support the USDOE Office of
    Fossil Energy, and the National Energy Technology Lab (NETL). Without
    their national presence not only our successes, but those of many
    others would not have been accomplished. The programs they administer
    serve a valuable purpose and are important to the long term efficiency
    of the front line State and Federal agencies and the small domestic
    operators who would not otherwise have been able to extend the life of
    domestic reservoirs and increase environmental and ground water
    protection at the same time.
                                     ______

           Prepared Statement of the National Hydropower Association
        The National Hydropower Association (NHA) \1\ appreciates the
    opportunity to submit this statement regarding hydropower funding
    priorities for the fiscal year 2009 appropriations budget cycle. NHA
    requests $54 million in fiscal year 2009 Energy & Water Appropriations
    for the Department of Energy's Waterpower Program.
    ---------------------------------------------------------------------------
        \1\ NHA is a non-profit, national trade association dedicated to
    promoting the Nation's largest renewable resource and advancing the
    interests of the hydropower and new ocean, tidal and instream
    hydrokinetic industries and the consumers they serve.
    ---------------------------------------------------------------------------
    hydropower's current and future potential as the nation's most robust,
                           renewable energy resource
        Congress is currently examining the implications of climate change
    on the environment, economy, and energy security of the United States.
    Crucial to the climate debate is the need for policymakers to work
    together to promote the development, deployment and expanded use of
    existing renewable resources, as well as innovative new technologies,
    that can play a significant role in addressing climate issues while
    maintaining a reliable and affordable electricity supply system.
    Hydropower of today and new water power technologies of tomorrow can
    provide significant benefits to these national energy and environmental
    goals.
        Currently, hydropower provides sizeable benefits. As the leading
    renewable energy resource in the country, it accounts for 7 percent of
    all of the Nation's electricity in terms of actual generation and
    approximately 9 percent in terms of actual capacity. Overall,
    hydropower accounts for 77 percent of actual renewable electricity
    generation and 83 percent of the Nation's renewable energy capacity.
        As an important source of electricity, hydropower offers advantages
    over other generation options. Importantly, hydroelectric units are
    able to start, stop, and change output quickly, which provides
    important grid stability and reliability benefits. As such, hydro has
    the ability to firm intermittent resources such as wind and solar, a
    benefit which becomes all the more important as the Nation moves to
    incorporate more renewables in its energy portfolio. Finally,
    hydropower's non-power benefits include water supply, flood control,
    irrigation, navigation and recreation.
        Hydropower's potential contribution is notable--from efficiency
    improvements and capacity upgrades at existing projects, to new
    development at existing non-powered dams, to significant new capacity
    gains from emerging waterpower technologies, such as ocean, tidal and
    instream hydrokinetic projects. According to a March 2007 Electric
    Power Research Institute (EPRI) report titled, ``Assessment of
    Waterpower Potential and Development Needs,'' the potential for
    increases in capacity, mostly without the need to build dams, is
    conservatively estimated at 23,000 MW by 2025, with an overall estimate
    of 85,000 to 95,000 MWs with appropriate public policy support. This
    includes:
      --2,300 MW capacity gains at existing conventional hydropower
            facilities;
      --5,000 MW of new conventional hydropower at existing non-powered
            dams;
      --2,700 MW of new small and low head power conventional hydropower
            (<30 MW installed capacity);
      --10,000 MW from ocean wave energy technologies; and
      --3,000 MW from hydrokinetic technologies (river-based).
        Realization of these capacity gains will require continued and
    increased research, development, demonstration and deployment (RDD&D)
    support and other economic incentives as well as planning, testing and
    impact evaluation assistance. As stipulated in EPAct 2005, the
    Secretary of Energy is required to conduct R&D for conventional and new
    waterpower technologies.\2\
    ---------------------------------------------------------------------------
        \2\ EPAct 2005, title IX, sec. 931--``Conduct a program of
    research, development, demonstration and commercial application for
    cost competitive technologies that enable the development of new and
    incremental hydropower capacity, adding diversity of the energy supply
    of the United States, including: (i) Fish-friendly large turbines. (ii)
    Advanced technologies to enhance environmental performance and yield
    greater energy efficiencies. (. . .) The Secretary shall conduct
    research, development, demonstration, and commercial application
    programs for--(i) ocean energy, including wave energy (. . .) and (iv)
    kinetic hydro turbines.''
    ---------------------------------------------------------------------------
       nha's statement requests full funding of the suite of initiatives
      identified in the epri report under the department of energy's new
        waterpower r&d program at a level of $54 million per fiscal year
    Waterpower Technology Development Needs
        Through direct contact with NHA members, which include hydropower
    owners and operators, ocean, tidal and instream hydrokinetic technology
    developers, and the analysts and experts cited in the EPRI report, NHA
    analyzed the report's suite of development recommendations and
    concluded that the EPRI report provides a useful model, a roadmap from
    which to guide activities under the DOE Waterpower R&D program. As
    such, this statement highlights and summarizes the various R&D
    initiatives outlined in the report. These directives are intended to
    address the needs left unfunded by the previous RDD&D program for
    hydropower and would expand the Department's efforts.
        Waterpower Realization Committee.--To provide the initial guidance
    and future oversight to benchmark results of the RDD&D program in terms
    of real waterpower capacity and generation gains. This committee, made
    up of representatives from industry, government resource agencies and
    non-governmental organizations would guide RDD&D efforts and monitor
    progress to ensure the realization of the capacity gains. The committee
    would measure on an annual basis the capacity gains from the various
    initiatives and make recommendations for refinement of the program, as
    necessary.
        Waterpower Performance Initiatives.--The suite of activities and
    programs available to meet the goals of the program are outlined below.
    Advanced Water Energy Science
        Statement of Need.--The industry has identified the need for
    advanced scientific techniques to support the following activities:
      --Advance Water Energy Science
        --Work that would support the industry's need to better predict
                flow measurement. Accurate flow values are needed for a
                variety of operation and environmental performance topics.
        --Modeling work to improve hydraulic modeling techniques.
        --Turbine research in order to develop better materials resistant
                to cavitation and erosion damage.
        --Generator research in order to discover materials suitable for
                use as stator core; build one prototype stator core; and
                study it over a period of time.
      --Meteorological Forecasting and Optimal Dispatch of Energy/Water
            Systems.--Work in this area will examine and determine the
            benefits of integrating wind and other intermittent renewable
            energy resources with hydropower and pumped storage resources.
            Specific work could include:
        --Near-term forecasting of meteorological conditions will help
                identify needs for improving meteorological data and
                instrumentation.
        --Long-term projections of global climate change and effects of
                other cycles and other factors on regional meteorological
                conditions and future regional electricity and water
                demand, energy and electricity supply mix, and fuel costs.
        --Research into the integration of meteorological information and
                load, energy price, and other forecasts with energy and
                water system operations.
      --Integration and Control of Renewable Energy Technologies.--Greater
            opportunities to adopt renewable energy technologies and their
            integration with water resources can be realized if research is
            provided to develop advanced integration and control
            mechanisms. Funding could be directed to the development and
            demonstration of hybrid control systems to include real time
            pricing, resource optimization and optimal economic value
            methodologies.
    Hydropower Environmental Performance
        Statement of Need.--The following objectives will improve
    hydropower performance by maximizing hydroelectric generation and
    protecting fisheries resources.
      --Complete RDD&D for Fish-Friendly Turbines.--Continued work on fish-
            friendly turbine development offers the opportunity to address
            energy and environmental impacts and needs. Activities under
            this category include:
        --Continue prototype Alden/Concepts NREC turbine development in
                preparation for commercialization. Additional fish survival
                testing.
        --Continue testing of the advanced turbines at Wanapum dam.
        --Perform power efficiency testing, and
        --Deploy and evaluate the Alden/Concepts NREC design at School
                Street Project, NY or other location.
      --Bioengineering for Fish Passage and Entrainment Mitigation.--
            Technologies are needed to solve the problem of fish mortality
            involving hydropower structures. Continued work activities
            include:
        --Basic research on the effect of hydraulic process on fish
                movement.
        --Utilize biocriteria in the development of new turbine and fish
                passage designs.
        --Conduct demonstrations of new technology to determine
                effectiveness in real-world applications.
      --Water Quality Mitigation Technology.--New and more cost-effective
            and less water intensive solutions are needed to address
            dissolved oxygen and water temperature issues involving water
            quality. Research is needed to:
        --Review state of the art techniques for addressing these issues.
        --Develop new technologies and target test sites for testing.
        --Conduct cost-shared demonstrations of new technologies.
      --Advanced Weirs for Flow Re-regulation and Aeration.--More work is
            needed to optimize the design of weirs and demonstrate how they
            can be used to improve the efficiency of existing projects.
            Research activities could include hydraulic design studies,
            coupled with model tests and prototype demonstrations.
    Hydropower Operational Performance
        Statement of Need.--Improved forecast models and the implementation
    of advanced technologies can play a crucial role in enhancing the
    operational performance of hydropower facilities. The following
    objectives will improve operations at facilities.
      --Hydropower Operation Decision Support Analysis.--Need to understand
            various hydropower generation sensitivities to various
            processes. Research activities could include:
        --Determination of sources of hydropower generating variability
                across spatial and temporal scales.
        --Develop improved climate/meteorological stream flow forecast
                models.
        --Incorporate understanding and forecast models into optimization
                and decision support models.
        --Demonstrate benefits of using improved decisions support models.
      --Demonstration Testing of the Advanced Hydropower Turbine System
            (AHTS) to Increase Use of Efficient Designs.--Demonstration
            activities will help potential users understand and overcome
            potential risks of using new technologies.
      --Advanced Electrical Equipment for Renewable Integration.--More
            research into these technologies would increase efficiency and
            reliability by providing ancillary services to the electric
            grid.
        Waterpower Technology Development.--This part of the program would
    use funds to advance hydrokinetic and ocean energy technology in four
    program areas:
    Hydrokinetic Resource Assessment
        Statement of Need.--New generation technologies are on the
    threshold of implementation, but require additional site assessment and
    a mapping program to outline the criteria for development. A complete
    resource assessment and criteria protocol for hydrokinetic sites in the
    United States is required and should be available to potential
    developers, similar to the resource assessment for small hydropower
    completed by DOE.
    Hydrokinetic Environmental Profiling
        Statement of Need.--Advanced technologies on the threshold of
    implementation often are stalled because prospective users cannot
    justify implementation risks and lack of knowledge among developers
    regarding the environmental and institutional barriers. Research to
    develop minimum time environmental data collection and analysis
    techniques for use in site evaluation of hydrokinetic machines is
    needed. This research would standardize monitoring techniques for
    evaluating the environmental impacts of hydrokinetic technologies and
    help expedite the deployment of these technologies.
    Hydrokinetic Technology Improvement
        Statement of Need.--Instream kinetic, tidal/wave energy and kinetic
    hydropower and pressure systems for manmade conduit systems all require
    test support and demonstration funding to support development,
    deployment and realization of their potential. Research is needed to
    determine proof of concepts with single prototype units and demonstrate
    operational viability and environmental effects with pre-commercial
    multiple unit projects. Support is also needed to identify
    universities, labs, and other entities where proof of concepts and
    operational tests can be conducted and environmental effects assessed.
    Advanced Ocean Energy
        Statement of Need.--Federal funding of ocean energy RDD&D and
    required regulatory activities would enable the United States to
    develop new domestic energy supplies, create jobs and capture an
    emerging global export market. Research is needed to develop an ocean
    wave energy technology industry to commercial deployment level
    including research into marine resources and converters; energy
    conversion, delivery and storage; environmental and cost monitoring;
    and field deployment.
                                   conclusion
        Hydropower is already a major source of energy for the Nation. The
    nascent ocean, tidal and instream hydrokinetic technologies are at the
    beginning stages of commercial deployment. Yet both technologies have a
    tremendous growth potential that could be realized through sustained
    Federal RDD&D support. These renewable resources are clean, climate-
    friendly technologies that can provide significant base load power to
    the United States at a time when our demand for electricity continues
    to increase dramatically. By expanding the funding for the DOE
    Waterpower R&D program, the Nation could soon realize the tremendous
    energy and environmental benefits of maximizing existing hydropower
    projects and infrastructure as well as the suite of emerging waterpower
    technologies.
                                     ______

