<DOC>
[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:55148.wais]
DEPARTMENT OF ENERGY'S PROPOSED BUDGET FOR FISCAL YEAR 2000
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ENERGY AND POWER
of the
COMMITTEE ON COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
FEBRUARY 24, 1999
__________
Serial No. 106-54
__________
Printed for the use of the Committee on Commerce
U.S. GOVERNMENT PRINTING OFFICE
55-148 CC WASHINGTON : 1999
COMMITTEE ON COMMERCE
TOM BLILEY, Virginia, Chairman
W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas RALPH M. HALL, Texas
FRED UPTON, Michigan RICK BOUCHER, Virginia
CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio FRANK PALLONE, Jr., New Jersey
Vice Chairman SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania BART GORDON, Tennessee
CHRISTOPHER COX, California PETER DEUTSCH, Florida
NATHAN DEAL, Georgia BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma ANNA G. ESHOO, California
RICHARD BURR, North Carolina RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California BART STUPAK, Michigan
ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York
GREG GANSKE, Iowa THOMAS C. SAWYER, Ohio
CHARLIE NORWOOD, Georgia ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma GENE GREEN, Texas
RICK LAZIO, New York KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming TED STRICKLAND, Ohio
JAMES E. ROGAN, California DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois THOMAS M. BARRETT, Wisconsin
BILL LUTHER, Minnesota
LOIS CAPPS, California
James E. Derderian, Chief of Staff
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Energy and Power
JOE BARTON, Texas, Chairman
MICHAEL BILIRAKIS, Florida RALPH M. HALL, Texas
CLIFF STEARNS, Florida KAREN McCARTHY, Missouri
Vice Chairman THOMAS C. SAWYER, Ohio
STEVE LARGENT, Oklahoma EDWARD J. MARKEY, Massachusetts
RICHARD BURR, North Carolina RICK BOUCHER, Virginia
ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey
CHARLIE NORWOOD, Georgia SHERROD BROWN, Ohio
TOM A. COBURN, Oklahoma BART GORDON, Tennessee
JAMES E. ROGAN, California BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ALBERT R. WYNN, Maryland
HEATHER WILSON, New Mexico TED STRICKLAND, Ohio
JOHN B. SHADEGG, Arizona PETER DEUTSCH, Florida
CHARLES W. ``CHIP'' PICKERING, RON KLINK, Pennsylvania
Mississippi JOHN D. DINGELL, Michigan,
VITO FOSSELLA, New York (Ex Officio)
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland
TOM BLILEY, Virginia,
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Moniz, Ernest, Under Secretary of Energy; accompanied by
Michael Telson, Chief Financial Officer, Department of
Energy..................................................... 11
Material submitted for the record by:
Department of Energy, responses for the record............... 57
(iii)
DEPARTMENT OF ENERGY'S PROPOSED BUDGET FOR FISCAL YEAR 2000
----------
WEDNESDAY, FEBRUARY 24, 1999
House of Representatives,
Committee on Commerce,
Subcommittee on Energy and Power,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2123, Rayburn House Office Building, Hon. Joe Barton
(chairman) presiding.
Members present: Representatives Barton, Stearns, Largent,
Whitfield, Norwood, Rogan, Shimkus, Wilson, Pickering, Bryant,
Ehrlich, Bliley (ex officio), Hall, McCarthy, Wynn, Strickland,
and Klink.
Staff present: Kevin Cook, science advisor; Donn Salvosa,
legislative clerk; Sue Sheridan, minority counsel, and Rick
Kessler, minority professional staff.
Mr. Barton. The subcommittee will come to order.
The Chair notes the presence of a quorum. We're going to go
ahead and begin, and hopefully, we will have Mr. Hall or one of
our minority members appear before our opening statements are
concluded.
Today's hearing is on the Department of Energy's proposed
budget for fiscal year 2000. This morning, we're going to
examine the Department of Energy's budget request. The
Department of Energy has a wide-ranging set of missions, from
cleaning-up contaminated sites here in the United States, to
ensuring the reliability of our nuclear arsenal, to conducting
the research and development to bring our energy systems into
the 21st century.
We have a number of energy issues that are important to the
subcommittee. We need to see if the Department's proposed
budget reflects the interests and priorities of the Congress
and this particular subcommittee.
It's probably too much to expect that we're on identical
courses, but it's reasonable to expect that we're on parallel
tracks moving in the same directions. If our paths diverge
significantly based on this hearing, then we'll have to take
the appropriate steps in conjunction with the Department.
At the top of the subcommittee's priority list is nuclear
waste. Spent fuel continues to accumulate at reactor sites
around the country. Potential liability of the Federal
Government continues to grow because of the Department's
failure to take acceptance of that waste, and the Department
still says that the earliest it can expect to open a permanent
repository is the year 2010. That is simply unacceptable.
Just 2 weeks ago, we held a hearing on H.R. 45, legislation
that
would accelerate acceptance of spent fuel by establishing an
in-
terim storage facility. H.R. 45 would protect consumers by
halting
the diversion of ratepayer fees into other Federal programs,
and it
would strengthen the permanent repository funding by ensuring a
funding stream that matches project requirements.
To this date, the Department does not support H.R. 45, and
the President has indicated that he will veto this legislation.
The administration apparently takes this position because it
believes that an interim storage will somehow jeopardize the
Department's efforts on a permanent repository.
The Chair does not share the Clinton administration's view
on that particular issue. I think it's time that we shed some
light on the status of the permanent repository. Several of our
witnesses 2 weeks ago expressed a lack of confidence whether
the Department could really meet its promised 2010 date for
opening the repository. It turns out that that lack of
confidence appears to have been well placed.
It is the Chair's understanding that the Department's basic
repository program faces serious funding shortfalls. At
historical funding levels, and with the existing caps in place
on the fees collected from the ratepayers, the Department of
Energy will not have sufficient funds to open the repository in
the year 2010. Meeting the 2010 schedule will require some real
budget sleight of hand and some very rosy assumptions regarding
future appropriations.
The DOE assumes that they will be able to tap into 100
percent of the fees collected from the rate payers, when in
recent years they have been to access only approximately 15
percent of those fees. The Department also assumes a 150
increase in Defense contribution to the repository. I think
this last assumption is not well-founded.
Based on the above information, it looks like the only
thing that will be open in 2010 is, unfortunately, the wallet
of the Federal taxpayer, since the Department will be paying
out billions of dollars of damages since they haven't taken
control of the repository.
I intend to explore this problem in more detail in the
question and answer period, but I am troubled to learn that the
repository program does not rest on a firm financial
foundation. I am hoping to hear from Secretary Richardson in
the near future, both on the funding problem, and to learn
whether he has a constructive alternative to offer in lieu of
H.R. 45.
I am also concerned about the approach to energy security,
as reflected in the Department's budget request. In terms of
real prices, oil is cheaper now than it was just before the oil
crisis in the mid-1970's, and by some calculations, may be as
cheap as the 1950's and early 1960's. The impact of these low
prices may be of only academic interest to those here inside
the Beltway; but to Mr. Hall and myself, who come from an oil-
producing State, we know very well what impact these low prices
have on the people in the oil-producing regions of the country.
Our reliance on cheap imported oil continues to grow, and
we run the risk of losing some of our essential domestic
capability to locate and develop new oil and gas resources. I
am pleased that we are no longer selling off oil from the
strategic petroleum reserve, and will be interested in what
other measures the Department is taking to improve our energy
security. I note that our lead witness did bring a handout on
that problem, and I'll certainly take a serious look at that
booklet.
The Department's budget request is in many ways a
reflection of its ability to manage and oversee its programs.
As Chairman of the Subcommittee on Oversight and Investigations
in the last Congress, I reviewed several DOE programs in
detail. I held hearings to review privatization contracting at
Pit 9 and at Hanford. The delayed cleanup of spent nuclear fuel
is stored dangerously close to the Columbia River at the
Hannaford site. The Office of Environmental Management's
failure to employ innovative environmental technologies which
could have saved taxpayers $20 billion in clean-up costs.
We also looked at problems with performance-based incentive
contracting and the Department's questionable funding of molten
metal technology.
At each of these hearings, the subcommittee identified poor
management by the Department that resulted in additional cost
to the taxpayers. This year, as we review the DOE budget, we're
going to be checking to see if the Department is making
progress in those areas.
The committee has a number of other interests, from climate
change, to nuclear energy, to environmental cleanup, and I am
sure that other members will go into those subjects in some
detail as they question our witnesses. We are anxious to learn
more about the Department's activities. We welcome Dr. Moniz,
who has appeared before my Oversight and Investigation
Subcommittee on numerous occasions, and look forward to your
testimony.
Not seeing Mr. Hall here yet, does Mr. Norwood request an
opening statement? Okay. The Chair would recognize Mr. Norwood
for a brief opening statement.
Mr. Norwood. Thank you very much, Mr. Chairman, for holding
this hearing on the Department of Energy's budget proposal for
fiscal year 2000.
As you know, Mr. Chairman, my district is contiguous to the
Savannah River site, the most impressive field site in the DOE
complex, and roughly 8,000 of my constituents currently work at
that site, which has been a vital part of our community since
World War II. I spent my first few years here in Congress
fighting layoffs that were inevitable as the results of the end
of the cold war; and now I want to make sure that the site is
not only properly equipped to clean up after 40 years of
defense buildup, but also is prepared for any new missions it
may be qualified to handle.
On that note, I commend DOE for its wise selection of SRS
for the majority of the plutonium distribution mission that was
recently awarded. While I am pleased to see that DOE's
environmental management budget for fiscal year 2000 looks
good, and that the site should not anticipate any major
layoffs, I will have some questions for Dr. Moniz regarding the
Department's recent selection of a commercial reactor at the
Tennessee Valley Authority to meet our country's future tritium
supply.
My other concerns today, Mr. Chairman, will revolve around
the ongoing saga of the Clinton administration's unwillingness
to accept its responsibility to deal with our country's spent
fuel problem, and a DOE budgetary proposal to eliminate funding
for transmission and power purchases for the power-marketing
administrations.
As you may know, the Southeastern Power Administration is
located in my district, and provides power to many of my
constituents. Eliminating appropriations for transmission and
power purchases will thoroughly disrupt the power supply for
many non-profit electric distributors. As a matter of fact,
does DOE realize that its budget proposal could disrupt the
power supply of preference customers in Secretary Richardson's
home State of New Mexico who are served by its P.M.A.? I hope
he's not planning on running for Senate any time soon. But, I
guess he could always run for Senator Moynihan's seat.
I do appreciate you making the effort to be with us today,
gentlemen, and I look forward to talking with you about these
and many other issues.
Thank you very much, Mr. Chairman.
Mr. Barton. I thank the gentleman from Georgia. Does the
gentlelady from New Mexico wish to make a brief opening
statement? Does the gentleman from Kentucky wish to make a
brief opening statement? And I missed the gentleman from
Tennessee, but we'll let the gentleman from Kentucky go, and
then we'll get back to Mr. Bryant.
Mr. Whitfield. Thank you very much, Mr. Bryant. Mr.
Chairman, I want to thank you for hosting our annual hearing on
the fiscal year 2000 Department of Energy budget proposal. All
of us look forward to hearing from Dr. Moniz about the
Department's plans to help secure our Nation's energy future.
I have the privilege of representing the workers at the
Paducah Gaseous Diffusion Plant, 1 of only 2 uranium enrichment
plants in the country. With the privatization of the U.S.
Enrichment Corporation, the former government corporation which
operated the Paducah and Portsmouth plants, the future of those
workers is quite uncertain.
The Ohio and Kentucky delegations have been meeting
regularly with DOE staff to ensure full implementation of the
provisions of Public Law 105-204, legislation I introduced with
Senator McConnell, to ensure that all amounts accrued on USEC's
books for the disposition of depleted uranium hexafluoride,
will be used to treat and recycle that by-product by
constructing two plants for that purpose--one at Paducah, and
one at Portsmouth.
The plan and proposed legislation to implement the law's
provisions to dispose of this uranium were supposed to be set
forth in the fiscal year 2000 budget. While I understand that
DOE will soon put out an Expression of Interest and Request for
Proposal, I am concerned about the amount of time it has taken
the Department to move ahead with full implementation of the
provisions of Public Law 105-204.
Even under the best-case scenario, it's clear that these
plants will not be up and running in time to mitigate the job
losses we already know are forthcoming, especially with the
continued importation of enriched uranium from Russia.
And, of course, Secretary Richardson was in Paducah just a
few months ago, and made the announcement that they would
proceed with those plants, and that it would be a part of the
fiscal year 2000 budget--which it is my understanding it is
not.
But we hope to hear more from Dr. Moniz about this issue,
and I hope that you will be able to give us your assurance of
DOE's commitment to move forward with the full implementation
of Public Law 105-204.
With that, I yield back the balance.
Mr. Barton. I thank the gentleman. We now recognize the
gentleman from Tennessee for a brief opening statement.
Mr. Bryant. I thank the Chair, and welcome our
distinguished panel. In the interest of time, I will simply
submit any statement that I might have for the record.
Mr. Barton. Thank you. Does the gentleman from California
wish to make a brief opening statement?
Mr. Rogan. Mr. Chairman, thank you. Very briefly, I want to
thank you for calling this hearing, and just touch on one quick
point.
My one concern in the President's budget is the DOE's lack
of activity on nuclear waste disposal. The budget itself
provides $370 million for the Yucca Mountain Nuclear Waste
Repository project, but makes this funding contingent upon
postponing depositing materials there until the year 2010. As
recent court cases have held, the Department of Energy is
responsible for not accepting this waste by the beginning of
the year, per Federal law. Therefore, funds must be allocated
to accelerate acceptance, to avoid liability. It doesn't appear
that any such provision has been made in President Clinton's
budget.
As there is a good deal of nuclear waste which must be
handled in California, it is key that a repository effort be
accelerate for public safety. It may be worthwhile to request
an update at some point on the Department of Energy's progress
on the Yucca Mountain site. Further, I believe the DOE must
make an effort to describe its long-term plans to make this
repository functional.
With that, Mr. Chairman, I thank you again. I yield back
the balance of my time.
Mr. Barton. I thank the gentleman. The gentleman from
Maryland is recognized for a brief opening statement. Okay. The
gentleman from Oklahoma, Mr. Largent.
Mr. Largent. Thank you, Mr. Chairman. I just want to say
that I'm pleased as I come this morning and see the Department
of Energy and Secretary Richardson's statement on America's
oil, our strategic resource. We need to make sure that the
plight of the domestic oil and gas producers in this country is
addressed. It's an immediate concern--just last year, the
industry itself lost 30,000 jobs; in the 10 years, the number's
approaching a half a million jobs.
We are losing our ability to produce oil in this country,
and it is a real--it's not just a colloquial interest for
Oklahoma, which I represent--it's a national security issue
that we have to address. And so, I look forward to working with
the Secretary of the Department of Energy, with this committee,
in addressing the real concerns that we have--particularly
coming from an oil-patch State--of losing our ability and
capacity to produce oil in this country.
Thank you.
Mr. Barton. We thank the gentleman. The Chair concurs with
that concern.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. Cliff Stearns, a Representative in Congress
from the State of Florida
Thank you, Mr. Chairman. I appreciate this opportunity to hear more
about the specifics of the Department of Energy's Fiscal Year 2000
budget.
I understand that the primary mission of the Office of Civilian
Radioactive Waste Management is to develop a permanent geologic
repository for the disposal of spent reactor fuel and high-level
nuclear waste. DOE requested $370 million in new budget authority for
FY 2000, a modest increase over FY 1999 of $12 million. Still, this may
not be enough money to adequately fund the project at the Yucca
Mountain site. Because the payments of utility ratepayers into the
Nuclear Waste Fund are expected to soon be over $649 million, I would
like to know if, in this budget, these fees will be diverted to other
federal programs.
In Florida, we have five nuclear units which provide about 19
percent of the state's electricity generation. The benefits of this
fuel source are clear: the use of nuclear energy has reduced Florida's
carbon dioxide emissions by 96.7 million metric tons since 1973.
However, these benefits have not come without a price. Since 1983,
consumers of nuclear-generated electricity have contributed over $649
million to the federal Nuclear Waste Fund. This fund was to finance
nuclear waste management beginning in January 1998. However, the
Department of Energy's failure to meet the January 1998 deadline to
begin storing used nuclear fuel clearly violates the federal agency's
contract with electric utilities operating Florida's nuclear power
plants.
I am concerned that this budget revealed little effort on DOE's
part to meet this obligation. I look forward to hearing more about DOE
efforts to address this issue. Thank you.
______
Prepared Statement of Hon. John Shimkus, a Representative in Congress
from the State of Illinois
Mr. Chairman, as always, I am delighted to be here this morning.
Thank you for holding this important hearing. I believe it is important
for the Congress and the Administration to sit face to face, at the
very least, once a year to discuss how we are spending the taxpayers
dollars. Though we do not always see eye to eye I do appreciate the
good efforts of the Department and its dedicated public servants.
I will have questions regarding our energy security, particularly
about the small oil producers in my district. I am also very concerned
about the growing liabilities to the department regarding commercial
nuclear waste. I believe the Department has lost two court cases
recently and I am curious as to how they plan to pay for these
liabilities. I imagine these liabilities will be paid out of the
Department's budget. Last, but by no means the least, I am also going
to be looking for an update on the Department's progress regarding
Public Law 105-388, which extended several programs under the Energy
Policy and Conservation Act. This reauthorization had language which I
drafted in conjunction with Chairman Barton last year to enhance and
promote the alternative fuels program established under EPACT. I am
looking forward to this hearing today and I know Dr. Moniz will do his
very best to answer our questions. Good Morning, Dr. Moniz. I yield
back, Mr. Chairman.
______
Prepared Statement of Hon. Tom Bliley, Chairman, Committee on Commerce
Thank you, Mr. Chairman. This is an important hearing, as it
provides our Members with an opportunity to review in detail the
Department of Energy's budget request for Fiscal Year 2000, and it
provides the Department with an opportunity to explain and justify to
us the roughly $18 billion dollars that it has requested for the coming
fiscal year. Many of the difficult issues before us in the 106th
Congress deal with energy programs. This budget hearing will help us
determine whether the priorities of the Department are consistent with
the priorities of the Congress.
My priorities on energy issues are clear and simple. First, we must
move forward with legislation to open up the electric utility industry
to retail competition. Everyone now acknowledges the benefits that
consumers will realize from opening our electricity markets to
competition--the question is not whether electricity restructuring is a
good idea, but how much of a role the Federal government should play
and how quickly we should proceed with restructuring.
A number of States are already pursuing restructuring, with varying
degrees of success. These are commendable efforts, but not all States
are moving forward to deregulate their electricity markets with the
same enthusiasm. It is becoming obvious that the States cannot do this
alone. The States cannot address the interstate commerce issues that
arise in restructuring, nor can they address the host of Federal
statutes that define the present Federal role in electricity. To assure
a level playing field, and most importantly, to assure a fair deal for
all consumers, Federal action is required.
I have tasked Chairman Barton to develop legislation that will
permit consumers to choose their electric supplier, that will promote
competition among electric suppliers, and will remove existing barriers
to interstate commerce in retail electricity markets. I trust that we
will have the full cooperation of the Department of Energy in our
efforts.
My other priority is solving the problem of spent fuel and high-
level nuclear waste. The Department recently released a Viability
Assessment that shows us that the technical problems are solvable. The
challenges we must now confront are not the technical ones--Congress
and the Administration must now come to terms with the financial,
legal, and political aspects of this problem.
Under the current DOE plan, the permanent repository will not be
able to begin accepting spent fuel until, at the earliest, the year
2010. That date is, quite simply, over a decade too late. That is not
the deal we made with the American people back in 1982, when Congress
and the President promised that the Federal government would begin
accepting spent fuel starting on January 31, 1998. That date has come
and gone, and we are still here debating this issue. The courts have
already spoken on this question, and have held that DOE has an
unavoidable, binding obligation to take this spent fuel. If DOE
persists in adhering to a schedule that won't allow the repository to
open until 2010, it is just compounding the potential financial
liability facing the Federal government.
All of us here today, both from the Congress and from the
Administration, have a responsibility to the American people to solve
this problem. We must ensure that the permanent repository is on firm
financial footing and that it is proceeding towards the earliest
possible completion date. In addition, we must explore alternatives
that would allow DOE to take possession of spent fuel at an earlier
date, placing it in interim storage until the permanent repository
opens.
This Subcommittee has already held a hearing on legislation which
would accomplish these goals. We want Secretary Richardson to testify
on this question, and then we plan to mark up this legislation and take
it to the floor of the House. Dr. Moniz, I hope you and your staff are
ready to roll up your sleeves and work with us in a constructive manner
to solve this problem. We need to show the American people that this
government keeps its promises.
I look forward to hearing the Department's testimony, and I thank
Chairman Barton for holding this hearing.
______
Prepared Statement of Hon. Ralph M. Hall, a Representative in Congress
from the State of Texas
Thank you, Chairman Barton, for calling this hearing and giving us
the opportunity to hear from the Department of Energy and to review
their budget request for Fiscal Year 2000. I want to also extend a
welcome to our witness, Under-Secretary Moniz, along with his staff.
We have several pressing issues facing this Committee in the next
year, and we are hopeful that we will gain the cooperation of both the
Department, and the Administration in working toward the resolution of
these issues. First in my mind, the question looms as to whether and
for how long the Administration will continue to oppose all reasonable
efforts at reaching a consensus on an appropriate opening date for
storage of spent nuclear waste at Yucca Mountain. While the
Administration indulges in last minute attempts to discourage action
towards the goal of opening this waste site, judgements grow both in
size and in numbers, and the taxpayers and the rate payers get hit with
the bill.
Of course, being from an energy producing state, I remain concerned
about the continued plight of the independent oil and gas producers.
This entire industry has felt the devastating impact of low priced
foreign imports coupled with the reversal of our former trade policy
with Iraq. While the Administration sees fit to permit the purchases of
oil from this terrorist country, in the name of humanitarian
assistance, it would seem appropriate that the Administration take both
an humanitarian, and a national security interest in doing more to
provide assurances to our own domestic, independent producers.
These folks are facing ``no turning back'' decisions about capping
wells. Once this happens, not only will multigenerational small and
family owned businesses be destroyed, but we as a nation will be
throwing ourselves at the mercy of foreign powers who will then decide
how much our consumers should pay for a monopolized commodity. As a
matter of logic, and as a matter of patriotism, the Administration must
place our national security above foreign humanitarian ventures in
Iraq.
Finally, I want to say that I am hopeful that we will be hearing
from the administration in the near future on their legislative
recommendations for an electricity restructuring bill.
Again, I want to thank you Mr. Chairman, for calling this hearing
today, and I yield back the balance of my time.
______
Prepared Statement of Hon. Frank Pallone, Jr., a Representative in
Congress from the State of New Jersey
Thank you Mr. Chairman. I welcome Dr. Moniz back before our
subcommittee today.
I want to highlight some areas of the budget that are of interest
to me. For instance, I'm pleased to see the Department of Energy's
(DOE) FY2000 request of nearly $1.2 billion (which represents a 28%
increase) to research, develop and deploy energy efficient and
renewable energy technologies. This amount includes $399 million for
DOE solar and other renewables programs (a 19% increase over last
year). An additional $47 million has been made available for renewables
through DOE's science program, as well. These are the programs of the
future and it makes sense to invest in them today.
I also see that the Department's FY2000 request includes $32
million for the Federal Energy Management Program (FEMP), which is
important because the Federal Government is the nation's largest single
energy user. The FEMP program helps identify, finance, and implement
energy efficiency and renewable energy projects in federal facilities,
resulting in conservation of energy resources and billions of dollars
in savings each year.
Along these lines, I also support the DOE overall budget request of
$1.1 billion for the climate change technology initiative for all DOE
climate-related research & development activities.
In the same vein, I'm glad that the administration is again
requesting funding for its fusion energy program. In addition to the
importance of fusion energy that we've discussed in previous years,
particularly in light of current events, successful development of
fusion will address the ever-present threat of international conflict
over energy resources and could play an important role in reducing or
altering atmospheric CO<INF>2</INF> emission levels that contribute to
global climate change. The Princeton Plasma Physics Laboratory (in my
state of New Jersey) contributes to new and innovative approaches to
fusion energy. For these reasons, I believe that funding for fusion
energy sciences should be increased from last year's enacted level of
$223 million to $260 million in FY2000. Ten million of this $260
million should be directed toward the Tokamak program at Princeton
University for Decontaminating and Decommissioning (D&D) the Tokamak
Fusion Test Reactor (TFTR). The President's Council of Advisors on
Science and Technology has recommended that the fusion energy sciences
be funded at $270 million.
I also wish to address the administration's request for the nuclear
waste disposal program. Last week, a DOE representative testified for
the first time that there is not enough money in the nuclear waste fund
to pay for both interim and permanent nuclear waste storage facilities.
DOE has not planned to build nor provide money for an interim facility,
nor is it planning for such an eventuality in the near future. Thus,
DOE has requested $370 million in new budget authority for FY2000, but
this may still not be sufficient to fund permanent and interim storage
and the related studies. And yet, ratepayers are expected to pay over
$630 million into the nuclear waste fund in FY2000. In addition, the
Administration is requesting the release of an additional $39 million
that has been held in reserve until authorized for use by Congress.
This amount was intended for interim storage, when DOE was considering
this concept back in the 1980s, but this sum is now being requested to
help pay for the ongoing scientific investigative work at Yucca to
further determine the site's suitability for permanent storage. If H.R.
45 were enacted into law, it appears funding for interim storage would
be severely lacking and that the permanent site could face even greater
delays due to funding problems. Moreover, I continue to be concerned
that this administration--like previous administrations and some here
in Congress--has become addicted to ratepayer money as a source of
deficit reduction.
Another issue that is going to require increasing U.S. attention is
the management and cleanup of spent fuel and radioactive waste in
Russia. I recently spoke on this topic at an international conference.
It is not enough to support counter-proliferation activities alone. We
must also assist Russia in properly dismantling, storing, disposing,
and cleaning up from the legacy of its nuclear arsenal buildup. To this
end, I am pleased to see that the budget request for nonproliferation
and national security activities includes $30 million for the new
nuclear cities initiative. This program will help employ Russian
scientists in civilian research endeavors, hopefully to begin to
address the drastic environmental and health problems facing Russia as
a result of its nuclear buildup. I hope that DOE will continue to
devote substantial resources to these activities as time goes on,
because the consequences of inaction will be global. In addition,
better coordination and management activities needs to occur at the
highest levels of our administration. I am pleased that the Consortium
for Risk Evaluation with Stakeholder Participation (CRESP) led by the
Environmental and Occupational Health Sciences Institute in New Jersey
is working to clean up several nuclear sites in the U.S. in cooperation
with the DOE. Perhaps their efforts could be expanded to provide
international assistance in the future.
In closing, I look forward to working with you to ensure that we
see concrete progress in all of these program areas. Thank you, Mr.
Chairman.
______
Prepared Statement of Hon. Ted Strickland, a Representative in Congress
from the State of Ohio
Thank you Mr. Chairman. And, I would like to thank the Under
Secretary for coming to the Hill today to address a range of budget
concerns and answer questions held by many of us on the Energy and
Power Subcommittee. Specifically, Mr. Under Secretary, I have a number
of questions regarding the ongoing work at the Portsmouth, Ohio Gaseous
Diffusion Plant and very serious concerns about the Department's
progress in developing its depleted uranium hexafluoride program. As
you know, the United States Enrichment Corporation or USEC, Inc.
operates the two gaseous diffusion plants in the nation--one of which
is in my district. These plants were initially built by the federal
government to process uranium for national defense purposes during the
Cold War. Now, they process uranium for purchase by the commercial
nuclear power industry.
As you also know, Mr. Under Secretary, last July, the Congress
passed and the President signed into law P.L. 105-204. The successful
passage of this legislation was possible through a terrific bipartisan
and bicameral effort and I would like to thank my colleague from
Kentucky, Mr. Whitfield, for his active support of that legislation.
Furthermore, I would like to express my appreciation for the guidance
provided by the leadership of the Commerce Committee, Chairman Bliley
and Mr. Dingell and of course, the advice of their dedicated staff.
Briefly, P.L. 105-204 secured almost $400 million from USEC, which
sits in an account at the Department of Treasury, for the development
of a program to convert and stabilize more than 9000 canisters of
depleted uranium hexafluoride generated and stored at both the
Portsmouth, Ohio and Paducah, Kentucky sites. I regret to say that I
have serious reservations about the commitment of the Department's
Nuclear Energy Office to meet the statutory requirements under P.L.
105-204. Requirements, which I might add, share a remarkable amount of
bipartisan support from both the states of Ohio and Kentucky.
I also have reservations about the role of USEC as the Executive
Agent under the Russian-Highly Enriched Uranium Agreement. This past
July USEC was sold in an initial public offering. As a private
industry, USEC, Inc. serves as the Executive Agent for the Russian-HEU
Agreement with the responsibility for purchasing specific quantities of
Russian uranium. USEC's role as the Executive Agent for the Russian-HEU
Agreement directly conflicts with the corporation's responsibility to
meet requirements outlined in the Energy Policy Act of 1992 and the
USEC Privatization Act of 1996. One such condition was the continued
operation of the gaseous diffusion plants in Portsmouth and Paducah.
During the process of privatizing USEC, I repeatedly reminded officials
in the Administration, including the Department of Energy, that the
corporation's function as Executive Agent for the HEU Agreement would
result in decisions that may adversely affect the continued operation
of the gaseous diffusion plants and therefore violate the statutory
terms and conditions established by Congress. Furthermore, I was
seriously troubled that either the workers and communities in southern
Ohio would suffer tremendously or potentially an incredibly important
foreign policy objective would not be met. Neither option was or is
acceptable to me.
