[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
                      ENERGY AND WATER DEVELOPMENT
                        APPROPRIATIONS FOR 2013

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS
                             SECOND SESSION
                                ________
              SUBCOMMITTEE ON ENERGY AND WATER DEVELOPMENT
              RODNEY P. FRELINGHUYSEN, New Jersey, Chairman
 JERRY LEWIS, California            PETER J. VISCLOSKY, Indiana
 MICHAEL K. SIMPSON, Idaho          ED PASTOR, Arizona
 DENNY REHBERG, Montana             CHAKA FATTAH, Pennsylvania
 RODNEY ALEXANDER, Louisiana        JOHN W. OLVER, Massachusetts
 STEVE WOMACK, Arkansas             
 ALAN NUNNELEE, Mississippi         
                                    

 NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full 
Committee, and Mr. Dicks, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
                Rob Blair, Joseph Levin, Angie Giancarlo,
                  Loraine Heckenberg, and Perry Yates,
                            Staff Assistants

                                ________

                                 PART 6
                          DEPARTMENT OF ENERGY
                                                                   Page
 Environmental Management, Legacy Management, FY 2013 Budget......    1
 Energy Efficiency and Renewable Energy, Fossil Energy, 
Electricity Delivery and Energy Reliability, FY 2013 Budget.......  113
 Science..........................................................  359
 Loan Guarantee Program and ARPA-E, FY 2013 Budget................  535

                                ________

         Printed for the use of the Committee on Appropriations

      PART 6--ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR 2013
                                                                      ?

                      ENERGY AND WATER DEVELOPMENT

                        APPROPRIATIONS FOR 2013

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS
                             SECOND SESSION
                                ________
              SUBCOMMITTEE ON ENERGY AND WATER DEVELOPMENT
              RODNEY P. FRELINGHUYSEN, New Jersey, Chairman
 JERRY LEWIS, California            PETER J. VISCLOSKY, Indiana
 MICHAEL K. SIMPSON, Idaho          ED PASTOR, Arizona
 DENNY REHBERG, Montana             CHAKA FATTAH, Pennsylvania
 RODNEY ALEXANDER, Louisiana        JOHN W. OLVER, Massachusetts
 STEVE WOMACK, Arkansas             
 ALAN NUNNELEE, Mississippi         
                                    

 NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full 
Committee, and Mr. Dicks, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
                Rob Blair, Joseph Levin, Angie Giancarlo,
                  Loraine Heckenberg, and Perry Yates,
                            Staff Assistants

                                ________

                                 PART 6
                          DEPARTMENT OF ENERGY
                                                                   Page
 Environmental Management, Legacy Management, FY 2013 Budget......    1
 Energy Efficiency and Renewable Energy, Fossil Energy, 
Electricity Delivery and Energy Reliability, FY 2013 Budget.......  113
 Science..........................................................  359
 Loan Guarantee Program and ARPA-E, FY 2013 Budget................  535

                                ________

         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 80-791                     WASHINGTON : 2013

                                  COMMITTEE ON APPROPRIATIONS

                    HAROLD ROGERS, Kentucky, Chairman

 C. W. BILL YOUNG, Florida \1\      NORMAN D. DICKS, Washington
 JERRY LEWIS, California \1\        MARCY KAPTUR, Ohio
 FRANK R. WOLF, Virginia            PETER J. VISCLOSKY, Indiana
 JACK KINGSTON, Georgia             NITA M. LOWEY, New York
 RODNEY P. FRELINGHUYSEN, New JerseyJOSE E. SERRANO, New York
 TOM LATHAM, Iowa                   ROSA L. DeLAURO, Connecticut
 ROBERT B. ADERHOLT, Alabama        JAMES P. MORAN, Virginia
 JO ANN EMERSON, Missouri           JOHN W. OLVER, Massachusetts
 KAY GRANGER, Texas                 ED PASTOR, Arizona
 MICHAEL K. SIMPSON, Idaho          DAVID E. PRICE, North Carolina
 JOHN ABNEY CULBERSON, Texas        MAURICE D. HINCHEY, New York
 ANDER CRENSHAW, Florida            LUCILLE ROYBAL-ALLARD, California
 DENNY REHBERG, Montana             SAM FARR, California
 JOHN R. CARTER, Texas              JESSE L. JACKSON, Jr., Illinois
 RODNEY ALEXANDER, Louisiana        CHAKA FATTAH, Pennsylvania
 KEN CALVERT, California            STEVEN R. ROTHMAN, New Jersey
 JO BONNER, Alabama                 SANFORD D. BISHOP, Jr., Georgia
 STEVEN C. LaTOURETTE, Ohio         BARBARA LEE, California
 TOM COLE, Oklahoma                 ADAM B. SCHIFF, California
 JEFF FLAKE, Arizona                MICHAEL M. HONDA, California
 MARIO DIAZ-BALART, Florida         BETTY McCOLLUM, Minnesota          
 CHARLES W. DENT, Pennsylvania      
 STEVE AUSTRIA, Ohio                
 CYNTHIA M. LUMMIS, Wyoming         
 TOM GRAVES, Georgia                
 KEVIN YODER, Kansas                
 STEVE WOMACK, Arkansas             
 ALAN NUNNELEE, Mississippi         
   
 ----------
 1}}Chairman Emeritus    
                                    

               William B. Inglee, Clerk and Staff Director

                                  (ii)


          ENERGY AND WATER DEVELOPMENT APPROPRIATIONS FOR 2013

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

                                         Wednesday, March 21, 2012.

 DEPARTMENT OF ENERGY--ENVIRONMENTAL MANAGEMENT & HEALTH, SAFETY, AND 
                        SECURITY FY 2013 BUDGET

                               WITNESSES

DAVE HUIZENGA, SENIOR ADVISOR FOR ENVIRONMENTAL MANAGEMENT (ACTING), 
    OFFICE OF ENVIRONMENTAL MANAGEMENT, DEPARTMENT OF ENERGY
GLENN PODONSKY, CHIEF HEALTH, SAFETY, AND SECURITY OFFICER, OFFICE OF 
    HEALTH, SAFETY, AND SECURITY, DEPARTMENT OF ENERGY
    Mr. Frelinghuysen. The hearing will come to order. Good 
morning, everybody. Thank you for being here. We have before us 
this morning David Huizenga, senior advisor for Environmental 
Management to the Secretary of Energy. We also have Glenn 
Podonsky, the department's Chief Health Safety and Security 
officer. We welcome you both to the subcommittee and we look 
forward to your testimony.
    Before we begin I would like to note that a colleague of 
yours, Brad Peterson, died last week in New Mexico due to 
injuries from a car accident. He was most recently with the 
Office of Secure Transportation. And I think I speak for 
everybody on the panel here on the subcommittee on extending 
our condolences to his family, his colleagues at the office, 
and to the department.
    Mr. Huizenga. Thank you, Mr. Chairman. He was a great guy.
    Mr. Frelinghuysen. We are pleased to note his work and we 
regret his passing.
    The Environmental Management budget request for Fiscal Year 
2013 is 5.009 billion for defense cleanup activities, a $14 
million reduction from last year's inactive level. While it is 
clear that many tough decisions have been made in putting 
together this request, you have even tougher decisions ahead. 
Many of your current cleanup agreements relied upon continued 
large increases in funding, increases that are unrealistic even 
with the strong support we have for these activities within the 
committee. It is the responsibility of the department to 
explain where those timelines are in jeopardy and to work 
constructively with its stakeholders to establish affordable 
milestones which would meet our legal commitments and our 
financial restraints.
    Mr. Podonsky, your budget request is $246 million, a 
reduction of 2 percent from last year's level. At the same 
time, you are undertaking a review of the department's safety 
and security model. I hope you will be able to show us this 
morning that this budget request will fully support that 
important work.
    Gentlemen, you are appearing together before the committee 
for the first time in order to better explain some of the 
challenges and, yes, some of the opportunities the EM Program 
and other nuclear operations that the department are facing. 
This subcommittee is taking a note of some very serious issues 
facing the department. Reports of poor project management 
leading to out-of-control cost growth and an apparent weakness 
in nuclear safety culture to name two of the most worrisome.
    The EM Program is at the middle of these concerns and the 
Health Safety and Security Office is mandated to evaluate and 
help resolve them. Over the past few years, the Department has 
taken some positive steps to address these issues such as 
updating its project review procedures. More recently, EM has 
been re-evaluating its bureaucracy to see if it should be 
realigned. We will be watching closely to make sure that safety 
in project management is adequately resolved and that 
management reforms are actually effective.
    Gentlemen, reports have identified major problems at the 
waste treatment and immobilization plant in Hanford. It appears 
that the Department of Energy has not yet been able to resolve 
significant design problems and changes may be on the horizon 
which will undoubtedly impact that project's cost and schedule, 
and could put the milestones of the Tri-Party Agreement in 
jeopardy. There are reports that as these troubles have 
festered, the safety culture of the site has deteriorated to 
such an extent that some find them to be a major risk to the 
project itself. The reforms you put in place must address these 
issues both at Hanford and anywhere else they threaten to come 
up.
    Mr. Podonsky, your group has done some good work looking 
into the sources of the safety culture problems, and we are 
looking forward to hearing your findings. Ensuring that these 
facilities will operate safely is one of our greatest 
responsibilities, and the subcommittee cannot support any plan 
that would place the safety of your employees and the public in 
any jeopardy. Please ensure that the hearing record, responses 
to the questions for the record, and any supporting information 
requested by the subcommittee are delivered in final form to us 
no later than four weeks from the time you receive them. And I 
also ask that if members have additional questions they would 
like to submit to the committee for the record, they please do 
so by 5:00 p.m. tomorrow.
    With these opening comments, I would like to yield to our 
ranking member, Mr. Visclosky, for any opening comments he may 
care to make.
    [The information follows:]

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    Mr. Visclosky. Thank you very much. Mr. Huizenga and Mr. 
Podonsky, thank you very much for being with us today.
    Mr. Huizenga, this will be your first time before the 
subcommittee as the leader of the Office of Environmental 
Management and I do have faith that you are up to the challenge 
ahead of you. The appearance of both of you will give the 
subcommittee a perspective on the individual programs and, 
also, the opportunity to understand how they interact and work 
together to ensure DOE projects are meeting the mission while 
also maintaining a safe work environment.
    The Manhattan Project and resulting nuclear weapons complex 
was an unparalleled scientific achievement. Today, we must 
obviously address the environmental impacts of this monumental 
undertaking, ensuring the health and safety of those 
communities affected. The Federal Government's obligation to 
remediate these sites is without question. However, given the 
constrained physical environment it will be paramount that all 
resources are used to their fullest potential. I understand 
that the department is undergoing a review of the implications 
of flat funding to the cleanup effort, and I would be 
interested today in hearing if you have any initial feedback 
for the subcommittee.
    Mr. Huizenga, I will make a point to you that I made to 
both Secretary Chu and NNSA Administrator D'Agostino. Issues of 
project management, corporate governance, and workplace safety 
are not the most electrifying issues to tackle, but I attach 
special importance to them and I do believe they are vital to 
the success of the department's mission. A strong leadership 
and fundamental management reform are not forthcoming at the 
Department of Energy after all of these many years. It will 
significantly inhibit the execution of your mission as well as 
the department's credibility. I hope that you will take some 
time today to update us on your specific actions in this 
regard, in particular any progress that you have made in 
getting EM off the GAO's high-risk list.
    Mr. Podonsky, in my opinion, worker health and safety is 
one of the most important elements in meeting the department's 
mission. In particular, given the materials and facilities 
under EM's charge, the potential human and financial losses 
that have come from having an unsafe worksite are mindboggling. 
I appreciate that you have taken seriously your charge to 
ensure the safety of the department's projects and look forward 
to discussing in detail your office's progress on this front.
    Mr. Chairman, thank you very much for the time.
    [The information follows:]

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    Mr. Frelinghuysen. Thank you, Mr. Visclosky. Mr. Huizenga, 
can you speak to what the Environmental--excuse me, I 
apologize. Your statements.
    Mr. Huizenga. Thank you, Mr. Chairman. Good morning, 
Chairman Frelinghuysen, Representative Visclosky, and 
Representative Simpson. I am honored to be here today to 
discuss the positive things that we are doing for the Nation 
through our ongoing efforts in the Environmental Management 
Program and, of course, to address your questions regarding our 
fiscal 2013 budget request.
    Our request of 5.65 billion enables the Office of 
Environmental Management to continue the safe cleanup of the 
environmental legacy brought about from five decades of nuclear 
weapons development and government-sponsored nuclear energy 
research. Our cleanup priorities are based on risk and our 
continuing efforts to meet our regulatory compliance 
commitments. Completing cleanup promotes the economic vitality 
of the communities surrounding our sites and enables other 
crucial DOE missions to continue. By reducing the cleanup 
footprint, we are lowering the cost of security and other 
overhead activities that would otherwise continue for years to 
come.
    In August 2011, the Office of Environmental Management was 
aligned under the Office of the Under-Secretary for Nuclear 
Security. This realignment promotes the natural synergies that 
exist between EM and NNSA. For example, at Oak Ridge 
Laboratory, we are working closely with NNSA now to accelerate 
the transfer of certain components of the Uranium-233 
inventory.
    This inventory is valuable for National Security 
applications and supports NNSA missions. Removing this material 
and transferring it to NNSA for their use will result in cost 
savings for our program and enable us to move forward with 
cleanup at the Oak Ridge National Laboratory.
    Over the years, the Office of Environmental Management has 
made significant progress in accelerating environmental cleanup 
across the complex. For example, last December, at the Defense 
Waste Processing Facility at our Savannah River Site in South 
Carolina, we solidified a record 37 canisters of highly 
radioactive waste. These are more canisters than we have filled 
in one month in the facility's 15-year history. Out west at our 
Moab site in Utah, we celebrated the removal of five million 
tons of uranium tailings from the site to a safe location away 
from the Colorado River. Through 2011, we safely conducted over 
10,000 shipments of transuranic waste to the Waste Isolation 
Pilot Plant in New Mexico, the world's largest operating deep 
geologic repository. As you can see from some of these 
accomplishments the EM has made great progress and will 
continue to do so with your help.
    We could not have achieved such notable accomplishments 
without an outstanding Federal and contractor workforce. The 
safety of our workers is a core value and is incorporated into 
every aspect of our program. I am sure we are going to be 
talking about that and I welcome the opportunity to talk more 
about it with Mr. Podonsky and you today. We maintain a strong 
safety record and continually strive for accident and incident-
free workplaces. We seek to continue improvements in the area 
of safety by instituting corrective actions and aggressively 
promoting lessons learned across our sites. In collaboration 
with Mr. Podonsky's office and our field sites, we are working 
to achieve a stronger safety culture within our Program and 
ultimately improve safe construction and operation of our 
facilities.
    We will continue to identify opportunities to reduce the 
life-cycle costs of our program, including the development of 
new technologies and other strategic investments. For example, 
in fiscal year 2013, we will continue our efforts to develop 
technologies that allow for the segregation and stabilization 
of mercury-contaminated debris and improve groundwater 
monitoring.
    Finally, we continue to work with the Government 
Accountability Office as we institutionalize the improvements 
in contracting and project management which I know are 
important to you. We have established project sponsor positions 
at Headquarters for all of our capital asset projects and 
conduct regular peer reviews of our most complex projects. We 
are including the U.S. Army Corps of Engineers personnel in 
some of these teams because of their project and contract 
management expertise. We are committed to becoming a best-in-
class performer in the area of project management.
    Chairman Frelinghuysen, Representative Visclosky, and 
Representative Simpson, we continue to apply innovative cleanup 
technologies so that we can complete our quality work safely, 
on schedule, and within costs thereby demonstrating value to 
the American taxpayers. Thank you and I would be pleased to 
answer your questions.
    [The information follows:]

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    Mr. Frelinghuysen. Thank you for your testimony. Mr. 
Podonsky, good morning.
    Mr. Podonsky. Thank you, Mr. Chairman and ranking member 
Visclosky and members of the Subcommittee for inviting me here 
today to testify on the 2013 budget of the Health Safety and 
Security Office. With your permission, I would like to submit 
my written testimony for the record.
    Mr. Frelinghuysen. Consider it done. Thank you.
    Mr. Podonsky. I would like to take a moment just to 
describe the role that the HSS plays within the DOE. And also 
address an issue that has received a lot of attention lately, 
and that is the safety culture within DOE and its role in 
ensuring the DOE's ability to accomplish its mission. First and 
foremost, I want to tell the committee, subcommittee that the 
secretary and the deputy secretary are extremely committed to 
maintaining a safe and secure work environment for employees 
and to ensure that its operations are not adversely affecting 
the health, safety, or security of the surrounding communities 
or of the Nation.
    My organization, HSS, is charged with helping DOE fulfill 
that commitment. We are very proactive advocates for the 
protection of DOE's workers as well as the protection of the 
DOE's assets. We are passionate about our mission. We have 
pursued every day with a sense of urgency and with a personal 
commitment. We strive to use and influence this commitment 
throughout the rest of the DOE.
    Our program consists of a wide variety of activities that 
are described in details in our budget's proposal but the 
essential elements are responsible for internal policies that 
govern health, safety, and security of the department, 
providing technical assistance to help align, implement those 
policies, and, maybe most importantly of all, to provide 
independent oversight of the DOE's performance as well as 
providing an enforcement of health safety and security 
requirements when necessary. The execution of our mission is 
accomplished through a variety of outreach efforts that include 
current and former workers, national labor union leadership, 
the Defense Nuclear Facility Safety Board, contractors, 
community leaders, and the Congress.
    We support the secretary and deputy secretary's commitment 
to a strong safety culture where all employees are encouraged 
to bring up safety concerns without fear of reprisal. The goal 
of safety in executing this mission is not just show or a 
bumper sticker. It has to be believed by the leaders and 
carried out through their actions.
    A robust safety culture is needed, especially for a large 
costly construction project, from designing and planning 
through construction operation to decommissioning, in order to 
reduce potential of escalating costs and to ensure DOE meets 
its commitments. HSS has been assessing the safety culture up 
at the Hanford Waste Treatment Immobilization Plant, which, as 
you know, is the DOE's largest ongoing project with an 
estimated cost of over $12 billion and over 3,000 Federal and 
contract workers.
    We found in our recent inspection that most people working 
on the project believe that safety was a high priority, but, 
alarmingly, there was a significant number that expressed 
reluctance to raise safety issues or concerns. We have provided 
recommendations to the department and to the Federal and 
contracted management at the site. And the recommendations have 
been accepted by the department, by the secretary, by the 
deputy secretary, by the under secretary for NNSA, and by my 
colleague Dave Huizenga. And we will be working with them to 
make sure that full implementation of those recommendations 
take place.
    As a result of this review, the secretary and the deputy 
secretary directed HSS to then do a center review condition of 
safety culture at all large projects within the department. We 
have started that. I would be happy to talk to you more about 
that.
    These are the projects that are over $1 billion in costs. 
The review will determine if those projects are being managed 
in the way that could pressure contractors or DOE managers to 
disregard nuclear safety in order to demonstrate acceptable 
project performance. We look forward to actually coming back 
and brief you, the subcommittee, the results which will be 
complete that end of the project in the fall.
    I would like to thank this committee and the staff for the 
interest you continue to show in HSS and our role in providing 
independent, unbiased, unfiltered information to the DOE of 
management, the leadership of the department, the secretary, 
and the deputy secretary on how well or how poorly the 
department is performing. Thank you.
    [The information follows:]

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    Mr. Frelinghuysen. Thank you very much, Mr. Podonsky. There 
are good reasons that the both of you are sitting together 
here. And each of you have a mission and to a certain degree 
you somewhat have to be independent. But in reality, where I 
think the bipartisan concern is support for both of what you 
are both doing.
    Mr. Huizenga, can you speak to what the Environmental 
Management organization is doing to evaluate the implications 
of the reduced budget, or the other term is constrained fiscal 
environment, and what it means to the department's cost and 
schedule projections for meeting the many constant milestones?
    Mr. Huizenga. Yes, I can, sir. First of all, let me just 
point out that 2013 request will enable us to fully meet our 
compliance agreements and our milestones in Fiscal Year 2013. 
It is a request that takes into account all of these issues. 
That being said, I do not want to underestimate the difficulty 
I believe we are going to have in the out years. In prior 
years, we have signed up for a number of milestones at many of 
our sites and we did this in a sense when we thought we might 
have slightly higher budget projections when things were 
different a few years ago. And we are in the process now of 
working complex-wide to understand if we were stay at 
relatively flat budgets for the next few years what that would 
mean for our compliance agreements.
    We started this discussion with our stakeholders in a 
meeting last November in New Orleans. We were being upfront 
with people that we are going to have to have open and 
transparent dialogue. If indeed we are going to need to make 
some adjustments, we want to give people a chance to understand 
our thinking and our rationale. We will be looking at the 
highest risk activities across the complex to make sure we are 
continuing to focus on them on those. Of course, this is a 
complex issue. It will take us another month or two to get our 
arms around completely the----
    Mr. Frelinghuysen. So, you are working on a new strategic 
plan having touched base as I assume you do on a regular basis 
with all your stakeholders, the municipalities, and localities?
    Mr. Huizenga. Exactly.
    Mr. Frelinghuysen. And so, we are going to be getting a new 
strategic plan?
    Mr. Huizenga. We are going to have to assess what we think 
we can do assuming a flat budget. Last time we did this we 
thought about $6 billion range. We are looking now closer to 
$5.5 or $5.65 billion consistent with our budget request. 
Obviously, if we base-lined our program and signed agreements 
at $6 billion there is going to be things that are going to 
have to be moved out if we are coming in----
    Mr. Frelinghuysen. So, we are going to be apprised of what 
those might be?
    Mr. Huizenga. We will be in consultation with our 
stakeholders and with you, of course, to explain what we think 
this ultimately----
    Mr. Frelinghuysen. So, you are going to lay out a pathway 
here?
    Mr. Huizenga. That is our----
    Mr. Frelinghuysen. Based on flat budget?
    Mr. Huizenga. In our fiscal year 14 budget build, we are 
trying to take this into account complex-wide.
    Mr. Frelinghuysen. So, this and a lot of what you are 
dealing with is incredibly complex? All these sites have a 
degree of complexity and some are involved with consent 
decrees. And you are taking all of that into consideration?
    Mr. Huizenga. Correct. We are currently----
    Mr. Frelinghuysen. Not only do you have expectations, but 
states and localities and I assume the courts have some 
expectation that certain things are going to be done within a 
timetable. So, are you taking a look at that timetable?
    Mr. Huizenga. Absolutely. We recognize our commitments to 
the local people in these areas that have made sacrifices over 
the years for the country. And we want to move ahead with the 
cleanup activities as expeditiously as possible. With that 
being said, we recognize that there are fiscal constraints that 
need to be addressed and we need to try to take those into 
account.
    Mr. Frelinghuysen. Mr. Visclosky.
    Mr. Visclosky. Thank you, Mr. Chairman. Mr. Huizenga, in 
the fiscal year 2012 Appropriations Act there is a requirement 
that the secretary notify the committee not later than 30 days 
before any uranium transfer takes place. Twice, as recently--
most recently, I should say, as Wednesday, the department has 
violated the provisions of this statute as far as congressional 
notification. What is the problem?
    Mr. Huizenga. We had two administrative errors, and we will 
not have another one.
    Mr. Visclosky. That is the proper answer. Another question 
is the issue of benefits for workers who transfer from USEC to 
the D&D contract. And Portsmouth has been an issue recently, 
and on March 9th, United Steelworker President Leo Girard wrote 
a letter that, among other things, said that we ask that DOE 
and its contractors at the site restore their benefits, 
including pensions and retiree health care, their seniority, 
any vacation time they have lost, any seniority credits to 
which they are due, and any other wages and benefits that have 
been scrimped as a result of the flawed 2011 service contract 
transition. What, from your perspective, is the problem at 
Portsmouth, and what action is the department taking or not 
taking?
    Mr. Huizenga. This is a complex issue and we met with the 
USW representatives several times. I met with him personally. I 
know that they have been in discussions with the Secretary's 
staff, as well. We fundamentally have a different view of the 
nature of when the employees change from USEC to working for 
Fluor-B&W Portsmouth LLC, the new contractor, our view is that 
they, the contractor, Fluor-B&W Portsmouth LLC, it is their 
responsibility to negotiate the benefits package. It really is 
not the Department of Energy's position. We set broad 
guidelines to make sure that they are doing this lawfully. They 
have to have some curbstones of which they need to stay in 
between. But it is up to Fluor-B&W Portsmouth LLC to work this 
out with the Steelworkers.
    Mr. Visclosky. Could I ask, assuming the worst and it is 
not worked out and the steelworkers file suit, there will be 
legal expenses and court costs involved. Are those reimbursable 
to the contract by the Department of Energy?
    Mr. Huizenga. In general, my understanding is that we pay 
the court costs for these type of issues.
    Mr. Visclosky. Will the steelworkers' legal expenses and 
court costs be reimbursed by the Department of Energy?
    Mr. Huizenga. That I do not know. I would have to get back 
to you on that, sir.
    [The information follows:]

    Mr. Huizenga. The Department of Energy (DOE) does not have a 
contract with the Steelworkers Union. DOE's prime contractors negotiate 
collective bargaining agreements between themselves and individual 
unions. If a union sues a DOE contractor operating under a cost-type 
contract, the contracts generally provide that most legal costs 
incurred by the contractor, including settlements, are allowable. There 
are a number of exceptions, however, and those would have to be 
reviewed in the context of a particular matter. The larger question is 
whether a judgement against the contractor would include the legal 
expenses and court costs of the union; that is generally not the case 
in American litigation. However, to the extent a judgment against the 
contractor includes legal expenses incurred by the opposing party, they 
would likely be allowable to the same extent as other costs incurred by 
the contractor.

    Mr. Visclosky. I must express a concern that you provide--
not you personally, but the Department, an unlevel playing 
field. If some party, whether it is in this case, the United 
Steelworkers, or another party, feels themselves aggrieved and 
they have to pay their own legal expenses and court costs and 
the contractor working for DOE gets reimbursed by the 
taxpayers, and somebody has deeper pockets than another party 
and they just outlast people, I think it is a very unfair 
proposition. So, I would ask that, while the department may not 
have the ultimate liability for the contract, that special 
attention should be paid because I think, in this case, the 
aggrieved party, at least that is the allegation, is in a very 
unfair situation legally.
    Mr. Huizenga. Yes.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Mr. Frelinghuysen. Thank you, Mr. Visclosky. Mr. Simpson.
    Mr. Simpson. Thank you. And thank both of you for being 
here today. We appreciate it very much. We mentioned fiscal 
constraint that we are under and probably will be under even 
greater after the budget resolution passes today which--never 
mind, I will not go there.
    Let me ask you. I think we have to find uses that maybe 
beyond what the original use was for some of the facilities. 
Currently INTEC at Idaho maintains a wet storage capability. 
The Navy is looking to refurbish their facility for wet storage 
for Navy fuel. Is it possible to keep the wet storage facility 
at INTEC at play and have a shared facility, potentially with 
the Navy, rather than doing the refurbishing of the Navy's wet 
storage facility?
    Mr. Huizenga. To continue to use the existing one?
    Mr. Simpson. At INTEC.
    Mr. Huizenga. I am not--to be honest with you, the Navy is 
moving out in their direction and----
    Mr. Simpson. I know. I am looking to try to save money here 
somewhere.
    Mr. Huizenga. I understand that. I had not tried to 
interfere with that. I could talk to the NNSA folks and see if 
there is some synergy there.
    Mr. Simpson. I am certain that the Navy would like to have 
their own facility. The question is, is that fiscally the 
responsible thing to do if we have a wet storage facility at 
INTEC that could serve the same purposes? We share the use of 
the Advanced Test Reactor with the Navy and so forth.
    Mr. Huizenga. Absolutely.
    Mr. Simpson. I would hope that you would explore the 
possibility, even though I would suspect that the Navy would 
like their own facility and not have to share. That is kind of 
the way the Navy is. I understand that. But it would seem to me 
like it might save some money in the long run.
    Mr. Huizenga. I would certainly agree.
    Mr. Simpson. Without having to put the other money into 
refurbishing their facility, which I cannot remember how much 
it is, but it is a substantial sum that they have requested, is 
it not? Yes. So, I am just suggesting----
    Mr. Huizenga. I will look into that.
    Mr. Simpson [continuing]. In this limited fiscal 
environment that we need to look at other things along the way.
    Along that same line, the Advancement Mixed Waste Treatment 
Plan will finish its Idaho mission within the next couple 
years. This is a facility that has done a fantastic job, I 
think. It would seem to be a shame to shut it down. Are there 
other missions that that facility could facilitate?
    Mr. Huizenga. I believe they are already making a 
contribution in that regard. Of course, they are doing a great 
job in Idaho with retrieval and packaging of the transuranic 
waste in Idaho. And as I understand it, they have also been 
successful in taking some waste from Hanford to Idaho, 
packaging it up and sending it down to WIPP so, you know, we 
certainly could explore----
    Mr. Simpson. So we may see a continued operation in that 
facility beyond the time when they finish their actual drop?
    Mr. Huizenga. I think that your point is well taken and at 
these times of fiscal constraints, we need to look at all 
options. And if we have got a facility that is up and running 
and doing a good job, then it can provide a more complex-wide 
benefit, I would be happy to look into that.
    Mr. Simpson. Okay. After the publication of the 
recommendation of the Blue Ribbon Commission, we have heard a 
lot of talk about consent-based process to identify a site to 
store spent nuclear fuel. Under the Idaho Settlement Agreement, 
the State of Idaho consented to temporarily store Navy and DOE 
spent fuel in exchange for DOE's commitment that the Idaho 
National Lab shall direct the research, development, and 
testing of treatment, shipment, and disposal technologies for 
all DOE fuel. That program did this work under the National 
Spent Fuel Nuclear Fuel Program. It is not funded in the 2013 
budget. Do you plan to fund this activity at the INL? And if 
not, how can you get states to consent to store spent nuclear 
fuel when commitments made to those already storing spent 
nuclear fuel were not kept or will not be kept?
    Mr. Huizenga. I talked to the folks on the National Spent 
Fuel Program about this a couple times, and we do intend to 
continue to fund them.
    Mr. Simpson. Okay. I have got some other questions, but I 
will----
    Mr. Frelinghuysen. Thank you, Mr. Simpson. Mr. Huizenga and 
the ranking member raised Portsmouth as a focus. The GAO, and 
you mentioned the GAO, I think, in one of your opening 
statements, has ruled that the Department's past use of uranium 
transfer to fund the cleanup work at Portsmouth is illegal, 
violating the Miscellaneous Receipts Statute. Is the $178 
million you have requested for Portsmouth the total amount of 
the cleanup work that you plan on funding in the fiscal year 
2013 budget or do you plan on using the TAILS transfer 
authority again in contravention of the law?
    Mr. Huizenga. Well, we respectfully disagree with the GAO's 
view on that, Mr. Chairman. We believe that we, under the 
Atomic Energy Act, have the authority to barter the uranium, 
and we hope to continue to do so because, indeed, we want to 
continue to accelerate our cleanup work at Portsmouth. And we 
have an asset, and we believe we can continue to barter this if 
we send some of the natural uranium to the contractor in return 
for the work that they will do for us.
    Mr. Frelinghuysen. Why not Paducah?
    Mr. Huizenga. That is a good question.
    Mr. Frelinghuysen. Well, that is why I asked you.
    Mr. Huizenga. Sir, I will have to look into it. I know we 
are focused right now. I mean----
    [The information follows:]

    Although the Department's current Secretarial Determination on 
uranium transfer was approved to support the acceleration of cleanup 
activities at Portsmouth, it is possible that future transfers, if any, 
could be considered for use to fund Paducah activities. However, 
currently planned cleanup activities of Paducah are supported by 
appropriated funds. Decontamination and decommissioning of the actual 
Gaseous Diffusion Plant (GDP) is not within EM's current baseline scope 
because the United States Enrichment Corporation currently leases and 
operates these facilities.