                Prepared Statement of the Health Physics Society
        This written testimony for the record for fiscal year 2009 requests
    reinstatement of funding for the Nuclear Education program appropriated
    to the Nuclear Regulatory Commission (NRC) in fiscal year 2008 to
    include at least $1.5 million for support of health physics programs,
    students, and faculty. This support is necessary to address the
    shortage of health physicists, which is an issue of extreme importance
    to the safety of our Nation's workers, members of the public, and our
    environment. As explained below, justification by the Office of
    Management and Budget (OMB) to rescind the NRC Nuclear Education
    program is not applicable to the health physics academic programs.
        Health Physics is the profession that specializes in radiation
    safety, which is necessary for the safe and successful operation of the
    Nation's energy, healthcare, homeland security, defense, and
    environmental protection programs. Although radiation safety is
    fundamental to each of these vital national programs, there is no
    single Federal agency that serves as a home and champion for the health
    physics profession as this profession cuts across all these sectors.
    However, health physics is necessary for all these sectors to exist as
    it supports the principle disciplines in these programs that are
    championed by multiple Federal agencies, such as engineers, medical
    professionals, law enforcement professionals, military personnel, and
    environmental scientists.
        As the Nation's development and use of radioactive materials grew
    following the end of World War II, the Nation's demand for health
    physicists increased in the areas of energy, defense, public health,
    and environmental protection. This need was mainly supported by student
    fellowships and scholarships from the Atomic Energy Agency (energy and
    defense) and Public Health Service (public health and environmental
    protection). However, over the years agencies and their missions
    changed, the nuclear power industry faltered and the Department of
    Energy (DOE) nuclear weapons complex downsized following the end of the
    cold war. This resulted in the academic program support from Federal
    agencies dwindling until the last remaining support from DOE was
    terminated in fiscal year 1999. With this dwindling support, the supply
    of new health physicists declined and the age of the existing health
    physics workforce increased despite the continued need for health
    physicists in energy, defense, public health, and environmental
    protection programs as well as an exponential growth in the medical and
    academic community. Due to these circumstances a human capital crisis
    was created in health physics.
        As the health physics human capital crisis grew and loomed in the
    early years of the 21st century, Congress and the DOE took action to
    add support to the nuclear engineering academic programs through DOE
    programs in the Office of Nuclear Energy (NE) and eventually agreed
    that this was an appropriate support mechanism for the health physics
    academic program. In fiscal year 2005, just 4 years ago, Congress
    appropriated money to DOE-NE for a health physics fellowship and
    scholarship program as part of the University Reactor Fuel Assistance
    and Support budget item. Shortly thereafter, Congress reinforced its
    position that DOE needed to support the health physics academic
    programs in provisions of section 954 of the Energy Policy Act of 2005.
    Despite the fact that the need for an increased supply of health
    physics professionals continued to exist, the DOE ceased funding the
    Congressionally authorized DOE-NE health physics fellowship and
    scholarship program after only 2 fiscal years of funding the programs
    at minimal levels.
        In fiscal year 2008, Congress transferred appropriations for a
    Nuclear Education program, including health physics programs, to the
    NRC. The Health Physics Society (HPS) applauds this insightful action.
    The NRC does have a vested interest in the radiation safety associated
    with most of the sectors covered by the health physics profession.
    Although the NRC quickly addressed the demands of starting a new
    education support program by opening two grant opportunities for
    student and faculty support, the administration has not included
    continuation of the program in their budget for fiscal year 2009.
        The OMB has provided a justification for rescission of the Nuclear
    Education program. This OMB assessment is patently wrong with regards
    to health physics programs.
        The OMB states ``. . . target levels for the undergraduate
    enrollment have been met . . .'' and ``Since the 1990s, enrollment
    levels in nuclear education programs have tripled . . .''
        Specific to ``target levels,'' since DOE has only funded health
    physics programs for 2 years, they have never established ``target
    levels'' for health physics program enrollments nor has there been time
    to assess the effect of those 2 years of funding on health physics
    program enrollments. The DOE-NE HP fellowship and scholarship program
    thus far has provided three graduate fellowships in fiscal year 2006
    and zero undergraduate scholarships. In 2004, the HPPDO developed a
    plan for revitalizing the academic programs to a level that could meet
    the projected shortfall of health physicists. The Health Physics
    Program Directors Organization (HPPDO) plan calls for an initial target
    of 20 graduate fellowships and 20 undergraduate scholarships, i.e.,
    target levels well above the actual performance of the Nuclear
    Education Programs.
        In addition, the HPS does not feel that undergraduate levels are an
    appropriate metric to measure the success of an academic program.
    Undergraduate levels are not viewed significant by university Deans
    looking to justify graduate programs at the Masters and Doctorate
    level. Furthermore, university administrators will not commit to
    replacing an increasingly large number of retiring health physics
    faculty unless the Federal Government demonstrates its commitment to
    investing in the research and academic health physics infrastructure
    necessary to support new faculty hires in this vital profession.
        The OMB justification also states ``. . . and the number of
    universities offering nuclear-related programs also has increased.''
    Actually, the number of health physics programs graduating at least 5
    students annually decreased from 20 programs in 1995 to less than half
    that number in 2005, which belies the OMB statement.
        We find the OMB justification ignores the value of Federal long-
    term investment in academic infrastructure and ignores the value of
    professional radiation safety professionals to the successful
    protection of workers, members of the public, and the environment while
    benefiting from the use of nuclear technologies.
        We consider it would take approximately $1,000,000 to get to the
    HPPDO plan of 20 fellowships and 20 scholarships in health physics. In
    addition, funding of $500,000 should allow for up to two young faculty
    members in health physics academic programs to receive grant support at
    the level offered by the NRC fiscal year 2008 grant opportunities.
    Considering the DOE budgets for the HP Fellowship and Scholarship
    programs for fiscal year 2005 and fiscal year 2006 combined have
    totaled $500,000 and only produced 3 fellowships, we feel this request
    is very modest while we recognize it will not begin to provide the long
    term support that will eventually be required if we are to have enough
    safety professionals for our energy, healthcare, homeland security,
    defense, and environmental protection programs. However, it will go a
    long way to help building the student and faculty infrastructure needed
    to reach this goal.
        The subcommittee's favorable consideration of this request will
    help meet our Nation's radiation safety needs of the future.
                                     ______