In an effort to address the issues raised during privatization of
USEC, DOE entered into two Memoranda of Agreement with USEC to provide
$66 million for the liabilities arising out of the disposal of depleted
uranium generated by USEC prior to privatization and the maintenance of
depleted uranium tails transferred to DOE from USEC through fiscal year
2004. A primary objective of the Agreements is to mitigate job losses
by offering displaced workers with retraining and a hiring preference
for the maintenance and disposition of the depleted uranium
hexafluoride canisters located at Portsmouth and Paducah.
I worked closely with officials in the Administration, including
the Department of Energy, to ensure that the dedicated workforce and
families long committed to supporting our nuclear industry would not
now find themselves left out in the cold at the declared end of the
Cold War. I cannot overstate how important this $66 million is to
southern Ohio and western Kentucky. My district simply has not enjoyed
the economic recovery that the rest of the state of Ohio and much of
the nation enjoys. For this reason, I urge you to empower the
appropriate DOE officials to move forward on a plan for spending this
$66 million in as expeditious a manner as humanly possible.
Finally, but not of least importance, I must make you aware of an
annual funding battle I undertake with a number of my colleagues from
both sides of the aisle. I am confident you are well aware of the good
work done by the Worker and Community Transition Office. This office
exists to to minimize layoffs and assist communities affected by the
Department's shift from weapons production to other missions. The
Department continues to work toward closure of numerous sites
throughout the complex which will ultimately lead to the dislocation of
workers.
The Portsmouth and Paducah sites are undergoing a tough transition
to a privately managed operation. This process, too, will result in a
significant reduction in the workforces at the gaseous diffusion
plants. In fact, USEC, Inc. recently issued a press release announcing
its second round of reduction in force which will involve approximately
250 employees at the Portsmouth and Paducah sites. This comes shortly
after the completion of round one in November 1998 which resulted in
259 layoffs shared by the two sites. The Worker and Community
Transition Office must have adequate funding to continue to help
workers affected in Ohio, Kentucky and throughout the DOE complex.
I must add that these significant layoffs at the gaseous diffusion
plants become particularly alarming when we acknowledge that USEC, Inc.
is limited to annual layoffs at the sites because of an Agreement it
has with the Department of Treasury. Under the Treasury Agreement USEC,
Inc.. must keep its annual workforce reductions for each of the next
two years to 250 people between the two gaseous diffusion plants.
However, in July 2000, that Treasury Agreement expires and USEC, Inc.
will no longer be limited in its workforce reductions. I have heard
projected numbers of future layoffs and for this reason, the Worker and
Community Transition Office absolutely must be ensured adequate funding
to provide the necessary resources to minimize the potential economic
impacts of privatization and restructuring.
I have taken enough time to provide some background for the
questions I have prepared to ask today. I appreciate your time and
cooperation and I look forward to hearing your answers to my inquiries.
Thank you.
Mr. Barton. Dr. Moniz, we will welcome you to the
subcommittee. Before we let you begin, the Chair announces that
all members not present have the requisite number of days to
put a written statement in the record if they so wish, unless
there's an objection. Hearing none, so ordered.
We'll put your statement in its entirety; we're going to
recognize you for such time as you may consume, and at the
conclusion of your statement, unless Mr. Telson wishes to also
make a brief statement, then we'll begin to ask questions.
Welcome, Dr. Moniz.
STATEMENT OF ERNEST MONIZ, UNDER SECRETARY OF ENERGY;
ACCOMPANIED BY MICHAEL TELSON, CHIEF FINANCIAL OFFICER,
DEPARTMENT OF ENERGY
Mr. Moniz. Thank you, Mr. Chairman and members of the
subcommittee, for the opportunity to appear before you today to
discuss the fiscal year 2000 budget request for the Department
of Energy.
I will just note, given your earlier reference, Mr.
Chairman, that I will be leaving this evening for your home
State--for a pleasant day, I'm sure, tomorrow.
In fiscal year 2000, the Department requests $17.8 billion
dollars for all of its science energy research, energy
security, environmental quality, and defense activities. This
is slightly less than the amount appropriated last year.
Let me provide a very brief overview of the Department's
four principal mission areas: In science, our main goal is to
ensure that the Nation's preeminent scientific infrastructure
successfully meets the missions and goals the Nation has set
for the Department of Energy. In turn, the Nation's scientific
community depends on DOE, and on our laboratory system, to
maintain U.S. leadership in an extensive range of research
disciplines. In particular, the Department has a unique
responsibility for designing, building and operating an
extensive set of facilities for over 15,000 scientists and
engineers across the Nation. For example, this year's budget
supports critical initiatives in material science--for example,
construction of its palatia neutron source--and in high-end
computing for science and engineering the scientific simulation
initiative.
These are examples of key enabling technologies for
science, and for our country's economy in the future. Our
request for science funding for fiscal year 2000 is $2.8
billion, an increase of 5.1 percent.
In national security, the Department plays a critical role,
by ensuring the safety, security, and liability of our nuclear
arsenal, and by reducing the dangers of the spread and use of
weapons of mass destruction. The Department is maintaining the
nuclear stockpile safely and reliably, without testing, thereby
supporting a comprehensive test ban while sustaining the
nuclear deterrent.
The Department also plays a central role in securing
nuclear materials and know-how in the former Soviet Union, in
support of America's non-proliferation goals.
The technological strength of the Department's laboratories
is being used to protect America from the threat of weapons of
mass destruction. The Department's $6.3 billion request--$6.2
billion request, excuse me--for national security programs, is
an increase of 4.1 percent over the fiscal year 1999
appropriation.
In environmental quality, the Department's task is to
continue to make progress in cleaning up the environmental
legacy of the cold war, while minimizing the risks to human
health and safety. Our goal is to finish the clean-up job at
most of our sites by the year 2006, while systematically
addressing the persistent challenges at our largest clean-up
sites in accordance with various regulatory agreements. DOE's
strong science and technology base, and our capacity to conduct
inter-disciplinary, leading-edge R&D, will help up accomplish
our clean-up goals. Furthermore, we will continue to work
toward resolving the scientific and technical issues
surrounding the important problem of disposal of spent nuclear
fuel, both civilian and military.
The Department is requesting $5.9 billion for the Office of
Environmental Management--roughly $100 million more than the
current year. We are also requesting $409 million for the
Office of Civilian Radioactive Waste Management, which is
needed to complete the work identified in the viability
assessment, as necessary to be able to make a suitability
determination about Yucca Mountain in 2001.
In energy resources, the Department of Energy is the lead
agency in the administration's commitment to abundant,
affordable, secure and clean energy, and to electricity
restructuring. Energy is, as you know, the life-blood of our
economy. The Department is advancing a broad R&D portfolio to
improve the efficiency of, and reduce the emission from, fossil
fuel use; to advance the development of economical renewable
technologies; and to provide nuclear energy options that are
passively safe, proliferation-resistant, and waste-minimizing.
At the same time, energy use is at the core of some of our
most pressing environmental challenges--smog and particulate
emissions, acid rain, global warming. Once again, DOE's policy
initiatives and energy R&D portfolio, which focuses attention
on increasing energy efficiency, will simultaneously help us
sustain a strong economy and improve environmental quality. The
Department will work with Congress to advance electricity
sector restructuring, which will bring lasting benefits to all
Americans, to the economy, and to the environment.
The Department's request for programs comprising the Energy
Resources Business Line is $2.3 billion--an increase of roughly
2 percent.
In the little time I have remaining, I'd like to just
highlight some of our initiatives in the energy resources area.
First, the Secretary has led a wide range of initiatives to
enhance America's energy security. These follow four basic
strategies, and are summarized in the briefing material that we
provided you this morning.
One, is to enhance America's energy security, including
actions such as Federal royalty oil for the petroleum reserve--
commercial storage in the petroleum reserve.
The second strategy is to preserve domestic oil and gas
production capacity, suspension of reduction requirements for
stripper oils on Federal lands, royalty relief on Federal
lands, Petroleum Technology Transfer Council crisis assistance
to independents.
A third involves trying to help lower costs of production,
access to problem-solving technologies for independents,
advanced technologies for improved recovery from endangered
reservoirs, energy-efficient technologies for oil production,
administrative and accounting relief on Federal lands.
And finally, fourth strategy of improving government
methods for making decisions. That is, improve coordination
with other Federal agencies, and dialog with industry, States
and Congress.
I have brought with me, again, today, a short summary of
these strategies.
Turning to electricity restructuring--very briefly--this,
of course, is not a budget initiative--as you know, we strongly
support restructuring, to ensure that U.S. consumers receive
the benefits of economically efficient energy production, and
that the production and transmission sectors are encouraged to
maximize their efficiency.
The administration supports the progress that is being made
toward promoting retail competition in the utility industry.
Our analysis indicates that competition will benefit consumers
in the economy, to the tune of roughly $20 million per year,
and that it will also be good for the environment.
Approximately 20 States have enacted legislation, or
promulgated regulations, that either have led or will lead to
the implementation of retail competition programs.
The Department believes it is important to act sooner
rather than later to complement what is going on at the State
level, and stands ready to work with Congress to get the job
done.
As Under Secretary, one of my main responsibilities is to
ensure that all the R&D activity supported by DOE, or performed
by our laboratories, serve the missions and goals set out for
the Department. To do this, we are organizing, over the past
year, all of our R&D activities at DOE into a comprehensive
portfolio, and assessing whether the portfolio is well-balanced
to meet the Department's mission needs. We are in the last
stages of developing the DOE R&D portfolio. I hope to share it
with you within weeks.
This will be the first time the Department publishes a
document that will provide in one place a clear description of
our entire research portfolio, organized around their support
for the Department's strategic goals. The document will
describe our current R&D activities and accomplishments, it
will be a basis for assessing how balanced the portfolio is for
long-term pursuit of our strategic goals, and it will be a tool
for helping to plan for future investments through road-
mapping.
In the energy resources R&D portfolio, there are many
examples in our fiscal year 2000 budget request that point to
the future. I'll just name a few--they include Vision 21
Powerplex, carbon sequestration R&D, the partnership for a new
generation of vehicles, the nuclear energy research
initiative--and one I'll comment on just briefly--the
scientific simulation initiative, where we will develop a new
program to develop large-scale, high-end computing simulation
capabilities of chemical reactions, fluid dynamics, and heat
transfer, associating with combustion, in order to facilitate
the rapid design of improved combustion devices.
Improved efficiency of such devices may provide savings of
up to $26 billion in fuel costs, and approximately 2.7 gigaton
reduction in carbon emissions for internal combustion engines
alone. Just an example of the kind of return we anticipate as
being possible from our basic science investments.
The budget we have submitted attempts to balance many
competing demands--from the scientific and national security
communities, from industry, and from communities that surround
and host our facilities--within current budgetary constraints.
We believe this budget--along with some of the essential policy
initiatives I have outlined--achieves this balance, and we ask
for your support.
Thank you again for the opportunity to testify this
morning, Mr. Chairman, and I would like to introduce Dr. Mike
Telson, the Department's Chief Financial Officer. Also, we are
accompanied by several key program staff and would be please to
answer any questions subcommittee has regarding our 2000
budget.
[The prepared statement of Ernest Moniz follows:]
Prepared Statement of Hon. Ernest Moniz, Under Secretary of Energy,
Department of Energy
Thank you, Mr. Chairman, and Members of the Subcommittee, for the
opportunity to appear before you today to discuss the FY 2000 budget
request for the Department of Energy.
In FY 2000, the Department requests $17.8 billion dollars for all
of its science, energy research, energy security, and defense
activities. This is slightly less than the amount requested last year.
This request supports the Departments activities in four business
lines:
<bullet> National Security: $6.228 billion
<bullet> Energy Resources: $2.318 billion
<bullet> Environmental Quality: $6.452 billion
<bullet> Science: $2.844 billion
This budget request, and the programs it supports, reflect the
Administration's agenda to meet the challenges of the 21st century. The
research and development capabilities of the Department of Energy place
it at the forefront of many of the technological advances that will
define the next millennium. ``Science, Security, and Energy: Powering
the 21st Century'' is more than just the theme of our budget request
this year; it defines the unique contributions that DOE has been
making, and will continue to make, towards improving the lives and the
security of all Americans. Attached to this testimony are concise
summaries of the budget requests for each of our programs.
doe's missions
In National Security, DOE plays a critical role by ensuring the
safety, security, and reliability of our nuclear arsenal, and through
our efforts, to reduce the dangers of the spread and use of weapons of
mass destruction (WMD). The Department is maintaining the nuclear
stockpile safely and reliably without testing, thereby supporting the
Comprehensive Test Ban while sustaining the nuclear deterrent. The
Department also plays a central role in securing nuclear material and
knowhow in the Former Soviet Union, in support of America's non-
proliferation goals. The technological strength of the Department's
laboratories is being used to protect America from the threat of
weapons of mass destruction.
In Energy Resources, DOE is the lead agency in the Clinton
Administration's commitment to abundant, affordable, secure, and clean
energy, and to electricity restructuring. Energy is the lifeblood of
our economy. The Department is advancing a broad research and
development (R&D) portfolio to improve the efficiency of, and reduce
the emissions from, fossil fuel use; to advance the development of
economical renewable technologies; and to provide nuclear energy
options that are passively safe, proliferation resistant, and minimize
waste.
At the same time, energy use is at the core of some of our most
pressing environmental challenges: smog and particulate emissions, acid
rain, and global warming. Once again, DOE's policy initiatives and
energy R&D portfolio--which focuses attention on increasing energy
efficiency--will help us to sustain a strong economy with ample and
clean energy resources. The Department will work with Congress to
advance electricity sector restructuring, which will bring lasting
benefits to all Americans, to the economy, and to the environment.
In Environmental Quality, the Department's task is clear. We will
continue to make progress in cleaning up the environmental legacy of
the cold war nuclear weapons program, and we will do so while
minimizing the risks to human health and safety. Our goal is to finish
the cleanup job at most of our sites by the year 2006, while
systematically addressing the persistent challenges at our largest
cleanup sites, in accordance with various regulatory agreements. The
scientific and technical issues involved in meeting this challenge are
among the most complex of any environmental cleanup job anywhere in the
world. DOE's strong science and technology base, and our capacity to
conduct interdisciplinary, leading edge R&D, will help us to accomplish
our cleanup goals. Furthermore, we will continue to work towards
resolving the scientific and technical issues surrounding the disposal
of spent nuclear fuel.
In Science, our main goal is to ensure that the nation's preeminent
scientific infrastructure successfully meets the missions and goals
that the nation has set for the Department of Energy. At its heart, DOE
is a science agency. Each of DOE's mission areas relies on cutting edge
science and technology to achieve its objectives. And the nation's
scientific community depends on DOE and the DOE laboratory system to
maintain U.S. leadership in an extensive range of research disciplines.
In particular, the Department has a unique responsibility for
designing, building, and operating an extensive set of user facilities
for basic and applied research, serving over 15,000 scientists and
engineers across the nation.
As Under Secretary, one of my main responsibilities is to ensure
that all the research and development activities supported by DOE, or
performed by DOE's laboratories, serve the missions and goals set out
for the Department. To do this we are organizing all R&D activities at
DOE into a comprehensive portfolio, and assessing whether this R&D
portfolio is designed optimally to meet the Department's mission needs.
We are in the last stages of developing the DOE R&D Portfolio. This
portfolio will describe and analyze, for each of the four business
lines, how the overall goals of the Department are supported by the
specific R&D activities carried out in each program, and will
facilitate discussions with the Department's stakeholders.
national security
The Department's $6.228 billion request for National Security
programs is an increase of $244 million over the FY 1999 appropriation.
The FY 2000 request for Weapons Activities is $4.531 billion; this
includes $2.286 billion for the Stockpile Stewardship program and
$2.071 billion for the Stockpile Management program. The Stockpile
Stewardship program is a science-based program designed to ensure the
safety, security, and reliability of the nuclear deterrent without
underground nuclear testing. Critical to the success of this effort is
the Accelerated Strategic Computing Initiative (ASCI), which is
developing state-of-the-art supercomputers and associated applications.
Another important component of this program is the National
Ignition Facility (NIF), a 192-laser beam facility under construction
at Lawrence Livermore National Laboratory, that will advance not only
our understanding of the physics of nuclear weapons, but will also
advance mankind's knowledge in fusion and basic science. The Stockpile
Management program request includes $170 million for the tritium
program, which will be used to develop the irradiation services option
chosen by Secretary Richardson, and to complete design work on the
accelerator option in order to preserve it as a ``back-up'' capability.
The $767 million dollar budget for Nonproliferation and National
Security is an increase from $697 in FY 1999. This does not include
separate requests for Intelligence ($36.1 million) and
Counterintelligence ($31.2 million--$18.6 in new budget authority). We
are asking for $221 million for Nonproliferation Research and
Development to develop technologies for detecting nuclear explosions,
detecting the production of different forms of WMD, countering chemical
and biological weapons that could be released in our cities, and aiding
federal, state, and local law enforcement agencies.
Our request also includes $30 million for the Initiative for
Proliferation Prevention and $30 million for the Nuclear Cities
Initiative. These programs are designed to ensure that Russia's most
experienced scientists and technicians can be gainfully employed at a
time when they are highly sought after by rogue nations and terrorist
organizations.
The Fissile Materials Disposition program includes a request for
$200 million to provide storage for U.S. weapons usable uranium and
plutonium, while providing a technical basis for similar actions by the
Russians. The Department recently announced that Savannah River is the
preferred site for the Pit Disassembly and Conversion Facility (FY 2000
request of $28.8 million) and the Mixed Oxide Fuel (MOX) Fabrication
facility ($12.4 million).
The Worker and Community Transition program request is $30 million.
This will allow the Department to facilitate earlier site closures and
to promote the reindustrialization of excess facilities. The result
should be long term savings approaching $1 billion. The program also
makes it possible to move to more efficient contracting mechanisms
while utilizing the skills of the existing work force. In the case of
Oak Ridge, for example, we were able to avoid immediate severance
liabilities of up to $45 million.
energy resources
The three key elements of DOE's Energy Resources mission are energy
security, clean energy, and electricity industry restructuring. The
Department of Energy continues to play a major role in helping to
ensure the Nation's energy security and responding to both U.S. and
world energy demand and the environmental consequences associated with
energy production and utilization. And just as end of the Cold War left
us with significant new national security challenges, the current
international energy and economic situation bring with them new energy
challenges.
While it may be of benefit to U.S. consumers, the international oil
market has created significant problems for producers. Low prices and
abundant near-term supply will exacerbate the decline in higher cost
domestic production while making investments in new energy supply and
increased efficiency less attractive. This has the potential to
increase U.S. dependence on imported oil and increase our vulnerability
to future price increases and supply shortages. The Department and the
Administration are moving to address these challenges on several
fronts.
First, in December, the Secretary appointed an internal Emergency
Oil Task Force to develop a balanced oil action plan to enhance
America's energy security, preserve domestic oil production capacity,
lower the cost of production and to explore other actions government
can take.
To enhance America's energy security, we have developed a plan for
using 28 million barrels of Federal Royalty Oil to fill the Strategic
Petroleum Reserve (SPR) from off-shore oil production in the Gulf of
Mexico. We also offered unutilized SPR capacity for long term
commercial storage with storage fees to be paid in oil to increase the
inventory. These steps reduce the vulnerability of the U.S. economy at
tremendous cost savings to the taxpayer.
To help lower the costs of production, we just committed $18
million for a technology-driven, industry cost-shared program to
improve oil recovery from endangered domestic reservoirs. We also
kicked off a program to assist small independents--those with less than
50 employees--that have specific production problems, ranging from
reservoir characterization to environmental compliance. We are working
with other agencies and the Administration to suspend production for
stripper oil wells on federal lands. These steps prevent premature
abandonment of important well capacity, maintain domestic production
and preserve oil and gas and small business infrastructure.
To lower the cost of production, we are announcing plans to expand
the use of energy-efficient technologies to lower the cost of oil
production. We are inaugurating a pilot program for on-line oil and gas
permitting for state agencies. We are aggressively pursuing improved
recovery from high-potential reservoirs, and we have requested a 3.2%
increase in oil technology research and development for FY 2000--a
modest reversal of the historic pattern of annual reductions, but a
reversal nonetheless.
In another action to preserve our domestic production, the
Department is exploring possibilities for targeted tax relief. Such
relief would have to be cost-effective and would require budget
offsets. Any tax relief proposal would require the concurrence of the
rest of the Administration, and the passage of legislation by the
Congress.
Second, the Department has moved very aggressively to reshape the
way in which we make technology investment decisions to maximize our
national return on those investments. Throughout the Department, and
especially within the civilian research and development sector, we have
initiated technology ``road-mapping.'' The process involves cooperative
discussions between the Department and industry sectors to determine
technology needs and the types of research and development activities
needed to address them. These roadmapping efforts serve two purposes.
They act as a catalyst for the industry to develop an effective R&D
roadmap, and they help us to identify those investments which are most
appropriate for the government to make. When appropriate, we are
requiring significant cost-sharing with industry to ensure marketplace
of the research agenda and a concomitant predisposition to deployment
of the new technologies.
We have also requested increases in funding to develop and deploy
new, energy efficient technologies that would not otherwise receive
adequate private-sector backing in the face of historically low energy
prices. These investments make good economic sense, and good
environmental sense. The FY 2000 budget includes a 20 percent increase,
or $209 million, to fund energy efficiency and renewable energy
programs.
Third, we strongly support legislation to restructure the
electricity industry to ensure that U.S. consumers receive the benefits
of most economically efficient energy production and that production
and transmission sectors are encouraged to maximize their efficiency.
The Clinton Administration supports the progress that is being made
towards promoting retail competition in the electric utility industry.
Our analysis indicates that competition will benefit consumers and the
economy to the tune of $20 billion per year, and that also it will be
good for the environment. The Department of Energy will soon be
forwarding an updated version of the Administration's Comprehensive
Electricity Competition Plan to Congress. This revised legislation will
retain the basic framework of encouraging retail electric competition,
but providing the states and unregulated municipal and cooperative
utilities the flexibility they need to ``opt out'' if they determine
that competition would not be beneficial to their consumers. Under the
leadership of Secretary Richardson, the Department has been engaged in
an effort to fine-tune the legislation the Administration sent to
Capitol Hill last year to: (1) make the bill more consumer friendly,
and.; (2) address issues which were not contained in the original
proposal (e.g., the role of federal utilities in a competitive
environment).
Approximately 20 states have enacted legislation or promulgated
regulations that either have led or will lead to the implementation of
retail competition programs. Almost every other state has the matter
under active consideration. While the states are playing a primary role
in the move towards competition, Federal action is necessary to remove
the statutory impediments that currently exist and also to ensure that
interstate electricity markets are sufficiently competitive and
reliable. The Department believes that it is important to act sooner
rather than later to complement what is going on at the state level,
and stands ready to work with Congress to get the job done.
Energy Efficiency and Renewable Energy
The Department's Energy Efficiency and Renewable Energy Program has
five principal objectives: (1) to reduce U.S. reliance on imported oil
through improving efficiency and increasing the use of domestic
renewable energy resources, (2) to maintain U.S. technological
expertise and competitive advantage in global energy technology
markets, (3) to minimize and reduce pollution attributable to energy
consumption, (4) to develop and deploy technologies capable of reducing
greenhouse gas emissions, and (5) to align the strategy for development
of efficiency and renewable energy technologies with the new demands of
a deregulated electricity market.
The FY 2000 funding request for the Department's Energy Efficiency
and Renewable Energy programs includes an increase of $209 million for
a total of $1.2 billion. Key results supported by the FY 2000 budget
request include:
<bullet> Power. Improve the performance, reduce the cost, and perform
highly leveraged field verifications of technologies that
generate electricity from renewable energy resources in a
highly competitive, restructured utility environment. Power
Technology programs are expected to replace up to 1.2 Quads of
domestic primary energy by clean renewable resources, save
consumers $1.4 billion, and reduce annual U.S. carbon emissions
by nearly 24 million metric tons of carbon equivalent by 2010.
This is roughly equivalent to all the energy used for a year in
homes in Texas, our nation's second largest state.
<bullet> Industry. Develop and facilitate the deployment of energy
efficient technologies in partnership with the most energy
intensive industries. Investments are expected to save up to
1.5 Quads, $6 billion, and 29 million metric tons carbon
equivalent (MMTCE) annually by 2010. This is roughly equivalent
to all the industrial energy used for a year in Pennsylvania,
the fifth largest state in the nation.
<bullet> Transportation. The Partnership for a New Generation of
Vehicles (PNGV) will support development of technologies needed
for an 80 mpg family automobile, and more efficient small and
heavy trucks. DOE Transportation programs are expected to save
up to one million barrels per day of oil, $9.9 billion, and
reduce carbon 25 MMTCE annually by 2010. This is roughly
equivalent to the oil-based fuels used in a year for
transportation in Florida, the third largest state in the
nation.
<bullet> Buildings. Work with industry, states, and other key partners
to develop and implement energy efficient buildings and
building technologies and programs leading to savings of up to
2.3 Quads, $16 billion, and 36 MMCTE annually by 2010. This is
roughly equivalent to all residential and commercial building
energy use in Texas in a year. In addition, the program will
weatherize nearly 77,000 low income homes.
<bullet> FEMP. Accelerate efforts to deliver federal energy savings
through $5 billion worth of Energy Savings Performance
Contracts (ESPCs) with the private sector under the Federal
Energy Management Program (FEMP). Also accelerate utility
financing and procurement of energy efficiency products to
achieve a 30 percent reduction in federal energy efficiency.
FEMP programs are expected to save up to 0.1 Quads, $400
million, and 1.2 MMCTE annually by 2010.
Fossil Energy
The FY 2000 Fossil Energy R&D request is $364 million, which
includes the use of $11 million in prior year balances for a total
operating budget of $375 million, a decrease of 2.4%. One of the key
components of the Fossil Energy R&D request is the development of the
``Vision 21 Powerplex''--the power plant of the future. This includes
modular technologies that could be integrated into a non-polluting
energy producing facility, such as membranes for the low-cost
separation of oxygen and other gases. The high efficiency of Vision 21
Plants (60 percent for coal and 75 percent for gas) could, by 2030,
reduce greenhouse gas emissions globally by 370 million tons of carbo
per year. Sequestration R&D could lead to low cost options for reducing
U.S. emissions by an additional 250 million tons of carbon during the
same time frame. The economic benefits of Vision 21 Plants, through
savings in electricity costs to consumers, could reach $5-15 billion
annually by 2030. In addition, lower cost emission control technologies
could save $5 billion annually by 2010.
Within the Clean Coal Technology Program, the Department is
requesting the net deferral of $246 million in funding until FY 2001
and beyond. This is due to changes in project plans for pending
projects that do not need to be funded at previously expected levels at
this time. During FY 2000, the Department expects to complete
demonstration of the third integrated gasification combined cycle
project at Pinion Pine and to continue operations at the Polk project.
Activities at these two Clean Coal Technology projects will provide the
engineering foundation for a new generation of powerplants with
efficiencies in the 60 % range.
We have also proposed $164 million to operate America's energy
security insurance policy--the Strategic Petroleum Reserve--without
selling oil, including $5 million to ensure adequate resources to
operate the Reserve at its maximum draw down rate during an emergency.
We recently announced programs to use royalty oil and facility leasing
to increase the amount of oil stored in the Reserve. In addition, we
are completing upgrades of Reserve facilities, and by the end of FY
2000, the Strategic Petroleum Reserve will have completed a
comprehensive systems refurbishment to assure physical system
capability through the year 2025.
Key results supported by the FY 2000 budget request include:
<bullet> Coal R&D. Start construction of a clean, advanced coal fire
power system--part of the final phase of the Low Emissions
Boiler Program (LEBS) to be completed in 2001. The system will
use newly developed high temperature filtration processes for
superior environmental performance and provide the foundation
for a new generation of highly efficient, supercritical steam
power plants. Complete subscale testing of a high temperature
air furnace technology for use in highly efficient, indirectly-
fired combustion power systems and in Vision 21 Power Plexes.
Complete initial laboratory tests of novel gaseous separation
(O2, H, CO2) technologies to provide low cost options for
Vision 21 Power Plexes. Identify candidates for low-cost gas
purification technologies to support zero emissions goal of
Vision 21 Power Plexes.
<bullet> Natural Gas and Oil R&D. Continue the scale-up development of
ceramic membranes for gas-to-liquids processing; continue
implementing the President's Committee of Advisors on Science
and Technology (PCAST) recommendation for a methane hydrates
recovery program; and continue development of advanced
diagnostics and imaging technologies for highly fractured and
bypassed gas reservoirs and endangered domestic oil reserves.
Continue support for National Laboratory partnerships with
industry and the Petroleum Technology Transfer Council.
Initiate Preferred Petroleum Upstream Management Practices
(PUMP). Continue a restructured advanced gas turbine program
for the 2001 introduction of ``quantum leap'' turbines,
continue scale-up tests of a solid oxide fuel cell, and
continue cost-reduction R&D for molten carbonate fuel cell
technologies.
<bullet> Naval Petroleum and Oil Shale Reserves. Continue to operate
NPR3 and to finalize equity determination activities on NPR1.
<bullet> Strategic Petroleum Reserve. Maintain a highly reliable level
of operational readiness. Complete oil skimming and
decommissioning at Weeks Island. Initiate the long term
monitoring of Weeks Island to assure mine stability. Test major
SPR systems in the post-Life Extension program era at all
sites. The addition of $5 million to the SPR Petroleum Account
will assure the capability to sustain drawdown operations.
