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[Senate Hearing 109-25]
[From the U.S. Government Publishing Office]

                                                         S. Hrg. 109-25

 PROPOSED FISCAL YEAR 2006 BUDGET REQUEST FOR THE DEPARTMENT OF ENERGY

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

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   TO

RECEIVE TESTIMONY REGARDING THE PRESIDENT'S FISCAL YEAR 2006 BUDGET FOR 
                        THE DEPARTMENT OF ENERGY

                               __________

                             MARCH 3, 2005

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

                                 ______

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21-194                      WASHINGTON : 2005
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                 PETE V. DOMENICI, New Mexico, Chairman
LARRY E. CRAIG, Idaho                JEFF BINGAMAN, New Mexico
CRAIG THOMAS, Wyoming                DANIEL K. AKAKA, Hawaii
LAMAR ALEXANDER, Tennessee           BYRON L. DORGAN, North Dakota
LISA MURKOWSKI, Alaska               RON WYDEN, Oregon
RICHARD M. BURR, North Carolina,     TIM JOHNSON, South Dakota
MEL MARTINEZ, Florida                MARY L. LANDRIEU, Louisiana
JAMES M. TALENT, Missouri            DIANNE FEINSTEIN, California
CONRAD BURNS, Montana                MARIA CANTWELL, Washington
GEORGE ALLEN, Virginia               JON S. CORZINE, New Jersey
GORDON SMITH, Oregon                 KEN SALAZAR, Colorado
JIM BUNNING, Kentucky

                       Alex Flint, Staff Director
                   Judith K. Pensabene, Chief Counsel
                  Bob Simon, Democratic Staff Director
                  Sam Fowler, Democratic Chief Counsel
                 Carole McGuire, Deputy Staff Director

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................    31
Alexander, Hon. Lamar, U.S. Senator from Tennessee...............    20
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     4
Bodman, Samuel A., Secretary, Department of Energy...............     5
Domenici, Hon. Pete V., U.S. Senator from New Mexico.............     1
Salazar, Hon. Ken, U.S. Senator from Colorado....................     3

                                APPENDIX

Responses to additional questions................................    43

 
 PROPOSED FISCAL YEAR 2006 BUDGET REQUEST FOR THE DEPARTMENT OF ENERGY

                              ----------                              

                        THURSDAY, MARCH 3, 2005

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:11 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Pete V. 
Domenici, chairman, presiding.

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

    The Chairman. First, let me say I know from the issues that 
a number of Senators, pointing over here to my good friend from 
Kentucky, have specific areas of questions, like the whole coal 
issue. I want to make sure we get to you. So I'm going to try 
very hard to stay and keep the timing, if you'll help me, Jeff, 
so Senators will get a chance before we're out of time.
    I'm not going to do a lot with my opening statement. I ask 
that it be made a part of the record, and if there's no 
objection, it will be.
    I want to raise an issue which I am certain Senator 
Bingaman is going to raise in his opening remarks. There are 
many, many issues of significance that you have to deal with 
that are very, very important. I've already told you that I 
commend you on the way you're taking to this job. I think you 
have a real opportunity for probably more good public service 
than you ever expected.
    But one of the really important institutions you know about 
and we know about is Los Alamos National Laboratory. You know 
what happened in an effort to solve safety and secret-leaking 
problems, and we had to shut down. I'm now talking about the 
contract. You expressed quite succinctly, if you change 
something that's been in existence for 60 years, there's got to 
be some angst, some anguish.
    I think you can't leave this all up to NNSA. I think it's 
very important that you involve yourself as soon as possible. 
Some of the things that have been proposed are just very 
discouraging to me. The University of California had Los Alamos 
for a long time, and there was a lot that happened in 60 years. 
But, you know, the paramount thing is it remained a great 
institution, as you so aptly said. You went there because it 
has this magnificent history.
    Well, they were the managers, right? They were involved. 
I'm almost of the opinion that these new contract specs are 
almost calculated to make sure that it's very, very hard for 
the University of California to get the bid, and I don't really 
think that's fair.
    In particular, this whole notion of setting up a new 
separate corporation, you're aware of that. I don't know what 
they attempted to do there, but the employees have a very hard 
time understanding what that does to them. There are some other 
issues that perhaps Senator Bingaman will mention that are 
very, very difficult.
    So I'm just asking you today if you will really pay 
attention to that. You can't afford to have a huge migration of 
scientists because of a contract bidding process. Now, maybe it 
won't happen, but you don't want it to happen. We don't want it 
to happen. So I really urge that you seriously look at this 
situation. We will have our own discussion with contract 
bidders on what this RFP means, and that's our prerogative.
    So having said that, my other remarks have to do with other 
issues that I'll take up in questions.
    Senator Bingaman.
    [The prepared statements of Senators Domenici and Salazar 
follow:]

       Prepared Statement of Hon. Pete V. Domenici, U.S. Senator 
                            From New Mexico

    Good morning. I want to welcome Secretary of Energy Samuel Bodman 
to the Committee this morning in his first official appearance since 
his confirmation as Secretary. I am pleased you are here to discuss the 
President's FY 2006 budget request for the programs of the Department 
of Energy.
    I am also pleased to note that the Senate has received the 
nomination of Clay Sell to be the Deputy Secretary of Energy. I hope to 
have his confirmation hearing very soon.
    I welcome my Ranking Member, Senator Bingaman, and the members of 
the committee to today's hearing. The Department of Energy has a 
significant presence in New Mexico, and I know Senator Bingaman and I 
will both have questions for you, Mr. Secretary.
    I must say, Mr. Secretary, that the FY 2006 budget presents a real 
challenge to this Committee and the Congress. The non-defense, non-
homeland security discretionary budget is held about one percent below 
current funding levels.
    The President's request of $24.3 billion for the Department of 
Energy represents a two percent reduction--about $475 million--below 
the current level. As the Congress continues its work to develop a 
comprehensive national energy policy, the Administration's budget 
proposals for DOE will require some careful consideration.
    In his State of the Union address, President Bush singled out 
nuclear power as a safe and clean source of energy and advocated more 
of it. That is the first time I remember a U.S. President emphasizing 
nuclear energy in a State of the Union Speech.
    I am delighted to see some of the nuclear programs I helped create 
receive significant support from the Administration this year.
    However, for Congress to fund some of the President's priority 
programs such as nuclear energy R&D, the hydrogen fuel initiative, 
carbon sequestration, and Nanoscale science, for example, Congress will 
have to accept some of the President's proposed funding reductions.
    Senator Bingaman and I will host a coal conference next week on 
March 10 to discuss coal and the challenge of developing and using coal 
in an environmentally-friendly manner to help meet growing U.S. demand 
for electricity. We are very interested in the President's proposals 
for DOE coal programs.
    I know there will be concern about programs the Administration 
proposes to terminate, which include the hydropower program, and 
research on oil and gas technology.
    The Administration also proposes significant savings in the 
environmental management area, which I know our members will want to 
discuss.
    I am particularly concerned that the Administration's budget would 
reduce funding for the Office of Science by nearly 4 percent.
    The Office of Science is the largest source of government support 
for research in the physical sciences. While we are clearly in a period 
of budget constraints, I question whether the proposed reductions in 
physical science research activities are in the long-term interest of 
the United States.
    Finally, the Administration proposes significant savings in 
mandatory programs under this committee's jurisdiction--about $40 
million in FY 2006, but nearly $3.1 billion over five years. These 
savings come from a proposal to allow Power Marketing Administrations 
(PMAs) to charge up to market rates for power. This proposal has 
already received much discussion by the members of this Committee.
    The programs of the Department of Energy affect all our 
constituents. They are important to the economic and national security 
of our nation.
    I am very pleased to welcome you today, Secretary Bodman. I look 
forward to working with you on comprehensive national energy policy 
legislation, and the nuclear weapons issues through the NNSA, which we 
will not specifically discuss today.
    I know we are anxious to hear your testimony and will have 
questions for you Mr. Secretary. We appreciate your appearance today 
after your short time on the job.
    I would ask you to summarize your testimony in 10 minutes, and ask 
unanimous consent to place your full written statement in the record.
    I would ask my colleagues to keep any opening comments brief so we 
can get to the questions and answers portion of the hearing.
    I would now ask my good friend and Ranking Member, Senator 
Bingaman, to make any opening statement he might wish. Then I will 
rotate back and forth to members based upon the order in which they 
arrived today.
    Thank you. Senator Bingaman, please proceed.

                                 ______
                                 
   Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado

    Thank you Mr. Chairman, and good morning to you and the members of 
the committee. I'd like to welcome Energy Secretary Bodman. It is good 
to see you again, Mr. Secretary. I look forward to our conversation 
this morning.
    The Department of Energy is responsible for a very large number of 
programs. Their reach extends from nuclear weapons research and nuclear 
waste disposal to power marketing administration and renewable energy. 
Even if this hearing were to last all day--and I hope that won't be the 
case--we would barely scratch the surface of the Energy budget.
    With this in mind, I will be focusing only on a few issues, ones 
that I feel are important to Colorado and to the United States. 
Specifically, I will be asking questions that target our country's path 
forward to energy independence.
    As you are well aware, Mr. Secretary, the National Renewable Energy 
Laboratory in Colorado is important not only to Colorado but to the 
whole country. Research in laboratories like NREL will drive our future 
energy strategy. While you have only been on the job for a short while, 
I would like to take this chance to commend you for your personal 
dedication to funding that laboratory and the work that goes on there.
    Mr. Secretary, I am sure we are both in agreement that if the 
United States could meet its energy demands without relying on foreign 
oil, the benefits would be enormous. For starters, we would 
significantly reduce the trade deficit, since money used to purchase 
fuel stocks would stay within our borders. Domestically produced energy 
would create more American jobs. In fact, the Union of Concerned 
Scientists has recently released a report stating that if only 10% of 
our energy demands came from renewable sources, this would create 
91,000 new jobs and would save industrial, business, and home energy 
consumers $28.1 billion dollars. From a national security standpoint, 
reduced demand for oil from the Middle East would significantly 
diminish the power of oppressive regimes in that region. And since 
America will not be able to achieve energy independence without a 
significant contribution from renewable sources like biomass or wind 
power, the environment would benefit substantially as well.
    Given the tremendous benefits our nation would reap on a path 
towards energy independence, I can not understand why the value of 
renewable energy is repeatedly sold short by this administration. I am 
very concerned about the economic models used by DOE to determine the 
costs of instituting a renewable portfolio standard, because I believe 
those costs are being grossly misrepresented.
    Mr. Secretary, in the DOE economic models, your estimates are based 
on numbers that simply do not hold up to inspection. The DOE budget 
request, volume 3, page 26, states that the estimated benefits due to 
the projected Energy Efficiency and Renewable Energy portfolio are 
based on the Energy Information Administration's (EIA's) Annual Energy 
Outlook 2004 Reference Case. By this model, the price of a barrel of 
oil in 2003 dollars is $35 in 2004, drops to $25 by 2010, and then 
slowly rises to $30 dollars in 2025. These forecast prices would be 
laughable if the repercussions for our nation's future were not so 
serious. The average price for a barrel of oil was approximately $41 in 
2004, and prices are above $50 per barrel even as we speak. Some 
economists now speculate there may be a new floor for oil prices at $40 
per barrel. Similarly, the EIA model for natural gas prices is also too 
low to be credible. Our nation deserves an analysis based on a 
realistic economic model and I will be asking you to provide me with 
that analysis.
    The reason the economic model is so important to me--and so 
important to the country--is that a wrong model can cause the nation's 
energy priorities to be misplaced. A wrong model can be used to support 
incorrect decisions, allowing the President to cut programs that need 
more funding, and allowing him to continue to fund programs that should 
be cut. I believe that the economic model being used by your agency 
needs to be put through the wringer, so to speak, in order that this 
committee and the American public can get a better sense of the 
advantages that renewable energy sources will provide.
    Mr. Secretary, I would like to thank you in advance for your candor 
in answering this committee's questions here today.

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

    Senator Bingaman. Thank you very much, Mr. Chairman. First, 
I welcome the Secretary and I appreciate his visit to our State 
last week, and I know it was very well received at both of our 
national laboratories in particular. There are very serious 
concerns about various parts of the budget, and I'll raise 
those in questions.
    Let me just underscore the issue that Senator Domenici 
raised; that is, this contract competition process that's been 
put in place there at Los Alamos. The way the process is now 
structured, as I understand it, it is designed to essentially 
ensure that whoever wins the contract, the employees at Los 
Alamos can no longer continue to be employed with the 
University of California and can no longer continue to receive 
the benefits that they have been entitled to under the 
University of California pension system.
    There's been a decision made within the Department of 
Energy to essentially require that any bidding be done by a 
separate corporation, and that there be a stand-alone pension 
system put in place for that location, a site-specific pension 
system.
    To my mind, this sort of undercuts the overall purpose of 
the contracting idea in the first place. The whole idea behind 
having a competition, as I understood it, was this was seen as 
a way to strengthen the laboratory, to make it more of a 
contributor to our national security. I'm concerned that the 
effect of this competition is to destabilize the laboratory, 
and it is to cause many of the most talented people there to 
look seriously at moving to some other location or some other 
employer, and that would be very unfortunate, as I see it.
    This is an issue that requires attention by you if 
anything's going to change. I think it's well on its way, and 
you're obviously fairly new to your position. But I think it 
would be a shame to just see it play out the way it now appears 
to be playing out, because it seems to me that if it does play 
out the way it's slated to play out, it's going to have very 
adverse consequences for the laboratory.
    So I raise that and I look forward to any comments you have 
on it, or any chance we have in the future to visit on it, and 
any opportunity you see for any of us here in Congress to be 
helpful in this process, because, as I say, I'm seriously 
worried about the impact of the competition process on this 
laboratory.
    Thank you very much, Mr. Chairman.
    The Chairman. Thank you, Senator Bingaman.
    Now we're going to proceed and have the Secretary give his 
statement. Thank you for coming, and would you abbreviate as 
much as you can? Your statement will be made a part of the 
record, and I thank you again.