               Prepared Statement of the Gas Turbine Association
        The Gas Turbine Association (GTA) appreciates the opportunity to
    provide the United States Senate Committee on Appropriations
    Subcommittee on Energy and Water Development with our industry's
    statement regarding fiscal year 2009 Department of Energy (DOE) Office
    of Fossil Energy (FE) Advanced Turbines R&D at $55 million and Energy
    Efficiency and Renewable Energy (EERE) Industrial Technologies Program
    (ITP) Distributed Energy at $60 million funding levels.
        From Connecticut to California, States are working to put in place
    regulations to dramatically reduce greenhouse gas emissions. At the
    same time, our economy will be demanding more electric power to
    maintain its growth. Without new technology, the power generation
    industry will be hard pressed to produce additional electric capacity,
    while at the same time meet the strict greenhouse gas emissions
    standards being set by States and the Federal Government.
        Federal investment in research and technology development for
    advanced gas turbines that are more versatile, cleaner, and have the
    ability to burn hydrogen-bearing reduced carbon synthetic fuels and
    carbon-neutral alternative fuels is needed to ensure the reliable
    supply of electricity in the next several decades. Domestic coal based
    Integrated Gasification Combined Cycle (IGCC) with carbon capture and
    sequestration is one such approach that would significantly supplement
    available supplies of domestic natural gas to guarantee an adequate
    supply of clean and affordable electric power. Alternative fuel choices
    range from imported LNG, coal bed methane, and coal-derived synthetic
    or process gas to biogas, waste-derived gases and hydrogen. Research is
    needed to improve the efficiency, reduce capital and operating costs,
    and reduce emissions.

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

                    $55 million for doe fe advanced turbines
                $60 million for doe eere itp distributed energy
        Supporting these programs provides the following benefits:
      --Efficient and reliable turbine technologies for alternative fuel,
            near-zero-emission power plants
      --Energy security by utilizing domestic energy sources to reduce the
            demand for foreign energy imports
      --Globally competitive electricity prices for U.S. industries,
            businesses and homes, with reduced greenhouse gas emissions
            from power plants

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

        Because policy makers have begun implementing rigid CO2
    regulatory mandates, failure to invest now will translate into stifled
    economic growth and the loss of our global competitiveness later. The
    Advanced Turbines program needs $55 million and the Distributed Energy
    budget needs to be restored to $60 million in fiscal year 2009 to
    ensure a smooth transition into a low-carbon economy.
                  gas turbines reduce greenhouse gas emissions
        The gas turbine industry's R&D partnership with the Federal
    Government has steadily increased power plant efficiency to the point
    where natural gas fired turbines can reach combined cycle efficiencies
    of 60 percent, and quick-start simple cycle peaking units can reach 46
    percent. The gas turbine's clean exhaust can be used to create hot
    water, steam, or even chilled water. In such combined heat and power
    applications, overall system efficiency levels can reach 60 to 85
    percent LHV. This compares to 40-45 percent for even the most advanced
    thermal steam cycles (most of which are coal fired).