    Mr. Frelinghuysen. I hear a lot about Paducah.
    Mr. Huizenga. We are doing different work at Paducah, 
obviously, because at the moment they are still operating and 
we have got a solid budget request for Paducah, so we think we 
are okay there.
    Mr. Frelinghuysen. The fiscal year 2012 conference 
agreement directed you to, and I quote, ``provide the full 
details of any proposed barter, transfer, or sale of uranium'' 
in your budget request. How much additional funding do you 
expect to generate for cleanup activities through these 
transfers, and why were you not able to provide this 
information in your budget request as we so clearly directed?
    Mr. Huizenga. These numbers depend, in part, on the uranium 
market, and I think that what we tried to do is provide a sense 
of our intention in this regard. And then, as we continue to 
want to do these on a quarterly basis, then we intend to get 
the signature authority correct and then we will send the 
letters up to you.
    Mr. Frelinghuysen. Please do. Mr. Visclosky.
    Mr. Visclosky. Mr. Podonsky, in the past, and I talk about 
the past, the Department has tended to not give adequate 
attention to the issue of safety and safety culture, and 
particularly at Hanford, but not necessarily limited to 
Hanford. I appreciate the fact that you had the Defense Nuclear 
Facility Safety Board study, contractor had a study, and the 
department has self-initiated two studies. If you could, for 
just a minute or two, bring the subcommittee up to speed as to 
what you and Mr. Huizenga are doing relative to making sure 
that there is transparency, there is an openness of culture, 
and that safety is going to be at the forefront here.
    Mr. Huizenga. I attach a lot of importance to it.
    Mr. Podonsky. As we do, too. And I want to thank you for 
asking me that question. I was enjoying the hearing up to now.
    First of all, if you will indulge me, we are responsible 
for independently assessing the performance of the department 
in terms of environment, safety, health, safeguard cyber. 
Nuclear safety culture is something that is not new to the 
department. The recognition of its importance is what is slowly 
becoming more apparent. When we look at what transpired, first 
with the Defense Board, Defense Nuclear Safety Board, about a 
year and half ago, looking into a whistleblower issue out at 
the Hanford site, the former assistant secretary on Ines Triay 
contacted my office and asked us to take a look at what was 
going on at the same time. And that was the genesis of the 
first report that we produced.
    And to understand that first report, we did identify 
issues, but we used our nuclear safety engineers. We used our 
technical capabilities, but what we did not have a recognition 
of, and that is the need for experts in safety culture. So, we 
reached out to the NRC and, following their years of 
experience, we actually brought on an external expert in 
nuclear safety culture, in behavioral sciences, and so that was 
the basis for our next review that we have done.
    And I have to do this in order to answer your question 
because it is complex. BNI, to their credit, as I would expect 
any good contractor to do a self-assessment, and that is what 
they did. They brought in some experts that they hired to do a 
self-assessment on their operation.
    So, you have four reports: our two and the two you just 
mentioned. What they all have in common is that they all 
identify that there are concerns. The varying degrees are the 
Defense Board, I would characterize it as having a chilled 
atmosphere is what they refer to out at the Hanford location. 
BNI identified it as isolated incidents. And then our report 
said it was much more pervasive than that in the second go 
around.
    What this has done, especially the most recent report that 
we did, and not meant to be a self-serving statement, but we 
used some rather rigorous focus groups, very structured 
interviews, as well as proven surveys of the staff out there as 
to what they were really feeling so we could reach into what 
the workers felt and could get to the folks that really had not 
already spoken before or maybe they did not feel safe in saying 
anything. And we actually penetrated that barrier through our 
processes using our experts.
    So, that brings us to where we are now. The Department, the 
contractor out there, the management out there, my colleague 
Dave Huizenga, the Secretary of Energy, all of us now recognize 
the extent of the problem which we did not understand before. 
None of us really understood how pervasive the issues are. Not 
the fear of raising issues, but as we said in our report, the 
concern that nobody is really interested in hearing about these 
issues, that the project costs and schedule were trumping 
safety. That was the biggest difference. And what the 
Department is doing now is I believe, with the embracing of the 
recommendations, both in our report, the Defense Board's Board 
Recommendation 2011-1, some of the findings that the BNI folks 
identified for themselves, I have every confidence that Dave 
Huizenga and his leadership, with the support of Tom D'Agostino 
and the Secretary of Energy, are going to start addressing 
these issues in a very systematic way. The proof will be in the 
pudding. The workers have to believe this. The workers have to 
believe that they can raise issues without concern of reprisal 
without fear of retaliation, and that is a tall order for this 
department.
    Mr. Frelinghuysen. Will the gentleman yield?
    Mr. Podonsky. Absolutely.
    Mr. Frelinghuysen. Have conditions improved?
    Mr. Podonsky. Since our first report, Chairman, yes, there 
have been improved conditions. Since our current report, I 
would tell you Mr. Huizenga in his capacity as managing the EM 
organization for the Secretary of Energy, whatever title you 
give him, he has taken more interest than any other person that 
I have seen at that level. He has been out to Hanford almost as 
many times as my team has been out there and maybe more. That 
hands-on personal involvement of Department leadership makes 
all the difference in the world because then the contractors 
know that we are serious. The Federal staff begin to believe 
us. And I believe what Mr. Huizenga--and it is not because he 
is sitting next to me, I am telling you I have seen the 
actions, that I believe that EM is going to move out in the 
direction that it has not previously done.
    Mr. Frelinghuysen. If the gentleman will continue. You 
know, allegations come up and they have to be considered 
seriously. Some of them may be old, but I assume you take a 
look at whether they are fresh allegations. But the general 
question, are conditions better than they were? Has the safety 
culture improved?
    Mr. Podonsky. We have seen----
    Mr. Frelinghuysen. Thank you for yielding.
    Mr. Podonsky. Sure. We have seen some evidence of 
improvement but I will tell you, just I am concerned that we 
must make sure that all Federal managers and contract managers 
understand the seriousness of safety culture. Just today in the 
Weapons Complex Monitor there was an article that talked about 
one of the whistleblowers registering a concern because during 
the course of our enforcement activities, that it appeared that 
an Environmental and Nuclear Safety manager at URS was not 
being allowed to be involved in interviews that we were 
conducting. And I will just tell you, to me, as the independent 
overseer of the Department, that is a clear indication that 
there still needs a whole lot of work to be done within the 
framework of both the Federal management and contract 
management to understand that even if you have best interests 
in mind for your corporation, you still cannot allow people to 
feel intimidated, even if you just have an attendance in a 
meeting.
    Mr. Visclosky. Or people having the opinion that no one is 
listening, forgetting the issue of whistleblowers. I 
congratulate you because I am not an apologist, as you know, 
for the Department on a regular basis. I have been disappointed 
in the past on the issue of the safety culture. That too often, 
well, it is a disgruntled employee. Sometimes whistleblowers 
are wrong or incorrect, sometimes they are very right, but it 
has tended to be passed off as discrete individual 
circumstances. I also appreciate that the culture is very hard 
to change, and people do have to understand, no, we are in this 
for the long haul.
    So again, anything we can do to be of assistance, I would 
ask you to do it. I also appreciate that you are taking this, 
if you would, approach to other projects within the department. 
And I congratulate you for that, but would also remind you we 
will be attentively following your progress on this, but wish 
you well on it. Thank you very much, Mr. Chairman.
    Mr. Frelinghuysen. We are going to Mr. Simpson. So, was 
this--I happened to see this article as well. Was this 
something that occurred last year?
    Mr. Podonsky. No, no, no, sir.
    Mr. Frelinghuysen. What is the timetable?
    Mr. Podonsky. This was just in the last few weeks.
    Mr. Frelinghuysen. Just a couple weeks. All right.
    Mr. Podonsky. If the subcommittee is interested, I can give 
you more articulation on this. But I do know that we expressed 
our concern to Mr. Huizenga and Mr. Huizenga has already taken 
action.
    Mr. Huizenga. Mr. Chairman, if I may? I have been talking 
to Glenn about this and we are making it very clear, providing 
guidance to the Office of River Protection out at Hanford and 
the contractor that no one will interfere with the HSS reviews; 
that they will have unfettered access to the documents and to 
the people that they need to to conduct their investigation.
    Mr. Frelinghuysen. Thank you for your response. Mr. 
Simpson.
    Mr. Simpson. Along that same line, you said that making 
safety a high priority and making sure that the contractors 
understand that it is a high priority to the Department. That 
is an initial step. Are there process changes that need to be 
made in order to more than just say it is a high priority?
    Mr. Podonsky. Mr. Huizenga I am sure will follow, but if 
you will allow me, there is something called a safety-conscious 
work environment, SCWE, which is an environment where the 
workers feel that they can raise issues without fear of 
retaliation. And I realize this is a budget hearing. And we can 
put all sorts of money on these projects and on these programs, 
but at the end, it is the leadership. It is the core values 
that the managers feel. And do they believe in the safety and 
do the workers believe in them as well? And if the workers do 
not believe the leaders and the managers, no matter how much 
money we put on these projects, they are not necessarily always 
encouraged to get out there and do the job because they do not 
always know that they are going to be able to do it as safely 
or raise issues, especially if they have issues that might 
improve the process.
    So the Department is looking at all sorts of experiences 
that were gained today in our other like similar hazardous 
work, and so there is a lot that we can do. But the most 
important thing that has to happen is that the leaders, like my 
colleague Dave Huizenga, like the Secretary of Energy, like the 
deputy secretary, need to continuously talk about the 
importance of safety and prove it through their actions. So at 
the end of the day, Congressman, whether it is a project of a 
nuclear construction or a nuclear operation, it does not 
matter. What is important is whether the values are expressed 
by actions, indeed by the managers that are out there, both Fed 
and contractor. And that is what has to change.
    And when the whistleblowers--we talked about the 
whistleblowers a moment ago from the ranking member--
whistleblowers, there are some that have good points and some 
that do not have good points at all. But they all need to be 
heard and need to be--felt that they are listened to and what 
happens to their issues that they raise. All of that comes 
together into a safety culture. It does not happen overnight 
but it has to be continuous and it has to be from one 
administration after another regardless of Republican or 
Democratic. It does not matter. Because at the end of the day, 
these are our workers and they have to feel they are being 
protected.
    Mr. Simpson. Okay. Mr. Huizenga, tell me about DOE's 
efforts to respond to the recommendation of the Blue Ribbon 
Commission. What is EM doing in this effort and when should we 
expect to see a plan from the administration of whether they 
accept the Blue Ribbon Commission's recommendations, also, that 
is going to require onsite storage? And what about spent 
nuclear fuel apparently onsite? What is EM doing to make sure 
that the spent fuel is stored and safe and its facilities are 
adequate for a longer than expected period of time?
    Mr. Huizenga. Thank you. Well, we have been working, of 
course, for years to stabilize our spent nuclear fuel. You know 
that in Idaho, we have moved a lot of the fuel out of the old 
wet storage pools into dry storage, and it can be stored safely 
there for many years to come.
    Similarly, we have stored Hanford production reactor fuel 
in a dry storage building. So we are in the process--and also, 
of course, we are going to be starting up a facility at Idaho 
to stabilize the remaining liquid high-level waste. And 
hopefully, later in April and by the end of the year, we will 
have that material in a stable form.
    So our goal is, given the uncertainties that we do have 
with the ultimate desire to find a repository for the Nation, 
we want to make sure that this material can be stored for 
several decades safely. And in that regard, we want to 
ultimately work to find a solution.
    So we are working closely with the Office of Nuclear Energy 
within the department. The Secretary of Energy has set up a 
task force and my staff members are working with Assistant 
Secretary Lyons' staff members to respond to the Blue Ribbon 
Commission's recommendations. I think it is in a six-month 
timeframe and we need to consult with the members of Congress 
and try to find the next step and path forward.
    Mr. Simpson. So we should see a recommendation or a plan 
within the next six months?
    Mr. Huizenga. Our intention is to come back up here within 
that timeframe and consult with you and put something on the 
table.
    Mr. Simpson. Okay. As I understand it, your EM program is 
responsible for the disposition of excessive plutonium at 
Hanford. Pete Lyons and the Office of Nuclear Energy owns the 
plutonium at Idaho and the NNSA's. Nonproliferation program is 
handling the MOX plant and the excess plutonium at Savannah 
River. It seems to me that we have excess plutonium and we have 
got three different entities in charge of it. Does this make 
sense?
    Mr. Huizenga. I think it does. It actually might be a 
little bit hard to explain. But in a sense, the 
nonproliferation mission that is being supported with the MOX 
plant in South Carolina, they have got a clear understanding 
and vision of what they are going to do. Ultimately, they will 
make MOX fuel out of several tons of excess plutonium, 34 tons 
of excess weapons pits. And our excess plutonium basically is 
not usable, so we are packaging up the excess plutonium and 
sending it to WIPP.
    To be honest with you, I do not know exactly what any 
people--I think that they are doing some separations technology 
and working at the Idaho facility now to try to explore backend 
of the fuel cycle. So we each are working in our lane. We are 
working together. We know what each other is doing. And indeed 
at South Carolina, at the Savannah River site, we are using our 
H-Canyon Facility to generate feed for the MOX plant to take 
some of that plutonium and clean it up and send it off to MOX. 
And we are using the H-Canyon to package some material and send 
it to WIPP.
    I think we each have the plutonium that is best suited for 
our particular mission and we are taking care of it.
    Mr. Simpson. Okay. Has there been any unexpected challenges 
in moving EM to under NNSA?
    Mr. Huizenga. Other than the fact that we might have done a 
little bit better job rolling it out, I think that--honestly, 
all kidding aside, I really think that there was a wisdom and a 
vision there.
    The mission of the other Under Secretaries is to focus on 
science and focus on research and bring home other important 
activities within the department's mission. But, of course, the 
defense programs actually generated most of this waste years 
and years ago, so they actually know where it came from and how 
to deal with it.
    And so the synergies that we found by coming under Mr. 
D'Agostino, the Under Secretary of Nuclear Security and the 
Administrator of NNSA, it has really made some things much 
easier for us bureaucratically inside the building. We can go 
to him and talk to him about issues. He has a complete 
understanding of the technical nature of the issues. He has a 
relationship with the Defense Nuclear Facilities Safety Board, 
so if we have Defense Board issues--and he is working through 
Defense Board issues with NNSA. We are working through some 
with EM. There is a common understanding of the terms and the 
issues. So we are looking for opportunities all the time to 
benefit from the fact that we are under the Under Secretary of 
Nuclear Security, and indeed we found some.
    Mr. Simpson. Thank you.
    Mr. Frelinghuysen. Thank you, Mr. Simpson. Mr. Huizenga, I 
would like to have a greater degree of comfort relative to the 
safety culture. Did the Department pay the contractor to do its 
own assessment of some of the problems at the Waste Treatment 
Plant?
    Mr. Huizenga. We did pay for the----
    Mr. Frelinghuysen. Is that a common practice?
    Mr. Huizenga. It is in the contract fundamentally that if 
there are issues that need to be addressed, we will pay for 
things like this Independent Review.
    Mr. Frelinghuysen. And last November that was done, and 
then they reached a conclusion which seems to be somewhat 
different than Mr. Podonsky's.
    Mr. Huizenga. I think it is different. I think that Mr. 
Podonsky, as he pointed out, there was kind of a gradation 
between the Defense Nuclear Facilities Safety Board's findings, 
the chilled atmosphere, the independent review by the 
contractor who, I guess, did not find as chilled an atmosphere, 
but also found that there was a common issue----
    Mr. Frelinghuysen. I am not impugning anybody--I just 
wanted to hear how independent it could be if----
    Mr. Huizenga. Well, they selected people with a reputation 
for knowing their business and working in the field for many, 
many years, and we met with them.
    Mr. Frelinghuysen. So would your conclusion be different 
than Mr. Podonsky's?
    Mr. Huizenga. No. I think, basically, what I am trying to 
say is that, in the end, although each of the reports had 
slightly different views on things, they all pointed out that 
there are issues that need to be addressed, that there are 
safety culture issues at hand that indeed we have to 
acknowledge and work to try to improve, and that is indeed what 
we are doing.
    Mr. Frelinghuysen. Well, I am sure you are doing it. What 
is your take on this, Mr. Podonsky?
    Mr. Podonsky. Well, I do not refer to the BNI review as 
independent because I do not see it as independent because it 
was done for the contractor by the contractor, regardless of 
where the funds came from. And I am not here to impugn their 
efforts. I am well aware of all the people that served on that 
panel. They are very distinguished qualified people. But again, 
at the risk of sounding self-indulging, we used a process that 
was very structured.
    And we learned from our first inspection to bring in 
external expertise in the area of safety culture so that we 
could actually get to understand what the workers were really 
feeling. Because, again, if I might, when we first went out and 
we conducted our interviews, there was some artificialities in 
those interviews that were unintentional. But when you put a 
lot of people in a room together, they are not always going to 
open up. The venue does not allow for it. But the focus groups 
that we did in the second group, or second inspection, we had 
peers talking to one another, and we did 37 of these and they 
were anywhere from 5 to 10 employees each. We had over 250 
people we talked to.
    And the point I am trying to make, in our review that we 
ended up with, is we ended up with understanding exactly what 
the workers were saying and not our interpretation of what the 
workers were saying. So I think, in the end now, EM and the 
department I think get the picture of how pervasive the problem 
is.
    Mr. Huizenga. If I may, Mr. Chairman, just for a 
clarification point. I mean, I think the bottom line is, I went 
out with Glenn to Hanford when he briefed out the results of 
his most recent study.
    Mr. Frelinghuysen. And may we commend you because Mr. 
Podonsky said that you have been out there an extraordinary 
number of times.
    Mr. Huizenga. Yeah. I am going there again later today. But 
the point really, and I think this is important----
    Mr. Frelinghuysen. If we ever let you out of here.
    Mr. Huizenga [continuing]. The contractor who--you know, 
you can debate who should pay for the independent review, but 
the contractor, and Glenn can substantiate this, said that 
Glenn's report trumps all the reports. I mean, they are paying 
attention to the findings in Glenn's report to the extent that 
their report might not have been as critical as Glenn's. They 
have embraced, and so have we, the fact that Glenn had some 
findings that need to be addressed.
    So they are not minimizing Glenn's report in favor of their 
own. We have got to move past that, frankly.
    Mr. Frelinghuysen. The companies that are involved in these 
activities are well-known and well-respected. And the issues 
they deal with are extremely complex, to say the least. But we 
are dealing with these consent reviews, which I think are 
important.
    Savannah River has been invoked. Mr. Huizenga, the fiscal 
year 2013 budget proposes that the Savannah River site H-Canyon 
facility transition to, what is called a modified operations 
mode. What are some of the activities that you have planned and 
do these include reprocessing of spent nuclear fuel?
    Mr. Huizenga. Yes, they do. We are going to take some fuel 
that we believe is at risk and reprocess it through H-Canyon. 
There is some fuel that is being stored at Savannah River site 
that cannot be stored for a long time. And we are going to 
process that fuel over the next year or year and a half through 
the H-Canyon and basically send it to the waste tanks so it 
will not be a vulnerability in the future. We are also 
partnering in one of the synergies that I mentioned with NNSA. 
So our base funding is on the order of about $150 million a 
year to keep the H-Canyon in warm standby but not actually 
doing much.
    If you make an investment of about $20 million you can run 
one of the dissolvers. So the NNSA people are pitching in $20 
million to run one of the two dissolvers to generate MOX feed. 
We are going to use the other dissolver to dissolve this fuel. 
We will continue to actually do some repacking of waste to go 
to WIPP and the HB line, which is on top of the H-Canyon. We 
are going to be continuing to do some R&D to try to purify 
plutonium that might also serve as additional feed for the MOX.
    Mr. Frelinghuysen. So the bottom line is that you are 
working with other programs, right----
    Mr. Huizenga. Yes.
    Mr. Frelinghuysen [continuing]. Offices to identify how to 
use the facility as the committee pretty much has directed 
throughout the----
    Mr. Huizenga. Yes, indeed. And we are working with the 
Office of Nuclear Energy as well to look at backend of the fuel 
cycle research and development opportunities that they might be 
able to use the canyon for.
    Mr. Frelinghuysen. We are glad to hear that. Mr. Visclosky.
    Mr. Visclosky. Thank you, Mr. Chairman. Mr. Huizenga, I 
would like to discuss the issue of project management and 
design while under construction. The Department has said that 
it will no longer begin construction on projects before the 
design is complete as part of its efforts to get off the GAO 
high-risk list. Yet, this past August, a contractor was allowed 
to weld shut the vessel heads where the Department continued 
construction and despite existing unresolved design issues. Why 
was that decision made and what were the circumstances? Is this 
the exception to the new rule or have we gone back to 
construction while design is underway?
    Mr. Huizenga. Well, we made a decision, for better or 
worse, a long time ago on the WTP project to have it be a 
design-build project. And of course, the desire is always to 
have your design running far enough ahead of your construction 
that you do not have such a narrow gap that you run into 
issues. This vessel welding is probably one of those areas 
where we are narrowing. And the fact of the matter is it was a 
management decision to keep moving, making progress. The 
vessels were in the shop and the next step was to weld the 
heads on. Time will tell whether, in the end, that was a good 
management decision because we will be able to place those 
vessels on schedule or whether we are going to have to actually 
take the tops off the vessels and make some adjustments to the 
mixing devices that are inside.
    You know, we have got an aggressive testing program that 
will go on for the next year or more to test the performance of 
those vessels to mix the complicated waste that will come out 
of the tanks and be processed in the pretreatment facility. But 
at this point, it is a function of the fact that we are moving 
along in a design-build mode, and we try ever as we may to not 
have these situations where we are creeping up on a decision 
before we have all the testing done. But in this instance, and 
with the complicated issues of mixing, we are running pretty 
close.
    Mr. Visclosky. When will we know whether it was the correct 
decision or not? When will that determination be made?
    Mr. Huizenga. We probably now are not realistically going 
to know for about a year.
    Mr. Visclosky. Okay.
    Mr. Huizenga. But suffice it to say that, you know, this 
comes back to one of the safety culture issues. Some people are 
concerned that we are going to install those vessels and we 
will not know really whether they are actually going to 
function safely, and we have got a hold on that.
    The vessels are in the shop and they are being stored. They 
will not ultimately be installed, because if we are going to 
have to actually make some adjustments as a result of our 
increased knowledge through the testing program, we are not 
going to be able to do it once they are installed, and we 
recognize that. So we are going to hold off, complete our 
testing, and then be able to install them.
    Mr. Visclosky. I appreciate knowing that. Are there any 
other circumstances right now where we are close as far as 
continuing construction relative to where we are in design, or 
because of just the inertia involved whatever may be 
structurally, will some of these circumstances still exist 
despite the Department's decision to make sure they have 
extended design out far enough to avoid this in the future? Are 
there others we should be cognizant of?
    Mr. Huizenga. There are other issues associated with piping 
and other vessel issues. And as a matter of fact, we, 
recognizing that this is an important area and we need to get 
it right, we have just recently issued direction to the 
contractor to demonstrate to us that some of these things that 
are questionable are actually completely consistent with our 
design margins. So we are actively engaged in this discussion 
with the contractor.
    Mr. Visclosky. If you could, for the record, provide a list 
of the major circumstances where this exists? Because again, I 
am concerned that, given past culture, we are going to design 
before we construct. But that is what we have been saying for 
20 years out here, to again make sure that the contractor 
understands. This is a different day.
    Mr. Huizenga. We certainly----
    Mr. Visclosky. I have been on this subcommittee through 
three administrations. And from my perspective, it has been a 
bipartisan failure with the Department that we continue to be 
on this high-risk list. And we are in the third year of the 
administration and I would hope people, if we are serious about 
it, know the culture is changing on that aspect, too.
    Mr. Huizenga. Yes. We can provide some stuff for the 
record. I would just point out, one of the issues is well-known 
to the Defense Nuclear Facilities Safety Board. There are some 
questions on potential erosion and corrosion in these vessels. 
If the waste itself is particles that are abrasive when you are 
shooting them through at high velocity through the pipes and 
into the tanks, it can erode some of the stainless steel. So we 
are looking at that very aggressively.
    [The information follows:]

    The two largest line item projects within Environmental 
Management's portfolio, the Waste Treatment Plant and Salt Waste 
Processing Facility, are both being constructed under design build 
contracts. The design maturity of the Salt Waste Processing Facility 
has reached a state where there are no instances where the project is 
in construction with significant design risks still in existence.
    At the Waste Treatment Plant, the project is currently moving from 
a design and construction focus, to construction, start-up and 
commissioning focus.

    Mr. Huizenga. I guess, if you do not mind, if I can just 
take a second to address maybe some of the issues that Glenn 
was raising. I mean, I am on my way to Hanford for the fourth 
time since coming back to EM. I take this very seriously. I 
have had two all-hands meetings talking with the people out 
there about the importance of safety.
    But back to one of the questions that was raised, you know, 
is this just rhetoric? And I want to try to explain what we are 
doing to institutionalize the fact that safety is important. 
And ultimately we are not going to--you know, nobody wants to 
run this facility if it cannot be run safely.
    So the people that have been raising the issues about 
erosion and corrosion for some time now, I have sat down with 
them the last time I was out there for two hours and went 
through their complex and technical list of questions. And I 
think what we are doing, as we are trying to do as Glenn 
suggested, to demonstrate that we actually are interested in 
understanding the problem.
    And again, we might not all ultimately come to the same 
conclusion, but we are going to have a transparent discussion 
of the issues and communicate back to people, okay, this is how 
you feel and why you believe this is--we either agree with 
you--as a matter of fact, sometimes we have agreed with people 
and have actually gotten back to them and told them that we 
agreed with them. So we need to do a better job of tracking the 
issues and getting back to people. And that is basically I 
think what we are doing to institutionalize the fact that it is 
a different day.
    Mr. Visclosky. And I would encourage you to continue those 
efforts. And, again, just so we can have that list of legacy, 
if nothing else. I understand you may have some legacies where 
you are close, and there may be extenuating circumstances, but 
there ought to be a limited universe, and nobody added to it.
    Mr. Huizenga. We do not need to keep doing that, I think is 
your point.
    Mr. Visclosky. Mr. Chairman, one other question. On the 
Separations Process Research Unit in Schenectady, DOE was 
criticized by EPA for a number of failures such as not properly 
evaluating whether there was a risk of releasing contamination 
into the environment. Do you agree with EPA's criticism or take 
exception to it, is the truth somewhere in the middle?
    Mr. Huizenga. Yes. I mean, it was, again, kind of an 
administrative issue that needed to be worked through with EPA 
relative to the NESHAP's permit requirements. We have done that 
now, we are in agreement now and understand our path forward. 
It stemmed, of course, from the initial problems in the fall of 
2010, when one of the tanks was pulled out inappropriately and 
started to be cut up, and some contamination was released on 
the site. So what we are doing now to address that and work 
closely with the EPA is we are putting in closures over the two 
main structures, the two main cleanup buildings. And we will 
have a ventilation system so we will not have a possibility of 
having a repeat of the problem we had before.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Mr. Frelinghuysen. So why do you need the ventilation 
system? Is the contamination such that you----
    Mr. Huizenga. There were low--there were relatively low 
levels of contamination. But, indeed, there is some 
contamination on the pad in these buildings, in one of the 
buildings in particular.
    Mr. Frelinghuysen. Is this required by the EPA?
    Mr. Huizenga. Ultimately, this was basically thought to be 
the best approach.
    Mr. Frelinghuysen. Okay. Mr. Simpson, thank you.
    Mr. Simpson. Thank you. I do not have anything else. I just 
was going to ask you how you handle differing professional 
opinions, and how you handle whistleblower complaints and that 
kind of stuff. Because I handle them as a big deal, and whether 
people believe that safety is a big issue and that you are 
concerned about their concerns. Understanding that sometimes 
people that have different professional opinions or have 
concerns about whistleblowers are going to hold to their 
opinion no matter what you do sometimes. And being able to at 
least say you have addressed them is a big issue, so I 
appreciate your previous answer.
    Mr. Huizenga. Relative to the differing professional 
opinion, this example of erosion/corrosion, that is a 
particular area that a gentleman has been concerned about for 
some time, and he has been respectfully working through the 
system. Ultimately, he filed a DPO. But I think that he 
finally--now, he actually forwarded me the letter that he 
worked on to forward to the contractor to tell them to address 
this issue. So he is seen, he is engaged in seeing action, he 
is actually part of resolving the issues that he has raised.
    Mr. Frelinghuysen. Good. I appreciate it, thank you. The 
Paducah plant is facing some difficult choices, including a 
real possibility of closing down. It is in Richmond. What 
happens, do we end up taking it back, or what does that mean?
    Mr. Huizenga. Ultimately, I am sure, of course, the Paducah 
facilities will come back, just like Portsmouth did and the 
facilities at Oak Ridge. The timing is important to us. We hope 
that the USEC Corporation can continue to operate the facility 
for another year or more as they are also trying to bring the 
ACP facility on in Ohio. It is a little unclear right now as to 
whether there is a business case for that. And we have been 
working actively with them to try to look for ways to continue 
to have USEC operate Paducah.
    Mr. Frelinghuysen. Is there any funding in question in the 
budget relative to this?
    Mr. Huizenga. Not for USEC itself, obviously. We are 
working with them on various ways to look for opportunities 
to----
    Mr. Frelinghuysen. But taking the facility back.
    Mr. Huizenga. Oh, I am sorry, I misunderstood. No, that is 
a pretty clear answer, there is no--we have no money in our 
budget to actually take over for USEC in 2013. If they are 
unable to continue their operations, we will have to be back up 
here talking with you.
    Mr. Frelinghuysen. You invoked in your opening statement 
Oak Ridge. The Department has recently proposed an alternative 
approach for removing Uranium-233 from Oak Ridge, which would 
save a significant amount of funding from the previous plan of 
record, which required expensive building modifications to down 
blend the materials. You expect savings from the original plan? 
And, if so, how much?
    Mr. Huizenga. I cannot quantify it, I have to take that for 
the record. But I can tell you that, again, this is an area, 
when faced with the fact that we have some real financial 
constraints, we looked for better solutions, working smarter 
not harder. So about half of the material that was at risk in 
this building is going to be--some of it will be reused and 
shipped to the Nevada site for NNSA to use the material.
    [The information follows:]

    As a result of the Phase 1 alternatives analysis, documented in 
January 2011, the Department decided to pursue direct disposition 
(involving either the transfer of valuable U-233 components to other 
DOE Programs for additional mission use, or the direct disposal of 
eligible components without processing) of approximately half of the U-
233 inventory. For the remaining inventory, decisions are yet to be 
finalized regarding the location and detailed plans for required 
processing, but will likely remain onsite. The final Draft Phase I 
Alternatives Analysis Report screened all of the Oak Ridge National 
Laboratory (ORNL) hot cell facilities for availability and suitability 
as potential alternatives to the use of Building 3019 for dissolving 
and down blending the remaining inventory to meet waste acceptance, 
security, and safety requirements. Buildings 2026 and 3047 were 
identified as the two most suitable facilities at ORNL, and both of 
these facilities are being further examined in the Phase II analysis. 
The Phase I report also suggested that the baseline plan involving 
construction of a new annex for drying and packaging the down blended 
material could be avoided by co-processing with a larger, existing 
waste stream at ORNL that needs to undergo treatment in any case.
    While a review draft of the Phase II analysis has not yet been 
completed, and no decision has been made, preliminary indications are 
that Building 2026 (which is located directly across the road from 
Building 3019) is the more attractive alternative due to cost and 
safety considerations and also because it has the least potential for 
competing programmatic demands. Building 2026 is not currently in use; 
the cost of any necessary modifications to Building 2026, as well as 
subsequent canister-by-canister processing, is expected to be far less 
than the original approach that involved retrofitting of Building 3019 
and U-233 processing operations in a high security, high hazard 
environment. The Phase II report is also likely to endorse the Phase I 
conclusion that after waste is moved from Building 2026, co-processing 
down blended material with existing sludges at the Oak Ridge 
Transuranic Waste Processing Center (TWPC) is the most cost-effective 
and least risky approach for final preparation of an acceptable waste 
form to ship offsite.
    The final cost savings are expected to be substantial when compared 
to the baseline estimate to process all of the remaining U-233 
inventory in Building 3019 and a newly constructed an adjacent annex 
for drying and packaging.

    Mr. Frelinghuysen. This has been going on for years, has it 
not?
    Mr. Huizenga. Yes, it has. But we found there was material 
there that actually had a use, I guess is the point I am trying 
to make. So, instead of trying to build a facility, a 
complicated, expensive facility, to turn something that had a 
use into trash and dump it, we are actually going to use it 
working with NNSA, or NNSA will use it. So we are transferring 
title to NNSA.
    Mr. Frelinghuysen. So there is a solution in the offing----
    Mr. Huizenga. Yes, that----
    Mr. Frelinghuysen [continuing]. And a timetable of some 
sort?
    Mr. Huizenga. We have already started shipping some of this 
material to the NNSA facility, so we are making steady 
progress.
    Mr. Frelinghuysen. Okay. Mr. Visclosky.
    Mr. Visclosky. Thank you, Mr. Chairman. The Department has 
asked for a large increase for the tank farm activities to 
prepare tank waste for reprocessing once WTP is operational, 
but we do not have an update from the Department on project 
execution for WTP, nor any details on preparations for the tank 
farm's needs to be completed. Why should the subcommittee 
support financially ramping up the tank farm when there may be 
imminent changes to the WTP program?
    Mr. Huizenga. Yeah, that is a good question. But I think 
what has happened in the past is we had ramped up funding for 
WTP, and, frankly, we just recognized now that, ultimately, we 
need to have feed for the tank farms come at the right time for 
WTP. And we needed to actually beef up the funding and increase 
the funding for tank farms to help them, basically, be able to 
provide feed when WTP is ready.
    Mr. Visclosky. So you are looking for the waste stream for 
the stock to catch up to the WTP?
    Mr. Huizenga. Yes, sir. They are continuing to add 
infrastructure and improvements that need to be taken care of. 
Those tanks are, of course, many, many years old. They have 
characterization activities that are necessary to understand 
the nature of the feed that will be fed into WTP. They also 
have their own Consent Decree milestones relative to continuing 
to empty out the tanks. So they have a number of drivers and 
are trying to be responsive to those needs.
    Mr. Visclosky. And I did not know as I asked the question, 
I guess that is why I am asking the question. I am assuming the 
Subcommittee has information as to the time frames for both WTP 
and the tank farms, then----
    Mr. Huizenga. As to----
    Mr. Visclosky [continuing]. So that they will be 
coincidental as far as the waste stream?
    Mr. Huizenga  [continuing]. Linking those up? If you do 
not, I am sure that we would be happy to provide it.
    [The information follows:]

    The baseline for the Tank Farms Project continues to be aligned 
with the baseline for the WTP Project in terms of when waste feed, 
secondary waste treatment, and immobilized waste storage will need to 
be available. Recently, the project has also initiated a One System 
approach that is focused on preparing for the startup and operations of 
the WTP under a single manager with staff from both the Tank Farms and 
WTP contractors. This approach represents a significant evolution in 
focus from design and construction of the WTP to preparations for 
commissioning, startup and eventual operations of this facility. This 
One System approach will integrate Tank Farms and WTP Project 
contractual, schedule, technical and other elements in preparations for 
the start of and sustained tank waste treatment operations at Hanford.

    Mr. Visclosky. Okay. One other question, if I could, on 
baselining of major construction projects. EM has a number of 
ongoing construction projects that either are trending behind 
schedule or over budget. WTP and the Salt Waste Processing 
Facility in Savannah River now require restructuring of their 
project execution plans to make up for the delays. What is the 
end process for re-baselining these programs and staying in 
touch with Congress so that as there is a re-baselining, there 
is going to be congressional support for the financing?
    Mr. Huizenga. We are going to have to have repeated 
dialogue with the WTP over the course of this year. Our 
intention is to--the contractor is now developing a proposed 
new baseline for our consideration, it will be prepared 
sometime in August time frame. And then we will take a look 
with our internal review, do an independent cost estimate of 
their proposal, and sometime by the end of the year or early 
next year, we would hope to have the new baseline in the 
contract renegotiated and in place.
    On salt waste processing, we ran into some difficulties 
with 10 of the vessels, similar to the vessels you mentioned 
that we welded the heads on at WTP. They are similar vessels 
that will be used in the Salt Waste Processing Facility, and 
they are being manufactured more slowly, frankly, than we had 
hoped. So we are having to do some pretty significant 
workarounds. We are having to keep part of the roof open so we 
can lower these vessels in as soon as they are delivered, which 
we hope is going to be within the next few weeks. But after the 
vessels get in, we are going to have to take a look at the 
remaining baseline, and we will have to come back up and 
consult with Congress on that, as well.
    Mr. Visclosky. May I encourage your efforts on the re-
baselining and getting some resolution, because--and, again, 
you and I have not had this conversation, but I have had this 
conversation with witnesses over several administrations, and 
it would be a relief not to have this conversation again. So I 
just encourage you, and whatever we can do, we are at the end 
of our rope here and we are serious about this.
    The first conversation I had with the Secretary when he was 
nominated is, and I am not being facetious here, I do not care 
what your energy policy is, but if you cannot manage some of 
these major projects and have the taxpayers' money controlled 
by Federal employees who are charged with running these, you 
are never going to be able to implement your policies. So I 
just really encourage, and I have a lot of faith in both of 
you, but just anything we can do, because, man, I am tired of 
having this conversation.
    Mr. Huizenga. I do not blame you, and I would love to not 
have this conversation with you, again, sir.
    Mr. Visclosky. That may be one reason why you are leaving 
town.
    Mr. Huizenga. The good news is, at Idaho, we are making the 
final preparations to start up the Sodium Bearing Waste 
Treatment Facility, one of our major construction projects. And 
if things come together as we hope they do, we will start it up 
and finish the job by the end of the year as the consent 
agreement requires us.
    Mr. Visclosky. Work hard and good luck.
    Mr. Huizenga. Yeah. I have spent some time with Gene Aloise 
shortly after coming to this position to try to understand 
GAO's issues and what they have been, what their concerns have 
been. So I think that we have--they are institutionalizing the 
project reviews, working closely and getting out in the site, 
understanding their issues, not letting them fester or be able 
to build up and be surprises later on. I think we are making 
some steady progress.
    Mr. Frelinghuysen. Mr. Huizenga, you have worn many hats.
    Mr. Huizenga. I have.
    Mr. Frelinghuysen. Did you start with EM and then move over 
to NNSA?
    Mr. Huizenga. I started at Hanford in 1985 and came to 
Washington in 1987 on a three-month detail. But then we worked 
together on nonproliferation issues for about a decade when I 
was in the former Soviet Union locking up materials.
    Mr. Frelinghuysen. We hope they are locked up.
    Mr. Huizenga. Glenn actually helped us on a couple of 
those, as well, sharing lessons learned from his security 
experts with our Russian colleagues.
    Mr. Frelinghuysen. From those closed nuclear cities, right?
    Mr. Huizenga. Uh-huh.
    Mr. Frelinghuysen. Well, you said such kind and positive 
things about Idaho, I guess that means I have to yield to Mr. 
Simpson.
    Mr. Simpson. That is all right, I am done.
    Mr. Frelinghuysen. You are done? I do have a question 
related to your reductions for protective forces. I know there 
is always a balancing act here. Can you talk a little bit about 
what that means?
    Mr. Huizenga. That, actually, is a good news story, thank 
goodness.
    Mr. Frelinghuysen. And before you leave here, at Defense 
hearings, I often pose the question, is there any question that 
we did not ask you which you thought we ought to know about? So 
when you respond to this, if either of you would like to make 
any comments about things that perhaps we have overlooked that 
are important that you would like to highlight, we would 
welcome that.
    Mr. Huizenga. Yes, sir. Relative to the security budget and 
the safeguard budget, the Department undertook an effort to 
harmonize, I think is the word they were using, the approach 
between the Defense Department, DOE and NNSA on securing 
materials. And we found some areas that we may--Glenn may know 
more about this than I do, because he might have been more 
directly involved. But the fact of the matter is, we might have 
been overprotecting material, which is good, but if you do not 
need to, you do not have to spend the money on it. So we found 
ways to actually adequately protect material for less cost. So, 
in some areas, we reduced the cost, not because we are setting 
ourselves up for failure, but because we actually believe we 
can do this in a more cost-effective way.
    Mr. Frelinghuysen. So, Mr. Podonsky, you are implementing a 
new safety and security reform plan, you are moving in that 
direction. How do you view----
    Mr. Podonsky. Well, Mr. Chairman, we are looking at how we 
can spend limited resources more wisely and more effectively. 
And in a post 9-11 environment, when none of us really 
understood what was going on 10 years ago, we even had tanks on 
top of Hoover Dam, but we did not know what we were dealing 
with. And, as Mr. Huizenga has said, we are looking at how do 
we save cost but still provide effective security?
    And what him and other elements of the Department are doing 
in following guidance that is coming out of my organization is 
we are looking at what the threat is at our sites, and how we 
are protecting it with our physical protection, and can we use 
other strategies, can we use technologies? The traditional 
guards, gates and guns is not necessarily always the most 
effective when we look at the world events today. So the 
department, in partnership with DOD, as well as NRC, are 
examining what the threats are and how best to protect, and 
there are cost savings to be made. I would, if I might----
    Mr. Frelinghuysen. Yeah, jump in.
    Mr. Podonsky. There is one thing that in your opening 
statement, Mr. Chairman, you asked how can we do--how can HSS 
do our expanded responsibilities with the budget going down? 
And I would tell you that we will continue to do our mission 
and we are prioritizing our costs so that we can, indeed, 
increase our nuclear safety and nuclear security oversight for 
the department. Where we are cutting our own budget that the 
President gave us and the Congress approved last year and the 
one that we are coming into now is we are cutting out programs 
that are not adding any value. We are cutting out programs that 
are redundant in others areas that we have covered. It is 
called being fiscally responsible.
    We are not in this business to always ask for more. We are 
going to do more with less, because that is what we have to do. 
We have a responsibility that came out of language from last 
year's Appropriations Bill to have us look at safety 
construction in the projects, and we are going to be able to do 
that with the plus-up in our oversight, and taking away from 
areas like some of our headquarters' security posture that we 
have. We are also responsible for headquarters security. We do 
not need all the funds that we currently have, and that is why 
our budget reflects a $5 million decrease.
    Mr. Frelinghuysen. We appreciate that effort, that degree 
of conscientiousness. Mr. Huizenga, anything further for the 
record?
    Mr. Huizenga. Well, I looked over my list of questions I 
thought you might ask, and you did a pretty good job, so I am 
not going to suggest. But if I may, I would just point out, we 
submitted a request that was lower than we have for the last 
couple years. And we recognize that you have constraints, but 
we are right down to the bone now relative to meeting our 
compliance agreements, and we are hoping that you are going to 
be able to do what you can do support the request. Because I 
think we are demonstrating that we are making a difference at 
these sites and making a difference for the taxpayers, and we 
would like to continue to do that work.
    Mr. Frelinghuysen. Well, I thank you both. Before you get 
out of Dodge here, I have one question. Mr. Huizenga, this is 
the fourth year in a row that the department has attempted to 
reauthorize Federal industry contributions into the uranium 
enrichment D&D fund as part of its budget request. Why should 
this subcommittee go forward now and instruct the domestic 
nuclear industry to take on additional obligations?
    And, secondly, when do you predict that the fund will be 
exhausted, and what work have you done to understand the full 
cost of the cleanup efforts? I know that is a rather all-
encompassing way to finish out the hearing here, but we want 
to----
    Mr. Huizenga. We know, Mr. Chairman, that ultimately this 
money, of course, is for the D&D of Portsmouth and Paducah 
facilities and the facilities at Oak Ridge that the fund is 
short. So that is why we actually are hoping to actually make a 
contribution to it again this year. We would request, I think, 
20 million more than we are actually hoping to pull out so that 
that money can stay in there and earn some interest, and 
ultimately benefit us. Relative to the industry's view on this, 
I am sure they will have a view and we will have to take that, 
you will have to take that into account. But we know we are 
going to need more money than is in the fund at this point, so 
sooner or later, we would like to try to build it back up.
    Mr. Frelinghuysen. All right. Mr. Visclosky, anything 
further?
    Mr. Visclosky. Nothing, Chairman.
    Mr. Frelinghuysen. Thank you both, and all the people who 
worked with you, we appreciate your work. Meeting stands 
adjourned.

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                                           Tuesday, March 27, 2012.

 DEPARTMENT OF ENERGY--ENERGY EFFICIENCY AND RENEWABLE ENERGY & FOSSIL 
    ENERGY & OFFICE OF ELECTRICITY DELIVERY AND ENERGY RELIABILITY--
                          ASSISTANT SECRETARY

                               WITNESSES

HENRY KELLY, ASSISTANT SECRETARY FOR ENERGY EFFICIENCY AND RENEWABLE 
    ENERGY (ACTING)
PATRICIA HOFFMAN, ASSISTANT SECRETARY, OFFICE OF ELECTRICITY DELIVERY 
    AND ENERGY RELIABILITY
CHARLES McCONNELL, ASSISTANT SECRETARY (ACTING), FOSSIL ENERGY
    Mr. Frelinghuysen. Good morning.
    Ms. Hoffman. Morning.
    Mr. Frelinghuysen. I would like to call this hearing to 
order; the Subcommittee on Energy and Water Development meets 
this morning to hear testimony on the fiscal year 2013 budget 
request for the Department of Energy's research and development 
programs for Energy Efficiency, Renewable Energy, Fossil 
Energy, and the Electricity Delivery System.
    We would like to welcome Henry Kelly, the Acting Assistant 
Secretary for Energy Efficiency and Renewable Energy, Patricia 
Hoffman, the Assistant Secretary for Electricity Delivery and 
Energy Reliability, and Charles McConnell, Acting Assistant 
Secretary for Fossil Energy.
    Dr. Kelly. Morning.
    Mr. Frelinghuysen. Good morning. Our country continues to 
face the prospect of even higher gasoline prices. While the 
public might think that the Department of Energy, and 
specifically the programs represented here today might be 
responsible for setting this country's energy supplies on a 
more secure footing, I suspect they should not expect much 
change from a year ago.
    We still import nearly two thirds of the oil we use and 96 
percent of our trucks, cars, and planes still depend on oil, 
while demand is skyrocketing in countries like China and India 
for the same energy sources we rely upon, and with much of the 
world's oil supply in the hands of those who do not like us, we 
must focus on our own backyard and take a look at what should 
be made more accessible.
    The President makes a strong call in the State of the Union 
Speech for the ``all of the above'' energy strategy and I would 
like to take him at his word. Unfortunately, his budget request 
appears to be more ideologically driven than driven by 
practicality. It cuts the very account, fossil energy, which 
could have the most immediate impact on the prices at the pump 
and electricity.
    Nuclear energy, which we considered before this 
Subcommittee a few weeks ago, is the other major source for 
today's electricity. That same request would cut its budget by 
more than 10 percent. At the same time, the request would 
increase energy efficiency and renewable energy by 28 percent.
    Even the rosiest scenarios for renewable energy predict 
only a marginal contribution to job creation coming from this 
sector. In other words, the President's budget request would 
accept higher prices for gasoline and electricity today in 
order to dump hundreds of millions of dollars into energy 
sources, which will only provide a marginal amount of power for 
years to come. These priorities are raising questions among 
members of Congress, and across the country, and many people at 
home are rightly upset.
    In the Energy Efficiency and Renewable Energy account, the 
Administration is asking for hundreds of millions of dollars to 
improve electric vehicles, solar, wind, and energy efficient 
technologies, and to increase the sources that we actually 
depend on each and every day.
    The story for American based manufacturing, a top priority 
of mine and I know for my ranking member, is more mixed, while 
the cuts to nuclear and fossil energy research and development 
would certainly be a setback for American innovation and may 
likely continue the flight of companies to less regulated world 
markets. The request would more than double funding for 
advanced manufacturing research and development within EERE.
    Precisely how that funding would be used and to what 
advantage is not fully clear in the budget request materials. 
And I expect we'll have much time today to explore this this 
morning.
    I ask that each of you please ensure that the hearing 
record, the questions for the record and any supporting 
information requested by the Subcommittee are delivered in 
final form to the Subcommittee no later than four weeks from 
the time you receive them. Members who have additional 
questions for the record will have until close of business 
tomorrow to provide them to the Subcommittee Office. And at 
this point I turn to Mr. Visclosky, the ranking member, for any 
comments he wishes to make.
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    Mr. Visclosky. Thank you very much, Mr. Chairman. I 
understand my statement and its entirety will be entered into 
the record. Good morning, Doctor Kelly, Ms. Hoffman, and Mr. 
McConnell, and along with the Chairman, thank you very much for 
being here today.
    The U.S. Energy Sector faces myriad challenges that pose a 
persistent threat to our economy, national security, and 
environment, cars and trucks of our citizens. The ships, 
planes, and tanks of our military rely heavily on petroleum 
fuels, much of which is imported from overseas. Power prices 
continue to increase and our electricity supplies depend on 
energy sources, they give off emissions, and operate on an 
aging electric power grid.
    Today we consider the budget request for applied R&D 
activities at the Department of Energy aimed at addressing the 
many difficulties we face. These programs, Energy Efficiency, 
Renewable Energy, Fossil Energy, the Office of Electricity 
Delivery, and Energy Reliability are all critical.
    The budget request for Energy Efficiency and Renewable 
Energy represents a large increase of 30 percent over this 
year's level. Doctor Kelly, in this budget setting, I hope that 
you have come prepared to discuss how this large increase could 
be used efficiently and effectively in pursuit of our energy 
independence.
    I am particularly interested in your justification for the 
large increase to the advanced manufacturing office, formerly 
known as the industrial technologies program. I believe that 
strengthening American manufacturing and returning to making 
things in America is not only the best source of job creation 
and economic recovery, it is an imperative.
    I am hoping that the Department has a sense of urgency in 
this area and can provide details on your plan. The request for 
fossil energy represents a reduction of 21 percent from the 
program level of 2012. I appreciate and understand the 
Administration's belief in renewable energy and that it is its 
preferred path towards our future.
    While I agree that renewable energy is a necessity, Mr. 
McConnell, I hope that you can explain why the reduction in 
fossil energy is appropriate at this time. Given that fossil 
fuels meet around 83 percent of U.S. energy demand, and I don't 
anticipate that is going to significantly change next month or 
by this summer, I would like to understand what the Department 
is doing to deliver technologies that can provide cleaner, low 
carbon electricity generation using domestic sources of coal 
and natural gas.
    The budget request for the third participant in the 
hearing, the Office of Electricity, Delivery, and Energy 
Reliability is approximately equal to 2012 levels. Given the 
importance of the electricity grid, I would like to understand 
how this program will allow the nation to maximize existing 
resources and allow the expansion of clear energy generation 
through the modernization of the nation's electricity 
transmission and distribution system. Mr. Chairman, thank you 
for the time.
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    Mr. Frelinghuysen. Thank you; Doctor Kelly. Thank you for 
being here and your remarks, in total, will be on the record, 
but please proceed.
    Dr. Kelly. Thank you, sir. Mr. Chairman and ranking 
members, members of the Committee, for letting me come here and 
talk about the fiscal FY13 Energy Efficiency and Renewable 
Energy budget proposal. And----
    Mr. Frelinghuysen. You may have to move that microphone a 
little closer.
    Dr. Kelly. All right.
    Mr. Frelinghuysen. Thank you.
    Dr. Kelly. Or talk a little louder. In the State of the 
Union, as the Chairman mentioned, the President called for an 
economy that is built to last and one that is built to support 
his commitment to safely and responsibly harness all of 
America's energy resources in an all of the above energy 
strategy. And renewable energy and energy efficiency are a key 
part of that strategy.
    So EERE has built its portfolio around three major 
challenges. The first is to reduce the nation's dependence on 
petroleum based fuels for transportation by developing 
affordable fuels from more renewable sources. Vehicles capable 
of using electricity, natural gas, and hydrogen, and extremely 
efficient conventionally powered vehicles.
    Second, we are seeking to diversify and expand the nation's 
electricity sources by developing renewable electricity that is 
competitive with other sources of electricity without 
subsidies.
    And finally, to help families, businesses, and government 
offices save on their energy bills by optimizing the efficiency 
of our homes, buildings, and factories. These goals are central 
to a strategy for addressing the nation's energy and 
environmental challenges, and meeting them will play a critical 
role in spurring the U.S. economic growth and job creation.
    The U.S. economy has always depended on innovation. And 
clean energy technology supported by the EERE budget will spur 
business and job growth in manufacturing and in many other 
parts of the economy. And the clean energy market has been 
increasing very rapidly and has been a key source of economic 
growth in the U.S. and worldwide; its increase almost a factor 
of five since 2004. But the global competition is fierce and 
retaining America's leadership role will require significant 
public and private sector investment in the next generation of 
renewable energy technologies and energy efficiency solutions.
    Since 2007, EERE investments have resulted in the issuance 
of hundreds of patents supporting innovative clean energy 
research. EERE investments in clean energy technologies have 
played a part in many important commercial successes. For 
example, nearly every hybrid electric vehicle sold in the U.S. 
uses better technology developed under EERE.
    Since 2007, EERE has successfully leveraged $60 million 
worth of research investment to secure more than $1.6 billion 
of private capital investment. Innovations in wind turbines 
developed with the support of EERE at reduced costs and 
increased reliability, allowing for 47 gigawatts of installed 
wind capacity in the U.S. and 35 percent of all new capacity 
installed in the last four years.
    Standards issued since 2009 will save consumers hundreds of 
billions of dollars in energy costs through 2030. Now EERE 
plans to build on these successes by making strategic 
investments that compliment those of the private sector. In 
FY13, our reviews of opportunities and gaps in the private 
investment resulted in a budget in which 60 percent of the 
funding is directed towards energy efficiency activities, and 
40 percent to renewables.
    EERE's FY13 budget request of $2.3 billion emphasizes key 
investments in energy solutions and renewable technologies, 
where the potential impact is largest and where federal funds 
are most critical. To give some examples, the vehicle 
technology program will incorporate a new grand challenge to 
develop technologies to make electric drive vehicles 
competitive and multiple light duty vehicle markets by 2020.
    This grand challenge will emphasize the accelerated R&D and 
advanced battery technologies, with a major concentration on 
better design optimization and innovative battery 
manufacturing. Biomass activities will be focused on converting 
non food cellulosic feed stocks to hydrocarbons such as jet 
fuel, that can be directly substituted for conventional fuels 
at competitive prices.
    Our photovoltaic SunShot Program is on target to meet our 
goal of a dollar a watt installed costs by the end of the 
decade. On shore wind, as I said, has been a commercial 
success, and we are now going to concentrate on the next 
generation of challenges and opportunities, including a new 
focus on capturing America's enormous offshore wind resources 
at competitive prices.
    And because residential and commercial buildings drive our 
electricity consumption, something like 70 percent of 
electricity goes into buildings, we continue to emphasize 
energy efficient products and integrated building systems for 
both new construction and for retrofits of existing buildings.
    Major emphasis has been placed on the advanced 
manufacturing program, which supports the research focused on 
innovative energy efficient manufacturing processes and 
advanced materials. And these new approaches will reduce energy 
consumption and manufacturing cost, making American businesses 
more competitive, and they will play a key role in driving down 
the costs of all clean energy products.
    So in closing today, the U.S. has poised its harnessing 
ingenuity of American science, the industriousness of American 
workers, and the creativity of American entrepreneurs to help 
secure America's future prosperity and global leadership.
    This 2012 budget request reflects tough decisions over a 
balanced and diverse portfolio, with the understanding that 
EERE's technologies will play a critical role in addressing the 
nation's urgent energy and environmental challenges. The 
Department appreciates the leadership of this Committee and 
providing the resources needed to accomplish our shared goal of 
creating a secure and efficient clean energy economy, and I 
would be pleased to respond to any questions that you may have. 
Thank you.
    [The information follows:]