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

    Secretary Bodman. Thank you, Mr. Chairman. It's a privilege 
to be here. I have a brief statement, and then I would like to 
make a comment on both your remarks as well as Senator 
Bingaman's. I'm very pleased to be here and I thank the 
committee for offering me this opportunity.
    On February 2, the President in his State of the Union 
address underscored the need to restrain spending in order to 
sustain our economic prosperity. This has been much in the news 
since that time. Of the more than 150 reductions, reforms, and 
terminations in the non-defense discretionary programs in the 
President's 2006 budget, six are DOE programs.
    These include the termination of the nuclear energy plant 
optimization program; the nuclear energy research initiative; 
hydropower and oil and gas research and development programs; 
reduced spending for environmental management; and a reform of 
the power marketing administration electrical rates.
    All are topics that I've had conversations with this 
committee about in the past. I look forward to working with the 
committee in order to achieve the savings that are described in 
these proposals.
    At $23.4 billion, the Department's 2006 budget is $475 
million below the 2005 appropriation, and it therefore will 
contribute to the President's goal of reducing our deficit. 
Overall, it's a 2-percent reduction from 2005. About $8.3 
billion of the 2006 request is for energy, science, and other 
programs within the jurisdiction of this committee.
    Over the past 4 years, improvements in the management of 
the Department through the President's management agenda 
increased our ability to deliver tangible results through our 
various programs. An example is reducing the high volume cost 
of automotive fuel cells from $275 per kilowatt in 2002 down to 
the approximately $200 per kilowatt in 2004, using the 
processes developed in partnership with the national labs. This 
number has got to get to $50 a kilowatt in order to have 
something that's commercially viable, but we're starting to 
move into that range.
    We've also made progress in our efforts to ensure that the 
nuclear power remains part of the Nation's fuel mix. In 2006, 
we propose to accelerate efforts to promote near-term 
construction of new nuclear power plant designs in the United 
States. We're also working internationally to develop advanced 
nuclear technologies to take us to the next level in terms of 
efficiency, reliability, and security.
    The long-term viability of nuclear power requires 
environmentally sound management of high-level radioactive 
waste and spent nuclear fuel generated from nuclear power 
plants. Therefore, the Department in the last 2 years has 
transformed the focus of our civilian radioactive waste 
management program from scientific research to construction of 
a permanent nuclear waste repository.
    In addition to nuclear research, we're focusing resources 
on other new technologies to meet future energy and 
environmental challenges. These are investments in 
transformative technologies that will change the way we use and 
produce energy.
    We're pursuing a path toward a hydrogen economy with 
affordable zero emissions fuel cell vehicles, abundant sources 
of production, and the safe storage and transportation of 
hydrogen fuel. The Department is developing carbon 
sequestration, which when used in conjunction with advanced 
power production technologies, could help reduce the 
environmental impact of coal-fired power generation.
    We're also contributing to the effort known as ITER, or the 
International Thermonuclear Experimental Reactor. This is an 
international effort to pursue the promise of clean, safe, 
renewable, and commercially available fusion energy by the 
middle of this century, very long term, but it's one of these 
things that's so good we can't, in my judgment, afford not to 
be a participant.
    The strong investment that the Department continues to make 
in advanced, cutting-edge science enables us to explore the 
possibilities of fusion and hydrogen to add strong options to 
the Nation's energy portfolio. The DOE budget request charts a 
focused course of investment for the Nation's future. I feel 
both excited and personally privileged to have the opportunity 
of leading this Department to fulfill the vision that the 
President has laid out for the year 2006 and beyond.
    If I may, Mr. Chairman, before concluding, I would just 
give you the commitment that I will certainly involve myself in 
the Los Alamos pension question that both you and Senator 
Bingaman have asked about. I have already spoken at length to 
the director of NNSA about this, and I am due to meet--I think 
it's next week, but soon--in an appropriate way with the 
chairman of the board that will be doing the selection, to talk 
about the RFP.
    I can tell you, Senator Bingaman, that the goal of the RFP 
was to try to level the playing field, and not to try to 
exclude anyone. So the reasons for the various features in the 
proposal were not to exclude anyone, but to include anyone. 
That was the goal, and to the extent that sometimes when one 
designs these things, you can have unintended consequences, to 
the extent that that's what has occurred here, you have my 
commitment, sir, that I will certainly look into it and do my 
best to see to it that we have a fair process.
    Mr. Chairman, that concludes my remarks.
    [The prepared statement of Secretary Bodman follows:]

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

    Good Morning, Mr. Chairman and Members of the Committee. I am 
pleased to appear before you today to discuss the President's FY 2006 
budget request for the Department of Energy (DOE).
    Before I address the highlights of our FY 2006 budget request I 
want to take us back to the President's February 2nd State of the Union 
Address. In his address to the nation the President underscored the 
need to restrain spending in order to sustain our economic prosperity. 
It is important that total discretionary and non-security spending be 
held to the levels proposed in the FY 2006 Budget to achieve the 
President's goal to cut the budget deficit in half by 2009. Overall, 
the FY 2006 Budget includes more than 150 reductions, reforms, and 
terminations in non-defense discretionary programs, of which six are 
DOE programs. These include termination of Nuclear Energy Plant 
Optimization, Nuclear Energy Research Initiative, Hydropower and Oil 
and Gas research and development programs; reduced funding for 
Environmental Management; and reform of the Power Marketing 
Administrations' electricity rates. We look forward to working with you 
to achieve these savings.
    At $23.4 billion the Department's FY 2006 budget is $475 million 
below the FY 2005 appropriation contributing to the President's deficit 
reduction goal Overall, this is a two percent reduction from FY 2005--
savings that reflect DOE's commitment to improved management, 
streamlined operations and results-driven performance. In the past four 
years, the Department has excelled to rank among the top Federal 
agencies in meeting the challenges of the President's Management 
Agenda. Funding decisions in the FY 2006 budget were driven by 
performance and measures of program effectiveness to achieve the goals 
set forth in the Department's Strategic Plan consistent with the goals 
of the President's Management Agenda. Owing in part to the successful 
implementation of these management initiatives, this budget is an 
investment formulated to deliver results in its four strategic mission 
areas: Defense, Energy, Science and the Environment.
    Over the past four years, improvements in the management of the 
Department increase our ability to deliver tangible results throughout 
our various programs. An example is the progress made to reduce the 
high-volume cost of automotive fuel cells from $275 per kilowatt in 
2002 to $200 per kilowatt in 2004, using innovative processes developed 
in partnership with the national laboratories and fuel cell developers 
toward a goal of $50 per kilowatt
    The Department has also made progress in its effort to ensure that 
nuclear power remains part of the nation's fuel mix. We have sharpened 
efforts to develop advanced nuclear energy technologies by focusing on 
the fundamental research and development challenges necessary to 
establish the viability of advanced nuclear energy technologies. This 
includes the development of advanced fuel cycle technologies to 
significantly improve fuel performance, energy utilization, and 
proliferation resistance for nuclear reactors. In FY 2006, we propose 
to accelerate efforts to promote near-term construction of new nuclear 
power plant designs in the United States. We are also working 
internationally to develop advanced nuclear technologies to take us to 
the next level in terms of efficiency, reliability, and security.
    The long-term viability of nuclear power requires environmentally 
sound management of high-level radioactive waste and spent nuclear fuel 
generated from nuclear power plants. Therefore, in parallel with our 
efforts to expand nuclear power generation, the Department in the last 
two years has successfully transformed the focus of our Civilian 
Radioactive Waste Management Program from scientific research to 
construction of a permanent nuclear waste repository. The transition 
was the result of the 2002 recommendation by the President and approval 
by Congress to designate Yucca Mountain, Nevada, as the site for the 
nation's permanent nuclear waste repository.
    In addition to advanced nuclear research, we are focusing our 
resources on other new technologies to meet future energy and 
environmental challenges. These are investments in transformative 
technologies that will change the way we use and produce energy. We are 
pursuing a path toward a ``hydrogen economy''--with affordable zero 
emissions fuel cell vehicles, abundant sources of production, and the 
safe storage and transportation of hydrogen
    The Department is developing carbon sequestration which, when used 
in conjunction with advanced power production technologies, could help 
ensure that this country's 250-year-coal reserves can be used with 
dramatic reductions in emissions of air pollutants. Further, we are 
contributing to the international effort, known as the International 
Thermonuclear Experimental Reactor (ITER), as the next step toward 
producing clean, safe, renewable, and commercially available fusion 
energy near the middle of this century. The strong investment the 
Department continues to make to advance cutting-edge science has 
enabled us to explore the possibilities of fusion and exploit the 
potential of hydrogen to add strong options to the nation's energy 
portfolio.

                       THE FY 2006 BUDGET REQUEST

    The Department's FY 2006 budget totals $23.4 billion, of which $8.3 
billion is for energy, science and all other programs within the 
jurisdiction of this Committee. Knowing the Committee's strong interest 
in all of the Department's programs, I would first like to address the 
overall priorities used to formulate the FY 2006 budget.
    The FY 2006 budget proposal that was submitted to Congress is a 
balanced and responsible portfolio of important investments for U.S. 
national and energy security that:

   Meets the requirements of the Nuclear Posture Review--The 
        budget includes $6.6 billion for weapons activities, a 0.7 
        percent increase above the FY 2005 appropriation. The request 
        supports scheduled research and development, maintenance and 
        evaluation, and certification for the nuclear weapons stockpile 
        as supported by the Nuclear Posture Review. I am pleased to 
        report that for eight consecutive years, the Secretaries of 
        Defense and Energy have reported to the President that the 
        nuclear weapons stockpile remains safe, secure and reliable. I 
        will join the Secretary of Defense soon in my first assessment 
        of the state of our nuclear stockpile.
   Proposes an aggressive nuclear nonproliferation agenda--The 
        FY 2006 budget includes $1.6 billion for defense nuclear 
        nonproliferation activities, a 15 percent increase above the FY 
        2005 appropriation. Projects include shutting down two 
        plutonium reactors in Seversk, Russia by 2008, completing 
        security upgrades in Russia by 2008, expanding the Megaports 
        program, and expanding research and development to improve 
        materials detection. All these efforts are directly related to 
        homeland protection. This increase demonstrates the President's 
        commitment to prevent, contain, and roll back the proliferation 
        of nuclear weapons-usable materials, technology, and know-how.
   Secures and safeguards nuclear materials--The budget 
        includes $1.4 billion for safeguards and security activities to 
        ensure protection for all nuclear weapons facilities, 
        scientific laboratories and facilities, and nuclear waste 
        material at our environmental cleanup sites.
   Continues progress on the Yucca Mountain nuclear waste 
        repository--The budget provides $651 million to support the 
        completion of the application process that precedes issuance of 
        construction authorization for the Yucca Mountain project.
   Maintains the accelerated environmental cleanup program--The 
        FY 2006 budget proposes $6.5 billion within the Environment 
        Management program to continue to meet the accelerated schedule 
        for cleanup of contaminated sites left behind by Cold War-era 
        nuclear development. The Department has cleaned up 76 of the 
        107 sites to date. By the end of FY 2006, a number of 
        additional sites will close including Rocky Flats, CO, and 
        Fernald and Mound in Ohio.
   Sustains important scientific investments--The budget 
        includes $3.5 billion for Science activities, including 
        continued operation of DOE's scientific facilities, completion 
        of the construction of the most intense pulsed neutron beams in 
        the world known as the Spallation Neutron Source, support for 
        scientific supercomputing, nanoscale research centers, and 
        basic research in genomics and hydrogen.
   Capitalizes on emerging opportunities in nuclear, fossil and 
        renewable energy and energy efficiency--The budget includes 
        $2.6 billion for energy resource programs to enable a reliable, 
        secure and affordable supply of energy for our Nation's growing 
        economy, while doing so in an environmentally responsible way.

           SAFEGUARDS AND SECURITY THROUGHOUT THE DEPARTMENT

    Securing our Nation's nuclear weapons, weapons-usable materials, 
information, and infrastructure from harm, theft or compromise and 
safeguarding complex wide DOE workers is one of the Department's 
highest funding priorities. That job has an impact on every program in 
the Department of Energy, and it has become more difficult and costly 
as a result of the increased post-9/11 threat to nuclear warheads and 
associated fissile materials.
    The FY 2006 budget request ensures implementation of the 2003 
Design Basis Threat (DBT) requirements and postures the Department to 
respond to the emerging specificity of the 2004 DBT requirements. The 
2004 DBT, approved in October 2004, established the high-level 
safeguards and security requirements from which the security scope of 
each specific DOE site is being finalized. As we implement 2003 DBT 
requirements by the end of FY 2006, we will ensure that the specific 
actions are consistent with the 2004 DBT requirements so we can meet 
our goal to implement the 2004 DBT by FY 2008. Funds in FY 2006 will be 
used, among other things, to upgrade protective forces weapons, 
training and equipment; fortify storage structures to withstand 
explosive impacts; improve earlier detection and assessment of 
intrusion; consolidate nuclear material; and install additional delay 
mechanisms and barriers around critical facilities in order to protect 
our facilities against an evolving threat. Let me be clear, we will do 
what needs to be done to sustain our protective force readiness and our 
ability to secure the complex.

                            ENERGY PROGRAMS

    The Department's $2.6 billion request for energy resource programs 
features investments focused on making current forms of energy more 
reliable, secure, efficient, and environmentally friendly; and develops 
long-term energy solutions to help reduce America's dependence on 
foreign energy sources. The Department's FY 2006 energy resources 
budget maintains the priorities established in the President's National 
Energy Policy. The budget continues initiatives in hydrogen use and 
production, electricity reliability, and advanced coal and nuclear 
power technologies. Investments in these pivotal areas honor a 
commitment to strengthen the Nation's energy security for the near-term 
and for generations to come.
    As part of the President's FY 2006 Budget, the Administration 
proposes several tax incentives to spur the use of clean renewable 
energy and energy-efficient technologies. Consistent with the 
President's National Energy Policy, the tax incentives include credits 
for the purchase of hybrid and fuel-cell vehicles, residential solar 
heating systems, energy produced from landfill gas, electricity 
produced from alternative energy sources such as wind and biomass, and 
combined heat and power systems.
    I join President Bush in calling on Congress to pass energy 
legislation While many of the initiatives in the National Energy Policy 
have been implemented, legislation is needed to modernize and improve 
our electricity grid, reduce our reliance on foreign sources of energy, 
increase conservation, improve energy efficiency, and expand the use of 
new technologies and renewable energy sources.
    Throughout DOE's energy and science programs is an emphasis on 
hydrogen-related research and development. The FY 2006 DOE budget 
request includes $257 million to continue the five-year $1.2 billion 
Hydrogen Fuel Initiative announced by the President in February 2003. 
Hydrogen is an attractive energy choice for the future because it can 
be produced from domestic sources and would produce virtually no 
pollution or greenhouse gases. Spearheading the President's Hydrogen 
Fuel Initiative is the Department's Office of Energy Efficiency and 
Renewable Energy. In FY 2006, funding for DOE hydrogen activities is 
requested for high-risk, high-payoff basic research in technologies to 
produce, store, and distribute hydrogen for use in fuel cell vehicles, 
electricity generation, and other applications. The FY 2006 budget 
request for DOE's Hydrogen Fuel Initiative activities includes the 
following four program areas:

   Energy Efficiency and Renewable Energy, $183 million;
   Nuclear Energy, $20 million;
   Fossil Energy, $22 million; and
   Science, $33 million

    The FY 2006 budget request will support the acceleration of 
hydrogen development in production and delivery research and 
development and systems analysis with the goal of meeting the 2010 
technical targets identified in the DOE Hydrogen Posture Plan and 
Multi-year Research, Development and Demonstration Plan. This lays out 
the Department's plan for successfully integrating and implementing 
technology research, development, and demonstration activities needed 
to cost-effectively produce, store, and distribute hydrogen for use in 
fuel cell vehicles and electricity generation.