<bullet> Clean Coal Technology. Continue prior cost-shared commitments
to 20 projects projected to be active in FY 2000.
Nuclear Energy
The FY 2000 request for Nuclear Energy programs is $269.3 million,
a $6 million increase from FY 1999. The Department's request includes
$25 million for the ``Nuclear Energy Research Initiative.'' NERI
supports peer-reviewed research and development in advanced
technologies that can address some of the barriers to the long-term use
of nuclear power in the United States. NERI will explore advanced
technologies associated with areas such as proliferation-resistant
reactor and fuel technologies, small and high efficiency reactor
systems, and methods for greatly enhancing safety and minimizing
wastes. The Nuclear Energy request also includes $30 million for the
Fast Flux Test Facility at the Department's Hanford Reservation. The
Department is currently evaluating future missions for the reactor and
will make a decision this spring on the future of the reactor. Funding
at the request level would be adequate to fund minimum surveillance and
maintenance to keep it in a safe and environmentally-compliant
condition.
The Department is also evaluating the potential application of
electrometal-
lurgical treatment technology to some of our spent fuel challenges. Any
decision to use this technology will be based, in part, on the results
of an ongoing National Research Council review, as well as on the
completion of an Environmental Impact Statement. The FY 2000 budget
provides limited funding for this technology pending completion of this
evaluation.
The Nuclear Energy budget also supports the Department's
radioisotope power system production capability. These power systems
are used by NASA and other government agencies for deep space probes
and other remote power applications. The Department has adopted a
strategy wherein the our budget is used only to maintain physical and
institutional capability to manufacture these systems, while the cost
of production will be charged to its federal agency ``customers.'' DOE
is the only source of these power science and technology systems, and
the nation's ability to explore deep space depends on the availability
of these systems.
The Nuclear Energy budget also supports production and distribution
of isotopes for medicine and research where no commercially available
alternatives exist. The FY 2000 budget request proposes to launch the
Advanced Nuclear Medicine Initiative, to apply our unique expertise and
capabilities in isotopes to advance nuclear medicine technology. This
initiative sponsors peer-reviewed research that would include using the
Department's large inventory of alpha-emitting isotopes to fight a wide
spectrum of illnesses.
The Office of Nuclear Energy has primary responsibility within the
Department for implementation of Public Law 105-204, which requires the
Department to prepare a plan to begin construction of two depleted
uranium hexafluoride conversion plants at Portsmouth, Ohio and Paducah,
Kentucky by January 31, 2004. Depleted uranium hexafluoride is a
residual product created from the operation of uranium enrichment
plants formerly operated by the Department and now operated by the
privatized U.S. Enrichment Corporation. The Department expects to
publish a formal solicitation for expressions of interest (EOI) in
construction of these plants within the next week. The Office of
Nuclear Energy is currently working to complete the statutorily
required plan to support plant construction. The Department expects to
transmit the final plan to the Congress this spring once responses are
received from the EOI.
Key results supported by the FY 2000 budget request include:
<bullet> Solve critical technology issues with existing nuclear plants.
<bullet> Conduct investigator-initiated, peer-reviewed innovative
nuclear energy research and development.
<bullet> Optimize the capability of existing nuclear power plants to
contribute to the reduction in U.S. CO2 emissions.
<bullet> Develop and produce vital medical, research, and industrial
isotopes and their related applications.
<bullet> Maintain the capability to produce safe nuclear power systems
and related technologies for future space exploration.
<bullet> Support research and education programs at U.S. universities
through grants, fellowships, and scholarships.
<bullet> Manage Nuclear Energy facilities and DOE research reactors in
a safe, economical, and environmentally sound manner.
<bullet> Develop advanced technologies to treat DOE spent fuel.
<bullet> Implement a long-term management strategy for the Department's
depleted uranium hexafluoride inventory.
<bullet> Maintain and/or deactivate the Department's surplus non-
weapons nuclear reactor sites.
environmental quality
Environmental Management
The Department is requesting $5.9 billion for the Office of
Environmental Management, including privatization, or roughly $100
million more than the current year. Of this amount, all but $571
million is funded under ``Atomic Energy Defense Activities'' as part of
the Nation's defense budget. The civilian portion of the budget request
includes environmental management activities at the Department's
civilian research and production facilities as well as funding for the
Department's statutory obligations for environmental restoration work
at the West Valley facility in New York, uranium mill tailings sites,
and uranium enrichment facilities.
The FY 2000 request reflects our effort to maintain a stable
program that provides sufficient resources to meet our multiple demands
of risk reduction, compliance and mortgage reduction. Because of the
complexity of the cleanup and waste treatment operations, reliable and
sustained funding is essential for performing the extraordinarily
complex planning required for these long-lead time projects. The
commitments based on this budget will be accelerated cleanup and
closure, deployment of new technologies, and progress in resolving the
nuclear waste backlog. We have set very ambitious goals for closing
several sites by the year 2006, including a number of major non-defense
projects including the Weldon Spring Site in Missouri, the Battelle
Columbus Laboratory and the Mound Plant in Ohio, and the Energy
Technology Engineering Center in California.
By working towards our goal for cleanup, we not only reduce the
hazards presently facing our workforce and the public, but also reduce
the long-term financial burden on the taxpayer. For every year that a
site remains open because cleanup has not been completed, we are paying
a ``mortgage'' of necessary overhead for activities such as site
security, facility operations, personnel, safety and other costs. By
completing cleanup sooner, particularly at sites where we have no other
continuing missions, we can substantially reduce these overhead costs.
The FY 2000 budget request is now fully structured to emphasize site
closure and project completion.
We have made substantial progress towards this vision. We are
completing site cleanups. In FY 1998, we finished cleanup of an entire
class of nuclear waste sites--uranium mill tailings sites. Except for
remaining ground water contamination, we completed cleanup of 22 large
uranium mill tailings sites as well as 5,300 ``vicinity properties,''
including elementary schools and homes. This project included
remediation of over 40 million cubic yards of contaminated soil and
material, a volume that would cover a football field with a mound of
dirt four miles high. Also in FY 1998, we completed the primary
vitrification campaign of the high-level wastes at the West Valley
Demonstration Project in New York, ahead of schedule, and have begun
the vitrification of high-level waste tank heels which will continue
through FY 2001.
I previously discussed the Department's responsibility for
construction of conversion plants for depleted uranium hexafluoride
resulting from the operation of uranium enrichment plants at Paducah,
Kentucky and Portsmouth, Ohio. Decontamination and decommissioning of
the uranium enrichment plants themselves, including a third plant
located at Oak Ridge, Tennessee are funded out of the Uranium
Enrichment Decontamination and Decommissioning Fund established by the
Energy Policy Act of 1992. This fund also is used to reimburse private-
sector companies operating uranium and thorium processing sites for
specified costs of environmental cleanup within statutorily defined
limitations. The Departments FY 2000 request for these activities is
$240.2 million--a $20 million increase over the current year. The
increase is entirely within the uranium enrichment portion of the fund.
Within the Defense Environmental Management account, we are
continuing work on the clean up of the Department's nuclear weapons
complex. We continue to have a goal of cleaning up several major sites,
including Fernald, Rocky Flats, and Mound, by the end of FY 2006, and
to reduce the life-cycle cost of completing clean up activities at our
other environmental management sites. We are also continuing with
privatization projects at Carlsbad, Hanford, Idaho, and Oak Ridge. The
Department will be submitting shortly its annual report to the Congress
on the status of these privatization projects.
The Office of Environmental Management has been playing a lead role
in the Department-wide effort to use roadmapping techniques to improve
the way we develop and manage science and technology programs. EM has
constructed science and technology roadmaps at three levels: overall EM
investments in science and technology have been mapped in the EM R&D
Program Plan that was released in November 1998; five problem area
roadmaps have been built at the Focus Area level; and a number of
project level roadmaps have been developed, e.g., Hanford Vadose Zone
and Salt Treatment Alternatives at the Savannah River Site.
EM is applying systems engineering principles to develop these
roadmaps on an integrated, complex wide basis. This complex-wide
integration effort, championed by five Field Office Managers and the EM
Assistant Secretary, was a winner of the 1998 Government Technology
Leadership Award, sponsored by Government Executive magazine. Complex-
wide integration activities, combined with science and technology
roadmapping efforts, will strengthen the scientific and technical
underpinnings of the EM program and ultimately reduce the cost of the
cleanup effort.
Office of Civilian Radioactive Waste Management
In December 1998, the Department completed, and submitted to the
President, the Congress, and the public the Viability Assessment of a
repository at Yucca
Mountain. This assessment assembled, for the first time, information
about all major elements of the site and proposed repository design.
Based on the results of the Viability Assessment, the Department
believes the scientific and technical work at Yucca Mountain should
proceed to support a decision by the Secretary of Energy in 2001 on
whether to recommend the site to the President for development as a
geological repository. The assessment also included a preliminary
baseline design, cost and schedule for completion of the proposed
repository. For FY 2000, the Department is requesting $409 million, an
increase of $51 million over the current fiscal year to fund the
additional cost of these efforts. This includes $39 million of the $85
million reserved in the fiscal year 1996 Defense Nuclear Waste
Appropriation. These funds will support continuation of technical
evaluation of the site and refinement of engineering and design for the
repository.
Under the current schedule, the Department would also complete and
issue the Final Environmental Impact Statement for the repository in
the year 2000. If the site is suitable, the formal recommendation of
the site to the President would be made in 2001 and submission of the
license application to the Nuclear regulatory Commission would occur in
2002.
science
As I said earlier, the Department of Energy is, at its heart, a
science and technology agency. Science and technology are not merely
parts of this Department, they are the foundation on which all the
Department's work is based. Our request for science funding for FY 2000
is $2.8 billion, an increase of $138 million. Included in this amount
is $70 million for the Department's role in the President's Information
Technology for the 21st Century initiative. This investment will enable
us to develop and deploy new, far faster computers for advanced
simulation. We call it the ``Scientific Simulation Initiative,'' or
``SSI.'' Our goal is to develop a multi-tera scale national computing
infrastructure for solving complex scientific and engineering problems
of national importance. We expect that this initiative, over the next
five years, will elevate simulation to a discovery tool alongside
experimentation and theory.
These new simulation capabilities will be powerful tools to do
things like design new, clean combustion devices, develop new
pharmaceuticals, explore new materials, and improve our weather and
climate research, reaffirming America's leading role in these fields.
We will continue investing in other science programs that will have
far reaching benefits to all of the country's and the Department's
research agenda. For example, we are continuing development of the
Spallation Neutron Source (SNS) at the Oak Ridge National Laboratory.
This state of the art neutron scattering facility will lead to the
development of stronger and lighter materials, more efficient motors,
and increase our understanding of the structure of matter. The SNS is
essential for restoring American leadership in neutron scattering, a
core capability for materials science.
It is important to emphasize here the contributions that the
Science program makes not only to the advancement of basic sciences in
this country and the continuation of U.S. scientific leadership, but
also the direct impact the science program has on the other three
missions of the Department of Energy. Energy Resources, Environmental
Quality, and National Security are all the beneficiaries of the steady
stream of discoveries and expertise from the DOE laboratory system, and
from the universities and industries who perform work funded by DOE.
departmental administration
The offices funded under the Departmental Administration
appropriations account provide headquarters with guidance and support
of all operating elements of the Department including such as areas as
human resources, administration, accounting, budgeting, legal services,
information management systems, congressional liaison and public
affairs. Management of program activities is funded by program
direction funding within each program budget. The Department is
requesting $247.5 million dollars for Departmental Administration, a
$2.9 million decrease.
management
Working with Congress, we have reduced our Federal employee
workforce by 25 percent in less than four years. We've also reduced our
contractor employment by 31 percent since its peak in 1992. But this
streamlining has left gaps in important skill areas. To resolve this,
in December, Secretary Richardson announced a targeted effort to bring
specialized skills into the Department as part of his ``Workforce 21''
initiative. One of the first steps taken was the development of an R&D
Technical Managers Initiative, which now includes a detailed action
plan for improving R&D technical management, to ensure the Department
has the essential expertise to carry out our missions in the future.
We are also taking a comprehensive look at the structure of the
Department, looking for ways to improve efficiency, strengthen
management, ensure accountability, and improve reporting requirements.
For example, we have restructured the Research and Development Council,
which I chair, to integrate our research activities across the
Department. We have also reinvigorated the Laboratory Operations Board
to ensure that our government-owned, contractor-operated laboratories
are being managed effectively and are fully accountable to the
Department.
conclusion
The Department's FY 2000 budget request of $17.8 billion will, if
funded, allow the Department to serve the American people effectively,
in pursuit of its core missions:
<bullet> Advancing the frontiers of science and technology;
<bullet> Ensuring the security, diversity and affordability of
America's energy resources;
<bullet> Promoting national security, and keeping our nuclear weapons
stockpile safe, secure, and reliable; and
<bullet> Cleaning up the environmental legacy of the Cold War.
The budget we have submitted attempts to balance many competing
demands from the scientific community, from industry, and from
communities that surround and host our facilities, within current
budgetary constraints. We believe that this budget, along with some of
the essential policy initiatives I have outlined, achieves this
balance, and we ask for your support.
Thank you again for the opportunity to testify this morning. I
would be pleased to answer any questions the Subcommittee has regarding
the FY 2000 budget.
U.S. Department of Energy
Office of Nonproliferation and National Security
FY 2000 Congressional Budget Request
[Dollars in Millions]
------------------------------------------------------------------------
FY 1999
Program Comparable FY 2000 Change
Approp. Request
------------------------------------------------------------------------
Research and Development......... $210.0 $221.0 $+11.0
Arms Control..................... 256.9 296.0 +39.1
International Nuclear Safety..... 30.0 34.0 +4.0
HEU Transparency Implementation.. 13.6 15.8 +2.2
Nuclear Safeguards............... 55.2 59.1 +3.9
Security Investigations*......... 30.0 30.0 0.0
Emergency Management............. 21.0 21.0 0.0
Program Direction................ 80.4 90.4 +10.0
------------------------------------------------------------------------
Subtotal......................... $697.1 $767.3 +$70.2
Use of Prior Year Balances....... -6.2 -- +6.2
Offset to user organizations..... -20.0 -20.0 0.0
------------------------------------------------------------------------
TOTAL, Nonproliferation.......... $670.9 $747.3 $+76.4
------------------------------------------------------------------------
*Program Offices are providing funding for Security Investigations to be
used for all contractor personnel in the field. For FY 1999, $20
million appropriated, plus $15 million per Congressional Notification
letter; and for FY 2000, a request of $20 million.
Key Results Supported by FY 2000 Budget
<bullet> Increases nuclear safety and threat reduction assistance to
Russia and maintains cooperation with the Newly Independent
States (NIS) and Baltics to secure and prevent the spread of
Special Nuclear and other Weapons of Mass Destruction materials
and expertise.
<bullet> Continues development of technology upgrades for Comprehensive
Test Ban Treaty monitoring and verification.
<bullet> Accelerates research and development of technologies for
domestic response to chemical and biological weapons threats.
<bullet> Sustains Nuclear Safeguards and Security and Emergency
Management Programs, and supports Critical Infrastructure
Program.
<bullet> Protects against inadvertent release of Restricted Data and
Formerly Restricted Data (P.L. 105-261), and continues the
declassification process while protecting our national
security.
U.S. Department of Energy
Office of Nuclear Energy, Science and Technology
FY 2000 Congressional Budget Request
[Dollars in Millions]
------------------------------------------------------------------------
FY 1999
Program Comparable FY 2000 Change
Approp. Request
------------------------------------------------------------------------
Nuclear Energy Research &
Development
Advanced Radioisotope Power $37.0 $37.0 $0.0
Systems.........................
Test Reactor Area & Landlord 6.8 9.0 +2.2
Functions.......................
University Reactor Fuel 11.0 11.3 +0.3
Assistance and Support..........
Nuclear Energy Plant -- 5.0 +5.0
Optimization (NEPO).............
Nuclear Energy Research 19.0 25.0 +6.0
Initiative (NERI)...............
------------------------------------------------------------------------
Total, Nuclear Energy R&D...... 73.8 87.3 +13.5
Fast Flux Test Facility.......... 30.0 30.0 0.0
Termination Costs................ 85.0 65.0 -20.0
Uranium Programs................. 35.4 41.0 +5.6
Isotope Production & Distribution 21.5 21.0 -0.5
Program Direction................ 21.2 25.0 +3.8
Subtotal, Nuclear Energy....... 266.9 269.3 +2.4
------------------------------------------------------------------------
Use of Prior Year Balances..... -3.5 0.0 +3.5
TOTAL, Nuclear Energy............ $263.4 $269.3 $+5.9
------------------------------------------------------------------------
Key Results Supported by FY 2000 Budget
<bullet> Solve critical technology issues associated with existing
nuclear plants.
<bullet> Conduct investigator-initiated, peer-reviewed innovative
nuclear energy research and development.
<bullet> Optimize the capability of nuclear power plants to contribute
to the reduction in U.S. CO2 emissions.
<bullet> Develop and produce vital medical, research, and industrial
isotopes and their related applications.
<bullet> Maintain capability to produce safe nuclear power systems and
related technologies for future space exploration.
<bullet> Support research and education programs at U.S. universities
through grants, fellowships, and scholarships.
<bullet> Manage Nuclear Energy facilities and DOE research reactors in
a safe, economic, and environmentally sound manner.
<bullet> Develop advanced technologies to treat DOE spent fuel.
<bullet> Implement long-term management strategy for the Department's
depleted uranium hexafluoride inventory.
<bullet> Maintain and/or deactivate the Department's surplus nonweapons
nuclear reactor sites.
U.S. Department of Energy
Office of Defense Programs
FY 2000 Congressional Budget Request
[Dollars in Millions]
------------------------------------------------------------------------
FY 1999
Program Comparable FY 2000 Change
Approp. Request
------------------------------------------------------------------------
Stockpile Stewardship
Core Stockpile Stewardship..... $1,012.0 $1,153.9 $+141.9
ASCI/Stockpile Computing....... 483.8 542.5 +58.8
Inertial Confinement Fusion.... 503.4 465.7 -37.7
Technology Partnerships........ 43.0 22.2 -20.8
Education...................... 19.0 29.8 +10.8
Infrastructure Construction.... 64.7 72.1 +7.4
------------------------------------------------------------------------
Subtotal, Stockpile 2,125.9 2,286.2 +160.3
Stewardship.....................
Stockpile Management
Core Stockpile Management...... 1,639.4 1,552.0 -87.4
Enhanced Surveillance.......... 81.5 85.3 +3.8
Advanced Manufacturing......... 79.5 85.0 +5.5
Radiological/Nuclear Accident 76.2 77.6 +1.4
Response........................
Tritium Source................. 167.0 170.0 +3.0
Materials...................... 27.9 28.4 +0.5
------------------------------------------------------------------------
Subtotal, Stockpile 2,071.5 1,998.3 -73.2
Management......................
Program Direction................ 249.6 246.5 -3.1
Subtotal, Weapons Activities..... 4,447.0 4,531.0 +84.0
Use of Prior Year Balances....... -47.0 0.0 +47.0
------------------------------------------------------------------------
TOTAL, Weapons Activities........ $4,400.0 $4,531.0 $+131.0
------------------------------------------------------------------------
Key Results Supported by FY 2000 Budget
<bullet> Maintain confidence in the safety and reliability of the
nuclear weapons stockpile without nuclear testing
<bullet> Initiate manufacture of W88 pits for enduring stockpile
<bullet> Maintain National Ignition Facility schedule
<bullet> Demonstrate three-dimensional analysis of specific behavior of
a nuclear weapon primary
<bullet> Execute two subcritical experiments
<bullet> Dismantle approximately 375 weapons
<bullet> Begin implementation of the Secretarial decision to produce
tritium in a TVA reactor including the start of construction of
the tritium extraction facility and maintaining an accelerator
as a backup
U.S. Department of Energy
Office of Worker and Community Transition
FY 2000 Congressional Budget Request
[Dollars in Millions]
------------------------------------------------------------------------
FY 1999
Program Comparable FY 2000 Change
Approp. Request
------------------------------------------------------------------------
Work Force Restructuring......... $9.4 $9.4 $0.0
Community Transition Assistance.. 16.6 17.1 +0.5
Program Direction................ 3.9 3.5 -0.4
------------------------------------------------------------------------
Subtotal, Worker & Community $29.9 $30.0 $0.1
Transition......................
Use of Prior Year Balances....... -1.7 0.0 +1.7
------------------------------------------------------------------------
TOTAL, Worker and Community $28.2 $30.0 $+1.8
Transition......................
------------------------------------------------------------------------
Key Results Supported by FY 2000 Budget
<bullet> Manage the Department's efforts to restructure its contractor
work force during FY 2000.
<bullet> Provide enhanced separation benefits to workers separated from
former defense nuclear program activities.
<bullet> With community assistance, create 1,700 new jobs through
expansion of existing businesses or new business starts within
communities affected by the Department of Energy's work force
restructuring.
<bullet> Support renegotiation or renewal of 25 collective bargaining
agreements throughout the Department of Energy complex and
assist field organizations in labor/management relations and
negotiations.
<bullet> Stimulate efforts to dispose of unnecessary assets and reuse
existing facilities.
U.S. Department of Energy
Office of Energy Efficiency & Renewable Energy
FY 2000 Congressional Budget Request
[Dollars in Millions]
------------------------------------------------------------------------
FY 1999
Program Comparable FY 2000 Change
Approp. Request
------------------------------------------------------------------------
Power Technologies (formerly $272.3 $325.2 $+52.9
Utilities)......................
Industry Technologies............ 165.9 171.0 +5.1
Transportation Technologies...... 243.8 305.5 +61.7
Building Technologies, States & 262.2 335.9 +73.7
Communities.....................
Federal Programs................. 23.8 31.9 +8.1
Program Management............... 59.7 66.9 +7.2
------------------------------------------------------------------------
Subtotal, Energy Efficiency & $1,027.7 $1,236.4 $+208.7
Renewable Energy................
Use of prior year balances....... -64.0 -0.8 +63.2
------------------------------------------------------------------------
Total, Energy Efficiency & $963.7 $1,235.6 $271.9
Renewable Energy................
------------------------------------------------------------------------
Key Results Supported by FY 2000 Budget
<bullet> Power--(formerly Utilities) Improve the performance, reduce
the cost, and perform highly-leveraged field verifications of
technologies that generate electricity from renewable energy
resources in a highly-competitive, restructured utility
environment. Power Technology programs are expected to replace
up to 1.2 Quads of domestic primary energy by clean renewable
resources, save consumers $1.4 billion, and reduce annual U.S.
carbon emissions by nearly 24 million metric tons by 2010,
roughly equivalent to all the energy used for a year in homes
in Texas, our nation's second largest state.
<bullet> Industry: Develop and facilitate the deployment of energy
efficient technologies in partnership with the most energy
intensive industries. Investments are expected to save up to
1.5 Quads, $6 billion, and 29 million metric tons carbon
equivalent (MMTCE) annually by 2010, roughly equivalent to all
the industrial energy used for a year in Pennsylvania, the
fifth largest state in the nation.
<bullet> Transportation: The Partnership for a New Generation of
Vehicles (PNGV) will support development of technologies needed
for an 80 mpg family automobile, and more efficient small
trucks and heavy trucks. DOE Transportation programs are
expected to save up to 1 million barrels/day of oil, $9.9
billion, and reduce carbon 25 MMTCE annually by 2010, roughly
equivalent to the oil based fuels used for a year for
transportation in Florida, the third largest state in the
nation.
<bullet> Buildings: Work with industry, states, and other key partners
to develop and implement energy efficient buildings and
building technologies and programs leading to savings of up to
2.3 Quads, $16 billion, and 36 MMTCE annually by 2010. This is
roughly equivalent to all residential and commercial building
energy use in Texas in a year. In addition, the program will
weatherize nearly 77,000 low income homes.
<bullet> FEMP: Accelerate efforts to deliver federal energy savings
through $5 billion worth of Energy Savings Performance
Contracts (ESPCs) with the private sector. Also accelerate
utility financing and procurement of energy efficiency products
to achieve 30 percent reduction in federal energy efficiency.
FEMP programs are expected to save up to 0.1 Quads, $400
million, and 1.2 MMTCE annually by 2010.
U.S. Department of Energy
Office of Fossil Energy
FY 2000 Congressional Budget Request
[Dollars in Millions]
------------------------------------------------------------------------
FY 1999
Program Comparable FY 2000 Change
Approp. Request
------------------------------------------------------------------------
Fossil Energy Research and
Development
Coal........................... $123.1 $122.4 $-0.7
Petroleum...................... 48.6 50.2 +1.6
Gas............................ 115.2 105.3 -9.9
Management & Other............. 97.1 97.1 0.0
------------------------------------------------------------------------
Subtotal, Fossil Energy R&D...... 384.0 375.0 -9.0
Naval Petroleum & Oil Shale 20.7 21.2 +0.5
Reserves........................
Elk Hills School Lands Fund...... 36.0 36.0 0.0
Strategic Petroleum Reserve...... 160.1 164.0 +3.9
------------------------------------------------------------------------
Subtotal, Fossil Energy.......... $600.8 $596.2 -$4.6
Use of prior year balances & -7.9 -33.2 -25.3
other...........................
Clean Coal Technology Program.... -40.0 -246.0 -206.0
------------------------------------------------------------------------
TOTAL, Fossil Energy............. $552.9 $317.0 $-235.9
------------------------------------------------------------------------
Key Results Supported by FY 2000 Budget
<bullet> Coal R&D--Start construction of clean, advanced coal fire
power system-part of the final phase of the Low Emissions
Boiler Program (LEBS) to be completed in 2001. The system will
use newly developed high temperature filtration processes for
superior environmental performance and provide the foundation
for a new generation of highly efficient supercritical steam
power plants. Complete subscale testing of high temperature air
furnace technology for use in highly efficient indirectly-fired
combustion power systems and in Vision 21 Power Plexes.
Complete initial lab tests of novel gaseous separation (O2, H,
CO2) technologies to provide low cost options for Vision 21
Power Plexes. Identify candidates for low-cost gas purification
technologies to support zero emissions goal of Vision 21 Power
Plexes.
<bullet> Natural Gas and Oil R&D--Continue scale-up development of
ceramic membrane for gas-to-liquids processing; continue
implementing President's Committee of Advisors on Science and
Technology (PCAST) recommendation for methane hydrates recovery
program and continue development of advanced diagnostics and
imaging technologies for highly fractured and bypassed gas
reservoirs and endangered domestic oil reservoirs. Continue
support for National Lab partnerships with industry and for
Petroleum Technology Transfer Council. Initiate Preferred
Petroleum Upstream Management Practices (PUMP).
<bullet> Continue restructured advanced gas turbine program for 2001
introduction of ``quantum leap'' turbine, continue scale-up
tests of solid oxide fuel cell, and continue cost-reduction R&D
for molten carbonate fuel cell technologies.
<bullet> Naval Petroleum and Oil Shale Reserves--Continue to operate
NPR3 and to finalize equity determination activities on NPR1.
<bullet> Strategic Petroleum Reserve--Maintain a highly reliable level
of operational readiness. Complete Weeks Island oil skimming
and decommissioning. Initiate long term monitoring of Weeks
Island to assure mine stability. Test major SPR systems in the
post-Life Extension program era at all sites. The addition of
$5 million to the SPR Petroleum Account assures the capability
to sustain drawdown operations until sales receipts are
available.
<bullet> Clean Coal Technology--Continue prior cost-shared commitment
to 20 projects projected to be active in FY 2000.
U.S. Department of Energy
Office of Environmental Management
FY 2000 Congressional Budget Request
[Dollars in Millions]
------------------------------------------------------------------------
FY 1999*
Program Comparable FY 2000 Change
Approp. Request
------------------------------------------------------------------------
Site Closure..................... $1,290.2 $1,265.6 $-24.6
Site/Project Completion.......... 1,141.1 1,081.8 -59.3
Post 2006 Completion............. 2,403.9 2,532.5 +128.6
Science and Technology........... 243.2 230.5 -12.7
UE D&D Fund...................... 220.2 240.2 +20.0
Privatization.................... 228.4 253.0 +24.6
Program Direction................ 337.1 349.4 +12.3
------------------------------------------------------------------------
Subtotal, Environmental 5,864.1 5,953.0 +88.9
Management......................
Uncosted Offset.................. -32.1 -25.0 +7.1
------------------------------------------------------------------------
TOTAL, Environmental Management.. $5,832.0 $5,928.0 $+96.0
------------------------------------------------------------------------
*Includes FY 1999 Emergency Supplemental funding of $13.8 million to
correct year 2000 computer problems.
Key Results Supported by FY 2000 Budget
<bullet> Accelerate clean up at as many sites as possible by 2006,
reducing risks to workers, public health, and the environment.
<bullet> Pursue accelerated closure of three major sites: Rocky Flats,
Fernald, and Mound.
<bullet> Provides for the first full year of operation of the Waste
Isolation Pilot Plant (WIPP) by receiving waste from multiple
sites across the country for permanent disposal. Transuranic
waste will be received from New Mexico, Idaho, Colorado, South
Carolina, Washington, Ohio, and Illinois.
<bullet> Continue EM's contracting strategy of privatizing clean up
activities at multiple sites.
<bullet> Support aggressive efforts to deploy new, efficient
technologies to accelerate clean up schedules, and produce
significant cost savings.