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    Mr. Frelinghuysen. Thank you, Doctor Kelly. Madame 
Secretary, welcome.
    Ms. Hoffman. Good morning. Good morning, Mr. Chairman and 
members of the Committee. Thank you for the opportunity to 
appear before you today to talk about the President's fiscal 
year 2013 budget for the Department of Energy's Office of 
Electricity Delivery, and Energy Reliability.
    Our office's mission is to lead the national efforts to 
modernize the electric grid, enhance the security and 
reliability of our nation's infrastructure, and facilitate 
recovery from disruptions to energy supply. This is a complex 
and crucial mission that involves action on a number of fronts, 
including research and development of new technologies, cyber 
security, policy coordination and implementation, and energy 
assurance.
    Our fiscal year 2013 budget request is $143 million, a 
three percent increase over the fiscal year 2012 
appropriations. This request will keep us moving strategically 
and steadily towards a more reliable, flexible, efficient, and 
resilient grid.
    To begin my discussion of our 2013 activities, I would like 
to highlight several areas of the budget request that we see as 
critical to the success of our mission. First, we are proposing 
establishing a new electricity systems hub that will bring 
together experts to solve system level challenges of grid 
modernization.
    The nation's electric grid is a complicated system that is 
evolving. Now it is time to tackle some of the critical issues 
and barriers associated with integrating, coordinating, and 
facilitating the numerous changes that are happening system 
wide. These changes include the addition of renewable energy 
resources, like wind, fluctuations of load, and the growing use 
of digital communications and controlled technologies.
    Given the regional nature of many of these conditions and 
needs effecting the grid, such as electricity use patterns, 
generation sources, energy policies and regulations, we are 
proposing to establishing two to three regional hubs, which may 
be the best way to address both the unique demands of each 
region, and the commonality shared at the national level.
    Therefore, the President's request includes a $20 million 
request for the establishment of these regional centers, 
consistent with the quadrennial technology review. Another 
priority is cyber security; there are numerous challenges with 
protecting the grid from cyber attack. Most cyber security 
solutions are developed for desktop information technology 
systems or IT systems, and these are not designed to meet the 
unique requirements of the energy delivery system.
    Another challenge is protecting the legacy devices that 
were installed before cyber security became an issue. We 
continue to be active in this area, as seen by our recent risk 
management maturity model initiative, which will provide a tool 
that allows electric utilities and grid operators to assess 
their own cyber strength and weaknesses and prioritize 
investments.
    The release of risk management process guidelines provides 
a consistent, repeatable, adaptable process for the electric 
sector. Our roadmap to achieve energy delivery system cyber 
security, which was released last September, provides a 
strategic direction of goals for public private partnership 
activities over the next 10 years.
    We are also involved in other efforts such as facilitating 
timely sharing of actionable information. The 2013 budget also 
includes a continued investment of $30 million to support the 
development of a wide range of next generation cyber security 
technologies.
    Another priority is advanced modeling of the electric grid. 
Our 2013 budget request provides $10 million for advanced 
modeling grid research to focus on accelerating the performance 
and predictive capability of operational systems, which uses 
real time data from the increasing number of sensors built out 
nationwide, with the Recovery Act funding.
    Researchers will develop computational mathematical 
understanding needed to transform the tools and algorithms that 
underpin the electric systems planning and operation, and 
applying new scientific insights in advanced computation to 
grid data.
    This work will involve collaboration with the Office of 
Science and universities, and will lay the foundation for the 
next generation computational modeling programs for the private 
sector. We will continue funding the permitting, citing, and 
analysis program that will provide technical assistance to the 
states and regions on the electricity policies and programs.
    As utilities have increased their investment in next 
generation energy technologies, we have seen an increase in the 
number of requests from states' electricity officials for 
technical assistance on topics such as repairs for energy 
efficiency, and demand response from renewable energy.
    Our 2013 budget also provides continued support for the 
infrastructure security and energy restoration programs work, 
enhancing the security and resilience of the nation's critical 
energy infrastructure and facilitating disruptions from the 
energy supply. As the lead sector specific agency for the 
energy sector, we closely monitor and assess the potential 
impacts of events, such as tornadoes, hurricanes, and 
geomagnetic disturbances on the electric grid. When a 
disruption to the energy infrastructure occurs, we serve as a 
focal point for responding and restoration efforts.
    Additionally, we have worked closely with other government 
agencies in the North American Electric Reliability Corporation 
to evaluate and enhance planning and operational practices, to 
address potential risks of geomagnetic disturbances, such as 
the recent solar storms, on the power system.
    The President's all of the above strategy marries today's 
need for affordable energy with a modernized electric 
infrastructure that will build a stronger future. Our 2013 
budget request allows us to continue to follow a steady, 
constant, focused path towards grid modernization. This 
concludes my statement, Mr. Chairman. I look forward to 
answering any questions you may have.
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    Mr. Frelinghuysen. Thank you for your testimony. Mr. 
McConnell.
    Mr. McConnell. Thank you, Chairman and members. I 
appreciate the opportunity to present the Office of Fossil 
Energy's proposed budget for fiscal year 2013. The Office of 
Fossil Energy's mission is to ensure that we remain able to 
utilize our nation's abundant resources of coal, oil, and 
natural gas by developing technology based energy options that 
enhance the U.S. economy, provide environmental sustainability, 
and ensure energy security.
    Fossil also manages the Strategic Petroleum Reserve, the 
Northeast Home Heating Oil Reserve, and the Naval Petroleum 
Reserves.
    The FY '13 budget request includes $420.6 million for the 
Fossil Energy research and development, which is focused on 
advancing technologies for carbon capture, utilization, and 
storage, or CCUS.
    This is a business driven, not regulatory driven approach 
to capture and to utilize CO2 from fossil 
facilities, and through this utilization, to safely and 
permanently store or sequester the CO2 from the 
atmosphere. The bulk of this R&D is directed at carbon capture 
technology development, CO2 storage, and utilization 
options, as well as CO2 monitoring, verification, 
and accounting, advanced power systems that support CCUS and 
cross cutting research.
    We are currently developing commercial scale demonstrations 
of first generation CCUS technologies, focusing on a range of 
carbon capture options. Through our regional carbon 
sequestration partnerships, we are also pursuing CO2 
storage in a variety of geologic formations, and the 
CO2 utilization will be accomplished via enhanced 
oil recovery, or EOR, in oil bearing formations.
    The benefits of EOR are very significant. EOR increases 
domestic oil supplies. It creates jobs, improves our balance of 
trade, and ensures that CO2 is safely and 
permanently stored. Our mission will ensure that measuring, 
monitoring, and verifying the CO2 in these 
formations will be permanent and safe.
    Because of CO2, EOR's substantial economic 
benefits and its potential to catalyze the commercialization of 
CCUS technology for the future, EOR must be an important 
element of our R&D. With six major CO2 EOR 
demonstration projects underway across the country, we are 
moving in that direction.
    We're also exploring additional pathways to CO2 
utilization, and our current R&D to lower the cost of carbon 
capture for the future is fundamental to this.
    So in addition to these first generation technology demos, 
we are also concurrently conducting and supporting long term 
R&D to develop second generation technologies, to further lower 
the cost of CO2 separation, and enable the 
utilization and low cost sequestration for the future. Our oil 
and natural gas technologies budget includes $12 million for 
oil and natural gas technology R&D, centering on the 
sustainable development of unconventional oil and natural gas. 
This request also has $5 million for methane hydrates. Efforts 
in FY '13 will focus on continuing collaborative R&D with the 
EPA, the DOI, and the U.S. Geological Survey to minimize the 
potential impacts and to ensure the sustainability of shale gas 
through fracking.
    This is in alignment with the recommendations of the 
Secretary of Energy Advisory Board Subcommittee which called 
for improved safety and environmental performance of fracking 
in shale gas formations. And we are currently developing a 
joint MOU amongst those agencies to ensure interagency 
alignment and collaboration.
    The FY '13 request also includes $10.1 million for the 
Northeast Oil Home Heating Reserve, which provides the 
Northeast with a 10 day supply buffer against disruption in 
heating oil supplies. The reserve's stock now is comprised 
exclusively of low sulphur heating oil, and it provides for 
storage and operation of a one million barrel reserve. This 
request also includes a $6 million rescission of prior year 
funds.
    The FY '13 budget also includes $195.6 million for the 
management, operation, and security of the Strategic Petroleum 
Reserve. The SPR has a capacity of 727 million barrels to 
protect our nation against disruption in U.S. oil supplies, and 
it also allows the U.S. to meet its IEA obligation to maintain 
emergency oil stocks.
    Key projects for the upcoming year at the SPR include 
moving the degasification plant, pursuing a capacity 
maintenance program, cavern volume creep, and cavern 
remediation.
    Finally in FY '13, the SPR will initiate plans to 
repurchase oil sold in the IEA's 2011 Libya Collective Action, 
using the remaining proceeds from that sale.
    The Office of Fossil Energy is committed to developing the 
science and technology that allow the nation to fully utilize 
its abundant fossil energy resources in an environmentally and 
economically sustainable manner. The FY '13 budget request will 
be supportive of DOE's goals to address issues of energy 
security and environmental security and sustainability. Thank 
you.
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    Mr. Frelinghuysen. Well, Mr. McConnell, we could hear you 
loud and clear. I am not sure you need that microphone. You 
better push it away. So it is fine, I thought your statement 
was right on target. To Dr. Kelly and Mr. McConnell, I know we 
often invoke the future. What are each of you doing in your own 
way, in your areas of responsibility, to lower gas prices right 
now?
    Dr. Kelly. Well, we are, of course, an integral part of the 
President's all-of-the-above energy policy. The administration 
is deeply concerned about the effect that gas prices or 
gasoline prices are having on families and businesses around 
the country, so we are pursuing things that can----
    Mr. Frelinghuysen. What sort of things? What are you doing 
now that could maybe give us a sense there might be some relief 
out there?
    Dr. Kelly. Well, in the short term----
    Mr. Frelinghuysen. And more importantly, how is it 
reflected in your budget?
    Dr. Kelly. Well, our budget is, of course, principally an 
R&D budget.
    Mr. Frelinghuysen. I realize that.
    Dr. Kelly. And so we are looking at things that have--the 
things that are paying off now are things that we have invested 
in in the past. We have lots of things coming out of the 
pipeline all the time. One of the things that we are doing is--
--
    Mr. Frelinghuysen. Is there anything you have done in your 
recent history that is reflected in the price of gas and its 
production now?
    Dr. Kelly. Well, we have a successful biofuels program that 
has--roughly 10 percent of the gasoline sold in the U.S. is now 
ethanol based. We are now moving toward cellulosic ethanol at a 
very rapid rate. We think we will have a competitive product 
there. We have done a lot of work on material for vehicles that 
have helped lower the weight of vehicles. And the very large 
gain in fuel economy that has been proposed in the recent fuel 
economy standards are made possible at least to some extent by 
the technology that we have developed to lower the weight of 
vehicles, and to make engines more efficient, and, of course, 
now to move towards electrification.
    Mr. Frelinghuysen. In your position, I assume people often 
come to you to get your opinion on an issue which is pretty 
critical to our constituents, how do we lower gasoline prices 
now. How would you react to that? How do we do that? I am going 
to ask the same thing to Mr. McConnell.
    Dr. Kelly. Well, there is not a----
    Mr. Frelinghuysen. We understand, obviously, we have got 
the possibility of the Strait through Hormuz and things that 
have happened in the Gulf that shut down production, but is 
there anything specific that you would like to suggest that 
would help us reduce gasoline prices?
    Dr. Kelly. Well, the----
    Mr. Frelinghuysen. In the short term.
    Dr. Kelly. In the short term, you know, again, our 
operation is an R&D operation.
    Mr. Frelinghuysen. Yeah.
    Dr. Kelly. So the impact we have had is based on 
initiatives that we have funded in the past. And I think we 
have had a significant impact on making fuel economy more 
efficient, making it possible to introduce alternatives to 
petroleum very rapidly here in the next 10 years. To me, the 
thing that we need to do is to have a sustained, predictable, 
and very efficient investment in R&D and moving these 
technologies out as soon as we possibly can, doing it in 
partnership with industry.
    Mr. Frelinghuysen. And in terms of gasoline production, is 
that reflected in your budget?
    Dr. Kelly. That would be within the Fossil Energy Office. 
What we are doing is looking at ways of using electricity as a 
fuel, natural gas as a fuel, and, of course, biological 
resources as a fuel.
    Mr. Frelinghuysen. Mr. McConnell.
    Mr. McConnell. I believe a large part of current gasoline 
prices is concern about overseas speculation and a lot of 
concern about energy security. A big part of what we have 
focused our efforts on and really begun to launch is this whole 
concept of utilization of carbon dioxide in carbon capture 
utilization and storage. The concept of being able to take 
advantage of domestic oil supplies that we have here in this 
country through the utilization of CO2 and enhanced 
oil recovery will go a long way toward improving our energy 
security, as well as creating jobs and other benefits 
associated with it, and not losing our mission of also 
permanently and safety storing CO2 from coal fired, 
oil fired, natural gas fired power plants and commercial 
industrial facilities. That is one part of the mission that we 
have shifted. And I think to the----
    Mr. Frelinghuysen. If we were to give you $50 million to 
add to your portfolio, what would you do with those dollars to 
address the current high prices of gas? Could you do anything 
with those dollars?
    Mr. McConnell. Well, sir, I suppose if you asked me as a 
person if I had more in my checkbook at home to do more for my 
family or my neighbors or my church, I would tell you yes. And 
there are things that we have in our portfolio that are very 
important and we are enthused about. And if you are asking me 
if I could do more if I had more, yes.
    Mr. Frelinghuysen. I am asking you--you have a position, 
and, you know, you have a responsibility. If we were to add $50 
million to your operation to address an immediate issue, how 
would you spend the money?
    Mr. McConnell. I would not change anything in our portfolio 
in terms of what we are doing. The activities, and the amount 
of demonstrations, and the continuation of the mission that we 
are on is strategically correct. And I believe that if we 
continue on that mission, we will go a long way toward 
addressing your question, as well as all of the questions 
associated with the all the above strategy. So strategically, I 
would not change anything. But if you are asking me if I could 
do more if I had more, surely I could.
    Mr. Frelinghuysen. So if we were to give you money, there 
would--nothing you could do in the short haul to address 
lowering gas prices?
    Mr. McConnell. The short haul that you are referring to 
would be the strategic alignment of what we have in our 
department today, which I believe, in the short and long run, 
goes a long way toward improving our energy security and our 
supply of oil, natural gas, and the generation capacities that 
we have in fossil.
    Mr. Frelinghuysen. Mr. Visclosky.
    Mr. Visclosky. Thank you, Mr. Chairman. Doctor Kelly, the 
Committee has been concerned over the multi-year grants that 
had become common in the Department's Energy and Science 
Offices. The practice not only inhibits programs from adapting 
to new technology and market conditions, but it also promises, 
most importantly to the Subcommittee, future money that your 
programs simply do not know will be appropriated.
    To address the issue, in the fiscal year 2012 
Appropriations Conference Report that was signed in the law, 
there was direction for the Department to transition away from 
these types of grants. The Department, in late February, 
announced a grant opportunity to lower the cost of solar energy 
called Bridging Research Interactions through Collaborative 
Development Grants in Energy. The grant announcement promises 
$9 million in grants, but the Congress has not yet appropriated 
$6 million of those.
    In March, the Department issued a press release entitled 
Energy Department Announces $180 million for Ambitious, New 
Initiative to Deploy U.S. Offshore Wind Projects. Another March 
release said that offshore wind gets $180 million boost from 
DOE.
    The problem is that only $20 million of that $180 million 
is actually available, and the rest depends on appropriated 
funds in future years. How and why was it decided to highlight 
these two programs with monies that have not been appropriated 
to the department?
    Dr. Kelly. Well, we, of course, read the Committee report 
and take it very seriously and are in the process of 
transitioning to a system where we are going to be fully 
funding many--a much larger fraction of our program. The 
Committee report also did recognize that there were some areas 
where multi year funding was going to be essential. And we 
fully informed the Committee of our intention certainly on the 
offshore wind project. We are not going to be able to make the 
full transition in one year, but we are certainly moving as 
quickly as we can. Each program has a slightly different set of 
subprograms. But in terms of the offshore wind, we communicated 
fully with the Committee--certainly at the staff level.
    Mr. Frelinghuysen. Would the gentleman----
    Mr. Visclosky. Absolutely.
    Mr. Frelinghuysen. You know, last August you announced some 
sort of a biofuels initiative, is that right?
    Dr. Kelly. With the Department of the Navy.
    Mr. Frelinghuysen. With the Department of the Navy, yeah. 
These sorts of announcements raise expectations here. We have 
to pay the bill here. You have not raised our expectations in 
terms of what the Department of Energy is doing relative to 
maybe some immediate issues like gas prices, but you seem to be 
coming out of a panic pretty quickly to sort of announce new 
programs without, shall we say checking to see whether we have 
the necessary appropriations to meet them. Back to you, Mr. 
Visclosky.
    Mr. Visclosky. Doctor Kelly, if I could follow up for one 
second. If we are short $160 million here on the offshore wind, 
and the Department does not get the full request, have the 
staff thought about what the configuration of that project will 
look like?
    Dr. Kelly. Well, the early stages of the project are the 
least expensive parts. And, of course, everything that--the 
competition makes it very clear that everything is subject to 
appropriation. So there are very clear stage gates in this 
project, and if funds are not available, we can stop.
    Mr. Visclosky. Okay. Also, relative to congressional 
direction, for the budget request for 2013, there are a number 
of initiatives in the budget documents from DOE that state they 
were started in fiscal year 2011. The 2013 request includes 
funding for the advanced grid modeling research and the 
innovative manufacturing initiative.
    As you know, in fiscal year 2011, your program was funded 
under a full year of continuing resolution that prohibited any 
new starts without congressional approval. And I am not aware 
that the two initiatives that appear were begun in 2011 as new 
starts were ever communicated to the Subcommittee, nor approved 
by us. Were these two started in 2011 or am I mistaken?
    Dr. Kelly. Well, I think that the grid modeling is a new 
program. The innovative manufacturing initiative funding was 
issued in 2012. Am I right on that? Yes.
    Mr. Visclosky. Okay. So I am mistaken. On the grid?
    Ms. Hoffman. For the advanced grid modeling, we will be 
running a solicitation that should be coming out this year for 
the advanced grid modeling activity. The activities that were 
related were under the renewables integration and the work from 
our transmission reliability part of our organization, looking 
at the sensors and the analytics around visualization.
    So we have existing activities that were funded under our 
transmission reliability line that were looking at sensors and 
how we will visualize system impacts.
    But for the grid modeling activities, those activities will 
be funded by a solicitation that will be released this year.
    Mr. Visclosky. So, Ms. Hoffman, you are suggesting that the 
advanced grid modeling research was not begun in 2011?
    Ms. Hoffman. Yes.
    Mr. Visclosky. And, Doctor Kelly, you are saying that the 
innovative manufacturing initiative was not begun in '11?
    Dr. Kelly. No. The solicitation was issued in 2012.
    Mr. Visclosky. Okay. Mr. Chairman, I am done for now.
    Mr. Frelinghuysen. Mr. Womack.
    Dr. Kelly. It did use 2011 funds.
    Mr. Frelinghuysen. So it does represent a new start? You 
started something without giving us a heads up, is that----
    Dr. Kelly. Well, we issued this thing in 2012, and we are 
trying to use the funds available from previous years.
    Mr. Frelinghuysen. Mr. Womack.
    Mr. Womack. Thank you, Mr. Chairman and thanks to the panel 
here this morning. In all three cases I want to thank you 
personally for the splendid cooperation you give me and my 
staff on these very important matters. I want to read a couple 
of snippets out of this morning's Wall Street Journal which 
will form the basis of a lot of my questions this morning.
    And the headline says, Steel Finds Shale Sweet Spot. I 
don't know that you have seen the article, but let me just read 
a couple of snippets. Production for so-called tubular goods 
used for pipes, tubes, and joints in gas drilling has doubled 
in two years at U.S. Steel. With prices of natural gas down 
more than 35 percent to 2.21 a gallon, a pretty significant 
number when compared to a lot of our overseas competitors.
    And after posting losses in the last three years, the 
company stock price, and in the interest of disclosure, I am 
not a stockholder, I am only reading, is up 13 percent in the 
last 3 weeks. And then the price of natural gas, down 35 
percent in America, 2.21 a gallon, in Europe it is 11.25 and in 
Japan, nearly $16. Now help me out, Doctor Kelly. We have a 
crisis on our hands right now. An absolute crisis, and people 
in my district and across America are going to the pump and 
more and more of their discretionary income is being taken up 
by higher and higher gas prices.
    The numbers and the basis of this article that I quote this 
morning, relates basically to stationary power for U.S. Steel. 
But with these kinds of price differentiations, if that is the 
word, it seems to me that we are missing an opportunity to 
harness an energy source. And I will come back to Mr. McConnell 
later about what the numbers suggest in so far as our long-term 
capacity.
    But with these kinds of prices and this kind of supply 
availability, what is your vision for how natural gas fits in 
to the overall, all of the above strategy that this president 
seems to want to champion?
    Dr. Kelly. Well, it certainly is fortunate that we have 
this resource. And again, we certainly share your sense of 
urgency about trying to make sure that transportation fuel 
stays as low as it possibly can. This metro gas is in fact a 
key element of this. We have discussed--well one of the things 
that is interesting of course is that we have been putting a 
lot of emphasis into domestic drilling and U.S. oil production 
is the highest it has been in eight years.
    And in fact, imports is the lowest that they have been in 
12 years. So we have been pushing very hard on this.
    Mr. Womack. But we could do more.
    Dr. Kelly. Yes, we could do a lot more.
    Mr. Womack. So much more.
    Dr. Kelly. So natural gas in transportation specifically, 
it certainly seems to make sense for heavy trucks. One of the 
things that we have been wrestling with is what the federal 
government can do to help, because the private sector, given 
those price differentials you have been talking about, has been 
very active. We know technically how to use natural gas in 
trucks and cars, so there is not really an R&D issue here.
    It is purely a matter of getting the infrastructure in 
place. So I would say that what is going to happen fastest is 
that you are going to see truck fleet vehicles, fleet vehicles 
like taxis, and heavy trucks move towards natural gas quite 
quickly. But the natural gas is a wonderful addition for easy 
and expanded use of renewables because you can turn it on and 
off very quickly. So natural gas powered electricity generation 
and renewables is a nice combination.
    Mr. Womack. Well, if I remember in the budget correctly, we 
have only allocated in this overall budget, Mr. Chairman, about 
$12 to $15 million toward this natural gas phenomenon. And I 
want to say, and Mr. McConnell you correct me if I am wrong, I 
want to say most of that money is dedicated toward insuring 
that fracking is environmentally friendly. Is that----
    Mr. McConnell. That is correct.
    Mr. Womack. Is that pretty accurate?
    Mr. McConnell. Yes it is.
    Mr. Womack. Okay. Now I have done a lot of budgeting in a 
previous lifetime, and usually you could look at someone's 
budget and get a clear idea of what their vision is. And in 
this budget, I do not get a clear idea that the vision is to 
harness this resource against the backdrop of our competitors 
overseas who do not have this capacity.
    We do, and it is an incredible resource. And it is not just 
in my district, but it is all over this country. And I would 
like to know, what is our capacity long-term? What are the 
current projections as to how much gas there is, and if we were 
able to successfully harness it and make it important in both 
stationary and transportation power, how long could we sustain 
with available resources?
    Mr. McConnell. Well I would not do justice to the answer to 
your question with a projection. I could give you some ideas in 
terms of what is currently known today. And then there is 
another whole region of geologies that have not yet been 
explored and that potentially the proving of those additional 
reserves might answer your question quite a bit differently.
    What I can say, is that I have heard the word fortunate 
used several times this morning about natural gas prices, and I 
think it is a combination of fortune, but it is also largely to 
do with the funding that the Department of Energy has had even 
back into the '70's when fracking was originally developed as a 
technology at The National Energy Technology Laboratory. And I 
could have sat here five years ago and everybody would have 
been certain that natural gas would have been $13 or higher 
here in the United States for the next 20 years.
    And then this technology that had been developed in the 
'70's came about and we are in an incredibly fortunate position 
today. And that is through largely a lot of the development 
work that the DOE did along with industry. In terms of the 
future, the other thing we all know is, is it is a bad deal in 
energy to bet on any one thing. And having a portfolio for the 
future is incredibly important.
    And so it is important that we continue to harness natural 
gas as you have described. I believe it is also important to 
continue to focus on ways to improve and help our domestic oil 
production and oil supplies. But in terms of the rest of our 
portfolio, renewable power, solar, wind, all of the things that 
we have in our portfolio, it is incredibly important for the 
future for anybody doing business planning to have a portfolio 
approach.
    Mr. Womack. Okay. Mr. Chairman, I have got one more 
question, and I am going to give this question to Doctor 
Majumdar when he comes in on ARPA-E, because I think it has got 
an ARPA-E component to it because of the risk involved. And I 
am going to throw this out on the table and any three of you, 
if you would like to comment, fine. If not, it is just in my 
mind. I know why the discerning public, using a normal gas-
powered engine, cannot fill up, if you will, at home. I get all 
of that. That is loaded with complications.
    But we are talking about electrification where you plug in 
a car at home and power it up so that you can get a certain 
amount of mileage around town. But I have got natural gas at my 
house. Is it possible with a little bit of investment, maybe in 
the ARPA-E area going forward, is it possible that we could 
develop the type of cylinder, if you will, that you could drive 
home at night, or I could drive into Mr. McConnell's 
neighborhood and knock on his door and say, hey I am running a 
little bit low, can I gas up here? Then we might have solved 
the infrastructure problem. So is that crazy?
    Dr. Kelly. Actually, it is not crazy. It may be difficult, 
but it is certainly something that we have been looking at. And 
one of the dilemmas on putting natural gas in cars, is 
getting--as you said, getting the tank in. We have been working 
with ARPA-E on trying to find ways to make a pressurized tank 
that looks more like a conventional gasoline tank.
    And some of these advanced materials that we have got like 
carbon fiber, will let you make more complicated shapes so you 
are not stuck with these big cylinders. Safety and other issues 
associated with actually letting people charge at home is 
challenging, but it is certainly not to say that it is 
impossible, and we are definitely looking at it.
    Ms. Hoffman. I definitely think from the electric vehicle 
side, it is possible and folks are looking and doing--plug-in 
hybrids at home and looking at plugging and charging the car. 
The greatest opportunity is giving consumers that choice of 
what fuels, and being able to decide what fuels are most cost 
effective for them to use as they run their vehicle on a daily 
basis.
    Mr. McConnell. And I will go back the previous question 
that you--or comment that you raised. I think that 
environmental sustainability in the fracking industry today is 
not mutually exclusive from the ability to harness that energy 
supply for the future and make sure that people in 
neighborhoods and people down the street can live in an 
environment with fracking that is occurring.
    And so a big part of our focus will be that sustainable and 
environmentally correct manner in which we are able to get 
natural gas and be able to enjoy that abundant resource that 
you have referred to.
    Mr. Womack. Thank you, Mr. Chairman.
    Mr. Frelinghuysen. Thank you, Mr. Womack. Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman. I have a number of 
questions and I do not know what order to do them in. Let me 
start with you, Mr. McConnell. It has been a number of years--I 
am now in my 20th year of Congress, I am convinced that at 
least for the last 10 years, we have been talking about carbon 
capture, sequestration, and such. And yet, I have no real sense 
of what the progress has been.
    Now you spoke in rather general terms about carbon capture, 
separation. You used sequestration and utilization. I think 
there were really three functions among those terms. One 
capture, one which must include some separation, and then 
sequestration and how you store it, and then you also used 
utilization. And you said, I think, that there were options in 
which your office is involved for each of those, if I may use 
capture and storage and utilization as terms that I understand 
best.
    Is there a plan for the research that is going on in your 
department that lays out what those options are and what the 
stages are of the research? So that sort of summarizes what the 
status of the research is in each of these areas, because each 
one of the options that you have--if you have five different 
options for capture in the first place, then each one of those 
might be used in one or more of the utilization modes that you 
are talking about, and also of the intermediate mode of 
separation, sequestrations, storage.
    So is there some kind of a broad roadmap that one can see 
as to where those things are? I would love to see how much 
money we have spent on each of those and which ones seem to 
have the best prospects for the future. Now I do not expect you 
to be able to give me much of an answer other than is there 
such a plan and is it possible to see such a document that 
would show those factors?
    Mr. McConnell. Well, let me try to give you a halfway 
decent answer, if I could. I think any of us sitting here, 5-10 
years ago, as a lot of the development went on in CCS, Carbon 
Capture and Sequestration, anticipation of climate legislation, 
etcetera, driving industry and many in industry concerned about 
sequestration of CO2 from the atmosphere.
    And as we sit here today, the absence of that legislation 
has caused us to look into other areas of CO2 
capture and sequestration and pursuing business-based 
opportunities to actually utilize that CO2 in the 
sequestration. That is really the strategy that we have moved 
to and begun to shift to.
    To answer your question, yes, there is a large portfolio of 
carbon capture technologies that is being explored in 
industrial applications, whether it is for stationary power, 
industrial applications, manufacturing facilities. All of these 
opportunities for us to bring in second generation and third 
generation technology through the R&D development to be able to 
lower the cost of CO2 separation, and ultimately to 
be able to utilize that CO2.
    Just to digress just a little bit, the enhanced oil 
recovery industry has for years, utilized CO2. But 
in today's environment, there is not enough CO2 to 
continue to develop this industry at the pace in which it could 
make a meaningful impact to our domestic oil supplies. So now 
we have a business opportunity to drive forward in terms of 
developing this carbon capture technology for the future, for 
the purposes of not just enhanced oil recovery, but in the 
process of doing so, also to safely and permanently store this 
CO2 through a process such as this.
    Mr. Olver. Well that is what I am looking for. I am trying 
to find out whether you have some sense of where we are in the 
sequence of how much research and development is required 
before there is a commercial end product that one can use in 
any of these. And I do not see how these options in capture and 
in storage and in utilization fit together at all.
    Mr. McConnell. Well in fact sir, what will be occurring--
over the next several years, we are in the process of 
developing and actually constructing several of the large 
scale, commercial scale facilities that have been funded and we 
anticipate starting up those facilities by the 2014-2015 
timeframe.
    Mr. Olver. How much money has been appropriated already to 
do this?
    Mr. McConnell. There was over $3.4 billion of----
    Mr. Olver. How much of that has been expended?
    Mr. McConnell. A small portion of it. As many of these 
projects in the stage gates that they are in are in the 
development stages. And so the ordering of the equipment, the 
installation of that equipment, and the purchases, we will see 
a large amount of that funding actually being spent over the 
next two to three years.
    Mr. Frelinghuysen. John, if we could go to Mr. Nunnelee in 
a minute, please.
    Mr. Olver. Let me--if I can write out a question properly 
that you can answer in detail, that would be great, with 
documentation. And I will try to do that. Let me just say that 
you mentioned at one point the issue of methane clathrates. 
Well there is an enormous amount of methane clathrates in deep 
waters and in the permafrost.
    And there is so much and methane is so critical as a very 
strong greenhouse gas, that that one really deserves a lot of 
attention, but I do not think any--very much at all has been 
given to it yet. So let me just leave it at that.
    Mr. Frelinghuysen. Thank you, Mr. Olver. Mr. Nunnelee, 
thank you for your patience.
    Mr. Nunnelee. Thank you, Mr. Chairman. Mr. McConnell, you 
oversee the Strategic Petroleum Reserve. Just give me an 
overview. What is the function of that? And tell me how you 
manage the deposits and withdrawals of the SPR.
    Mr. McConnell. Several years ago, the United States made a 
commitment to the IEA to participate in a global capability for 
oil storage for the purposes of international disruption, 
whether they are weather-related, wars, disruptions as such. 
The United States maintains roughly half of the global supply 
of crude oil for those interruptions and we operate four sites 
along the Gulf Coast in Texas and Louisiana, where we utilize 
underground, large, salt dome cavern storage of crude oil. We 
have a nameplate capacity of 727 million barrels of oil, which 
is roughly 90 days of supply here in the United States for 
imported oil. And that is part of the responsibility that we 
have undertaken as a nation to the International Energy Agency. 
It is a responsibility that we have. Our department funds and 
oversees the day-to-day O and M, Operations and Maintenance of 
that facility, and projects associated with it, to keep it in a 
ready-to-run and safe and in a sustainable position so that 
when policy decisions are made to release oil or bring oil in, 
et cetera, we make sure it is ready to go and safely done.
    Mr. Nunnelee. All right, and you released 31 million 
barrels last year. Is that right?
    Mr. McConnell. Thirty, yes, sir.
    Mr. Nunnelee. Thirty, all right. And I keep hearing that 
you are considering releasing more this year. Is that something 
that is being considered?
    Mr. McConnell. It is being considered and our job at Fossil 
Energy is to ensure that if the decision is made, we will be 
ready to respond and if the decision is something different, we 
will be responsive to that, as well. And, so, our job at Fossil 
is really to have all of the facilities in a ready-to-go 
condition and safely operated.
    Mr. Nunnelee. All right, so, if it is being considered, 
what is the triggering emergency that is causing it to be 
considered?
    Mr. McConnell. Well, that could be anything. This past 
summer, of course, the Libyan Crisis generated an international 
response to the IEA that the United States responded to as part 
of an international reaction to that activity. As things move 
forward, those policy decisions and determinations are not made 
at Fossil Energy, but, certainly, we have a responsibility to 
be ready to respond however they are.
    Mr. Nunnelee. Okay. And then the 30 million that was 
released last year, has that been replenished?
    Mr. McConnell. No, sir, it has not. That money has been set 
aside and there is a repurchasing plan in place between 2013 
and 2017 where that oil, over time, will be replaced, but we 
continue to maintain the caverns and the capabilities of that 
remaining oil to be able to respond. So, just roughly, rather 
than having 90 days of supply, today, we have approximately 80 
days of supply.
    Mr. Nunnelee. Okay, so, the release last year lowered our 
availability by 10 days.
    Mr. McConnell. Yes, it did.
    Mr. Nunnelee. Or roughly 11 percent.
    Mr. McConnell. That and a combination of several other 
maintenance and project-related activity, today, we sit at 
approximately 81 days of capacity, yes, sir.
    Mr. Nunnelee. All right.
    Mr. Chair, I will yield back at this point and go the next 
round.
    Mr. Frelinghuysen. Okay, thank you, Mr. Nunnelee.
    Dr. Kelly, I want to just get back to one issue that I 
mentioned a few minutes ago. And grants from your Department of 
Energy Supply and Research Program I think we know when you 
make announcements, can affect nationwide markets. And I want 
to talk about that August 16 press release, where you touted 
the $510 million program, which includes $170 million for the 
Department of Energy to build jet biofuel refineries. This 
practice of putting out press releases when there is no funding 
attached to it, how do you explain why you do that?
    Dr. Kelly. Well, this was a Memorandum of Understanding 
between the Navy, U.S. Department of Agriculture, and the 
Department of Energy, and it was a Statement of Intent to work 
together. Obviously, all three agencies had to work with their 
appropriations organizations in order to provide that funding.
    Mr. Frelinghuysen. There was not much enthusiasm on the 
Department of Defense side. The Navy was interested in it.
    Dr. Kelly. Yes, but----
    Mr. Frelinghuysen. The committee on which both Mr. 
Visclosky and I serve on, Defense Appropriations, did not fully 
embrace the purposes for which you were signing that 
memorandum.
    Dr. Kelly. Well, clearly, the memorandum depends on 
appropriated funds and----
    Mr. Frelinghuysen. Yes, I know, but I think there is a 
potential for affecting markets here, and I think there is a 
degree of inappropriateness here, and I think this is something 
which registers high on the irritation scale.
    My second concern, and I am not sure we heard your last 
words, the issue of new starts, you issued on June 24, 2011, a 
financial assistance FOA, Funding Opportunity Announcement, for 
innovating manufacturing initiatives.
    Dr. Kelly. Yes.
    Mr. Frelinghuysen. How does that not constitute a new 
start?
    Dr. Kelly. Well, it was issued in 2012. Our intention was 
to send----
    Mr. Frelinghuysen. No, wait, wait. The issue date here is 
June 24, 2011.
    Dr. Kelly. June 2011. Okay, I was just misinformed in that 
case.
    Mr. Frelinghuysen. Well----
    Dr. Kelly. Okay, but our intention is to spend FY12 money--
--
    Mr. Frelinghuysen. Well, you spent 2011 money.
    Dr. Kelly. No, this----
    Mr. Frelinghuysen. Fifty million dollars.
    Dr. Kelly. If I am understanding this correctly, these IMI 
grants have not actually been funded yet. Well, the selections 
have been made. I was not aware that there was sensitivity 
about using FY11 money on it. If there is, we can sit down and 
discuss this with you.
    Mr. Frelinghuysen. Well, there is some sensitivity. Your 
budget calls for $100 million for the IMI and you are going to 
tell us a little bit about what it does in a few minutes, and 
we are a bit surprised to find out that half of this is to pay 
mortgages and awards first made with fiscal year 2011 funds. 
So, when Mr. Visclosky asked you was the IMA a new program in 
fiscal year 2011, you said no.
    Dr. Kelly. I was mistaken about the date when it came out. 
But it is certainly going to be funded this year.
    Am I getting this right? This is into a detail that--so, 
the funding will be FY----
    Mr. Frelinghuysen. The information we have--
    Dr. Kelly. Yes, yes.
    Mr. Frelinghuysen. Is that you had spent 2011 funds.
    Dr. Kelly. I have got to double-check this, but, so far, we 
have not spent any----
    Ms. Hoffman. The awards----
    Dr. Kelly. Yes, the awards are being made and if we are 
prohibited from using FY11 funds, we will certainly not use 
FY11 funds.
    Mr. Frelinghuysen. Okay, Mr. Visclosky?
    Mr. Visclosky. Just following-up on the Chairman's remarks 
here for a moment, relative to the program with the Navy, I 
think his concern is that those types of announcements can also 
move markets and lead people to make decisions in anticipation 
of events. There was an Energy Trade Journal article dated 
January 23, and I am quoting from it: ``To get a commercial 
plant in operation, United Airlines and its partners plan to 
tap into the $510 million investment that the Departments of 
Agriculture and Energy, as well as the U.S. Navy dedicated to 
advance to drop in biofuels in August.''
    In our earlier discussion, Dr. Kelly, you also referenced 
``stage-gates.'' Are those milestones when you use the term?
    Dr. Kelly. Yes, they are places where you build certain 
performance expectations into these agreements and to say 
further funding is dependent on meeting those expectations.
    Mr. Visclosky. Are you moving in that direction as far as 
your grants and agreements with individuals that use federal 
monies?
    Dr. Kelly. Yes, absolutely, and we are moving very 
aggressively in that direction and also really making sure that 
we have very effective program management so that we follow the 
progress in each one of these very carefully and make sure that 
when they claim that they have made a stage-gate that they 
actually have.
    The one thing I would like to say on the Navy agreement, 
one of the things, that if we are actually going to be getting 
drop-in fuels for the Navy, the Navy cannot use ethanol. They 
need really a substitute for the jet fuel and for diesel, and 
we are trying to find a way to accelerate the introduction of 
the fuels. Of course, the airlines need the domestic--there are 
a lot of other domestic uses for this. If you can move from an 
alcohol fuel to something that is a direct substitute for jet 
and diesel, that is a huge breakthrough and we think we are 
poised on being able----
    Mr. Frelinghuysen. Will the gentleman yield?
    Mr. Visclosky. Yes.
    Mr. Frelinghuysen. Is it financially feasible? And the 
question might be asked: Why has the commercial sector not 
invested in it themselves or have they?
    Dr. Kelly. Well, because of the Recovery Act, we have a 
number of commercial and pilot-scale operations underway. We 
expect the information from that to allow us to move to a much 
larger scale fairly quickly, and that was what this project was 
intended to do. It is very risky. One of the things about 
energy markets is the uncertainty makes it very difficult for 
investors to take very big risks----
    Mr. Frelinghuysen. Well, that is all the more reason not to 
be announcing things before we really have things nailed down.
    Dr. Kelly. Well, it was to demonstrate first of its kind 
production of this stuff. It was, in fact, not funding a 
commercial operation, it is to invent a commercial operation, 
and, so, we are working with USDA on developing new feedstock 
supply chains and Navy would be----
    Mr. Frelinghuysen. We want to make sure, if the gentleman 
will yield, that it is financially feasible here.
    Dr. Kelly. Yes. Well, we are saying it only makes sense if 
it is economically-competitive with conventional supplies of 
jet fuel and diesel.
    Mr. Frelinghuysen. Is it?
    Dr. Kelly. Not now, but----
    Mr. Frelinghuysen. It sure is not.
    Dr. Kelly. No, it is not, and that is the reason that we 
are doing this development work and----
    Mr. Frelinghuysen. I thank the gentleman for yielding.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Dr. Kelly, my sense is historically the department has used 
bilateral agreements on these milestones where both parties 
would have to agree for a termination. My understanding is you 
are going more in a direction with these stage-gates 
milestones, that if certain criteria are not met, then 
unilaterally, the government can terminate these agreements.
    Dr. Kelly. Yes, and this is understood by the recipient at 
the beginning that if they do not meet the mark there, we have 
to make a tough decision.
    Mr. Visclosky. I, for one, appreciate you moving in that 
direction and I encourage you.
    Dr. Kelly. Thank you.
    Mr. Visclosky. On mechanical insulation, buildings are 
responsible for about 40 percent of U.S. energy demand, and in 
the Fiscal Year 2012 Appropriations Conference Report, we had 
language encouraging the Department to continue working with 
the industry relative to the use of mechanical insulation as a 
means of energy efficiency and job creation. Currently, the 
Industrial Technologies Program has partnered with outside 
groups to execute a mechanical insulation campaign.
    Besides that campaign, what other plans are there in EERE 
to promote energy savings through mechanical insulation?
    Dr. Kelly. Well, we have been working with people that help 
train people in installing this material. We have several 
programs that are encouraging retrofits of existing industrial 
facilities in particular to upgrade their plants. There is 
something called the Industrial Assessment Centers, which take 
teams of engineers and students in to help develop proposals 
for small and medium-sized businesses to upgrade their 
facilities, and, often, the recommendations will include this 
kind of insulation.
    Mr. Visclosky. With encouragment in that regard, I just 
think many of these issues are unseen by the general public, 
but can translate into great energy conservation.
    One other question, if I could, Mr. Chairman, for this 
round. Dr. Kelly, my question is about waterpower. My 
understanding is the fiscal year 2013 request would reduce 
funding for research and development in this area by 66 
percent. Why?
    Dr. Kelly. The reductions are primarily in conventional 
hydropower, and we have done a fair amount of work on the 
technology of turbines, particularly fish-friendly turbines in 
the past. Getting these things used is the most important 
activity. So, we are trying to make sure that we are doing work 
on identifying where you could upgrade facilities or where you 
could put power plants on existing dams that are not powered. 
That is much less expensive than doing the research. We are 
swinging the pendulum towards marine and hydrokinetics, which 
are more of a technology issue, which is, of course, our 
comparative advantage. So, we are looking at tides, waves, and 
other technologies in the water area.
    Mr. Visclosky. For that section of your water power budget, 
would that be an increase in funding as far as research 
dedicated to it?
    Dr. Kelly. I believe it is about equal to last year. I 
could look that up and get back to you, but it----
    Mr. Visclosky. Yes. Are there other possibilities as far as 
inland waterpower besides dams specifically? Because, to be 
honest with you, being an accounting major, you never thought 
about various types of turbines and lifts and buoys and the 
oceans. Makes a lot of sense to me once somebody acknowledges 
it. Are there other things people are looking at as far as 
inland water systems?
    Dr. Kelly. Some of our projects, actually, we have funded 
last year looking at things in rivers, canals, and other inland 
areas.