                 ENERGY EFFICIENCY AND RENEWABLE ENERGY

    The request for the Department's Energy Efficiency and Renewable 
Energy programs is $1.2 billion. In addition to increases for hydrogen 
technologies, the $354 million renewable energy budget emphasizes 
development of low-wind speed technologies, advancements in solar 
energy including concentrating solar power systems, and geothermal 
technology development. Research in hydropower technology has advanced 
and can now be adopted by industry. Therefore, the budget proposes to 
eliminate the Hydropower Program in FY 2006 and transfer the results of 
program research, development and demonstration to industry.
    The budget proposes $847 million for energy efficiency activities 
including fuel cell activities that support the President's Hydrogen 
Fuel Initiative and FreedomCAR, and efficiency of buildings to include 
lighting, windows and space conditioning research and development. The 
FY 2006 budget request proposes to decrease efforts aimed at energy-
intensive industries and focus instead on the successful completion of 
existing projects with the highest potential future energy efficiency 
and environmental benefits. New projects will be selected based on 
their potential to significantly reduce energy intensity and must 
demonstrate that they would otherwise not be undertaken without federal 
research and development support.
    The budget continues its strong commitment to assist low-income 
citizens through the Weatherization Assistance program. Since 2001, the 
Weatherization Assistance Program has helped 117,000 more low-income 
families than would have otherwise received assistance. In the FY 2006 
budget request, $230 million is requested to weatherize more than 
92,000 homes in 2006 and leverage resources from other state, local and 
private sector entities sufficient to weatherize approximately 100,000 
additional homes. This method of implementing conservation through 
proven energy savings measures helps reduce reliance on energy imports.

                 NUCLEAR ENERGY, SCIENCE AND TECHNOLOGY

    The FY 2006 budget request includes $511 million for nuclear energy 
programs to expand the development of advanced nuclear energy 
technology. Nuclear power, which generates 20 percent of the 
electricity in the United States, is a significant component of a 
balanced, clean energy portfolio. It is relatively inexpensive, safe, 
and versatile and contributes to reducing the nation's reliance on 
foreign energy.
    The Department has intensified its efforts to develop advanced 
nuclear energy technologies by addressing the fundamental research and 
development needed to establish a viable advanced nuclear energy 
system. The FY 2006 budget requests $45 million for the Generation IV 
Nuclear Energy Systems Initiative to expand research and development 
and cooperation with our international partners to develop next-
generation reactor and fuel cycle systems that are a significant leap 
in economic performance, safety, and proliferation-resistance.
    The FY 2006 budget request will also bring us closer to the reality 
of constructing the next generation of nuclear power plants in the 
United States. With a request of $56 million, the Nuclear Power 2010 
program will be able to complete early site permit (ESP) demonstration 
projects, focus on documenting and recommending future ESP applicants, 
and prepare guidance for the construction, operation and license 
application This will help enhance U.S. energy supply diversity and 
energy security.
    The Advanced Fuel Cycle Initiative, with a request of $70 million, 
will complement the mission of the Nuclear Nonproliferation program 
through the development of new technologies that significantly reduce 
accumulated plutonium in civilian spent fuel, thus reducing the threat 
of nuclear proliferation. Moreover, this technology can be deployed to 
support the operation of current nuclear power plants to achieve a 
significant reduction in the amount of high-level radioactive waste 
requiring geologic disposal.

                             FOSSIL ENERGY

    The FY 2006 budget request includes $491 million for fossil energy 
research and development activities. Within this request is $351 
million for Coal and Other Power Systems research reflecting the 
importance of domestic coal resources to the nation's energy future. 
America has a 250-year supply of coal that fuels more than half of our 
domestic electricity generation. Just as coal helped make America the 
world's foremost industrial power over the past two centuries, it will 
continue to be an important part of our national economy in the 21st 
century and beyond. The key is technology. Within the coal request is 
$68 million for the Clean Coal Power Initiative (CCPI), a key component 
of the National Energy Policy. The CCPI is a cooperative, cost-shared 
program between government and industry to rapidly demonstrate emerging 
technologies in coal-based power generation and to accelerate their 
commercialization. The FutureGen project, which is part of the CCPI, 
will establish the capability and feasibility of co-producing 
electricity and hydrogen from coal with essentially zero emissions. A 
critical component of the FutureGen project will be the demonstration 
of technologies that sequester carbon emissions associated with coal 
power generation.
    The FY 2006 budget request includes $18 million for FutureGen but 
also proposes an advance appropriation of $257 million from prior year 
clean coal project balances, to be made available in FY 2007, to 
provide the Federal share of FutureGen for several years. The budget 
also increases research and development in clean coal technologies that 
are integral to the FutureGen concept, such as Integrated Gasification 
Combined Cycle systems, carbon sequestration, and next-generation 
turbines. Another major aspect of advanced power systems is fuel cell 
research and development. These activities offer the potential to meet 
peak electricity demand in a cost-effective manner, without the need 
for capital-intensive, central station generation capacity or costly 
investments in transmission and distribution. The Solid-State 
Electricity Conversion Alliance (SECA) is DOE's major initiative for 
stationary fuel cell development. The goal is to create a solid oxide 
fuel cell (3-10 kilowatt) that can be mass-produced in modular form at 
relatively low cost.
    The Sequestration Research and Development program is part of the 
President's Climate Change Technology Program, where $67 million is 
being requested in the FY 2006 budget. The $22 million funding increase 
above the FY 2005 appropriation will ensure that the program will be 
able to test sequestration technologies and infrastructure concepts 
needed to successfully deploy these technologies in the most important 
U.S. regions. The FY 2006 budget request will also sustain core 
research and development needed for successful carbon capture, storage 
and monitoring. The most promising approaches will be tested at larger 
scale.
    The FY 2006 budget request includes $20 million for the cost of 
orderly termination of the Oil and Gas technology programs. The 
decision to terminate these programs reflects a strategic assessment of 
the programs' technical effectiveness, as measured by the Program 
Assessment and Rating Tool (PART), compared to other fossil energy 
programs that are more efficient and technically viable. This is in 
line with our commitment to deliver results for the American taxpayer. 
The focus in FY 2006 will be to conduct the orderly termination of 
these programs and I look forward to achieving this efficiency for the 
taxpayers. Funding requested in the FY 2006 budget will be used to 
fulfill legal obligations incurred in the termination process.
    In addition to Fossil Energy Research and Development, the Fossil 
Energy program request includes $166 million to continue storage site 
maintenance, operations, security and drawdown readiness activities of 
the Strategic Petroleum Reserve (SPR). The inventory of the SPR will 
reach 700 million barrels by mid-calendar year 2005. An inventory of 
700 million barrels will provide the equivalent of 58 days of net 
import protection. In FY 2006, the continued operation and readiness of 
the Northeast Home Heating Oil Reserve will be sustained using 
carryover balances available from prior years. The budget requests $19 
million for Naval Petroleum and Oil Shale Reserves (NPR) to provide for 
operation and maintenance of NPR-2 in California and NPR-3 in Wyoming, 
and closeout activities relating to NPR-1 in California. The Elk Hills 
School Lands Fund payment to the State of California continues with a 
request of new budget authority of $48 million, in addition to an 
advance appropriation of $36 million included in the FY 2005 Interior 
Appropriations Act.

                    ELECTRICITY AND ENERGY ASSURANCE

    The need to modernize our country's aging electric infrastructure 
is paramount to our national and energy security. This was underscored 
by the East Coast and Midwest blackout of August 2003 which left 
millions of Americans in the dark and cost the Nation billions of 
dollars. The FY 2006 budget request seeks $96 million for national 
efforts to modernize and expand our electric delivery system, and 
ensure reliable, robust electricity transmission
    Also within the request is $45 million for High Temperature 
Superconductivity research and development to bring the tremendous 
efficiency and capacity advantages of superconductive materials to 
electric power transmission applications. Funding of $6 million is 
requested for GridWise research and development activities to modernize 
the Nation's electric infrastructure by upgrading software to employ 
real time controls at the local level In addition, $5 million is 
requested for GridWorks research and development activities to 
integrate advanced hardware technologies into platform systems 
necessary for control, communication and information sharing.

                    POWER MARKETING ADMINISTRATIONS

    The Administration makes several proposals associated with this 
budget to improve the performance of the Power Marketing 
Administrations (PMA) by removing unnecessary government intervention 
and allowing the PMAs to operating in a more business-like efficient 
manner.
    The FY 2006 budget request proposes to reclassify receipts that are 
currently deposited to the Treasury and are collected based on 
appropriations for PMA expenses. The budget proposes that these 
receipts directly offset appropriations requested for the program 
direction and operation and maintenance activities of the Southeastern, 
Southwestern, and Western Area Power Administrations. This change will 
allow the PMAs to operate on a more business-like and efficient manner.
    In addition, the budget proposes to reclassify receipts to directly 
fund the hydropower portions of the Corps of Engineers (Corps) and 
Bureau of Reclamation (BuRec) operations and maintenance expenses. 
Currently the PMAs collect receipts based on appropriations to the 
Corps and BuRec for these activities. Directly funded activities will 
include short-lived capital investments typically considered 
maintenance. Direct funding will enable the Corps and BuRec to perform 
needed maintenance and small rehabilitation projects in a more timely 
manner. The Administration proposes the direct financing of BuRec's 
hydropower research and development activities by Bonneville and 
Western, the primary beneficiaries of the program.
    The Administration proposes to very gradually bring PMA electricity 
rates closer to average market rates throughout the country. This will 
accelerate recovery of taxpayer subsidies and repayment of PMA debt 
owed to Treasury, while creating a more level playing field for the 
wholesale power market. In addition, we propose to clarify the 
liabilities that count toward the Bonneville Power Administration's 
statutory cap on borrowing so that all debt-like transactions count, 
which will restore meaning to the debt cap. The Budget proposes to 
increase BPA's debt ceiling by $200 million in 2009, which exceeds 
BPA's estimate of the additional transactions that would count toward 
its cap.''

                                SCIENCE

    The $3.5 billion FY 2006 budget request for Science programs 
continues important research activities, completes construction of the 
Spallation Neutron Source, and increases support for best performing 
activities that can provide the broadest benefits to society. When 
combined with the significant science expenditures throughout the 
complex, the Department of Energy is the largest federal supporter of 
the physical sciences. The FY 2006 budget request is a strong 
investment that will help enable us to maintain America's leadership 
position in the world scientific community.
    The FY 2006 budget request of $1.4 billion for the Basic Energy 
Sciences (BES) program is a $41 million increase above the FY 2005 
appropriation. The request includes $43 million for the operation of 
four nanoscale science research centers located at Oak Ridge, Argonne, 
Lawrence Berkeley, and Sandia/Los Alamos National Laboratories. These 
centers are designed to promote rapid advances in the promising areas 
of nanoscale science and are part of the DOE contribution to the 
Administration's Nanotechnology Initiative.
    The request for Basic Energy Sciences includes $42 million to 
complete construction of the Spallation Neutron Source (SNS) at Oak 
Ridge National Laboratory and $107 million to begin operation of the 
facility in FY 2006. The SNS will provide the most intense pulsed 
neutron beams in the world for scientific research and industrial 
development. Neutron-scattering research used for example to research 
the structure of materials, on the scale of the SNS holds enormous 
potential for improving our quality of life such as making stronger, 
lighter plastic products. This type of research has already been 
applied to make improvements on jets; credit cards; pocket calculators; 
compact discs, computer disks, and magnetic recording tapes; shatter-
proof windshields; adjustable seats; and satellite weather information 
for forecasts.
    The Basic Energy Sciences program also includes $33 million in FY 
2006 for a portion of the President's Hydrogen Fuel Initiative. This 
basic research program investigates the potential of a hydrogen economy 
and is based on detailed findings and research directions identified by 
the scientific community and DOE applied programs. All research awards 
are based on the results of peer reviews that assess past performance 
and the quality of the hydrogen research and development proposals.
    The FY 2006 budget request proposes to support Nuclear Physics 
activities at $371 million which continues research and operation of 
facilities at the Thomas Jefferson National Accelerator Facility in 
Newport News, VA, and the Relativistic Heavy Ion Collider at Brookhaven 
National Laboratory, NY.
    High Energy Physics activities continue with a $714 million budget 
request in FY 2006. Funding will support the facilities at Fermilab, 
IL, $304 million, and the Stanford Linear Accelerator Center (SLAC), 
CA, $144 million. Both facilities will operate at an increased rate, 
affording scientific users a combined total of 9,760 hours of operation 
or a 26.8% increase from FY 2005.
    The FY 2006 budget requests $207 million for Advanced Scientific 
Computing Research (ASCR) to continue U.S. leadership in high 
performance supercomputing, networking and software development. The FY 
2006 budget request initiates a new activity to allow Scientific 
Discovery Through Advanced Computing (SciDAC) teams to evaluate new 
computer architectures as tools for science. In addition, the budget 
will support two competitively selected SciDAC institutes at 
universities that can become high-end computing centers of excellence.
    The FY 2006 budget request includes $456 million for Biological and 
Environmental Research to continue fundamental, innovative, peer-
reviewed research leading to discoveries in the Life Sciences, Climate 
Change Research, Environmental Remediation, and Medical Applications 
and Measurement Science. In FY 2006, a $20 million increase is provided 
for genomics research for imaging and characterization of complex 
microbial communities for energy and environmental applications.
    The budget request includes $291 million for Fusion Energy 
programs, which seek to study plasmas, the fourth state of matter, and 
understand and control the process of fusion that can produce an 
enormous release of energy. The budget request includes $46 million to 
begin U.S. contributions to the $5 billion cost shared International 
Thermonuclear Experimental Reactor (ITER), an international burning 
plasma experiment that may ultimately lead to a fusion power plant. 
When the President announced that the United States would participate 
in the project, he noted that ``the results of ITER will advance the 
effort to produce clean, safe, renewable, and commercially available 
fusion energy by the middle of this century.'' The FY 2006 budget 
request for ITER assumes that international partners reach a timely 
site decision and would be used to fund the first year of equipment 
fabrication for the United States' in-kind contributions to this 
important partnership.
    The FY 2006 budget request also reflects participation by the 
Office of Science in multi-year budget planning. Expanding the budget 
horizon to a five-year profile enables the Office of Science to 
evaluate its programs, activities, and progress toward meeting both 
near and mid-term goals in a multi-year context, assures budgeting 
discipline and allows for a broader, larger scale to long-term 
planning.

                        ENVIRONMENTAL MANAGEMENT

    The Administration's commitment to the environment includes taking 
action to address the environmental legacy of our past work, 
particularly building the nuclear weapons complex that helped win the 
Cold War.
    In 2002, DOE took an aggressive approach to transform the 
Environmental Management program from managing risk to one of reducing 
and eliminating risk to human health and the environment. The 
Department reassessed its cleanup strategies and methods and announced 
an accelerated cleanup strategy.
    The total FY 2006 budget request for Environmental Management 
programs is $6.5 billion. As cleanup is completed at sites such as 
Rocky Flats, Fernald and Mound, it makes sense that the Environmental 
Management budget will decline. The FY 2006 budget request is $548 
million lower than the FY 2005 adjusted appropriation of $7.1 billion.
    The total FY 2006 Environmental Management budget request includes 
$941 million for the non-defense Environmental Management and Uranium 
Enrichment Decontamination and Decommissioning activities within the 
jurisdiction of this Committee. Included in the budget request are 
design and construction activities for a Depleted Uranium Hexafluoride 
(DUF6) Facility at both the Portsmouth, OH, and Paducah, KY, sites.
    The Office of Environmental Management has included five-year 
budget plans in the FY 2006 Budget. These plans will provide budgetary 
rigor and an out-year context to programmatic decisions, and along with 
the Office of Science five year plans, will serve as a model for the 
rest of the DOE programs, which will develop five year budget plans for 
the FY 2007 budget submission This effort assures budgeting discipline 
and allows for a broader, larger scale to long-term planning.