<bullet> Vitrify between 100 and 105 canisters of high-level waste at
the Savannah River Site, South Carolina and in West Valley, New
York
U.S. Department of Energy
Office of Environment, Safety and Health
FY 2000 Congressional Budget Request
[Dollars in Millions]
------------------------------------------------------------------------
FY 1999
Program Comparable FY 2000 Change
Approp. Request
------------------------------------------------------------------------
Technical Assistance............. $50.4 $50.8 $+0.4
Health Studies................... 78.5 86.5 +8.0
Oversight........................ 25.0 25.5 +0.5
------------------------------------------------------------------------
Subtotal, Environment, Safety and $153.9 $162.8 $+8.9
Health..........................
Use of Prior Year Balances....... -5.1 -8.7 -3.6
------------------------------------------------------------------------
Total, Environment, Safety and $148.8 $154.1 +$5.3
Health..........................
------------------------------------------------------------------------
Key Results Supported by FY 2000 Budget
<bullet> Technical Assistance: Technical experts in fields of nuclear
safety engineering, occupational safety, radiation protection
and other environment, safety and health disciplines work with
DOE line programs to solve critical problems and develop
programs to prevent injuries, illnesses, environmental
contamination, and to comply with all environmental laws and
regulations
<bullet> Health Studies: Continue research on the effects of radiation
on humans; epidemiological studies on occupational diseases;
and studies to determine potential health effects to workers
and community residents exposed to hazardous materials from DOE
operations. This year includes funding for the Department of
Health and Human Services to conduct health studies previously
funded by the Office of Environmental Management.
<bullet> Oversight: Perform independent oversight to appraise the
effectiveness of environment, safety, health, safeguards, and
security programs, and follow-up with corrective actions.
Administer enforcement programs to assure DOE contractors
adhere to safety rules.
U.S. Department of Energy
Office of Science
FY 2000 Congressional Budget Request
[Dollars in Millions]
------------------------------------------------------------------------
FY 1999
Program Comparable FY 2000 Change
Approp. Request
------------------------------------------------------------------------
Basic Energy Sciences............ $799.5 $888.1 $+88.6
Biological and Environmental 436.7 411.2 -25.5
Research........................
Less One Time Projects......... -46.8 0.0 +46.8
Total BER Base................. 389.9 411.2 +21.3
Fusion Energy Sciences........... 222.6 222.6 0.0
Computational and Technology 157.5 198.9 +41.4
Research........................
High Energy Physics.............. 695.5 697.1 +5.5
Nuclear Physics.................. 334.6 342.9 +4.5
Multiprogram Energy Labs & Other. 72.1 74.6 +2.5
Subtotal....................... 2,718.5 2,835.4 +117.2
General Reduction/Use of Prior -13.0 0.0 +13.0
Year Balances...................
Superconducting Super Collider -7.6 0.0 +7.6
(SSC) Balances..................
------------------------------------------------------------------------
TOTAL, Science................... $2,697.9 $2,835.4 $+137.8
Technical Information Management. $8.6 $9.1 $+0.8
------------------------------------------------------------------------
Key Results Supported by FY 2000 Budget
<bullet> Begin the ``Scientific Simulation Initiative,'' a critical
element in the President's Information Technology for the 21st
Century program, in partnership with NSF and other agencies
(NASA, DOD, NOAA, NIH); an integrated initiative in computer
simulation and modeling that builds upon, and is integrated
with Accelerated Strategic Computing Initiative (ASCI)
capabilities.
<bullet> Increase Climate Change Technology Initiative research in
carbon management science, in relation to DOE's technology
programs which are directed at the themes of science for
efficient technologies, fundamental science underpinning
advances in all low/no-carbon energy sources and sequestration
science.
<bullet> Continue construction of the Spallation Neutron Source at Oak
Ridge National Laboratory to regain our position of
international leadership in neutron sources used for physical,
chemical, materials, biological, and medical research. This
$1.3 billion facility involves DOE leadership of an
interlaboratory effort (ORNL, LBNL, LANL, BNL, and ANL).
<bullet> Maintain scientific user facilities by providing operating
time and user support for over 15,000 scientists in
universities, federal agencies, and industry.
<bullet> Continued participation in the President's Next Generation
Internet initiative, the Partnership for New Generation of
Vehicles, DOE 2000, genome and global climate change.
<bullet> $32 million for carbon management science, including using
microbial genomics to find ways to sequester carbon for
potential greeenhouse gas reduction.
U.S. Department of Energy
Office of Fissile Materials Disposition
FY 2000 Congressional Budget Request
[Dollars in Millions]
------------------------------------------------------------------------
FY 1999
Program Comparable FY 2000 Change
Approp. Request
------------------------------------------------------------------------
Future Storage................... $0.9 $4.3 $+3.4
Disposition...................... 86.0 95.0 +9.0
Facility Design.................. 48.0 62.9 +14.9
U.S./Russian Activities.......... 24.9 24.9 0.0
Core Technologies................ 2.7 2.3 -0.4
NEPA Compliance.................. 1.9 3.3 +1.4
Program Direction................ 4.6 7.3 +2.7
Use of Prior Year Balances....... -1.5 0.0 +1.5
TOTAL, Fissile Materials $167.5 $200.0 $-32.5
Disposition.....................
------------------------------------------------------------------------
Russian Plutonium Disposition.... 200.0 0.0 -200.0
------------------------------------------------------------------------
Key Results Supported by FY 2000 Budget
<bullet> Complete Title I and initiate Title II designs of Pit
Disassembly and Conversion Facility and Mixed Oxide (MOX) Fuel
Fabrication Facility
<bullet> Initiate Title I design of an Immobilization and Processing
Facility
<bullet> Begin implementation of U.S./Russian accord for plutonium
disposition in Russia
<bullet> Continue Phase II testing of integrated prototype for pit
disassembly and conversion
<bullet> Upgrade surplus pit storage facilities at Pantex
<bullet> Continue disposition of surplus highly enriched uranium (HEU)
<bullet> Issue a draft environmental impact statement on disposition of
U\233\
U.S. Department of Energy
Office of Civilian Radioactive Waste Management
FY 2000 Congressional Budget Request
[Dollars in Millions]
------------------------------------------------------------------------
FY 1999
Program Comparable FY 2000 Change
Approp. Request
------------------------------------------------------------------------
Yucca Mountain Site $282.4 $331.7 $+49.3
Characterization................
Waste Acceptance, Storage and 1.9 5.7 +3.8
Transportation..................
Accelerator Transmutation of 4.0 -- 4.0
Waste...........................
Management Functions............. 69.7 71.6 +1.9
------------------------------------------------------------------------
Subtotal....................... 358.0 409.0 +51.0
Less the Use of Previously -0.5 -39.0 -38.5
Appropriated Funds..............
------------------------------------------------------------------------
TOTAL, Civilian Radioactive Waste $357.5 $370.0 $12.5
Management......................
------------------------------------------------------------------------
Key Results Supported by FY 2000 Budget
The FY 2000 budget requests $370 million in new budget authority
and assumes that $39 million of the $85 million reserved in the FY 1996
Energy & Water Development Appropriations Act (P. L. 104-46) will be
made available by Congress. The total program funding request of $409
million in FY 2000 supports activities necessary to be completed in
time to determine the suitability of the Yucca Mountain site as a
repository, develop the documentation needed for a Secretarial decision
on the Site Recommendation to the President in FY 2001, and conduct
other activities associated with the federal government's waste
acceptance obligations.
Yucca Mountain Site Characterization Project in FY 2000 will:
<bullet> Select the natural system reference models to support a
decision on whether to recommend the Site to the President and
the License Application.
<bullet> Select the reference repository and waste package designs to
support a decision whether to recommend the Site to the
President and the License Application.
<bullet> Complete and issue the final Environmental Impact Statement.
<bullet> Continue the evaluation of this site for compliance with 10
CFR Part 960, the Department of Energy's repository siting
guidelines.
<bullet> Initiate development of the documentation to support a
Secretarial decision on Site Recommendation.
Waste Acceptance, Storage, and Transportation activities will focus on:
<bullet> Development of processes for the legal and physical transfer
of commercial spent nuclear fuel to the federal government.
<bullet> Pre-licensing discussions with the Nuclear Regulatory
Commission for a non-site-specific interim storage facility.
<bullet> Updating a Request for Proposal scheduled for issuance in FY
2001 for acquisition of waste acceptance and transportation
services.
<bullet> Institutional issues of concern to Program stakeholders
regarding transportation.
Regulatory Compliance, Program Control, and Management functions
include:
<bullet> Nuclear quality assurance, NEPA compliance, and compliance
with external regulatory requirements.
<bullet> System engineering and integration, program planning,
independent technical oversight of critical program elements,
validation of repository design concepts and operating
strategies, and licensing records management.
<bullet> Federal salaries, training, computer applications and
information technology.
Mr. Barton. Thank you, Dr. Moniz.
We've been joined by the distinguished chairman of the full
committee, the Honorable Tom Bliley. Does he wish to ask
questions first? Mr. Chairman, I've given you the honor, if you
wish to be the first questioner.
Mr. Bliley. Oh, I'll pass.
Mr. Barton. Okay.
The Chair will then recognize Mr. Norwood--Mr. Norwood's on
a tight time schedule and asked if he could go before some of
the other subcommittee members.
Mr. Norwood, for 5 minutes, questions only.
Mr. Norwood. Thank you very much, Mr. Chairman, and I do
appreciate it--the tight schedule is difficult today, and I do
have some questions--however, those I have about Tritium and
Yucca Mountain, et cetera, I'd like to submit for the record,
and concentrate my efforts just a few minutes on the power
marketing administration. In particular, my interest is the
southeastern power marketing administration, which happens to
be the best one, I think--I believe I'm right in saying that
out there--at least we tend to generate more than we spend,
that's always a good sign.
Mr. Barton. It's the best one in the Southeast----
Mr. Norwood. There's no question you can say that, Mr.
Chairman, you're right very often.
Has the gentleman--in either or both--has the
administration made an actual policy decision to terminate
wholesale power contracts with existing preference customers
by, in your budget, having eliminated funding for purchase
power and wheeling? Has there been a decision made, a policy
decision?
Mr. Moniz. The budget reflects, clearly, a policy that the
PMAs would not need to participate in purchasing power or
wheeling services for PMA customers, because the customers can
obtain the services themselves, working directly with
suppliers. However, since announcing that policy, we have
learned that a number of PMA customers believe in an abrupt
adoption of this policy----
Mr. Norwood. Would you pull that mike just a little closer
to you, please?
Mr. Moniz. Yes. Since that time, we have learned that a
number of PMA customers believe that an abrupt adoption of this
past will create undue hardships. So we stand ready to work
with Congress and PMA customers to develop a workable plan to
go forward. The Department is open to new ideas that provide a
permanent solution for financing this activity.
If I may, Mr. Norwood, let me ask our CFO, Mike Telson, to
amplify on this statement.
Mr. Norwood. Thank you. Well, did you say to me you've
changed your mind and you're going to change the budget--is
that what you said? And then we'll talk about it again under
more sensible circumstances.
Mr. Telson. Mr. Norwood, we're willing to work with you to
address any problems that are raised, but if I might take just
about a minute to describe what the problem is. Over a number
of years, we've been working with our customers to bring down
what we call purchase power, using alternate financing
techniques--that is, wherever possible where the customers can
pay where we get our power from, we would arrange for that to
happen, and so get it off our budget book.
The problem that we have is that the purchase power/
wheeling expenditures that we have to seek--we have about $50
million or so that are left right now from a peak of much
higher a number of years ago--that money has to be sought as a
discretionary appropriation, even though that money comes back
to us immediately in the form of a reimbursement from our
customers.
However, that money goes to the Treasury, it doesn't come
to us.
Mr. Norwood. In other words, they sell electricity and we
put it back into the Treasury.
Mr. Telson. Correct.
Mr. Norwood. I understand.
Mr. Telson. But we have to take $50 million, roughly, from
a very, very tight pot, which you have----
Mr. Norwood. I understand.
Mr. Telson. [continuing] even a worse problem than we do,
having to find money within a discretionary pot. So, we have an
asymmetry which creates a problem for the Department, creates a
problem for the whole budget. Obviously, just the bottom line
is that if we don't appropriate the money, it's clear that we
can't get the receipts from the purchase power. Right?
Mr. Norwood. Right.
Mr. Telson. Obviously. Yet prior OMB and CBO baselines
would have you believe that that was possible. See, that's the
situation we encountered when we were preparing this budget. So
what we've done is we've taken the lead to work with OMB to
prepare a proposal that would rectify the situation by
basically taking these receipts out of the base sum, because
we're not going to seek an appropriation for that.
Mr. Norwood. You know, we all appreciate the problem that
you generate the money, it goes to the Federal treasury, and
you don't get it back appropriately--I've fussed about that for
a long time. In fact, all of us who pay taxes into the Federal
treasury have the same problem--we can't seem to get any of it
back. But I understand and appreciate where you're coming from,
but there are nuances here that will lower the amount that's
going into the Federal treasury if you continue down this line,
wherever the money's spent, and that's not good, either.
Mr. Telson. Right.
Mr. Norwood. Let me just ask quickly--because we're running
out of time--did you check on the law when you made the
decision, because it is my understanding that there is some
question as to whether the Department of Energy would be able
to comply with the Flood Control Act it this amount of
appropriations were to stick.
Mr. Barton. This will have to be the last question----
Mr. Telson. Yes. Sir, we will work with you to address
these issues, because, clearly, it is not in our intent to
create problems for you.
Mr. Norwood. I didn't think it is, and this isn't hard. All
we've got to do is put it back like it was and then--so that we
can generate more income for the Federal Treasury.
Mr. Telson. Right. Maybe, perhaps if the CBO could also
adjust their baseline. Maybe this is something to also be
looked at.
Mr. Norwood. Mr. Chairman, the rest of them I'll put in
writing.
Mr. Barton. Okay, I thank the gentlemen from Georgia. We've
commented that I think Bear Bryant had a hat made out of the
same cloth that your coat is----
Mr. Norwood. Actually, he did, yes.
Mr. Barton. The Chair would recognize the gentlelady from
Missouri for 5 minutes for questions.
Ms. McCarthy. Thank you, Mr. Chairman.
Dr. Moniz, I appreciate your remarks with regard to energy
efficiency, renewable energy, and--if I might read from your
testimony--``to maintain U.S. technological expertise and
competitive advantage in global energy technology markets to
develop and deploy technologies capable of reducing greenhouse
gas emissions.''
I cannot find, when I look at the budget, where those
numbers are--these are lofty and wonderful words--I happen to
believe in them--I happen to think that addressing technology
is a win-win for this country. I'd rather see us develop it and
export it, than buy it under some foreign country's name as we
did with electronic technology in the past in other instances.
But I see the words, I don't see the numbers, and I want to
know what you're talking about when you talk about ``develop
and deploy technologies capable of reducing greenhouse gas
emissions.''
Could you give me a little more information on that,
please?
Mr. Moniz. Certainly. Thank you for the question.
The portfolio, which will be addressing greenhouse gas
emissions, first of all, is very broad, and I will walk through
a few of those examples. I do want to also emphasize that
without exception, the technologies that we are working on to
develop greenhouse gas emission reduction, are simultaneously
addressing multiple goals in terms of energy security, clean
environment at local levels as well as global levels, et
cetera. So these are multipurpose technologies--in particular,
of course, efficiency is a technology which serves essentially
all of our energy and economic goals.
Ms. McCarthy. I'm particularly interested in those
technologies that we can export to developing countries--they
are an incredibly important component if we are going to
address greenhouse gas emissions, we certainly can as a nation,
but we need everyone addressing it. And one of the keys to that
is to make technologies that are affordable and usable in these
developing countries so they can participate in the goals we
all seek.
Mr. Moniz. Yes. There is a very good synergy here, in the
sense that, as one develops, for example, renewable
technologies, they of course are very environmentally
friendly--they are also a technology, because they are often
very modular, they depend upon resources which are available in
rural areas and in many foreign countries. As we develop those
technologies, they will be very important as we evolve to
distributed power in this country, as we serve our own rural
areas, and provide the basis for what we believe will be an
exceptional export market as we serve other countries, for the
same reasons.
Ms. McCarthy. Are you working with private industry on
this--because there are, you know, entrepreneurs all over
America trying to accomplish this--this sort of next Silicon
Valley approach to the future.
Mr. Moniz. Yes. The--our energy programs, our energy
resource and technology programs--of course, some of the work,
particularly the basic--the more basic work--is done to a large
extent in our laboratories in some universities. But certainly
as we go into the development phase, the applied research
phase, a very large fraction of our work is done in cost-shared
partnerships with the private sector.
Ms. McCarthy. Is there enough money in the budget for this
effort? I think it's a critical one.
Mr. Moniz. Well, the--we have to work, of course, within
the overall constraints. We certainly have program pressure
that could use more funding. On the other hand, we do have a
fairly robust increase in the efficiency and renewable areas,
for example--the order of a 20 percent increase in those areas.
Ms. McCarthy. Can you get a little more detail to me and
anyone else interested on the committee? I know a number of us
that, along with the Chairman, went to Kyoto to participate in
the protocol effort there, and came away convinced that this
could be an economic opportunity for this Nation.
I'd like to know a little bit more--and more detail--just
what's going on, so that I can be of assistance in that regard.
I don't want to take up the committee's time this morning, but
I would like to have more information made available to me
about these two important points that you make.
Mr. Moniz. We would be delighted, of course, to provide you
much more detailed briefings at your pleasure. Let me just note
that, again, the principal Departmental response in the context
of Kyoto, is to develop this robust and broad energy R&D
portfolio, developing the new technologies that will provide
power, whether it's through higher efficiency in fossil, or
through developing renewables, or whether it's developing new
modular small nuclear power plants, which may find use
elsewhere and of course, have no emissions.
The market for addressing the anticipated very, very large
growth in energy use worldwide is enormous. We are talking
trillions of dollars, and we believe that these technologies
will also give our industries a strong competitive edge.
Ms. McCarthy. I just remain concerned that when I couldn't
find electronic components made in America, that I don't want
to see this happen with our opportunity here, and that's why I
keep raising these issues.
Mr. Moniz. And we agree fully.
Ms. McCarthy. These lofty words and these big numbers are
great, but I really want to know how we're doing against our
competitors out there in the world who are obviously, I think,
a little ahead of us on the curve, and--Mr. Chairman, I know
I've gone over my time, but--I know you are concerned about
this issue, as well.
Mr. Moniz. Mr. Chairman, if I may add one comment--or am I
out of order?
Mr. Barton. No, we'll give you--we've got the hearing room
until 12, so----
Mr. Moniz. I would just note that we are very acutely aware
of the concern that you expressed. The good news is that in
many areas--for example, even in nuclear power, where we have
not, ourselves, had a new plant ordered for many years--we have
modern designs from American companies which are leading the
world. In advanced turbines, we are out there in front. For the
photovoltaics--we have a huge export market right now for the
photovoltaics.
We could provide a lot more detailed information on this--
--
Mr. Barton. I thank the gentlelady from Missouri. We'd
recognize the gentleman from Oklahoma, Mr. Largent--he asked to
go out of order--and then we'll proceed in regular order after
that.
Mr. Largent, for 5 minutes.
Mr. Largent. Thank you, Mr. Chairman.
Dr. Moniz, how many employees are there at the Department
of Energy? Currently?
Mr. Moniz. The Federal workforce is--I believe it's around
15,000. Then there are about 100,000 when you include the
contractors who work in our laboratories and production
facilities.
Mr. Largent. Is that number going up or going down?
Mr. Moniz. That's gone down very substantially. Both the
Federal and the contractor workforces, in this decade, have
gone down in the order of a quarter to a third, depends if it's
Federal or contractor.
Mr. Largent. Next question, I want to ask you about this
Emergency Oil Task Force? It's been commissioned by the
Secretary in December to develop a balanced oil action plan--
when is that commission to report?
Mr. Moniz. Well, in some sense, Mr. Largent, they are
reporting continuously through developing the kinds of
initiatives that we've outlined here. This task force was
assembled to keep working with the industry and providing many
of the ideas you've seen here.
Mr. Largent. Okay, then let me ask you this question. The
first idea that you mentioned in your report talks about
taking--or putting 28 million barrels of oil into the strategic
petroleum reserve, and using the oil--finding that oil from the
offshore production. Why would you choose to use offshore
production as opposed to domestic production from independent
producers?
Mr. Moniz. With your permission, may I ask one of the
experts to address that question?
Mr. Largent. Sure. You bet. I guess my point, while your
expert comes to the table, is that 80 percent of the production
that occurs domestically is done so through the work and
efforts of independent producers. So why wouldn't we want to be
helping the 80 percent as opposed to the 20 percent which is
your majors--and your majors are principally responsible for
the offshore productions--not independents--so I'm saying, in
this time of crisis, why are we not looking to help the
independent producers who are doing 80 percent of the work, as
opposed to the majors, who are doing 20 percent of the domestic
production?
Mr. Barton. We need the expert's name and title at the
Department.
Mr. Shages. I'm John Shages. I'm the Director of Finance
and Policy for the Strategic Petroleum Reserves Office.
Mr. Barton. Okay.
Mr. Shages. The answer, Congressman, is that logistically,
the oil coming in from offshore is the only oil that can be
brought directly to the strategic petroleum reserves. All the
pipelines of the country lead inland from the coast; they do
not lead from the inland back to the coast. All the strategic
petroleum reserve sites are on the coast. We will try to make
this program available to all the producers in the Outer
Continental Shelf--there are about 140 leases out there and a
number of them are with independent companies.
Mr. Largent. Isn't it true that those pipelines used to
flow the other way, though? In other words, when we were
actually exporting oil, those pipelines flowed the other way,
and now because we're importing over 50 percent, maybe over 55
percent of the oil today, those pipelines have reversed as a
result, is that not true?
Mr. Shages. Some oil did use to flow to the coast, and it
no longer does.
Mr. Largent. Okay. All right, thank you for that, I
appreciate it. Let's see, the other thing I want to say about
this is that there is an invitation that will be forthcoming
from the Oklahoma delegation to try to--an invitation to the
Secretary to come to Oklahoma, where we could put on a highly
publicized forum on this issue. I believe it's not only an
interest to oil-patch States like Oklahoma and Texas, but it
really does present national security issues that I think we
need to highlight and underscore at this time.
One other question I had about that is--and this is, I know
this is a loaded grenade that I'm kind of throwing in here--and
I have mixed emotions about it as well, but--what is the
Department of Energy's thought--or the administration's
thought--on an oil import fee? Because I don't see it mentioned
anywhere in here, and yet I've heard it brought up in
conversations.
Mr. Moniz. Mr. Largent, well, first of all, I may just note
that I think the Secretary would very much welcome the
invitation to Oklahoma. With regard to the oil import fee, I'm
afraid I'm not aware of any such discussion at the moment.
Mike? Do you----
Mr. Telson. No, I'm not, either. You may want to ask the
Secretary, but we don't know.
Mr. Largent. Okay. Let me--if I have just a little bit more
time--I want a real quick question. Why do we not consider
reprocessing spent nuclear fuel in this country, when
everywhere else in the world, it's done? We'd reduce the amount
of waste by 90 percent, it is environmentally friendly, it's
the right thing to do. Why do we not do that in this country?
Mr. Moniz. The policy, of course, goes back about 20 years
to our non-proliferation concerns, in particular the
reprocessing that is being pursued in other countries right now
separates out plutonium, which is then--if acquired in the
wrong hands--rather directly usable in a nuclear weapon, so we
continue to try to maintain a strong non-proliferation regime.
Mr. Largent. Mr. Chairman, let me just say in closing--ten
seconds--that I am--I want to commend the Department of Energy
and the administration for putting out a plan on electricity
restructuring. It's a very important issue for our country, and
I look forward to working with you on coming to a consensus
bill in the near future.
Thank you, Mr. Chairman.
Mr. Moniz. Thank you.
Mr. Barton. Thank you, Congressman Largent. We'd recognize
Congressman Wynn for 5 minutes.
Mr. Wynn. Thank you, Mr. Chairman.
I noted in your testimony that you said that the problem
would be working with Congress to advance electricity
restructuring. My colleague just mentioned he was looking
forward to working with you on that role. I'd like you to
comment, if you would, about consumer protection issues with
respect to restructuring, and specifically on the Department's
position with respect to reliability issues that may be raised
in the course of restructuring.
Mr. Moniz. First, there will be a number of consumer issues
addressed in the plan which is still undergoing final tuning.
For example, a very important issue of serving rural customers
is one very important example--as well as other issues
involving PMAs.
With regard to reliability, there are discussions, of
course, as to how regulation of transmission would be handled.
Second, we are--of course, reliability--a near-term issue of
reliability is Y2K, where we are working with NERC to try to
assure----
Mr. Wynn. Could you repeat that please--I didn't----
Mr. Moniz. A near-term reliability issue is our work with
NERC--the North American Electric Reliability Council--to make
sure the Y2K problem does not bite us later on this year. And
finally, we are increasing our research program in reliability
technologies for the good of the future.
Mr. Wynn. There is a lot of sentiment--and I don't want to
actually get in the debate today--but there's a lot of
sentiment that individual States are well-positioned to address
most of the restructuring concerns, but that they may not be as
well-positioned to discuss or to address the reliability
issues. What's the Department's position on this? Is there a
Federal role in reliability--addressing reliability concerns?
Mr. Moniz. Yes, we believe there is. We believe there are a
number of considerations that go beyond the State
considerations, involving, for example, regional issues. In
that context, we are--we will be discussing a role for FERC in
addressing reliability rules, basically. So that is under final
development, but we are proposing, certainly, a role for FERC.
Mr. Wynn. When do you believe that you will be in a
position to discuss these with Members of Congress?
Mr. Moniz. I believe the administration bill is in process.
We believe it's very close. I would anticipate, certainly, in
March.
Mr. Wynn. By March----
Mr. Barton. Would the gentleman yield on that point?
Mr. Wynn. Certainly, Mr. Chairman.
Mr. Barton. Just to inform the Under Secretary--and you can
inform the Secretary--we're going to be holding hearings on
comprehensive restructuring probably mid-March.
Mr. Moniz. Mid-March, thank you.
Mr. Wynn. Just a question regarding--you said there was
perhaps an issue relative to rural customers--would similar
issues be raised with respect to urban or low-income customers
as well?
Mr. Moniz. I'm not sure. Do you know [speaking to staff]? I
will be honest, I am currently unaware of such discussion, but
it's a very important point. I will----
Mr. Wynn. What we've been hearing is that there may be some
price discrimination with respect to customers in urban areas
or low-income customers. Obviously, restructuring represents an
opportunity for tremendous consumer savings, but those savings
are basically for wholesale customers or larger customers and
don't actually trickle down to the residential--both low-income
and middle-income customers--that would be problematic, and I
would really appreciate the guidance of the administration and
your Department on how we address these issues.
Mr. Moniz. Yes. One thing I might just add--of course, it
is not specifically targeted at urban customers, but--the 1998
bill proposed a public benefits fund, which includes State
grants, which of course, could be used in targeting particular
populations.
Mr. Wynn. Thank you very much. Thank you, Mr. Chairman.
Mr. Barton. Thank you, Congressman Wynn. The Chair would
recognize--I think Mr. Whitfield was here before Ms. Wilson--so
we would recognize Mr. Whitfield, 5 minutes, questions only.
Mr. Whitfield. Mr. Chairman, thank you very much. During my
opening statement, I mentioned the fact that Secretary
Richardson, back in October, came to Kentucky, and amidst a lot
of publicity, talked about how he was going to have submitted
in the Department of Energy's budget for the year 2000 funds
and a legislative plan to build two conversion plants--one at
Portsmouth, Ohio and one at Paducah--to help deal with this
depleted uranium hexafluoride problem. And yet, I notice in the
2000 budget for the Department, there's not anything in there
about this plan. I was wondering if you could address that, Mr.
Moniz.
Mr. Moniz. Yes, I certainly would be happy to. I'm
certainly aware of your and Mr. Strickland's strong interest in
this issue. Let me say first of all that we regret that the
plan is not on the table at the moment, but let me outline what
we believe is a schedule that will allow all of us to work
together on this important issue.
First, you referred earlier to the Expression of Interest
that we will be sending out to begin the process, and
particularly looking at getting industrial input in--in terms
of the conversion plants and possible demonstration plants.
That EOI will be completed this week and in the Commerce
Business Daily next week. In March, we will issue a preliminary
DUF6 plan, and also complete and issue the final programmatic
EIS.
With the input from the EOI, then we will move to a final
plan. We are targeting that for May--to issue a final DUF-6
plan--and then to issue a draft RFP for the conversion contract
and hold a bidders' conference and go through that entire
process. We would hope to issue a final RFP in July,
potentially receive conversion plant proposals in September,
move to award early in 2000, and potentially--and I stress, of
course, these are all subject to change after we receive the
EOI input--but we would like to target, if at all possible,
completed design for full-scale facilities very early in 2002.
So that is the path that we have laid out, and it will be
kicked off with the EOI and the draft preliminary plan very,
very shortly.
Mr. Whitfield. Well, that's very good news. I hope that you
all will be able to maintain that timetable on that aspect of
it.
On this Worker and Community Transition Program, there's
been some discussion recently about the elimination of the
Office of Worker and Community Transition Program--that
obviously is a very important program because, as a result of
the privatization, there already has been job loss in Kentucky
and in Ohio, and we think it's quite important that we keep
this worker and community transition program in existence. I
had heard recently that the administration might propose the
elimination of the Office of Worker and Community Transition.
Is that accurate, or is that just a rumor?