    Mr. Visclosky. Okay.
    Thank you, Mr. Chairman.
    Mr. Frelinghuysen. Thank you.
    Mr. Womack.
    Mr. Womack. I want to go back to vehicles for a minute. I 
will stay away from natural gas. I think I made my point there.
    Secretary Hoffman and Dr. Kelly, the budget request puts a 
large emphasis on energy storage research and in particular on 
batteries. These are important technologies for the energy 
sector and could be vital in manufacturing, but there are 
significant risks that most advanced batteries invented through 
your programs end up being manufactured overseas. So, let us 
not forget that while we invented the lithium battery used in 
most portable electronics, that most manufacturing for these 
projects has been moved offshore in the last several decades.
    So, what can you do to ensure that the innovations that we 
are developing here in this country lead to manufacturing jobs 
here in this country?
    Dr. Kelly. Well, thank you. First of all, actually, the 
lithium ion battery manufacturing, we are hoping is a success 
story. We had almost lost that business completely, but because 
of the Recovery Act, we are able to make significant 
investments in domestic manufacturing. There is now a very 
active lithium ion battery manufacturing enterprise in the U.S. 
We are going to have to make sure that we continue to maintain 
this and grow it, but the general point you are making is one 
that we care about very deeply, that we are frustrated by 
seeing American-developed technology ending up creating 
production jobs overseas.
    There are several things we can do. One is in the case of 
clean energy technology to make sure we have a high demand for 
it and the president has called for a national clean energy 
portfolio standard that would certainly help. We have a 48C tax 
incentive that is designed entirely to try to encourage 
investment in domestic manufacturing.
    And, in our case, we have been trying very hard to work 
with industries in a way that would encourage them to build 
their prototypes and their first plants here in the United 
States. We have something called the Affordable Manufacturing 
Initiative that is trying to get production back in the U.S. It 
is a place where we had a 40 percent market share a decade ago 
and it is now 4 percent. So, we really need to jumpstart 
domestic manufacturing in that area.
    So, as you may know, there are certain restrictions on what 
we can do with intellectual property, but within those 
restrictions, we are trying to be as creative as we possibly 
can to encourage any of our recipients to produce domestically.
    Mr. Womack. Secretary Hoffman.
    Ms. Hoffman. And I would echo what Dr. Kelly started for 
our activities. We are looking at energy storage system for the 
bulk power system. So, we look at flywheels, batteries, flow 
batteries, different energy storage in support of the electric 
system and we do as much as possible to encourage manufacturing 
within the United States, and, of course, that the deployment 
of the product is directly related to the electric system 
asset.
    Mr. Womack. And then my last question is: I have a company 
in my district that staff of DoE's have visited in the past, 
Arkansas Power Electronics, which I guess part of its genesis 
came out of ARPA-E. But it produces a silicon carbide 
electronics component used in electric vehicles and it is a 
very impressive facility. It is a source of a number of jobs in 
my district.
    As EERE looks kind of toward the future on the Vehicle 
Technologies Program, knowing that I think, if I remember in 
the budget correctly, about 40 percent of the Vehicle 
Technologies Program was electrification, Where do you see the 
silicon carbide component these technology solutions?
    Dr. Kelly. So, in the electronic program, obviously, 
batteries are the best cost driver and they are a significant 
portion of what we are doing, but we are also looking at power 
electronics and control systems where these silicon carbide 
devices would be very crucial to getting high efficiencies and 
low cost and low volume. Of course, we are also looking at 
efficient electric motors. But the silicon carbide is also a 
key part of our Program because the power electronics 
associated with turning the DC, the solar cells, into AC that 
we can use goes through an inverter and the inverters would 
benefit enormously by the advances in silicon carbide 
technology.
    Mr. Womack. So, it has a place.
    Dr. Kelly. It has many places.
    Mr. Womack. Okay. I yield back, Mr. Chairman.
    Mr. Frelinghuysen. Thank you, Mr. Womack.
    Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman. Ms. Hoffman, you deal 
with the electricity grid, essentially, with General Power and 
the quality of the grid. Now just for clarity, conventional 
water power would probably be in your portfolio then, I take 
it, because we do produce a lot of electricity that generally 
goes into the grid through the conventional land-based power 
system.
    Ms. Hoffman. Actually our efforts are generation technology 
neutral. So what we do is actually look at the system to ensure 
the system is flexible to accept any form of generation. And 
then our goal is actually to look at how do we optimize that 
generation portfolio, so we have an efficient system. So 
hydropower was originally under the energy efficiency program. 
We do not do generation technologies under our portfolio.
    Mr. Olver. Okay. All right. I continually get confused as 
to who's got what in their portfolio. To you, my sense is that 
natural gas fired turbines and coal fired turbines and nuclear 
fired turbines, nuclear powered turbines all produce at least 
10 percent; 20 percent in the case of nuclear and 50 percent 
within coal. And water powered, what is the water power amount 
in what presently is our grid electricity?
    Dr. Kelly. I will give you the right number but it is in 
the order of 8 percent.
    Mr. Olver. Eight percent? All right. So that is the fourth 
one. At first I did not have the water power component and 
should have. But there are at least four major components that 
get you to that kind of percentage. Oil is now below that, I 
think, by a good deal.
    In the case of renewable energy, let me switch over to you, 
Dr. Kelly. The major things in renewables seem to be your sea-
based research and development issues in water power. There is 
wind. There is solar. There is geothermal. There is biofuel, 
but biofuel really is mainly in transportation. That would not 
get into grid, particularly. That is not a grid-related issue.
    Dr. Kelly. It is a little bit of biopowered----
    Mr. Olver. Yes. Well there are a few burners that do that. 
But I do not think that we ever expect that the accumulation of 
wood burners is going to get up above the one percent. Do all 
of those have a potential to produce, all the ones that I have 
talked about, have a potential to produce one percent or more 
of renewable energy?
    Dr. Kelly. Well, absolutely. This is the core of the all-
of-the-above strategy. And of course, the big new contributor 
in the last few years is, it has been on-shore wind. Something 
like 35 percent of all capacity added in the last three years 
has been on-shore.
    Mr. Olver. We are above one percent on on-shore wind.
    Dr. Kelly. Definitely.
    Mr. Olver. We have almost no off-shore wind yet.
    Dr. Kelly. Well, we have zero off-shore wind, to be exact.
    Mr. Olver. Okay. Well on-shore and off-shore wind are a 
little bit like a separation between on-shore water power and 
off-shore water power, in a sense. And my real question is sort 
of similar to what I asked Mr. McConnell earlier, which is, is 
there a document, a planning document--it could be fairly long, 
I suppose, that gives a sense of what the expectations might 
be, what the status is for the research and development on each 
of these programs, and if each of these programs has 
significant subprograms that are a significantly different path 
in the way you have to function? Some of them might take years 
and years and years, and some of them are fairly close. Is 
there a document that summarizes that so that one can see what 
it is that is in our overall portfolio? What should be in our 
minds, or if we were trying to think comprehensively about what 
looks to be available in renewable energy?
    Dr. Kelly. Yes. Of course, there is the official forecast, 
the annual energy outlook by the Energy Information 
Administration that has their view of this. We have also done 
some internal planning work to say if we succeed in meeting our 
technology goals.
    Mr. Olver. Well a critical component of that would be, just 
where are we now at this stage of commercialization as to what 
the cost is per kilowatt hour, or whatever. We sort of know 
what it is for coal fired or natural gas fired or nuclear. 
Though in the case of nuclear, it is quite a bit of 
subsidization so it is a little hard to be certain whether you 
are getting it all. Is there something that brings that aspect 
in, the cost now and what our prospects for how long it is 
going to take to bring that cost down to the level of others? 
And does it also include with it a sort of life-cycle costing 
program for what one has to think about over a 50-year period, 
since most of these facilities are going to last that long? Do 
you have a document that would do it?
    Dr. Kelly. Well we have the information you need. In fact, 
some of it is actually summarized in the budget document. You 
will see these curves. And what these curves are doing is 
saying, what is the cost of electricity from the technology of 
today and what do you have to do to get to the end point, and 
how long do we think it will take to get there.
    Mr. Olver. The budget is a very long document. I will pass.
    Mr. Frelinghuysen. You are going to pass the baton onto Mr. 
Nunnelee, are you?
    Dr. Kelly. Yes. Yes.
    Mr. Olver. Certainly.
    Mr. Frelinghuysen. Thank you very much, Mr. Olver. Mr. 
Nunnelee.
    Mr. Nunnelee. Thank you, Mr. Chairman. Dr. Kelly, I 
understand you are looking at regulating decorative gas 
fireplaces and log sets. Just give me an update on the status 
of that rule.
    Dr. Kelly. Well we are sort of proud of the way we are 
setting rules like this. We have a very open process. We take 
comments. We have gotten comments. I believe that this is now a 
matter of litigation, so it is a little difficult for me to 
talk about it. But all I can do is assure you that the comments 
of all parties are being very carefully considered and we are 
going to have to wait for the outcome of this litigation.
    Mr. Nunnelee. You used the term proud. What does that mean? 
What does that imply?
    Dr. Kelly. That means that we have a process for setting 
standards that is based on the best available data that is 
reviewed by experts. It is completely transparent and open. We 
get public comment and we have a process of adjudication that 
we think has worked very well.
    Mr. Nunnelee. I understand your hands are tied if it is in 
litigation. I just want you to give me your assurance that you 
are working with all parties. I am not sure how you come to the 
conclusion that these are heaters, but I will be anxiously 
following your progress on that road.
    Dr. Kelly. Okay. I know that there are many opinions on 
this subject, and they are certainly all being fairly 
considered, is the one thing I can assure you.
    Mr. Nunnelee. All right. Also the 2012 report language 
included a commitment to manufacturing from this committee, 
including an investment of $12 million for state manufacturing 
improvements. And I just want you to give me your assurance 
that in FY2012 we are spending $12 million for solid state 
manufacturing improvements in your budget.
    Dr. Kelly. If you told us to do it, I will assume we are 
doing it, but I would prefer to make sure that I double-check 
this with our guys.
    Mr. Nunnelee. Okay. Can you do that and get back with me?
    Dr. Kelly. I will definitely get back to you with it.
    Mr. Nunnelee. All right. That is all I have, Mr. Chairman.
    Mr. Frelinghuysen. It is good to know what you are doing. 
Yes. Thank you. Mr. Fattah.
    Mr. Fattah. Thank you, Mr. Chairman. Let me apologize for 
being late but I had a cyber security briefing having to do 
with my other responsibilities on CJS. But I am here and I 
thank you for holding this hearing. And I want to thank all of 
the witnesses for the extraordinary work that the Department is 
doing, even in the face of a political dynamic that is 
unfortunate and not really focused on I think the real 
challenges, so let me try to set this up.
    The European Energy Alliance has just announced in the last 
couple of weeks that, based on the efforts of what is being 
done here in the United States, that the European Union, in 
order to compete economically has to now invest in renewable 
energy and energy efficiency. They have set up a series of 
goals related to 2030 because they say that, given the emphasis 
that has been placed here, it is the only way their industries 
are going to be able to compete.
    And, you know, I have been around. I have seen the fuel 
cell. I was out in New Haven, Connecticut visiting a new 
supermarket construction where they are using fuel cell 
technology. And, as you know, many new supermarkets are using 
fuel cells and they are very energy inefficient, generally. But 
now with the fuel cells, they can operate these supermarkets, 
which require a lot of energy.
    And right in the Philadelphia area, Bloom Energy has now 
hired over 1500 people in a plant making fuel cells. UTC is 
making fuel cells. All of this is a result of the investments 
that you have made. And we have seen the same thing with 
industry in terms of trucks, based on investments made.
    I went out and visited the Argonne Lab in Chicago, which is 
focused on batteries. And I know that these batteries have been 
licensed by the Department to the private sector and that they 
have a capacity that ranges between 100 and 300 times more than 
the normal batteries. So I think that a lot of work has been 
done.
    I have been a big proponent of the renewable energy sector. 
Notwithstanding that, I mean, the Department has been working 
this term of art on all of the above, you know, the new nuclear 
plants that have now been licensed for the first time in 30 
years, and on and on and on.
    The politics of this, I cannot figure out. I mean, we are 
competing economically with China and the European union and 
others. I would like you to speak a minute about what our 
competition is doing in this regard and how you see our efforts 
relative to this competition for the kind of quality of life 
that Americans expect as a global leader, vis-a-vie, what our 
competitors--and we are fine with competition but it should 
bring the best out of us. So talk a little bit about what you 
see internally.
    Dr. Kelly. Well countries all around the world understand 
that clean energy technology is a place that is going to be 
driving growth and they want their share of that growth. And 
places like China have made an extraordinary investment in 
capturing key parts of these markets. They have been pushing 
for manufacturing of photovoltaics for efficient lighting. Now 
they are getting into electric vehicles, and so we are, of 
course, very concerned. And the Europeans are also very active.
    If you look at something like off-shore wind, there are 
major projects in Denmark, in Germany, in Korea, in Japan and 
China. So we think that we can out-innovate these guys but it 
is going to be tough competition. Of course, there are very 
aggressive government programs in many of these countries.
    Mr. Fattah. So the largest wind farm is now in Honduras? 
And you also have activity in South America. And on this front 
you have a lot of activity. So I just think that the community 
and we as a country should be aware and I think the committee 
is aware. I know the Chairman is because we have had a chance 
to visit some of these national laboratories and see the work. 
It is critically important that we make these investments 
because we are not shadow-boxing. And it is a cost to our 
industry if energy costs more here. I met with a host of CEOs 
of chemical companies in Philadelphia, which happens to be the 
home of a large share of the chemical industry, yesterday.
    We were talking about how--because of the low cost of 
energy, mainly through natural gas and other vehicles, that 
they are able now to bring a lot of these jobs back home that 
had been outsourced. And so I think it is very, very important 
as we go forward that we keep in mind that the investments we 
make now are not just investments, vis-a-vis, what we can see 
clear to invest, but also relative to what our economic 
competitors are investing, and what it means if we lose this 
competition, if we lose the competition on batteries for 
vehicles.
    The belief among the experts is that we would also lose the 
car industry itself. Whatever country wins on developing these 
batteries, that is where these cars are probably going to end 
up being made. And this is a competition that will impact not 
really many of us, because we are kind of over-the-hill or 
headed that way, but for our grandchildren and their quality of 
life, it will have a big impact. So thank you for the work that 
you are doing and thank you for your appearance, and I thank 
the Chairman.
    Mr. Frelinghuysen. Thank you, Mr. Fattah. Do you agree with 
Mr. Fattah's contentions that things are happening abroad that 
should concern us? And let us just focus for a few minutes on 
the American solar industry. How would you describe its state 
at the moment?
    Dr. Kelly. Well, as I said, we had 40 percent world market 
share about 10 years ago and it is now 4 percent. We went from 
40 percent to 4 percent. It is now around 4 percent, so we are 
very concerned. And, of course, we are now coming out with a 
new generation of technologies, technologies that are very 
efficient, a new generation of thin films and other things. And 
we are trying to make sure that all of these new technologies 
are going to be produced here, and we are making every effort 
to do that.
    Mr. Frelinghuysen. So we commend you for that. How do you 
actually protect that intellectual property?
    Dr. Kelly. Well, you know, there is a Bayh-Dole Act which 
puts pretty clear guidance to what the----
    Mr. Frelinghuysen. Well, you are aware, obviously the 
Department of Commerce has announced new rules to address this 
sort of a subsidy issue, but what about the greater 
intellectual property issue here?
    Dr. Kelly. Well in the case of Bayh-Dole, the smaller 
companies and the universities are given a hundred percent of 
intellectual property. That is just in the statute. And the 
idea was, you do not want the feds holding it; you want the 
private sector to have it.
    Mr. Frelinghuysen. We are not against That.
    Dr. Kelly. Yes.
    Mr. Frelinghuysen. But I am just saying how do we actually 
maintain it here. Both Mr. Visclosky and I and every member of 
this committee are interested in what we could do to promote 
manufacturing jobs here and keep them here. Is that a pipe 
dream or what?
    Dr. Kelly. We share your concern. And as Mr. Womack was 
pointing out, trying to find strategies for keeping this 
production in the U.S.----
    Mr. Frelinghuysen. So what would you suggest would be the 
strategy?
    Dr. Kelly. Well, one thing is certainly to make sure that 
we have got a very strong domestic demand for clean energy 
technology and----
    Mr. Frelinghuysen. Which we do.
    Dr. Kelly. Which we do, a lot of states have various kinds 
of renewable or clean energy portfolio standards. Getting a 
national one, we think would help the 48(c) tax credit, in our 
view, very successful in encouraging domestic manufacturing 
investments here in the United States.
    Mr. Visclosky. Which tax credit?
    Dr. Kelly. It is called 48(c). We requested actually $5 
billion for this, if I am correct. This is part of a program 
that was in place two years ago. I believe it was part of the 
recovery act, but it gave----
    Mr. Visclosky. Was that used to import windmills?
    Dr. Kelly. No, no. This was to give tax credits to 
companies that build factories in the U.S. And it was solar 
factories, wind factories and----
    Mr. Frelinghuysen. How would you characterize where those 
factories stand today? We have made these investments. I assume 
you are familiar with how successful they have been.
    Dr. Kelly. Well it is a little difficult to do a survey 
since it was a tax and went through IRS, but we are trying to 
track them down and make sure that we understand the effects. 
Of course they do not get the tax write-off if they do not do 
anything.
    Mr. Frelinghuysen. But collectively, certainly, the 
Department must have a pretty good idea who is out there. I 
mean, New Haven was mentioned. I think Connecticut has an 
indigenous fuel cell company, I assume.
    Dr. Kelly. Right.
    Mr. Frelinghuysen. There used to be five or six that I was 
familiar with. So you have an overview of the landscape here?
    Dr. Kelly. Well on that particular program I know they are 
collecting data. Exactly where it is, I will have to get back 
to you. But I know we are----
    Mr. Frelinghuysen. No. I wonder, because if we are going to 
match what you are doing to what is out there, it might be good 
to know what is out there.
    Dr. Kelly. Well we are trying to track down--as I said, 
trying to work through the IRS to collect this information.
    Mr. Frelinghuysen. Yeah. But in reality, the Department of 
Energy is pretty good at coming up with--I forget what that 
component is--a lot of energy information, for that portion of 
your operation. I am sure some people would like to eliminate 
it, but in reality I like the idea.
    Dr. Kelly. Well in this case we are trying to go out and 
contact the firms and find out exactly what is happening.
    Mr. Frelinghuysen. Well let us maybe work on that. I just 
want to focus for a minute. Our committee has been very 
supportive of the mission and goals of the Industrial 
Technologies Program. Every year we seem to undergo some sort 
of name change but now it is renamed the Advanced Manufacturing 
Program. But whatever it is called, we are supportive of things 
that strengthen American industry and manufacturing, and there 
is a lot more to be done on that front.
    But setting the goals aside for a moment, I would like to 
discuss the implementation. We have serious concerns about the 
proliferation under the program of the last two years of a 
variety of different centers, all of which must require some 
sort of physical and permanent space.
    In the last few years, within just the Advanced 
Manufacturing Program, the Department has established clean 
energy applicant centers, industrial assessment centers, 
manufacturing demonstration facilities, advanced manufacturing 
clusters and an energy innovation hub. To say the least, I have 
serious concerns about the out-year commitments that these 
centers require, a commitment which is $141 million in fiscal 
year 2013 for a program that had $160 million appropriated in 
the current year. This raises serious concerns about the 
propensity to start centers here, this issue of raising 
expectations. So I would like for you to comment on these 
different centers, first the Industrial Assessment Centers. 
Tell us a little bit about--you have, I think, $6 million in 
there?
    Dr. Kelly. Mm-hmm.
    Mr. Frelinghuysen. Tell us about how many there are when 
you first asked them for them in your budget request, when they 
were established, how long we anticipate they are going to be 
around.
    Dr. Kelly. They have been around for a number of years, I 
believe over a decade. What these are----
    Mr. Frelinghuysen. So how many are there?
    Dr. Kelly. I do not know off the top of my head.
    Mr. Frelinghuysen. Could somebody in back of you maybe 
provide us with that information? Because I am going to ask you 
about the manufacturing demonstration facilities, which you 
devoted $28 million for those in fiscal year 2012 yet they are 
not mentioned in your budget request. So maybe we can put some 
meat on the bones here.
    Dr. Kelly. Certainly. Well, the clean energy application 
centers were----
    Mr. Frelinghuysen. Well, what about the industrial 
assessment centers, the manufacturing demonstration facilities 
and then maybe give the committee some information on the clean 
energy application centers.
    Dr. Kelly. All right. The new facilities are the 
manufacturing demonstration facilities. The other ones have 
been in place for some time.
    Mr. Frelinghuysen. They are new but they are not mentioned 
in your budget?
    Dr. Kelly. They are an implementation of the program that 
we described in the budget. Our thinking is that we have 
developed some very specific ways of implementing what we said 
we were going to do in there. So there are three concrete, 
three specific things that we are going to do that account for 
most of the growth.
    Mr. Frelinghuysen. Well, where are they going to be and how 
long--are they going to be around indefinitely? Here we 
obviously have set them up.
    Dr. Kelly. Well, let me go through the new ones. As I said, 
there are a number of these things that have been created by 
statute and we are continuing that have been in the program for 
some time. The industrial assessment centers are university 
based. They train students. They do audits and retrofits for 
small- and medium-size businesses. They have been very 
successful from our point of view.
    The clean energy application centers were established 
primarily to look at----
    Mr. Frelinghuysen. How much money do they get now?
    Dr. Kelly. I would have to look that up.
    Mr. Frelinghuysen. Does anybody know?
    Dr. Kelly. Yes, I can look it up. I just do not have it in 
my hand.
    Mr. Frelinghuysen. Okay. Well, let us start on the advanced 
manufacturing clusters. After some inquiry, the Department 
tells us that you would like an increase of funding for them 
from $6.7 million to $20 million, but your official request 
documents do not mention them at all. Can you give us some 
information on them?
    Dr. Kelly. Certainly. There are a number of questions on 
the table so I can start going through them.
    Mr. Frelinghuysen. Yeah, there are and so we need just some 
basic facts on all these centers.
    Dr. Kelly. The ones that have been existing are the clean 
energy application centers and the industrial assessment 
centers. Those have been--those continue and I can go into the 
details of the budget and find out what they are. The new 
things that we are proposing here are first a program that is 
going to be looking broadly at innovative proposals and 
research on advanced manufacturing and advanced material. And I 
can give you some examples of those, but these are things which 
both help improve the efficiency of the manufacturing process 
itself--and about 30 percent of our energy goes into 
manufacturing so it is energy, productivity, and 
manufacturing--but also driving down the cost of clean energy 
products is what we do throughout our organization. So we want 
to get cheaper lighting, cheaper photovoltaic, cheaper wind 
machines, cheaper batteries, and so on. All of that is a 
manufacturing or a lot of it is a manufacturing issue.
    Mr. Frelinghuysen. So where does the critical materials hub 
come into this?
    Dr. Kelly. So the critical materials hub is a new proposal. 
It is funded in the FY12 budget. We will be putting out a 
solicitation for that probably within a month.
    Mr. Frelinghuysen. The issue here is that we have got all 
these centers and I am sure there are some remarkable people 
that are working to make them successful and would work to make 
the new ones successful, but I think we are going to find 
ourselves in one heck of a budget squeeze here. What would be 
your priorities in the overall--in this sort of a budget 
environment?
    Dr. Kelly. Well, the critical materials hub----
    Mr. Frelinghuysen. We have to have some priorities here.
    Dr. Kelly. Right, exactly, and we plainly show in the 
budget that we think manufacturing is a priority. This has come 
out of the concern of the entire administration and Congress. 
And we had a big commission put together by the President`s 
Council of Advisors on Science and Technology that made a bunch 
of recommendations. They set up this panel that is chaired by 
the president of MIT and Dow that has been looking into this in 
detail and has had hearings around the country. So that is 
where this came from.
    Mr. Frelinghuysen. I think we value that contribution from 
the private sector and academia, but there seems to be an over-
commitment here and I just want to make sure we do not raise 
expectations. That is related obviously to----
    Mr. Womack. Will the gentleman yield?
    Mr. Frelinghuysen. Yes.
    Mr. Womack. Do these programs ever go away?
    Dr. Kelly. Yes, programs go away all the time.
    Mr. Womack. These centers, these hubs, I mean, as 
technology changes, as emerging technologies--as evidenced by 
the line of questioning this morning--things now become 
important, rare earth, et cetera, et cetera. Do they take the 
place of other programs that have previously been authorized 
and funded by Congress?
    Dr. Kelly. Well, the increase that you see here is not just 
building on the, perpetuating everything we were doing before. 
We cut a lot of things out to do this. For example----
    Mr. Womack. What have you cut out--and maybe provide that 
for the record?
    Dr. Kelly. Conceptually what we are doing, for example, in 
biomass we are moving from ethanol to drop-in fuel. In wind we 
are moving from onshore to offshore. In batteries we did nickel 
metal hydride batteries for a long time. They are now 
successful in commercial. We just declared success and got out 
of that, and we are now doing lithium. And a few years from 
now, we will move from lithium to something else.
    Mr. Frelinghuysen. Something else. Mr. Visclosky.
    Mr. Visclosky. I would like to follow up in just a bit of a 
different fashion on the comments my colleagues, including the 
chairman, have just touched upon. And it gets back to the issue 
of manufacturing where we have gone from 40 percent to 4 
percent relative to solar as I understand the statistics. I, 
too, am very concerned about the proliferation of centers at 
the Department. We have got 46 frontier research centers. A 
colleague asked if we ever get rid of anything. We have three 
bioenergy research centers. We have a genome institute. You 
know, 13 independent programs within your jurisdiction itself. 
And we went from 40 percent to 4 percent on solar, and we are 
spending hundreds of millions of dollars a year, billions of 
dollars a year, on research for energy in the United States of 
America. When asked by the chairman what we are doing to keep 
this intellectual property and these jobs in the United States, 
you mentioned that we need to ensure we have demand for this 
energy. I agree with you. And to an extent, the government has 
a role in developing that demand by buying the energy. But that 
is an external demand. You mentioned the 48(c) tax credit. That 
is not within your purview, although I understand you support 
it. That is terrific.
    You also mentioned collecting data. As I like to tell my 
colleagues sometimes, we have been dialoguing with the Chinese 
on steel forever. Now they make four times more tonnage than we 
do, and we have been dialoguing. We are going to dialogue 
ourselves to death. And now we are collecting information.
    If you could for the record, with solar--because we are at 
the end of our game now on solar and we are going to have more 
questions on solar tomorrow and batteries, there has been a lot 
of emphasis on batteries--if you could just concisely, simply, 
bullet-point what are you and your department doing to make 
sure all of this money we are spending stays here in jobs? I do 
not want to hear about green jobs. I am sick of green jobs. No, 
it makes me sick. I tell people I am going to talk to the 
Secretary in a minute about it. My green job is the United 
States steel industry using 30 percent less CO2 
since 1990 to make a ton of steel. That is a lot of trees. That 
is my green job. So I would ask for the record, besides the tax 
credit, besides increasing demand, besides collecting 
information, what are you doing to make sure we do not lose 
batteries and we do not lose that last 4 percent for the 
record?
    Now talking about the various centers and hubs. Secretary 
Hoffman, there is a proposal this year for an energy innovative 
hub. We have five. You have made a request for another one. 
This is different in that as I understand it there would be 
multiple hubs. Will they be called hublets?
    Ms. Hoffman. I said regional hubs.
    Mr. Visclosky. Hublets, sub hublets?
    Ms. Hoffman. If you like the term hublets, but we are 
calling them regional hubs.
    Mr. Visclosky. Regional hubs. Besides New Jersey and 
Indiana, where does the third one go?
    Ms. Hoffman. We will be running a solicitation so the hubs 
will be determined by a solicitation.
    Mr. Visclosky. All kidding aside, why do you need three? 
Why do you need three physical locations?
    Ms. Hoffman. Actually we are looking at two to three, but 
it reflects the regional nature of our electric grid. In 
different parts of the country, we have different generation 
resources. So the generation mix in the southeast is very 
different than the generation mix in the west. We have 
different markets and policies that are being implemented 
differently across the United States. PJM is a market whereas 
in the southeast they operate under bilateral agreements. There 
are different state policies. So what we wanted to do with the 
regional hubs was to actually build upon some of those local 
differences, to say how do we advance the electric grid in 
modernizing the grid, looking at data that we are getting in 
those regions, looking at the capabilities of how do we deal 
with cyber security in each of those regions considering the 
mix is different, the technology is different, the architecture 
is different. So we recognize that there are differences in the 
regions, but we want to pull that together and make sure that 
we can do a national effort.
    Mr. Visclosky. You cannot, with all the scientific 
knowledge we have at the Department of Energy, do that from one 
location? As my colleague from Pennsylvania, I am over the 
hill. I do not telecommute, but I understand a lot of people in 
the federal government do that. And a lot of research is done 
through the Internet and video conferencing, and you think we 
need two or three centers to do this?
    Ms. Hoffman. We need two or three centers to reflect the 
different nature of the regions in the United States. There are 
parts of the centers that we can pull apart and do nationally 
as we look at demand response and the impact of demand response 
nationally. But we need those centers to really identify those 
regional differences. The wind integration and the renewables 
are primarily in the west. The east deals with a different 
generation mix and a different market and policy structure that 
has to be tailored to the needs of those regions.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Mr. McConnell. The pipeline is set up to deliver oil to 
distribution centers, most probably in the Cushing, Oklahoma 
area and ultimately end up in regional refineries along the 
Texas Gulf coast. 50 percent of the refining capacity in this 
country is along the U.S. Gulf Coast. That oil and the 
characteristics of that oil are well-suited to be refined in 
those refineries along the U.S. Gulf Coast.
    Mr. Fattah. And then what will happen with these refined 
products, in your judgment? Based on your knowledge of the 
industry.
    Mr. McConnell. Refined products are very likely to be 
consumed in the United States in the domestic market.
    Mr. Fattah. Okay. Now, we are a net exporter now of oil?
    Mr. McConnell. No.
    Mr. Fattah. No?
    Mr. McConnell. No. We are a net importer.
    Mr. Fattah. We are a net importer. So, then what do we 
import and how much do we import?
    Mr. McConnell. Well and again, if you are speaking about--
--
    Mr. Fattah. China was at, over the last five years, double 
the amount that it utilizes, right? I mean, where are we at in 
this? Are we growing in the amount that we are importing? Are 
we decreasing? Where are we at?
    Mr. McConnell. Actually, over the past several years we 
have decreased the amount of imported oil from approximately 70 
percent to approximately 50 percent.
    Mr. Fattah. And the difference is being made up by less 
demand or what? Where is the difference being made up?
    Mr. McConnell. It is a combination of improved domestic oil 
supplies in the United States, demand, new technologies, and a 
good part of the all of the above strategy.
    Mr. Fattah. If you were looking forward, how do you see the 
next five years? Is the demand for imported oil going to be 
greater or less?
    Mr. McConnell. The way the policy and the way our efforts 
are aimed is to improve and continue to work at improving 
energy security in this country. Domestic production versus 
imported production are aspects of an energy security strategy, 
and a big part of what we are constantly working at in terms of 
a portfolio approach is to make sure that energy security at 
the top of the list is first and foremost.
    Mr. Fattah. Now, we are the wealthiest economy in the 
world, right? So like today there is an announcement they found 
oil in Kenya for the first time, right? And oil is on the world 
market, right? It would seem to me, logically, we would want to 
buy as much oil from other places as we possibly could and hold 
on to domestic supply. Is that illogical? Why was it in our 
national interest to make sure that oil was on the world 
market?
    Mr. McConnell. I am not sure I understand your question, 
directly, sir.
    Mr. Fattah. Okay. I am trying to understand why it is we 
insist, for instance--I mean, you know, our number one foreign 
policy goal vis-a-vis Venezuela is that it all be available on 
all markets, right? So, we want oil wherever it is found, 
right? To be sold on a world market. That is our government's 
policy. And I am trying to make sure that even though that was 
set a long time ago, that that is still a good policy going 
forward, in your judgment.
    Mr. McConnell. Well in my judgment, sir, I do not know that 
we are in a position to create a world policy on oil and its 
availability, and I think that is the biggest concern we all 
have in terms of energy security. There is not any world 
policy, there is only our ability to access oil as it is 
available, the price that it is available from, and the ability 
to secure supplies necessary for this country. So again, back 
to a portfolio approach of being able to access the most 
available oil at the most attractive prices. That is business.
    Mr. Fattah. Thank you very much. I want to have some other 
questions for the record. Thank you.
    Mr. Frelinghuysen. Mr. Olver.
    Mr. Olver. Thank you again, Mr. Chairman. I want to very 
briefly enter the comments about the hub--the grid-related hub. 
It sounds to me that it is more three parts because we 
developed it at an earlier stage, before we really started 
hubs, a group of biofuel centers which I do not think that--I 
have not seen a very different approach from those bio-research 
centers. And I forget just where they are. I guess they are 
under the Offices of Science--what you are describing.
    It just does not seem to me that there is much difference 
between the universities--there are lots of utilities, our big 
four in terms of power generation remain coal, gas, nuclear, 
and maybe we ought to have wind. Wind, you say, is in the West, 
but we also have some substantial wind on-land production in 
the East.
    So, I really do not see why there is a need for just 
regionalization. Although I am a supporter of the concept that 
one should not put all one's energy eggs in one basket. I am 
trying to see how--much of the questioning here as I have heard 
it this morning is that this is a diffuse expanding universe of 
programs, in essence. It is almost like a cosmic expansion of 
the universe, which physicists tell us is going on and has been 
going on since the Big Bang in the first place. I just see it 
getting larger and larger and more diffuse in the process.
    I wanted to ask Secretary Kelly. You have a critical 
materials hub that you are going to be going out for 
solicitations on that. That will be one hub?
    Dr. Kelly. One hub, yes.
    Mr. Olver. One hub. The battery hub is not under you. The 
battery hub is under the Office of Science?
    Dr. Kelly. Correct.
    Mr. Olver. And when they get finished with proving that 
things can be done scientifically, then it is your office's job 
to help them to commercialization. It is really taking it 
farther up the development chart from the relatively long 
research and early development to the development that gets you 
toward commercialization. So, you do not have--you will not 
have the hub, but you will get the partially-developed--the 
proven science. Your office would be the one that is supposed 
to try and find the companies that can do this and bring it to 
fruition. But you do have hubs. You are going to be putting up 
the critical materials, but you also have the building 
materials hub at the--I am sorry, but my colleague from 
Philadelphia has not yet raised it. In Philadelphia, it has 
been up there for a while. Give us a good positive reading of 
exactly where we are on that building efficiency hub.
    Dr. Kelly. They are doing extraordinary work in 
Philadelphia.
    Mr. Olver. Okay.
    Dr. Kelly. Lots of Philadelphians involved. Well first, on 
the battery issue. We have a tech team in the Department that 
includes ARPA-E, our office, and the Office of Science. They 
collectively put together the solicitation so we are in very 
close communication with them all the time.
    Mr. Frelinghuysen. The solicitation on the critical 
materials is one that is being done by this tech team? This?
    Dr. Kelly. The battery one you mentioned. So, we actually 
have--the people all working on the basic science, the people 
working in ARPA-E and the people in EERE working on batteries 
are working very, very closely together, and doing exactly what 
you described.
    Now, the Philadelphia hub. It has been up and running for 
about a year. We think it has got a tremendous opportunity to 
help us understand how buildings actually work. Its focus is on 
improving computing models of how buildings operate, how they 
could work with new technologies, how they could work as a 
whole, and then validate those models against real buildings. 
The good thing about having it in the Philadelphia Navy Yard is 
that they are going to be retrofitting a bunch of buildings in 
that area, and so they will be able to really do a first-rate 
job.
    What they have done already is, they have built computing 
that is helping researchers all around the country work 
together and develop this work. They have built a very 
interesting 3-D visualization environment where architects and 
engineers and others can work together to both design the 
building and understand the energy implications of the way it 
is going to operate. They have actually installed the state-of-
the-art or beyond state-of-the-art building sensors and control 
system in part of their own facility that is hooked onto a very 
sophisticated modeling tool.
    If you compare the way energy systems operate in an 
airplane with the way energy systems operate in a typical 
commercial building, they are just light years apart. One of 
the things they are able to do is really build the kind of 
sophistication into buildings that can allow you to make sure 
that everything is operating correctly.
    Until recently, sensors and controls were very expensive, 
but now you can actually imagine doing this, and that center 
has been really at the cutting edge of that.
    Mr. Olver. So we do not yet have any real sense of how this 
is going to spread out into the general economy?
    Dr. Kelly. Well you know, it has attracted 22 partners, 
including a lot of industrial partners who have been 
participating in this. People are already using this 3-D 
visualization center.
    Mr. Olver. Okay, I wish you the best of luck. I mean, there 
really is an enormous amount of energy conservation. It is 
still the low-hanging fruit, there is no question about that.
    Dr. Kelly. Yes, and it certainly is a lot cheaper, in most 
cases, to save electricity than to generate it. So there is a 
huge opportunity space out there.
    Mr. Olver. Thank you, Mr. Chairman, for your patience.
    Mr. Frelinghuysen. Thank you, Mr. Olver. Just a few brief 
questions. Secretary McConnell, recoverable shale oil? Can you 
talk about that? There is certainly a view that we have some 
real potential there.
    Mr. McConnell. We agree there is a real potential----
    Mr. Frelinghuysen. And what are we doing? What is the 
Department doing in that area?
    Mr. McConnell. Well as suggested previously, a lot of the 
work that went on in the '70s was a big part of hydraulic 
fracturing.
    Mr. Frelinghuysen. You gave us that history lesson. I 
thought that was valuable, but----
    Mr. McConnell. We do not have anything specific in our 
budget related to shale oil, sir, for the coming year.
    Mr. Frelinghuysen. But if we talk about diversity and all 
the above, this is not something which--you do not believe it 
has merit? Or do you think it is too complicated? It is not 
financially feasible? How would you characterize?
    Mr. McConnell. There are a lot of challenges to shale oil 
development. There is a tremendous amount of uncertainty. But 
also at the same time, potential for that resource.
    We do not have anything on our budget for the coming year. 
We were required to make strategic choices in terms of the 
areas that we were going to focus on, and that was not one of 
them.
    Mr. Frelinghuysen. Is the private sector doing investments 
in this area? And how would you characterize those investments?
    Mr. McConnell. Yes, they are doing investments. It is very 
early on and very much in a discovery mode.
    Mr. Frelinghuysen. Okay.
    Mr. McConnell. And if I might?
    Mr. Frelinghuysen. Yes, please do.
    Mr. McConnell. If I could just pick up on something that I 
said earlier. I want to make sure based on the age of the 
Internet that I said exactly what gets picked up. I was not 
speaking about any specific release from the strategic 
petroleum reserve. The Administration has consistently talked 
about no options being off the table in terms of where we are 
with the strategic petroleum reserve, or in terms of any supply 
interruptions that have or may occur, but I was not speaking 
specifically of anything being considered right now, 
specifically.
    Mr. Frelinghuysen. Yes, well I did not characterize your 
statement as being imminent----
    Mr. McConnell. Thank you.
    Mr. Frelinghuysen [continuing]. I can assure you. I think 
it would be ill-advised, but we understand.
    Mr. McConnell. But just in case somebody else might. Thank 
you.
    Mr. Frelinghuysen. Whoever picked that up I am sure will 
correct the record.
    Mr. McConnell. Thank you.
    Mr. Frelinghuysen. Very briefly, for Secretary Hoffman and 
Dr. Kelly. There was an announcement recently about using the 
four power marketing administration's goals. Can you talk about 
that, to transforming the nation's electric sector?
    Ms. Hoffman. Yes. The Secretary sent a letter out to the 
power market administrations, looking at some policies and 
looking at what the power market administrations can do to 
advance the deployment of renewable energy, look at energy 
efficiency, among other topics. The power marketing 
administrations are not under either Dr. Kelly or under my 
jurisdiction, but we expect further information to come out 
with respect to how that policy will be implemented with the 
administrations.
    Mr. Frelinghuysen. So that does not provide me with very 
much information.
    Ms. Hoffman. We can provide you with more information for 
the record.
    Mr. Frelinghuysen. So, you are going to be involved in 
those activities?
    Ms. Hoffman. We communicate on a regular basis within the 
Department of Energy on the activities.
    Mr. Frelinghuysen. Is this budgeted for? Or is this just 
talk? Is this just contemplated?
    Ms. Hoffman. I do not have----
    Mr. Frelinghuysen. Has there been any direction?
    Ms. Hoffman. I do not have any details on the direction. We 
could probably provide that for you, for the record.
    Mr. Frelinghuysen. Okay. Mr. Visclosky, anything further?
    Mr. Visclosky. If I could, Mr. Chairman, for just a few 
minutes. Keystone has been mentioned and it is relevant to the 
issue at hand, but it leads back to my concern about the 
attention of all three of you and your departments about the 
money we are spending to keep and create good-paying living 
wage jobs in the United States of America for the Keystone 
Pipeline. I disagree with the President's past position, 
potentially it is evolving. A great boon to job creation. The 
only problem is, almost every ounce of steel for the pipeline 
was poured outside of the United States of America. Nobody was 
thinking about the steelworkers then, and I am not blaming 
anybody on the panel. I am just venting here a little bit. It 
will be fabricated in the United States--somebody poured it 
outside. It is a private pipeline, that is their prerogative.
    On SPRU--and I know you have not even brought SPRU up 
today, Mr. Secretary. I heard nothing about SPRU. Well, the 
last time there was a release, there was a waiver of the Jones 
Act that allowed foreign flag vessels to transport the oil. The 
Jones Act is in place for a very specific reason, and I know 
that is not your policy decision either but I am trying to send 
a message here.
    There is potentially an argument there is not enough U.S. 
domestic-created ships. Why? Because we are not doing enough to 
encourage ships being built in the United States of America in 
the first place to take this oil and put somebody to work in 
this country. Again, not a lecture to you. But, assuming all 
options are on the table, I would hope waiving the Jones Act is 
not one of them.
    I would like to talk about coal, if I could just for a 
minute or two, Mr. Chairman. My understanding is in 2010 coal 
represented 21.3 percent of energy demand by fuel in the United 
States of America, and that the EIA estimates that by 2035, 46 
percent of our electricity will continue to come from coal. I 
mentioned the steel industry saving 30 percent CO2 
per ton. A lot of trees.
    I believe in global warming. I think we ought to move from 
a carbon-based economy. I absolutely believe that. As a 
pragmatist, I am looking at the statistics saying that almost 
half of our electricity is going to come from coal in 2035.
    Why was the coal budget savaged? We worked on turbines for 
water to get more energy from the same amount of water in those 
waterways. Why not work to get more efficiency out of that 
ounce of coal we are going to continue to burn until 2035. Why 
take all that money out of coal?
    Mr. McConnell. I agree with everything that you mentioned, 
and when I took this job I made a commitment to do everything 
we can do with what we have available to do exactly what you 
just described. And that is what I am going to continue to do 
as leader of the Fossil Energy Organization.
    Mr. Visclosky. I assume you being a very bright individual, 
if you had additional resources at your disposal--mentioning 
your household income earlier, you would be able to put it to 
good use.
    Mr. McConnell. Whatever----
    Mr. Visclosky. If you volunteered to do so.
    Mr. McConnell. Whatever resources I have got available in 
fossil energy, you can bet we will put them to good use.
    Mr. Visclosky. Okay. Mr. Chairman, thank you very much.
    Mr. Frelinghuysen. Thank you. Anything else, Mr. Fattah or 
Mr. Olver? Anything else? Secretaries, we thank you all for 
your time and effort here this morning. Appreciate your 
testimony. We stand adjourned.