                 CIVILIAN RADIOACTIVE WASTE MANAGEMENT

    Consistent with the President's National Energy Policy, the 
Administration's FY 2006 budget request maintains the commitment to 
develop a permanent nuclear waste repository. The Department is 
requesting $651 million to meet the commitment to establish a geologic 
repository at the Yucca Mountain site in Nevada. The FY 2006 budget 
request supports the completion of the application process that will 
lead to the issuance of construction authorization. In preparation for 
the eventual construction of the repository, the FY 2006 budget request 
also includes $85 million to continue to develop and manage the 
transportation capability required to transport spent nuclear fuel and 
high level radioactive waste from specified locations to the 
repository.

                           LEGACY MANAGEMENT

    The total request for Legacy Management activities in FY 2006 is 
$79 million. The program conducts the long-term stewardship tasks of 
managing land, structures, facilities, and records, and overseeing the 
Department's pensions and post retirement benefits for former 
contractor employees after site closure. The FY 2006 budget reflects an 
increase of $3 million, to address higher than estimated requirements 
for post-retirement life, medical, and long-term disability benefits. 
The request also includes $31 million to support working with the 
closure site contractors to enhance the delivery system for pension and 
health benefits for closure sites. The Department considers the role 
planned for community and worker transition activities to be completed, 
and no additional funding has been requested.

                     ENVIRONMENT, SAFETY AND HEALTH

    The FY 2006 budget request includes $107 million for Environment, 
Safety and Health activities to directly support the mission of DOE to 
ensure that the safety and health of the DOE workforce and members of 
the public, and the protection of the environment are integrated into 
all DOE activities. FY 2006 funding will continue to provide for the 
establishment of DOE policy to ensure safe and secure workspace across 
the complex and establish and enhance the scientific basis for worker 
protection policy and standards. The budget includes $14 million for 
the Radiation Effects Research Foundation and $6 million for Marshall 
Islands activities. The FY 2006 budget request reflects the transfer of 
Part D Energy Employee Occupational Illness Compensation Act program 
activities to the Department of Labor. Prior to the transfer to the 
Department of Labor, DOE was responsible for assisting nuclear weapons 
workers who worked at DOE facilities that developed work-related 
illnesses as a result of exposure to radiation and toxic chemicals. In 
FY 2006, within available funds, DOE will continue to support the 
Department of Labor's implementation of Part E, which includes the 
responsibilities transferred from DOE in FY 2005, by conducting record 
search activities in the field as well as provide site survey data.

                               CONCLUSION

    The Department's FY 2006 budget request proposes a series of 
investments enabling DOE to meet critical Presidential commitments and 
at the same time reflects prudent fiscal responsibility. The 
efficiencies identified in this request reflect the return on the 
Department's efforts in the last four years to strengthen management 
and accountability for the American taxpayer. This request charts a 
focused course of investment for the nation's future--one guided by a 
cohesive mission and targeted performance metrics. I am both excited 
and privileged to have the opportunity to lead this Department to 
fulfill the vision the President has laid out for us in FY 2006 and 
beyond. Mr. Chairman, I also look forward to working with you and the 
Members of this Committee on how we can best accomplish our mission of 
providing for national and energy security.
    Thank you. This concludes my formal statement. I would be pleased 
to answer any questions you may have at this time.

    The Chairman. Thank you very much. I want to look at 
nuclear power for a little bit, because I am very optimistic 
that there's a significant movement of a positive nature, 
motivated both by the fact that the world seems to be more 
interested in nuclear power than ever, China buying 25 reactors 
and the like, and we're closer and closer to moving forward.
    But, Mr. Secretary, I have real concerns about the pattern 
of delay in the leadership of NP 2010. Now, you know what NP 
2010 is, and it's an exciting program to expedite and cut the 
time for construction and licenses as contrasted with site 
licensing for nuclear power plants. We happen to be partners 
with two consortia, Dominion and New Start, which have a very 
large array of nuclear power plants.
    We've made awards to two of these private sector consortia, 
and these moneys have been 5 months--it's 5 months since it was 
culminated, and the money hasn't been dispersed. Now, I know 
you know that you can't leave things like this to the ordinary 
bureaucracy to nitpick instead of understanding that things 
have to get done in areas that are very, very important.
    If we can't show the same utilities that are doing what 
they're doing that we're interested, then I think we have 
little chance of the dream that we're talking about. So I need 
you to tell us that using your business acumen on getting 
things done, that you will look at this and see why it's taken 
so long, which now is not so important because it's done, but 
why we can't get it done expeditiously so that we move with the 
terrific spade work that has already been done to get the 
consortia together, to get the program together. Can you 
address that, please?
    Secretary Bodman. Yes, sir. I expect that there will be 
other questions from other Senators related to the timeliness 
with which we in the Energy Department accomplish our desired 
missions and goals. I can't give you the details about this 
particular issue. I can tell you that I will certainly be happy 
to look into it, and I will be happy to give you a response.
    [The information follows:]

    The Department is moving with diligence to issue the Nuclear Power 
2010 cooperative agreements and associated FY 2005 funding to the 
industry. It is our firm desire to keep the momentum on new nuclear 
plants progressing toward deployment.
    The Dominion Energy decision to change its selected reactor 
technology to the General Electric ESBWR design caused the Department 
and industry to re-evaluate project cost, cost share, and annual 
funding in both the Dominion Energy and NuStart projects. This is due 
in part to the fact that the GE ESBWR reactor design is part of both 
projects. In addition, NuStart requested additional FY 2005 funds to 
accelerate the Westinghouse AP-1000 work scope. Both of these 
conditions required re-submittal of detailed cost information by both 
reactor vendors to the Department. In addition, intellectual property 
rights terms and conditions required complex and lengthy negotiation 
with the reactor vendors. The Department reached agreement on the terms 
and conditions for the cooperative agreements during the week ending 
March 11, 2005. The Department expects to issue the cooperative 
agreement to Dominion Energy by the end of March and to NuStart in 
April 2005.

    Secretary Bodman. The Department means well. The Department 
is doing its best in its own way, I believe. There is not a 
conscious effort to withhold funds or to miss deadlines. But we 
somehow seem to have that as a part of the fabric of the way we 
do business, and we're going to attempt to improve that. And so 
I will make that commitment to you, sir. We will certainly look 
into it, both generally and specifically.
    The Chairman. Well, again, I'm going to leave the rest of 
my questions--if I don't get to them, I'll submit them. I'm 
going to proceed with other Senators.
    Senator Bingaman.
    Senator Bingaman. Thank you very much, Mr. Chairman. Let me 
ask about the Office of Science budget. In the strategic 
highlights, which is--this is one of the volumes of the 2006 
budget--on page 7 it shows a 5-year estimated projection for 
the Office of Science, projecting that it'll go from $3.6 
billion this fiscal year to $3.36 billion 5 years out, or in 
fiscal year 2010. If you assume 3 percent inflation, the 
baseline would grow to 4.17. So you could look at how much of a 
shortfall we are going to have relative to where we are now 
even.
    This concerns me. It seems as though we are essentially 
laying out a long-term plan for decreasing our investment in 
science. That seems short-sighted to me, and I'm certain that 
it does to you too, Mr. Secretary. I don't know how we break 
out of this circumstance and start to give more priority, 
particularly to physical sciences, but to all science work in 
general in this country. But it just strikes me that if you see 
a long-term decline in the budget of the Office of Science, 
that's something that ought to concern this committee and ought 
to concern the Congress generally.
    Secretary Bodman. First of all, I would reiterate what I 
stated in my opening remarks, sir, that we are in a very, as 
you're well aware, a very stringent budget environment, and 
therefore the tough judgments have been made in terms of which 
parts of the Department's programs would be increased, which 
part would be decreased.
    There were judgments made largely focusing on homeland 
security, largely focusing on the defense, the war on terror, 
and the necessity of beefing up our efforts with respect to our 
nuclear weapons. Hence, most of the increases went there and we 
had decreases in the balance of our portfolio.
    Having said that, sir, I view the responsibilities of the 
Department of Energy with respect to funding, support for our 
physical sciences--you mentioned sciences in general--but I 
would cite, I think you're quite right in singling out the 
physical sciences. Fortunately, the life sciences have received 
very positive treatment, both from the Clinton administration 
as well as from the Bush administration. We've seen sizable 
increases in the National Institutes of Health and other life 
science efforts.
    I think it has gradually become clear to even those 
responsible for the life sciences that you can't make the kind 
of progress you need there without efforts and progress in the 
physical sciences. So this is a serious matter.
    I was not involved in the discussions, you're aware of 
that, with respect to this budget. I will certainly look at it 
and try to apply my own judgments as to where we allocate our 
resources. I can tell you that with respect to the science 
budget, significant reductions were made in programs that were 
and are important in the sciences budget, but they were made 
intelligently, and still will enable us to provide the kind of 
leadership in the physical sciences that this country has 
enjoyed in the past.
    Senator Bingaman. Let me ask about a couple of specifics. 
One is, oil and gas research and development programs are 
slated for termination. That seems short-sighted to me. Some of 
that work is done in our state at New Mexico Tech. It's work 
that's intended to help independent petroleum producers get 
maximum production off of wells in this country.
    One other, which is a very small item, but it's just one I 
wish you would pay some attention to and focus on a little, the 
budget proposes to zero out the U.S.-China Cooperative Program 
on Fossil Energy, which is a program to promote efficient, 
clean burning of coal in China.
    Now, this is a very, very small program. As I understand 
it, I was fortunate to be in China last August with seven other 
Senators, and I was told then that the Department of Energy was 
going to have an office in China for the first time, which was 
very encouraging, and that there was a great hope that we could 
work with the Chinese and assist with encouraging them to do 
more to move toward clean burning of coal in the great number 
of power plants, coal-fired power plants that they're bringing 
online. For us to zero out the funding to support this effort 
just seems to me extremely short-sighted, and I wish you would 
look into that. It's a very small item in the budget, but one 
that I think could have a lot of benefit.
    The Chairman. We'll put it in appropriations.
    Secretary Bodman. If I may make a couple of quick comments 
on that.
    Senator Bingaman. Please go right ahead.
    Secretary Bodman. In both cases, the opening remark is the 
same, you know, we have tough choices to make, and so it's been 
one trying to decide where we put our money to get the maximum 
return.
    With respect to oil and gas, frankly my understanding is, 
and I would have to agree with it, that with oil at $50, the 
industry is in better financial shape than it has been in many 
years, and one might respectfully ask the question, does it 
make sense for the Government to be funding the technical work, 
even for the independents--I recognize there's a difference 
between the majors and the independents--and so that was a part 
of the thinking, I have to believe, in terms of making that 
judgment that we've got very high energy prices--this is the 
other side of the coin. There are some advantages to having 
high prices in that they're doing well and they ought to be 
able to spend money on research and develop these things 
themselves.
    Second, with respect to the Chinese cooperative program, I 
have no idea. I'd be happy to look into it. I'm unaware of 
that, and I'll be happy to find out more about it and get back 
to you, sir.
    [The information follows:]

    China is a large market for U.S. Clean Coal Technologies. Bilateral 
cooperation with China, maintained by the Office of Fossil Energy, is 
aimed at using the bilateral relationship to minimize the impact on the 
global environment as China's economy expands, while helping to 
intensify the engagement of U.S. clean energy technology vendors in the 
Chinese energy market.
    The Office of Fossil Energy maintains technology cooperation with 
China through the U.S.-China Fossil Energy Protocol, which encourages 
Chinese use of U.S. Clean Coal Technologies on a government to 
government basis and the U.S.-China Energy and Environmental Technology 
Center (EETC). As an example of one activity under this Protocol, the 
Department hosted a delegation of senior Chinese engineers and provided 
a one week tutorial (at their request) on U.S. fuel cell technology. 
The work under this Protocol area is progressing well.
    The activity that has been zeroed out is the EETC. The EETC 
maintains offices at Tulane University in New Orleans and Tsinghua 
University in Beijing. The EETC is a source of information technology 
and is a source of information for U.S. industry on planned clean coal 
projects in China. Approximately one million dollars was appropriated 
for this Center last year as a congressional earmark.