        Gas turbines already play a very significant role in minimizing
    greenhouse gas emissions worldwide. Gas turbines are both more
    efficient and typically burn lower carbon fuels compared to other types
    of combustion-based power generation and mechanical drive applications.
    The Nation needs to reinvigorate the gas turbine/government partnership
    in order to develop new, low carbon power plant solutions without
    increasing our reliance on natural gas. This can be done by funding
    research to make gas turbines more capable to utilize hydrogen and
    synthetic fuels as well as increasing the efficiency, durability and
    emissions capability of natural gas fired turbines. If Congress
    provides adequate funding to DOE's turbine R&D efforts, technology
    development and deployment will be accelerated to a pace that will
    allow the United States to achieve its emissions and energy security
    goals.
    technologies for advanced igcc/h2 gas turbine--reducing the
                       penalty for co2 capture
        The turbines and related technologies being developed under the DOE
    FE Advanced Turbines program will directly advance the performance and
    capabilities of future power generation with CO2 capture and
    sequestration. Advances are needed to offset part of the power plant
    efficiency and output reductions associated with CO2
    capture. Program funding is required to cost-share in the technology
    development of advanced hydrogen/syngas combustors and other components
    to realize the DOE goals.
        Several GTA member companies are working cost-share programs with
    the DOE to develop technologies for advanced gas turbine power plants
    with carbon capture. These technologies will: (1) increase plant
    efficiency; (2) increase outputs; and (3) allow further reductions in
    combustion emissions of hydrogen rich fuels associated with
    CO2 capture and sequestration. This will help offset some of
    the efficiency and output penalties associated with CO2
    capture. These programs are funding technology advancement at a much
    more rapid rate than industry can do on their own.
        The need for increased levels of Federal cost-share funding is
    immediate. The fiscal year 2009 funding request for the Advanced
    Turbines program is inadequate to meet DOE's 2010 Advanced Power System
    goal of an IGCC power system with high efficiency (45-50 percent HHV),
    near-zero emissions and competitive capital cost. To meet this 2010
    goal, the researchers must demonstrate a 2 to 3 percentage point
    improvement in combined cycle efficiency above current state-of-the-art
    Combined Cycle turbines in IGCC applications.
        The plan for the IGCC-based FutureGen-type application is to
    develop the flexibility in this same machine with modifications to
    operate on pure hydrogen as the primary energy source while maintaining
    the same levels of performance in terms efficiency and emissions. The
    goal is to develop the fundamental technologies needed for advanced
    hydrogen turbines and to integrate this technology with CO2
    separation, capture, and sequestration into a near-zero emission
    configuration that can provide electricity with less than a 10 percent
    increase in cost over conventional plants by 2012.
        The Advanced Turbines program is also developing oxygen-fired (oxy-
    fuel) turbines and combustors that are expected to achieve efficiencies
    in the 44-46 percent range, with near-100 percent CO2
    capture and near-zero NOX emissions. The development and
    integrated testing of a new combustor, turbine components, advanced
    cooling technology, and materials in oxy-fuel combustors and turbines
    is needed to make these systems commercially viable.
        The knowledge and confidence that generating equipment will operate
    reliably and efficiently on varying fuels is essential for the
    deployment of new technology. Years of continued under funding of the
    Advanced Turbines program has already delayed the completion dates for
    turbine R&D necessary for advanced IGCC, as well as timing for a
    FutureGen-type plant validation.
                          mega-watt scale turbine r&d
        In the 2005 Enabling Turbine Technologies for High-Hydrogen Fuels
    solicitation, the Office of Fossil Energy included a topic area
    entitled ``Development of Highly Efficient Zero Emission Hydrogen
    Combustion Technology for Mega-Watt Scale Turbines''. Turbine
    manufacturers and combustion system developers responded favorably to
    this topic, but DOE funding constraints did not allow any contract
    awards. The turbine industry recommends a follow-up to this
    solicitation topic that would allow the developed combustion technology
    to be tested in machines at full scale conditions and allow for
    additional combustion technology and combustor development for high-
    hydrogen fuels.
        The turbine industry believes that this technology is highly
    relevant to industrial coal gasification applications: (1) site-
    hardened black-start capability for integrated gasification combined
    cycle applications (the ability to restart an IGCC power plant when the
    electric grid has collapsed); (2) supplying plant electric load fueled
    on syngas or hydrogen; (3) increasing plant steam cycle capacity on hot
    days when large amounts of additional power are needed; and (4) in gas
    turbines for compression of high-hydrogen fuels for pipeline
    transportation. The development of MW-scale turbines (1-100 MW) fueled
    with high-hydrogen fuels will promote the sustainable use of coal. In
    addition, highly efficient aeroderivative megawatt scale engines
    operate under different conditions than their larger counterparts and
    are installed for peaking or distributed generation applications. LNG,
    syngas and hydrogen combustion are issues for new sites and the legacy
    fleet. Funding is required to design efficient and low emissions
    combustors that accommodate the new fuels.
             high-efficiency, alternative-fueled distributed energy
        The administration's budget request recognizes the need for the
    development of alternate and dual fueled combined heat and power gas
    turbines systems. The budget document states ``ITP would also pursue
    the growth opportunity in traditional industry CHP applications below
    20 MW, including medium-sized plants that require both power and
    process heat. Specific activities would include the development of
    alternative/dual fuel capability for turbines that meet the most
    stringent NOX and CO regulations (e.g., those in southern
    California)''.
        However, there are insufficient funds allocated in the request to
    do any work in this area. The administration's justification contends
    ``full consideration of the new DG/CHP activity within the context of
    the fiscal year 2009 request was not possible''. If the United States
    is serious about transitioning to a low-carbon economy, we must restore
    the Distributed Energy budget to $60 million in fiscal year 2009 to
    allow DOE to fund partnerships to develop ultra-high efficiency
    alternative and dual fuel CHP systems.
               university turbine systems research (utsr) program
        Under the UTSR program, a consortium of 111 U.S. universities
    located across 42 States conducts fundamental and applied research to
    resolve critical knowledge gaps identified by the 17 industrial
    partners that sit on the UTSR program's Industrial Review Board and by
    the DOE in support of the IGCC/FutureGen program. The UTSR program has
    been described as a model for university/government/industry
    collaboration that is tightly focused on the research needed to support
    widespread use of syngas and hydrogen fueled gas turbines for power
    production.
        This DOE/industry/university partnership is needed to help power
    producers cleanly and efficiently produce electric power from gasified
    coal, biomass and hydrogen, as well as natural gas. The UTSR program is
    the only federally-funded university-based program in the gas turbine
    area. The UTSR program's critical research efforts is needed to meet
    the Advanced Turbine program goals of preparing low-cost, high-
    efficiency, high-reliability, low-emission gas turbines for electricity
    production using IGCC-derived fuels. The UTSR program provides critical
    gas turbine research expertise in the United States and graduates with
    knowledge and training. Without adequate DOE funding, universities will
    de-emphasize this area in their own research investments and
    curriculums and the United States will lose its competitive advantage
    in this critical industry.
        The Advanced Turbines program needs $55 million and the Distributed
    Energy budget needs to be restored to $60 Million in fiscal year 2009
    to keep pace with the rapidly approaching Climate Change emissions
    mandates.
                                     ______