Mr. Moniz. I am certainly not aware of that--as you know,
we've proposed a $30 million budget this----
Mr. Whitfield. Right. And I guess that's down from about
$45 million. So you all have no intention of proposing the
elimination of the program?
Mr. Moniz. That is certainly my understanding. We feel that
the program clearly accomplishes very important goals with
regard to the communities that have served us and that we
serve. It has, in fact, generated, we estimate, about 16,000
jobs over the complex. We expect to equal that in the years
ahead.
Mr. Whitfield. Okay. Well, I see my time has run out, but I
have more questions.
Mr. Barton. No, the Chair is going to let every member here
ask 5 minutes, and then the Chair has a number of questions. If
the gentleman from Kentucky wishes to stay, we'll, once
everybody has at least 5 minutes, we're going to have kind of
an open-ended question session that you can participate in.
The Chair would recognize the gentleman from Ohio, Mr.
Strickland, for 5 minutes.
Mr. Strickland. Thank you, Mr. Chairman, and I would like
unanimous consent to submit an opening statement and a list of
questions that I probably will not have the chance to ask
today. With your permission, I would----
Mr. Barton. Without objection--we had already given that
blanket consent, but we will certainly give you special
unanimous consent.
Mr. Strickland. Thank you, Mr. Chairman--and I want to
follow up with my colleague, Mr. Whitfield's comments. Thank
you, Mr. Under Secretary, for being here to answer our
questions.
I noted that in the President's proposed budget there's $5
million allocated, and we are concerned--I think Mr. Whitfield
and I both are concerned--that only $5 million has been
allocated to implement Public Law 105-204, and I'm just
wondering if you could give us some explanation as to why what
appears to be a fairly meager sum has been included in the
President's request.
Mr. Moniz. Well, we believe of course, first of all, we
want to husband the resources, that total $400 million roughly,
carefully. We believe in the process that I just laid out in
response to the last question on the timetable. These $5
million will be appropriated for beginning the work on the
conversion plans, going through NEPA processes, getting design
work going.
As I said, we are hopeful--again, contingent on the kind of
input we receive from industry--but we believe we can aim for a
2002 design completion.
Mr. Strickland. So the amount of money, in your judgment,
does not reflect any lack of commitment or intent to follow
through with the intent of the law?
Mr. Moniz. Quite the contrary, Mr. Strickland--this is a
strong commitment, and we will absolutely do our best to feed
input and hold to the kind of schedule that we discussed.
Mr. Strickland. I would like to ask a question, if I could,
about the Russian HEU deal--both, once again, Mr. Whitfield and
I have had very similar concerns in regard to these issues.
I understand that the Omnibus Budget Act of 1998 included
$325 million to purchase natural uranium stockpiles from Russia
in an attempt to encourage Russia to resume shipments of
enriched uranium and to rescue this HEU deal that is of concern
to us. Could you explain to me precisely what the
administration is going to buy with the $325 million? Will this
material be stockpiled? If so, could you tell us where, and
where the resources to pay for the storage will come from? I
don't know if you have those bits of information right now, but
that's an issue that is of great concern to me.
Mr. Moniz. I can certainly respond to that.
First of all, as you correctly point out, the HEU agreement
with Russia, which of course is a centerpiece of our non-
proliferation objectives, is currently not functioning
optimally. The key is, in fact, to resolve to so-called natural
uranium component--and there currently are or soon will be,
approximately 11,000 tons of natural uranium sitting at USEC.
The $325 million to which you referred was appropriated to
purchase the 1997 and 1998 uranium--namely, these 11,000 tons
at the then market price--however, contingent upon there being
a contract between Russia and western companies to market all
future natural uranium consistent, of course, with the ceiling
set in the original legislation.
So, if this all goes forward, then presumably, we would
purchase the 11,000 tons. As indicated in the protocol that the
Secretary signed with Mr. Adamov in Vienna, we would--in the
interests of stabilizing everything--store that uranium for
approximately 10 years; details to be worked out, but
presumably, somewhere with USEC.
Mr. Whitfield. Mr. Chairman, could I ask one quick follow-
up?
Mr. Barton. Yes, you may. You would ask it anyway, so we'll
just give you permission. No--you're very welcome to.
Mr. Whitfield. I'm wondering, in your judgment, is it
likely that there will be a requirement for additional
expenditures in the future to keep the Russian HEU deal alive?
Mr. Moniz. No.
Mr. Whitfield. Thank you. Thank you, Mr. Chairman.
Mr. Barton. The Chair would recognize the gentlelady from
New Mexico, Congresswoman Wilson, for 5 minutes.
Mrs. Wilson. Thank you, Mr. Chairman. I have a number of
questions which I'll submit in writing, but there are several
things that I thought you might answer here today.
Starting out with the issue of non-proliferation and
following on my colleagues' questions, what percentage of the
Russian residual stockpile will remain after the expenditure of
the $525 million appropriated last year?
Mr. Moniz. First, let me indicate that the $525 million are
in two pieces--the $325 million just referred to in terms of
uranium, and $200 million to start our program of plutonium
disposition.
I cannot give you precise numbers in terms of the remaining
stockpile, but let's just say that in the uranium case, perhaps
comparable amounts might be remaining, and in the plutonium
case, somewhat larger amount than the first traunch of 50 tons.
Mrs. Wilson. Do we have any plan for further purchases to
complete the purchase of that stockpile? And if not, what is
the--what are our intentions with respect to controlling
proliferation of that material?
Mr. Moniz. It's a very good and very difficult question.
Our work with Russia--and, in fact, our own internal work--
involves, clearly, a steady stream of disposing of the
material--and I might add that--for example, the HEU--the 500
tons over 20 years is about all the system can bear.
With regard to the remaining material, we are working, of
course, with very strong materials protection control programs,
so we are trying to make sure that the material is secure. With
regard to the plutonium, in addition, we will be moving
materials into a new storage facility that the Department of
Defense is working to construct with Russia at Mayak.
So basically, it is physical control, accounting, and a
steady program of disposition.
Mrs. Wilson. In your budget, you have $30 million for a
nuclear cities initiative, and $30 million for initiatives for
proliferation prevention. Can you please describe to me exactly
what we're purchasing in those cases, or what the programs are?
Mr. Moniz. Yes. Both programs--they're somewhat different--
but both programs involve a variation on the theme of engaging
Russian scientists and engineers in Russia, as opposed to
having them engaged elsewhere. They involve, in the IPP--
Initiative for Proliferation Prevention--case, they involve
research programs--some of which may lead to commercialization
in which American national laboratory individuals oversee the
programs, guarantee accountability in terms of the work done,
and in terms of it not being employed for weapons work--in
contrast to a recent New York Times article.
In the nuclear cities initiative, the first initiative is
focused on a wide variety of Russians institutes, including
those in major cities. The nuclear cities initiative addresses
the 10 so-called closed cities, or secret cities, which are
typically in not very convenient places in terms of
infrastructure and transportation. We are working there in the
cities to develop unclassified work. Frankly, it's an issue of
working with them to help right-size their complex, which, for
our own security reasons, we want to see come down in scale
over the next years.
Mrs. Wilson. Has the Department of Energy or the
administration considered any alternatives other than direct
subsidy of those cities in keeping those people in place? In
particular, have you worked or considered changing immigration
laws to get those scientists, or key scientists and engineers
out of Russia?
Mr. Moniz. Over the last years, since the end of the cold
war, of course, there have been a number of Russian scientists
and engineers who have come to this country and worked with us.
There is, however, not an organized plan to bring the
scientists from the nuclear cities to the United States--there
are other issues in terms of impacting our own workforce which
could be addressed. What we are doing--we do not view this as
simply aid--we are working with them to develop specific
projects which can also help them develop something of an
economy. This is a challenge, but as an example, I will note--
and I regret I can't say what the details are at the moment,
but probably within a few weeks, for example, you will see,
under the nuclear cities umbrella, an expansion of software
work going on at one of the closed cities, involving American
industry. So that's the kind of program that we like to see
develop.
Mrs. Wilson. Thank you, Mr. Chairman.
Mr. Barton. Thank you, Congresswoman Wilson. The Chair
would recognize the gentleman from Pennsylvania, Mr. Klink, for
5 minutes.
Mr. Klink. Mr. Chairman, I thank you. I apologize for my
late arrival, but your old subcommittee is also meeting, and as
you know, I'm the ranking member up there--we're holding a
simultaneous hearing, and Dr. Moniz, let me welcome you, thank
you for being here. It's good to see you again--I saw you
briefly in the hall, but we were running to our committee.
I really appreciate the Department's mission to foster a
secure and reliable energy system that is environmentally and
economically sustainable. But I am disturbed that there is a
year-by-year cut in the fossil fuels program. I'd like an
explanation about that--specifically, Dr. Moniz, I want to ask
about fossil fuel research and development. The fiscal year
2000 budget request for this is $364 million--that's down $20
million, or about 5.4 percent from fiscal year 1999. I notice
in your testimony that you make up for the decrease; that
you're continuing to develop Vision 21 Powerplex program, which
you call the roadmap to the future, and the power plant of the
future--where modular technologies will be integrated into non-
polluting energy-producing facilities such as membranes for the
low-cost separation of oxygen and other gases.
You say you expect Vision 21 power plants to be highly
efficient. In your testimony, you also say that by the year
2030, these plants could reduce greenhouse gas emissions
globally by 370 million tons of carbon a year--that's pretty
good.
Now, you may know that, currently, I don't support the
Kyoto protocol because it doesn't require the same emission
standard reductions between developed and developing countries.
We have to get the developing countries to participate
meaningfully. But I'm very proud of the work that we've done in
Pittsburgh by the Federal; Energy Technology Center--the FETC
Center--where they manage the entire coal and natural gas
program for the Department's Office of Fossil Energy. I know
you're very familiar with what they to there. FETC is working
with private industry, with universities, and with national
laboratories, to develop advanced energy and environmental
technologies. I believe that they deserve an increase in
funding for fossil fuel research and development--or at least
the same level as last year, instead of a steady decrease. You
seem to be correlating Vision 21 with global warming--I'm not
sure that that's true, but that's part of my question.
Today, a fossil fuel, coal, is the primary source of fuel
for electric generation. Realistically, you know that we cannot
meet the Kyoto emissions reduction requirements by 2008. It
would have a tremendous effect on the transportation industry,
the manufacturing industry, building, power-generation sectors
of our economy. Don't you think it would be most beneficial to
increase, or at least maintain, the funding level for fossil
fuel research and development rather than cutting it?
Coal is the backbone of our economy currently. We have to
have a bridge to get from where we are to where we want to be
by 2030 or 2050. The good people at FETC, I think, should be
given more funds so they can expand their partnership with
industry, with universities and laboratories, to further
develop an advanced energy and environmental technology. I
believe this funding cut is to the detriment of FETC's
partnerships, and I believe the Department is making a mistake
in cutting fossil fuel funding. I would like to hear the
rationale you have for cutting fossil fuel research in your
budget, and I will thank you and let you respond.
Mr. Moniz. Thank you for the questions. Let me make several
comments, if I may. First of all, I will note that I am pleased
that I will be visiting FETC on March 15 and 16, and I'm
looking forward to that very much.
Let me first respond to the question about the association
of the Vision 21 with greenhouse gas emission reduction. It is
indeed, I think, a very important contribution to greenhouse
gas emission reduction by improving efficiency enormously, but
I do want to stress that, again, the objectives are multiple--
increasing efficiency in our fossil energy use addresses our
economic strength, our energy security, our environmental
issues--be they urban smog particulates or acid rain, or global
warming issues. So, it's certainly a multi-pronged approach.
With regard to the budget--I would just note two things. First
of all, I want to go back and maybe stress--of course, we
recognize that 85 percent of our energy use in this country is
fossil. And when we talk about efficiency programs, be they in
the fossil energy program or in the conservation appropriation,
they are both basically fossil programs. So in some sense, once
you add a major part of the efficiency program with the fossil
program, to understand our total investment in fossil energy
R&D.
Second, the small decrease in the funding, I should also
note, that part of that is the end of some major programs. For
example, in the fossil energy case, the low emission boiler
program is coming to an end--so that is ramped off.
In the natural gas arena, for example, there's a major
program in the efficiency program that involves small
turbines--gas fire turbines--that program is going into
commercialization, and we're coming out of it.
So we believe the program, while not, frankly, as robust as
we would like, does, in fact, maintain the core activities
quite well.
Mr. Barton. The gentleman's time has expired. Do you have
one more question, Congressman Klink?
Mr. Klink. No, I will have some follow-up in writing, and
if the Under Secretary would be so kind as to respond, I
would----
Mr. Barton. The Chair would recognize the gentleman from
Mississippi, Mr. Pickering, for 5 minutes.
Mr. Pickering. Thank you, Mr. Chairman. Dr. Moniz, the
first question is concerning the nuclear waste issue. My
understanding is the DOE program staff estimate the nuclear
waste program will need approximately $11.6 billion in funding
between fiscal year 2000 and fiscal year 2010, in order to
maintain the schedule and open the repository in the year 2010.
Now, to stay on this schedule, program staff estimates the
DOE needs $739 million in fiscal year 2000. Yet, you only ask
for $370 million. So my question is, how can you say you're on
track for the repository in 2010 when you only ask for half the
funds needed to get the job done?
Mr. Moniz. The request of just over $400 million, we
believe, is the request to keep us on track for the repository
in 2010. The request, in particular in the year 2000--in fact,
we increased it above $370 million because of the results of
the viability assessment that identified some issues that
needed increased funding in order to keep us on track for the
suitability determination in 2001. So, according to our
profile, to reach the $10-plus billion requirements through
2010, we believe we are on track with that budget request.
Mr. Pickering. Let me make sure that I understand. Does DOE
staff project that you need 739, or is that incorrect, for this
year? Or--excuse me, for 2000, fiscal year 2000.
Mr. Moniz. No--perhaps the CFO would like to address that
question----
Mr. Telson. The staff request is $409 million for this
year--$370 plus $39 million of supplementary funds, they were
requesting. 739, I believe, includes other work that does not
pertain to our program, per se.
Mr. Barton. Would the gentleman from Mississippi yield?
Mr. Pickering. Gladly, Mr. Chairman.
Mr. Barton. This is a point that I'm going to get into in
my questions--but to facilitate the gentleman's questions from
Mississippi--if you take $400 million times 11--that's $4.4
billion--that's not $10 to $11 billion. So you must have a
funding profile that in the future goes up much more rapidly
than the $370 to $400 million. Is that correct?
Mr. Moniz. Yes. In the years, for example, 2006, 2007--our
profile is up at $1.3 billion--per year.
Mr. Barton. I yield back----
Mr. Pickering. Thank you, Mr. Chairman. My other questions
concern the strategic petroleum reserve. I want to commend the
Department for looking at flexible ways to address some of
those issues, but I also want to kind of combine these
questions to the efforts that Mr. Largent--the issue Mr.
Largent raised--is there a way that we can also help our
domestic producers, our independent producers--and you
mentioned in your budget, also, ways that you will try to help
them through tax relief and through research and development.
My first question on strategic petroleum reserve--the
current capacity is approximately 700 million--is that correct?
700 million----
Mr. Moniz. 680 million.
Mr. Pickering. And that is after the decommission of the
site. And you currently have how much oil in the strategic
petroleum reserve?
Mr. Moniz. 561. 561.
Mr. Pickering. And you say that you will put 28 million
barrels of offshore production in your budget, and so that
leaves approximately 100 million barrels of capacity. Do you
believe that the commercial storage potential will fill the
rest?
Mr. Moniz. I think it's--we'll have to wait to see what the
industrial response is. But again, if I may ask our expert on
this what he thinks--if you'll permit. John, do you want to----
Mr. Shages. We're of course hopeful, but the amount of
capacity that we're offering is the capacity of the Big Hill
site, which is 70 million barrels of capacity, and so the
commercialization effort wouldn't fill more than that.
Mr. Pickering. Now, would you charge a fee or lease
arrangement for them to store in your facility?
Mr. Shages. Yes, that's the whole idea of the program--that
we would charge a fee to be paid in-kind so that we would be
adding oil to the strategic petroleum reserve inventory.
Mr. Pickering. Would it produce a revenue flow to the
Department of Energy that could be used for help in other
domestic production?
Mr. Shages. We would not accept money in payment--we would
be accepting----
Mr. Pickering. It would be in-kind----
Mr. Shages. In-kind.
Mr. Pickering. Okay. So, in essence, you would provide--not
free storage--but, in essence, you would give the incentive to
have the storage for our nation's stability and security of
supply, and in return we would have an additional capacity in
storage in this strategic petroleum reserve.
Mr. Moniz. Yes, and it would increase in capacity.
Mr. Pickering. As you know, back in the 1992 Energy Act,
there was a--several issues raised, and subsequently--on the
possible lease of oil versus the purchase of oil. Now, if I
remember correctly, a lease arrangement cost about a quarter--
25 percent--of a purchase of oil over a 15 year period of time.
Is that correct?
Mr. Telson. Are you referring, sir, to the leasing of oil
from producers, or----
Mr. Pickering. From producers. Now, in the past, it was
always done under the assumption it would be from a foreign
producer, but I think in today's environment, we may want to
look at domestic producers or domestic supply. A foreign lease
has, as you know, many complications. The question is, can you
do more--either through a lease of the commercial storage--if,
for example, we drew down more of the strategic petroleum
reserve, currently, around 500 million barrels? If you sold it
at $10 a barrel, that's approximately $5 billion. Could you use
the $5 billion to then have targeted tax relief, assistance to
the domestic industry to maintain our infrastructure, and feel
it would be the commercial storage lease at a lower cost to the
government? Do you understand my question?
Mr. Telson. Yes, sir, I think you are suggesting, if we
sold some oil, what would happen to the proceeds from that?
Mr. Pickering. That is correct, and could you produce
revenue----
Mr. Barton. This will have to be the last question of this
question period.
Mr. Pickering. Sure. But the question is, you are saying
that you need offsets to be able to help the domestic industry
through tax relief or through other efforts. If you were to
sell the oil but at the same time replace the commercial
storage or lease, so that we don't jeopardize our security of
supply, but it is a more cost-effective way, and it could
provide the offsets to assist our domestic industry--as the
Department considered or contemplated that type of approach?
Mr. Telson. Mr. Pickering, we will be glad to sit with you
and discuss these ideas. They are pretty complicated ideas, as
you know, just laying them out. But maybe there is something
there that we should look into.
Mr. Pickering. Is it possible, if you sold it, you could
use the receipts for these other purposes?
Mr. Telson. Not without a congressional authorization. But
we will be glad to talk about it.
Mr. Pickering. Thank you.
Mr. Moniz. I would just add that, of course, selling oil
right now is one of the things we are trying to not to because
of the market.
Mr. Pickering. Right. I realize that, but in business, you
know, bad money after bad money is not a good principle. If you
can do it at 25 percent of the cost, and at the same time use
the money for productive purposes that will give a good
investment, then you have to look at those options.
Mr. Moniz. Yes. It is a tradeoff. Again, we would be happy
to certainly work with you.
Mr. Pickering. Thank you.
Mr. Barton. The gentleman from Mississippi used to work for
the Majority Leader, Mr. Lott, and he stretched that one last
question to about 5 minutes' worth of questions.
We are going to recognize the gentlelady from Missouri. She
claims she has one followup question before the chairman
starts.
Ms. McCarthy. Thank you very much.
Dr. Moniz, I want, first of all, to thank the Secretary for
visiting the Allied Signal plant in my district and for his
very wise decision with regard to their future. We are all very
pleased.
I wanted to talk about the overall Federal management
technologies Allied Signal budget because in fiscal years 1998
and 1999 we, the Congress, increased the funding earmarked for
them. In 1998, we increased the appropriation from the
requested amount by about $20 million, and in fiscal year 1999
the Congress add-on amounted to $12 million.
Can you tell me how much of this was actually sent to
Allied Signal, and if all was not given to the plant, where the
remainder was sent? And Mr. Telson?
Mr. Telson. I am sorry, Ms. McCarthy, could you repeat the
question? I heard the elements, but I didn't put it together.
Ms. McCarthy. Yes. The Congress put more money into the
Federal manufacturing and technologies Allied Signal plants in
the past 2 fiscal years. I don't need to go over the numbers.
Mr. Telson. Yes, of course.
Ms. McCarthy. But that add-on, I wonder how much of it
actually reached those facilities across America, including my
own----
Mr. Telson. Congresswoman, we will be glad to get you the
specific answer, the number. We have run into the phenomenon
over the past several years that there are additions to lines,
and then below the line there are general reductions required
by the committees. What often happens is that the general
reductions, when they are distributed across, in many cases end
up eating up a lot of those increases. So we will get you a
description of that.
Ms. McCarthy. That would be very helpful, because that
would, then, address the rumor that about $20 million was sent
to the laboratories, and we could put that rumor to rest.
Mr. Telson. We would be glad to get that information for
you.
Ms. McCarthy. I thank you very much, Mr. Chairman, for your
gracious offer.
Mr. Barton. The Chair is going to recognize himself for an
open-ended question period, since everybody has had an
opportunity to answer first round. If the members here--well,
Mr. Fossella has not had a chance. Does Mr. Fossella wish to be
recognized for 5 minutes?
Mr. Fossella. No, thank you.
Mr. Barton. Okay. Now all members that are present, if they
wish to participate either in the line of questioning that the
Chair is going or another one, feel free to interrupt, because
we know that they have schedules.
Mr. Secretary, I want to refer you to a draft funding
profile that we just handed out. It was given to us last week
at the staff level on the minority and majority side in
preparation for this hearing. The title--it is a draft, and it
is ``Cashflow Funding Profile for H.R. 45,'' which is the high-
level nuclear waste interim storage bill that is pending before
this subcommittee. Do you have a copy of that? Have you ever
seen that before? I don't have knowledge that you have seen it,
but I don't want to----
Mr. Moniz. I saw it last night.
Mr. Barton. You did? Okay, so you have at least had some
familiarity with it.
I want to go back to some of the questions that Mr.
Pickering was asking, because it is the majority staff view--
and I believe the minority staff would concur with this--that
an analysis of this admittedly entitled ``draft'' profile
indicates that the annual appropriations required for Yucca
Mountain are going to be significantly higher than the
historical appropriation levels. If you assume a historical
funding profile of $350 million, we don't believe that the
permanent repository is going to open in 2010.
Now if you look on this chart, at the top, you have got a
category called Yucca Mountain, and it has a funding profile
this year of $308 million, and it goes to the current budget
year that you were testifying before today, $359 million. If
you go on out, it does get up in 2005 and 2006 to $925 million,
and then $1.02 billion in 2006; 2007, it is over a billion
dollars. So that the aggregate total from fiscal year 1999 to
2010 is $6.5 billion.
The interim storage proposal, the next line below that, its
aggregate number is $4.553 billion. The program management
number is a little over half a billion. The total program
number is $11.613 billion--$11.6 billion, and that is an
average of over a billion dollars.
Now the appropriation request that we have before us
doesn't appear to match that. Could you elaborate on that or
explain to me how I have misread this document?
Mr. Moniz. Yes, sir. First of all, I don't think you have
misread it, from what I can understand. But, of course, this is
a draft cashflow chart for building the repository and doing
interim storage----
Mr. Barton. Right.
Mr. Moniz. [continuing] whereas our appropriation is that
matched to doing the repository. So in that profile, then the
$409 million in 2000 is what our profile says. So, without
interim storage, the profile is roughly $400 million, up or
down a bit, through 2002, and 2002 is when the licensing within
our construction starts, and then the profile jumps
dramatically after 2002.
The chart that we have here includes interim storage, and
then, of course, it ramps up much more----
Mr. Barton. I understand that.
Mr. Moniz. Yes.
Mr. Barton. But it doesn't appear to me that, based on your
testimony today, that you are on track, based on this, to have
the funding levels that you need to get the repository open.
Mr. Moniz. Mr. Chairman, I would say we are on track.
Without interim storage, we are on track, but it does raise the
issue that, as you noted correctly, that 5 years down the road
we would need to be at an appropriate level, substantially
higher than the historical funding.
Mr. Barton. Okay, well, let me ask this question: Based on
this--again, this is a draft analysis; you didn't submit this
in your testimony, so I understand that it is not official
departmental policy. But in this analysis, you get out to 2006,
2007, et al., and you are well over $1 billion a year.
Mr. Moniz. Yes.
Mr. Barton. Now where is that money going to come from?
Mr. Moniz. May I just add that is the case with or without
interim storage. It is higher with interim storage, but it is
$1.3 billion I think in the case without interim storage.
What I would say is the integrated cost to year 2000--to
2010, excuse me--which in the Yucca Mountain repository only
program is $10.1 billion, can be accommodated in the waste
fund. The issue is getting access to it, getting the annual
appropriation to be in this $1-plus billion annual range. But
the waste fund is growing currently in terms of receipts plus
interest at roughly a billion a year.
Mr. Barton. Well, then, my understanding is these funding
requests do not take money from the waste fund. Is that correct
or incorrect?
Mr. Moniz. I think that would be a policy issue to address
at that time. Mike, do you want to?
Mr. Telson. It does. It would have to, presumably. But that
is the issue we have to address in the years forward.
So, again, we would argue the waste fund has the resources,
but it will require an administration/congressional
understanding that one has access to a billion----
Mr. Barton. My staff analysis is that there has been about
$15 billion put into the waste fund. We have got about $8
billion currently in the fund. Is that the Department's
assessment of the fund also?
Mr. Moniz. It is $7 point something, is our current
assessment. What is the number? Our analysis is $7.3.
Mr. Barton. $7.3 billion?
Mr. Moniz. Yes, and growing at about $1 billion a year.
Mr. Barton. Okay. Now let's go back to Mr. Telson. Is it
the Department's position to take some of the funding for the
repository from the waste fund, which you don't show that you
are going to do that? But at some point in time do you think
you will? ``You'' being the Department, not you personally.
Mr. Telson. No, no. We do in 2000. Our request does take
money from the waste fund in 2000, part of it, and in the
outyears it is 370, I think--I am sorry, 307, is that correct?
A hundred and fifty in 2000 from the waste fund itself, but in
the future we will have to tap into it higher than we are now,
and that is just the consequence of the fact that we have been
undertapping it over the last 15 years, and now we will have to
go the other way, when we start the construction. That was the
purpose, presumably, for developing the balances.
Mr. Barton. We are going, in the very near future, to mark
up H.R. 45 in this subcommittee. Is the Department going to
offer an alternative to H.R. 45? Is the Department going to
offer amendments to H.R. 45? Or is the Department going to just
oppose H.R. 45? Or do you know?
Mr. Moniz. Well, the administration, as you know, continues
to oppose H.R. 45, and certainly the bill in its current form
the President presumably would veto. The Secretary, as he said
in his confirmation, is looking forward to discussions with
Congress on this subject.
Mr. Barton. Okay. Would you inform the Secretary that the
Chair and the ranking minority and the full committee chairman
and the ranking member of the full committee are going to
invite the Secretary for a discussion on that in the very near
future?
Mr. Moniz. Yes.
Mr. Barton. Because we are planning to move the bill, at
least in the subcommittee, and I can't give you a time table,
but very quickly. If there is a way--if there is a specific
concern that can be alleviated by a particular amendment or a
change in phraseology, or whatever, we would certainly wish to
discuss that with either the Secretary himself or whoever he
designates to be his spokesperson.
Mr. Moniz. If I may add, Mr. Chairman, the Secretary
certainly has stated that he hopes to avoid or help avoid a
legislative showdown on this.
Mr. Barton. We understand. We share his willingness to
avoid a showdown, if that is the term he wants us to use.
Mr. Moniz. On the other hand, I think the administration
does remain strongly committed to the idea that any kind of
early--certainly any kind of a commitment to the kind of
interim storage proposal being proposed would undercut our
development of the repository.
Mr. Barton. I have a pending vote on the floor. At some
point in time, I am going to actually have to suspend. What is
your time schedule? Are you willing to wait? I think Mr.
Whitfield is going to come back; Ms. McCarthy probably is going
to come back. Are you willing to--I think even if we take time
for a little vote, we can wrap this up by 12:30.
Mr. Moniz. Oh, that would be fine, Mr. Chairman.
Mr. Barton. Okay. Then we are going to recess the hearing
until five until 12. I should be back here at five until 12,
and we will continue the questions.
Mr. Moniz. Very good.
[Brief recess.]
Mr. Barton. We certainly appreciate Under Secretary Moniz
being very agreeable to staying. Hopefully, we can wrap this up
in the next 30 minutes or so, if we don't have any other votes.
Before the recess, Mr. Under Secretary, we were looking at
this draft flowchart, a funding profile which would be required
under H.R. 45. Now I want to read from the written testimony
that Mr. Lake Barrett presented to our subcommittee on H.R. 45
2 weeks ago.
I quote, ``H.R. 45 would undermine our ability to open the
repository as scheduled in 2010 by shifting budget priorities
and work effort to an interim storage facility.''
He went on to state that, again, ``Based on historical
appropriations patterns, the proposed bill's funding provisions
do not provide sufficient funding resources to support the
simultaneous construction and operation and an interim storage
facility and the repository program.''
Now we will accept the fact that H.R. 45 requires higher
funding levels than have been historically appropriated. That
is a valid criticism. But if you look at this funding profile,
it appears to me that the Department's funding profile, whether
you have an interim program or not, does the same thing. It
just does it later. Do you all agree with that?
Mr. Moniz. I think that is likely to be true.
Mr. Barton. Likely to be true? Is that as close as I am
going to get you to giving me a straight answer?