    Senator Bingaman. Thank you.
    The Chairman. Senator Alexander. Were you here ahead of 
him? You didn't put that on here. You all made a mistake. All 
right, Senator. They have it the other way. That's the only 
reason I did it. Sorry.
    Senator Thomas. Okay. I'll let it go.
    The Chairman. I've got to be careful here. We're going to 
have a Wyoming Senator who's going to be mad at me, and it will 
be the staff's fault.
    Senator Thomas. Well, thank you, Mr. Secretary, for being 
here and taking on this job. As you know, we have spent and 
continue to spend a good deal of time with respect to an energy 
policy. I think most of us agree that an energy policy would 
include such things as efficiency, as conservation, as 
renewables, as domestic production. These are basic things that 
I think we want to be there.
    So as I look at it a little bit, energy efficiency research 
is down some. Coal, which is our best opportunity, our largest 
fossil fuel resource, to be able to convert that into more of 
an environmentally sound thing, is much a part of our future.
    Renewables, we have in our policy, the funding here seems 
to be down a little. Clean coal, I mention again, and, you 
know, we've talked a long time about FutureGen, but nothing 
seems to be happening. The money's always there, but nothing's 
happening.
    So, in general terms, would you comment a little bit on how 
consistent this budget is relative to what I think most of us 
perceive to be the future of energy policy?
    Secretary Bodman. Yes, sir, I'd be happy to. It strikes me 
that this budget seeks to identify those areas, and exactly 
those areas, whether it's coal or improved efficiency, whether 
it's the hydrogen program, whether it's nuclear power, in all 
of these areas where we think we get the maximum returns. And 
in some cases looking at the differences between the 
appropriated level and the budget or the proposed 2006 budget 
is--does not look hard at what we proposed a year ago.
    And so the Congress does its will and moves these numbers 
around itself, and therefore, in most of these areas, I 
believe, where we are proposing increases or levels that are at 
least equivalent to the figures that were proposed a year----
    Senator Thomas [presiding]. Well, actually, oil and gas 
technology is out, energy efficiency is down, renewables are 
down----
    Secretary Bodman. With respect----
    Senator Thomas. I don't think what you're saying is 
consistent with what's in the numbers here.
    Secretary Bodman. Again, I'll be happy to go back and go 
through each one. Oil and gas, you're correct, sir. There's no 
doubt about that, and that I can't help but restate what I 
stated before to the question that Senator Bingaman asked. We 
have an industry that is at record levels in terms of prices 
for its products, and does it make sense----
    Senator Thomas. Yes, but the role of the Energy Department 
in some of those things is a little different than the role of 
the commercial folks, when we're looking forward in terms of 
how to do things in the long term a little bit better. So, at 
any rate, I'd like you to look at that.
    Secretary Bodman. Yes, sir.
    Senator Thomas. Western Power, you know, the PMAs, I see 
there's a look to turning that into commercial prices. These 
things, of course, go basically to rural areas through non-
profits, and some people are very concerned that that would 
become just a commercial kind of a thing rather than serving 
those people that are difficult to reach, so that PMA change is 
apparently in this budget.
    Secretary Bodman. Well, with respect to the PMAs, I know 
that's a topic that other Senators also will have questions 
about. With respect to the PMAs, the proposal is to allow a 
gradual increase in prices that over a period of time, and 
reflective of a situation that will not disrupt economic 
activity, but will start to move us in a direction that we 
remove the subsidies that are believed to exist for all of the 
PMAs, from taxpayers who do not benefit from the--from being--
--
    Senator Thomas. PMAs do offset their costs, however, the 
way it is currently.
    At any rate, I've taken my time, sir.
    Secretary Bodman. All right, sir. Thank you.
    Senator Thomas. But we'll talk about it some more later.
    Senator Wyden.
    Senator Wyden. That's the question I want to start with. I 
mean, your proposal with the PMAs is just economic poison for 
our region, and we are going to block it. We have the good 
fortune of having Senator Domenici strongly opposed, along with 
Senator Craig and many of us on the committee.
    But here's my question to you. You have the ultimate 
approval over the rates of Bonneville and the PMAs, and what 
I'd like is your assurance that you won't do an end-run on 
Congress, and in effect go out and administratively put in 
place this proposal that you have for Bonneville and the 
powered marketing agencies. Can you give me that assurance this 
morning that you won't do it administratively?
    Secretary Bodman. Senator, I'm just an engineer, sir, and 
not a lawyer. And I would tell you--and therefore, having--
speaking from that vantage point, I do not believe that I or 
anybody at the Energy Department has the flexibility of doing 
an end-run. That's why this is in the budget. It is our view 
that this would require legislative change if we are to change 
the way the PMAs do business. That's why it's in there.
    It is my understanding--and my belief--I'm basically a 
business man, sir, and I will see to it that we do business in 
these authorities according to the law that created them, 
because that is my responsibility, and I will continue to do 
that while we have this discussion.
    Senator Wyden. We're going to block you, Mr. Secretary.
    Secretary Bodman. All right, sir.
    Senator Wyden. I'll just give you that up front. And you've 
told me now that you're not going to pursue it 
administratively. We think that there are some concerns that 
you could do it administratively. That's why I'm asking.
    Let me turn to high oil prices, because yesterday oil hit 
$53 a barrel, and you were quoted as saying you've got no plans 
to talk to OPEC. Your exact quote was, I'll be speaking in time 
with representatives of the governments of OPEC.
    What's the argument for not being on the phone with them 
today? People are getting clobbered by these high prices. I 
hear about it at every town hall meeting. I don't understand 
why you wouldn't be on the phone with OPEC pressing right now 
to try to get some relief for our consumers.
    Secretary Bodman. Senator Wyden, the capability of any 
representative of this government to influence the members of 
OPEC is limited, and it is something that has been done in the 
past and will presumably be done in the future, and we will be 
a part of that. I can't comment on that particular quote, but I 
will tell you that I do expect to play a role, and to continue 
to play a role as a part of my responsibilities here. But I 
will tell you I do not control what OPEC does.
    Senator Wyden. What's the argument for not pressing now? 
There's no question that you can't just snap your fingers and 
suddenly make them do things. But what's the argument for not 
doing it today? I don't understand why there would be any 
delay. I mean, why not push immediately?
    Secretary Bodman. Senator Wyden, I have a lot of things on 
my plate. All I can tell you is that I am aware of your views 
and I will take them into account as I try to make a 
determination as to how I proceed.
    Senator Wyden. Well, I'm sure you have a lot on your plate, 
Mr. Secretary, but this ought to be in the front of your plate, 
because this is what people are concerned about, that if we 
have these prices continue to escalate, we're going to see 
great harm for our economy.
    The last question I had on my round was about the cuts in 
clean-up funding at Hanford. There's a concern that Hanford is 
taking bigger cuts in the clean-up budget than is other areas, 
and we would like to know what's behind that and what you'd be 
willing to do about it. In fact, you're proposing to cut 
overall clean-up funding at Hanford in our area by over 10 
percent,* and it's a larger cut as far as we can tell than the 
other sites. What would be behind that?
---------------------------------------------------------------------------
    * Senator Wyden amended this figure from 7 to 8 percent to over 10 
percent.
---------------------------------------------------------------------------
    Secretary Bodman. First of all, sir, Hanford is the largest 
clean-up effort that we have. It takes a very high priority on 
my time and on the time of those of us responsible for this 
Department.
    The proposal is in excess of $1,800,000, so it is not 
something that we are ignoring. There are three reasons for the 
decline. The first is that it was discovered by the new 
contractor that there were incompletions in the seismic 
information that they had, that based on the original design, 
so they have slowed the construction progress of the 
vitrification plant in order to be able to reassess the effect 
of the new seismic information on the foundations. And so that 
has caused and will cause a delay in the vit plant construction 
effort.
    Second, we've actually completed certain aspects of the 
Hanford clean-up, and so that there are some reductions that 
come about because of that.
    And then third, there are issues where we do have a 
difference of opinion with the State of Washington, with 
respect to the approach that we are using with respect to the 
waste incident to the reclamation program that is ongoing, or 
the so-called WIR Project. And therefore, we have slowed the 
spending down there in order to try to take on those things 
where we are in agreement, and then hopefully we will be able 
to reach agreement with the State over a period of time.
    So those are the three reasons that led to the reduction, 
but it's still $1,800,000, still a sizable undertaking.
    Senator Wyden. My time is up. It is a bigger cut than the 
other sites have faced, Mr. Secretary. And I saw in Engineering 
News that you said the huge cuts in Hanford clean-up were 
justified by saying that the clean-up is winding down.
    But it's hard for us to see how clean-up is winding down 
when none of the high-level waste from the tanks has been 
processed, and the vitrification plant necessary to process the 
waste hasn't even been built. So Senator Cantwell has really 
led us in this effort, but the people of Oregon care a great 
deal about it, and I'm going to be asking some additional 
questions of the Department on this as well.
    Thank you, Mr. Chairman.
    Senator Craig [presiding]. Thank you.
    Senator Alexander.
    Senator Alexander. Thank you, Mr. Chairman. I'd like for my 
statement to be a part of the record, my opening statement.
    Senator Craig. Without objection.
    [The prepared statement of Senator Alexander follows:]
Prepared Statement of Hon. Lamar Alexander, U.S. Senator From Tennessee
    Thank you. Mr. Chairman.
    I've mentioned before that we're at a major crossroads in terms of 
our nation's energy security. If we continue down the current path, we 
will continue to depend on foreign sources of energy, prices will 
continue to rise, and our environment will continue to be polluted. We 
can choose another path.
    Unlike some other issues we deal with here in Washington, there are 
some relatively clear solutions to our energy problems--solutions 
driven by advances in science and technology, American ingenuity, and a 
healthy dose of common sense.
    DOE has a critical role to play in all three of these areas. Its 
FY06 budget funds many of the programs that move us towards new clean 
energy technologies that also improve our economic competitiveness. I 
am encouraged by the fact that the FY06 budget request increases 
funding for nuclear energy and some aspects of clean coal R&D, both of 
which are focused on helping us reduce air pollution. On the science 
side, the Department should be commended on its continued commitment to 
research in areas such as hydrogen, and should be especially proud of 
its sustained commitment to completing the Spallation Neutron Source, a 
new national user facility in Tennessee. As the FY06 budget process 
unfolds, I will be paying particular attention to 4 priority areas.
    1. Strong support for our national laboratories. According to the 
National Academy of Sciences, nearly \1/2\ of our nation's economic 
growth since World War II can be attributed to advances in science and 
technology. If we want that to continue, we need to invest in the 
research that fuels those advances at places like the Oak Ridge 
National Laboratory in Tennessee. This means we must make a stronger 
investment in fundamental research in the physical sciences and a more 
sustained commitment to regaining international leadership in advanced 
scientific computing at the National Leadership Computing Facility.
    2. Continued support for nuclear energy and practical solutions to 
nuclear waste storage. Nuclear power-plants generate 20% of the 
nation's electricity but nearly 70% of the ``emissions-free'' 
electricity produced annually by this country. I'd like utilities to 
consider additional nuclear facilities and am glad to see that the 
Department continues development of next generation nuclear power 
plants. We need to create the right policy environment so DOE's 
investments result in a new generation of nuclear plants in the near 
future. On the issue of nuclear waste, clear leadership focus on Yucca 
Mountain in needed. TVA ratepayers have paid almost $700 million into 
Yucca Mountain--with no tangible return to date. Their contributions 
represent approximately 2 years worth of TVA revenue from the 2003 rate 
increase paid by ratepayers all over the Valley.
    3. Support for clean coal technologies including coal gasification. 
Tennessee and the states around it use a lot of coal to generate 
electricity. The U.S. has an ample supply of coal. The vast majority of 
my state is in non-attainment with federal air quality standards and 
the Great Smokies Mountain National Park is the most polluted national 
park in the country. To clean up our air, investment in clean coal 
technologies must continue to be a priority at the Department.
    4. Support for technologies that help reduce the price of natural 
gas so lobs stay here in the U.S. This means funding methods to 
increase domestic natural gas supplies and reduce demand through new 
energy conservation solutions. I'll be introducing legislation 
regarding this subject in the near future.
    I have a few questions I'd like to ask Secretary Bodman regarding 
some of these funding priorities.