       Prepared Statement of SNM--Advancing Molecular Imaging and Therapy
        SNM, formerly known as the Society of Nuclear Medicine, appreciates
    the opportunity to submit written comments for the record regarding
    funding in fiscal year 2009 at the Department of Energy (DOE). SNM is
    an international scientific and professional organization of over
    16,000 members dedicated to promoting the science, technology, and
    practical applications of molecular imaging and therapy.
        In fiscal year 2008, Congress restored funding for nuclear medicine
    research, after the Federal Government abandoned its over 50-year
    commitment to funding vital nuclear medicine research by eliminating
    funding in fiscal year 2006 for the research at the Department of
    Energy (DOE) and making no accommodation to transition nuclear medicine
    programs to other Government organizations. In past years, nuclear
    researchers have used Federal funding within DOE to make major
    accomplishments benefiting millions of patients with heart, cancer, and
    brain diseases. The loss of Federal funding for nuclear research
    adversely impacted future innovation in the field. With the restoration
    of funding last year and the continuation of funding in fiscal year
    2009 we will be able to get this research back on track. For that
    reason, SNM advocates the continuation of funding for fiscal year 2009
    at the level of $17.5 million for the nuclear medicine research program
    now housed under the Office of Science's Biological Research Life
    Science Radiochemistry and Instrumentation program \1\ in the fiscal
    year 2009 Energy and Water Appropriations bill.
    ---------------------------------------------------------------------------
        \1\ Previously nuclear medicine research was funded under the DOE's
    Office of Science, Biological and Environmental Research (BER)
    program's Medical Applications and Measurement Science. The BER program
    has been restructured, as directed by Congress, into two separate sub
    programs--Biological Research and Climate Change Research. Biological
    Research included activities in Life Sciences which is where this
    research is now housed. They also renamed it to Radiochemistry and
    Instrumentation.
    ---------------------------------------------------------------------------
                           what is nuclear medicine?
        Nuclear medicine is an established specialty that performs non-
    invasive molecular imaging procedures to diagnose and treat diseases
    and to determine the effectiveness of therapeutic treatments--whether
    surgical, chemical, or radiation. It contributes extensively to the
    management of patients with cancers of the brain, breast, blood, bone,
    bone marrow, liver, lungs, pancreas, thyroid, ovaries, and prostate,
    and serious disorders of the heart, brain, and kidneys, to name a few.
    In fact, recent advances in the diagnosis of Alzheimer's disease can be
    attributed to nuclear medicine imaging procedures.
        Annually, more than 20 million men, women, and children need
    noninvasive molecular/nuclear medicine procedures. These safe, cost-
    effective procedures include positron emission tomography (PET) scans
    to diagnose and monitor treatment in cancer, cardiac stress tests to
    analyze heart function, bone scans for orthopedic injuries, and lung
    scans for blood clots. Patients undergo procedures to diagnose liver
    and gall bladder functional abnormalities and to diagnose and treat
    hyperthyroidism and thyroid cancer.
              lack of federal funding threatens future innovations
        The goal of the DOE's nuclear medicine research program is to
    deliver relevant scientific knowledge that will lead to innovative
    diagnostic and treatment technologies for human health. The modern era
    of nuclear medicine is an outgrowth of the original charge of the
    Atomic Energy Commission (AEC) to exploit nuclear energy to promote
    human health. This program supports directed nuclear medicine research
    through radiopharmaceutical development and molecular nuclear medicine
    activities to study uses of radionuclides for non-invasive diagnosis
    and targeted, internal molecular radiotherapy.
        Over the years, the DOE nuclear medicine research program has
    generated advances in the field of molecular/nuclear medicine. For
    example, DOE funding provided the resources necessary for molecular/
    nuclear medicine professionals to develop PET scanners to diagnose and
    monitor treatment in cancer. PET scans offer significant advantages
    over CT and MRI scans in diagnosing disease and are more effective in
    identifying whether cancer is present or not, if it has spread, if it
    is responding to treatment, and if a person is cancer free after
    treatment. In fact, the DOE has stated that this program supports
    ``research in universities and in the National Laboratories, occupies a
    critical and unique niche in the field of radiopharmaceutical research.
    The NIH relies on our basic research to enable them to initiate
    clinical trials.''
        The majority of the advances in molecular/nuclear medicine have
    been sponsored by the DOE, including:
      --Smaller, More Versatile PET Scanners.--Brookhaven National
            Laboratory (BNL) has completed a prototype mobile PET scanner,
            which will record images in the awake animal. The mobile PET
            will be able to acquire positron-generated images in the
            absence of anesthesia-induced coma and correct for motion of
            the animal. The long-term goal is to develop PET
            instrumentation able to diagnose neuro-psychiatric disorders in
            children.
      --Highest Resolution PET Scanner Developed.--Scientists at the
            Lawrence Berkeley National Laboratory (LBNL) have developed the
            world's most sensitive PET scanner. The instrument is 10-times
            more sensitive than a conventional PET scanner and became
            operational in 2005.
      --Imaging Gene Expression in Cancer Cells.--Images of tumors in whole
            animals that detect the expression of three cancer genes were
            accomplished for the first time by investigators at Thomas
            Jefferson University and the University of Massachusetts
            Medical Center. This advanced imaging technology will lead to
            the detection of cancer in humans using cancer cell genetic
            profiling.
      --Modeling Radiation Damage to the Lung.--Treatment of thyroid
            disease and lymphomas using radioisotopes can cause disabling
            lung disease. Investigators at Johns Hopkins University have
            developed a Monte Carlo model that can be used to determine the
            probability of lung toxicity and be incorporated into a
            therapeutic regimen. This model will optimize the dose of
            radioactivity delivered to cancer cells and avoid untoward
            effects on the lung.
      --New Radiopharmaceuticals with Important Clinical Applications.--The
            DOE radiopharmaceutical science program has developed a number
            of innovative radiotracers at the University of California at
            Irvine for the early diagnosis of neuro-psychiatric illnesses,
            including Alzheimer's disease, schizophrenia, depression, and
            anxiety disorders.
      --Rapid Preparation of Radiopharmaceuticals for Clinical Use.--The
            DOE-sponsored program at the University of Tennessee has
            developed a new method for preparing radiopharmaceuticals by
            placing a boron-based salt at the position that will be
            occupied by the radiohalogen. The method has been used to
            prepare a variety of cancer-imaging agents.
        With continued DOE funding, essential molecular/nuclear medicine
    research will continue at universities, research institutions, national
    laboratories, and small businesses. Moreover, research with
    radiochemistry, genomic sciences, and structural biology will be able
    to usher in a new era of mapping the human brain and using specific
    radiotracers and instruments, to more precisely diagnose neuro-
    psychiatric illnesses and cancer.
        In addition, to gain the full benefits of nuclear medicine, it is
    important to ensure that nuclear medicine researchers have a steady
    supply of radionuclides. One way to accomplish this goal would be to
    create a National Radionuclide Enhancement Production program at the
    DOE that would meet the Nation's medical and homeland security needs.
     nas study recommends enhanced federal commitment to nuclear medicine
                                    research
        On September 20, 2007, the National Academy of Sciences (NAS)
    released a report sponsored by the Department of Energy (DOE) and
    National Institutes of Health (NIH), entitled Advancing Nuclear
    Medicine Through Innovation. The charge of the NAS study was to provide
    findings and recommendations on the state of the science in nuclear
    medicine.
        As one of the important findings, the report highlighted the
    detrimental loss of Federal commitment to nuclear medicine research, as
    evidenced by the large cuts in funding for the basic sciences related
    to nuclear medicine in the DOE Office of Science Office of Biological
    and Environmental Research (OBER) Medical Applications and Measurement
    Science (MAMS) program in fiscal years 2006 and 2007.
        As a result, says the report, ``there is now no short- or long-term
    programmatic commitment by any agency to funding chemistry, physics,
    engineering research and associated high-technology infrastructure
    (accelerators, instrumentation, and imaging physics), which are at the
    heart of nuclear medicine technology research and development.''
        There are countless new innovations on the horizon in this area
    that promise to improve patient care through new therapeutic isotopes
    to cure disease, earlier diagnosis of Alzheimer's disease and cancer,
    detection of the effectiveness of cancer therapies, development of the
    next generation of imaging technologies, and more. However, without
    ongoing funding for basic nuclear medicine research at DOE Office of
    Science, these breakthroughs may never materialize.
        To enhance Federal commitment, the NAS report recommended that
    ``reinstating support for the DOE-OBER nuclear medicine research
    program should be considered.'' Additionally, the report recommends ``a
    national nuclear medicine research program should be coordinated by the
    DOE and the National Institutes of Health with the former emphasizing
    the general development of technology and the latter disease-specific
    applications.''
        The report also states, ``Although the scientific opportunities
    have never been greater or more exciting, the infrastructure on which
    future innovations in nuclear medicine depend hangs in the balance. If
    the promise of the field is to be fulfilled, a federally supported
    infrastructure for basic and translational research in nuclear medicine
    should be considered.''
        We are at a critical juncture in nuclear medicine. In order to
    capitalize on groundbreaking research that will improve and save lives,
    Federal support for basic nuclear medicine research at DOE Office of
    Science must continue. Therefore, SNM calls on Congress to support the
    DOE Office of Science's Radiochemistry and Instrumentations programs
    with $17.5 million in funding for nuclear medicine research for fiscal
    year 2009.
                                   conclusion
        By continuing funding for the DOE's Radiochemistry and
    Instrumentation nuclear medicine research program at the DOE, policy
    makers will keep our Nation at the forefront of nuclear medicine
    research and innovation. We thank you for the opportunity to present
    our views on funding for these initiatives at the DOE and would be
    pleased to answer any questions you may have.