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                                           Tuesday, March 20, 2012.

              OFFICE OF SCIENCE, U.S. DEPARTMENT OF ENERGY

                                WITNESS

WILLIAM F. BRINKMAN, UNDER SECRETARY FOR SCIENCE (ACTING), DEPARTMENT 
    OF ENERGY, OFFICE OF SCIENCE
    Mr. Frelinghuysen. Good afternoon, everybody. The ranking 
and I want to apologize for the late start of the meeting. We 
had a vote and we may be interrupted by some further votes 
during the hearing process, but we want to acknowledge the fact 
that all of you were here on time even if we were absent.
    We have before us today Dr. Bill Brinkman, Director of the 
Office of Science, to discuss the Department's Fiscal Year 2013 
request. Dr. Brinkman, welcome once again to our subcommittee.
    Dr. Brinkman, although most of our constituents may not be 
aware that the Department of Energy is one of the major 
government supporters of basic science, we are all well aware, 
acutely aware of the importance of your mission. The scientists 
and technicians under your direction are responsible for world 
leading advances in technology, science, and intellectual 
property, and I thank you and all your colleagues for their 
important work.
    Last year our Subcommittee fought hard, given the limited 
funds we had available, to ensure that your office was fully 
supported. The final act provided $4.9 billion, a $46 million 
increase, no small change when every dollar is carefully 
allocated among competing priorities. That $4.9 billion, 
however, was $500 million below the President's request last 
year. I know the request was based on a desire to double 
funding for basic science research across the government, but 
that plan was simply not achievable under current budget 
restraints.
    Your Fiscal Year 2013 budget request seems to begin to 
recognize this reality. At $5 billion, it is a $103 million 
increase over last year, and you make some hard choices within 
that request. We likely will not agree with every choice you 
have made, and we will be exploring these during our 
discussions today, but we appreciate that you are now making 
them.
    Unfortunately, even though your budget request is more 
reasonable, it still includes investments which were only 
supportable under the doubling path, not under a more realistic 
flat-funding outlook. We need to understand how the 
administration is going to shift its longer-term planning, 
which is why in the conference agreement last year we directed 
you to provide the committee with a flat budget scenario by 
February 10th. This report has not been submitted, and you can 
be sure we will ask why.
    Dr. Brinkman, please ensure that the hearing record, the 
questions for the record, and any supporting information 
requested by the subcommittee are delivered in final form to 
the subcommittee no later than 4 weeks from the time you 
receive them. Members who have additional questions for the 
record will have until the close of business tomorrow to 
provide them to the subcommittee office.
    [The information follows:]

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    Mr. Frelinghuysen. At this point I will turn to my ranking 
member, Mr. Visclosky, for any comments he may have.
    Mr. Visclosky. Thank you, Mr. Chairman. Sorry for being 
here late. Dr. Brinkman, welcome.
    The Secretary of Energy, Dr. Chu, has said that he regards 
his two principal challenges to be energy independence and 
climate change. In the long term I believe that much of the 
inspiration to overcome both of these challenges will come from 
the Office of Science. I appreciate that the administration 
continues its support for basic science by requesting a 2 
percent increase in the Department's budget, this is not the 
boost in funding that many advocates had hoped for; yet in a 
constrained fiscal environment it is significant.
    In many areas of science and technology, American 
researchers arguably remain the best in the world. However, our 
margin of leadership is neither as wide nor as clear-cut as it 
has been in the past, and in certain areas we have fallen 
behind. Given the constrained environment we face, it is 
particularly important that we strategically plan each program 
to ensure that we are proceeding in a deliberate and thoughtful 
manner, increasing or maintaining our lead in areas where we 
can, and limiting our investment where we cannot.
    U.S. leadership in many areas of science and technology 
depends in part on the continued availability of the most 
advanced scientific facilities. However, I remain very 
concerned that many of the infrastructure plans of the 
Department were developed with a far more optimistic funding 
profile than the current reality will support. We have also 
ensured that any redundancy is eliminated in order to maximize 
the scientific and technological advances within tight fiscal 
constraints. It is an issue I am very concerned about. I hope 
to hear from you today how the Office of Science has begun to 
reevaluate the strategic plans of major program areas.
    While the committee has been supportive of the Office of 
Science and other related programs, such as ARPA-E, we also 
continue to have concerns regarding the duplication and 
interaction of several recent organizational initiatives. The 
Energy Innovation Hubs, ARPA-E, and the Energy Frontier 
Research Centers are just a few examples. While the 
subcommittee will examine the performance of ARPA-E separately, 
the justification for this program in part was that different 
organizational models were necessary because the Department's 
existing programs were not sufficient agents for 
transformational or disruptive technological advances.
    While I appreciate that some of the early reviews of these 
new models have been positive, I would like to hear what you 
and the Office of Science are doing to ensure that this new 
culture is, in fact, being integrated into other science 
programs.
    With that, Mr. Chairman, I would yield back my time.
    Mr. Frelinghuysen. Thank you very much, Mr. Visclosky.
    [The information follows:]

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    Mr. Frelinghuysen. Dr. Brinkman, the floor is yours.
    Mr. Brinkman. Thank you very much, Chairman Frelinghuysen 
and Ranking Member Visclosky and members of the committee. I am 
pleased to come before you today----
    Mr. Frelinghuysen. You may need to move that mic a little 
closer to make sure we can hear you.
    Mr. Brinkman. Is it on?
    Mr. Frelinghuysen. It is on.
    Mr. Brinkman. Okay. I want to thank the committee for its 
continuing strong support for our office. Even in this 
challenging fiscal environment, the Office of Science is the 
largest source of funding of basic physical sciences in the 
United States, and the research facilities funded by the office 
are critical to enhancing U.S. competitiveness and maintaining 
U.S. leadership in science and technology.
    In his State of the Union address, President Obama 
emphasized the importance of basic research and urged Congress 
to support the same kind of research and innovation that led to 
the computer chip and the Internet, to American jobs, and to 
American industries.
    The President's fiscal year 2013 budget request for the 
Office of Science is $5 billion, representing a 2.4 percent 
increase from 2012. Within the President's request for the 
overall flat discretionary funding, this increase to the Office 
of Science demonstrates the President's commitment to basic 
science, which is vital to producing the discovery and 
innovation that will strengthen our competitiveness and 
economic leadership.
    The Office of Science is doing its part to ensure that the 
United States is a global leader in clean energy science and 
technology. Our three Bioenergy Research Centers are taking 
complementary paths toward producing next-generation biofuels. 
We support 46 Energy Frontier Research Centers across the 
country, which conduct research in an array of material science 
and engineering issues related to the solving of various energy 
problems.
    The Fuels from Sunlight Hub is ramping up operations while 
already producing scientific output and publications. I would 
like to thank the committee for its support of the second 
Energy Innovation Hub on batteries and electrical storage, 
which will accelerate development of energy storage solutions 
for both transportation and grid sectors. The Basic Energy 
Science program is on schedule to make a selection for that hub 
by the end of the summer.
    The ten national laboratories in the Office of Science 
routinely produce cutting-edge science and technology and 
operate a set of user facilities that are the envy of the 
world. We have created the world's first x-ray laser which 
unlocks new areas of research in multiple fields. Our 
synchrotron light sources regularly make key contributions to 
our understanding of protein structure and materials, our 
scientific computing facilities enable ground-breaking research 
and development to produce exascale computing, and we will 
deliver a strategic plan on exascale to you soon.
    In the biological and environmental research division, the 
Environmental Molecular Sciences Laboratory integrates 
computational and experimental capabilities as well as fosters 
collaboration among disciplines to characterize biological 
organisms and molecules. The Atmospheric Radiation Measurement 
facility, or ARM as it is called, makes critical measurements 
of clouds and aerosols to aid in our understanding of the 
atmosphere and climate. There are many examples of industry 
making use of these facilities, and we have illustrated this, a 
few of these in the handouts here.
    While the President's budget prioritizes clean energy 
research, we continue to be the primary funding agency for an 
array of basic sciences. That has meant making difficult 
choices and trade-offs in several program areas while focusing 
on areas where we can make the strongest impact. High Energy 
Physics continues its transition into the intensity frontier 
and will deliver a report on the scientific opportunities in 
the intensity frontier later this year.
    This month our Daya Bay experiment, in collaboration with 
China, measured one of the important characteristics of 
neutrinos, the ubiquitous particle that is so poorly 
understood. We continue to participate in the Large Hadron 
Collider and the search for the Higgs particle now appears to 
be bearing fruit.
    Despite a challenging budget environment for nuclear 
physics, the President's request includes $22 million for the 
Facility for Rare Isotopes Beam at Michigan State University 
and will allow the project to move forward. In Fusion Energy 
Sciences the administration is committed to the ITER project, 
an international fusion experiment involving six nations and 
the European Union, and the culmination of decades of research 
in fusion. ITER will produce the world's first burning plasma, 
producing net energy from sustained thermonuclear reactions. I 
want to emphasize that although U.S. contributions to ITER call 
for us to build and deliver hardware to the project in France, 
80 percent of the ITER funding is spent in the United States, 
and if you include the support of American scientists working 
overseas in France, that number rises to 90 percent. Although 
the focus of critical energy research in the President's 2013 
budget has resulted in difficult decisions across the Office of 
Science, these decisions were made with extreme care, and the 
resulting trade-offs remain robust, maintain robust research 
programs in high-impact areas in both use-inspired and 
discovery science.
    I look forward to working with you, Mr. Chairman, and the 
rest of the committee on the Office of Science budget request. 
Thank you.
    Mr. Frelinghuysen. Thank you, Dr. Brinkman.
    [The information follows:]