    Senator Alexander. Mr. Secretary, thank you for coming. I 
have what I hope will be a constructive suggestion and a couple 
of questions about specific things. I know you were not part of 
making up of this budget, and I am a supporter of the 
President's effort to bring some fiscal discipline to the 
Federal Government.
    But in line with some of the other comments that have been 
made, I think it would be a grave error for the United States 
to limit our spending in a way that keeps us from having 
economic growth, and more than half of our new jobs since World 
War II have come from advances in science and technology.
    When I was Governor, I used to work hard to restrain 
Medicaid spending so that we could invest more in centers of 
excellence at the universities and in colleges and in schools 
and in research. I would say we should be doing that here. We 
were ambushed as a country by a terrorism. We're about to be 
ambushed by countries who want our jobs and our money, and I 
don't want to see our budget-cutting activities over the next 5 
years get us on a glide path that underfunds our ability to 
grow new jobs, and I know you don't either.
    So what I'm suggesting is within the councils of the 
administration. I hope you and the Secretary of Education and 
others suggest, for example, that if we're going to only 
restrain the growth of Medicaid by $12 billion--we're going to 
spend $1.2 trillion on it over the next 10 years--we restrain 
its growth by $12 billion over the next 10, let's restrain it 
more and put more of that money into investments in research.
    The Office of Science's own 20-year plan developed by this 
administration would double the funding for the physical 
sciences in the next 5 years, yet this budget takes it down. So 
we'll do our part on this side. There are a number of Senators 
on both sides of the aisle who want to see us make the proper 
investments in science and technology, and I'm just encouraging 
those within the administration, while you're making up the 
next budgets, to help with that.
    Here are two specific questions. Last year, Senator 
Bingaman and I--I give him the credit--he encouraged me to go 
to Japan and see the earth simulator. I did, and as a result, 
all of us working together, we set about to recapture the 
international lead in high-speed advanced computing. In the 
Office of Science's plan, it's the No. 1 domestic priority, 
second only to the international fusion project.
    Yet this budget does not adequately fund our effort to try 
to recapture the lead in international computing, yet we're 
starting two new programs in new computing. So my question is, 
why would we underfund this effort to help us get to 100 
teraflops by 2006 in high-speed advanced computing? Why would 
we underfund that in order to start two new programs in 
computers?
    Secretary Bodman. First of all, this is one of those cases, 
sir, where the proposal in the budget this year is equal to or 
greater than the proposal in the budget last year, and that it 
was not one of trying to underfund. We've tried to make some 
tough choices, but we are continuing to fund the supercomputer 
at the level that we had proposed to the Congress last year, 
and it is something I'm very enthused about personally.
    I would also tell you, sir--as you know, from when you and 
I visited in your office--you will certainly have my support. 
I'm a great believer in science, and I think that's an 
important component of this Department. We are, however, in 
very stringent and difficult times from a budgetary standpoint.
    Senator Alexander. I understand that, but I think it's 
important, as I said earlier, that we've got a big budget, and 
the one thing we don't want to do in the next 5 years is 
underfund our ability to keep our standard of living. We're all 
giving speeches about that and beginning to understand it 
better right now, but the rest of the world understands we 
produce a third of the money for only 5 to 6 percent of the 
population. If we sit here and underfund science and technology 
and education without restraining Medicaid, then we're making a 
bad mistake.
    My last question is, you were asked a question in your 
testimony in the House about the possibility of instead of the 
Department of Energy regulating the science labs, such as the 
Oak Ridge National Laboratory, might not it be better to let 
OSHA and the Nuclear Regulatory Commission do that sort of 
regulation? Might not they be better suited for that 
regulation, and might they not be more efficient in that kind 
of regulation of safety and health issues at your 10 science 
laboratories? I wonder if you've had a chance to think about 
that since then.
    Secretary Bodman. Yes, sir, I have had a chance to think 
about it, and my first priority will be to improve the safety 
and security powers of the individual laboratories themselves. 
Before we start seeking out help, I'd rather at least make an 
effort to see what we can do to improve the situation 
ourselves. So I would respectfully, at least at this point in 
time, like to focus on it. I think we can improve, and I would 
like to see us try.
    I became quite confident, having visited Los Alamos and 
Sandia last week, that we will be able to continue to make 
progress there. And sometimes, sir, the appearance of help in 
the form of additional regulators is not what we need. What we 
need to do is manage what we have today better, and that's 
where I'd like to put my effort.
    Senator Alexander. Well, I didn't mean additional. I meant 
in lieu of for the science labs.
    Thank you, Mr. Chairman, for your time.
    The Chairman [presiding]. Thank you, Senator.
    Senator Cantwell.
    Senator Cantwell. Thank you, Mr. Chairman.
    Secretary Bodman, welcome officially as Secretary of Energy 
to your first hearing as Secretary before this committee.
    Secretary Bodman. Thank you.
    Senator Cantwell. I find a little bit of irony in having 
you, smart, business, MIT person coming here to try to sell 
this particular committee that somehow there is something wrong 
with cost-based power. But we'll get to that. And I look 
forward to the challenge of seeing how you defend this 
position.
    But I'm assuming from your testimony this morning that you 
and the administration are still pushing the reform concepts of 
the power market proposal by OMB. Is that correct?
    Secretary Bodman. That's correct. It's the President's 
budget, ma'am, so it's not OMB, it's the President's budget.
    Senator Cantwell. Okay. That probably makes it even more 
clear to my constituents.
    Second, are you aware of a letter that we sent on February 
9 informing you that--actually, the agency--if it does 
participate in the use of public funds to investigate this 
proposal, that it is a violation of the Energy and Water 
Appropriations Act of 1993?
    My predecessors from all throughout the Northwest have been 
clear for decades about this issue and this proposal, and 
Senator Hatfield clearly called for outlining of any public 
dollars to be used to promote or study this idea of shifting 
cost-based rates to market-based rates.
    Are you aware of that letter? And when can I expect a 
response?
    Secretary Bodman. I am aware of the letter. I can't give 
you a date on the response, but you may be sure that you will 
be getting a prompt response.
    The essence of the response will be that the President, 
under his constitutionally mandated authorities, does have the 
need to do sufficient work on any topic that he chooses to make 
a recommendation to the Congress on, and that the 
interpretation of the law to which you refer, which has been 
studied with some care over time, is interpreted to allow him 
sufficient flexibility to undertake his constitutionally 
mandated authority.
    Senator Cantwell. I think the reason why this language is 
there is because lawmakers think that you're wasting our time, 
just as this particular budget proposal will waste our time as 
well. I think that you will probably hear from the majority of 
members of this committee that they don't support this concept. 
I think we've heard from Senator Gregg that he doesn't plan on 
supporting it in the budget proposal. So I think that's why 
that language exists.
    But let me turn to the real issue, because I think this is 
what we need to get down to. First of all, the Northwest 
economy has been greatly hurt. We paid $30 million in emergency 
sales, ordered by the Department of Energy, for the California 
crisis. We've never gotten paid for it. We have had the lack of 
Federal regulators doing their job and getting us relief from 
fraudulent Enron contracts that we're still being sued to pay 
for.
    Now this proposal, which is no more than an assault on 
public power and cost-based rates, is nothing more than an 
attempt to turn the lights out on the Northwest economy. Now, 
our Governor was just here, and not only do we have almost 
10,000 signatures from rate payers saying how much they're 
going to be hurt by this, we even have evidence now of 
businesses saying they don't know whether they're going to get 
their financing for expansion in the Northwest, because they're 
concerned about this proposed rate increase on public power 
rates.
    Now, I ask you, is the administration's problem with cost-
based rates? Or is the administration's problems with standing 
behind some notion that somehow the Northwest is subsidized on 
these rates? Because I see no Treasury transfer of dollars. I 
could come up with lots of programs here that represent a 
transfer of Federal dollars to specific interests. Public power 
doesn't meet that.
    So fundamentally it seems that the administration, in your 
response to this proposal, your testimony today said that 
electricity rates should be closer to market rates. The reason 
why we don't want to be closer to market rates, we decided in 
the 1939 Reclamation Act that this proposal of cost-based 
rates, of getting power just at the cost that it takes to 
produce it, was good for the Northwest economy and good for the 
economy throughout America. And somehow this administration 
wants to say no, you should pay more than that simply because 
other people can't produce power at that rate.
    So why should Northwest rate payers or rate payers in New 
Mexico or anywhere else have to pay more simply because an 
Enron or somebody else can charge more money? That's not the 
philosophy that this Congress has had for decades since 1939. 
So why do you want to change it?
    Secretary Bodman. To answer the question--you asked several 
questions during the course of that. To answer the question----
    Senator Cantwell. That's why I'm counting on that MIT 
expertise.
    Secretary Bodman. I'll try to do my best, ma'am. The 
administration's position on this matter is that there is a 
subsidization of the PMAs by the American taxpayer, and this is 
an effort to gradually change the rates so that they, over a 
period of time, can approach market levels. It's as simple as 
that.
    Senator Cantwell. So could you please tell me how there is 
a subsidization when there is no transfer of dollars from the 
Treasury? How could there be a subsidization?
    Secretary Bodman. I can tell you that the form of the 
subsidization involves the calculation of costs as they exist 
now, and it relates to the funding that was made available to 
these PMAs, not the recent funding during the 1990's, but the 
funding during the 1980's, 1970's, and 1960's, which was done 
at sub-market rates, and when the General Accounting Office, 
and when the Congressional Budget Office analyzed all of this, 
they too agreed that there is a subsidization of the PMAs. And 
so it's a simple matter of trying to correct what we view as a 
deficiency in the economics of the system.
    Senator Cantwell. Well, I know my time is up, Mr. Chairman, 
but I believe the GAO report refutes the notion that BPA and 
ratepayers are subsidized. In fact, I think that it shows just 
the opposite. So perhaps in the next round we'll have a chance 
to talk about that.
    The Chairman. Thank you very much. Thank you, Mr. 
Secretary.
    Senator Bunning.
    Senator Bunning. Thank you, Mr. Chairman. Just a couple 
highlights in the DOE budget. There has been an actual 2 
percent cut overall in the budget, 2 percent. If we get down 
into the budget itself, I heard Senator Wyden saying that the 
Hanford clean-up took a 7 to 8 percent cut. If you look at the 
Paducah clean-up, we're looking at a 13 percent cut in clean-up 
dollars.
    Not only that, but we're having a terrible time continuing 
the clean-up because of the transfer from Bechtel Jacobs to 
other entities. Now we have a lawsuit preventing clean-up at 
all.
    So my feeling is that your budget, the DOE's budget, 
cutting from $111.3 million to $98 million is unjustified. This 
was supposed to be a sped-up budget. In other words, we were 
going to clean it up faster. It's the first time in the history 
of the Department of Energy I've ever seen a clean-up go faster 
by paying less. Since I've been here, I've been here for 19 
years, I've never seen us spend less and get more out of it.
    The other thing at the Paducah plant is the DUF6 facility. 
You have proposed a decrease of $5.1 million from $55.9 
million, and we're trying to build that so we can get rid of 
the waste that is on that facility.
    Now, please explain to me the rationale, how you feel that 
you can get more for less, and accelerate the clean-up.
    Secretary Bodman. Sir, I hope it will not be the last time 
that you ask me this question. I do hope that over time we can 
find ways of getting a lot more for a lot less in the way we 
manage our environmental affairs in this Department.
    Now, with respect to Paducah, I know of your interest in 
it, and I have looked at the whole range of efforts that are 
ongoing at Paducah. As I said in my remarks earlier, there are 
certain examples of the management of our departmental efforts 
that I think fall short of standards that I would have. This is 
one of them. We have had a delay beyond acceptable periods of 
time in honoring or pursuing bids that have been made.
    As you've pointed out, sir, we now find ourselves the 
object of some lawsuits. It's something that well-intended 
people have arrived at a situation that I find unacceptable. 
And we will look hard at it to see if we can't make 
improvements so that I do not have to take this question from 
you again.
    But I would tell you, sir, that with respect to the budget 
that is proposed, the budget for 2006, which is the proposal 
that is before you and that is being considered here today, 
does accomplish that which we need to accomplish in order to 
get the job done, and that unrelated to----
    Senator Bunning. We have a difference of opinion, but 
that's okay.
    Secretary Bodman. Yes, sir.
    Senator Bunning. We're going to have a lot of those for as 
long as you're here, for the next 4 years.
    One other thing I am dumbfounded by is that you have 
removed all--everything that was in the overall comprehensive 
energy package on clean coal-burning technology, the tax 
credits. I know that is not specifically in your bailiwick, but 
it is overall in the Energy program.
    We're down to $50 million for clean coal power initiatives. 
We had $2 billion in the overall energy bill last year in tax 
incentives for burning clean coal. Unless we do those things, 
Mr. Secretary, we are going to continue to depend on foreign 
sources for not only coal and the technologies that we arrive 
at, but in energy overall. We're going to be behind the 8-ball 
as far as depending on foreign imported energy sources, and we 
want to do just the opposite. That's why a bunch of us are 
going up to ANWR this weekend to look at a natural resource in 
the United States of America that could take our dependency 
away from Saudi Arabia for a million barrels of oil per day 
over 30 years, just that one resource.
    So we have to look at coal, which whether you like it or 
not, produces about 52 percent of our electric generation in 
the United States. So I think it's short-sighted that we don't 
spend more to develop clean coal technologies.
    Secretary Bodman. I can say a couple things, if I may, sir. 
First, we're great believers, I'm a great believer personally 
in coal generally and in research that is focused on improving 
the way we use coal. And so the clean coal power initiative, 
the other related activities that are in this budget, are 
something that I'm quite enthused about, and we have funded and 
will continue to fund in the future.
    With respect to ANWR and other fossil fuels, I will be 
accompanying you, sir, on the trip this weekend, and I look 
forward to learning more about ANWR and about the opportunities 
for an additional source of energy of the sort you describe. 
And perhaps while we're traveling, you and I can have a chance 
to talk further about coal and the advantages of that.
    Senator Bunning. Dress warm.
    Secretary Bodman. Thank you, sir.
    Senator Craig. Senator Murkowski.
    The Chairman. Are you finished, Senator?
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman, and welcome, 
Secretary Bodman. I too look forward to joining you on our trip 
up north. I think it will be an opportunity to showcase what we 
have done in Alaska over the past 30 years with regard to 
exploration and development of, as Senator Bunning has 
indicated, an incredible resource for us. It has been done in a 
manner that highlights not only our technology, but highlights 
how we are able to do it in balance with the environment, in 
balance with the animals that live up there, and still provide 
economic opportunity to the Inupiat, to the natives, and to 
provide a resource for the rest of the country. So we're 
looking forward to that.
    This leads me to my question and my concern, and that is 
the elimination, or the phase-out, of DOE research into 
accessing the non-conventional gas resources, and further into 
the technology side.
    Now, you have indicated in your comments that with the 
price of oil at the heights that it is, quite honestly, private 
industry should be able to step forward and pursue these 
technologies. We do recognize that the price of oil is at 
unprecedented levels. Certainly there should be some incentives 
out there.
    But I go back to comments that were made by Senator 
Alexander talking about certain policy decisions that we make. 
We want to make sure that we continue a level of economic 
growth. We want to make sure that we continue meeting the 
country's energy needs. But we also want to make sure that 
we're doing things responsibly environmentally. We're talking 
about clean air, we're talking about emissions. You will see 
when you come up north, climate change is real in Alaska. You 
will see it there. We need to be addressing the technology that 
allows us to adapt, that allows us to mitigate to the extent 
possible.
    So there are policies that will help spur this advanced 
technology, whether it relates to oil or whether it relates to 
natural gas. It doesn't come cheap, and we don't necessarily 
see the answer in the first year.
    We have been working for the past 5 years to see if we 
can't commercialize gas hydrates, unconventional sources of 
gas. We're looking at the potential of 32,000 trillion cubic 
feet of gas hydrates up north. But this program would phase 
that out.
    This is an area, again, where we have the opportunity as a 
nation to reduce our dependence on foreign sources of our 
energy. We're already well past help when it comes to oil. But 
we don't need to go there with gas, and we've got an 
opportunity with gas hydrates. I want you to work with us in 
that area. We need the assistance there. I want you to see the 
advances that we have made.
    I also want you to see what the technology has allowed us 
to do with the directional drilling so we're not impacting the 
tundra. The caribou don't even know that we are there. These 
are the types of incentives that have come about because we 
have had these programs in place, and I am hopeful that after 
your visit next weekend, we can maybe sit down and look at some 
of the benefits to this.
    Now, I've used all my time talking, but it was important to 
get that statement out. What I do want to ask of you 
specifically with the gas hydrates, we need to have some 
assurance that the Department of Energy understands the 
importance to us of these unconventional gas sources. I would 
like your assurance that not only you'd work with us there, but 
that you would look at the technology that's being utilized up 
north, recognize the potential for us in ANWR so that we can 
develop responsibly and in a manner that works not only for the 
oil companies.
    We're not looking to feather the nests of the oil companies 
with these incentives. We're looking to benefit the country 
through the advantage of the resource and benefit the region, 
my State, through sound environmental policies. So I need to 
know that you're going to work with us in these two areas.
    Secretary Bodman. Senator, I'm also happy to learn, and I 
look forward to going and to learning. I don't know what more 
to say. I would repeat that some very tough choices had to be 
made in the construction of this budget. And the ones that were 
made were the ones that were felt to be appropriate.
    Obviously, it's now in your court, and the Congress will 
decide what it wishes to do. In terms of the unconventional 
energy resources, the hydrates that you mentioned, in terms of 
directional drilling, I'm also happy to learn more, and I 
expect to learn on this trip.
    Senator Murkowski. I appreciate your open mind. Mr. 
Chairman, I have one really brief question that I would like to 
ask of the Secretary if I may, and this relates to our natural 
gas pipeline. As you know, we were successful in enacting the 
legislation. We appreciate the assistance last year in getting 
the incentives moved forward.
    We've had a conversation about DOE's role in moving this 
project forward once we figure out the logistics of the 
sponsors and what authorization they file under with FERC. 
Among other things, your Department's responsibilities will 
include granting the necessary authorizations, conducting 
environmental rules, and really a lot of coordination with 
many, many agencies.
    We know that we've got to get Alaska's gas to market as 
soon as possible. And in reviewing the budget, it's just not 
clear to me whether DOE has requested the funding necessary to 
carry out the responsibilities that your Department will have 
as we move forward with the natural gas pipeline.
    Secretary Bodman. We haven't, and we will need to undertake 
a reprogramming in order to get the necessary budgeting 
flexibility, which we will be undertaking, and I would 
certainly ask for your and the help of Congress in looking 
favorably on a reprogramming so we could do just what you 
request.
    Senator Murkowski. Okay. I'll look forward to discussing it 
with you on the trip, because there are some items that need to 
move quicker than others. Certainly the coordinated effort 
amongst the agencies is something that we need to key on very 
quickly, so I'll look forward to doing that. And as Senator 
Bunning said, dress warm.
    Secretary Bodman. Thank you.
    Senator Murkowski. Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Akaka.
    Senator Craig. I'm next.
    Senator Akaka. Thank you very much.
    The Chairman. Senator Craig was here. That's all right. You 
were here much longer, so let's do that. Go ahead, Senator 
Craig, and then we'll go to Senator Akaka.
    Senator Craig. Well, I do appreciate that accommodation. I 
need to get to the floor to get involved in the current debate. 
So Danny, thank you for the accommodation.
    Mr. Secretary, I will not be going to ANWR. I know that 
climate change has warmed Alaska, but not enough. It will still 
be 30-plus below on the ANWR, and so I'll plan to go in the 
spring when the mosquitoes are out.
    Secretary Bodman. We'll give you a report, sir.
    Senator Craig. I trust you will. The President proposes and 
the Congress disposes, and we are so disposed not to move our 
PMAs to market-based rates, and we will not do that. I believe 
that. The chairman of the Budget Committee agrees.
    Let me tell you why. Bonneville Power repays the Federal 
Treasury for all of the power-related investments made in the 
Federal hydro system. BPA has made its Treasury payments in 
full on time for 21 straight years. In the last 3 years, the 
Bonneville Power Administration has prepaid the Treasury just 
over $1 billion.
    The claims that Bonneville are subsidized rest on the 
difference between the average interest rate of Bonneville's 
appropriated Treasury debt, and the long-term market interest 
rates that prevailed during the 1980's and the 1990's. That was 
a discussion that you and Senator Cantwell had.
    According to the GAO, in 1996, the Bonneville Power 
Administration appropriated Treasury debt was being repaid at 
an average rate of 3.5 percent. Prevailing Treasury rates were 
9 percent.
    The region disagreed that the difference in interest rates 
that prevailed at the time represented a subsidy. As many of 
the Northwest pointed out at the time, it is like the bank 
claiming that it subsidized a homeowner who has a 6 percent 
fixed rate mortgage in an 8 percent mortgage market. I think 
there has to be some reality brought to this subsidy 
discussion.
    But in order to put the perennial subsidy argument to rest, 
which we thought we had, the Northwest congressional delegation 
negotiated a refinancing arrangement for Bonneville's debt with 
the Office of Management and Budget, Bonneville, and the 
Treasury Department. The agreement was first introduced in 1994 
by Senators Hatfield and Representative DeFazio, and finally 
enacted in 1996.
    Here's how it worked. The net present value of the stream 
of payments that Bonneville owed was calculated at the time. 
The interest rate was arbitrarily increased to a market rate of 
7.1 percent, which means we are repaying an average market rate 
today, above average compared to the rate today. The principal 
amount at the end of 1996 was in fact reduced from $6.7 billion 
to $4.1 billion.
    The effect of increasing the interest rates and reducing 
the principal amount was that the net present value of the 
stream of payments the Treasury would receive remained exactly 
the same. In other words, the taxpayer was no better or worse 
off as a result of the transaction, with one important 
exception: Bonneville and the region's ratepayers agreed to pay 
an additional $100 million earlier in the new repayment stream, 
thus leaving taxpayers $100 million better off than they were 
before refinancing legislation was passed.
    The $100 million benefited and was confirmed by OMB. The 
Federal Government also confirmed that this refinancing 
resolved the issue of proposed or supposed Bonneville Power 
subsidy.
    Here's what a former Secretary of Energy said in 1994: 
Benefits to the Government and this legislation are that it 
provides a minimum $100 million increase in the present value 
of Bonneville's debt service payments to the U.S. Treasury. The 
increase represents agreement between ratepayers and the 
government to resolve subsidy criticism for outstanding 
appropriate repayment obligation.
    Bonneville's customers recognized that recurring subsidy 
criticism must be addressed once and for all because of the 
risk they posed to Bonneville's financial stability and rate 
competitiveness. The legislation included assurances to 
ratepayers that the government will not increase the rate 
payment obligation in the future.
    My message to you today is to pick up the phone and call 
OMB and ask them to read this, and stop the silly argument that 
the way they're going to increase the flow of revenue to the 
Federal Government is to dispute this agreement that we all 
came together on in 1994, Mr. Secretary, to deal with the 
criticism that still rebounds today.
    There is no subsidy today. It has been effectively handled, 
and Bonneville has advanced payments by almost $1 billion. So 
the ratepayers of the region, I believe, have met their 
obligation. That's my frustration.
    Last, the chairman and I are very interested in new 
generation nuclear power. We get pushed back, we're moving 
ahead, we hope to get cooperation from you certainly. That's 
going to be extremely valuable in the future. Everybody's 
talking about, including Wall Street and investors, that the 
name of game in town is clean technology. One of the greatest 
forms of clean technology today is nuclear, and yet to build 
that new generation facility, to create the efficiencies, to do 
the kind of things we want to do, which also embody the 
President's hydrogen proposal and hydrogen program, are within 
that.
    So we trust that you'll be with us in that, that we won't 
continue to get the progressive push back from OMB simply 
because they're playing a numbers game in direct opposition to 
the language being talked about by the administration and by 
this committee and by this Congress collectively.
    Thank you.
    The Chairman. Mr. Secretary, I don't know if you have 
enough time to answer, but nonetheless----
    Secretary Bodman. I could just say----
    Senator Craig. The Bonneville doesn't need to be 
addressed----
    Secretary Bodman. I just would say----
    Senator Craig. I'm just simply saying, go back and read the 
content of the 1994 law. It's real. Let's don't play this game 
anymore.
    Secretary Bodman. I understand and I will certainly go back 
and read the 1994 law. I have not done that, and I will 
certainly do it. The statements I made before stand, sir.
    With respect to NGNP, there is a serious effort on the part 
of this Department to do the research that is necessary to 
select a process for the eventual NGNP program. We just signed 
yesterday a Gen IV--a day before yesterday, I guess it was--a 
Gen IV agreement among five countries that will call for joint 
research related to a number of nuclear efforts.
    I would be remiss, however, if I did not state that my 
understanding--I have not had the discussions about this 
personally--but my understanding is that there is a good deal 
of hesitation and concern about the $2 billion, plus or minus, 
price tag on building an NGNP process plant in order to 
undertake this program. It's a very expensive effort, and the 
first thing will be to select the right process.
    And that's what the 2006--I think it's $45 million that's 
in there, a portion of which will be committed to the selection 
of a process. It's been suggested we talk to the National 
Academy of Sciences in order to get some help on that or to get 
verification that we've got the right approach.
    But I would be remiss if I did not say that at least my 
understanding is there is some concern about whether we've got 
the wherewithal in order to deal with a $2 billion price tag 
for the NGNP process.
    The Chairman. Thank you, Mr. Secretary.
    Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman. Mr. 
Chairman, I ask that my full statement be included in the 
record.
    [The prepared statement of Senator Akaka follows:]