Mr. Moniz. No, I will----
Mr. Barton. It is true. I mean, the plain fact, Doctor, is
that it is true. Again, I am not here to get into an argument
with you over the high-level waste bill.
Mr. Moniz. Right.
Mr. Barton. I mean, the Clinton administration, Secretary
Richardson can support it, oppose it. I understand that
President Clinton has given Senator Bryan a letter that he
still intends to veto it. That is fine.
We are going to try to do a bipartisan bill that can
sustain, that can overturn a veto. We are not idiots up here. I
mean, you know, we understand the President does what he has
the right under the Constitution. To trump him, we have got to
have more than a two-thirds vote. I am working to get that in
the House, and I know certain Senators are in the Senate.
But it would be nice to at least agree on what the funding
profile is, whether you support an interim storage facility or
not. Now I think we are going to get you the votes, so that
next year, if you are still the Under Secretary and you come
before this subcommittee, and I am still the chairman, we are
going to talk about funding interim storage, because it is
going to be a law of the land. But I may be wrong; we may not.
But let's at least talk from the same page in terms of funding
requirements.
Even though it is a draft, and it is not official policy,
it does appear reasonable that this is the funding amounts that
are going to be required. Do you agree with that?
Mr. Moniz. May I, Mr. Chairman, explain what I meant by the
``likely'' statement?
Mr. Barton. Yes, you may. You don't have to ask permission
to explain yourself. This is an open hearing.
Mr. Moniz. I was trying to be precise within my limited
understanding of budgetary issues. What I meant was the
following, and perhaps Mr. Telson can clarify:
Each year there is coming in now an annual funding stream
of $650-or-so million.
Mr. Barton. Right.
Mr. Moniz. In the future, I believe there will be an
additional funding stream coming from the defense side to catch
up.
Mr. Barton. We are less sanguine about that actually
happening, but we understand that is your proposal. We are a
little skeptical of that, but we----
Mr. Moniz. And this is all part of where the ``likely'' was
coming.
Mr. Barton. Right.
Mr. Moniz. If that is the case, and that is raised up to
the billion dollar scale, my understanding is--and, again, I
would ask Mr. Telson to clarify--is that there are a variety of
thresholds in terms of the difficulty of funding these peak
years.
Mr. Barton. We would share that assessment.
Mr. Moniz. Appropriations is an issue. There is an issue of
going up to the annual income stream. With the defense issue,
it was a major issue.
Mr. Barton. Right.
Mr. Moniz. And then there was an issue of, beyond that cap,
having to access the existing fund. So all I was suggesting was
that where the annual income stream is relative to the peak
funding year is a qualitative year. That is all I meant by
``likely.''
Mr. Barton. The subcommittee's assessment is that you are
going to need more dollars sooner than you are requesting. And
I think that Congressman Hall is not here; he is somewhat under
the weather. He is voting on the floor, but he has trouble
speaking. I think I am speaking for the majority and the
minority, and so don't be surprised if, based on this hearing,
we send a letter to the appropriators asking for more money for
this program than the Department is. I don't think that is a
bombshell to this group, but just be aware of that.
Mr. Telson?
Mr. Telson. If I may just modify it, Mr. Barton, we will
need increases in future years higher than what we have now.
But in fiscal year 2000, we are confident that the $409 million
will do the job that we need to do to get the position----
Mr. Barton. Okay, now you used a phrase that I should know,
but I don't. What is $409 million?
Mr. Telson. $409 million is the amount of money we are
asking.
Mr. Barton. Oh, the amount of money.
Mr. Telson. Yes.
Mr. Barton. Okay. Well, Mr. Whitfield, I have another line
of questioning on something else, but you have been very
patient. Do you want to ask some of your questions?
Mr. Whitfield. Thank you, Mr. Chairman. I just have a
couple.
Mr. Barton. Sure.
Mr. Whitfield. I appreciate that.
Mr. Barton. Mr. Shimkus, we are in kind of an open question
period here.
Mr. Whitfield. Dr. Moniz, I wanted to say, again, that I do
appreciate your laying out this timetable on these conversion
plans. Actually, it is the first time we have heard about any
timetables.
But now I want to ask you--you indicated that you hoped to
have design completed by the year 2002, I believe. I was
curious, why is it necessary for the Department to do the
design, and why wouldn't you just contract that out with some
outside firm to do design, in hopes of speeding up the process?
Mr. Moniz. The real question is when one can be prepared to
startup construction on the full-scale facilities. That is what
we hope to be able to target for this early 2002.
Mr. Whitfield. Okay.
Mr. Moniz. The design is complete and moving toward
construction.
Mr. Whitfield. Now that I have advocated your letting this
out to private contractors, I want to criticize you for letting
out something to private contractors. You know, one of the
linchpins of the privatization was that we do everything to
mitigate job loss in a well-trained workforce that the USEC
plans. I notice DOE has entered into an agreement with Bechtel-
Jacobs to be the agent for the Department in future
construction projects at these plants. Of course, they are
going to be subcontracting that out, but why would you not be
able to utilize more of these USEC employees, many of them who
do have the skills necessary to do this kind of work? Why would
you not make more of an effort to do that?
Mr. Moniz. My understanding is that the discussion as to
how that work will be handled remains to be fully resolved.
Certainly, the Department very clearly supports efforts to
minimize impact on the incumbent workforce, and we will working
with the contractors in this direction.
Mike, do you want to add anything to that?
Mr. Telson. Just that this contract was awarded on April 1,
1998, and, basically, it was part of our effort to be more
efficient in how we handle our environmental management work at
all of our plants throughout the whole system. So it is one of
the features of another program that we are trying to do.
Mr. Whitfield. Well, I could proceed on this, Mr. Chairman,
but I look forward to working with you all, because it is a
real priority, not only for the Ohio delegation, but the
Kentucky delegation, to get these conversion plants completed
as soon as we can, because we have a real need for them.
Thank you for your time today.
Mr. Barton. Dr. Moniz, I want to switch gears on you a
little bit. I am going to hold a hearing, I hope, within the
next 2 to 3 weeks on the status of the domestic oil and gas
industry with specific focus on the small, independent oil and
gas operators. One of the themes of that is going to be to get
the State Department and the Department of Energy to explain
the policy with respect to Iraq. But just to get the ball
rolling, can you explain to me what the current policy is with
respect to oil sales allowed under the U.N. Protocols by Iraq?
Mr. Moniz. My understanding, Mr. Chairman, is that there is
a sales sort of price ceiling, that is, an income ceiling of
roughly $5 billion a year.
Mr. Barton. That is my understanding, too.
Mr. Moniz. $5.2 billion a year.
Mr. Barton. Let's assume the number is $5 billion, because
that is good enough for this first round in this hearing. When
that number was derived, do you know what the per-barrel price
of oil was, the world markets?
Mr. Moniz. I would have to guess, but, given the timing, I
would guess it was somewhere in the $17, $18.
Mr. Barton. Yes, it was over $17; it was between $17 and
$20 a barrel.
Now that being the case, what is the world price of oil per
barrel today?
Mr. Moniz. Well, as we know, let's call it in round numbers
$10.
Mr. Barton. Approximately, for even rounder numbers, let's
say it is about half.
Mr. Moniz. Right.
Mr. Barton. Make it easy. If that is the case, doesn't it
make sense to lower the cap? Because if you don't, it doesn't
take a lot of mathematical genius to realize the Iraqis are
going to produce twice as much oil, and if they do, that is
going to further exacerbate the oversupply problem.
I am told--again, I am not the Under Secretary of Energy,
and I don't have all the resources that you and the Secretary
have--but I am told that one of the principal reasons that we
are continuing to have these low, low oil prices is because the
Iraqis are pushing the upper limits, and maybe even exceeding
the limits, of what they can produce. They have the capacity to
produce even more oil than they are, and so it is killing, I
mean literally, the independent oil and gas community in the
United States, the small guys that do these 15-or 10-barrel-
per-day wells.
So why shouldn't we, cooperatively, on a bipartisan basis,
take another look at this Iraqi cap, which was based on a price
much higher than the world oil markets are today?
Mr. Moniz. I am afraid, Mr. Chairman, I don't know the
exact numbers in terms of the Iraqi--the volume of sales and
how that impacts the market. Obviously, additional sales don't
help the market.
And I am afraid that the issue of the cap, I will certainly
carry your message back, but in the end that is the State
Department and other people----
Mr. Barton. Well, we are going to talk to our friends at
the State Department, too.
Mr. Moniz. Yes.
Mr. Barton. And we are going to do a hearing focused almost
entirely on this.
Mr. Moniz. Yes.
Mr. Barton. You weren't briefed that you were going to have
to talk about this, so I don't expect you to know all the
details. I am just asking kind of general theory right now.
Mr. Moniz. Right. I would add, I believe currently the
Iraqi--with current oil prices, let's say $10 a barrel, I
believe the Iraqi capacity to produce tops out at, in financial
terms, $3 billion or so, I think is all they are capable of
producing.
Mr. Barton. We are told that, again, on the old price they
could produce between 1 and 2 million barrels a day, and they
are currently producing around 3 million barrels a day and they
could go up to 4 to 4.5 million barrels a day. Now I haven't
confirmed that.
Mr. Moniz. We would have to look into that and get back to
you. Again, my understanding is that I think they really cannot
produce today more than around 2.5 billion barrels a day.
[The following was received for the record:]
At the time of the hearing, the Energy Information
Administration (EIA), an independent agency within the
Department that collects and analyzes energy data, was
estimating current Iraqi crude oil production at about 2.5
million barrels per day. With inflation-adjusted prices near
all-time lows at that point, the EIA was estimat-
ing that under the current phase of the United Nations' Oil-
for-Food program, Iraq
would generate about $3 billion in the 180-day phase that ends
at the end of May.
This is far less than the maximum of $5.256 billion allowed
under the program. Because Iraq was so far under the maximum
allowed, the EIA was assuming that Iraq was producing at full
capacity. The EIA was also not expecting Iraqi oil revenues to
reach the revenue cap through at least 2000.
Since the hearing, however, oil prices have increased
significantly. Largely as a result of an agreement among
countries belonging to the Organization of Petroleum Exporting
Countries to cut oil production, oil prices have risen about $5
per barrel since the hearing. The EIA's forecast also estimates
that Iraqi oil production will increase from current levels of
about 2.5 million barrels per day to 2.7-2.8 million barrels
per day by sometime in 2000. Consequently, the FIA's most
recent short-term forecast now estimates that Iraqi oil
revenues may exceed the current maximum allotted revenues
($5.256 billion) in the 180-day phase that begins in November
1999 and ends in May 2000.
Mr. Barton. Of course, if you are a stripper well producer
in east Texas, in Congressman Hall's district, and you have got
a well that is producing 8 barrels a day, the price, because of
delivery charges, that they are offering is $6 to $7 a barrel.
It doesn't help you a lot that the Iraqis may only have another
half-a-million-barrels-a-day capacity. You are going out of
business. And once you plug all those wells--and, as you well
know, your own testimony, at least this little booklet shows we
get about 20 percent of our oil from these small producers.
Once they are gone, they are gone. Once you plug one of those
wells, you don't reopen it next year, when the price goes back
to $15, $16 a barrel.
Mr. Shimkus, I think you might have had a question or two
on this line?
Mr. Shimkus. I do. Thank you, Mr. Chairman.
I got a chance to visit DOE in my last term, and so I see
some familiar faces, and I appreciate that relationship that
that visit developed.
Energy security is a big issue in your office. So I, too,
have concern over the low prices in oil. It is a big local
constituent concern, because still in southern Illinois we have
marginal wells, maybe 2 gallons a day, that--2 barrels, excuse
me. Marginal, marginal wells.
They are being plugged up, too. From the debate of energy
security, which those of you who followed just by first two
terms, and being a former Army officer, is a big concern of
mine. So I, too, encourage the chairman to, and look forward to
the hearing on these low oil prices because it will have an
impact, as we continue to close up the marginal wells in our
country. I think that needs to be discussed.
Is there dumping; i.e., the dumping--lower prices--of oil
or refined gas on our markets? Do you know of any instances of
that?
Mr. Moniz. I personally do not know, Mr. Chairman, but if I
may ask one of the experts here, they can respond. We have no
knowledge of that.
Mr. Barton. I used to know a little bit about the oil and
gas business, but under the classic definition of dumping, they
have got to sell in our market below their cost of production
in their market, and the Saudis could make money at $5 a
barrel. So, under classic definition, there is not dumping.
There is obviously a surplus of oil on the market, but I don't
believe anybody is bringing any kind of an antidumping case,
because literally they can produce it and ship it to us and
make money at very low prices.
Mr. Shimkus. Do we import refined gasoline?
Mr. Moniz. Yes.
Mr. Shimkus. I mean, I have been told that in the district.
So, as we do that, even if we import oil, our refineries are
closing down, or are threatened to close down, because if we
are importing the gasoline, we are no longer even refining the
oil. Again, that is another national security issue.
Mr. Barton. That will be another hearing.
Mr. Shimkus. Another hearing, good. I like hearings.
So that is going to be a concern that I want to focus on.
Again, I guess for that purpose, as we said in the Army, it is
a warning order that this is of great concern to my district
and the issue of national security.
Mr. Chairman, I have two other areas that I want to move
into real quick.
Mr. Barton. You are our last questioner, Congressman
Shimkus. So, as soon as you are through, I am going to release
the witness.
Mr. Shimkus. Okay. Following up on energy security, the
biodiesel legislation that passed and was signed into law, I
would like to know--of course, the Department has to promulgate
the rule. What is the status on the rule for biodiesel?
Mr. Moniz. The Department plans to issue an interim rule
that will take effect in the March-April timeframe.
Mr. Shimkus. Be careful when you use dates. I mean, we are
rabid on dates on this committee. So March-April?
Mr. Moniz. March-April. Can I spell it April?
Mr. Barton. Of this year, 1999?
Mr. Shimkus. Thank you, Mr. Chairman.
Mr. Moniz. Of course, then there will be a comment period
on that rule.
Mr. Shimkus. Now that biodiesel is an approved fuel under
EPACT, is it safe to assume that DOE will now begin collecting
data on biodiesel fuel use?
Mr. Moniz. I actually thought we had, but perhaps I am
mistaken. No? I am sorry----
Mr. Shimkus. Well, the issue is you do it for all the other
fuels, and I think it would be helpful if you looked into doing
it for the biodiesel.
Mr. Moniz. Okay. I think this year we are planning to
invest roughly $50 million in biofuels development in general,
and certainly it is a direction that we want to emphasize. So
we take your suggestion.
Mr. Shimkus. And the last thing that I want to address--and
I was on the floor because part of the committee process was
the 911 emergency bill. So I apologize for not being here
earlier.
I want to address the interim storage site and, actually,
the lawsuits filed by the utility companies, and the judgments
ruled by the courts. Where is the budget amount of payment for
these liabilities, and where are they as a line item?
Mr. Moniz. Actually, probably the CFO wants to address
that.
Mr. Shimkus. He probably doesn't want to, but----
Mr. Moniz. I would just note that internal estimates are of
potential damages in the half billion to billion range. We
understand there are higher estimates by others. How any
judgments would be covered is an issue that we are discussing
with the Department of Justice.
Mike, do you want to add to that?
Mr. Barton. That is a question that the Chair was going to
ask in writing. So we look forward to hearing your answer to
this.
Mr. Telson. I think you would be better off with it in
writing, but payments with a judgment fund are made under a
permanent appropriation, but they do come out of the judgment
fund. They are made out of the permanent appropriation.
Mr. Barton. We have a judgment fund?
Mr. Telson. The United States has a judgment fund to pay
for defaults and----
Mr. Barton. Well, is the Department preparing a submission
of liability to submit to the judgment fund?
Mr. Telson. Mr. Chairman, I would like to have our General
Counsel--they have been handling this whole issue. So I would
like to have them be able to comment on that.
Mr. Barton. Well, this was a subject at our hearing on H.R.
45, and at that time the senior Department of Energy official
was very ambivalent about where the money was coming from.
There was some discussion about it coming from the waste
depository, the waste fund itself----
Mr. Telson. No, it has not been determined. That is why
we----
Mr. Barton. Former Chairman Dingell had a number of
questions on this also. So we are going to seriously look
forward to hearing--we want to get that lined out, where that
money is going to come from.
Mr. Moniz. We will respond in writing, Mr. Chairman.
[The following was received for the record:]
The Department has not included any line item in the budget
for these liabilities. Although the Court of Federal Claims has
ruled in favor of three utilities, the court has not yet
decided what damages should be awarded to these utilities. It
has not yet been determined whether the damage awards should be
paid from the Nuclear Waste Fund or from the Judgment Fund. The
Office of Legal Counsel at the Justice Department is currently
analyzing that question.
Mr. Moniz. Again, I would just add that there certainly are
discussions going on with the Department of Justice in terms of
how would approach this issue.
Mr. Barton. Right. We understand.
Mr. Shimkus. A better solution would be to get onboard and
move the interim storage site, and not incur these liabilities.
I yield back my time.
Mr. Barton. I thank the gentleman.
We are going to have a number of written questions. I have
got 10 pages of written questions that I am not going to
belabor.
I want to thank you, Mr. Under Secretary here, for being
gracious and willing to stay while we had to go vote.
Please, again, encourage Secretary Richardson to accept the
invitation to meet with myself and Mr. Hall, Mr. Bliley, and
Mr. Dingell on H.R. 45, because we want to at least give the
Secretary the opportunity to have a dialog, if he so wishes,
before we begin our open markup process.
This hearing is adjourned.
[Whereupon, at 12:20 p.m., the subcommittee was adjourned.]
[Questions, in addition to those below, were sent to the
Department of Energy, responses were not received at time of
publication.]
[Additional material submitted for the record follows:]
Department of Energy Responses to Questions for the Record
questions from chairman barton
Nuclear Waste Disposal
Question 1: The Department's proposal for Yucca Mountain requires
annual appropriations that are significantly higher than historical
appropriation levels. Assuming historical funding levels of $350
million, when will the permanent repository be ready to begin accepting
spent fuel?
Answer 1: The funding levels in the President's fiscal year 2000
budget request are sufficient to support a site suitability
determination in 2001 and, if the site is determined to be suitable,
submittal of a license application in 2002. It is difficult to
determine the extent to which the opening of a permanent repository
would be deferred, based on a flat funding profile. As the Department
has stated before the subcommittee, the constraints imposed by the
Federal budget process have the potential to limit the availability of
funding for the nuclear waste program in the outyears, particularly
during repository construction. The Department has not fully analyzed
the impacts of outyear funding at historical levels, but as a rough
measure of the outyear impacts of such a funding profile, the
Department estimates that approximately $10 billion is required from FY
2000 through 2010 to develop the waste management system described in
the Viability Assessment report and the Total System Life Cycle Cost
analysis. The Department desires to work with Congress to address this
issue. In exploring any funding alternatives, the Department is
committed to meeting two important objectives: not imposing undue
burdens on either utility ratepayers or taxpayers, and ensuring that
the revenues raised by the nuclear waste fee remain available to
complete the job.
Question 2: In order to make the 2010 schedule for the permanent
repository, what specific changes have been assumed from the historical
appropriation trends, existing fee caps, and the budget rules? What is
DOE's basis for making such assumptions?
Answer 2: Both the Department and the Congress have been aware for
some time that the overall constraints of the federal budget process
limit the availability of funding for the nuclear waste program in the
out years. The recently released ``Viability Assessment of a Repository
at Yucca Mountain'' provides the Department's current estimate of costs
to construct and operate a repository. Funding at historical
appropriation levels will not be adequate to pay Program costs during
repository construction. Future budget requests for the Program have
yet to be established and will be determined through the annual
Executive and Congressional budget process. The Department would like
to work with the Congress to ensure that the repository program is
adequately funded. Two important objectives need to be considered: (1)
the Federal Government does not impose an undue burden on either
ratepayers or the taxpayers, and (2) the revenues raised by the nuclear
waste fee remain available to complete the job of the safe management
and disposal of nuclear waste.
Question 3: The DOE budget submission does not take into account
the potential fiscal impacts of damage claims against DOE for its
failure to accept spent fuel. Has the Department, in coordination with
the Department of Justice, determined how these claims will be paid?
Answer 3: The Department of Justice, Office of Legal Counsel, is
investigating how claims emanating from DOE's delay in accepting spent
fuel should be paid, but has not yet issued an opinion identifying the
proper method and source for paying such claims.
Question 4: It appears that DOE is proposing in the budget to use
$39 million of the $85 million in Defense Nuclear Waste Disposal funds
previously set aside by Congress for the purpose of interim storage.
Does this request indicate the Department is pursuing some version of
interim storage, or is the Department proposing to use those funds for
a purpose other than that which Congress intended?
Answer 4: The Administration opposes pursuing any options that
would jeopardize the existing geologic disposal policy by forcing
resources to be redirected to interim storage development, rather than
completion, by 2001, of the site characterization work needed to make a
decision on the suitability of the Yucca Mountain site. The Viability
Assessment, which was submitted to the Congress and to the President in
December 1998, revealed no technical showstoppers. But, it did identify
additional scientific and technical work that is needed before a
decision can be made whether to recommend Yucca Mountain as a site for
a repository. The $39 million of prior year budget authority will be
used to reduce the uncertainties in our understanding of Yucca
Mountain. Specifically, we will continue to study the presence and
movement of water through the repository block, the effect of water on
the waste package, and the effect of heat from the waste packages on
the hydrologic and geologic behavior of the site.
Question 5: What is the present balance in the Nuclear Waste Fund?
Answer 5: The present balance in the Nuclear Waste Fund as of
February 28, 1999, is $7.7 billion. The data is derived from a report
entitled ``Nuclear Waste Fund Summary of Cash Balances,'' prepared by
the Department's Office of Chief Financial Officer on a monthly basis.
Question 6: Does the Department plan to use the balance accumulated
in the Nuclear Waste Fund for the permanent repository program?
Answer 6: The Nuclear Waste Policy Act established the Nuclear
Waste Fund in order to ``ensure that the costs of carrying out
activities relating to the disposal of such waste and spent fuel will
be borne by the persons responsible for generating such waste and spent
fuel'' [Sec. 111(b)(4)]. As required in section 302(d), Nuclear Waste
Fund revenues can be used ``only for purposes of radioactive waste
disposal activities.'' Both the Department and the Congress have been
aware for some time that the overall constraints of the Federal budget
process limit the availability of funding for the nuclear waste program
in the out years. The Department would like to work with the Congress
to ensure that the repository program is adequately funded. It is
important that funding alternatives not impose undue burdens on either
utility ratepayers or the taxpayers, and that revenues raised by the
nuclear waste fee remain available to complete the Department's waste
management activities.
Energy Security
Question 7: I am pleased that the Department has established an
Emergency Oil Task Force and is taking steps to assist our domestic oil
industry. What specific actions is DOE taking to assist small
independent operators, and how much funding is dedicated to this
purpose in FY2000?
Answer 7: Specific actions taken to assist small independent
operators and the corresponding funding in FY2000 include:
Assistance to Independents: focus on technology production problems
identified by small operators by conducting cost-shared research with
independents on marginal wells at risk of abandonment ($0.5 million).
Reservoir Class Demonstration Program Revisit: designed to
encourage producers to use new techniques for prolonging the production
life of mature oil fields, now under pressure for premature abandonment
due to low oil prices. The program will revisit the nearly completed
three reservoir classes to address new technology applications in
different regions of the country ($6.6 million).
Preferred Petroleum Upstream Management Program (PUMP): start an
on-line permitting project to enable States and independents reduce
permitting costs and speed response time and to conduct limited
technology transfer of best reservoir management practices for
production and environmental compliance ($0.5 million).
Streamline State/Tribal/Federal Regulations: enhance cooperative
efforts with states, tribes and Federal agencies to streamline
environmental regulations and regulatory processes without compromising
environmental protection. Generate independent quality scientific data
to help implement national policy in streamlining and improving
existing regulations and laws ($1.6 million).
Technology Outreach: support regional workshops through the
Petroleum Technology Transfer Council (PTTC), provide complete packages
of applicable results from Reservoir Class Demonstration and other
projects, assist operators in extending reservoir life, improve
efficiency and coverage in electronic and hard-copy dissemination of
publications and software, and expand schedule of exhibits at
professional meetings ($2.9 million).
Approximately one-third of the FY2000 Oil Technology budget applies
directly to small independent operators, with the remainder also
applicable to other segments of the petroleum industry, including
exploration, production and oil services.
Strategic Petroleum Reserve
Question 8: I understand that DOE has decided to add 28 million
barrels of oil into the Strategic Petroleum Reserve. Are there plans to
store additional quantities of ``Federal Royalty Oil'' in the Reserve?
Answer 8: To date, the Administration has only decided to transfer
28 million barrels of royalty oil to the Department of Energy. We are
conducting an interagency study on the appropriate size of the
Strategic Petroleum Reserve that we anticipate completing this summer.
If we reach the conclusion that the Reserve inventory should be greater
than 590 million barrels we would then address the issue of how to best
obtain the oil.
Energy Security
Question 9: The budget request includes $50 million for research
and development on oil production technologies. Please explain in more
detail what activities will be conducted with these funds?
Answer 9: The Oil Technology Program conducts a broad range of
research and field demonstration activities designed to enhance the
efficiency and environmental quality of domestic oil operations. These
R&D activities are conducted in partnership with universities, State
and local governments, industry and other organizations. Private sector
participation is emphasized through industry cost-sharing with
individual companies and consortia to ensure relevance and to
facilitate the transfer of technology to the private sector while
leveraging Federal R&D investment.
These activities are carried out under three major areas:
exploration and production, reservoir life extension and management,
and effective environmental management. Following is a more detailed
description of activities in each area:
Exploration and production research consists of exploration and
advanced drilling, completion, and stimulation systems, advanced
diagnostics and imaging systems, the Multi National Lab/Industry
Partnership, reservoir efficiency processes, and planning and analysis
efforts.
<bullet> Exploration work aims to stimulate activity in currently
underdrilled areas and in untested formations within older
producing areas
<bullet> Advanced drilling, completion, and stimulation work focuses on
developing tools and techniques to drill, complete and
stimulate oil wells that can achieve and maintain higher
production rates.
<bullet> Advanced diagnostics and imaging systems work focuses on the
development of technologies and methodologies that improve
success rates and cost efficiencies for the development of
existing fields and the discovery of new fields.
<bullet> Multi Lab/Industry Partnership activities represent an
industry driven program utilizing a wide range of tools
developed for the defense programs and adapted to oil and gas
use to improve seismic, production, drilling, and environmental
technology.
<bullet> Reservoir efficiency processes include research to develop and
demonstrate tools and methodologies that permit oil operators
to recover hydrocarbons in mature reservoirs that are not
producible by current technology. It also supports university
research in extraction technologies with an objective on the
development of scientific breakthroughs.
Reservoir life extension and management work focuses on
coordinating oil technology activities in research, development, and
demonstration of advanced technologies to improve recovery of
hydrocarbons from mature oil reservoirs. Activities in this area
include revisiting major reservoir groups to address key production
problems, and increasing production from marginal wells. In FY 2000,
activities will be initiated in the reservoir life extension and
management area for a preferred Petroleum Upstream Management Practices
(PUMP) Program. PUMP is designed to provide a short-term supplement to
mid- and long-term R&D and will focus on data management and effective
environmental compliance. PUMP will use known technology transfer
mechanisms, regional approaches, and integrated solutions to
technology, regulatory, and data constraints.
Effective environmental protection research activities focus on
technologies and practices that reduce the threat to the environment
and decrease the cost of effective environmental protection and
compliance involved in exploration, production, and oil processing. In
FY 2000, the program will focus on detection and control of air
emissions from gas and oil equipment and facilities, treatment of
produced water to meet environmental standards, remediation of soils
contaminated with hydrocarbons or produced water, treatment and
disposal of wastes containing naturally occurring radioactive
materials, underground injection of produced water, and other
approaches to manage oil and gas field wastes. Activities also include
identification of pollutants present in petroleum and development of
technologies to prevent their formation and to reduce emissions from
petroleum fuels. Also, the program will implement, together with states
and industry, on-line expert systems for environmental permitting and
reporting that can save both producers and state regulators time and
money. Through these activities with state governments and industry,
the gas and oil environmental program can contribute toward decreasing
cumulative industry compliance costs, between now and 2010, by as much
as $16 billion, increase gas production by 90 billion cubic feet per
year, and retain production of up to 140,000 barrels per day of oil
that would otherwise be abandoned.
Question 10: The funding for coal and natural gas is down from
Fiscal Year 1999. Yet Dr. Moniz's statement notes the ``pressing
environmental challenges of smog and particulate emissions, acid rain
and global warming''. In light of those challenges, why is the
Department reducing its efforts on these fossil fuels?
Answer 10: The current reduction in FY 2000 reflects completion of
the Low Emission Boiler Systems project in the Coal program ($12
million) and the use of prior year funds to finance a portion of FY
2000 requirements. In most areas this does not lead to a lower level of
effort compared to that for FY 1999.
Fossil Energy's proposed research program has been developed to
achieve the twin goals of a cleaner environment and a growing economy.
The research proposed in the FE program can substantially reduce the
burden of environmental costs by billions of dollars annually, while
sustaining environmental progress. This means that the Nation can
continue to benefit from fossil fuels at the same time that we continue
to improve the environment, grow the economy and enhance our energy
security.
Question 11: According to the Energy Information Administration,
coal is the source of roughly half of the electricity generated in this
country. If we start to lose a significant portion of our coal plants
for air quality reasons, how will we replace that lost generating
capacity?