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    Mr. Frelinghuysen. We all know you are faced with making 
some tough trade-offs this year. With limited funds, your 
request almost unavoidably had to make some tough decisions by 
cutting funding from some programs that this Subcommittee has 
historically been very supportive of, but on top of that tough 
reality your request adds $92 million for new Basic Energy 
Science research. Why has the Department made it more difficult 
for a number of major programs, which we have supported, and 
made it more difficult for some of your existing laboratories 
and other facilities by proposing to add new initiatives when 
those programs are worthy of support on a historical basis, 
those types of adjustments?
    Mr. Brinkman. I agree with you that those programs are 
worthy of support on a historical basis, but at the same time, 
the administration's high priority is clean energy, and we 
regard it as a very high priority to try to improve on our 
ability to make clean energy without CO2, and the 
additions that we put to BES are designed to do that. They are 
focused exactly on that subject.
    Mr. Frelinghuysen. So you defend your decision for new 
spending, based on the administration's priorities?
    Mr. Brinkman. Right. It is based on the administration's 
priorities, that is the way it was worked out. We believe that 
we want to support this idea, this program, towards directing 
of the Department to work on clean energy and to try every 
technique we can think of to push that forward because of the 
importance of the program, so we added----
    Mr. Frelinghuysen. So we are pushing some new initiatives 
forward, and what are we doing with the historical commitment? 
You mentioned some, you mentioned within nuclear physics the 
request delays by a year the start of the Facility for the Rare 
Isotope Beams facility in Michigan, cuts in half the operating 
time for the RHIC at Brookhaven.
    Mr. Brinkman. Yes.
    Mr. Frelinghuysen. What does that mean to our overall 
mission and the direction we are going if we are putting those 
on the back burner here?
    Mr. Brinkman. Clearly the budget for nuclear physics is not 
sufficient to keep everything going, and within the next year 
will we have to look at it very carefully and figure out what 
to do.
    Mr. Frelinghuysen. Well, why don't we look at it right now?
    Mr. Brinkman. Well, we are.
    Mr. Frelinghuysen. But I mean there are some layoffs at the 
Fermilab in Illinois.
    Mr. Brinkman. There will be some layoffs in Fermilab coming 
up this year.
    Mr. Frelinghuysen. Well, let me just focus, as you might 
anticipate, on fusion. You are quite familiar with fusion, with 
all of your Princeton connections.
    Mr. Brinkman. Right.
    Mr. Frelinghuysen. I think we all understand that budgets 
are tight, and we have a responsibility to make tough budgetary 
choices. But I would like to take a moment just so there is a 
focus on, shall we say, the fusion accounts. The President's 
budget request's funding for domestic fusion is cut by $49 
million, and ITER is cut by $50 million from its planned level, 
while it increases funding for other science programs. I would 
say fusion comes out as a loser here. Why is that?
    Mr. Brinkman. Well, it is the same thing I said earlier.
    Mr. Frelinghuysen. Because this is one area, as are the 
other areas, I assume, where only government would have perhaps 
the resources to make this type of----
    Mr. Brinkman. Yes, fusion is definitely in the government 
domain, and we have not gotten as much money as we would like, 
and we are trying to keep both these things alive. We had to 
make some very hard decisions in the fusion program as to what 
we would do and would not do in the coming years.
    Mr. Frelinghuysen. So what is literally going to happen to 
those who are involved in these kinds--I can certainly cite 
Princeton, but MIT, General Atomics, I mean there are a lot of 
players in here that are involved.
    Mr. Brinkman. Yes. It was a very hard decision that needed 
to be made among those three: the General Atomics, the DIII-D 
machine; and the Princeton NSTX machine; and Alcator C-MOD. And 
our folks who run that program took a lot of time to think hard 
about which one they felt was least beneficial to the future.
    Mr. Frelinghuysen. So the people who thought hard about it 
were not the people in those facilities? It was people under 
you?
    Mr. Brinkman. Well, of course the community also had its 
own views of that, but mostly the people----
    Mr. Frelinghuysen. Not people over in OMB, I hope?
    Mr. Brinkman. No, no. That particular issue was not people 
at OMB.
    Mr. Frelinghuysen. But there is a domestic component here.
    Mr. Brinkman. Yes.
    Mr. Frelinghuysen. Because you made the point yourself that 
a lot of the money that is spent here goes out--80 percent I 
think was the figure you mentioned, right, goes back to our 
economy?
    Mr. Brinkman. Right.
    Mr. Frelinghuysen. What about our international 
obligations? To ITER?
    Mr. Brinkman. Oh, the insufficient funds you mean?
    Mr. Frelinghuysen. Yes.
    Mr. Brinkman. That is a problem that we are working right 
now. We have been talking with our partners.
    Mr. Frelinghuysen. You made it more difficult by putting 
more money into other accounts here.
    Mr. Brinkman. Yes, that is true.
    Mr. Frelinghuysen. And so what will become of the ITER, if 
you will pardon the expression, maybe because I had oversight 
of NASA, but it is like the international space station in many 
ways.
    Mr. Brinkman. I hope it is not quite that bad.
    Mr. Frelinghuysen. Well, it is a huge asset, and ITER will 
be, too. You have a lot of contributing nations here.
    Mr. Brinkman. Yes.
    Mr. Frelinghuysen. What does it mean to us that we are not 
fulfilling our obligations when I assume other countries are 
doing it?
    Mr. Brinkman. We intend to fulfill our obligations. We may 
not have enough money this year, but we certainly intend to 
fulfill our obligations to ITER, and the administration has 
stated very clearly that they support, will support ITER, and 
so we intend to make those commitments. Now, we were short this 
year, but we will try to figure out how to compensate for that, 
and we are working at trying to do that and figuring out the 
best way to do that. You know, ITER is a very different problem 
than the space station, the way it is set up.
    Mr. Frelinghuysen. Maybe it was an unfortunate analogy, but 
there are a lot of contributors, it is an international 
project.
    Mr. Brinkman. There are a lot of contributors. I think the 
big difference----
    Mr. Frelinghuysen. And our reputation to some extent is on 
the line here.
    Mr. Brinkman. Yes, I agree with that. I agree with that. We 
do not want to fail. We do not want ITER to fail because of the 
United States; let's put it that way.
    Mr. Frelinghuysen. And this does impact people on the 
ground here in a variety of laboratories and in the private 
sector as well?
    Mr. Brinkman. It does, yes.
    Mr. Frelinghuysen. And the committee has had a keen 
interest in making sure that wherever we are making these 
investments, there is some commensurate area where in fact we 
either protect or increase employment rather than reduce 
employment.
    Mr. Brinkman. Right.
    Mr. Frelinghuysen. You could be doing some things here in a 
way that would impact, you know, the future probability of 
success in some of these areas.
    Mr. Brinkman. Oh, yes, I think we are definitely doing 
that.
    Mr. Frelinghuysen. I mean, the nuclear physics----
    Mr. Brinkman. We are taking some risks here.
    Mr. Frelinghuysen. There are some risks, so you feel 
comfortable with your recommendations here?
    Mr. Brinkman. I feel as good as I can.
    Mr. Frelinghuysen. Well, we hope that you will have some by 
the end of this hearing, we will convince you perhaps of some 
other things. Mr. Visclosky.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Dr. Brinkman, the administration has highlighted that 
American manufacturing is a major theme in this year's energy 
budget, and it would seem to be particularly relevant to the 
Department's applied research programs. Can you give us a 
couple of specific examples of how the Office of Science is 
going to specifically and discretely support manufacturing?
    Mr. Brinkman. Yes. In the last 10, 15 years, there has been 
a very major change.
    Mr. Frelinghuysen. Doctor, you have got to move that 
microphone right in front of your mouth so we can hear you, 
please.
    Mr. Brinkman. A major change in our national laboratories 
in the sense that we used to simply do research experiments at 
the laboratories with university people involved, but we have 
now created over the last 15, 20 years a whole set of 
facilities that are unique and that no company is really 
willing to build, going to build. A synchrotron is not 
something a single company is likely to build, and our high-
speed computing is not something a company, unless they are 
Intel, will build. And so what has happened is we have had a 
lot more interaction with U.S. industry. In fact, this little 
brochure which we brought along has a whole host of examples of 
how we have coupled and helped industry with our facilities, 
and you can look on the back side here, just this whole list of 
companies that have benefited greatly from the facilities we--
--
    Mr. Visclosky. I see the list of companies. But the 
Secretary in a conversation he had with me is saying that this 
is a particular initiative in this year's budget 2013. What 
examples can you give me in the 2013 budget that you have that 
is going to provide assistance to maintaining and increasing 
manufacturing in the United States of America because of the 
Office of Science? We are talking about the 2013 budget.
    Mr. Brinkman. I understand, but I think what he wastalking 
about is the applied energy programs when he was talking. I don't know 
that he was talking about us.
    Mr. Visclosky. So you have no discrete programs in the 
office at this time?
    Mr. Brinkman. We have a lot, but we don't have a special 
program that addresses that issue specifically. There is a hub 
that we are going to put together.
    Mr. Visclosky. We have five hubs now.
    Mr. Brinkman. Oh, there are five hubs, but there is one hub 
that is on critical materials, which is very closely working 
with the industry. Our biofuels centers are very closely 
coupled to industry, so we are working to transfer the patents 
and know-how to industry through them. Our synchrotrons are 
cranking out protein structures one after another these days.
    Mr. Visclosky. But you are doing that today. The Secretary 
emphasized there are going to be discrete new initiatives 
because of the loss of manufacturing. What companies----
    Mr. Brinkman. But I think that that is----
    Mr. Visclosky. What specific companies are we trading 
patents and trademarks with that are going to keep 
manufacturing in the United States?
    Mr. Brinkman. As far as I know what he is talking about 
there is some of the things that he has got going in the 
applied programs.
    Mr. Visclosky. Okay. If I could ask another question. On 
your budget request for the Office of Science, there would 
appear to be between fiscal year 2012 and 2013 some discrete 
decisions made as far as priorities. For example, and the 
chairman has touched on it, there is a cut of $15 million in 
the recommendation for high-energy physics. On the other hand, 
there is a request for $105 million more for basic science, 
which would lead me to believe somebody really made a discrete 
value judgment, whether we agree with it or not.
    In looking at the composition of the Basic Energy Science 
programs, and I will give you a couple examples here, in 
fundamental interactions research we have chemical physics 
research increased by $3 million and atomic molecular and 
optical science increased by a million. There is a differential 
there obviously of a factor of 2. When we get to chemical 
transformation research, catalystic science is $4 million, 
separations and analysis is $2 million, heavy elements 
chemistry is $2 million, geosciences research is $2 million. 
When we get to photochemistry and biochemistry research, 
photosynthetic systems is $2 million, physical biosciences is 
$2 million, solar photochemistry is $2 million. And when we get 
to nanoscale science research centers, the Center for Nanoscale 
Materials is $2.2 million, Center for Functional Nanomaterials 
is $2.7 million, molecular foundry is $2.2 million, the Center 
for Nanophase Materials Science is $2.2 million, and the Center 
for Integrated Nanotechnologies is $1.7 million. Those are 
almost all exactly the same number, and I don't have a sense 
anybody made a discrete decision as to which had more value 
between molecular foundry or the Center for Nanophase Materials 
Science or physical biosciences. Everybody got $2 million more.
    Mr. Brinkman. There is a whole group.
    Mr. Visclosky. They all have exactly $2 million more value?
    Mr. Brinkman. You are talking about a whole group of 
sciences in chemistry and materials that really are the core 
part of this whole clean energy activity, and so we have tried 
to increase them some. It is true that it is rather spread 
around, that is a fact, it may be spread around more than you 
like, but it is important for us to get in this clean energy 
initiative, to get all these different areas healthy and keep 
them going.
    Mr. Visclosky. Well, if I--with the chairman's----
    Mr. Frelinghuysen. I just want to make sure we get Mr. 
Olver and Mr. Womack in here.
    Mr. Visclosky. I am sorry.
    Mr. Frelinghuysen. But, no, I think that Mr. Visclosky 
needs an answer.
    Mr. Visclosky. Mr. Olver is here in case he cannot--I will 
defer, we are coming back.
    Mr. Frelinghuysen. Mr. Womack, do you want to get your oar 
in the water here, or Mr. Olver? I am not sure we want to have 
two scientists go at it here. But we are prepared. Mr. Womack, 
do you want to get in?
    Mr. Womack. Not at this stage. I certainly hope that you 
are not inferring that I am a scientist at all, because I am 
far from it.
    Mr. Frelinghuysen. Okay, Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman, thank you very much. I 
was getting very interested in where my ranking member was 
going with that discussion of what sounded like very small 
differences. Of course, I don't know what the total was for 
each of those eight or ten items that he mentioned, all of 
which went up $2 million essentially over the year.
    Dr. Brinkman, in your testimony you point out that the 
infrastructure modernization has been slowed somewhat due to 
the budget constraints, but is still intact. You point out that 
the budget does support four continuing line-item construction 
projects. But I don't know, unless the chairman has already 
mentioned a couple of them by name, what are those four 
construction projects and what amount of money goes into those?
    Mr. Brinkman. Let's see. Those are SLI construction 
projects. These are modernization projects.
    Mr. Frelinghuysen. Just to break down the acronym a little 
bit for the record here.
    Mr. Brinkman. I have forgotten what SLI stands for. They 
are a laboratory improvement program. It is a special 
laboratory improvement program.
    Mr. Olver. Of the U.S. science laboratories?
    Mr. Brinkman. Right, at the U.S. science laboratories.
    Mr. Olver. National laboratories.
    Mr. Brinkman. And so there are things like----
    Mr. Olver. Which are the four that are the ones that also 
supports all four continuing line-item construction projects? 
Which ones are those, for how many dollars? Maybe somebody has 
an answer.
    Mr. Brinkman. There are four that we have going here. There 
is one at the Jefferson Lab.
    Mr. Frelinghuysen. Put that microphone a little closer.
    Mr. Brinkman. One at the Jefferson Lab, there is one at 
Fermilab.
    Mr. Olver. Those are the two that are new?
    Mr. Brinkman. Those are new ones, but the old one is a 
science building at SLAC.
    Mr. Olver. SLAC, where is that?
    Mr. Brinkman. I am sorry. At Stanford, linear accelerator 
facility at Stanford. There is the energy science building at 
Argonne National Laboratory, and there is a renovated science 
lab phase II at Brookhaven.
    Mr. Olver. Brookhaven?
    Mr. Brinkman. Yeah.
    Mr. Olver. What is the fourth one?
    Mr. Brinkman. They are all infrastructure.
    Mr. Olver. What is the fourth one?
    Mr. Brinkman. Brookhaven. It is a renovated science lab.
    Mr. Olver. I have Stanford, Oregon, Brookhaven. What is the 
fourth one?
    Mr. Brinkman. Not Oregon. Stanford, Argonne National 
Laboratory.
    Mr. Olver. Argonne.
    Mr. Brinkman. Brookhaven, and--well, there are two at SLAC, 
two at Stanford. There is a research and user support building.
    Mr. Olver. So two of the four are at Stanford, one at 
Brookhaven, and one at Argonne.
    Mr. Brinkman. Those are the ones that----
    Mr. Olver. What is the total amount of money involved in 
the construction budget for the continuation of those, our 
continuing line-item construction projects?
    Mr. Brinkman. Yes, the highest one is $36 million, the 
lowest one is 14.
    Mr. Olver. What is the sum total?
    Mr. Brinkman. The sum total is $109 million.
    Mr. Olver. One hundred nine million dollars is the amount 
that is in this budget for those four?
    Mr. Brinkman. Right. All of them, including the new ones.
    Mr. Olver. Oh, including the new ones?
    Mr. Brinkman. Right.
    Mr. Olver. How much are the two new ones?
    Mr. Brinkman. Well, they are not much, $5 million.
    Mr. Olver. There are the two that you mentioned in your 
testimony at Fermi, one at Fermi and one at Thomas Jefferson. 
Where is the Thomas Jefferson?
    Mr. Brinkman. Down in Newport, Virginia.
    Mr. Olver. I figured it was in Virginia, but I did not 
realize there was a national lab sitting in--you do learn 
something around here.
    Mr. Brinkman. Right.
    Mr. Olver. Those two are $5 million each?
    Mr. Brinkman. Two-and-a-half actually. They are just 
starting, it is just the design phase.
    Mr. Olver. All right. So then it would sound as if there is 
over $100 million for continuation of the four. Are those four 
going to be complete with that $109 million or are those going 
to have a continuing budget next year as well?
    Mr. Brinkman. Let's see. I do not have those numbers. I do 
not know those numbers. I think they are finished in 2014. Is 
that right? That is not here.
    Mr. Olver. Well, okay, I am----
    Mr. Frelinghuysen. Will the gentleman yield?
    Mr. Olver. Surely.
    Mr. Frelinghuysen. You have some bigger projects in the 
offing here, right?
    Mr. Brinkman. Oh, yes.
    Mr. Frelinghuysen. Some major construction ones.
    Mr. Brinkman. This is a program. Let me try to make sure 
that you understand. This is a program of around $110, $115 
million which is meant to be for modernization of the 
infrastructure at the laboratories. There have been lots of 
complaints about the fact that the laboratories have really 
gotten old and they need new buildings, and----
    Mr. Olver. We have a lot of them. It would be hard to keep 
them all up to snuff at maintenance levels. You do have 
facilities that will degrade over a period of time, there is no 
question.
    The reason I asked that is that I also understand that, I 
think you were here at that time, you asked for the two new 
ones that are there in the 2011 budget. They were not funded in 
the 2011 budget.
    Mr. Brinkman. That is right.
    Mr. Olver. You did not ask for them in the 2012 budget, but 
now even though you are saying you are on constrained time, you 
are asking for the start of these two new ones. I am not sure 
whether the old ones will be complete.
    Mr. Brinkman. The old ones will be----
    Mr. Olver. I am not sure you indicated clearly whether the 
old ones will be completed in this budget.
    Mr. Brinkman. Can I just say one thing? We have a budget of 
around $115 million, plus or minus, for this program. We try to 
keep it at that level, and so we are phasing these projects in 
and out to keep the total constant. That is our plan, to spend 
about that much money every year on infrastructure.
    Mr. Frelinghuysen. Will the gentleman yield? This is 
relative to modernization and renovation----
    Mr. Brinkman. Right.
    Mr. Frelinghuysen. So a variety of labs, bring them up to 
speed.
    Mr. Olver. So the implication of what you have just said is 
that if any of the four old ongoing ones are completed----
    Mr. Brinkman. Others will come in.
    Mr. Olver [continuing]. And is no longer there, then in the 
next year you are going to have others that will come along on 
a list of priorities.
    Mr. Brinkman. And we have a long list.
    Mr. Olver. Keeping the whole of this at $100 to $115 
million total.
    Mr. Brinkman. Right.
    Mr. Olver. For all the facilities that need upgrading.
    Mr. Brinkman. That is right. I can tell you, we have a very 
long list of things that the various laboratories would like 
for us to do, so we are just kind of working our way through 
this thing very gradually.
    Mr. Olver. Okay. I will try to digest that.
    Mr. Frelinghuysen. Mr. Olver, we better let Mr. Womack jump 
in here.
    Mr. Womack. The role in maintaining U.S. Leadership in 
high-performance computing is a key to American innovation, 
economic growth. The Office of Science, through its operation 
of the National Energy Research Scientific Computing Center at 
Berkeley and the leadership class facilities at Argonne and Oak 
Ridge,has played a central role in keeping America in a 
leadership position. Unfortunately, because of a proposed nearly 5 
percent decrease for high-performance computing and an apparent lack of 
urgency on exascale planning, the Office of Science's commitment does 
not seem to reflect the importance of the issue. So the fiscal year 
2012 enacted appropriations directed the Department to report to the 
committee by February its plans for moving forward on the exascale 
computing initiative, a report which to this day I do not think has 
been submitted.
    Mr. Brinkman. It is essentially ready.
    Mr. Womack. Give us an update.
    Mr. Brinkman. Pardon? It is there. The report will be to 
you shortly. Look, we very much believe in working on exascale, 
but we at the same time want to keep our computer centers that 
we have at the cutting edge. And as you know, recently Japan 
and China sort of beat us at this game, and we would not like 
to let that continue. And so we are working on that and we are 
working on exascale at the same time.
    In the exascale world, there are some very fundamental 
issues that need to be solved in order for us to do exascale, 
and when there are kind of research-type questions, you do not 
throw a lot of money at them. You get good research people to 
work on them, and then when you figure out what you can do, 
then you spend the money. So we are a little bit slower than we 
might be on exascale, but we think we are doing well on it, and 
so we think we will be pushing forward at a good, fast clip, 
but there are just some very hard technical problems that have 
to be solved.
    Mr. Womack. Is there a timeline?
    Mr. Brinkman. There is a timeline. We are shooting at 2020.
    Mr. Womack. 2020, okay.
    Mr. Frelinghuysen. If the gentleman would yield, we are 
upgrading our existing capacity in a variety of sites around 
the country, right?
    Mr. Brinkman. Yes. The Office of Science has two upgrades 
that are coming: one at Oak Ridge, which is a major upgrade of 
that facility; and there is another one, there is a Blue Gene/Q 
IBM machine that will be installed at Argonne National 
Laboratory.
    Mr. Frelinghuysen. So it is Argonne and Oak Ridge. But the 
report you allude to is our jump over that.
    Mr. Brinkman. That is a jump over.
    Mr. Frelinghuysen. A technological jump over that.
    Mr. Brinkman. Exascale is a technological jump over that.
    Mr. Frelinghuysen. So the report is, what, being vetted? 
Where is this report?
    Mr. Brinkman. It is somewhat near its concurrence.
    Mr. Frelinghuysen. Describe to me what ``concurrence'' 
means for the record.
    Mr. Brinkman. It means various people have to approve it 
before it goes out the door.
    Mr. Frelinghuysen. So is it variably good news? Where are 
we going to be relative to the Japanese and Chinese?
    Mr. Brinkman. No, no.
    Mr. Frelinghuysen. What?
    Mr. Brinkman. We are going to take care of that issue.
    Mr. Frelinghuysen. Oh, we are?
    Mr. Brinkman. Yes.
    Mr. Frelinghuysen. Mr. Visclosky.
    Mr. Visclosky. The plan is brought forth, and you mentioned 
2020, and I understand it ranges 2019 to 2022. Will you have 
discrete benchmarks for each of the fiscal years, so that as we 
proceed the committee can review progress or lack thereof?
    Mr. Brinkman. As I said earlier, we will, but we have to 
get to a point where we have a path to get there. And that is 
one of the issues right now is we have to get to a point where 
we understand how to get there, and you cannot go running on a 
path when you do not know what the right path is. So we are 
spending money now to try to define the path.
    We have these teams of people that are looking at this 
problem trying to understand how we go forward with it. And for 
instance even yesterday, there was a meeting looking at the 
hardware part of this problem, trying to understand what we 
could do to solve the energy-use problem that is a very, very 
big important aspect of this problem. So we are doing those 
kinds of things, but we have got to solve this problem first.
    Mr. Frelinghuysen. Allow me to use this opportunity, we 
have two votes, so we are going to be absent from this room for 
maybe half an hour.
    Mr. Brinkman. Okay, we will be waiting.
    Mr. Frelinghuysen. Good, I am so happy to hear that. We 
will be back. Thank you. We stand adjourned.
    [Recess.]
    Mr. Frelinghuysen. I am happy to resume our hearing, and 
thank you for your forbearance, your patience. I just want to 
follow up. I asked about exascale, and you were not dismissing 
me, but I have some legitimate concerns about what the Chinese 
and Japanese are doing.
    Mr. Brinkman. Yes.
    Mr. Frelinghuysen. And how would you characterize where 
they are? I see it on the defense side. Both Mr. Visclosky and 
I serve on the Defense Subcommittee, and people often say, you 
know, that the Chinese will never measure up with aircraft and 
submarines in their defense posture.
    Mr. Brinkman. Right, until they do.
    Mr. Frelinghuysen. Until they do. And things are always, if 
you will pardon the expression, accelerated. And I assume in 
the world of supercomputers this is, if you will pardon the 
expression, our great leap forward. And where do we stack up in 
that area?
    Mr. Brinkman. Well, at the moment they have this machine 
that is, I think, second in the world. The Japanese actually 
have the first in the world machine, but they built that one 
with American parts. The Chinese are going ahead very rapidly 
now to try to build their own microprocessors and build a 
machine that is completely Chinese, and I have every reason to 
believe that they will succeed. They are very dedicated and 
looking to do that.
    Now, we have our own plans which, you know, involve Cray 
and IBM and Intel and Nvidia and these various companies, all 
of which are working with us very closely to try to see to it 
that we stay ahead, and get back in the lead; we are very much 
hoping to be able to do that in the next year or two.
    Mr. Frelinghuysen. So the report you referenced will--what 
will that report indicate?
    Mr. Brinkman. Well, that report will only talk about 
exascale, which is a longer-term thing, which is not the 
immediate competition that is going on for the next couple 
years, and so----
    Mr. Frelinghuysen. But the exascale is, in fact, to assure 
in the future our superiority.
    Mr. Brinkman. Right. At the moment we are only going a 
factor of 10 from the petascale machine, 10 to 20, we are 
moving up that much in the new machines, but exascale is a 
factor of a thousand from the peta, so that is a very big step 
forward. The current estimate is it would take a power plant 
next to your computer to run it, that is not what is going to 
get built, and so we have to figure out some ways. For 
instance, a conference we had yesterday----
    Mr. Frelinghuysen. Are you suggesting we do not have the 
ability to build a power plant? I know we have difficulty 
building nuclear power plants and oil refineries, but----
    Mr. Brinkman. I think I suggested that I would not have the 
budget to run a power plant.
    Mr. Frelinghuysen. Well, at the rate you are going--no.
    I want to get back, if I could, in all seriousness, to 
follow up where the ranking member was going in terms of 
scientific research leading to something here in the U.S.
    Mr. Brinkman. Yes.
    Mr. Frelinghuysen. To actual manufacturing. And the ranking 
can state it, but he comes from Gary, Indiana, and whether you 
come from Gary, Indiana, or you come from the pharmaceutical 
capital of the world, which also includes parts of the former 
Bell Laboratories system in New Jersey. We are keenly 
interested in things that are inherently of value to the United 
States of America.
    Mr. Brinkman. Right.
    Mr. Frelinghuysen. And so I want to get into what you are 
doing to assure the type of investments we are making, and we 
understand there are some tough decisions here, whether there 
is a real focus here on American jobs and technology, our 
industrial base. So give us some level of assurance.
    Mr. Brinkman. Well, let me just say one of the things I 
forgot to mention is that we have proposed as part of this 
whole chemistry materials work a mesoscale physics initiative, 
and we believe that that initiative is very much oriented 
towards manufacturing. We want to make a strong emphasis, 
especially for you from a pharmaceutical State, we have very 
strong interactions with a whole host of pharmaceutical 
companies; it is very interesting. Eli Lilly, the company, has 
actually its own beamline at Argonne National Laboratory, and 
they have theirresearch facility in San Diego. They send 
proteins to Argonne to have the structure determined, and then come 
back and they use it. It is an integral part of their drug development 
today, and so they very much use our facility.
    Mr. Frelinghuysen. Well, Sandia has a little piece of the 
action, too.
    Mr. Brinkman. Sandia?
    Mr. Frelinghuysen. It actually does have some sort of 
pharmaceutical connection.
    Mr. Brinkman. Oh, yeah, that is a different kind of thing 
completely.
    Mr. Frelinghuysen. Yes.
    Mr. Brinkman. I mean, there are other things, like General 
Electric has used Brookhaven National Laboratory a lot to look 
at their development work on sodium sulfur batteries. A sodium 
sulfur battery is a big round thing and it has got sodium on 
the outside in a membrane and then sulfur on the inside, and 
you need to understand all the various interfaces between those 
materials, and you can do that with x-rays at our synchrotrons. 
They regularly come and image the battery, look at the battery, 
and see what the battery is doing.
    Mr. Frelinghuysen. Our question to Dr. Chu, and this is my 
view of where we were going when he testified before us, is 
that we are involved in all these things. You are providing 
invaluable assistance in terms of these types of developments, 
but how do we actually keep the essential intellectual property 
here? Dr. Chu gave us the impression that there is no way we 
could stop the migration of some of these discoveries, and it 
gets back to what we would like to do to resurrect our 
manufacturing base and better own the waterfront.
    Mr. Brinkman. Look, I am certainly not an expert in 
international patent law, but certainly many of these things 
are being patented. My impression is that we have a lot of 
conflict over patent law with China, but I do not know anything 
about that.
    Mr. Frelinghuysen. But you have under your jurisdiction a 
lot of centers.
    Mr. Brinkman. Yes.
    Mr. Frelinghuysen. Mr. Olver pointed out some. And then 
there is, what, 82 frontier centers, and----
    Mr. Brinkman. Forty-six.
    Mr. Frelinghuysen. You have these hubs and everybody has a 
degree of excitement about ARPA-E, we have got all sorts of----
    Mr. Brinkman. They all have very strong patent and 
intellectual property programs, and we try to patent as much as 
we can. Every laboratory has a patent office that works to do 
that. As you know, we have things like CRADAs and this new 
thing we call Act, which is a new way for a company to approach 
a laboratory, which is a little faster and maybe a little 
simpler for smaller companies. So we have worked hard to try to 
find new ways to do this.
    For our user facilities it is a rather easy process because 
we are not trying to claim their intellectual property. They 
have to pay full cost recovery if they want to use the facility 
for company private things, but if they are going to simply 
publish the data, we do not charge them. And so we have very 
specific processes to try to protect our intellectual property, 
we have worked very hard at that.
    One of the things we have done over the last few years is 
we very much elevated the intellectual property technology 
transfer organization in the Department. It now reports 
directly to the Secretary, and so we have worked hard at 
improving this situation.
    Mr. Frelinghuysen. Mr. Visclosky. Thank you for your 
patience.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Doctor, just to catch up to where we were right before we 
left, we were talking about exascale computing, and you 
mentioned that you do not have milestones yet, because you have 
not defined the path which will be in the final report.
    Mr. Brinkman. Let's see. It is not defining the path, it is 
determining the path.
    Mr. Visclosky. Okay, when you determine the path.
    Mr. Brinkman. Yeah, we have to figure that out.
    Mr. Visclosky. That path will be delineated in the report 
that will be submitted?
    Mr. Brinkman. Oh, no, no, no. The report you are going to 
get is the next few weeks, and the path that we are talking 
about here is a technology path that we have to figure out.
    Mr. Visclosky. Right.
    Mr. Brinkman. In that report we will talk about how we are 
going to use, to work on the technology to get there, but that 
is not a complete path.
    Mr. Visclosky. Let me ask you this, then: In the report, 
will you with any specificity be able to tell the Subcommittee 
when we are sitting here next year what you anticipate will be 
accomplished between now and next year, so that we can see if 
you are making progress or not?
    Mr. Brinkman. Yes, there are several things that we are 
working on that we need to understand. One of them I already 
mentioned, this issue of the amount of power such a machine 
would take. We cannot----
    Mr. Visclosky. Right, but my time--because I have other 
questions, but there will be discrete----
    Mr. Brinkman. There are these discrete things that we are--
--
    Mr. Visclosky [continuing]. Milestones that you will be 
able to----
    Mr. Brinkman [continuing]. Working on to try to understand 
how to go forward.
    Mr. Visclosky. Okay. If I could get back to my original 
line of questioning. Why did everybody just get $2 million 
more? No, I am serious.
    Mr. Brinkman. No, no, I understand that. And the answer is 
that this distribution was notional. We will be competing 
proposals across those various subfields, and however that 
competition comes out, the money will be redistributed. So that 
was a sort of notional effort about how much each one of those 
little fields will get in that competition, but we will have a 
competition.
    Mr. Visclosky. When you say ``notional'', you are 
essentially saying everybody gets the same, we will see where 
the grants come in, and then we will move money around.
    Mr. Brinkman. And then we will move money around.
    Mr. Visclosky. Before the Department solicits for grants, 
there is no anticipation as to what types of work, what types 
of research, or what types of different proposals----
    Mr. Brinkman. No, no, no, no, no.
    Mr. Visclosky. There is a Department of Energy.
    Mr. Brinkman. I am sorry. Don't get the idea that we just 
let any grants come in. We have a thing called FOA, it is 
Funding Opportunity Announcements, that we announce what areas 
we would accept grants in.
    And so we put out these Funding Opportunity Announcements 
and specify what we are looking for, and they tend to be fairly 
broad so that they can be used, you know, within that subfield 
that we are talking about there.
    Mr. Visclosky. In your mind, looking ahead a year, the 
Department doesn't come to some conclusion that separations and 
analysis under the chemical transformation might put more funds 
in there and it creates more applications because there is more 
need there?
    Mr. Brinkman. If we get better applications then somewhere 
else, we will put the funds over there. That is what it is 
saying, within the confines of the larger program.
    Mr. Visclosky. Why do you break it down by accounts if you 
just wait to see what you get in? Why even bother?
    Mr. Brinkman. Well, we could. But we put a notional number 
there. We try to----
    Mr. Visclosky. I know. Why did you even bother? Why don't 
we just have transformation research?
    Mr. Brinkman. It is a good question. We could have done 
without it. We could have done without it. We thought it would 
be helpful.
    Mr. Visclosky. I find the answer very unsatisfactory.
    Mr. Brinkman. Sorry.
    Mr. Visclosky. The next question I have is the budget 
request for fiscal year 2012 asks for $97 million within basic 
energy sciences for major items of equipment. The final 
conference report passed by the United States Congress in 
December, signed into law by the President of the United 
States, provides $97 million, explicitly providing funds for 
each of the six major items of equipment projects at the levels 
in the budget request. Doctor, how much money did the 
Department allocate for these purchases for fiscal year '12?
    Mr. Brinkman. For MIEs?
    Mr. Visclosky. Yes.
    Mr. Brinkman. I don't know if we know that number off the 
top of my head.
    Mr. Visclosky. $73.5 million, okay.
    So in spite of Congress' direction for $97 million to go to 
these projects, the Office of Science went in a different 
direction. In fact, your 2013 budget request formally--and I 
might add incorrectly--states that the lower $73.5 million was 
appropriated in fiscal year 2012, and it begs the obvious 
question as to where the money went. Of the six projects in the 
request and that Congress funded, what did you cut to get to 
your number?
    Mr. Brinkman. Let's see. We probably cancelled something in 
there. What was it? Team II and PUP? We cancelled one of the 
projects is what happened.
    Mr. Visclosky. The other one was the SNS power upgrade 
project for $5.4 million.
    Mr. Brinkman. Yes, SNS, yes. That one was cancelled, right? 
That was cancelled.
    Mr. Visclosky. And you never communicated that to this 
Subcommittee or to the Senate Subcommittee, as I understand it.
    Mr. Brinkman. Oh, I am sorry.
    Mr. Visclosky. After the fact, after the fact.
    Mr. Brinkman. Yes. We felt that we had to do that because 
we wanted to put more emphasis on the Synchrotron.
    Mr. Visclosky. I have got to tell you, Doctor, when people 
cut down trees and put ink on a piece of paper in a sign into 
law, I would expect that the administration comes back and 
consults with the United States Congress, a coequal branch, 
before they start moving around $23 million.
    And my other question, and it is rhetorical, is out of a 
basic energy science budget of $1.7 billion, of which $1.5 
billion is research, that the Department couldn't find $11 
million?
    Mr. Brinkman. I don't know the answer to this. Can I get 
back to you on this?
    Mr. Visclosky. It is a rhetorical question.
    Mr. Brinkman. Because I just don't know the details of 
this. Okay, I will get back to you on this.
    Mr. Frelinghuysen. Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman.
    You know, I have to wander back and forth around these 
papers that I have in front of me in order to find what I want 
to do, but, Mr. Secretary, you at several points have 
emphasized that your priorities have been for clean energy and 
that you, wherever there was change, you were giving priority 
to clean energy.
    Well, it seems to me that--I am now going into talking 
about the fusion sciences. It seems to me that the high-energy 
physicists and the fusion scientists and the plasma scientists, 
wherever they happen to be--and this is similar to their 
talking about inertial or magnetic containment--that they think 
that that is the Holy Grail, truly the Holy Grail of clean 
energy.
    Mr. Brinkman. Yes, I agree.
    Mr. Olver. All right. But what we are seeing here is a 
substantial change in the budgets. The budget for--and 
realizing that inertial containment is in a different NNSA 
program--the magnetic is all within your area, within the 
Office of Science. And the Office of Science for fusion 
sciences is flat-funded for this coming year.
    Now, the chairman has already pointed out that there had 
been at an earlier time a commitment for a higher number for 
here than is actually provided, a number that was up in the 
$200 million range for this year, and that is down, but a 
sizeable amount up $50 million from what it was last year.
    Mr. Brinkman. Right.
    Mr. Olver. And the number of dollars for the domestic 
programs, the various domestic programs, which include at the 
science labs, at some of the universities which do theoretical 
work around the country, and at the place that had experimental 
facilities, mainly General Atomics and MIT and Princeton, in 
the major scientific experimental equipment, that the sum total 
for them is down by $50 million; and I think the chairman, 
without driving it home, is questioning where we are headed.
    If our commitment to ITER--and you are saying our 
commitment has got to be whole--my impression is that ITER has 
gone through some benchmark changes or goalpost movements or 
something so that the timeframe has moved somewhat along, and 
it has become considerably more expensive over a period of time 
than was the case in the early years, 8 or 10 years ago, that 
the total amount of dollars intended for that has gone up.
    But in the coming years, in 2014, we go 1 more year and 
they are talking about a $250 million commitment to ITER and a 
$300 million a year commitment in the next couple of years even 
going higher than that. And if we are going to end up with a 
flat budget, then the domestic programs are going to really be 
affected. At the moment, while the budget seems to really take 
it, it puts the wood to the program at MIT, which was one of 
our two functioning--well, I shouldn't say this. Maybe there 
are more than two functioning tokamak laboratories right now.
    I understood that Princeton is waiting for an upgrade, an 
important upgrade that has to be done to get them back on 
track. And when they come back on track, they will be in better 
shape. They will be at higher capacity than others.
    Mr. Brinkman. They will be back on track. They will be in 
better shape.
    Mr. Frelinghuysen. Obviously, if we move ahead.
    Mr. Olver. Right. But will we have any money left in there? 
How are we going to get this kind of money with ITER? ITER was 
going to eat our whole domestic program essentially in the 
program with the numbers that are involved here.
    Mr. Brinkman. Look, obviously, that can't happen.
    Mr. Olver. Obviously, that can't happen. Tell me how.
    Mr. Brinkman. You can't take ITER up to $250 million a year 
and take another $100 million out of the bill of domestic 
programs. There won't be a domestic program if you do that, 
right? We cannot do that. We are going to have to find another 
way to fund ITER.
    Mr. Olver. Well, why isn't that obvious right now?
    Mr. Brinkman. Well, it is obvious; and we are going to work 
that over the next year to make sure we get it right.
    Mr. Olver. Yes. Well, but it is kind of like a gun to the 
head the way this is playing out. It is a gun to the head. 
Anybody that is in any of the others--by the way, each--no two 
of these tokamak programs, the magnetic programs, looks exactly 
alike.
    Mr. Brinkman. No. That is true.
    Mr. Olver. Our biggest one that is operable at the moment I 
think is the General Atomics facility.
    Mr. Brinkman. That is right.
    Mr. Olver. And there are others in other countries, some of 
them larger; and all of them have different shapes, different 
characteristics, different measures. All of them have done 
work, and every one of them has done work that is ending up as 
the baseline for ITER to do its work. Because ITER is just 
basically an upgrade in size, in capacity, and power and so 
forth----
    Mr. Brinkman. Right.
    Mr. Olver [continuing]. To get us to something that, if 
they can sustainably burn, which they hope to get to test by 15 
years or so from now, sustainability to burn----
    Mr. Brinkman. Yes, look, what has happened in this field of 
magnetic fusion, over a period of something like 50 years there 
has been a gradual building of larger and larger machines that 
did more and more and got closer and closer to a burning 
plasma. The last two of that sequence, one was JET in England 
and the other was GFTR at Princeton, we got to that point and 
then it became clear that the next machine, in order to really 
demonstrate a burning freezer, was a very large machine, right? 
That is when things went into this international fit and took 
all this time to get going.
    When I came on the scene, in 2009, ITER was frankly in 
quite a mess because it didn't have the proper management. It 
didn't have a whole bunch of things in the right place. We have 
straightened out a lot of that now. I believe that the program 
is now running much, much better than it was 3 years ago. 
Through all of that, there are all these estimates of what it 
was going to cost, and, frankly, they were often made almost as 
guesses rather than real designs.
    And now we have really real designs. We know exactly. We 
had a really--working at detailed designs. We are trying to 
find ways to save money on those designs and building them. So 
we are doing a heck of a lot of work to try to understand how 
to keep the cost under control and the project moving forward. 
It is a very, very intense period right now for the ITER 
project.
    Mr. Olver. We don't even yet know whether the Holy Grail is 
going to be through the inertial or the magnetic mechanism, 
exactly.
    Mr. Brinkman. That is true.
    Mr. Olver. Yes, that is true. Maybe they both will work.
    Mr. Frelinghuysen. If the gentleman will yield, but if you 
reduce the funding by $150 million, I mean, that is a shocker.
    Mr. Brinkman. Peace.
    Mr. Frelinghuysen. No. You must have come to some rationale 
for that decision, and I would like you to----
    Mr. Brinkman. The rationale of the administration is that 
we need to push harder on clean energy, that that fusion is not 
likely to occur for more than 50 years, all right, 2050, maybe, 
and so, from an administrative point of view, it had less 
priority than the other clean energy programs. That was----
    Mr. Olver. Okay, well, it is whatever provides for clean 
energy now. Although many of the other things that we are doing 
on clean energy are not going to happen immediately or 
commercialize within 10 years in many cases.
    Mr. Brinkman. Oh, no, no, no. No, no, no, no, no. Look, 
nothing happens in a few years. The kinds of things we are 
doing take 10 years. For instance, you can't introduce a new 
type of battery in less than 10 years by the time you do all 
the safety things.
    Lithium burns, so you can't--you have to worry about all of 
the safety issues, et cetera. So typically 10 years for a new 
product.
    Mr. Frelinghuysen. I want to get Mr. Womack in here.
    Mr. Olver. Yes, fine. I will come back.
    Mr. Frelinghuysen. Please do.
    Mr. Womack.
    Mr. Womack. I want to come back to computing again, and I 
know some of this discussion maybe has already transpired right 
after the votes and before I was able to make it back in. But 
help kind of a lay citizen like myself understand, in this next 
generation of computing, what is your vision for what this type 
of speed, if you will, or this type of data processing can 
actually do that we can't do now?
    And then I have a follow-up question. I know you had a 
military partner in this initiative with the NNSA, and I 
realize there maybe are some futuristic things that could be of 
some classified nature, but what does it do for our military?
    Mr. Brinkman. Well, let's see. Let me take first the 
science part, and then I will talk about the military parts.
    In the science world, there are just many, many problems 
for which we still cannot model these problems and simulate the 
problems on our current computers. Various examples include 
combustion and an engine inside of this. It is a very, very 
difficult problem.
    There are hundreds of different molecules that get created 
in the process of that combustion, and a turbulence inside the 
cylinder has to be modeled, and we just can't, even with 
petaflop machines, we can't model that completely.
    In a materials world we can model perfect crystals today, 
but we want to be able to model materials with small grains and 
see how the small grains of crystals interact and make better 
and better materials, and that is part of the whole nanoscience 
initiative to be able to do that kind of thing. We are seeing 
results from that today.
    Still we could go a lot further in those things. Fusion is 
the classic example of something that needs a much higher level 
to simulation before we really completely understand it. So 
there are lots of problems. I am not worried about finding 
problems to work on.
    On the industrial side, we have worked with Boeing, for 
instance, and did simulations of their wings for the 787. They 
went out and bought their own petaflop machine because it was 
so important to them to be able to get that simulation.
    One of our favorite examples is this smart truck thing 
where we used our petaflop machine to simulate the flow of air 
around 18 wheelers, trailers. You know, the big problem with 
the trucks is they have a very flat back, so they essentially 
create a kind of vacuum behind them. Well, guess what? That 
vacuum sucks on the back of the truck trying to pull it 
backwards, right? So, we invented a small part that they can 
slap underneath the trailer, which greatly reduces that vacuum 
and, we increase the efficiency of those trucks by 12 percent. 
This is a truck that gets 6 miles a gallon. So you save one 
heck of a lot of gasoline with that.
    So these kinds of simulations, even that simulation is not 
as detailed as eventually you might like it to be. So I think 
there is no question that we will be able to do that.
    In the military, there was a big emphasis at the Livermore 
laboratory which has been the simulation of nuclear weapons. 
That is another very big problem because of the amount of 
materials and the types of chemistry that goes on and that 
nuclear reaction that goes on, and that is something that is 
very hard to simulate.
    So these problems are very hard to attack, and I think a 
bigger and bigger machine will allow us to do that.
    Mr. Womack. Before the vote, we talked a little bit about 
the facilities piece and the investment that is being made in 
this exascale initiative, and I know you mentioned China and 
Japan specifically, and I think there was even some discussion 
before I came back. But what about Europe? Where is Europe in 
this race, if you will?
    Mr. Brinkman. Well, I don't know where they are as far as 
where they stand on this famous Linpack scale, but they 
certainly are trying as well.
    We have to remember also that there is this whole 
international business, and IBM and Cray are trying to sell the 
machines that we helped work with them to develop. They are out 
there on the market right now trying to sell these things. And 
that is all fine, right? That is what it should be. That is 
good American industry, making money. And so that is happening 
as well. You have to recognize that, as it is going on.
    Mr. Womack. And if I heard you correctly before we ended my 
last round of questions referencing China and Japan, upon 
implementation, you are pretty confident that the United States 
is going to be looked at as, shall we say, a leader in this 
field.
    Mr. Brinkman. Yes. Yes. I feel confident that we will 
maintain our leadership in this field. We have a set of 
companies behind us and very good people at our national 
laboratories, and I think we can maintain our place in the 
field. I think you take Intel, you take Cray, you take NVIDIA 
and IBM, these companies are very strong in this field, and we 
can work with them to keep us ahead.
    Mr. Womack. Thank you, Dr. Brinkman.
    Mr. Frelinghuysen. Thank you, Mr. Womack.
    Just for the record, where are we doing the truck 
simulation?
    Mr. Brinkman. That is at Oak Ridge.
    Mr. Frelinghuysen. And we are also taking a look at tires 
as well? I don't want to get into where they are manufactured, 
but I----
    Mr. Brinkman. The tires work was done at Sandia, and it has 
been going on for quite a long time with Goodyear. That 
simulation apparently----
    Mr. Frelinghuysen. That is worthy of simulation as well.
    Mr. Brinkman. Oh, yes.
    Mr. Frelinghuysen. We hope that some of those tires might 
be domestically produced.
    Mr. Brinkman. Well, that is a different question.
    Mr. Frelinghuysen. I want to get back to some of the issues 
I raised in my opening remarks.
    Dr. Brinkman, this year is similar to the last two in that 
additional funding for any program is going to be exceedingly 
hard to come by. The budget for the Office of Science is 
particularly difficult because of the existing commitments, 
some of which we have talked about, to several large projects. 
Those budgets are scheduled to grow this year, not all, but 
some of them are.
    But this committee must live within its means, and that 
means making extremely difficult decisions. It is very likely 
that we cannot count on having an additional $100 million for 
you to add to the Office of Science in your budget request. 
This will be based on the debate in Congress probably over the 
next couple of weeks but certainly over the past year.
    We look to you and the Department to help in prioritizing 
as we make these decisions. To that end, the Fiscal Year 2012 
appropriations conference report, which has been referenced 
earlier, directed your office to provide us with what I would 
call a flat budget scenario. That is, if you receive funding at 
the 2012 level, how would you prioritize your budget? When are 
we going to get that report, and would you outline for the 
committee what you do with flat funding? Because there is a 
strong probability it may be flat funding.
    Mr. Brinkman. Yes.
    Mr. Frelinghuysen. I wish it wasn't, but, in reality, that 
may be where we are going.
    Mr. Brinkman. The answer to that, I think, is a little 
tricky. Because if we----
    Mr. Frelinghuysen. The report, though, where is the report? 
That isn't tricky.
    Mr. Brinkman. It is tricky. That has not gone through. We 
do not have a report ready for you at this stage, and we need 
to work on that.
    What I was going to say is----
    Mr. Frelinghuysen. Let me just say, I think it is important 
to accelerate that. I mean, there is a strong probability we 
may be put in a position----
    Mr. Brinkman. The problem with publishing a report of what 
you do over 5 years with constant level budget is that in that 
report, you are going to propose closing down a bunch of 
things.
    Mr. Frelinghuysen. Well, you already proposed that in your 
budget.
    Mr. Brinkman. For this year.
    Mr. Frelinghuysen. No, but let's lay it out. To some 
extent----
    Mr. Brinkman. I am going to lay out more.
    Mr. Frelinghuysen [continuing]. You have already signed a 
warrant for certain actions, haven't you?
    Mr. Brinkman. Yes, sir.
    Mr. Frelinghuysen. And that is going to ripple across the 
public and private sector.
    Mr. Brinkman. Yes.
    Mr. Frelinghuysen. But I just think somebody over in your 
operation ought to be taking a look at----
    Mr. Brinkman. Well, we certainly are doing that. The 
question is whether we can show whether we can release those.
    Mr. Frelinghuysen. The worst-case scenarios--I know we turn 
to our military people, and we ask what happens when you reduce 
the Army by 80,000 and the Marines by 20,000 and you have ships 
under 285 and you have a reduced number of submarines? I can't 
imagine we couldn't take a look at growth, the broad spectrum 
of all of your centers and programs.
    Mr. Brinkman. We do that. We do that.
    Mr. Frelinghuysen. Well, we have asked for something.
    Mr. Brinkman. Well, we will try to work that out, okay?
    Mr. Frelinghuysen. On another issue, there was considerable 
buzz last year in the science community and the general public 
about a tentative of funding at the CERN, the Europeans' 
physics center, showing that neutrinos actually move faster 
than light. You want to talk about that? I saw something 
actually in the Wall Street Journal and the New York Times. 
What is going on?
    Mr. Brinkman. What happened there is that the group that 
was doing that discovered----
    Mr. Frelinghuysen. And give us an overview of what CERN is 
doing.
    Mr. Brinkman. Well, what CERN is doing there is they take 
their accelerators and smash muons into a target and the muons 
decay and give you neutrinos. You can time very accurately when 
those neutrinos are created at that point, and then you can 
time it very accurately when the neutrinos are detected at the 
cave in Italy.
    So what you are doing, you are timing the neutrinos between 
those two points, but you also have to make sure you coordinate 
the timing of those two points by light and up through the GPS 
satellites. What happened is that there was a connector from 
the sensor that captured the signal from the GPS to put it into 
an optical fiber, and that connecter being loose turns out it 
puts a delay in the time light takes to get from CERN to Gran 
Sasso cave. So, because of this connector, not because the 
speed of light was anything different, because this connector 
had a delay in it, it looked like light was taking longer than 
the neutrino. And that is where this thing came----
    Mr. Frelinghuysen. So do we have any labs that are doing 
similar type research, and knowing you have Princeton roots and 
this is all about Einstein, isn't it?
    Mr. Brinkman. Yes. This is all about Einstein. That is for 
sure.
    Mr. Frelinghuysen. And so what are we doing here at home 
and where do you put Einstein on this question?
    Mr. Brinkman. My own belief is that is what is going to 
happen here.
    I think, first of all, this answer that they have, the 
group that originally published this thing, is saying this is 
at the speed of light. The speed of neutrinos is the same as 
the speed of light. My view is, I don't think we have got to go 
check that again, frankly, but we are.
    Mr. Frelinghuysen. So are we doing anything that relates to 
it here and where are we doing it?
    Mr. Brinkman. Yes, at Fermilab. At Fermilab.
    Mr. Frelinghuysen. Mr. Visclosky.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Doctor, the long baseline neutrino experiment would focus 
obviously on neutrino research. The possible total construction 
costs of the project as proposed at Fermilab could range in 
excess of a billion to $2 billion. There have been hurdles in 
arriving at the current design. Inparticular, the National 
Science Foundation was slated to build and maintain the detector 
facility, but they announced in late 2010 that they were pulling all 
funding. This year's budget for your Department instead provides 
funding to continue research while it evaluates the proposed plan.
    Do you know when the Department is going to be making a 
decision as to whether they are going to proceed with this 
proposal or not, given the fact that there is also now a new 
budget proposal in the House that cuts discretionary spending 
by another $19 billion?
    Mr. Brinkman. Yes. Let me tell you where we are on this, 
and what our thinking is.
    All through summer and fall of this past year we have asked 
Fermilab and the high energy physics community to figure out 
and settle and come up with a real design, down select the 
various options from the various options and give us a real 
plan for what this thing would look like.
    They have done all of that and they have done a really good 
job. They really went at it in detail and came back to us. But 
the problem is they came back with a very high price. So, with 
constant level of funding, I don't see us being able to do that 
specific experiment.
    But we have a couple of smaller experiments that we are 
doing in the Homestake Mine out in South Dakota. For $11 
million we can keep the pumps running and do these smaller 
experiments.
    One of them is a dark energy experiment, and the other one 
is called a Miranda experiment, it is basically a neutrino--
decay. These are two interesting experiments that will keep us 
with that mine. South Dakota and their benefactor out there 
have put almost a hundred million dollars into that mine at 
this stage, and so we are trying to help them keep that open 
and do some science.
    But I think we are going to be looking for other ways. The 
fact of the matter is that one of the very important parameters 
of neutrinos has just been measured at Daya Bay in China where 
we are a collaborator with the Chinese on an experiment which 
looks at neutrinos coming from reactors.
    Mr. Visclosky. But for budgetary purposes it is not being 
built into the administration's budget in the outyears.
    Mr. Brinkman. Not at this stage.
    Mr. Visclosky. The next question I would have is the budget 
proposal before us has $20 million for the Energy Frontier 
Research Centers, and I have been a proponent of those centers. 
There are 46 of them.
    Mr. Brinkman. No, no, no, no.
    Oh, yeah, yeah. You are right. I am sorry. Yes, sir. You 
are right.
    Mr. Visclosky. I stand to be corrected. All you have to do 
is look at my pocket and know I am a goofball.
    Mr. Brinkman. Now I know what you are talking about.
    Mr. Visclosky. Has the Department made a decision as to how 
they will distribute that $20 million between the 46 centers?
    Mr. Brinkman. I don't think they have gotten that far. That 
$20 million is meant to try to help to couple those centers 
into projects in EERE. That is the thought behind it, and we 
will see how it works out. We haven't worked that out yet.
    Mr. Frelinghuysen. What do you mean ``couple?'' Could you 
expand? What does that mean? I think we know what it means, but 
maybe you could explain it.
    Mr. Brinkman. The Energy Frontier Research Centers are 
creating a lot of really interesting new ideas for gadgets and 
devices, and those things need to be taken further towards 
development and then into development and manufacturing. That 
is really EERE's job. So we want to try to enhance these things 
in ways that makes that easier.
    Mr. Frelinghuysen. Excuse me.
    Mr. Visclosky. If I could have one more question, Mr. 
Chairman.
    The budget request reduces funding for the RHIC facility at 
Brookhaven National Laboratory, and it is my understanding that 
this would reduce operating time in fiscal year 2013 to 9 
weeks. The facility received $156.6 million in the request, and 
I am led to believe that for an additional $3 million they 
could run up to 15 weeks, enough to conduct a run in 2013. Why 
not include the additional $3 million?
    Mr. Brinkman. I would have to go back and look at the exact 
numbers, how long they can run. I know that their budget, the 
budget we gave them, did not allow them to run anywhere near 
the full capacity, and that is very unfortunate, but that 
reflects back on the total budget of the nuclear physics 
program.
    Mr. Visclosky. Yes, if you could, for the record, what the 
trade-off was and why they didn't get to three.
    Mr. Brinkman. Well, it involves the nuclear physics program 
having a reduced budget in the proposed '13 budget. So between 
trying to fund FRIB and RHIC and the Thomas Jefferson 
laboratory, something had to give.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Mr. Frelinghuysen. Before going to Mr. Olver, both Mr. 
Olver and I mentioned the work at MIT. Does this basically shut 
down their operation, or is there money in there to shut it 
down----
    Mr. Brinkman. There is money in there to see to it that we 
handle the graduate students and let some of them finish; it is 
a gradual shutdown.
    Mr. Frelinghuysen. A major blow, in any case.
    Mr. Olver.
    Mr. Olver. Okay, since you raised that one, Mr. Chairman, 
thank you. Do any of the university programs in plasma science, 
or fusion sciences have more graduate students than MIT?
    Mr. Brinkman. Well, I am not absolutely sure, but there is 
a large number. It is something like 300 graduate students 
outside of MIT in the program.
    Mr. Olver. In programs around, but I was just asking if any 
one has as many as they have. I think they are in the 50 or 60 
level themselves.
    Mr. Brinkman. Well, Wisconsin is probably the next 
competitor. MIT has a fairly large----
    Mr. Olver. Very large.
    Mr. Brinkman. Yes, but these kinds of considerations were 
all thought about in trying to come up----
    Mr. Olver. Okay. All right. I understand that things are 
not easy.
    But let me follow a little line in these numbers. Over a 5-
year period, the budget has gone up and down. The proportion of 
the budget 5 years ago for the national labs and the programs 
in other institutions around the country was somewhat larger 
than it is now. And it is now--for the first time, it is coming 
down about $5 million.
    As a side question, is the amount of money spent at Oak 
Ridge as the leader of our ITER program, is that attributed to 
ITER, as a contribution to ITER? That portion goes----
    Mr. Brinkman. No, no, no, no. That whole portion is 
attributed to ITER and not at all to the base program.
    Mr. Olver. Okay. Then the three major ones, the major 
individual programs which were General Atomics and Princeton 
and MIT, those represent about a third of the budget, as it 
looks like for now.
    Mr. Brinkman. Right, that sounds about right.
    Mr. Olver. And then ITER has been growing, and it is the 
one that is just going up, up, up, if we are going to make 
those commitments.
    Now my intention would be that if we wish ITER to be 
successful, then we have to have a successful group of these 
major institutions that are continuing to function. Because 
each one of them puts in things. What ITER is doing is simply 
upscaling whatever works. And to terminate anybody at this 
point in this game is a dangerous thing to do, not only for the 
success of ITER but, of course, for the success of our own 
domestic program as well.
    I am repeating, I think, that every one of these components 
has had some inputs into the development of the ITER program.
    Mr. Brinkman. I agree with you that all three have had 
inputs into the ITER program, all three of the national 
facilities. However, if you asked me which has been the most 
productive from the point of view of preparing for ITER, it has 
clearly been DIIID. They have done a series of experiments.
    Mr. Olver. And it has grown relative to the others in the 
last few years, no question.
    Mr. Brinkman. No question. And it has just done very well. 
In fact, there is an annual, international plasma physics 
meeting, run by IAEA, the International Atomic Energy 
Commission, and 4 out of the last 5 years experiments at DIIID 
have won the best paper at the meeting. So they have done very, 
very, very well.
    And the other thing, I don't want to belittle MIT's effort, 
either. They have done some very nice work in particular on 
tungsten walls and tungsten diverter walls in the bottom part 
of the machine. But I have to say that is also being done at 
JET in England. And so this is all the kinds of things that we 
took into consideration.
    Mr. Olver. One needs whatever it is that JET is doing in 
England and whatever there are others doing in Japan or South 
Korea.
    Mr. Brinkman. You want to take those into account.
    Mr. Olver. All those need to be part of this or else this 
Holy Grail is going to be made hard.
    Mr. Brinkman. Right.
    Mr. Olver. One last short question. I started asking, 
shortly after we started creating hubs, was there any 
expectation that some of the research, frontier research 
centers, which must be pretty close to hubs that are being 
created----
    Mr. Brinkman. Yeah.
    Mr. Olver. Are any of them to be subsumed into the hubs as 
reviews go forward?
    Mr. Brinkman. Now, I would say it is very possible that 
that would happen. For instance, right now, the hub that is 
just getting started----
    Mr. Olver. You only have one hub going at the moment.
    Mr. Brinkman. Right. They have the Fuels from Sunlight Hub.
    Mr. Frelinghuysen. If the gentleman would yield, I think we 
are looking for some information on the hubs. I think we are 
still missing an update as to what they are doing.
    Mr. Brinkman. I could answer his question. I mean, the 
answer is that in the Fuels from Sunlight Hub, the scout 
techgroup, that head set actually was part of an EFRC. So, to some 
extent, the technology with the EFRCs has been consumed into the hub. 
In fact, Nate Lewis, who was a professor at Cal Tech, is using a whole 
set of EFRCs to feed new catalyst into the hub.
    Mr. Olver. But that should also happen with ones like the 
battery science or the solar science one, the two hubs that are 
functional out of Erie.
    Mr. Brinkman. We are just getting the proposals to start 
the battery hub.
    Mr. Olver. That is right.
    Mr. Brinkman. But here again is a situation, but I don't 
know who is going to win this. But let me take Argonne National 
Laboratory for a minute. We have an EFRC on batteries there, 
and in that EFRC they have some people who invented some of the 
new cathode materials that are being introduced into batteries 
today, into Volt and things like that. I am sure they are going 
to apply for a hub. If they win the hub, that EFRC will be part 
of it.
    Mr. Olver. They will be an applicant in it. But we will 
still leave the other frontier science centers sitting where 
they are.
    Mr. Brinkman. Right.
    Mr. Frelinghuysen. The shades will be closed, but they are 
not quite closed on this hearing.
    Mr. Brinkman. I can see that.
    Mr. Frelinghuysen. I don't know how you withstood it. You 
could have winked at us or something, and we would have put the 
shades down for you. We like--you know, we like transparency 
and openness.
    I want to just focus for a few minutes on the bioresearch 
centers. You are plugging in a $375 million investment again 
for the next 5 years; is that correct?
    Mr. Brinkman. We are hoping to, yes.
    Mr. Frelinghuysen. Yes, can you tell us how you evaluate 
each of these centers?
    Mr. Brinkman. Yes. Well----
    Mr. Frelinghuysen. How do you actually evaluate their 
performance and how do you match that relative to their 
original goals? Each of them had a whole set of goals.
    Mr. Brinkman. Well, we have very elaborate review processes 
that we use. First of all, we have these places write a report. 
We bring in outside scientists. Then they come--they either go 
to the laboratory----
    Mr. Frelinghuysen. They are independent peer reviewed.
    Mr. Brinkman. It is totally independent peer reviewed. They 
will spend at least a day either at the site or at a review 
here in Washington, go through the whole process of reviewing 
them.
    We then asked each of those reviewers to write us reports 
on what their views of the centers are, and a few of the 
reviewers actually sit on review committees for more than one 
center, so we get into some intercomparison among the centers.
    And that process was just finished this fall, and then that 
is why----
    Mr. Frelinghuysen. And so do each of the centers have 
specific goals?
    Mr. Brinkman. Each of the centers have specific goals.
    Mr. Frelinghuysen. And can you assure us they have been met 
or is this still----
    Mr. Brinkman. I can get you the specific examples.
    Mr. Frelinghuysen. Give us an example.
    Mr. Brinkman. Well, let's see, the simplest example is one 
that was done at JBEI at Berkeley where they took an E. coli, 
these microbes that everybody gets sick on every now and then, 
but they took them, modified the DNA and the E. coli so that 
the E. coli would act as an agent for taking cellulose and 
making it into--I think disabalene was the name of the 
molecule, which is a drop in a substitute fuel for gasoline. So 
they are making that kind of progress of finding new ways to 
make fuels, and we are hoping that----
    Mr. Frelinghuysen. So one has a particular focus on 
cellulose, right, and what we might describe as next-generation 
biofuels?
    Mr. Brinkman. The one in Oak Ridge, for instance, has a 
very strong focus on breaking down ligon. One of the crazy 
things about plants is the plant generally are coated with 
ligon, and that is what makes the plant so strong. And in order 
to get to cellulose to sugars you have to break down this 
ligon, and it is not easy. So they have done the modification 
of plants, of DNA so that the plant actually grows with a ligon 
that is not so strong.
    Mr. Frelinghuysen. And are you focusing on plants that are 
not involved with the food chain and food supply?
    Mr. Brinkman. Absolutely.
    Mr. Frelinghuysen. So that is passe, is that right?
    Mr. Brinkman. We are surely not trying to use corn.
    Mr. Frelinghuysen. Good, glad to hear that.
    So have you uncovered any specific concerns about any of 
these three centers in terms of where they are going and what 
they might likely be doing in the next 5-year cycle?
    Mr. Brinkman. We believe that they are heading in quite 
different directions, two I talked about. The third one is 
actually heading and trying to understand what kinds of soils 
and what kind of terrain you can grow these kind of plants that 
are not food plants but would be good for fuel. And so they 
have taken that tack, which means, all three have sort of found 
their own direction to move, and I think it has been very good.
    Mr. Frelinghuysen. Does this program compare notes to 
similar programs that might be----
    Mr. Brinkman. Yes, they go to all the conferences and that 
kind of stuff, so they definitely are in the field and know 
what is going on.
    Mr. Frelinghuysen. Okay. Mr. Visclosky, any further 
questions?
    Mr. Visclosky. I have got more, if you wouldn't mind, Mr. 
Chairman.
    On the fusion budget, there is a request for about a $3.8 
million reduction for fiscal year '13, but I understand that 
there are reports that the Office of Science is exploring 
having American fusion scientists do work overseas. Is that 
true?
    Mr. Brinkman. Well, what is going on there is the 
following: we have not built any. The newer machines that are 
being built are all being built with superducting magnets, and 
also there tend to be stellarators, and we are not building any 
machine like that. So we believe that in order for us to be 
able to use and learn from those kinds of machines we are going 
to have to work on some of the international machines.
    There is a machine in Germany which is a stellarator, a 
super ducting stellarator, which we would very much like to do 
experiments on. With the kinds of budgets we haven't had the 
kind of money to build those kinds of machines here.
    Mr. Visclosky. Another question I would have is, my 
understanding as far as the Department's commitment for 
research grants--and I certainly understand multiyear funding 
for these grants, that science just doesn't start and stop on a 
12-month basis--but that the rotation right now would allow for 
about 6.5 percent of fiscal year '12s monies to go to new 
grants because of the multiyear funding. And I am wondering, 
has the office looked at that to provide a greater window for 
new opportunities as research is taking place, a new idea has 
come so that there is more than 10 percent available in new 
grants?
    Mr. Brinkman. We worry about this. We worry about the ratio 
of the number of renewals. Our typical grants are 3 years. So 
you would say, well, there is a third will be coming up every 
year. But you don't just want to renew that third. You want to 
give a lot of opportunities for new things. So you tend to take 
some 10, 20 percent of those older ones and not fund them and 
put on new things.
    Mr. Visclosky. So are most for 3-year periods, Doctor?
    Mr. Brinkman. Most of our grants are 3 years, right?
    Mr. Visclosky. And if I could just bring in ARPA-E in for a 
second, my understanding of ARPA-E is that at the beginning you 
have got 3 years and don't come back to us for this particular 
idea.
    Mr. Brinkman. Yes.
    Mr. Visclosky. Has the office looked at that to free up 
money?
    Mr. Brinkman. I don't know that--I would not have said 
that--My understanding of ARPA-E----
    Mr. Visclosky. I understand I might not be correct on it, 
but----
    Mr. Brinkman. My understanding of ARPA-E, the way they are 
set up is they are saying, hey, we are not trying to fund long-
term research. We are trying to fund things that are very close 
to development. And so we are asking you to march down a 
development path, and if you can't get down that path we are 
going to cut you off.
    That is the thing, that is the way they work.
    But I think we are somewhat different. We are trying to 
fund somewhat longer-term research, and so we have to be a 
little more careful about cutting people off because----
    Mr. Frelinghuysen. Longer-term research, some of which we 
have been discussing, and we might be cutting a few off, right?
    Mr. Brinkman. Yes.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Mr. Frelinghuysen. Mr. Olver, I just have one question. I 
want to get a little focus here. In the area of basic energy 
sciences, you have $42 million for mesoscale science to apply 
nanoscience. Tell us a little bit about this initiative.
    Mr. Brinkman. I described a little bit of this earlier.
    Mr. Frelinghuysen. I am aware of the NanoValley and a lot 
of people are working in this area.
    Mr. Brinkman. Right.
    Mr. Frelinghuysen. What are you doing specifically?
    Mr. Brinkman. Well, we, of course, have had these five 
nanoscience centers that we have had for some time now; and 
these, I think, have been very successful in doing new things 
like, for example----
    Mr. Frelinghuysen. You have got to move the mike closer, 
please.
    Mr. Brinkman. These nanoscience centers that we have, I 
think, been quite successful. One example, for instance, is 
that we found that you can make palladium and platinum 
catalysts much more effective if you make a very tiny, say, 
gold particle and then coat the particle with platinum or 
palladium. That gives a much better catalyst, a much more 
effective catalyst. This is the kind of nanoscience that we 
think is tremendously important, and so we are very interested 
in doing that.
    But we also believe we can make all kinds of new things 
that reach up into the mesoscale. The mesoscale is at the 
micron level and the size of cells and things like that, but 
also we think that these kinds of materials where you use the 
nanoscale size things to put them together in complex ways will 
make for more--for instance, a very high-strength steel or very 
high, composite materials that are much, much stronger than 
what we have today. Those are the kinds of things we are 
thinking about.
    Mr. Frelinghuysen. You are doing it. Are others doing it as 
well?
    Mr. Brinkman. Oh, yeah.
    Mr. Frelinghuysen. There is quite a lot of our industrial 
complex that is focusing on this.
    Mr. Brinkman. Yes.
    Mr. Frelinghuysen. I am just hoping the twains are meeting 
in terms of our support in a variety of different budget areas, 
that these scientists are talking and collaborating where 
appropriate.
    Mr. Brinkman. Yes, and you know the NSF also has a 
nanoscience program, a fairly sizeable one, in which we talk to 
each other.
    Mr. Olver. Mr. Chairman.
    Mr. Frelinghuysen. Mr. Olver, you are batting cleanup 
standing between our votes.
    Mr. Olver. Oh, are we about to vote? Oh, okay.
    You are talking about mesoscale and nanoscale. I was going 
to ask you, but you then answered that meso is micro. I was 
wondering, what was this? Were we going in the other direction? 
Are you involved in nano? No. Okay.
    But you are doing the science, and once the science is done 
under you, under your office, then that will end up in the 
critical materials hub----
    Mr. Brinkman. We would hope so. Yes, that is what we have 
planned.
    Mr. Olver [continuing]. Over here.
    Mr. Brinkman. Right, but you have to be careful, right? The 
critical materials hub is going to look at critical materials, 
right? So we don't always invent new things that only use 
critical materials or alternative critical materials. We will 
be inventing things that will not just necessarily go to that 
hub.
    Mr. Olver. But you are going to be making the basic 
materials.
    Mr. Brinkman. We will be making things that they use in 
various places.
    Mr. Olver. And then they are going to be figuring out how 
to commercialize them.
    Mr. Brinkman. Right.
    Mr. Olver. How to make them function much more 
economically.
    Mr. Brinkman. Right.
    Mr. Frelinghuysen. Thank you, Dr. Brinkman. Thank you for 
being here.
    We stand adjourned.

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                                         Wednesday, March 28, 2012.