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page

    Allard, Senator Wayne, U.S. Senator From Colorado:
        Prepared Statement of........................................    35
        Questions Submitted by.......................................    51
        Statement of.................................................    57
    Alliance for Materials Manufacturing Excellence (AMMEX), Prepared
      Statement of the...............................................   436
    American Council for an Energy-efficient Economy (ACEEE),
      Prepared Statement of the......................................   421
    American Forest and Paper Association, Prepared Statement of the.   438
    American Geological Institute, Prepared Statement of the.........   442
    American Society of Agronomy, Prepared Statement of the..........   444
    American Society of Plant Biologists, Prepared Statement of the..   454
    Anastasio, Dr. Michael R., Director, Los Alamos National
      Laboratory, Los Alamos, New Mexico.............................   269
        Prepared Statement of........................................   272
    Association of State Energy Research and Technology Transfer
      Institutions (ASERTTI), Prepared Statement of the..............   464

    Bennett, Senator Robert F., U.S. Senator From Utah, Statements 127, 167
    Biomass Energy Research Association, Prepared Statement of the...   428
    Bond, Senator Christopher S., U.S. Senator From Missouri,
      Statements of..................................................4, 165
    Bunn, Dr. Matthew, Belfer Center for Science and International
      Affairs, John F. Kennedy School of Government, Harvard
      University.....................................................   365
        Prepared Statement of........................................   368

    Center for Advanced Separation Technologies, Prepared Statement
      of the.........................................................   430
    City of Los Angeles Board of Harbor Commissioners, Prepared
      Statement of the...............................................   407
    Cochran, Senator Thad, U.S. Senator From Mississippi:
        Prepared Statements of....................................... 8, 77
        Questions Submitted by.......................................    51
        Statement of.................................................    77
    Consortium for Fossil Fuel Science (CFFS), Prepared Statement of
      the............................................................   418
    Copper Development Association, Prepared Statement of the........   441
    Craig, Senator Larry, U.S. Senator From Idaho, Statements of.7, 55, 259
    Crop Science Society of America, Prepared Statement of the.......   444

    D'Agostino, Hon. Thomas P., Administrator, National Nuclear
      Security Administration, Department of Energy..................   233
        Prepared Statement of........................................   241
        Questions Submitted to.......................................   315
        Statement of.................................................   238
    Domenici, Senator Pete V., U.S. Senator From New Mexico:
        Opening Statements of.....................3, 54, 125, 162, 236, 333
        Questions Submitted by..........39, 45, 50, 155, 157, 214, 218, 315
    Donald, Admiral Kirk, Deputy Administrator for Naval Reactors,
      National Nuclear Security Administration, Department of Energy.   233
    Dorgan, Senator Byron L., U.S. Senator From North Dakota:
        Opening Statements of.....................1, 53, 123, 161, 233, 331
        Questions Submitted by.........45, 46, 102, 115, 120, 216, 221, 325

    Electric Drive Transportation Association, Prepared Statement of
      the............................................................   456
    Energy Committee of ASME's Technical Communities, Prepared
      Statement of the...............................................   461

    Feinstein, Senator Dianne, U.S. Senator From California:
        Questions Submitted by.....................................109, 118
        Statement of.................................................   265
    Florida State University, Prepared Statement of..................   470
    Frantz, David G., Director, Loan Guarantee Program Office, Office
      of the Chief Financial Officer, Department of Energy...........    73
        Prepared Statement of........................................    74
        Questions Submitted to.......................................   120
    Friends Committee on National Legislation (Quakers), Prepared
      Statement of the...............................................   447

    Garrison Diversion Conservancy District, Prepared Statement of
      the............................................................   410
    Gas Technology Institute, Prepared Statement of the..............   435
    Gas Turbine Association, Prepared Statement of the...............   477
    GE Energy, Prepared Statement of.................................   458
    Glass Manufacturing Industrial Council, Prepared Statement of the   441
    Ground Water Protection Council, Prepared Statement of the.......   471

    Health Physics Society, Prepared Statement of the................   475
    Hecker, Dr. Siegfried S., Co-director, Center for International
      Security and Cooperation, Stanford University..................   357
        Prepared Statement of........................................   359
    Hunter, Dr. Thomas O., President and Director, Sandia National
      Laboratory, Albuquerque, New Mexico............................   291
        Prepared Statement of........................................   292
        Questions Submitted to.......................................   325
    Hydraulic Institute, Prepared Statement of the...................   441

    International Copper Association, Prepared Statement of the......   441
    Irrigation and Electrical Districts Association of Arizona,
      Prepared Statement of the......................................   412

    Johnson, Robert W., Commissioner, Bureau of Reclamation,
      Department of the Interior.....................................   184
        Prepared Statement of........................................   192
        Questions Submitted to.......................................   221
        Statement of.................................................   190
    Johnson, Senator Tim, U.S. Senator From South Dakota, Statement
      of.............................................................   166

    Karsner, Hon. Alexander, Assistant Secretary for Energy
      Efficiency and Renewable Energy, Department of Energy..........    65
        Prepared Statement of........................................    66
        Questions Submitted to.......................................   115
    Kolevar, Hon. Kevin M., Assistant Secretary for Electricity
      Delivery and Energy Reliability, Department of Energy..........    14
        Prepared Statement of........................................    15
        Questions Submitted to.......................................    45

    Lower Brule Rural Water System, Prepared Statement of the........   413

    Miller, Dr. George H., Director, Lawrence Livermore National
      Laboratory, Livermore, California..............................   280
        Prepared Statement of........................................   282
    Murray, Reed, Director, Central Utah Project Completion Act
      Office, Bureau of Reclamation, Department of the Interior......   184
    Murray, Senator Patty, U.S. Senator From Washington:
        Questions Submitted by.....................................154, 231
        Statement of.................................................   163

    National Association of State Energy Officials, Prepared
      Statement of the...............................................   451
    National Congress of American Indians, Prepared Statement of the.   416
    National Corn Growers Association (NCGA), Prepared Statement of
      the............................................................   397
    National Hydropower Association, Prepared Statement of the.......   472
    National Mining Association (NMA), Prepared Statement of the.....   433
    National Research Center for Coal and Energy, West Virginia
      University, Prepared Statement of the..........................   419
    New York State Division of Housing and Community Renewal,
      Prepared Statement of the......................................   426
    New York State Energy Research and Development Authority,
      Prepared Statement of the......................................   426
    Next Generation Nuclear Plant Working Group, Prepared Statement
      of the.........................................................   424

    Oglala Sioux Rural Water Supply System, Prepared Statement of the   413
    Onley, Kameran, Acting Assistant Secretary for Water and Science,
      Bureau of Reclamation, Department of the Interior..............   184
        Prepared Statement of........................................   186
    Orbach, Hon. Raymond L., Under Secretary for Science, Department
      of Energy......................................................    53
        Prepared Statement of........................................    59
        Questions Submitted to.......................................   102
        Statement of.................................................    57