  Prepared Statement of Hon. Daniel K. Akaka, U.S. Senator From Hawaii

    Thank you, Mr. Chairman, for calling this timely hearing on the 
Department of Energy's FY 2006 budget. I realize that the President has 
pledged to cut the nation's record-high budget deficit of $427 billion 
in half by 2009. But to do so at the expense of discretionary programs, 
especially at the expense of critical energy programs, is not a wise 
decision given our high prices for crude oil, growing demand for 
energy, and current energy portfolio.
    The federal budget is a template by which priorities are drawn and 
I have concerns about those priorities. This year, the discretionary 
part of the nation's budget will receive a decrease of about one-
percent, the first real-dollar decrease in over 20 years.
    The Department of Energy's Fiscal Year 2006 budget request of $23.4 
billion would add money for national security, hydrogen research, 
nuclear power and clean coal technologies, while cutting spending on 
science, environmental and conservation programs. The result would be a 
2 percent reduction in discretionary spending for the Department of 
Energy, a decrease of over $475 million dollars!
    As you know, I have been a strong supporter of the DOE science and 
energy programs. I am disturbed that the FY 2006 request for the 
important programs in Science, including the Department's contribution 
to the U.S. Global Change Research Program, are cut by nearly 4 percent 
from the FY 2005 appropriations level.
    I am extremely concerned about the elimination of Natural Gas 
Technologies programs. I authored legislation that shaped the Gas 
Hydrates program and have long supported the pursuit of Gas Hydrates 
research and development. Gas Hydrates represent a vast potential 
source of clean energy and warrant an intensified research and 
development effort. The Administration's request has scaled back 
enacted levels consistently since FY 2002, and no funds are requested 
in FY 2006.
    The notable bright spots are increases for Hydrogen research and 
nuclear security, through the National Nuclear Security Administration. 
The NNSA budget is 2.5 percent ($233.3 million) more than in 2005. 
Within NNSA, the Defense Nuclear Nonproliferation subgroup is targeted 
for a 15.1 percent budget increase. I am pleased to see this commitment 
to national and international nuclear security. I look forward to 
working with you on securing sealed nuclear sources that can be used as 
material for `dirty bombs.'
    Thank you Mr. Chairman. I have some questions that I will ask 
during the question and answer period.

    Senator Akaka. Mr. Secretary, thank you for being here, for 
taking on this huge challenge, and I realize you didn't 
participate in the drafting of this budget, but I'd like to 
discuss some of the issues.
    The fiscal year 2006 DOE budget has a budget structure 
change relating to the off-site source recovery program. All of 
the National Nuclear Security Administration, or NNSA, and DOE 
programs related to nuclear materials removal and radioactive 
source security and recovery have been consolidated into a new 
unit to support the new global threat reduction initiative, 
GTRI, announced by former Secretary Abraham.
    GTRI includes activities transferred from the Office of 
Environmental Management, the nonproliferation and 
international security and international nuclear materials 
protection and cooperation programs, and the off-site source 
recovery program.
    Specifically, Mr. Secretary, the U.S. radiological threat 
reduction subprogram of the GTRI recovers and stores excess and 
unwanted sealed nuclear sources to reduce the threat of such 
sources being used in radiological dispersal devices.
    I am pleased that the DOE budget request for USRTR budget 
reflects a meaningful increase from $7.5 million to $12.75 
million for fiscal year 2006, and that the NNSA has moved 
aggressively in the past year to identify and recover such 
nuclear materials.
    At a September 2004 hearing before this committee, the 
Director of the Office of Commercial Disposition Office of 
Environmental Management, Ms. Christine Gelles, stated that DOE 
had located the responsibility for designating a permanent 
disposal facility for greater than Class C waste to 
environmental management. And yet, I cannot find evidence of 
this funding.
    My first question, is there funding in the DOE fiscal year 
2006 budget for the activities needed to identify a permanent 
repository for GTCC nuclear waste, such as an environmental 
impact statement, and for the facility or contract for 
disposal?
    Secretary Bodman. Yes, sir, there is funding. Are you 
speaking of Yucca Mountain, sir?
    Senator Akaka. Yes.
    Secretary Bodman. Which is meant to be the permanent 
repository, and there is funding for the Yucca Mountain 
repository that is in the 2006 budget.
    Senator Akaka. Yes, well it doesn't only have to pertain to 
Yucca Mountain. It could be for other facilities.
    Secretary Bodman. I'm a little confused by the question, so 
maybe if we could----
    Senator Akaka. Yes, well if----
    Secretary Bodman. If we can maybe deal with that off-line, 
I'd be happy to try to be helpful in providing the information 
that you want.
    [The information follows:]

       FUNDING FOR A PERMANENT REPOSITORY FOR GTCC NUCLEAR WASTE

    DOE did not request funding in the FY 2006 Budget for the Greater-
Than-Class C (GTCC) waste disposal activities because carryover funds 
(approximately $1.5 million) from prior years are sufficient to fund 
the ongoing GTCC Environmental Impact Statement (EIS) activities 
through FY 2006. DOE plans to request funds in the FY 2007 Budget to 
complete the EIS and to begin implementation of the Record of Decision 
for GTCC disposal.

    Senator Akaka. Yes. I know I mentioned so many different 
agencies here and their relationships. I would appreciate a 
response from you on this.
    Secretary Bodman. It shall be done, sir.
    Senator Akaka. In writing, yes.
    Second, can you please confirm, Mr. Secretary, for the 
record that the responsibility lies within or with 
environmental management, and comment on DOE's progress and 
plans to identify a process and site for these wastes? So for 
the record if you'll provide that for us, I'd certainly 
appreciate that.
    Secretary Bodman. I would be happy to provide for it to the 
extent that--again, I'm a little unclear as to the exact nature 
of the question. There is in the budget--and in an organization 
separate from environmental management, in the so-called 
Radioactive Waste Office, where there is significant funding 
that--that is geared to the creation of a permanent repository 
for nuclear waste. That is something that we devote a good deal 
of time, money and effort to.
    [The information follows:]

RESPONSIBILITY FOR FUNDING FOR A PERMANENT REPOSITORY FOR GTCC NUCLEAR 
WASTE COMMENTS ON PROGRESS AND PLANS TO IDENTIFY A PROCESS AND SITE FOR 
                              THESE WASTES

    The Office of Environmental Management is responsible for 
completing the Greater-Than-Class C (GTCC) Environmental Impact 
Statement (EIS) and determining how the Department will meet its 
responsibilities for disposing of GTCC waste. Current efforts are 
focused on performing the necessary National Environmental Policy Act 
(NEPA) analyses, including the development of an EIS. This spring, we 
expect to issue an Advance Notice of Intent, which will request 
comments from the public and interested agencies about the proposed 
EIS, the preliminary range of disposal alternatives, and the potential 
issues related to DOE's decisions for this category of waste. In 
addition, we are in the process of developing updated inventories of 
commercial GTCC waste and comparable DOE waste, which is essential for 
analyzing potential disposal options. We also have entered into 
discussions with the U.S. Environmental Protection Agency and the U.S. 
Nuclear Regulatory Commission about their potential participation in 
the EIS as cooperating agencies. Upon completion of the EIS, DOE will 
issue a Record of Decision documenting how it intends to meet its 
responsibilities to dispose of GTCC low-level waste. The entire EIS 
process usually requires 1-1/2 to 2 years from the issuance of the 
formal Notice of Intent (which is expected to be issued later in 2005) 
to the issuance of a Record of Decision.

    Secretary Bodman. There are other issues with respect to 
the environmental management's efforts to deal with the legacy 
wastes that occurred in various sites, including the State of 
Washington, including Idaho, including Tennessee, Ohio, and so 
forth. And so that's the province of the environmental 
management folks. And there is funding in the budget to focus 
on that as well.
    Senator Akaka. Thank you, Mr. Bodman.
    Mr. Chairman, my time has expired. I have other questions, 
but I'll submit them for the record.
    The Chairman. Okay. If we don't have time, will you submit 
them for the record?
    Senator Akaka. Yes.
    The Chairman. Senator Smith, I think it's your turn.
    Senator Smith. Thank you, Mr. Chairman. Secretary Bodman, 
welcome. Thank you, Senator. You've probably noticed that there 
are a lot of Northwest Senators on this committee.
    Secretary Bodman. I have taken that into account, sir, yes, 
I have.
    Senator Smith. You'll also recall that in our first visit 
when you were nominated, you and I reviewed the history of 
public power in the Pacific Northwest and how much a 
cornerstone it was to the economy of the Pacific Northwest. I 
won't reiterate what I was going to do--reiterate what Senator 
Craig indicated, but there is no subsidy anymore. This was 
all--to the degree there was, was resolved with the Hatfield 
agreement. It is the statutory law of this country.
    Notwithstanding that, President Bush isn't alone. When I 
got here, President Clinton made a run at the same thing, 
because it is much misunderstood apparently by OMB. We defeated 
it then and we must defeat it now, and I believe we already 
have. So I hope you're not counting on those market rates for 
your budget, because they're not going to happen.
    The Northwest Power and Conservation Council has estimated 
that the proposal to have BPA go to market-based rates would 
result in a 65 percent rate increase for customers in the 
Pacific Northwest. Did OMB to your knowledge do any 
calculations on what an impact of such a rate increase would be 
on industries in the Pacific Northwest? Was any thought given 
to that, and on unemployment rates that are already too high in 
Washington, Oregon, and Idaho?
    Secretary Bodman. I can't speak to the question of 
unemployment rates, but OMB did do calculations with respect to 
the impact on the ratepayers of your region, sir. They did do 
that. Their numbers were significantly below the number you 
just quoted.
    Senator Smith. You know, I'm a businessman in a commodity 
business. I understand supply and demand and I understand 
markets very well. But there is a real misunderstanding of 
markets to think that there is a market in the Pacific 
Northwest when it comes to power production. Bonneville Power 
is a public entity that finances endless claims on its 
treasury, to say nothing of its obligation to the treasury that 
it not only meets, but exceeds. But it has obligations to the 
tribes in terms of treaties, it has obligations to Canada in 
terms of the management of the river. It has obligations to 
more public entities than we've got time this morning to 
indicate.
    So the notion that it is producing market-based power is 
ridiculous. It is serving endless public needs. To the degree 
that you want us to go to a California-style spot market for 
rates in addition to that just simply hits our region with a 
cost that misunderstands the law, and certainly, I think, 
devalues the people of that region and misunderstands as well 
their history.
    Frankly, because we are current on all of our BPA payments 
and the interest rates are at market rates, as I understand, 
we've even prepaid Treasury debt, can you tell me of any other 
public works project in U.S. history that has returned this 
much money to the U.S. Treasury? Do you know of any public 
works project that's got a rate of return like BPA does to the 
Treasury?
    Secretary Bodman. I haven't tried to do a history of all 
the public works projects. I'd be happy to take a look at it.
    Senator Smith. You won't find any.
    Secretary Bodman. There is no effort, sir, to demean or 
degrade the citizens of any region. This was strictly an effort 
to reconcile what is deemed to be a difference in the rates of 
subsidy among the different PMAs that exist, in our view.
    Senator Smith. Well, this was harmful to President Clinton 
when he tried it in our region, and it's harmful to President 
Bush. I sure hope that they'll back away from this, the sooner 
the better. I think the Congress has already backed away from 
it in terms of the budget that will be brought to the Senate 
floor.
    Do you know, is any other region of the country making as 
much investment in new transmission as the Pacific Northwest?
    Secretary Bodman. I don't have the figures by region, sir, 
so I can't speak to it. I'd be happy to get those for you if 
that's useful.
    [The information follows:]

    Yes, there appear to be other regions of the country that are 
making as much new investment in transmission as the Pacific Northwest, 
relative to the value of their existing transmission assets. These 
regions include the Electric Reliability Council of Texas and the 
California Independent System Operator. However, the existing Federal 
data sources are not comprehensive enough to draw strong conclusions 
about regional patterns or trends in major transmission investment.