        DEPARTMENT OF ENERGY, ARPA-E AND LOAN GUARANTEE PROGRAM

                               WITNESSES

DR. ARUN MAJUMDAR, DIRECTOR, ARPA-E
DAVID FRANTZ, DIRECTOR, LOAN GUARANTEE PROGRAM
    Mr. Frelinghuysen. Good afternoon. I would like to call the 
meeting to order, and I apologize to everyone for the delay in 
getting going. Our hearing today is for Fiscal Year 2013 budget 
request for the Department of Energy's Loan Guarantee Programs, 
and for the Advanced Research Programs Agency--Energy, ARPA-E. 
Dr. Majumdar, thank you for being here. Mr. Frantz welcome to 
the committee.
    We asked the two of you to appear together because of the 
unique nature of your programs. Although you were authorized 
before 2008, you both formed the backbone of some of this 
administration's most visible initiatives. Now that we are into 
the fourth year of the administration, you have enough of a 
track record that we can have a more informed discussion about 
the successes you have had, and some of your challenges.
    Mr. Majumdar, this budget request for $375 million for 
ARPA-E activities is a $75 million increase for the Fiscal Year 
2012 appropriation. This is a 27 percent increase, matched only 
by the 28 percent increase requested for energy efficiency and 
renewable energy. At the same time, the request cuts funding 
for fossil energy, and nuclear energy research and development. 
While I would like to believe that the present support for all 
of the above energy strategy is for an all-of-the above 
engineer strategy, the facts indicate that this budget request, 
in some ways, is more ideological than practical.
    Yet, the ARPA-E program has identified an important niche 
for itself by supporting high-risk, high-reward projects, and 
given all of the political pressures surrounding your program, 
you have made some tough decisions, including the termination 
of projects which were not achieving their goals. And I think 
that is commendable. I would encourage other parts of the 
Department to learn lessons from the way you have done 
business.
    The Loan Guarantee Program, on the other hand, has been the 
center of some controversy, starting with the Solyndra 
bankruptcy, and now extending into questions about other 
companies. Apparently, even the President no longer wants to 
take responsibility for this program, according to remarks he 
made last week.
    Mr. Frantz, you are not asking for any new loan guarantee 
authority, but given the billions of dollars that your programs 
are overseeing, you will have some hard questions. We will have 
some hard questions for you to answer today. We look forward to 
your answers.
    And may I say, parenthetically, I generally support loan 
guarantees, but I do think, to some extent, and it is 
unfortunate, that the water has sort of been poisoned here 
because I think they have been a valuable resource. But we are 
going to move on.
    Please ensure that the hearing record, questions for the 
record, and any supporting information requested by the 
subcommittee are delivered in final form to us no later than 4 
weeks from the time you receive them. Members who have 
additional questions for the record will have until the close 
of business tomorrow to provide them to the subcommittee 
office. With that, I turn to Mr. Visclosky for any opening 
comments he cares to make.
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    Mr. Visclosky. Thank you, Mr. Chairman. Doctor, it is good 
to see you again, and Mr. Frantz thank you for taking the time 
to be with us. Dr. Majumdar, I will be interested to hear what 
progress is being made at ARPA-E. As you know, despite my 
appreciation for the innovation and streamline project model 
you use, I have repeatedly shared my concerns regarding the 
programs's potential overlap with other areas of DOE. Many of 
the activities pursued by ARPA-E are in the areas where either 
DOE has applied programs or the Office of Science is also 
endeavoring to make progress. I believe that there is a place 
for competition within the Department, but in an era of scarce 
funding, redundancies must be kept to a minimum, if not 
eliminated.
    I am interested in hearing your approach to coordinating 
between programs at the Department, to ensure that overlap is 
minimized, and how also you are working in your position to 
spread, if you would, your new culture. While the subcommittee 
was initially a reluctant supporter of the program, I believe 
that given many positive reviews, we should pursue the ARPA-E 
model long enough to determine if we can get a return that 
justifies the investment.
    Mr. Frantz, the Allison Report recently requested by the 
White House found that the Federal Credit Reform Act 
methodology the Loan Guarantee Program office uses was 
appropriate. Further, using that measure, the report estimated 
a potential budget impact of the outstanding loans is less than 
DOE's current estimates, and below the loan loss reserve 
provided by Congress.
    Your own reestimate, as I understand it, confirms this, 
showing that the total credit subsidy cost of the portfolio 
went down from 22.5 percent to 13.2 percent driven by primarily 
by the success of the Ford and Nissan loan guarantees. To be 
fair, the statistics are dated.
    After looking at the details of the reestimate, there is a 
particular area of concern that I hope you will address today, 
loans that have no link to a utility and are primarily projects 
related to manufacturing. I also am keenly interested in the 
actions the Department is taking both through its own 
initiative and also in response to the recommendations made by 
the report.
    With that, gentlemen, thank you very much. Thank you, Mr. 
Chairman.
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    Mr. Frelinghuysen. Dr. Majumdar, please, the floor is 
yours. We have a full house here today. There is a high 
interest in the work that both of you are committed to.
    Dr. Majumdar. I would like to extend my thanks to the 
Chairman, to the Ranking Member and the esteemed members of the 
Subcommittee for inviting me to present the Department of 
Energy Fiscal Year 2013 budget request for the Advanced 
Research Projects Agency--Energy, or ARPA-E. As I said before 
to many of you, I consider you all to be my board of directors. 
I am here to report to you what we have done in the past, and 
what we plan to do in the future. ARPA-E is focused on research 
to create breakthroughs in energy technologies.
    Let me explain what I mean by using an example. Until the 
1970s, we used to use punch cards like this to enter data into 
computers, and in only 30 years, we went from punch cards to 
this, smartphones. Most of the innovations that allowed 
information revolution--transistors, integrated circuits, 
wireless communication, and the Internet--were created first in 
the United States, and then used globally. We didn't make 
better and better punch cards. We invented the future using 
technology innovations based on a strong foundation in science 
and engineering. The U.S. has been doing this all throughout 
the last century, from the Wright brothers and the airplane, 
Jonas Salk and the polio vaccine, to Nikola Tesla and 
Westinghouse creating the first AC electric grid.
    These and many of the innovations by our parents and 
grandparents created a better and more secure life for all of 
us. ARPA-E's goal is to catalyze similar innovations in the 
energy sector so that our children and grandchildren have a 
better future than we do. ARPA-E's statutory goal is to invest 
in research to rapidly translate science into breakthrough 
energy technologies that are too risky for the private sector, 
but ones that would ensure U.S. global competitiveness and 
security. ARPA-E does not fund incremental improvements in 
existing technologies, but rather quantum leaps in energy 
technologies.
    Let me give you a few examples of what I believe are early 
ARPA-E successes.
    Last month, an ARPA-E awardee, Envia, announced the world 
record in energy density at 400 watt-hours per kilogram for a 
rechargeable lithium ion battery, which is double that of 
today's batteries. What does this mean? If we were to travel 
from Washington to New Jersey, it would cost about $40 for 
gasoline in a conventional car, whereas in an electric car the 
electricity cost would be about $6; more than six times 
cheaper. But the challenge in electric cars is that the battery 
pack would cost about $30,000. Now Envia's battery is not yet 
ready for prime time, but if you were to use Envia's batteries 
today, it would cut the battery cost in half, and they are 
trying to reduce the cost even further. ARPA-E's goal is to 
reduce the cost of batteries so that electric cars can have 
comparable range and cost as gasoline-based cars so that they 
can be sold without subsidies and reduce our dependence on 
imported petroleum.
    We all know that algae can produce oil, but those oil-
producing algae don't grow very fast. We have a team at 
Berkeley that is taking the set of genes that produce oil in 
algae, and inserting those genes in a plant like tobacco that 
grows fast and in bad soil. If this works, you would simply 
squeeze the leaves of tobacco, and produce oil. I really hope 
that research is widely successful because it could put our 
tobacco farmers back to work and reduce our dependence on 
imported petroleum by creating a renewable fuel. That is a win/
win/win proposition.
    Our grid is an aging infrastructure.
    Here is an example. The average age of a transformer in the 
United States is 42 years, 2 years beyond its projected life 
span. A typical 1 megawatt transformer in a distribution 
substation weighs about 8,000 pounds and is manufactured by 
foreign companies. An ARPA-E awardee, Cree, based in North 
Carolina, is creating a quantum leap in electric power 
technology. They are developing a 1 megawatt transistor--in 
fact, here it is. This is a 1 megawatt electrical power 
transistor that can handle 1 megawatt, that is 200 homes using 
a single transistor made of silicon carbide, the size of a 
fingernail. If they are successful, the 1 megawatt transistor 
could shrink from 8,000 pounds to 100 pounds and greatly reduce 
the cost and increase reliability. Now, here is the kicker. 
Because the United States is the world-leading manufacturer of 
silicon carbide, the Cree project could transform future 
electrical power technologies, and create a large export 
market.
    These are only a few chapters of the ARPA-E story, and the 
ARPA-E story is an American story. These pioneers are the 
Wright brothers, the Salks, the Edisons, and Teslas of the 21st 
Century. They will compete and sometimes fail, but they will 
get back up and try again. The future prosperity and security 
for our Nation depends on them. ARPA-E will continue to find 
these crown jewels of our Nation and invest in them.
    Last month we organized the third annual ARPA-E Energy 
Innovation Summit which was attended by about 2,500 innovators, 
entrepreneurs, investors, Federal and State agencies, Members 
and staffers of Congress, and the White House. We showcased 
ARPA-E funded technologies and also showcased technologies that 
ARPA-E could not fund. We want them to win as well.
    We had the pleasure of having Congressmen Womack and Fattah 
of this Subcommittee speak at the summit and I hope you all get 
a chance to attend the summit next year and meet the pioneers 
and innovators from your own districts.
    Let me report what we are going with Fiscal Year 2012 
appropriations.
    Last year, I promised that we would focus on the use of 
natural gas in transportation. In February, we have announced a 
new program to fund research on breakthroughs that would make 
it cheaper to own and operate natural gas vehicles than a 
gasoline-based one, and one you could refuel at home.
    I also promised that we would create a joint program with 
the Department of Defense to invent dual use technologies that 
address our National security needs and also a civilian 
economy. We are in the process of issuing a new funding 
opportunity for improving the safety, reliability, and 
performance of energy-stored systems.
    ARPA-E is unique for issuing an open funding opportunity to 
all of our Nation's innovators, to propose any new idea on 
energy. This openness is important because innovators can 
integrate across traditional silos, and create something new; 
ones that we could not imagine.
    ARPA-E projects involve risk that the private sector is 
unwilling to take. Because this is research, some may fail. 
Managing the risk on behalf of the taxpayers through active 
program management is part of ARPA-E's DNA. We have 
discontinued several projects where the idea simply did not 
work. This is a promise I made last year, and one that we can 
have now carried out.
    ARPA-E will continue to proactively seek out, white spaces, 
where it can fill a vital gap in early-stage research in 
coordination with the Office of Science and Applied Energy 
Offices. In Fiscal Year 2013, we plan to have an increased 
emphasis on transportation, but with adequate attention to 
stationary power systems.
    I thank you for the opportunity to testify before you and I 
look forward to answering your question. Thank you.
    Mr. Frelinghuysen. Thank you, Doctor.
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    Mr. Frelinghuysen. Mr. Frantz, welcome.
    Mr. Frantz. Thank you very much, Chairman Frelinghuysen, 
Ranking Member Visclosky, members of the Subcommittee. Thank 
you very much for inviting me to be here to talk about our 
request for the Fiscal Year 2013 budget. Mr. Chairman, as you 
indicated, we are merely----
    Mr. Frelinghuysen. Could you please just move that 
microphone a little closer to you, please.
    Mr. Frantz. Thank you. As you indicated, Mr. Chairman, we 
are merely requesting an increase on our admin budget of $38 
million for the Title XVII program, and $9 million to cover the 
admin budget for the ATVM program. Because we are not seeking 
an expansion of our loan authority, or any increase in the 
appropriation for the credit subsidy, I am going to focus my 
oral comments briefly, very briefly on an update of the program 
and its current and future work plan.
    At the onset, I want to particularly express my thanks to 
all of you, the members of this committee, as well as your 
respective staffs. You have contributed over the 5-year period 
of our program immeasurably to the successes that we have had 
through your support and interest in the program.
    Before highlighting the successes and challenges that we 
have faced over the past year, I would also like to acknowledge 
and commend the LPO staff publicly for their unswerving 
commitment and diligent work associated with the 
accomplishments of the program. The staff is one of the finest 
project finance teams assembled in the world today and its 
record over the past year is unprecedented by world standards. 
It is comprised of very experienced investment officers, most 
of whom have worked all over the world, underwriting, 
structuring, and closing financial transactions in much more 
challenging legal and regulatory regimes than exist here in the 
United States.
    I would hasten to add that the GAO in its recent audit of 
the DOE Loan Guarantee Program acknowledged that commercial 
lenders interviewed by GAO stated that LPO's underwriting and 
due diligence standards are as rigorous as or more rigorous 
than those in the private sector.
    It is noteworthy that the DOE loan program's office 
represents the largest single debt financing for clean energy 
projects in the United States, public or private. Two 
transactions were recently recognized for their exceptional 
structure by preeminent journals in the project finance field 
as ``Deals of the Year.'' At this time, the LPO has committed 
or closed $35 billion in direct loans or loan guarantees, which 
financed nearly three dozen projects with total project costs 
greater than $56 billion. When it ended on September 30, 2011, 
the Section 1705 program included a portfolio of over $16 
billion in loan guarantees for 28 renewable energy projects.
    Collectively, the LPO projects are expected to support more 
than 60,000 jobs and deploy alternative energy that will save 
nearly 300 million gallons of gasoline per year. It is 
important to note that the commercial projects closed under 
Section 1705 fulfilled much of a legislative intent of Section 
1703 as well. Together, the innovative and commercial projects 
closed under Section 1705 represent a broad spectrum of 
technologies including biomass, geothermal generation, solar 
generation, wind generation, transmission and solar 
manufacturing.
    In addition, the LPO issued commitments, as you all know, 
for loan guarantees for one nuclear power generation and a 
uranium enrichment project. To date, the LPO has closed five 
ATVM loans totaling over $8.3 billion. These projects support 
advanced vehicle projects in the United States. As you have 
indicated in your opening remarks, Mr. Chairman, we, of course, 
have been challenged in our activities and we have reacted on a 
continuing basis to fundamental lessons learned. Particularly, 
in the manufacturing space, where marketing acceptance of 
employed technology is much less certain due to the absence of 
long-term off-take contracts, such as those that we obtain in 
power purchase agreements which we have in all of our solar, 
wind, geothermal power-generation projects. In addition, the 
LPO has placed a high priority in developing and deploying 
state-of-the-art business systems, including workflow 
management and records management systems.
    We are presently focusing on the staffing and employment of 
processes and systems to support the LPO portfolio management 
division. I would reiterate that these practices have been 
successfully employed at the U.S. EX-IM bank and OPIC for many 
decades. On the origination side, we are working diligently to 
close our first advanced nuclear power project, Vogtle, and we 
are continuing final due diligence and initial closing planning 
for the AREVA uranium enrichment facility at Eagle Rock in 
Idaho.
    In addition, we are continuing to perform due diligence for 
several fossil projects and we expect to resume within the next 
few days the underwriting of Section 1703, qualified renewable 
projects.
    As indicated in my written testimony, we are proactively 
addressing the dearth of applications in the ATVM program by 
implementing a very proactive outreach program to the 
automotive industry.
    In conclusion, with your support, we look forward to 
continuing to promote opportunities for the United States to 
stay at the forefront of innovation in clean energy generation 
and manufacturing, at the same time, supporting projects that 
offer the benefits of job creation, and pollution reduction, 
while ultimately protecting the interests of the United States 
taxpayer.
    In administering the Title XVII and ATVM programs, we 
strive continually to improve our systems and processes in 
order to manage loan transactions and portfolios in the most 
effective and efficient manner possible. Thank you very much, 
Mr. Chairman, and I look forward to answering your questions.
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    Mr. Frelinghuysen. Thank you very much, Mr. Frantz.
    Doctor, thank you for invoking New Jersey twice in your 
remarks; not only the trip in the electric car from Washington 
to New Jersey, but also the role of Thomas Alva Edison, whose 
ingenuity continues to promote a lot of important research and 
development across the board.
    But the reality is that most of my constituents probably 
couldn't afford an electric car, so much of the focus of our 
committee has been what can we do in the short-term to lower 
gasoline prices. Now, my constituents can't afford a Tesla, and 
open sources have suggested that the battery you referred to, 
it is either in The Journal or The New York Times, if that 
battery dies, there is not much of an ability to resuscitate 
it. And so you could find yourself with a very expensive car 
with a battery that could be kerplunk.
    So you want to put a little meat on the bones here? I know 
maybe I should be reluctant to lock horns with you, but, tell 
me, is there any truth to the fact that if the battery goes 
out, then you have to go and buy another battery for the same 
amount. So--this isn't foolproof.
    Dr. Majumdar. Well, Congressman, I think the batteries that 
we are focusing on, number one, is to reduce the cost and make 
sure that electric cars have the same range and cost as a 
gasoline-based car so that you do not need subsidies. I firmly 
believe that is sustainable business. We are at the early 
stages, and we are investing in a portfolio of 15 or 16 
different approaches, and we don't know which one is going to 
win. We just create the competition. But these are all for 
rechargeable batteries, and we look for how many cycles. There 
are two lives that are relevant. One is the cycle life, how 
many cycles you can charge and discharge, and the other is the 
calendar life. Our goal, and this is there in our programs, is 
to make sure that they will outlast the car--that is really the 
eventual goal. Of course, as I said, this is research right now 
that we are investing in, but our target is to really make sure 
that the battery lasts longer than the car.
    Mr. Frelinghuysen. But in reality, the battery that I 
referred to, if it goes out entirely, you have to get a new 
one.
    Dr. Majumdar. Well, you can change the battery, but ARPA-
E's goal----
    Mr. Frelinghuysen. Change the battery at $30,000 a clip.
    Dr. Majumdar. Well, ARPA-E's goal is to look for 
technologies not used today. This is the research stage, and 
translating the science into technologies that will at least 
make cars in the future that the batteries that are 
rechargeable and outlast----
    Mr. Frelinghuysen. Are you looking at any innovative ways 
to reduce gasoline prices?
    Dr. Majumdar. Well, Congressman, this is an issue that I 
feel I really understand what people are going through. This is 
difficult for people--teachers, construction workers--they have 
to travel, and it is really hard on them. I can assure you that 
we are doing everything that we can in this Administration to 
reduce the burden on our families. As you know, we now have 
more domestic production of oil in the last 8 years. We have 
for the first time in more than a decade reduced imported 
petroleum to less than 50 percent, but that is necessary, but 
not sufficient. I think the all-of-the-above strategy is 
absolutely important, and if you look at what are the other 
things that we are doing, we have historical mileage standards 
that have been created, and that, will save $8,000 for an 
American family per year. We are looking at natural gas, as I 
mentioned.
    Mr. Frelinghuysen. Assuming they could be met, those 
standards.
    Dr. Majumdar. That is right.
    Mr. Frelinghuysen. And you can impose standards, but in 
reality, we hope that the private sector has the capital to do 
it. But from everything we have seen, you need to have 
substantial government support in order to bring people across 
the finish line. I think my basic question, is there anything 
that you are actually working on now, and we are highly 
supportive of what you do. You have a lot of supporters, a lot 
of ingenuity, a lot of innovation, that actually addresses the 
issue of reducing gasoline prices?
    Dr. Majumdar. Well, as I said, we are doing everything we 
can within our means to do that.
    Mr. Frelinghuysen. For the foreseeable future, we are going 
to have this incredible reliance on oil. You look at the makeup 
of our energy picture, that is where the reliance is, nuclear, 
coal. I just wonder whether you are doing anything in your 
portfolio that relates to----
    Dr. Majumdar. Yes, we are.
    Mr. Frelinghuysen [continuing]. New technologies.
    Dr. Majumdar. Mr. Chairman, as I said, we are looking at 
multiple technologies. We are technology agnostic. We created a 
program for the use of natural gas for electric vehicles, 
natural gas cars. Natural gas is abundant in the United States. 
It is a domestic resource, and it is inexpensive. The problem 
is that if you want to use a natural gas car and refuel at 
home, it is expensive. Our job is to reduce the cost so that 
the additional cost of putting a heavy duty tank for high-
pressure natural gas that gives you a range of 200 miles,with 
the compressor cost can pay for itself in 5 years, and after that you 
save money.
    That is the technology that we are going to create. That is 
a new program that we have created using natural gas that you 
could then save money.
    Mr. Frelinghuysen. There is nothing you are doing in the 
short-term here that is innovative to reduce gasoline prices.
    Dr. Majumdar. Well, ARPA-E is----
    Mr. Frelinghuysen. I understand that. That is a long-range 
commitment, but obviously, you have got some of the best minds 
and innovators collectively here that we have ever had. And I 
just wondered in your overall portfolio, whether there has been 
anybody who has come up with an ingenious idea, that in fact, 
could get some traction.
    Dr. Majumdar. Well, at this point, we are looking at all 
options, all of the above options, and I would love to engage 
with you in a discussion as to how we can do that. This is a 
concern not just of you, Mr. Chairman, but for all of us, and I 
feel empathy for all of the people who, you know, have the 
burden of additional gas prices.
    Mr. Frelinghuysen. Okay, Mr. Visclosky. Thank you.
    Mr. Visclosky. Thank you, Mr. Chairman.
    Mr. Frantz, you had mentioned the nuclear program, and you 
have one conditional commitment. Looking ahead for the rest of 
2012, what can we expect as far as any other additional 
commitments possibly?
    Mr. Frantz. At this time, Congressman, we are, as I 
indicated in my remarks, working very vigorously to actually 
close the Vogtle transaction. The condition of precedents to 
our activities are focused, as you perhaps well know, the 
obtaining of the COL license from NRC for each of the projects. 
The next project to receive that license is the Summer project 
in South Carolina, and they have not yet received that. I 
understand it is possibly now within days of occurring. That 
project is among four of the projects that we have had 
discussions with. We haven't had an indication from them on how 
they would like to proceed with us. We haven't been actively 
pursuing that until they have received their license.
    Mr. Visclosky. So that would be a precedent as far as any 
settlement.
    Mr. Frantz. Yes, sir.
    Mr. Visclosky. Has the price of natural gas affected the 
Department's consideration of the financial viability of the 
loan guarantees?
    Mr. Frantz. It has, to a certain extent, relative to those 
projects that we call merchantman, that we have two projects 
among the top four projects that are not rate based. Those 
projects clearly have been affected by the price of natural 
gas, as well as, frankly, the absence of carbon legislation. So 
they are both merchantmen, one in Texas and one here in 
Maryland. I think you are familiar with them.
    Mr. Visclosky. Yes.
    Mr. Frantz. That clearly has been a significant factor in 
the decisions, particularly with respect to the investment 
base, the equity investment base for those projects, to say 
nothing of our concerns. So, yes, it would, in terms of moving 
to a closing.
    Mr. Visclosky. I appreciate your answer, but I have not, in 
my mind, always discerned the difference between the two types 
and understand exactly what you are talking about, as far as 
merchant-based facilities.
    Mr. Frantz. Yes, there are two--the PGM market here in the 
East Coast and ERCOT is the market in Texas. Those projects 
tender on a 24- to 36-hour basis for their power generation. So 
they are not rate-based, and their power is not guaranteed to 
be taken. Now, in normal instances, it is taken because of its 
volume and its reliability, but they tender on a daily basis 
for the delivery of that energy. In counter-distinction to the 
rate base which is taken on a full contract.
    Mr. Visclosky. Well, along the same lines, if I could draw 
your attention to the fossil programs.
    Mr. Frantz. Yes, sir.
    Mr. Visclosky. I understand you said in your remarks you 
have about $8 billion as I understand it.
    Mr. Frantz. Yes, sir.
    Mr. Visclosky. But at this point again, no commitments. 
What activities, might we or might we not expect between now 
and the end of the fiscal year on the fossil side?
    Mr. Frantz. Thank you, that's a very good question. 
Actually, on our solicitation, which was issued for the fossil 
projects in 2008, we obtained eight applications. Of those 
eight, four are in active due diligence with us under the 
program. The one right now that we are most active with is a 
rate-based project. We are in active due diligence on that 
project, as well as three others. The first one that I am 
alluding to, there isn't a chance that we can reach a 
commitment in this fiscal year for that project. The other 
three, because of the complications of the off-take 
arrangements, as well as NEPA compliance, will probably be a 
year from now.
    Mr. Visclosky. And at this point in time, you would 
anticipate continuing to consider these past this fiscal year.
    Mr. Frantz. Oh, yes, sir, yes, sir. They are in active due 
diligence, all four of them.
    Mr. Visclosky. Is there a time frame that you have 
established at some point that you cross that it is time to say 
no?
    Mr. Frantz. No, not for these particular projects. As I 
say, they are well underway in terms of obtaining off-take 
contracts for their power, the disposition of their product. 
Two of them are gas generators, coal-to-gas generation. One is 
a coal liquification, and the other is gas-to-electric power. 
So these are long, complicated, large projects that require 
significant amounts of time to complete those elements.
    Mr. Visclosky. Just one more brief one.
    Mr. Frantz. Yes, sir.
    Mr. Visclosky. On that, the differential between the 
liquification programs because of the environmental concerns, 
is there any additional impact relative to your consideration 
on that project?
    Mr. Frantz. We are still spending a great deal of time 
looking at all of the issues surrounding that project. It is a 
very complicated project in that regard and it is under active 
consideration.
    Mr. Visclosky. Thank you. Thank you, Mr. Chairman.
    Mr. Frelinghuysen. Mr. Visclosky. Mr. Simpson.
    Mr. Simpson. Thank you. If his constituents can't afford 
electric cars, then mine certainly can't, because yours are 
rich compared to mine.
    I have two questions that are kind of philosophical 
questions. We talked a little bit about one in my office the 
other day. One to you, Mr. Frantz. Ever since the Loan 
Guarantee Program, this cloud came over it because of Solyndra; 
more than a cloud, it was a big black cloud, came over it after 
Solyndra. The question comes in from the public, why should the 
government be investing in these technologies, or these 
programs, or whatever, if the private marketplace won't do it?
    The question I have, and this is kind of a question I ask 
myself, is when you compared your program to the private 
sector, you said you had more stringent rules and so forth than 
the private sector, the one thing that the private sector 
doesn't have is us looking over their shoulder. You get your 
funding from us. There was criticism in Solyndra or accusations 
that the administration put pressure on, and et cetera, et 
cetera. The same things happen in other programs. The AREVA 
plant, I met with your predecessor several times on the Loan 
Guarantee Program for AREVA, because it was of interest to me. 
Maybe undue pressure. I am sure that there are people from the 
Ohio delegation that are probably talking to you, or will very 
shortly about USEC and the potential for the loan guarantee for 
them.
    How does political influence, whether it is from Members of 
Congress, the administration, whoever, influence your decision? 
How much does it influence your decision, and is there a way or 
should there be a way that you can make these loan guarantees 
based on the marketplace, and what is required, rather than the 
political pressure from us? And I, you know, I am not 
criticizing the administration. I throw myself in there with 
the rest of the people that have been interested in the 
program.
    Mr. Frantz. Thank you, Congressman Simpson, a very good 
question. It could take me hours to answer. I will try to do it 
very briefly.
    Mr. Simpson. That is why I said it was a philosophical 
question.
    Mr. Frantz. Very briefly. The program with which you are 
familiar with, was stood up, and I did that, frankly, in 2005 
with these considerations very much in mind. And I am in the 
Senior Executive Service. I am not a political appointee. Both 
the previous administration in which we stood the program up as 
well as this administration has been scrupulous in avoiding 
putting direct pressure on the decisions we make in terms of 
the underwriting of these projects, the due diligence, and the 
fundamental decisions that we take on whether to go forward 
with the project or not.
    And that is absolutely true to this very day as it has been 
from the time we set this program up in August of 2005. So I 
can assure you that, yes, I hear it. Isee it, but it does not 
impact the fundamental decisions we take on these projects.
    Mr. Simpson. Should there be a way to reassure the public 
that that doesn't happen, because I am sure you hear it just 
like I do from the public, well, yeah, you know, the 
administration comes and tells them to loan money to their 
backers and so forth. Well, and I look at them and say, well, 
you know what? I went and talked to them about AREVA, and 
AREVA, we are talking thousands of jobs in southeast Idaho, and 
it was important to me.
    Did I put undue influence on the administration? Should 
there be a way that we can separate those two things so that we 
can reassure the public that that is not what is driving some 
of these loan guarantees?
    Mr. Frantz. Also, a very good question. I have 
scrupulously, because of the requirements on me, quite frankly, 
legally, to be as absolutely apolitical as I personally can 
possibly be. Therefore, I have tried to the best of my ability 
to avoid discussions that are purely political, and have 
deferred to the political appointees to handle those 
conversations and those decisions.
    So I, for that reason, also have not been in the public 
domain. I have not felt it appropriate for me generally to be 
out giving speeches--and I have had enough work to do at my 
desk without being in the general public. So I think your 
question is a very good one. We are going to great lengths to 
try to communicate what is really transpiring in the program 
without----
    Mr. Simpson. And I have to say that when your predecessor 
and his staff would come in and talk to me, they were really 
talking to me about the--well, I always wanted more 
information. There was stuff they wouldn't tell me----
    Mr. Frantz. Sure.
    Mr. Simpson [continuing]. They were telling me about the 
process and where they stood and so forth. Have you ever pulled 
the plug on projects?
    Mr. Frantz. Oh, I certainly have, sir, yes, at all stages. 
I think the point is, and I tried to present that in my oral 
comments to all of you, I have been at this business all over 
the world for over 40 years. I am not atypical of the staff. We 
have a lot of experience doing these projects. The other thing 
we emphasize clearly is that there are no guarantee that you 
are going to be funded until the day we fund. I think this 
Subcommittee is well aware of a project just recently in which 
we had already been through the closing documentation, and we 
are at the point where we could have funded, and we could not 
get comfortable with something that you have all alluded to, 
and that is the market conditions. I recommended to the 
Secretary we not proceed and we did not proceed.
    I mean, that is very expensive. That is one extreme. What 
we attempt to do is to try to reach those conclusions much 
earlier in the process, although you are well aware that we do 
get criticized for that as well. You have heard that.
    Mr. Simpson. Sure, from us.
    Mr. Frantz. But on that, without sounding defensive, the 
point and the bias is, particularly from my perspective, we are 
in the business, at your behest, to complete transactions, not 
to find ways to not do them. So if there is any fault, and it 
is my responsibility that we draw out the process of 
consideration, due diligence, certainly, we do it with the bias 
with the attempt to try to ultimately do the transaction, not 
to spend their--the client's--money or to delay them in the 
decision-making.
    Mr. Simpson. Well, I appreciate that answer. It is a 
difficult issue, and if I could ask one brief question of Dr. 
Majumdar. We talked a little bit about ARPA-E kind of replacing 
a lot of the Bell Labs and those types of things that used to 
do this research before. How do you decide whether you are 
trying to drive the marketplace with your technology, or if you 
are following the marketplace, if you understand what I am 
saying.
    Dr. Majumdar. Sure, the way we create our programs is, 
number one, to recruit very smart people. Number two, we give 
them a little bit of opportunity to understand where the 
``white space'' is. As I mentioned before, our job is to make 
the U.S. globally competitive; is to reduce the cost of energy, 
and security for our Nation in the future. That is really what 
we are trying to do. That could be translated into whether it 
is natural gas for vehicles, whether it is power electronics 
that I mentioned to make our grid more secure, and lower the 
cost of electricity. So we get these smart people to identify 
the ``white space,'' and the ``white space'' is where there is 
a technological gap. We are in what we call the first valley of 
death, where you have a science, and there is a future market 
out there, but there is this gap of translating the signs and 
understanding of nature into something that is tangible.
    That is how we do business. That is how we create new 
programs. Just to give you the natural gas one. It is obvious 
that we have a lot of natural gas, and it is inexpensive, and 
it is just that we do not--it is not cost-effective to use in 
light-duty vehicles. It is cost-effective to use that in long-
haul trucking, and we said we are not going to go there because 
it is a business proposition today, and our job is to get out 
of the way. In the case of light-duty vehicles, it is too 
expensive. Our job is, can we create breakthrough technologies 
which will enable natural gas to be used in vehicles that is 
not just cost-effective, but is actually cheaper. 
Thattechnology does not exist, and that is where you can look at the 
material signs and computation techniques, et cetera, to see if you can 
make a technology that will enable the market in the future and make 
the U.S. more competitive----
    Mr. Simpson. Thank you. I appreciate both of your programs.
    Mr. Frelinghuysen. Mr. Fattah.
    Mr. Fattah. Thank you both. I am a big supporter of both of 
these initiatives, and I think the chairman was correct to 
point out that these programs which were launched by 
legislation passed by Congress, and were started under the 
previous administration are still needed.
    Now, I think we can all agree that you can't have 
innovation without failure. The two go hand in hand. I happen 
to have the responsibilities as the ranking member on the NASA 
appropriations. So you know, we launch a satellite; doesn't 
make orbit; it falls down; it is $500 million that is gone. We 
are not getting out of the satellite business. We are going to 
get right back up and launch another satellite. We have done 
this throughout the history of our efforts in space, with a 
great deal of bipartisan support in this Congress and in the 
country, because there is a realization that innovation and 
failure go hand in hand. But let me just talk about the Loan 
Guarantee Program for a second.
    In your advanced vehicle program, the largest loan was 
issued to Ford, almost $6 billion. Can you talk a little bit 
about that deal, and what it portends?
    Mr. Frantz. Well, I would prefer not to focus on specific 
projects today, Congressman, but to the extent that there has 
been a lot of public information associated with it, I can make 
a couple of comments.
    Mr. Fattah. Just what the loan guarantee provides Ford the 
opportunity to be able to do.
    Mr. Frantz. Well, at the time, it happens to be one of our 
great stories of the program, I think, and clearly vindicates--
--
    Mr. Fattah. I agree. There is some notion in the public 
that Ford didn't benefit and I just want to use this as an 
example.
    Mr. Frantz. No, oh, not at all. They desperately needed us. 
That is probably the fundamental point. The loan was made at a 
time when we were in a deep recession. The automotive industry 
was in serious trouble, and certainly, decisions are taken in 
these major corporations with respect to new capital addition, 
or what we call discretionary capital addition. It was at a 
time when the company was fighting for survival, and by virtue 
of our program, it enabled them to do discretionary capital 
expenditure and get ahead of the curve for new innovation in 
automotive applications. It was purely our program that enabled 
them to do that simultaneously, as they recovered from the 
recession, and the huge downturn in the industry. So that is 
one of the great success stories, just very briefly, on how we 
were very positively utilized in that automotive sector.
    Mr. Fattah. Now, in terms of ARPA-E, you were modelled on 
the DOD program, DARPA----
    Dr. Majundar. That is right.
    Mr. Fattah [continuing]. Which has been at the very 
forefront of positioning our Nation in relation to National 
security, making innovation critical to the development of new 
systems to project American power and to protect our forces, 
and to kill or capture our enemies. So the idea of ARPA-E is 
really a model directly after that. I want you to tell us, 
given the level of public investment in ARPA-E, how much has 
been invested by the private sector in the same project that 
you have; what the leverage has been, I guess vis a vis these 
investments?
    Dr. Majumdar. Well, so ARPA-E has been around only now for 
almost 3 years. And in those 3 years, what we have found, as I 
mentioned before, some projects have failed. That is part of 
the risk that the government has always taken, and this is 
research. But the ones that have been successful, that have 
reached the milestones, and they are approaching the targets 
that we had set out for them. Just to give you an example, 11 
projects that received about $40 million for funding from ARPA-
E which allowed them to do the research, and translate it into 
something that is the first breakthrough, have now received 
more than $200 million from private-sector funding so it is a 
leverage of 5 to 1, and individually, some projects have gotten 
10 to 1 or so.
    On an aggregate, the amount of funding that the private 
sector has made on ARPA-E funded projects, is equal or now 
increasing to more than what ARPA-E, the Federal dollars, have 
actually funded on an aggregate basis.
    So that is where we are in 3 years. And the private-sector 
funding is going to keep on increasing.
    Mr. Fattah. All right, thank you very much. Thank you, Mr. 
Chairman.
    Mr. Frelinghuysen. Thank you, Mr. Fattah. Mr. Womack.
    Mr. Womack. Thank you, Mr. Chairman, and my thanks to the 
gentlemen for being here today. I will focus most of my 
comments and questions with Dr. Majumdar, with whom, and his 
team I have had a great relationship, very splendid cooperation 
from the agency. And I want you to know how much I appreciate 
that. And also, thanks for your visit to my district last year. 
That meant a lot. And congratulationson the summit. That was a 
terrific well-attended event where the attendance had to be capped, as 
I understand it, because of the widespread interest. And you are to be 
commended for your leadership there.
    Let me open by offering something. As I was listening to 
the testimony today, Mr. Chairman, I received an email and I 
want to read a portion of this, Dr. Majumdar, because it will 
interest you.
    That the Small Business Administration's district office in 
Arkansas has named Arkansas Power Electronics International as 
the 2012 small-business of the year. They will be honored at a 
reception next month. This is a program that has had a 
relationship with ARPA-E, so you might just explain very 
quickly what this power electronics organization has been doing 
because it fits into what your organization is trying to 
champion.
    Dr. Majumdar. Well, thank you, Congressman, for the news. 
It is great. I am delighted to hear that. Arkansas Power 
Electronic International is a small business which has received 
funding from ARPA-E to create power electronics using chips 
like this to integrate into a system for battery charging of 
electric vehicles. And this is going to be made in Arkansas. 
And they have got Toyota as a partner in there, and Toyota is 
actually co-investing money into Arkansas Power Electronics 
International. So I am delighted to hear they were selected to 
be the top small business and, you know, I wish them all 
success.
    Mr. Womack. It is a great segue into our discussion today 
because I would submit, Mr. Chairman--and I am a huge fan of 
ARPA-E, because I was a huge fan of the DARPA model, and I know 
what Dr. Majumdar is doing in his agency--but I would submit 
that if there were no failures, that you would have to agree 
that they are into territory that probably the private sector 
should primarily be in. And if there were only failures, then 
you would have to agree that their model is probably off base. 
I think the real test here is, there is going to be some of 
both, and it is the ability of the organization. This is what I 
like about the model.
    It is the ability of the organization to do periodic 
assessments with milestone reports, and a quick determination 
as to whether or not these projects are on the right track, or 
are not, and whether they should continue to be funded or not. 
So in a recent conversation, you talked about an organization 
that really never got off the ground and was canceled post 
haste.
    Dr. Majumdar. Right, thank you for bringing it up, Mr. 
Congressman. Here is what we do, just to explain our go/no-go 
milestone, and Congressman Visclosky, we had a discussion on 
that in your office. We want these teams to do the impossible. 
That is what we set out for them. Because if they reach that 
impossible, that is innovation. So we put a target out there, 
reduce the cost and make the energy density of the battery so 
much, or reduce the cost of gas tank for natural gas, so on, 
and on the way, they have annual go/no-go milestones because if 
they don't reach that first milestone or the second milestone, 
or if they are off by a factor of 10, they are unlikely to get 
there. So that becomes a blind alley.
    That is why we, you know, we take these go/no-go milestones 
very seriously. We try to help them. The people we recruit are 
some of the smartest people. They go and visit them on site 
visits and try to help them to become successful. But 
sometimes, the ideas just don't work out, and then based on 
that big gap between where they are and what the milestones 
are, we discontinue the projects, and put the money where 
actually it is working. That is the model that we have used, 
and it sends a signal to the research community that this is 
something that they have to take very, very seriously. If 
something is not working, it is a mutual agreement that they 
would rather do something else. They learn from the failures, 
and go back and try again, just like Edison and Tesla, and 
others have done in the past. That is the American culture that 
we have created. This is really where we are trying to go.
    Mr. Womack. You mentioned, not to belabor the point on the 
natural gas issue, but it is one that I have a significant 
interest in because of the cost differentiations between what 
we are able to produce with American resources, and how 
competitive we are with other nations, particularly in the area 
of stationary power. But as it goes back to transportation, you 
have indicated that your agency does not have an interest in 
the long haul truck fleet operations because that is already 
being tried and tested in the private sector. But on the 
passenger side, what specifically--because you have stood up 
this passenger car program, and I met your program manager 
recently--but what specifically do you believe that this 
program is going to be able to demonstrate, if successful, in 
the near term, to go back to Chairman Frelinghuysen's remarks 
about what are we doing today to lower gas prices?
    People are looking for alternatives, and some of these 
alternatives are not ready for market. But what, on your 
milestones, what do you see as being the key? Is it the tank? 
Is it the capacity to be able to deliver some kind of a system 
at the home? I mean, just what kind of a process are we going 
through here?
    Dr. Majumdar. Sir, we have to look at this as a system. So 
if you ask the question, why aren't all of the carsnatural gas 
today? Two things. Number one is that we don't have the infrastructure 
to, like we have the gasoline infrastructure, we have 120,000 gas 
stations around the Nation. Now, to create that infrastructure for CNG, 
compressed natural gas, it will cost more than $100 billion, maybe $150 
billion, and that is really expensive. However, natural gas goes to 
many homes. So the idea is, can you do that at home--refilling at home 
so that you avoid infrastructure costs. To do that, today you can buy a 
compressor and put it in your home, and you can buy a Honda CNG car. 
But the additional cost is cost-prohibitive for most American families.
    So what we are trying to do is to create those technologies 
that would reduce the cost of the system. That means lowerng 
the cost of the compessors; so, if someone comes up with a 
really low-cost compressor that can go from 0 to 360 psi, that 
is great. That is part of the solution. But the other part of 
the solution is to create a tank which is high strength, 
lightweight, and low cost. This is not trivial. You need 
science and engineering to do that. So we have to look at it as 
a system so that the extra cost of both the tank--maybe it is a 
new absorbent material that will suck up the natural gas be 
there or maybe it is a new way of making the tank materials, 
using carbon fiber and other materials--and the compressor: if 
you could reduce the cost of the whole system to the point that 
it pays back itself in 5 years and saves money, that is where 
we want to go. And it needs innovation and science and 
engineering to do that.
    Mr. Womack. Thank you very much for your testimony. Mr. 
Chairman, I yield back.
    Mr. Frelinghuysen. Thank you very much, Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman. I was trying to get a 
little bit of background data on this. Let's see. We have had, 
for 25 years, what is called an SBIR program, Small Business 
Innovative Research Program, which goes across virtually all 
agencies, any agencies that do any research and development.
    Dr. Majumdar. Right.
    Mr. Olver. They are required to make available for small 
businesses sums of money that go to programs. It is a very 
specifically authorized, reauthorized several times, given 
sizes of programs. In your work, the largest program that you 
have funded under ARPA-E is how much? How large?
    Dr. Majumdar. The average is about $3 million for 3 years.
    Mr. Olver. $3 million.
    Dr. Majumdar. The largest is about $9 million for 3 years, 
and the smallest is roughly $300- or $400,000, something like 
that. So that is the rough range.
    Mr. Olver. I think we talked about this and I think I asked 
the same thing, but I am quite a bit older than you are, so I 
lose some of these numbers over time. Are you exempt from the 
SBIR program, or do you have authorization under the SBIR 
functions, does that have any implications for what you do?
    Dr. Majumdar. Congressman, as you mentioned, we have to 
have an SBIR program. That is, I believe, required by law.
    Mr. Olver. Yeah. For 25 years, as I say.
    Dr. Majumdar. That is right. So we do have an SBIR program, 
and as you know----
    Mr. Olver. You have to do--even with money you get, you 
have to----
    Dr. Majumdar. Yes.
    Mr. Olver [continuing]. You have to use the SBIR approach--
--
    Dr. Majumdar. That is right.
    Mr. Olver [continuing]. For a portion of the money?
    Dr. Majumdar. That is right.
    Mr. Olver. Really?
    Dr. Majumdar. Yes, I believe that is 2.5 percent.
    Mr. Olver. You actually make that available.
    Dr. Majumdar. That is right. We are making it available 
now.
    Mr. Olver. With all of the constraints that it has? I mean, 
the SBIR program says exactly how much you can give as a first-
stage project and how much can you do as a second-stage project 
and so forth. You must feel tremendously constrained by that.
    Dr. Majumdar. Well, let me just say that before I came to 
Washington, I was at a university, and I had actually started a 
company which had received SBIR funding. So I am a former 
recipient of SBIR.
    Mr. Olver. How many first-stage SBIRs did you have to apply 
for before you got one funded?
    Dr. Majumdar. When I was outside the government?
    Mr. Olver. Yeah.
    Dr. Majumdar. I believe we wrote, my company wrote about, 
you know, three or four proposals and got one funded.
    Mr. Olver. And got one. And then did the whole spigot open 
at that point? You got new first stages, and then on to second 
and third stages?
    Dr. Majumdar. Well, let me just say that one of the things 
that we faced, and we are going to fix this is that when you do 
a Phase I in SBIR, you get about 150K or so, 100, 150K.
    Mr. Olver. The most recent authorization, may be larger 
than that. But yes, it used to be $75,000, I remember.
    Dr. Majumdar. Right, and then there is a gap where you have 
to write a proposal again. It goes through evaluation and then 
you get Phase II. And that----
    Mr. Olver. And then you can get up to like $750,000 or 
something like that.
    Dr. Majumdar. That is right. And that gap is actually quite 
difficult. Because for a small company, and this is what we 
faced, cash flow is everything. So we went under because we 
could not sustain our operations through the gap.
    Mr. Olver. Okay.