    Pump Systems Matter, Prepared Statement of.......................   441

    Reed, Senator Jack, U.S. Senator From Rhode Island, Statement of.   167
    Rispoli, Hon. James A., Assistant Secretary for Environmental
      Management, Department of Energy...............................   123
        Prepared Statement of........................................   133
        Questions Submitted to.......................................   154
        Statement of.................................................   128
    Riverside County Flood Control and Water Conservation District,
      Prepared Statement of the......................................   399
    Rosebud Rural Water System, Prepared Statement of the............   413
    RTI International, Prepared Statement of.........................   469

    Santa Clara Valley Water District, Prepared Statements of the....   401
    Slutz, James, Acting Principal Deputy Assistant Secretary for
      Fossil Energy, Department of Energy............................    18
        Prepared Statement of........................................    21
        Questions Submitted to.......................................    46
    Smolen, Major General Bob, Deputy Administrator for Defense
      Programs, National Nuclear Security Administration, Department
      of Energy......................................................   233
    SNM--Advancing Molecular Imaging and Therapy, Prepared Statement
      of.............................................................   480
    Soil Science Society of America, Prepared Statement of the.......   444
    Sproat, Hon. Edward F., III, Director, Office of Civilian
      Radioactive Waste Management, Department of Energy.............   139
        Prepared Statement of........................................   141
        Questions Submitted to.......................................   157
    Spurgeon, Hon. Dennis R., Assistant Secretary for Nuclear Energy,
      Department of Energy...........................................     1
        Prepared Statement of........................................    10
        Questions Submitted to.......................................    39
        Statement of.................................................     8
    State of Alaska Department of Natural Resources, Prepared
      Statement of the...............................................   463

    Tobey, William H., Deputy Administrator for Defense Nuclear
      Nonproliferation, National Nuclear Security Administration,
      Department of Energy...........................................   331
        Prepared Statement of........................................   337
        Statement of.................................................   334

    University Corporation for Atmospheric Research (UCAR), Prepared
      Statement of the...............................................   467
    US Fuel Cell Council, Prepared Statement of the..................   449

    Van Antwerp, Lieutenant General Robert, Chief of Engineers, Corps
      of Engineers--Civil, Department of the Army, Department of
      Defense--Civil.................................................   180
        Prepared Statement of........................................   180
        Questions Submitted to.......................................   216
    Vanadium Producers & Reclaimers Association, Prepared Statement
      of the.........................................................   441
    Vision2020 Technology Partnership, Prepared Statement of the.....   441

    West River/Lyman Jones Rural Water System, Prepared Statement of
      the............................................................   413
    Wolf, Robert W., Director, Program and Budget, Bureau of
      Reclamation, Department of the Interior........................   184
    Woodley, Hon. John Paul, Jr., Assistant Secretary of the Army for
      Civil Works, Corps of Engineers--Civil, Department of the Army,
      Department of Defense--Civil...................................   161
        Prepard Statement of.........................................   169
        Questions Submitted to.......................................   214
        Statement of.................................................   167

                                 SUBJECT INDEX

                                  ----------

                          DEPARTMENT OF DEFENSE--CIVIL

                             Department of the Army

                           Corps of Engineers--Civil

                                                                       Page

    Additional Committee Questions...................................   213
    Budget Request...................................................   215
    Civil Works Program..............................................   218
    Collective Bargaining Rights.....................................   216
    Construction Program.............................................   181
    Contracting Out..................................................   217
    Cost Engineering Improvements....................................   182
    Earmarks.........................................................   215
    Highlights:
        Program Areas................................................   171
        Water Resources Development Accounts.........................   170
    HPO Structure....................................................   218
    Inland Waterway Trust Fund.......................................   214
    Negotiating Over Appropriate Arrangements and Procedures.........   217
    Other Budget Highlights..........................................   175
    Performance-based Budgeting......................................   169
    President's Management Agenda....................................   176
    Protection of the Metropolitan New Orleans Area..................   175
    Summary of Fiscal Year 2009 Program Budget.......................   180
    Terms of Employment..............................................   218
    Value of the Civil Works Program to the Nation's Economy and
      Defense........................................................   182
    Water Resources Development Act of 2007..........................   175
    Workforce........................................................   217

                              DEPARTMENT OF ENERGY

    Additional Committee Questions.................................102, 154
    Algae Research...................................................    98
    America Competes Act.............................................    82
    Basic and Applied Research and Development Coordination..........    62
    Biomass:
        And Biorefinery Systems R&D..................................    66
        Ethanol Mandate..............................................   115
    Budgeting for Our Priorities.....................................   135
    Building Technologies............................................   118
        Program......................................................    70
    Cellulosic Ethanol...............................................    90
    Climate Change...................................................   105
        Models.......................................................    96
    Competes.........................................................   102
    Concentrating Solar Power........................................   117
    Credit Subsidy Model.............................................   120
    Current Investment Climate.......................................   121
    Electric Energy Storage..........................................    89
    Energy:
        Frontier Research Centers....................................    83
        Transmission.................................................    88
    Environmental Management (EM):
        Budget Shortfalls............................................   143
        Fiscal Year 2009 Budget:
             Priorities..............................................   152
            Request..................................................   150
        Molecular Sciences Laboratory................................    86
    Ethanol Technology and Production................................    83
    Facilities and Infrastructure....................................    72
    Federal:
        Energy Management Program....................................    71
        Loan Guarantee Applications..................................   101
        Procurement Regulations......................................94, 98
    Fiscal Year:
        2008 and Fiscal Year 2009 Solicitation Implementation Plan...    76
        2009 Budget Request.........................................75, 136
            And Key Activities.......................................   142
    Geothermal Technology Program....................................    69
    Hydrogen Technology:
        Funding......................................................    79
        Program......................................................    67
    Idaho National Laboratory........................................    92
    Impact of Tax Credits for Renewable Energy and Energy Efficiency.   119
    Implementation of E&W Direction to Consolidate Spent Fuel........   157
    Implications of Non-Access to the Nuclear Waste Fund.............   143
    Industrial Technologies Program..................................    71
    ITER Project.....................................................    91
    Joint Dark Energy Mission........................................   107
    LANSCE Refurbishment.............................................   104
    License Application..............................................   157
    Loan Guarantee:
        Potential....................................................   120
        Program Applicants...........................................    73
    Loan Guarantees..................................................    80
        Budget.......................................................    73
    Long-Term Investment Funding.....................................   101
    Los Alamos:
        National Laboratory (LANL):
            Cleanup..................................................   155
            National Academy Study on Groundwater Protection.........   156
        Neutron Scattering Center (LANSCE)...........................    83
    Managing Our Priorities..........................................   134
    Mesa Del Sol Solar Project.......................................   117
    Missed:
        Compliance Agreements Milestones Fines.......................   147
        Milestones Nationwide........................................   155
    Nanoscale Science Research.......................................    97
    Nanotechnology...................................................   105
    New Nuclear Plants...............................................   159
    Physical Sciences Facility.......................................    85
    Plug in Hybrid Technology........................................   117
    Radiation R&D....................................................   106
    Renegotiate LANL Consent Order...................................   155
    Renewable Energy Funding.........................................    77
    Sandia--Advanced Computing.......................................   104
    Science and Technology...........................................   156
    Sciences Laboratories Infrastructure.............................    86
    Solar Energy:
        Program......................................................    68
        Research.....................................................   102
        Technology...................................................    96
    Solicitation Implementation Plan.................................    74
    Spent Fuel Disposal..............................................   145
    Staffing of Loan Guarantee:
        Office.......................................................   121
        Program......................................................    73
    Superconductivity................................................    88
    Three Hanford Procurements.......................................   154
    Timetable........................................................   120
    Vehicle Technologies Program.....................................    67
    Water Power Program..............................................    69
    Weatherization...................................................   116
        And Intergovernmental Activities Program.....................    71
        Grants.......................................................    79
        Program......................................................   100
    Wind Energy......................................................    93
        Program......................................................    69
    WIPP.............................................................   156
    Yucca Mountain:
        License Application..........................................   144
        Next Steps...................................................   158