Answer 11: To put the scenario posed in your question in context,
we note that substantial reduction in emissions from coal-fired power
plants have been achieved over the past two decades without leading to
significant shutdowns of coal-fired capacity. EIA analyses suggest that
further emissions-reductions required over the coming years by the acid
rain provisions in the 1990 Clean Air Act amendment can also be
achieved without endangering the economic viability of significant
amounts of coal-fired capacity.
Taking the scenario posed in your question as given, three
variables that would be crucial in understanding whether lost coal
capacity could be replaced in a manner acceptable to U.S. electricity
consumers would be:
(1) Growth in demand for electricity;
(2) The pace of replacement: how much coal would have to be replaced
each year? and
(3) The cost of alternative technologies and fuels.
If electricity demand growth is high, and your hypothesized
constraints on coal use are binding, then substantial natural gas
capacity additions would be expected, along with associated increases
in natural gas use and pipeline infrastructure requirements. These
infrastructure and fuel use increases might be stretched to replace
substantial amounts of coal capacity, without substantial price
increases.
Finally, research and development into new technologies for
electricity generation can also provide direct benefits in holding down
the cost to America's electricity consumers should the scenario posited
in your question come to pass.
Question 12: Can you explain the deferral of Clean Coal Technology
funding for FY2000? Is the decision to defer these projects largely a
Department decision, or is it coming from your industry partners?.
Answer 12: The proposed deferral resulted from schedule delays in
the Clean Energy Demonstration Project--an Integrated Gasification
Combined Cycle (IGCC) planned for Illinois and the Clean Power From
Integrated Coal/Ore Reduction (CPICOR) project--a combined steel making
and power generation project planned for Utah. These two projects have
over $300 million in future funding requirements; however, the next
funding requirements are not until fiscal year 2001.
Both of the extensions were made at the request of the industrial
participant. For the Clean Energy project, the delay was necessary due
to resiting of the project and the inclusion of the host utility as an
equity partner in the project. The CPICOR delay resulted from a change
in the technology vendor. Both projects are expected to begin
construction activities in 2001.
DOE Asset Sales
Question 15. Have DOE contractors fulfilled their legal obligations
to identify and dispose of surplus assets? Provide a legal opinion on
the duty of DOE contractors to identify and dispose of surplus assets
under their control. Provide a list of DOE contractors, indicating the
value of DOE assets under the control of each contractor, whether each
contractor has disposed of surplus assets over the past five years, and
the value of any surplus assets disposed of by each contractor over the
past five years.
Answer 15: Yes. DOE management and operating contracts contain a
paragraph within the property clause 48 Code of Federal Regulations CFR
970.5204-21 Department of Energy Acquisition Regulation (DEAR) which
requires, among other things, that the contractor disposition personal
property as directed by the contracting officer. Both the 41 Federal
Property Management Regulations, Chapter 101-43.101, ``Agency
utilization reviews,'' and the Department of Energy Property Management
Regulations (DOEPMR) 41 CFR 109-43. 101, ``Agency utilization
reviews,'' require that contractors be responsible for continuously
surveying property under their control to assure maximum use, and to
promptly identify property that is excess to their needs and make it
available for use elsewhere. Attachment I provides a list of DOE
contractors by Operations or Field Office, demonstrates that each
contractor has identified and disposed of surplus personal property
over the past 5 years, and shows the value of surplus personal property
assets disposed of by each contractor over the past five years.
Attachment 2 provides a list of DOE contractors and indicates the value
of personal property assets under the control of each contractor.
Total Value Of Any Surplus Assets Disposed By Each DOE Contractor
------------------------------------------------------------------------
Acquistion Cost
Field Office FY 1994-MAY 1999
------------------------------------------------------------------------
Albuquerque Operations Office
Allied Signal....................................... $152,002,000
Los Alamos National Lab............................. $216,452,747
Mason & Hanger...................................... $79,939,731
Sandia National Laboratory.......................... $236,494,785
Westinghouse (WIPP)................................. $8,482,192
Subtotal.......................................... $693,371,455
Chicago Operations Office
Ames Laboratory..................................... $955,490
Argonne National Laboratory......................... $48,696,734
Brookhaven National Laboratory...................... $21,489,712
FERMI National Accelerator Lab...................... $38,128,729
Princeton Plasma Physics Lab........................ $1,871,805
Subtotal.......................................... $111,142,470
Idaho Operations Office
Idaho National Engr & Env Lab....................... $114,403,219
Nevada Operations Office
Nevada Test Site.................................... $21,362,800
Oak Ridge Operations Office
Bechtel Jacobs (ETTP)............................... $25,662,120
Lockheed Martin Energy Sys.......................... $5,419,470
Lockheed Martin Energy Res.......................... $9,876,300
Thomas Jefferson National Accel..................... $3,646,572
Oak Ridge Associated Univ........................... $1,388,418
Subtotal.......................................... $45,992,880
Oakland Operations Office
Lawrence Berkeley National Lab...................... $12,300,000
Lawrence Livermore National Lab..................... $150,000,000
Stanford Linear Accelerator Center.................. $11,900,000
Subtotal.......................................... $174,200,000
Richland Operations Office
Hanford Site-Fluor Daniel Hanford................... $154,930,246
Savannah River Operations Office
Savannah River Site Westinghouse.................... $151,879,000
Golden Field Office
National Renewable Energy Lab....................... $5,879,946
Ohio Field Office
Fernald Environmental Mgmt Proj..................... $23,213,251
Mound Site.......................................... $78,535,450
Ashtabula........................................... $157,243
West Valley Project Westinghouse.................... $3,747,739
Subtotal.......................................... $105,653,683
Rocky Flats Field Office
Kaiser Hill LLC..................................... $114,849,460
Federal Energy Technology Center
FETC-DOE............................................ $25,783,537
Amax Research & Development......................... $1,915,200
Bartlesville Research Facility...................... $762,078
Subtotal.......................................... $28,460,815
Strategic Petroleum Reserve Project Office
Strategic Petroleum Reserve......................... $4,175,958
Pittsburgh Naval Reactors
Bettis Atomic Power Laboratory...................... $11,754,174
Schenectady Naval Reactors
Knolls Atomic Power Laboratory...................... $14,656,545
GRAND TOTAL....................................... $1,752,712,651
------------------------------------------------------------------------
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[GRAPHIC] [TIFF OMITTED] T5148.004
[GRAPHIC] [TIFF OMITTED] T5148.005
[GRAPHIC] [TIFF OMITTED] T5148.006
Question 16: Has DOE fulfilled its legal obligations to identify
and dispose of surplus assets? Provide a legal opinion on the duty of
Federal agencies to identify and dispose of surplus assets.
Answer 16: Yes. The Federal Property and Administrative Services
Act of 1949, as amended, implemented in Title 41 CFR 101-43.101,
``Agency utilization reviews,'' Federal Property Management
Regulations, requires that every agency continuously survey property
under its control to assure maximum use and to promptly make personal
property that is excess to its needs available for transfer. All
personal property that is excess to an agency is then screened by the
General Services Administration (GSA) for use by other Federal
agencies. DOE excess personal property is screened for reutilization
within DOE as described in the DOE Property Management Regulations, 41
CFR Chapter 109-43.304-1.50, ``DOE reutilization screening.'' After
such a screening, remaining excess personal property is reported to
GSA.
The Federal Property and Administrative Services Act of 1949,
implemented in 41 CFR Subpart 101-47.2, as amended, ``Utilization of
Excess Real Property,'' and Subpart 101-47.8, ``Identification of
Unneeded Federal Real Property,'' Federal Property Management
Regulations, requires that the Department annually survey its real
property (land and facilities) to identify property that is
underutilized or not being put to optimum use, and directs agencies to
follow certain procedures with respect to any such property.
Question 19: How much surplus property has DOE donated to nonprofit
organizations over the past five years?
Answer 19: DOE has donated over $258,000,000 in surplus property
over the past five years.
PEIS Lawsuit Settlement Agreement
Question 20: The Department recently entered into a settlement
agreement with the NRDC that requires the Department to establish a
$6.25 million fund to provide grants to environmental groups monitoring
DOE cleanup efforts. Where will these funds come from, and what is the
Department's authority to make such grants? If DOE allows a third party
to administer this grant program, as is specified in the settlement
agreement, who in the Department remains accountable for how these
funds are spent? How does the Department prevent the kind of abuses we
discovered in the Nevada Project Office, where federal funds were used
for lobbying rather than for objective analysis?
Answer 20: The initial funding ($1.25 million) for the Citizen
Monitoring and Technical Assessment Fired (Fund) is provided from the
Department's Defense Environmental Restoration and Waste Management
account. The Department provided the initial $1.25 million for the Fund
to RESOLVE, Inc. (RESOLVE), which was chosen as the Administering
Organization of the Fund. After reviewing RESOLVE's financial
management documentation pursuant to the settlement agreement, DOE
transferred the initial $1.25 Million to RESOLVE in March 1999. The
balance of the required funding ($5 million) is included in the
Department's FY 2000 budget request now before Congress. In addition to
the Department's usual authorities including the Atomic Energy Act and
the DOE Organization Act, for payment of funds to public and private
groups, Federal appropriations guidelines also provide that a court
ordered settlement confers authority to fund projects such as those to
be selected by RESOLVE.
The Department is firmly committed to ensuring strict adherence to
the requirements of the settlement agreement, which limits use of the
Fund to technical and scientific studies, and prohibits use of the Fund
for litigation, lobbying, or fundraising. There are several means of
Fund oversight. First, RESOLVE must provide an annual report to the
Department outlining how the Fund is spent, consistent with OMB
Circulars for the expenditure of public funds. Second, in the event
that DOE requires an audit, it would be conducted pursuant to the
normal procedures associated with the federal government grant-making
process. Third, the Department has prohibited the use of funds for
litigation, lobbying, and fundraising activities in the settlement
agreement, as it Specifically states that funds may not be used for
such activities. As Administering organization of the Fund, RESOLVE is
responsible for determining that the Fund is used consistent with the
intent of the settlement agreement. However, the Department will
oversee RESOLVE's administration of the Fund. A DOE contracting officer
(yet to be selected) will be responsible for determining that
appropriated funds are used consistent with the intent of the
settlement agreement. No money has yet been granted from the Fund by
RESOLVE, but initial receipt of applications is expected by July.
External Regulation
Question 21: For several years now, this Committee has been
advocating external regulation of DOE facilities and operations by the
NRC and OSHA. In testimony before this subcommittee last May, then-
deputy Secretary Moler agreed with us on the benefits of external
regulation at DOE facilities and promised to work with NRC and OSHA to
establish the scope, timing, and resource needs to implement external
regulation. She also promised us that this interagency process would be
in place by July 1998 and would be reflected in the FY2000 budget
planning process. However, Secretary Richardson stated in a February
19, 1999, letter that DOE will complete the ongoing pilot projects and
then put this concept on the shelf--not conducting any more pilots and
not submitting any implementing legislation to Congress. Please explain
the Department's apparent reversal on external regulation?
Answer: As noted in the Secretary's letter to Congress of February
19, 1999, a number of significant, unresolved issues were identified in
the three regulatory pilots completed by DOE and NRC. A number of
regulatory and cost uncertainties would need to be addressed before
proceeding to submit any legislative proposal for transition to
external regulation. As indicated in the Secretary's most recent letter
of March 31, 1999, accompanying ``working drafts'' of two of the three
pilot reports (for Lawrence Berkeley National Laboratory and the
Receiving Basin for Offsite Fuel at Savannah River), the Department
remains concerned about the ``extent to which existing regulatory
flexibility or exemptions would be available to effectively address the
DOE's unique nuclear facilities and operations, and what potential
impacts such uncertainties carry with them.'' The letter also noted
that this issue--the degree of flexibility or exemptions that the NRC
can actually afford in defining how the existing regulatory framework
is applied to specific DOE facilities through a licensing process--
``cannot easily be answered by the reviews contained in the enclosed
pilot reports.'' In this letter, the Secretary concludes that ``these
potential impacts cannot be overstated and must be fully addressed
before any regulatory transition is pursued.''
Hanford Spent Nuclear Fuel Project
Question 25: Dr. Moniz testified before the Subcommittee on
Oversight and Investigations last year regarding the Hanford Spent
Nuclear Fuel (SNF) project, which, at that time was $600 million over
budget and four years behind schedule. What progress has been on the
Hanford SNF project since our hearing last year?
Answer: The Hanford Spent Nuclear Fuel Project has achieved
significant progress since the establishment of the high confidence
level schedule in the Fall of 1998. The current Project life cycle
cost, based upon this schedule, is $1,720M which includes a
deactivation cost of $133.5M. The proposed budget of $1.375B for the
SNF Project reported in last year's testimony, reflected the known
changes added to the current baseline at the time of the Congressional
hearing. Subsequently, a re-estimate of the entire SNF Project was
completed and validated to support the Tri-Party Agreement schedule
commitments. This re-estimate resulted in the $1.586B baseline approved
in December 1998. When added to the deactivation costs, the total life
cycle cost is $1.720B. The validation of the SNF Baseline was
accomplished over a three month period by a joint team consisting of
Department employees, Contractors from FDH and DESH, and the EPA. The
detailed Basis of Estimate and backup for each SNF subproject's
proposed baseline was verified and validated as appropriate for the
known workscope. Contingency requirements and identified risks were
also evaluated during the review. Project expenditures from fiscal year
1995 to February of fiscal year 1999 have been $593M. Institution of a
disciplined baseline change control process has resulted in improved
controls on the use of funds. Expenditures are being tracked against
the risks identified in the contingency analysis. As a result, the
project is performing within its cost goals. Several technical issues
have caused decreased schedule performance to date. However, the
Department expects to recover the slippages in the project by the
summer of 1999.
The status of significant activities are:
-- The fuel characterization effort has been successfully completed and
the final report was issued in March 1999. The cask/
transportation sub-project has also been successfully
completed.
-- The K-West Basin Integrated Water Treatment System and the Fuel
Retrieval System installation activities are on schedule for
completion this fiscal year. Installation of the K-West Basin
Cask Load Out System has been put on hold temporarily due to a
potential technical problem, and plausible mitigative solutions
are currently being evaluated.
-- The Canister Storage Building construction is on schedule.
Additionally, the acceptance testing for the Multi-Canister
Overpack Handling Machine is also on schedule. The Cold Vacuum
Drying process equipment skid procurement has been awarded.
However, the delivery schedules are very tight.
-- Additional contractor operations staff are being hired and trained
pro-actively to support various start-up activities. Major
contractor performance improvements have been noted as
continued attention is being focused in ensuring that seasoned
personnel are in place to best serve the project needs.
The SNF project is on track to meet the Departmental commitment to
start fuel removal from the basins by November 30, 2000.
Question 26: The contractors on the project--Fluor Daniel and Duke
Energy--made a commitment to the Committee and to the DOE to complete
this project on time and under budget or risk all of their profit. What
is the status of this commitment?
Answer: Fluor Daniel Hanford, Inc., (FDH) and DE&S Hanford, Inc.,
(DESH) have both committed to complete the Spent Nuclear Fuel (SNF)
Project on time and within budget. The U.S. Department of Energy,
Richland Operations Office (RL) has modified the FDH prime contract
(modification No. 062) that places Performance Agreement fee earned by
FDH in fiscal year 1999 and 2000, at risk upon the successful start of
fuel removal from the K Basins by November 30, 2000. FDH has also
modified the DESH subcontract to flow this requirement down. Therefore,
both organizations have put their respective portions of earned SNF
Project Performance Agreement fee at risk on fuel movement.
In fiscal year 1998, the performance fee opportunity that was
available on the SNF Project was $7.2M. In fiscal year 1998, FDH and
DESH earned no fee. In addition to not earning fee, both FDH and DESH
were penalized $351K through penalty clauses that were invoked in the
performance agreements.
Question 27: It is the Committee's understanding that the
subcontractor on this project, Duke Energy, is now trying to get out of
the contract. What is the status of this situation?
Answer: On February 4, 1999, Dr. Ernest Moniz (Under Secretary) and
James Owendoff (Acting Assistant Secretary for Environmental
Management) met with James Stein (President and Chief Operating Officer
of Fluor Daniel) and Richard Priory (President and Chief Executive
Officer of Duke Energy) to discuss the contractors' approach for
managing this project. Fluor Daniel and Duke stated at this meeting
that they remain fully committed to the success of this project.
As a follow up to this meeting, Mr. Stein and Mr. Priory provided
additional details of their plan. In brief, the contractors proposed a
change to the contractual relationship of Fluor Daniel as prime
contractor and Duke as major subcontractor for the spent fuel project,
to a relationship where Fluor Daniel will be directly responsible for
project execution and Duke Energy would provide technical support
through a staff augmentation type subcontract. This change was
subsequently made.
Consistent with commitments made by senior management from both
Fluor and Duke to DOE/HQ and DOE/RL, the DESH transition has been
completed without any cost or schedule impacts to the SNF Project.
Specifically, the transition included:
* The transition of the DESH Subcontract is not a termination.
* The DESH contract will remain a cost reimbursement, performance fee
based subcontract.
* Effective August 1, 1999, DESH transitioned from the major
subcontractor for SNF to a staff support subcontractor to FDH.
FDH is now responsible for execution of the SNF project and
DESH provides human resources to fill work scope tasked by FDH.
The existing subcontract between DESH and FDH has been modified
accordingly to accommodate this transition. Notwithstanding any
changes made in the subcontract, for the staff augmentation
scope, the continuing rights and obligations of DESH as the
performing entity prior to August 1, 1999 remains unchanged.
* Consistent with commitments made to Congress, DOE/HQ, and the DOE/RL
all fee earned by DESH on the SNF Project will be contingent on
the movement of fuel in November 2000. As in the past, the fee
DESH earns will come out of FDH earned fee and will not be
billed as a separate direct cost back to the DOE/RL. Also,
consistent with commitments made, DESH's subcontract has been
extended through September 30, 2001.
* Currently, DESH supports the SNF Project and the TWRS Project with
approximately 200 DESH employees. These employees have been
transferred over to FDH (<difference>180) for the SNF work
scope and LMH (<difference>20) for the TWRS work scope. The
only change in this employee transition is that the employees
have changed the name tags on their badge (i.e., DESH to FDH or
LMH). There were no layoffs, involuntary reductions in force,
or relocation of DESH staff. Therefore, there were no costs
associated with severance pay, pension costs, retirement,
relocation, cost of money, and travel.
* DESH also supports the SNF Project with approximately 30 DE &
Services, Inc., staff (Home Office Personnel). These are staff
that are on full time assignment to the SNF Project. There will
be no change with these staff. They are still being utilized
through the existing subcontract relationship between DESH and
FDH at no increased cost to the SNF project.
* Currently, DESH is also supporting the SNF Project with approximately
30 DE& Services, Inc., temporary staff who are here on short
term assignments. These resources will continue to be utilized
as necessary and will also be accessed through the existing
subcontract relationship between DESH and FDH at no increased
cost to the SNF project.
DOE has made it clear that, regardless of the contractual
relationship, DOE expects Fluor Daniel to hold Duke and itself to the
commitments made to the Committee on this project, and to assure that
the necessary technical experts are made available to achieve a
successful outcome.
questions from the honorable tom coburn
Strategic Petroleum Reserve
Question 1: Dr. Moniz, I realize the Department has instituted a 28
million barrel Strategic Petroleum Reserve increase from the market in
lieu of payments, but what is the real effect this will have on the oil
market? Will this move help to bolster falling prices and is it
believed to help the independent oil producer?
Answer 1: The reasons that the Administration is acquiring royalty
oil for the Strategic Petroleum Reserve now are that we want to enhance
energy security by replacing the oil that was sold from the Reserve in
fiscal years 1996-97, and that we want to be prudent by doing it while
prices are low.
The direct price effect of transferring 28 million barrels of
royalty oil over the course of a year is expected to be negligible.
Question 2: By my calculation the 28 million new barrels accepted
into the Reserve will give us a total of 589 million barrels of oil in
reserve. What is the future plan of DOE in regards to the Strategic
Petroleum Reserve? Would it not be wise to try and fill the Reserve
with oil at this time to a level of 680 million barrels based on a two
pronged effect: (1) It take more oil off the market and would help
shore up prices, and (2) we make a wise business decision to get the
oil at historically low prices.
Answer 2: The Administration is conducting a study of the
appropriate size level of the Strategic Petroleum Reserve that we
expect to complete this summer. Our policy on adding more oil to the
Reserve will be determined after its completion. However, it is not our
policy to try to influence oil prices, and the Energy Policy and
Conservation Act specifically directs the Department to acquire oil in
a manner to minimize the impact upon supply levels and market forces.
It is both good policy and our intent to act in a business like fashion
and acquire oil only at favorable prices.
Fossil Energy R&D
Question 3: I noticed a request that actually decreases the Fossil
Fuel R&D account by about $20 million dollars from 1999. What are the
specific reasons that the request is lower and would it not be wise to
actually increase the R&D account given the struggles domestic
producers are having and the fact that projections indicate a heavy
dependence on foreign oil? Is this an indication of how the
administration feels about the fossil fuels industry?
Answer 3: Although there are several small increases and decreases
in the Fossil Energy Congressional Request, the two major reasons for
the overall decrease are completion of the Low Emission Boiler Systems
project ($12 million), and the use of prior year funds to finance a
portion of FY 2000 needs ($11 million.)
The overall Fossil Energy R&D budget request reflects a balancing
of budget priorities by the Administration, given restrictive budget
caps.
Oil Dependence
Question 4: I am very alarmed by the statistics that indicate
imported oil will rise to over 16 million imported barrels a day by the
year 2020 accounting for 66% of oil consumption in the United States.
While these are bleak projections the amount requested for Energy
Resources programs only is increased $6 million dollars. It is my
understanding that the Energy Department's security strategy relies on
this money to help develop technology to increase energy efficiency and
reduce energy demand. The projections indicate this plan is a failure.
Is the meager request for an increase a sign that the DOE believes the
energy security plan is a failure? If so, why have we not looked at a
more vigorous avenue to fight foreign oil dependence?
(Note: The 66 percent dependence on imported oil is for 2010
according to the Annual Energy Outlook 1999 by EIA. Their estimate for
2020 is 71 percent reliance on imported oil. In addition, EIA projects
that imports will be almost 11 million barrels per day in 2010, and
almost 12 million barrels per day in 2020)
Answer 4: Two-thirds of the oil used by the U.S. is for the
transportation sector. The Department is requesting $305.5 million for
transportation technologies to develop technologies that will reduce
our dependence on oil. If the current programs of the Office of
Transportation Technologies (OTT) are successful, it is estimated that
demand will be reduced by 1.8 million barrels per day off the projected
2020 oil use for the U.S. But, every barrel of oil reduced in
transportation does not translate into a barrel of reduced oil imports.
Therefore, reducing the projected 71 percent dependence on imported oil
for 2020 will require even greater attention to efficiency
improvements, substitutions, and enhanced domestic production.
That is why the budget request also includes $50.2 million for
research and development on oil production technologies. Fossil
Energy's Oil Technology Program conducts a broad range of research and
field demonstration activities designed to enhance the efficiency and
environmental quality of domestic oil operations. These R&D activities
are conducted in partnership with universities, State and local
governments, industry and other organizations. Private sector
participation is emphasized through industry cost-sharing with
companies and consortia to ensure relevance and to facilitate the
transfer of technology to the private sector while leveraging Federal
R&D investment.
Climate Change
Question 5: While Fossil Fuel R&D decreases by $20 million, which
helps producers find new ways to produce oil more cheaply, the Climate
Change Technology Initiative (CCTI) is increased $22 million. How can
we be sure this increase, and for that matter, the rest of this
funding, is not being used to promote an unratified Kyoto treaty? What
are some assurances that you can give me for the record that this money
will not be used to foster implementation of this treaty while it has
not been ratified?
Answer 5: Fossil Energy has two related programs contained in the
CCTI: advanced clean, efficient, fuel flexible, power generation
technologies (Vision 21) and carbon sequestration research. Neither is
directly related to the Kyoto Protocol, and none of the funding is used
to implement the Protocol. Both of these programs are targeted to
produce a suite of practical technologies for deployment in the 2015
time frame, with significant expansion in scope and reduction in cost
for sequestration in the following decade. These technologies will
provide cost-effective tools for reducing carbon emissions generally,
without respect to the specific targets in the Kyoto Protocol. The
Kyoto agreement focuses on binding national commitments, and R&D
programs such as these are not part of it.
questions from representative ralph n. hall
Emergency Oil Task Force
Question 1: Mr. Secretary, in November you formed a DOE emergency
task force to address the price crisis being faced by America's
independent oil and natural gas producers. Nearly 50,000 U.S. oil and
gas industry jobs have been lost since November 1997 and almost 200,000
wells have been permanently shut-in.
I'm aware of the initiatives DOE has announced to help including
refilling the 28 million barrels of oil sold from the SPR by initiating
a royalty-in-kind program and providing technical aid and efficient
energy programs to domestic producers. I also understand you may
announce a DOE/SBA effort to publicize a program offering loan
guarantees for domestic producers and their capital providers.
I congratulate you on these efforts but I'm afraid that much more
is necessary. One can argue that America's oil producers are facing the
same crisis as America's farmers and steel manufacturers. However,
President Clinton and Vice President Gore haven't uttered a word about
the serious economic and national security threats posed by this price
downturn. Why haven't we seen the White House, the Treasury Department
and other agencies take a stronger and more visible position in support
of far-reaching initiatives to help this struggling industry? When will
the rest of the Administration begin publicly discussing ways to avert
the loss of significant amounts of America's onshore lower 48 states
domestic oil production and the attendant risk to future natural gas
development industry?
Answer 1: We agree with you that the latest round of low oil prices
presents a severe problem to domestic petroleum production. This is a
vital industry that is integral to the energy and economic security of
our country.
With respect to your question about White House involvement,
Secretary Richardson chaired a meeting at the White House to address
these issues on March 16, 1999. John Podesta, the President's chief of
staff, Gene Sperling, chairman of the National Economic Council, Bob
Rubin, Secretary of Treasury, and Secretary Richardson met with
representatives of the petroleum industry to hear their concerns and
discuss possible actions. One of the first tangible accomplishments
from that meeting was the establishment of a special energy working
group within the National Economic Council. This group has brought in
high level representatives from all agencies within the Administration
to address important energy issues. We expect this group to make a real
contribution in terms of creating a forum where important issues
affecting the petroleum industry and other energy industries, can be
discussed with all important government officials.
Question 2: Again, referring to your task force. Do the members of
the task force have other recommendations that will go further and
provide substantial relief for the industry? Has DOE been working with
the Treasury Department on tax relief measures? If so, please
elaborate.
Answer 2: Yes, they do. The work of the task force is an ongoing
process where new ideas or initiatives to aid the industry are being
considered. For example, since releasing its first report DOE has begun
working with the U.S. Department of Agriculture to determine if their
loan guarantee program for businesses in rural areas could be expanded
to include oil and natural gas businesses.
With respect to tax relief, DOE and the Treasury Department has
been closely following the tax proposals currently in Congress. The two
agencies have discussed the pros and cons of these proposals, and are
anticipating serious consideration of them in Congress. DOE has offered
to work with Congress in its efforts to develop the most cost-effective
and efficient proposals possible.
Question 3: The Clinton Administration has consistently touted its
global climate change agenda--an agenda which most in Congress do not
support. One of the key elements of that agenda is a substantial
increase in domestic natural gas production. Has anyone in the
Administration recognized the implications of the current oil price
crisis on this natural gas agenda?
Answer 3: Yes, we are concerned with the potential impact of low
oil prices on future domestic production of natural gas. The Energy
Information Administration (EIA), in its Annual Energy Outlook for
1999, presented findings from sensitivity analyses it did on the
effects of low oil prices that indicate that low prices may not
significantly impair domestic gas production in the future.
FOR 2020
------------------------------------------------------------------------
NG
Oil prices NG prices production
------------------------------------------------------------------------
EIA Base Case....................... $22.73/bbl $2.68/mcf 27.4 TCF
EIA Low Oil Price Case.............. $14.57/bbl $2.62/mcf 26.9 TCF
------------------------------------------------------------------------
As can be seen from this data for the year 2020, EIA forecasts that
domestic gas production will be basically unchanged whether oil prices
are $22.73/bbl. (all in constant 1997 dollars) or $14.57/bbl.
Having said this, we are still concerned with this important issue.
We expect the National Petroleum Council, which is currently conducting
a study of future gas supplies in the U.S., to give us their assessment
of the implications of low oil prices. The results of that study should
be conveyed to DOE in the Fall of 1999.
Question 4: Some of your predecessors viewed DOE's Fossil Energy
programs, particularly the oil and gas program, as a source of
additional funds for other programs. I am pleased to see that you have
made a slight increase in Fossil Energy's oil research and development
program. Can we count on DOE to continue fully funding this program?
Will you fight to maintain this program when congressional
appropriators attempt to rob this program to fund more popular programs
such as Energy Efficiency?
Answer 4: I fully support the Fossil Energy FY 2000 budget request.
I believe that the oil and gas program budget level is appropriate and
balanced in light of current budget constraints. I also support the FY
2000 budget request for Energy Efficiency and believe that it is
appropriate and balanced, too. I will support maintenance of both
programs.
questions from representative norwood
Purchase Power and Wheeling
Question 1: Has the Administration made a policy decision to
terminate wholesale power contracts with existing preference customers
by eliminating funding for purchase power and wheeling?