    Dr. Majumdar. So I think one of the things that we are 
going to do in ARPA-E, is to use this go/no-go milestone and 
close the gap to zero. Because if in Phase I, you can reach the 
milestones of Phase I, it should be automatic to go to Phase 
II, so that you don't have a cash-flow problem, and I believe, 
and I have talked to many small businesses, that this is 
something that they would love to see.
    Mr. Olver. And you can do that.
    Dr. Majumdar. I believe we can do that within the law.
    Mr. Olver. You can do that just administratively, since you 
must do SBIRs, with those 2 or 3 percent or whatever of the 
money. You can then change the whole pattern of the program.
    Dr. Majumdar. I believe there is flexibility in doing so, 
but I could take the question for the record, and get back to 
you in more detail.
    Mr. Olver. Okay, that would be fine. Am I already off my 
time?
    Mr. Frelinghuysen. You are----
    Mr. Olver. Off my time.
    Mr. Frelinghuysen. Never off your time. But Mr. Nunnelee is 
ready.
    Mr. Olver. I will come back.
    Mr. Frelinghuysen. Mr. Nunnelee.
    Mr. Nunnelee. Thank you, Mr. Chairman. Mr. Frantz, way back 
in 1976, the Congressional Budget Office had a paper entitled: 
Loan Guarantees, Current Concerns and Alternatives for Control. 
It was referenced by a recent Congressional research service 
report. Let me just quote from that one: ``Commercial lenders 
originate loans that are guaranteed by the government. These 
lenders may be more concerned with the adequacies of the loan 
guarantee agreement, than by the actual risk of the project. As 
a result, projects may not receive an adequate amount of due 
diligence by the lender. Therefore, increasing the Federal 
Government's risk of exposure.''
    Mr. Frantz. Yes.
    Mr. Nunnelee. Can you respond to that?
    Mr. Frantz. Oh, I certainly can. When you, in a bipartisan 
way, decided to enact the 1705 program under the Recovery Act, 
we, in our office, took a look at it and created what you may 
be familiar with, a subset called our Financial Investment 
Partnership Program. We did it for two reasons. One was to 
extend the capability of the private markets, to have a greater 
breadth in the opportunity to loan; and secondly, to drag them 
kicking and screaming back into this space in terms of new 
innovative technologies, which they had vacated at the time, 
particularly during the recession.
    So, that program, which was sunset September 30, 2011, was 
enormously successful. What we did, and I want to assure you 
that we did, and this was a part, in fact, of the GAO report 
reflected it--those projects went through double due diligence 
process. The applicants were required to be financial 
institutions. They had done due diligence on the projects 
themselves, and then when they came to us as an application, we 
started all over again on the projects.
    So that those projects actually went through a double 
credit underwriting and due diligence process. For that reason, 
by the way, those projects are among the soundest projects we 
have in the portfolio today. They largely focus on generation, 
as you would expect, solar generation. So I think, if anything, 
we have corrected, or at least addressed maybe some of the 
shortcomings of the earlier program in that regard.
    Mr. Nunnelee. All right, I am still new to this committee 
and learning, but your contention is that without these loan 
guarantees, the private sector would not have made the loan, or 
there are not enough venture capitalists out there.
    Mr. Frantz. Certainly not. I want to assure the full 
committee in that regard, and that is true today. We are in 
constant communication on a weekly basis with the major 
financial private markets. It is a part of our 
responsibilities, and they are still in a position where, in 
many instances, they would not undertake these new and 
innovative technologies, either in the first instance or at 
utility scale where we are financing them today.
    Mr. Nunnelee. All right. Mr. Chairman, I will yield back. I 
will get some more later.
    Mr. Frelinghuysen. Some good questions. I referred to it in 
my opening remarks. I think a lot of players were shaken by 
some of the challenges you have faced, and it is one of those 
underlying uncertainties here. I just want to talk for a few 
minutes, Mr. Frantz, about the Allison Report, and----
    Mr. Frantz. Yes, sir.
    Mr. Frelinghuysen [continuing]. And the report recommending 
that you better define what is a reasonable prospect for 
repayment. That is obviously for the purpose of the loan 
portfolio.
    What is your understanding of this recommendation, and what 
are you doing to implement it?
    Mr. Frantz. Well, on this particular one, or all of them, 
Mr. Chairman?
    Mr. Frelinghuysen. Well, let's just start with the 
reasonable prospect of repayment.
    Mr. Frantz. With respect to that requirement, we have taken 
a very, very conservative approach to that recommendation. A 
50/50 flip of the coin does not meet our criteria. So we are 
looking at very high percentages, as a function of our total 
identification of risks and our mitigation of those risks, to 
ensure that there is a very high probability that, for the 
benefit of the taxpayer, our loan is going to be repaid. It 
varies in terms of the percentage. It varies by business 
sector, as you can well imagine, and----
    Mr. Frelinghuysen. So who do you pull from within your 
organization to do this evaluation? Because I get people from 
the private sector, shall we say, condemning us all in 
Government for a lot of the things that have been happening. 
You don't have the right people in place? How would you 
characterize some of the people that are doing these 
assessments here? Some come from the private sector with pretty 
remarkable credentials.
    Mr. Frantz. Virtually all of them do, Mr. Chairman. All of 
my staff represent people who are essentially from the private 
sector. For the most part, we are not career government people.
    Mr. Frelinghuysen. We salute you, the fact that you are in 
Senior Executive Service, of course.
    Mr. Frantz. We do a very thorough due diligence and 
underwriting of these projects in the first instance with the 
origination group. These are people who have been doing this 
virtually for their entire careers. It is then reviewed by what 
we call a very separate credit group. That group is referred to 
in the Allison Report as the ``risk management group.'' We are 
looking to address his recommendation in that area to tighten 
that up, and change a little bit of its focus. But that group 
operates and views these transactions very separately from the 
origination group. So, that is the first checks and balances 
that occur.
    Mr. Frelinghuysen. Well, there is a drum beat, which is 
maybe over the last couple of days, that somehow we blame it 
all on the Chinese. But in reality, somebody is looking, you 
know, we are looking over our shoulder as to what is going on 
around the world, and in China, and India. I mean, we are 
taking a look.
    Mr. Frantz. Exactly.
    Mr. Frelinghuysen. That has to be factored into the overall 
equation here.
    Mr. Frantz. Yes, and as a matter of fact----
    Mr. Frelinghuysen. We understand that there are subsidies 
here, there is manipulation, there are currency issues----
    Mr. Frantz. Right.
    Mr. Frelinghuysen [continuing]. But in reality, if you have 
all of these qualified people, they ought to be taking a look 
at that.
    Mr. Frantz. They are, and we are putting additional 
emphasis on that per the recommendation in the Allison Report 
with respect to the specific responsibilities of the staff and 
the portfolio management group that I also alluded to. So those 
folks are constantly looking at the world markets, and the more 
macro issues that might pertain to these projects down the 
road. That is a part of their responsibility once these 
projects move into the portfolio management.
    Mr. Frelinghuysen. The stakes are pretty high here.
    Mr. Frantz. Yes, sir.
    Mr. Frelinghuysen. We have this underlying problem that 
still carries a shadow over something which had been going, I 
think fairly well, prior to this administration.
    Mr. Frantz. Sure.
    Mr. Frelinghuysen. And within this administration, but 
obviously highlighted by some really dramatic situations.
    Mr. Frantz. We also, we diversified the staff, Mr. 
Chairman, so now within our program we now have a very 
sophisticated technical group, and that technical group is also 
separate from the origination group. It does its own analyses, 
and they are also looking at all of the markets impacting all 
of our projects.
    Mr. Frelinghuysen. Tell us a little bit about the early-
warning system, and what you are doing relative to managing 
information reporting systems and so forth.
    Mr. Frantz. I am happy to address that, Mr. Chairman. The 
early-warning system is a process that begins, this--now, we 
are talking about the portfolio management group.
    Mr. Frelinghuysen. Yes.
    Mr. Frantz. These are once the projects have moved from the 
origination and closing into the portfolio management group. 
The first piece of that oversight is what we call our watch 
list. The watch list is for a variety of reasons and projects 
move on and off the watch list continuously, but the watch list 
is for those projects for a variety of different reasons, 
either specific to the project, or to your suggestion specific 
to the markets that might be involved, go on this list. That 
list is reviewed on a weekly basis. The circumstances of the 
projects on the list, and all issues surrounding them. That is 
the first step.
    The second step is that the officers are responsible on a 
monthly basis for all of their projects, covering all aspects 
that might occur. Those are the two first and major steps, and 
then that feeds into another recommendation that was a part of 
the Allison Report and that is, we have established a very 
separate risk committee. That committee convenes every week on 
Thursdays, and that committee oversees any updates or changes, 
material or otherwise, on each one of the projects that may be 
occurring on a weekly basis.
    Mr. Frelinghuysen. How would you rate the health of your 
current portfolio?
    Mr. Frantz. We think it is very solid. You know, there 
clearly are unknowns, Mr. Chairman. We are not perfectly 
clairvoyant. We don't overall know what the future holds.
    Mr. Frelinghuysen. But some loans inherently are riskier 
than others, aren't they?
    Mr. Frantz. Yes, sir, they are, and I alluded to them in my 
oral comment, that is in the manufacturing phase. In that 
regard, just as a parenthetical for all of you, in the 
manufacturing in the solar phase, we have two projects that 
have not even funded yet. And wedon't know if they ultimately 
will be. We hope they are. We have also incurred milestones that have 
to be met both prior to the initial funding as well as the continuing 
funding, and that provides us off ramps in case these projects get in 
trouble. We don't commit all of the U.S. taxpayer dollars to the 
project.
    Mr. Frelinghuysen. There have been lots of lessons learned 
here.
    Mr. Frantz. Yes, sir, certainly there have been.
    Mr. Frelinghuysen. Just to the Doctor. The white spaces you 
talked about, one of the things that the committee has learned 
is how many new centers the Department of Energy set up. Across 
the broad spectrum we have frontier centers, we have hubs. 
Where do you connect to the hubs?
    Dr. Majumdar. Well, it is a different model.
    Mr. Frelinghuysen. But in reality, they want us to set up a 
new hub, and we have a number of functioning hubs. I think the 
jury is out as to how well they are working, but I assume, do 
you cross-pollinate? Do you communicate?
    Dr. Majumdar. From ARPA-E's position, we coordinate very 
closely with all of the things that are going on in the 
Department including the hubs, as well as, you know, all of the 
EFPCs, I think there was a question about overlap, et cetera. 
Let me just address that very clearly. When we create programs 
in ARPA-E, the first thing we do, as I said, is to recruit 
really smart people, and then have a workshop. In that 
workshop, we bring in all of the stakeholders, the scientific 
community that are relevant, and sometimes communities that 
have not previously interacted with each other. We have people 
from the Office of Science, and all of the relevant applied 
energy offices in those workshops and manning them. They take 
some positions, leadership positions in creating that workshop.
    Mr. Frelinghuysen. Why don't you stop there? That is sort 
of why I, you know, maybe I didn't get into Mr. Frantz' 
portfolio well enough, is whether there are some things that 
you are doing that perhaps could be directed towards a look-see 
at some of those within your portfolio. In other words, there 
are maybe some other stakeholders that would take a look at 
some of the risks, or do you?
    Mr. Frantz. We do. We do.
    Mr. Frelinghuysen. All right, and then I will go to Mr. 
Visclosky, but I just wanted to know whether there is----
    Dr. Majumdar. Well, I think one of the questions in the 
appropriations report is, have some of the practices in ARPA-E 
been adopted by other parts of the Department? One of the test 
cases is what we are doing in the SunShot initiative. And as 
you know, the goal of SunShot initiative is to reduce the cost 
of electricity from solar to 5 cents, or below a dollar per 
watt within this decade. But internally, it is also a 
coordinated management of all solar activities from Office of 
Science, from EERE, as well as ARPA-E. What they have done is 
adopted many of the practices of how we create the funding 
opportunity; how we have a workshop to bring in the 
stakeholders; how we review application; and how we then 
contract. Our contracting time in ARPA-E is down to 3 months or 
sometimes even less.
    Mr. Frelinghuysen. Well, you are sort of like the special 
forces.
    Dr. Majumdar. Special ops.
    Mr. Frelinghuysen. Yeah, you are special ops. You are 
like----
    Dr. Majumdar. So SunShot is an experiment where we are 
trying to take some of those best practices and see whether 
they can work. Some of them are showing some very positive 
results, and that is what we wanted to know.
    Mr. Frelinghuysen. Special ops often doesn't have to wait 7 
years for something to be procured. They take it right off the 
shelf. Mr. Visclosky.
    Mr. Visclosky. But then I look at some of the troops behind 
you, and Doctor--just a joke, I am sorry. You have to know the 
personalities involved. Sorry about that.
    Doctor, I didn't mean to ignore you, I do appreciate your 
work, and would attach myself to the observations that the 
chairman just made, especially about the milestones that you 
had other interchanges with Members. EERE was in yesterday, and 
many of their contracts are bilateral with both parties, and we 
did have a discussion about this, have agreed to a 
determination, and they now are beginning to more closely 
integrate some of the milestones and have unilateral authority 
if they are not met. And again, best of intentions, but there 
are limited resources, and we ought to focus them. So I 
appreciate, and again, would encourage you to every degree to 
continue to do that.
    I would just ask for the record, and not now, because I did 
ask a question in EERE yesterday. You mentioned solar 
batteries, and they were the two discrete programs I asked them 
to respond to for the record. To make sure those jobs are clear 
5 years from now, the response yesterday was we are looking to 
create demand, we are looking at tax credits which have nothing 
to do directly with the Department of Energy, and we are 
collecting information. Not good enough for me. If you have 
some ideas, and again, for the record, just what are you 
looking to do? What should the Department do to make sure that 
on two programs, solar, and keep the jobs here, create the jobs 
here? I would appreciate that.
    Dr. Majumdar. Well, I am sorry.
    Mr. Visclosky. Go ahead. I wanted to have a conversation 
with Mr. Frantz there.
    On the health of the portfolio, and the chairman alluded to 
that, I would ask if you could address the concerns raised 
about the exposure concerning First Solar, as well as the 
Spanish firm Abengoa, I believe it is, because of their out-
sized----
    Mr. Frantz. Sure.
    Mr. Visclosky [continuing]. Out-sized appearance in the 
portfolios. Is there anything in particular you have concerns 
about looking at as far as your staff?
    Mr. Frantz. No, Congressman Visclosky, your concerns are 
well taken. Any time that a concentration occurs in our 
business, it is of concern, and it does require particular 
oversight. We make it a priority to look at it. With respect to 
First Solar, I would like to make two or three comments 
quickly. One is that First Solar, we have three projects with 
them; they are the big solar generation projects, but remember 
that their participation in the projects now, is as the EPC, 
the construction contractor, and the vendor supplier. Of those 
three projects that we have, one of them was the deal of the 
year. General Electric and Nexterra, two of the largest 
corporations in the United States, are the sponsors and the 
owners in that project.
    Agua Caliente, we just had the experience that while NRG 
was the primary sponsor, it sold down 49 percent of that to 
MidAmerica. That has been publicized and that is a very 
positive thing in terms of the dispersion of the concentration, 
and Antelope Valley Solar, is one of the largest utilities in 
the United States as well. So the point is, with respect to 
First Solar, if there were any hiccups on any one of those 
projects, which we have no suspicion that there will be, these 
are sponsored by some of the largest corporations in the United 
States that could support a financial hiccup, and certainly 
would be able to readily change the vendor, or the contractor 
on those projects.
    Abengoa, your question, a very good one. On this one, we 
were frankly delighted that Abengoa is one of our primary 
project sponsors in the portfolio. Abengoa is a world-class 
corporation in this space. Revenues of $9 billion this year. 
Every one of their financial tests for 2011 are up. Revenues 
were up 46 percent; EBITDA, 36 percent; net income, 24 percent, 
and their leverage is going down.
    They happen to be one of the most proactive and active and 
successful corporations in the world in the solar generation 
space. So they bring to the table enormous experience 
worldwide, and they have very positive financial performance. 
So in that regard, we are very pleased with their participation 
and we are very satisfied with the results that are taking 
place.
    As a matter of fact, the Solana project among them is over 
half constructed now and is going very, very well. Also a very 
important point to make with respect to them, they bring to 
this Nation the follow-down in manufacturing capacity. They 
have built the plant which is now fully functional in the State 
of Arizona which is manufacturing to support their projects 
here in the United States. That is a big, big plus for the U.S. 
taxpayer, and for us as portfolio managers.
    Mr. Visclosky. Okay, thank you. I may have some more for 
Dr. Majumdar, but I will defer to the Chairman.
    Mr. Frelinghuysen. Mr. Nunnelee.
    Mr. Nunnelee. Thank you, Mr. Chairman. Earlier this month, 
the House Oversight Committee issued a report on the loan 
program. I have numerous questions. I will just pick a couple 
of them from that report, and just get you to respond. One, 
they say that the Department of Energy invested a 
disproportionate amount of its funds in solar technology 
leaving taxpayers vulnerable by overemphasizing a single 
technology.
    Mr. Frantz. The truth of the matter is, we did invest very 
heavily in the solar space. It has been revolutionary. The 
point of it is, and I would like to emphasize this point, that 
the predominance of solar, we have 12 projects in solar 
generation. All of those projects have what we call power 
purchase agreements that exceed the tenure of our employed 
loans, and that is one of the most solid aspects of our entire 
portfolio.
    So it is true there is a heavy concentration there, but it 
is also is the safest, and ultimately will be the most 
successful. There is no question about it. With respect to the 
solar manufacturing space, I think I previously made the 
comment, Congressman, that we had four projects in solar 
manufacturing. They are relatively small amounts, in terms of 
loan that have been borrowed, as well as project size, and two 
of the four we have not yet dispersed; and we will not, until 
we are satisfied that the satisfactory milestones have been 
completed. So it is true, there is a disproportionate amount, 
but that was where the demand for this program is. The good 
news is that we have structured those deals to the point that 
they are probably going to be our strongest and most viable 
projects in the portfolio.
    Mr. Nunnelee. All right, in another observation from House 
Oversight it says that: The Department of Energy's failure to 
diligently oversee cost and set prudent limitations on 
executive compensation, while it distributedbillions of dollars 
in loan commitments, has created a significant moral hazard, and has 
created enormous risk for the Department of Energy and for taxpayer 
funds. And the report cites Beacon Power Corporation, the second 
recipient of the 1705 loan, paid three executives more than a quarter 
of a million dollars and bonuses in March of 2010, and 18 months later 
declared bankruptcy.
    Mr. Frantz. Well, a quick answer to that one and a very 
logical one. First of all, generally, not just us, but 
generally, in the private markets as well, senior lenders do 
not participate in board directorships. That is not what we do. 
So in effect, we do not have direct control over the governance 
of these projects and these corporations. That is left to their 
board of directors. So the assertion may be true, but we do not 
have the ability to control the compensation levels of 
corporations and projects to which we lend to.
    Mr. Frelinghuysen. So, if the gentleman will yield, unlike 
the TARP, you don't have any role?
    Mr. Frantz. Yes, sir, Mr. Chairman, correct.
    Mr. Frelinghuysen. Troubled Asset Relief Program.
    Mr. Frantz. Correct.
    Mr. Nunnelee. You need to understand the awkward position 
it puts me in. I have people in North Mississippi that are 
spending $4 a gallon to get back and forth to work, and they 
are struggling. And they get their paycheck, and withheld from 
their paycheck are Federal income taxes, and that goes to pay 
companies that pay multimillion dollar bonuses that declare 
bankruptcy.
    Mr. Frantz. Uh-huh.
    Mr. Nunnelee. You understand the awkward position that puts 
me in?
    Mr. Frantz. Yes, sir, I do. I do.
    Mr. Nunnelee. All right, thank you. Thank you, Mr. 
Chairman.
    Mr. Frelinghuysen. Mr. Nunnelee. Mr. Olver.
    Mr. Olver. Thank you very much. Sir, go ahead.
    Mr. Frelinghuysen. Mr. Fattah, sorry.
    Mr. Fattah. Thank you. The loan guarantees, you have done a 
number of deals in geothermal.
    Mr. Frantz. Yes, sir.
    Mr. Fattah. Any of them relate to tidal-based energy, tidal 
waves?
    Mr. Frantz. Oh, no, no.
    Mr. Fattah. So all of this--none of this is offshore.
    Mr. Frantz. No, our geothermal projects are all deep drill 
programs in primarily the West.
    Mr. Fattah. Okay, now, the wind projects, any of them 
offshore?
    Mr. Frantz. No, we have none presently. We have four wind 
projects, and they are all on the Continental United States.
    Mr. Fattah. Now, you have a lot of international 
experience, right?
    Mr. Frantz. I do. Yes, sir.
    Mr. Fattah. Honduras has got the largest wind farm. Do you 
know how that was financed?
    Mr. Frantz. No, I don't.
    Mr. Fattah. Well, do you know anything about how our 
economic competitors interact with the generation of renewable 
energy in general? I know 2 weeks ago the E.U. in its Energy 
Alliance Agreement talked in large measure about what the 
United States was doing and how the E.U. needed to compete 
around some of these same issues.
    Mr. Frantz. Uh-huh.
    Mr. Fattah. Because not doing so would put them at a 
disadvantage. And I know here, we got into solar, which I 
totally support, in part, because the Chinese were----
    Mr. Frantz. Uh-huh.
    Mr. Fattah [continuing]. Subsidizing it, and Germany has 
been subsidizing wind in a variety of different ways. So I was 
wondering whether you could share where we are relative to our 
competitors in helping to grow these industries.
    Mr. Frantz. Well, I think generally, it is true, that with 
respect to the solar and the renewable space, that it is 
important that there are incentives to encourage that 
development. As you are well aware, the utilities in the State 
of California, with the endorsement of their Public Utility 
Commission, have permitted higher rates for the power purchase 
agreements which has been very important. I would emphasize the 
fact, and I think, Congressman, you are alluding to it, that 
the returns to employed equity on these projects is very, very 
low, so most investors go into them for strategic purposes, and 
they go in for the long haul.
    There are potentially two applicants in the offshore wind 
space, and they will be in a position, we feel, that could be 
very viable based on their location, and incentives that they 
have locally.
    Mr. Fattah. Well, I think that we have made some very 
significant strides. Since the chairman spoke about New Jersey, 
I will mention my hometown of Philadelphia. Our international 
airport terminal is now completely powered by wind energy. The 
Eagles, who are going to win the Super Bowl next year, the 
entire stadium in which they play is now powered by wind and 
solar power. So I think that there are significant 
opportunities in pushing clean energy. On the nuclear side, we 
haven't done any nuclear in 30 years; however, the 
administration has really crossed a major rubicon in the sense 
of moving the country out of this kind of a stagnant position 
relative to nuclear, with a bias towards action. You had 
mentioned in your testimony, that on the advanced nuclear, you 
have a deal in, I don't know where it is in your process, but 
it is in process somewhere.
    Mr. Frantz. Uh-huh.
    Mr. Fattah. Could you comment on that?
    Mr. Frantz. Well, I alluded to the Vogtle project, which 
you are well aware of.
    Mr. Fattah. Right, the Vogtle project.
    Mr. Frantz. This project is well along. There are over 
1,500 people employed on the site. They did receive their 
license. We are in the final negotiations to close the 
documentation on that project. I have talked with the senior 
management. I talk with the senior management of the Southern 
Companies weekly. They are profoundly committed to completing 
this project, and we have every expectation that it is going to 
be a great success story in terms of the renaissance of the 
nuclear power in the United States. And by the way, there are 
discussions about destruction. We arein the process of finally 
negotiating that deal, but it is a classic example of the strength of a 
public partnership in bringing a very complicated and very large 
project on line.
    Mr. Fattah. All right. Thank you, Mr. Chairman.
    Mr. Frelinghuysen. Keep an eye on the small modular 
reactors, too. There is a lot of excitement in that area.
    Mr. Frantz. We have been in discussions, Mr. Chairman, on 
that subject, as a matter of fact. We are very interested.
    Mr. Frelinghuysen. Some real excitement, a lot of different 
players. Some large, some small.
    Mr. Frantz. We will have to come back to you with a new 
solicitation, if you will permit us.
    Mr. Fattah. We would be interested on a bipartisan basis.
    Mr. Frelinghuysen. Mr. Olver, you are at the end of the 
line, but always front and center for us. Want to put a plug in 
for your home State?
    Mr. Olver. You are going to confuse me if you do that, 
because I was going to talk again about SBIR, which my home 
State does very, very well on. But instead, I wanted to talk 
about carbon capture, and storage, and utilization because we 
had a long discussion about that yesterday, where I think I 
raised everybody's level of confusion in the process. You have 
spoken in your testimony here about the cost of capturing 
carbon dioxide from a coal-fired power plant at $80 per ton of 
CO2. I take it that would apply also to gas-fired 
plants. They would be of a very similar nature?
    Dr. Majumdar. More expensive, because it is----
    Mr. Olver. More expensive? Why is it more expensive for----
    Dr. Majumdar. Because the amount of carbon dioxide is of 
lower concentration in pure natural gas. You have less carbon. 
So thereby, if you want to purify, you want to extract 
something out which is more dilute----
    Mr. Olver. Okay.
    Dr. Majumdar. As a chemist you would know that it takes 
more energy to do that.
    Mr. Olver. Okay. But the technique of capture is no 
different.
    Dr. Majumdar. That is true.
    Mr. Olver. Okay.
    Dr. Majumdar. Well, that is--see----
    Mr. Olver. Now, are there other places where--we aren't yet 
getting around trying to do--we are looking at the big points 
sources, which are these big power plants and the action of 
capture. We haven't done anything about capture for 
CO2 in the case of our mobile sources like our 
transportation sources, have we?
    Dr. Majumdar. Well, Congressman----
    Mr. Olver. Have we done anything on that? Are you doing any 
research? Are you giving out projects?
    Dr. Majumdar. Well, I think there are several ways of 
addressing that. If you want to decarbonize the transportation 
sector, you could look at biofuels. The goal that we have set 
out for ourselves----
    Mr. Olver. But that is not carbon capture.
    Dr. Majumdar. That is not carbon capture.
    Mr. Olver. I wanted to see. How many different options are 
there for carbon capture, or is the technique essentially one 
technique on whether it is coal, or gas-fired facilities?
    Dr. Majumdar. Sure. So today, there are only a few 
techniques for carbon capture. A few. And they are based on 
chemicals or a chemical reagent. Either you have chilled 
ammonia, or you have a solution of what is called 
monoethanolamine. And so you have an air separation unit. You 
pass CO2 coming out of an exhaust of a coal-fired 
power plant and you drop this amine solution down and it gets 
absorbed. Then you take that amine solution with absorbed 
CO2 to a separate location and then you have got to 
heat it to about 100, 120, 150 degrees Celsius to emit the 
CO2 again, but now you have got a purified form. 
Thereby, you can concentrate it and you can then pump it to a 
location where you can do utilization and pump it down and 
produce oil, which is the whole idea of carbon capture 
utilization and sequestration.
    You can sequester the CO2 below and produce oil 
at the same time. Using that technique today is $80 a ton of 
CO2 for capture. While the cost is coming down, in 
ARPA-E what we created is that look, we have to reduce the cost 
way further.
    Mr. Olver. So you have given out 15 projects which are 
intended to reduce the cost.
    Dr. Majumdar. That is right.
    Mr. Olver. So it is 15 projects, each of which has a 
different approach to how they are going to do that.
    Dr. Majumdar. Exactly, that is right.
    Mr. Olver. So you are now getting two approaches, and out 
of that process we might end up with a couple of these 
approaches that actually meet your goals.
    Dr. Majumdar. That is right. And our goal is to reduce the 
cost to $25 a ton, and why 25? Because the price of 
CO2 that is set by EOR and it has to be on the order 
of 30, 35 or so.
    Mr. Olver. That is an option for utilization, and you don't 
go from storage. You go from the producing, to the capturing, 
directly to utilization.
    Dr. Majumdar. Well, that is the goal. When you pump 
CO2 down to produce oil, it also getssequestered at 
the same time. So this is a win/win/win proposition, again, because you 
can capture the CO2 from the coal-fired power plants, pump 
it down, sequester it, and produce domestic oil. So this is something 
that we are deeply interested in, and the key challenge is to reduce 
the cost of carbon capture, which is where ARPA-E and the Department of 
Energy as a whole have focused to reduce the cost of carbon.
    Mr. Olver. What are the sizes of your 15 projects?
    Dr. Majumdar. On an average, about $3 million. That is a 
typical ARPA-E project and some of them are a few hundred 
thousand dollars.
    Mr. Olver. Oh, you have some techniques for people that 
propose to do this for much less than $3 million?
    Dr. Majumdar. No. In our ARPA-E projects, the program that 
we have created is focused only on carbon capture, because that 
is the cost barrier that we have today. We are not focused on 
pumping down and utilization.
    Mr. Olver. No, I understand. You have all of these 
different projects. You have some people who are thinking that, 
have I either only asked for, or you have concluded that it is 
risky, or something, and you don't want to spend so much to 
give them all the same number?
    Dr. Majumdar. Well, this is on an average. These are risky 
ideas. These are game-changing potentially. The average is $3 
million; $1 million a year. This is to try out a new idea; and 
if it is successful, then they will go to the next stage of 
scaling and putting it in a power plant, et cetera. But that 
comes in a pilot plant, and that comes at a later stage. But 
this is to try out other avenues.
    Let me give you an example. There are something called 
ionic liquids. These are new kinds of reagents, and the idea is 
that could you take ionic liquids to capture carbon dioxide and 
then move it away at a much more cost-effective and energy-
efficient way. There are other membranes that have been created 
to do carbon capture. We have enzymes. We are capturing carbon 
dioxide in our body and we are exhaling it right now and we 
don't have to heat ourselves to 150 degrees Celsius. There is 
something else going on.
    Mr. Olver. Well, let me quickly repeat the question that I 
had asked yesterday, and I had the impression that we had a 
whole group of options for carbon capture, and we had also a 
whole group of options for storage, and a group of options for 
utilization. And you are not certainly contradicting that. 
Obviously, utilization may be in many different things besides 
the EOR program, and some of them will appear if we can cheapen 
the amount so that we are producing CO2 that you can 
handle in serious tonnages in a better way than we can do now.
    And I was asking, as a one-time chemist, is there someplace 
where I can see a compendium, not too long, because otherwise I 
would never get it read, but a review paper, or something like 
that about the different problems that we have like the problem 
of sequestration, the problem of capture, the problem of 
storage, and the problem of utilization.
    And sometimes it is going to have all three components, and 
sometimes it may not have a long storage component. And I 
wanted to see what we were doing in these, and what our 
prospects were, how far along we are on this area.
    Dr. Majumdar. I would be delighted to share the review 
papers on these, and where we are on each of those components. 
I will be delighted to share them with you.
    Mr. Olver. You are talking now about several review papers. 
There are review papers on each of these, and I will have a 
pile of paper and it will never get read.
    Mr. Frelinghuysen. You will make sure that Mr. Olver has 
those papers?
    Dr. Majumdar. Yes, I will make sure. I will make sure you 
have those papers.
    Mr. Frelinghuysen. We are going to make sure you get those 
papers. And I want to get back and I think the hour is late, 
and we were kind of a late start. I just want to get back, Mr. 
Frantz, you mentioned the 705 loan guarantee, you know, that 
you ran out of authority on that----
    Mr. Frantz. Uh-huh.
    Mr. Frelinghuysen [continuing]. To issue new loan 
guarantees. You still have, I believe, over $500 million of 
emergency funding that you have not yet obligated. Can you--
what are you going to use this funding for?
    Mr. Frantz. Well, we feel it is very important to have this 
availability, given that our tenures and the complexity of our 
projects, and there will be a requirement almost certainly that 
there be modifications to these transactions. Therefore, this 
is a safety valve for us to accommodate modifications that may 
have to be made in these projects in the outyears, given 
circumstances that we can't foresee right now, but certainly in 
all probability they will occur.
    Mr. Frelinghuysen. So just for the record, how many loan 
guarantees have been modified to date, and----
    Mr. Frantz. Well, none have been modified to date because 
we are just in the initial stages.
    Mr. Frelinghuysen. So as we look ahead here, what would you 
anticipate?
    Mr. Frantz. You know, I couldn't, Mr. Chairman, put a 
specific number on it, but they are almost certainly, given the 
complexity and the size of these projects, there will be a 
requirement for those modifications in the outyears.
    Mr. Frelinghuysen. Doctor, before we close-up here, Mr. 
Visclosky asked about, and others asked about what are we doing 
to actually maintain the intellectual property that you have 
developed to make sure that it stays here----
    Dr. Majumdar. Right.
    Mr. Frelinghuysen [continuing]. And that there is a direct 
relationship between the creation of American jobs. I mean, we 
have heard others from the departments testify, but we don't 
get much reassurance that all of the creativity, innovation 
that you are talking about, all of the best minds that 
collectively you have put together on a variety of these 
projects, that--we don't have a feeling of assurance that a lot 
of that is going to stay stateside here. What are you doing?
    Dr. Majumdar. Mr. Chairman, I appreciate the question. This 
is something that is of deep concern to me. I am very 
passionate about it. Actually, I wrote an article on this 
called ``Make Locally, Sell Globally.'' And I have outlined 
some of the issues, and I can share this with you.
    Mr. Frelinghuysen. You are going to give that to me when 
you give Mr. Olver his reports?
    Dr. Majumdar. This is a single page.
    Mr. Frelinghuysen. I am concerned about patents.
    Dr. Majumdar. I agree.
    Mr. Frelinghuysen. I am concerned about, you know, we are 
aware that--it depends where you listen, the Chinese have a lot 
more patents than we do in certain areas, and that scientific 
papers are lacking sometimes compared to what we used to do, 
and I just wondered whether we are keeping intellectual 
property here as best we can, and protecting our manufacturing 
base.
    Dr. Majumdar. Yes, Mr. Chairman. There is no silver bullet 
on this one. Let me just explain. There are multiple things 
that have to be done. Number one is the IP part, and what we 
have done is, for example, for small businesses, there is the 
Bayh-Dole Act, and we have gone a little beyond Bayh-Dole to 
ensure that some of the IP leads to American manufacturing here 
in the United States. But if you are looking at manufacturing, 
which as I said, I am very passionate about, there is other 
things as well. Financing is very important.
    So, and this goes beyond ARPA-E now. Because ARPA-E's job 
is to look at the breakthrough, to demonstrate that something 
can actually work. But we have created, and this is right in 
the DNA of ARPA-E, a tech-to-market team within ARPA-E. Their 
job is to look at the innovations that are coming out, and once 
they are successful, to create the connective tissue for the 
rest of the world which includes large business, which includes 
financing, so that they can succeed in going beyond ARPA-E and 
leads to manufacturing, and leads to jobs out here. Some of 
that is showing success. I just heard yesterday there is a team 
that we funded called Phononic Devices in North Carolina, and 
our funding was to demonstrate that you have a new kind of 
solid-state refrigerator, and they have been successful. Now, 
that is leading to a pilot plant in North Carolina to develop 
these devices right there.
    But if you really want to look at manufacturing as a whole, 
there are other aspects. There is a human capital aspect, which 
I think is very important and you and I had a discussion on 
that. There is a market demand that needs to be created, but 
that is, frankly, I would say a little bit beyond ARPA-E. We 
are doing everything we can.
    Mr. Frelinghuysen. Well, some of our best human capital, 
and it is disturbing, but we live in a global economy, have 
moved to China. I mean, there have been some remarkable people 
that we have trained and educated who are now, shall we say, 
setting up shop in China. And just for the record, do the 
Chinese have multiple ARPA-Es? How wouldyou describe what they 
are doing?
    Dr. Majumdar. I have not heard of an ARPA-E in China, 
frankly. Maybe they are doing something that I don't know of. 
They haven't announced it, but what I could say is what we are 
doing out here. I think we are doing everything we can to 
transition some of the technology breakthroughs into 
manufacturing out here.
    Mr. Frelinghuysen. I say that because both Mr. Visclosky 
and I serve on Defense Appropriations Committee, and from one 
of the military installations I represent, this individual was 
followed around when he went to China, and he asked many of the 
students who were gathered around him what they were majoring 
in, and they said they were majoring in warhead development. 
There were about like 150 of them. And I just wondered whether 
what we, obviously--we don't have that type of, shall we say, 
college or university major, but at the installations we have 
people who focus on that in research and development. I was 
just wondering whether you are taking a look over your 
shoulder.
    Dr. Majumdar. We are. All I can say is I strongly believe 
in the science and engineering infrastructure out here, which 
is the best in the world. I also believe in the capacity for 
the United States to manufacture. I strongly believe in that, 
which is why I am so passionate about it, and that is why I 
wrote the article. But I really think that we have to align 
multiple things and I think we have to align the financing. We 
have to align the market demand created out here. We have to 
align the human capital so that people get retrained and get 
into the workforce, and we have to align that with the 
technology innovations and the IP protection. We are looking at 
whatever we can in our capacity in ARPA-E to do that.
    Mr. Frelinghuysen. Mr. Visclosky, anything further?
    Mr. Visclosky. If I could, Mr. Chairman. Mr. Frantz, on the 
USEC program, it does not lack controversy in your office or on 
this subcommittee, and I view it as multifaceted as far as your 
consideration. One, is the technology, and the Department 
obviously has looked at developing a $300 million research and 
development program----
    Mr. Frantz. Uh-huh.
    Mr. Visclosky [continuing]. As well as the financial 
standing of the company itself. Could you bring the 
subcommittee up-to-date as to your impression from a loan 
guarantee perspective as to----
    Mr. Frantz. Well, sure. This project is no longer ongoing. 
It has been--it is being managed separately within the 
Department of Energy under a separate program. As you are 
perhaps well aware, it was an applicant for the front end 
uranium enrichment in the Loan Guarantee Program. We never have 
been able to reach a conclusion that the technology was ready 
for full commercial application, nor have we been able to 
ascertain that the corporation was financially enough sound to 
execute the overall project. So based on that determination 
within my staff, the Secretary has chosen to establish a 
separate program for that project within the Department.
    Mr. Visclosky. On the auto program, markets have obviously 
changed since the inception of that program, and I believe you 
have about $4 billion left in the program.
    Mr. Frantz. Yes, sir.
    Mr. Visclosky. What is your forecast, if you would, for 
assumptions going forward? Will it be demand from the industry, 
and will it be from the manufacturers? Will it be from the 
component side, and do you draw a distinction between the two?
    Mr. Frantz. Yes. We do draw a distinction. I will work 
backwards. You have asked me two or three questions. First of 
all, given our experience in the sector, and particularly with 
the OEMs, which the original equipment manufacturers, the major 
auto companies, it is a known fact, and we hear it in the 
marketplace all the time that they prefer to control all of the 
integral parts within their organization from a quality-control 
point of view, as well as the economics of vertical 
integration.
    So it is very, very difficult for an independent individual 
component manufacturer who is not underwritten, or subscribed 
to by the major automobile companies to actually penetrate and 
become ultimate suppliers to them. So that is the impediment in 
the first instance.
    Yes, there has been a dramatic change, a very positive one, 
wonderful news for the American economy for sure, that there 
has been a dramatic turnaround in this industry. For that 
reason, what I would want to assure the committee, is that we 
have a very proactive initiative in the automotive industry 
through Webinars, outreach to all the companies--not only the 
major automotive makers, but as well as smaller individual 
companies that we are still in business. We are open for 
business. We would very much welcome their applications. So I 
can't comment specifically, but we are doing a full proactive 
outreach to this industry to make sure that everybody is aware 
we are here.
    We are still open for business, and we are still very 
interested in helping them, in assisting them to bring new 
technologies, particularly as they pertain to the CAFE 
standards, and the efficiencies of motor gasoline.
    Mr. Visclosky. The chairman made a comment, because I have 
been on the subcommittee for some number of years and have been 
through the iterations of the 2005 program, the auto program, 
and the stimulus bill. And while, as far as the dollar amount 
and the exact configuration of programs, it would be different 
than if I was writing it individually, this is obviously a 
collective effort, and I have supported all of them.
    It would be easy, because there have been some problems--I 
wish there had been no problems--to castigate you and the 
Department for them. I wish they had not happened.
    Mr. Frantz. Uh-huh.
    Mr. Visclosky. I would encourage you as we go forward to 
continue, from my impression of your testimony today, to 
exercise that great care. My sense is you have had over 600 
applicants. Some you probably threw away the first day. We 
talked about USEC, it is in a different department now. I urge 
you to continue to be very careful. I mean, we wouldn't have a 
Loan Guarantee Program if there wasn't a risk.
    Mr. Frantz. Correct.
    Mr. Visclosky. Whether it is technological, or whether it 
is financial.
    Mr. Frantz. Correct.
    Mr. Visclosky. Nuclear, I have had interchanges with some 
of my colleagues who do not share my opinion, and said well, 
there is not a technical risk. I said, but you and I are having 
a political conversation. There is other types of risk. There 
is other types of risk here.
    Mr. Frantz. Yes, sir.
    Mr. Visclosky. I would encourage you to be as attentive as 
you can on this program. And Doctor, I do appreciate your good 
work.
    Dr. Majumdar. Thank you.
    Mr. Frantz. Thank you.
    Mr. Frelinghuysen. I associate myself with those comments. 
Mr. Fattah.
    Mr. Fattah. If you are going back around, I will ask some 
more questions.
    Mr. Frelinghuysen. Go right ahead. Mr. Olver is going to be 
the last one to question. I am sure he will keep his remarks 
short.
    Mr. Fattah. Question, the CAFE standards, at one point you 
had the automakers protesting, at and another point or a year 
or so later after they were finally announced they were 
standing with the President in agreement that we could get 
above 50 miles an hour. In terms of the remaining $4 billion in 
loan guarantees and I am just following up on the ranking 
member's question about this. What expected deal flow exists 
going forward to help those auto manufacturers who are on 
board?
    Mr. Frantz. Yes, the simplistic answer. That is the----
    Mr. Fattah. We like simplistic answers, thank you.
    Mr. Frelinghuysen. Simplistic answers, Mr. Olver. You are 
the last out of the box here.
    Mr. Olver. Mr. Secretary, early on in your conversation, 
you said you terminated some projects on your major ARPA-E 
projects. You had only been going for 3 years. I think you got 
your first major money in within fiscal year 2009, but it was 
actually through the passage of the American Competes Act, or 
something, I think that may be where it came.
    Dr. Majumdar. From the Recovery Act. That is where we got 
the first dollars.
    Mr. Olver. Was that authorized for $100 million?
    Dr. Majumdar. In the Recovery Act, that is right.
    Mr. Olver. In the Recovery Act? All right, okay. So that is 
the only money that you have actually had up for as much as 3 
years, because you got another $180 million in each of the 
following, or thereabouts in each of fiscal year 2010 and 2011.
    Dr. Majumdar. Right, so we had to obligate all of the 
Recovery Act money by September of 2010, which we did. Then we 
had fiscal year 2011 as the first budget that you appropriated 
for us, and now we have the fiscal year 2012 appropriated 
budget.
    Mr. Olver. Have you terminated any of the projects that you 
gave out with 2011 money?
    Dr. Majumdar. Congressman, it is too early to--we have to 
give them a chance.
    Mr. Olver. So it would be among the $400 million that you 
had originally.
    Dr. Majumdar. Right, that is right.
    Mr. Olver. And how many of those did you have----
    Dr. Majumdar. We have terminated now nine projects, and 
that money went back to Treasury.
    Mr. Olver. But weren't those all by 3-year contracts?
    Dr. Majumdar. The maximum was 3 years. It is anywhere from 
2 to 3 years.
    Mr. Olver. So did you terminate before the end of a 
contract?
    Dr. Majumdar. That is right.
    Mr. Olver. You actually terminate before you got to the end 
of a contract?
    Dr. Majumdar. That is right. Because they did not meet 
their milestones.
    Mr. Olver. And you are actually following milestones.
    Dr. Majumdar. That is right. There are go/no-go annual 
milestones and if they don't meet the milestones we terminate 
the project. We discontinue the project before the end of the 
project and we put that money back in Treasury. That is what we 
did with the Recovery Act.
    Mr. Olver. Okay, but these were fairly large projects. If 
we were trying to do that sort of thing with SBIR, I am 
commending you for the innovation that you were able to do. But 
some of that money, even of the $400 million, had to go out by 
the SBIR project, 2 or 3 percent of it had to go out by that, 
so that was under constrained arrangements. You had not yet 
gotten so innovative that you were trying to do this under 
entirely different sorts of procedures.
    Dr. Majumdar. Well, let me just say that so far, the SBIR 
program in the Department of Energy has been centralized. This 
is the first time in fiscal year 2012 that we are going to 
launch an SBIR effort within ARPA-E. So we don't have a history 
of doing SBIR before because it is all centralized and went 
through one office. This time in fiscal year 2012 we are trying 
for the first time in the SBIR effort within----
    Mr. Olver. So then I guess you would change the answer to--
I asked, did you have to put out 2 or 3 percent of the $400 
million into SBIR?
    Dr. Majumdar. That is right.
    Mr. Olver. So it was taxed into the central department 
program?
    Dr. Majumdar. That is right. It was a centralized effort.
    Mr. Olver. That percent was taken out and put into the 
central program----
    Dr. Majumdar. That is right.
    Mr. Olver [continuing]. Which was very bureaucratic in 
nature. I mean, I say it was very bureaucratic. It is very 
difficult to get it from the first one to the second one and 
the timing as we talked about it earlier. My State did very, 
very well. I was in the State Senate at the time that it was 
created in the middle 1980s, and it immediately got the small 
businesses in my area into it. And some of them eventually 
began to get into the swing and others never could get anything 
out of it. And yet as you said before, it took a long time to 
get from the first one to the second one.
    Dr. Majumdar. Right.
    Mr. Olver. And a whole new application process, where you 
are operating in a much more flexible way. It is interesting.
    Dr. Majumdar. We are starting that SBIR now, and as I said, 
I had the same experience, and we are going to take the time 
gap between Phase I and Phase II and make it zero, and thereby 
enable small businesses not to have this cash-flow problem.
    Mr. Olver. It was a horrible gap.
    Dr. Majumdar. That is right.
    Mr. Olver. Okay.
    Mr. Visclosky. The gentleman, would you yield? When you 
were in the--you on the Finance Committee, right?
    Mr. Olver. Yes.
    Mr. Visclosky. That is why they all ended up in your 
district.
    Mr. Olver. No, actually, my district, in general--in 
Massachusetts my district was in the western part of the State, 
so we got a few of them anyway.
    Mr. Frelinghuysen. We are going to send out an electric car 
from Washington to Pittsfield. Anything else for the Good of 
the Order? Gentlemen, thank you very much. We stand adjourned.

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                               WITNESSES

                              ----------                              
                                                                   Page
Brinkman, W.F....................................................   359
Frantz, David....................................................   535
Hoffman, Patricia................................................   113
Huizenga, Dave...................................................     1
Kelly, Henry.....................................................   113
Majumdar, Dr. Arun...............................................   535
McConnell, Charles...............................................   113
Podonsky, Glenn..................................................     1

                                  
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