                    National Nuclear Security Administration

    Addendum--Issues of Concern......................................   300
    Additional Committee Questions...................................   315
    Advanced Computing.............................................315, 325
    Appropriation and Program Summary Tables--Out-year Appropriation
      Summary Tables--Fiscal Year 2009 Budget Tables...............250, 343
    Beyond Nuclear Security..........................................   372
    Budget Increases for MPC&A and GTRI..............................   369
    Bush Administration--Weapons Policy..............................   317
    Challenges Facing the NNSA Weapons Complex and LLNL..............   282
    Changing Partnership With Russia.................................   360
    Chemistry and Metallurgy Research Replacement (CMR-R) Project....   318
    Complex Transformation Preferred Alternative.....................   253
    Coping With North Korea and Iran.................................   373
    Critical Crossroads for the National Stockpile Stewardship
      Program........................................................   279
    Cyber-Security...................................................   264
    Defense Nuclear Nonproliferation.................................   337
    Development of the Stockpile Stewardship Program.................   272
    Economics of the Proposed Uranium Process Facility...............   318
    Elimination of Weapons Grade Plutonium Production................   342
    Energy Security..................................................   298
    Enhanced Surety..................................................   319
    Expanding Cooperative Threat Reduction Beyond Russia.............   361
    Fiscal Year 2009 Budget Request Programmatic Detail............244, 340
    Fissile Materials Disposition....................................   342
    Funding:
        And Personnel................................................   303
        Oversight....................................................   260
    Future of the NNSA Laboratories in National Security.............   299
    Global Threat Reduction Initiative...............................   341
    Increasing Risks to the Future Success of the Stockpile
      Stewardship Pro- gram..........................................   276
    Intelligence and Analysis to Support Policy......................   377
    International Material Protection and Cooperation................   341
    Laboratory Capabilities..........................................   296
    LANL Performance--On the Right Track.............................   320
    Lawrence Livermore Financial Issues..............................   265
    Limiting Proliferation of Nuclear, Chemical, and Biological
      Expertise......................................................   377
    Los Alamos Neutron Science Center (LANSCE).......................   320
    Managing the Health of the Stockpile.............................   287
    Materials:
        Consolidation--MOX...........................................   321
        Missions, and Manpower.......................................   256
    National:
        Ignition Facility............................................   306
        Laboratory Funding...........................................   309
    Naval Reactors:
        Overview.....................................................   244
        Program......................................................   255
    New Stockpile Stewardship Tools and Their Application............   284
    NNSA Science Strategy............................................   322
    Nonproliferation and:
        International Security.......................................   342
        Verification Research and Development........................   343
            Fiscal Year 2008--$133 Million Plus-up Spend Plan........   354
    Other Needed Nuclear Security Steps..............................   370
    Preventing Nuclear Terrorism.....................................   369
    Programs for the Office of Science...............................   298
    Public Law Authorization.........................................   344
    Reducing:
        Demand for Nuclear Weapons...................................   374
        Plutonium and HEU Stockpiles.................................   378
        The Proliferation Risks of Nuclear Energy....................   375
    Reliable Replacement Warhead..............................261, 267, 322
    Sandia Funding Diversity.........................................   326
    Science and Technology Funding Trends............................   312
    Stopping Black-market Nuclear Networks...........................   375
    Strengthening:
        Safeguards...................................................   376
        The Nonproliferation Regime and Expanding Nuclear Power......   363
        U.S. Technical Capabilities to Combat Proliferation and
          Nuclear Terrorism..........................................   364
    Subterranean Nuclear Tests.......................................   263
    Support of Defense Nuclear Nonproliferation Programs.............   289
    The Budget and Adequacy of the Defense Nonproliferation Programs.   360
    The Global Nuclear Future........................................   295
    The Stockpile Stewardship Program Has Been a Success.............   273
    The U.S. Nuclear Deterrent.......................................   293
    Tough Challenges Ahead--Los Alamos National Laboratory...........   277
    University Robotics Program......................................   323
    Weapons Activities Overview......................................   242
    Z Machine......................................................323, 327
        And National Ignition Facility...............................   324

             Office of Electricity Delivery and Energy Reliability

    Additional Committee Questions...................................    39
    Infrastructure Security and Energy Restoration...................    17
    Natural Gas and Coal Resources...................................    28
    Permitting, Siting, and Analysis.................................    17
    Power Outage in Florida..........................................    24
    Research and Development.........................................    16

                            Office of Fossil Energy

    Additional Committee Questions...................................    39
    Carbon Sequestration.............................................    26
        Continues....................................................    27
    Clean Coal:
        Funding......................................................    27
        Power Initiative.............................................    22
        Research.....................................................    37
    Fossil:
        Budget Priorities............................................    25
        Energy Research and Development..............................    21
    Fuel Cells.......................................................    22
    FutureGen........................................................21, 29
    Gasification Technology..........................................    22
    Hydrogen.........................................................    22
    Meeting the Nation's Critical Energy Needs.......................    23
    Naval Petroleum and Oil Shale Reserves...........................    23
    Northeast Home Heating Oil Reserve...............................    23
    Oil and Natural Gas Technology...................................    22
    Outer Continental Shelf Resources................................    34
    Sequestration....................................................    22
    Strategic Petroleum Reserve......................................23, 24

                            Office of Nuclear Energy

    Additional Committee Questions...................................    39
    Advanced:
        Fuel Cycle Initiative and GNEP...............................    12
        Test Reactor.................................................    33
    Environmental Management.........................................    33
    Generation IV....................................................    12
    Hydrogen Initiative..............................................    12
    Nuclear:
        Energy.......................................................    30
        Facilities...................................................    13
        Power 2010...................................................    11
    Other Defense Activities.........................................    13
    Spent Fuel Recycling.............................................31, 36
    University Funding...............................................    13

                           DEPARTMENT OF THE INTERIOR

                             Bureau of Reclamation

    Additional Committee Questions...................................   213
    Animas-La Plata..................................................   229
    California Bay-Delta Restoration Fund (CALFED)...................   196
    Central Valley Project Restoration Fund..........................   195
    Columbia Basin Project, Potholes Supplemental Feed Route.........   231
    Desalination.....................................................   228
    Drought..........................................................   221
    Energy and Water Act.............................................   221
    Executive Order..................................................   229
    Fiscal Year 2009 Planned Activities..............................   196
    Interior's Accomplishments.......................................   187
    Legislative Proposals............................................   190
    Loan Guarantee...................................................   230
    Managing for Excellence..........................................   196
    Middle Rio Grande................................................   228
    Odessa Subarea Special Study.....................................   231
    Ongoing Rural Water Projects.....................................   195
    Other Budget Priorities..........................................   189
    Overview of the 2009 Budget......................................   186
    Policy and Administration........................................   195
    Research and Development.........................................   227
    Rural Water......................................................   225
    San Joaquin:
        River Restoration Fund Proposed Legislation..................   195
        Valley.......................................................   226
    Supporting the Department's Mission..............................   189
    The Challenges Ahead.............................................   187
    Title XVI......................................................195, 227
    Water:
        And Related Resources........................................   192
        For America................................................188, 226
    Yuma Desalting Plant.............................................   230

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