Answer 1: No. The Administration has made no policy decision to
terminate existing wholesale power contracts. On the contrary, the
Administration expects and intends that the PMAs will continue to
perform critical purchase power and wheeling activities as necessary to
fulfill their contractual commitments. The sole purpose of the
Administration's proposal to eliminate appropriations for purchase
power and wheeling is to correct an anomaly in the appropriations
process. This anomaly unfairly weakens and jeopardizes the PP&W
function--a situation which the Administration's proposal would
correct. The Administration recognizes that the financing methods used
to firm Federal power and wheel it to users must take into account the
individual situations found at each PMA power system. The
Administration is open to other ideas that provide a permanent solution
for financing this activity without relying on scarce appropriations.
Question 2: What happens to the contracts for transmission service
if funds are not provided in the budgets for the PMA's?
Answer 2: It is the Administration's intention that funding will be
available, without appropriations, for the continuation of contracts
for firming energy and transmission services. Currently, more than half
of the PMA purchase power and wheeling activity is funded without
appropriations, through existing off-budget, alternative financing
methods, including net-billing, bill crediting and reimbursable
authorities. Off-budget financing of the remaining portion of the
programs is anticipated from customers. We understand that the
Administration's proposal has generated some concern among current
suppliers and customers. Adequate funding of firming energy and
wheeling services is vital to the ability of the PMA's to meet
contractual firm power delivery requirements. In the event we are
unable to achieve sufficient alternative financing given the time
constraints, we plan to work with the Congress prior to the start of FY
2000 to develop other solutions.
Question 3: If the PMAs do not have funds for purchase power, can
they continue to sell firm source power? And if they cannot sell this
power, will they be able to still generate the same amount of revenues?
Answer 3: Purchase power is vital to a PMA's ability to market the
variable hydro generation as a firm energy resource. Without purchase
power funding, the ability to market firm source power would be greatly
reduced, possibly to zero for some projects. Non-firm sales on the
other hand would be greatly increased, raising concern over the ability
of the PMAs to secure adequate revenue under such a scenario, as the
burgeoning non-firm products, representing a much higher percentage of
sales, would be sold at spot-market prices, which are generally less
than firm power prices. There have been times when surplus
hydroelectric energy had no monetary value in northern California due
to market saturation during high flow periods.
However, the Administration's proposal does not intend to eliminate
the purchase power function of the PMAs; rather, it is an attempt to
move the funding responsibility for these vital functions from the
uncertain appropriations process to those that benefit and pay for the
services--the PMA power customers.
Question 4: Did you check on the law when you made this decision?
Because it is my understanding that there is some question as to
whether the Department of Energy will be able to comply with the Flood
Control Act.
Answer 4: The Flood Control Act requires that the PMAs transmit and
dispose of the power from Flood Control projects on a widespread basis
consistent with sound business principles. As a matter of policy, the
PMAs market their power consistent with this mandate, and the
Administration's FY 2000 Purchase Power and Wheeling financing proposal
intends to continue this policy. We do not believe that the FY 2000
proposal violates any provisions of the Flood Control Act, since the
proposal is only shifting the responsibility of financing purchase
power and wheeling from appropriations to customers.
Question 5: If the General Counsel's office had advised your budget
personnel that eliminating the funding for purchase power and wheeling
violated statutes governing the authority of the PMAs, would DOE still
pursue this proposed change in funding?
Answer 5: No.
Question 6: Why has the administration made the apparent policy
decision to raise electric rates for retail electric customers of
municipal utilities and rural electric cooperatives that currently buy
power from the federal government?
Answer 6: The Administration's proposal shifts the responsibility
for funding the purchase power and wheeling program from the U.S.
Treasury to those that benefit from the services--the PMA customers.
The proposal does not eliminate the ability of the PMAs to perform
these functions. If successful, we do not anticipate rate impacts to
existing PMA customers. If funding arrangements cannot be accomplished,
we plan to work with the Congress to provide other solutions.
questions from representative wilson
Waste Isolation Pilot Plant (WIPP)
Question 1: What is the current status of opening WIPP? When do you
anticipate moving the first shipments of waste? What are the remaining
barriers to opening WIPP and how can the Congress assist in removing
these barriers?
Answer 1: The Waste Isolation Pilot Plant (WIPP) is open. The first
shipment of waste from the Los Alamos National Laboratory arrived at
WIPP on March 26, 1999. As of June 2, 1999, there have been nine
shipments of non-mixed waste to WIPP from Los Alamos and one shipment
of non-mixed from the Idaho National Engineering & Environmental
Laboratory. Over the next several months, DOE plans to send additional
shipments to WIPP from Los Alamos, Idaho, and Rocky Flats.
The Department's Resource Conservation and Recovery Act permit
application for mixed waste for WIPP is pending before the New Mexico
Environment Department (NMED). NMED's permit hearing concluded March
26, 1999. Based on the schedule announced at the close of the hearing,
it appears that NMED will issue a final permit in November 1999.
DOE Budget Request for 2000
Question 2: What are the DOE estimates of annual liability costs
for failure to accept spent fuel by January 31, 1998? How do you plan
to accommodate, avoid or budget for these costs?
Answer 2: It is not possible, at this time, to estimate the
``annual liability costs'' for the delay in accepting spent nuclear
fuel. The United States Court of Federal Claims has found in the cases
brought by utilities with no operating reactors that the Department's
delay constitutes a breach of contract. However, the amount of damages
has not yet been determined.
We understand that the Department of Justice's Office of Legal
Counsel is conducting an analysis to determine how to properly treat
these costs. The Department cannot plan for accommodating and budgeting
for these costs until the Office of Legal Counsel has completed its
review.
Question 3. What is the status of the dispute with the contractor
for PIT-9? Does DOE plan to litigate this matter, settle it, or
arbitrate it in some way? If no decision has been made about this
particular course of action, what is the timeline for a decision on
what course of action?
Answer 3. The dispute arising from the decision by the Department's
management and operating contractor at INEEL, Lockheed Martin Idaho
Technologies Company, Inc. (LMITCO), to terminate for default its
subcontract with Lockheed Martin Advanced Environmental Systems, Inc.
(LMAES) (the Pit 9 Subcontract). The Department was not a party to the
Pit 9 Subcontract. Accordingly, the dispute is a private one between
two subsidiaries of the Lockheed Martin Corporation. The Department's
interest is secondary and, essentially, that of an entity responsible
for the facility at which the subcontracted work was to be performed
and for which the Department has reimbursed LMITCO for the $54 million
paid by LMITCO to LMAES during the course of LMAES's ultimately failed
performance--funds that LMAES and the Lockheed Martin Corporation are
now obliged to return to LMITCO.
The dispute has given rise to two lawsuits. First, LMAES and
Lockheed Martin Corporation have commenced an action in the United
States Court of Federal Claims against the United States (but not
specifically against the Department). Second, LMITCO commenced an
action against LMAES and the Lockheed Martin Corporation in the United
States District Court for the District of Idaho, to which the
Department is not a party.
In the Court of Federal Claims action, LMAES and the Lockheed
Martin Corporation has challenged the default termination, contending
that the termination was effected by the Department and not by LMITCO.
The United States has filed a motion to dismiss the Court of Federal
Claims action because (i) there exists no privity of contract between
the United States and LMAES or the Lockheed Martin Corporation upon
which to base a direct contract action against the United States, and
(ii) no action undertaken by the United States Government has effected
a cognizable taking of property of LMAES or the Lockheed Martin
Corporation in violation of the Fifth Amendment to the United States
Constitution. That motion is pending before the Court.
The Idaho district court litigation is a private law suit between
LMITCO, LMAES, the Lockheed Martin Corporation, and EG&G, Idaho, Inc.
(LMITCO's predecessor as the INEEL management and operating
contractor). LMITCO seeks to recover the $54 million paid by LMITCO to
LMAES pursuant to the failed Pit 9 Subcontract effort which LMAES and
the Lockheed Martin Corporation promised to return to LMITCO if LMAES
failed to perform. LMAES and Lockheed Martin Corporation have
subsequently challenged in the Idaho Court LMITCO's prior default
termination of the Pit 9 Subcontract. The Department is not a party to
that litigation. We understand that there have been discussions between
LMITCO and LMAES and the Lockheed Martin Corporation. In addition,
LMITCO has been exploring with the Department various mechanisms that
might be available and appropriate to address issues raised by the Pit
9 subcontract dispute. Such an undertaking has been impeded, however,
by the efforts of LMAES and the Lockheed Martin Corporation to have the
Idaho litigation stayed (that is, consideration of its merits delayed)
while they pursue their Washington, D.C. Court of Federal Claims
action.
Question 4: Has DOE considered transmutation of spent nuclear fuel
rather than long-term storage? If so, what were the conclusions of that
assessment?
Answer 4: The Department of Energy commissioned the National
Academy of Sciences in 1991 to conduct a study that evaluated
transmutation of spent nuclear fuel. The Academy's report, published in
1996, stated that the current policy to dispose of spent nuclear fuel
in a geologic repository should continue, and a once-through fuel cycle
for commercial spent nuclear fuel should be maintained. The report
found that accelerator-based transmutation may become available some
decades in the future. But, even then, geologic disposal will be
necessary to dispose of separation waste and activation isotopes.
questions from congressman markey
External Regulation
Question 1: A February 19, 1999 letter from Secretary Richardson to
the Subcommittee Chairman regarding external regulation of DOE
facilities states that in pilot projects ``many of the potential
benefits that we expected to see from external regulation have not been
demonstrated and appear to be outweighed by associated costs and
difficulties.'' What benefits were expected, and why have they not been
seen? What are the costs and difficulties that were found?
Answer: The December 1996 ``Report of the DOE Working Group on
External Regulation, Chapter 5,'' summarized the expected benefits of
external regulation. Key expected benefits included allowing DOE to
focus on its primary missions and ensuring the establishment of a
single set of standards and requirements appropriate to DOE's nuclear
activities. The pilots conducted to date have highlighted the
difficulties in establishing a single set of standards and requirements
for DOE's nuclear activities--and the need to provide for regulatory
flexibility and exemptions through any licensing process. These
benefits have not been fully realized and, in our judgment, are
outweighed by the potential cost impacts associated with the regulatory
uncertainties that have been identified in the pilot program to date.
Copies of two of the three pilot reports (Draft Report on the Pilot
Project on External Regulation of DOE Facilities at Lawrence Berkeley
National Laboratory and Draft Report on the Pilot Project on External
Regulation of DOE Facilities at the Receiving Basin for Offsite Fuels,
Savannah River Site) were delivered to DOE's committees of record on
March 31, 1999, These draft reports contain details of both
implementation issues and costs. Analyses of the results from these
pilots is continuing. The report on the Radiochemical Engineering
Development Center was issued and delivered to Congress on July 2,
1999.
Question 2: The letter notes difficulties upgrading facilities to
meet NRC standards. NRC standards are intended to ensure the safety of
workers and local communities. Is the Department reluctant to provide
its workers and surrounding communities the same level of safety
afforded those at private plants?
Answer: Definitely not. As noted in the draft reports, the issues
are regulatory in nature. The safety assurances provided by existing
DOE and NRC standards utilized by the Department provide at least an
equivalent safety to that of the commercial industry. For those
facilities where the pilots were performed, NRC confirmed this.
Question 3: The issues listed in the letter refer only to NRC
regulation. Has OSHA oversight been easier to implement?
Answer: DOE continues to work with OSHA as well as with the NRC.
With regard to the issues in the February 19, 1999, letter, most of the
uncertainties and issues being addressed were reflective of NRC
requirements. However, some apply equally well to OSHA oversight. In
terms of requirements, the Department already implements OSHA's
regulations pursuant to a memorandum of understanding between the two
agencies. The Department is pursuing several initiatives with OSHA to
define the appropriate oversight of occupational safety at privatized
facilities and on-Atomic Energy Act sites (e.g., fossil energy and
energy efficiency facilities), as well as cooperative agreements to
enhance occupational safety and health in DOE operations.
Renewables and Conservation
Question 1: According to your Department's excellent information
source, the EIA, the amount of electricity generated from wind in the
United States decreased from 11 million kilowatthours in 1995 to 6
million kilowatthours in 1997, and photo-voltaics similarly decreased
from 4 to 3 million kilowatt hours. Why has production from these
emerging renewable energy sources decreased? To what extent are federal
policies, state policies and competition in the electric industry
responsible for what I hope is a temporary setback for these clean
energy sources?
Answer: The most recent figures for the amount of wind and solar
electricity generated in the United States can be found Table A17 of
EIA's Annual Energy Outlook 1999, page 134. The figures for 1995 are in
the same table in the same publication for 1998, page 122. The relevant
portions of these tables are reproduced below:
Table A17. AEO 1998 and 1999 Renewable Energy Generation
(in billion kilowatt hours)
------------------------------------------------------------------------
2000 2020
1995 1997 forecast forecast
------------------------------------------------------------------------
Solar Thermal..................... 0.82 0.90 0.95 1.44
Solar Photovoltaic................ 0.00 0.00 0.09 1.56
Wind.............................. 3.17 3.41 6.11 8.44
------------------------------------------------------------------------
These tables show that wind generation increased almost 10 percent
from 1995 to 1997. Although photovoltaic electricity is not yet
generating in quantities large enough to be measured in billions of
kWh, it continues its rapid growth. Energy Information Administration
reports an increase of almost 50% in the number of kilowatts of
photovoltaic cells and modules shipped by U.S. manufacturers from 1995
to 1997 (Renewable Energy Annual 1998.)
Question 2: Could you highlight a few recent accomplishments of the
DOE renewable energy and energy efficiency programs?
Answer 2: The following list provides a brief summary of
accomplishments of the renewable energy and efficiency programs.
<bullet> Office of Building Technology State and Community Programs:
Consumer savings totaling more than $33 billion since 1978. A
recent example is the Department's Energy Star program. In
1998, more than 50 manufacturing partners signed on to the
Energy Star program to produce and label Energy Star windows,
doors, and skylights. Currently, more than 2,000 retail store
partners (including such giant national chains as Home Depot,
Circuit City, and Montgomery Ward), 33 utilities, and nine
major appliance manufacturers nationwide stock and promote
Energy Star products.
<bullet> Office of Industrial Technologies: Over 100 energy saving
technologies in the market, saving $2.1 billion since 1985. The
Bethlehem Steel Corporation recently joined with the
Department's Office of Industrial Technologies to showcase
energy saving technologies for the steel sector. To remain
competitive in the global marketplace, U.S. steel producers
much reduce production costs while improving the quality of
their products. A critical component of lowering overall
production costs is reducing energy consumption during
production. Bethlehem Steel's Bums Harbor, Indiana, steel mill
will install six advanced steel making technologies and
processes, that if implemented throughout the steel industry,
could provide net energy savings by 2005 of over 93 million Btu
per year, the equivalent of $198 million.
<bullet> Office of Transportation Technologies: Over 50 models of cars
and trucks, using fuel efficiency technologies and alternative
fuels are saving 2 billion gallons of conventional fuel a year,
consumer savings since 1978 near $10 billion, oil savings near
20 billion gallons. The Department's Clean Cities Partnership
Program is a voluntary, locally based, government/industry
partnership to expand the use of alternative fuel vehicles
(AFVs) and by building a local AFV refueling infrastructure.
Over the past four years, 67 communities have joined the Clean
Cities effort, enabling deployment of more than 200,000 AFVs in
both public and private fleets. The vehicles will reduce
gasoline and diesel fuel use by an estimated 210 million
gallons per year and emissions by an estimated 54,000 metric
tons through 2005.
<bullet> Federal Energy Management Program: The Program has reduced
annual Federal energy costs more than $800 million from
projected 1985 levels. Additional taxpayer savings directly
from EERE federal programs is nearly $1.5 billion. Award of
five delivery orders under the Western Region Super ESPC will
provide private sector investments of over $7 million for
projects at Coast Guard, FAA, GSA, Forest Service, and VA
facilities. The projects Will result in $14.4 million in
savings to the government over the term of the delivery orders.
<bullet> Office of Power Technologies: Renewable energy costs are down
80% since 1980. Over $5 billion in U.S. produced renewable
sales this decade. World's Largest Wind Power Facility. In
1998, Enron Wind Corporation began operation of the world's
largest wind power facility, a project of 143 wind turbines.
spread across 15 miles of farmlands near Lake Benton,
Minnesota, for a total generating capacity of 107 MW. Enron has
publicly credited their research partnerships with the
Department as essential to the development of the technology
making this wind plant possible. Enron's turbine manufacturing
subsidiary, Zond Energy Systems Inc. of Tehachapi, California,
partnered with the Department under its wind turbine research
and field verification programs for the development of the Z-
550, Zond's first commercial wind turbine. The advanced design
tools, technical assistance, testing capabilities, and utility
operating experience made possible by the Department's Wind
Program were critical to the successful development of Zond's
Z-750 turbine used in the Minnesota project. Enron Wind Corp.
has several hundred additional megawatts of wind power now
under development.
Nuclear Energy Research
Question 1: Dr. Moniz, if you believe in free markets, as I do,
then government subsidies should be reserved for emerging industries
that need initial support or for clear national interests.
a. Would you consider nuclear power an emerging industry or a
mature industry?
b. I see that the DOE budget includes $5 million for a new program
to extend the life of existing nuclear reactors, presumably beyond
their 40 year licenses. After 40 years, why can't the industry fund its
own research?
Answer: a. The nuclear power industry is a mature industry and we
do not subsidize it.
b. Industry is investing over $80 million annually to conduct
short-term nuclear power plant research and development. This work
focuses on issues such as plant relicensing. The Nuclear Energy Plant
Optimization (NEPO) program is focused on longer-term, higher-risk
research and development aimed at improving the state of nuclear power
technology in order to realize important strategic benefits for the
Nation--such as the reduction of greenhouse gas emissions. Despite the
fact that this program represents a longer-term technology investment
than is generally funded by industry, the Electric Power Research
Institute has committed to funding 50 percent of the research cost. We
believe that achieving strategic benefits such as reducing air
emissions is an important role for government and our proposed $5
million program represents a very modest investment for the future.
Question 2: The budget also increases funding for new reactor
concepts to $25 million.
c. Given that no new reactor has been order and built for 25 years,
what are the chances that any of these reactor will ever get built?
d. If you were CEO of an electric utility in a competitive
industry, would you risk bankrupting your company to try to build a new
nuclear plant?
Answer: a. The purpose of the Nuclear Energy Research Initiative
(NERI) program is to maintain nuclear energy as a viable option for the
future by addressing obstacles to long-term deployment of nuclear
energy through improving plant economics, providing for proliferation
resistant technologies, and addressing issues associated with waste.
b. Nuclear power plants are among the most efficient sources of
baseload electricity available today, with operating costs averaging
1.9 cents per kilowatt-hour. True, the construction cost of past plants
has been a major factor in the fact that no new plants have been built
for many years, however we believe advances in technology--such as are
pursued in the NERI program--can lead to plants that are cost
competitive to build and operate.
questions from representative shimkus
Biodiesel
Question 1: Last year, the Congress passed legislation (P.L. 105-
388) to reauthorize the Energy Policy and Conservation Act. Included in
this bill was language directing the Department of Energy to issue a
rule on the use of biodiesel in the alternative fuel vehicle program
under Energy Policy Act. The deadline for rule issuance was January 1,
1999. What is the status of this rule? When does the Department expect
to issue a rule, as directed by the Congress?
Answer: The Energy Conservation Reauthorization Act of 1998 amended
the Energy Policy Act of 1992 (EPACT) to create a Biodiesel Fuel Use
Credit. The Biodiesel Fuel Use Credit will allow for the allocation of
an alternative fuel vehicle (AFV) acquisition credit for a specified
amount of biodiesel fuel use by a fleet or covered person currently
required to purchase a certain percentage of AFVs under EPACT's titles
III and V.
Although the Energy Conservation Reauthorization Act was signed
into law on November 13, 1998, it called for a rule to be issued by
January 1, 1999. DOE regrets that the rule was not issued by the
statutory date. The Department has issued an interim rule, which took
effect on May 19, 1999. Although the interim rule would take effect
fight away, DOE would also establish a comment period during which
interested parties could comment on the interim rule. Those comments
would be taken into consideration by the Department before issuing a
final rule. We would expect to issue a final rule by fall 1999.
We are enthusiastic about realizing the benefits offered by
increased use of fuels from renewable sources, and are expecting that
this legislation is resulting in expanded sales of biodiesel fuel.
Question 2: As you know, the Department collects data for other
fuels such as natural gas. Does the Department of Energy plan on
collecting biodiesel fuel use data? Additionally, does the Department
plan on holding training sessions, in cooperation with the biodiesel
industry, for fleet managers who are interested in using biodiesel in
their fleets? When will these meetings begin?
Answer: The Department does plan on collecting annual biodiesel
fuel purchase data from those fleets choosing to utilize the biodiesel
fuel use credit to meet, in part, their alternative fueled vehicle
purchase requirements under the Energy Policy Act of 1992. We plan to
revise the annual reporting form, DOE/OTT/101, Annual Alternative
Fueled Vehicle Acquisition Report for State Government and Alternative
Fuel Provider Fleets, so that State and alternative fuel providers can
report their biodiesel purchases and claim credits. The Department also
plans to amend the Federal Energy Management Program reporting form to
allow Federal fleets to report their biodiesel purchases and claim
credits.
The Department does not, at this time, plan to hold training
sessions for fleet managers who are interested in using biodiesel in
their fleets. We are hopeful that the issuance of the Interim Final
Rule, be published in the Federal Register on or about May 19, 1999,
will provide sufficient guidance to fleet managers regarding the
biodiesel fuel use credit. However, if the biodiesel industry believes
that some other form of guidance, be it training sessions, guidance
documents or some other media, is necessary, the Department stands
ready to work with industry to see that fleet managers have the
information necessary to make informed decisions regarding the
biodiesel fuel use credit.
questions from congressman strickland
Worker and Community Transition Office
Question 4A. Your testimony indicates that the funding request for
the Worker and Community Transition Office is $30 million. Frankly, I
am concerned that this funding may be inadequate and I say this because
I am well-aware of imminent layoffs at the gaseous diffusion plants
this year. And, beyond July 2000, as I explained in my opening
statement, there remains no restriction on the number of additional
reductions in the workforces at the two sites. With that said, it is
important for me to point out that the Department has a proposal from
the Southern Ohio Diversification Initiative, the Community Reuse
Organization in Piketon, Ohio, requesting just under $6 million for
development of industry ready sites and parks. With that understanding,
are you confident that $30 million will meet the needs of all of the
DOE sites throughout the complex? If not, will the Department support a
reprogramming necessary to meet the needs of sites like Portsmouth and
Paducah?
Answer 4A. As you know, a formal agreement was signed between the
Department of Treasury and United States Enrichment Corporation (USEC)
limiting work force reductions at the Portsmouth, Ohio and Paducah,
Kentucky gaseous diffusion plants through July 2000. A parallel
agreement between the Department of Energy and USEC established a $20
million fund to cover separation benefits to be provided to separated
workers. In addition, funds from this account not required for worker
benefits can be used to provide community assistance at these sites. We
estimate that approximately $4-6 million will be available from this
fund for community assistance purposes. Additional funding may be made
provided from Worker and Community Transition appropriations based on
established criteria and available funds.
In the event there are major work force reductions at Portsmouth
and Paducah after July 2000 and that available funds would not allow
for consideration of appropriate worker separation assistance, the
Department would consider whether a reprogramming request was
necessary.
P.L. 105-204
Question 1: P.L. 105-204 specifically calls for the Administration
to submit with the President's FY 2000 budget request a plan and
proposed legislation for implementing a depleted uranium hexafluoride
program that includes the construction of conversion facilities at both
the Portsmouth, Ohio and Paducah, Kentucky sites. Could you please
explain why the Budget Request was presented on February 1, 1999 and it
failed to include a plan or proposed legislation for implementing P.L.
105-204 when the law was signed by the President in July, 1998?
Answer: The Initial and Final Plan for the Conversion of Depleted
Uranium Hexafuoride was submitted to Congress on March 12, 1999 and
July 6, 1999, respectively. In the case of the initial plan, the
Department used the extra time to analyze a wide range of possible
activities and work with the Congressional delegations to ensure the
plan met the intent of Congress. The final plan, also reviewed by the
Congressional delegations, reflects the Department's review of the
Expressions of Interest from the private sector and provides a more
detailed, final schedule for the depleted uranium hexafluoride
conversion project. This schedule provides for the construction of
conversion plants two years earlier than anticipated by P.L. 105-204.
With respect to legislation, Public Law 105-204 required the
Secretary of Energy to prepare proposed legislation for consideration
by Congress. Other than funding legislation, the Department does not
believe that additional legislation is necessary at this time. The
Department will continue to consider whether additional legislation is
advisable in light of future developments in the program.
Question 3: You state in your written testimony that ``the
Department expected to publish a formal solicitation for expressions of
interest in construction of these plants within the next week.'' Could
you possibly give me a target date when the Department will issue the
expression of interest?
Answer: The Department issued the solicitation for Expressions of
Interest for construction and operation of conversion plants on March
4, 1999. Expressions of Interest were received from the private sector
on April 5, 1999. A summary of the Expressions of Interest were
provided to Congress on May 13, 1999. The Draft Request for Proposal
was published July 30, 1999, for comment.
Question 5: I would also hope that before a final plan makes its
Way to the Hill, interested Members of Congress, such as myself and Mr.
Whitfield will have the opportunity to review the plan and the
legislation. Could you assure us that, in fact, we win have the
opportunity to provide the Department with our input on the plan?
Answer: Yes. The Final Plan includes input from the affected
Congressional delegations.
Question 6: As you may also know, I sent the Secretary a letter,
dated December 4, 1998 which outline some of my suggestions for
developing a comprehensive plan to construct and operate depleted
uranium hexafluoride conversion facilities at Portsmouth and Paducah.
Could you please tell me when I may expect a response to my
recommendations included in that letter?
Answer: The Department has addressed the recommendations contained
in Representative Strickland's letter of December 4, 1998, as well as
his letter of May 24, 1999, in the Final Plan for Conversion of
Depleted Uranium Hexafluoride (July 6, 1999) and in the draft Request
for Proposal. The Congressman's suggestions were very helpful to the
Department in completing our final plan and issuing a draft Request for
Proposal.
Question 7: More specifically, the December 4, 1998 letter includes
a recommended approach for transferring the funds under P.L. 105-204.
c. Has the Department made preliminary decisions regarding the
transfer of the P.L. 105-204 funds?
d. If so, could you please share them with us. (The letter urged
the Department to secure a nondiscretionary funding source by
identifying an offset. OMB could help identify the offset and this
would avoid an annual appropriations battle to ensure funding.)
Answer: The Department is committed to working to find
opportunities this year to secure acceptable funding sources for the
depleted uranium hexafluoride conversion project. We expect to work
closely with the Ohio and Kentucky delegations on this important issue.
Question 9: One other issue raised in the December 4, 1998 letter
is the issue of creating a process for public comment on the draft plan
under P.L. 105-204. Will there be a formal process for interested
parties to comment on the Plan?
Answer: The Final Plan for Conversion of Depleted Uranium
Hexafluoride (July 6, 1999) included review and incorporates the
comments of interested parties on the plan, including the affected
Congressional delegations. There will be additional opportunities to
provide input on the project as the Department proceeds with
implementation of the milestones contained in the plan. For example,
formal public review is underway at present on the initial draft
Request for Proposal.
Question 10: I am also aware that the Budget Request includes $5
million to initiate a program to recycle depleted uranium hexafluoride.
Could you please explain to us the Department's justification for
recommending only $5 million from the larger P.L. 105-204 funds for the
upcoming fiscal year?
Answer: The Department's fiscal year 2000 budget request includes
$5 million to begin the process of constructing depleted uranium
hexafluoride conversion plants. These funds are included in the Uranium
Program Budget and are requested for activities related to site-
specific National Environmental Policy Act activities and for
procurement activities. The Department has also committed to use USEC
MOA funding for this purpose. The Department is committed to working
closely with the Ohio and Kentucky Congressional delegations to find
opportunities this year to secure additional funding for the depleted
uranium hexafluoride project.
Memoranda of Agreement--$66 Million
Question 15: On another topic, I mentioned in my opening statement
two Memoranda of Agreement established between the Department and USEC
making available $66 million for the maintenance and disposition of the
depleted uranium hexafluoride stored at the Portsmouth and Paducah
sites. I am aware of several proposals presented by the Department for
the best way to spend these funds. I am troubled that the emphasis was
not placed on job creation. These Agreements stem largely from concerns
raised about worker displacement as a result of USEC privatization.
Could you assure me that the $66 million will be spent on activities
directly related to immediate job creation efforts at Portsmouth and
Paducah?
Answer: Of the $66 million in funding the Department received from
the United States Enrichment Corporation (USEC), $38.7 million of those
funds are earmarked for management of approximately 11,200 cylinders
that have or will be received from USEC over the next several years.
Another $3.3 million is earmarked for conversion plant procurement
activities and for accelerating activities conducted pursuant to the
National Environmental Policy Act. We are preserving the remaining $24
million for use as initial funding for the DUF<INF>6</INF> conversion
project, or, if it is not needed for that activity, to fund near-term
projects at the gaseous diffusion plant sites. All of these activities
should. help to increase the number of new jobs created at the Paducah
and Portsmouth Sites and mitigate the impact of workers displaced by
USEC privatization.
Question 18: One last question on the $66 million. The Community
Reuse Organization in southern Ohio has expressed a strong interest in
working with the Department to most effectively use these additional
funds. Will the Department consult with the Community Reuse
Organizations as decisions are made about the allocation of the $66
million?
Answer: We have met with community groups in Ohio and Kentucky and
will continue to meet with these groups to discuss the best approach to
implement overall projects including their suggestions regarding best
use of funds.