    Senator Smith. Well, part of the problem with the 
California crisis that occurred a few years ago was much 
related not just to production but to transmission. In response 
to that, BPA has tried mightily to add to transmission, and 
obviously that takes borrowing authority. Yet I understand that 
the administration wants to restrict needed transmission 
upgrades, in other words, reduce their borrowing authority.
    If that's done, we're simply not going to get third-party 
financing arrangements with those kinds of borrowing ceilings, 
and it just hurts the future, it really does cloud it. So I 
hope that that can be rethought as well.
    You've probably heard enough on this issue today, but I 
hope you have a sense of what kind of a wall the administration 
is running into in the Congress.
    Secretary Bodman. I do have a sense of it, sir.
    Senator Smith. Thank you.
    The Chairman. Did you have another round or----
    Senator Bunning. Mr. Chairman, I will just submit some 
questions to the Secretary.
    Senator Smith. Mr. Chairman, I just wanted to ask one more 
thing.
    The Chairman. Please do.
    Senator Smith. Mr. Secretary, can you commit that the 
Department will not attempt to force BPA to charge market-based 
rates administratively in violation of current law?
    Secretary Bodman. Senator, there is no way that this 
Department will do anything in violation of current law.
    Senator Smith. That's a good answer. Thank you.
    The Chairman. Well, I'm going to excuse myself for 2 
minutes and turn it over to you, and I will return because I 
have a number of questions.
    I just want to make an observation about PMAs. It has 
nothing to do with merits. You will soon be participating in 
another round of budget discussions, and I think you should 
look at the history of submissions of PMA reform and what's 
happened.
    Now, it's good that Presidents continue to submit policy 
matters that are significant. But I think you ought to think 
through and make a point that if you're going to continue to 
put them in your budget when they're not going to happen, then 
we're just jeopardizing programs that we know we need, because 
we can't get the savings. If we're expected to meet a goal, 
you're just taking that amount, and in a sense saying, we all 
know it's not doable, but as a matter of policy we want to put 
it in there, but then we have to cut all the other programs.
    I can tell you this is reminiscent of President Nixon 
sending us proposals--he started it and then over and over 
again--to privatize a nuclear enrichment program. They finally 
stopped submitting it and then we did it. It took 26 years.
    So in the meantime, every President put it in and we were 
expected to make the money from the sale, and I'm very 
thankful. That was the biggest privatization done in about 8 
years, and I did it with the help of a Senator from Kentucky. I 
just give you an analogy that sooner or later it gets 
counterproductive for your Department and expenditures.
    Now, Senator Cantwell, if you will preside and then I will 
return shortly and we won't take much longer, Mr. Secretary.
    Secretary Bodman. Thank you.
    Senator Cantwell. Thank you, Mr. Chairman, and thank you 
for your comments as well about power markets. But I think, Mr. 
Bodman, I think your break-off from our last discussion, which 
I wanted to pick up on, has adequately been addressed by the 
exchange between you and my colleagues from the Northwest. So I 
think I'll stop on the subsidy point, but we will certainly be 
looking for your response to that issue.
    Let me, if I could, turn to the Hanford budget issue, and 
the fact that the DOE cuts to Hanford seem to be, I would say, 
at odds with our ongoing commitment for clean-up, given the 
tri-party agreement that we have between the State of 
Washington and DOE. Can you explain to me why Hanford received 
more than half the cuts in the Environmental Management budget 
despite the fact that it continues to be really at the early 
stages of clean-up? Why would we juxtapose to Oak Ridge or 
Rocky Flats, you know, over half of those cuts come from the 
Hanford budget?
    Secretary Bodman. First, Senator, it is the intention of 
this Department to comply with the tri-party agreement that you 
alluded to in your question.
    Senator Cantwell. And since you just brought that up, could 
you clarify that also means cleaning up 99 percent of the tank 
waste?
    Secretary Bodman. That's correct. That's correct, and 
that's what the commitment is and will be and we will tend to 
honor that.
    Senator Cantwell. Thank you.
    Secretary Bodman. With respect to the reductions, I think I 
alluded to those before, but they were one that certain 
components, certain parts of the project have actually been 
completed--we have seen a modest part of the reduction is due 
to the fact that there have been some completed portions.
    The largest part of the reduction is related to the 
slowdown that has occurred in the building and the construction 
and the need to redesign the foundations of the vitrification 
plant during the process of construction. It is not a 
circumstance that I as an engineer am very happy with, but we 
have what we have.
    And apparently we have a situation where there was either 
inadequate attention given to or inadequate information 
available during the original design of this plant, and 
therefore there is a process ongoing of reverifying and 
rechecking all of the foundation calculations related to the 
vit plant. And therefore, that process has slowed down the 
construction. I don't like it, you don't like it, but those are 
the facts. It seems to me to be not an unintelligent way to 
proceed given the circumstances that we are now faced with.
    And then third, there are differences, as you're aware, 
between the Department's view and the State of Washington's 
view of the WIR situation, and therefore, that in and of itself 
has caused a delay in certain aspects of it. And so we have 
limited funds, and so we have decided to put those funds where 
we have a higher degree of certainty, where we do have 
agreement, and where we don't have the same sort of problems.
    We are continuing to spend over $1,800,000 if Congress 
approves this budget. It is not an inconsequential amount of 
money. It remains the biggest program that we have, and it will 
certainly have my attention any time we're spending that kind 
of money. It needs to have the attention of the Secretary and 
it will have.
    Senator Cantwell. Thank you, Mr. Secretary. I think our new 
Governor is most anxious to work with you on the settlement of 
the WIR issues and move ahead, and certainly we will want to 
follow up with the discussion on the vit plant and commitment 
on the budget.
    But I appreciate your----
    Secretary Bodman. If I could just say, I did meet your 
Governor when she was in town earlier this week, and we did 
have a brief discussion of it, and I expressed to her the same 
commitment that we will do our very best to try to honor this.
    Senator Cantwell. Last year, Congress gave the Department 
of Energy the broad authority to reclassify waste at Savannah 
River and at the Idaho National Lab as well, the Engineering 
Environmental Lab. So basically it was the ability to leave 
tank waste in the tanks. Now, that wasn't something I agreed 
with. In fact, I thought it was a big mistake.
    Earlier, this week, the National Academy of Science issued 
a thoughtful report that basically confirmed, I think, what we 
were saying here, those of us who objected. The report rejected 
the notion that DOE should be making these decisions, and this 
was something Senator Alexander and others had brought up that 
basically that DOE shouldn't be making these decisions, and 
basically called for the Nuclear Regulatory Commission or EPA 
to have the final say on this issue. This was something of high 
importance that basically ended up going through the Armed 
Services Committee, a committee that, I believe, this committee 
thought didn't have jurisdiction to make that decision, and was 
stuck into the Armed Services' budget.
    So I don't know if you're familiar with the National 
Academy of Science report, but would you be willing to work 
with us on developing a new regulatory regime as it relates to 
waste replacement and the authority that was, I think, rushed 
through, I should say, in last year's Defense Authorization 
bill?
    Secretary Bodman. I am, Senator, familiar with the National 
Academy's report in that I know there was a report. I have not 
yet read it. I think it just came out yesterday or the day 
before, so it's really fresh off the presses, and it--the 
schedule did not permit me enough time to read the report prior 
to this testimony.
    I will certainly plan to read the report and take into 
account any recommendation that the Academy makes. I have to 
say that in the absence of that--again, without the benefit of 
that--I have looked at the agreements that were struck with 
respect to giving the Department, or giving the Secretary, I 
believe, the authority of making a judgment with respect to the 
nature of the WIR waste, and allowing the Department to proceed 
with the clean-up.
    I would hope that over time perhaps we could develop a 
level of trust that we're going to take this matter seriously, 
we do take it seriously, and that we could find a way to 
accommodate the wishes of you, of your Governor, and your 
constituents. And I will certainly do that.
    Senator Cantwell. I don't think it's really about the 
wishes of an individual state. Trust is an interesting word, 
and I think we all want to have it, but this is about science. 
What we want are not members who want to cut a deal on a budget 
so that they can say, yeah, we want more money and so we'll go 
with expedited clean-up, we'll leave tank waste in the tanks. 
We want science to be based--we want our decisions to be made 
on what that science says.
    And right now, the National Academy of Sciences also agrees 
that this was not a well-thought-out strategy to give the 
Secretary of Energy the ability to just decide this. This is an 
important decision that has to be considered by a variety of 
organizations that have been involved.
    I think one of the things you'll find quite interesting is 
when you look at the regime of definitions of high-level waste, 
and how the change in one definition then triggers the 
requirements or their lack of requirements on clean-up or 
transportation of those wastes, you'll see how complex this 
regime of definitions is.
    So I would just say to you in reading that National Academy 
of Science report, it's not whether someone trusts the 
Secretary of Energy. It's whether our decisions should be based 
on sound science. So I hope you'll take that into 
consideration.
    Secretary Bodman. Senator, I have a doctorate in science 
from Massachusetts Institute of Technology. I believe in 
science and I understand the need for having sound science in 
reaching conclusions. I will certainly take advantage of that 
background as I go about my work.
    Senator Cantwell. Well, as I have said to the chairman 
before, I'm hoping at some point in time we will get an Energy 
Secretary for life that will then proceed in cleaning up 
Hanford, and certainly your science background would be very 
helpful in that.
    We continue to have these debates about science, and at 
this juncture, we continue to debate issues that I think that 
really should be resolved. And in this particular case, the 
level of tank waste, we want to have a decision that everybody 
agrees on because of that science. So I appreciate your 
efforts.
    The Chairman. Well, I heard the desire to have a Secretary 
for life to solve that problem out there. I was just thinking 
about the Bible and that person would have to be Methuselah, 
it's going to take so long at the current rate and with all the 
arguments we've got.
    I frankly believe, not necessarily in contradiction to 
what's been said by the distinguished Senator, but I think 
we've made some terrific progress in the last 3 years on clean-
up, the kind we're talking about. If we were to continue on the 
previous path, this comes out of the DOE defense budget, we'd 
have taken up a third of the budget out here in about 15 years 
to do the clean-up in the country, and it can't be done. We've 
got to figure out some practical way.
    I urge that along with pure science that you also continue 
to have in mind what's realistic in terms of risk. And enough 
on that.
    Mr. Secretary, Yucca Mountain continues to be a terrific 
goal and nuclear is looking at it saying we must have something 
like that, so we have to keep moving ahead. We don't have 
enough time here, and I don't want to give a lecture. I think 
it would be good if you could review just the real status of 
Yucca Mountain. You know, it is not just a problem of funding, 
it's not a problem of again setting a new licensing date. It's 
an analysis of just how can we get where we have to go.
    I mean, these guidelines, the court decision, who's going 
to make the new guidelines, I think you have to know 
realistically what this is all about. I would hope that in a 
sense of helping us, if you could do such a summary and make it 
available as kind of an adjunct to this hearing, do you think 
you might be able to do that with your people? I think it would 
be a good exercise anyway, because it's sort of amorphous from 
the standpoint of what we see happening. I guess you understand 
what I'm talking about.
    Secretary Bodman. I do understand, sir, and you certainly 
have my commitment that I will be--this is again--this is a 
major responsibility of this job, and I will certainly look 
into it and I will certainly try to determine what a practical 
and reasonable and responsible way of proceeding is. And I will 
be happy to discuss that with you.
    [The information follows:]

    There are several issues facing the Yucca Mountain Program which 
the Department is working to overcome to move the program forward.
    The U.S. Court of Appeals for the District of Columbia Circuit 
vacated the Environmental Protection Agency's (EPA's) Yucca Mountain 
radiation protection standard with regard to its 10,000 year regulatory 
compliance period. Consistent with the President's direction, EPA is 
currently working to revise its Yucca Mountain radiation standard to 
conform to the court's direction. The Department remains hopeful that 
EPA's work in promulgating the standard will be contemporaneous with 
our work on the license application and that both will be completed by 
the latter part of the year.
    Both Congress and the Administration have recognized the long-term 
funding problem facing the Program and the need to make Nuclear Waste 
Fund monies available for their intended purpose. Historical funding 
patterns will not be adequate to support the increased construction and 
acquisition activities required to begin acceptance of spent nuclear 
fuel and high-level waste. The Administration believes that the fees 
currently paid to the Government by utilities to finance the repository 
should be treated as offsetting collections against the appropriation 
from the Nuclear Waste Fund. To ensure stable and sufficient funding, 
the Administration continues to support the concept embodied in the 
legislative proposal submitted last year to provide the increased 
annual funding needed for construction and operation of the repository. 
The Administration remains interested in pursuing such a proposal and 
intends to have further discussions with Congress in the hope of 
reaching some agreement.
    Despite these issues, the Department is continuing its efforts to 
move the program forward. The Department has developed a draft license 
application. We are working diligently to refine the analysis and 
improve the presentation of the technical information to meet our 
objective of completing preparation of a high quality license 
application that addresses existing regulatory requirements and having 
it ready to submit to the Nuclear Regulatory Commission by December 
2005.

    The Chairman. You know, you might be the kind of Secretary 
that may end up saying, while we're looking at this, we've got 
to something else, because this might be something that takes 
so long while we move ahead with it. I don't know. I'm thinking 
we have a responsibility to do that too. But ultimately we have 
to do it in conjunction with you all.
    Secretary Bodman. I'll be happy to work with you, sir.
    The Chairman. Now, plutonium disposition, we're all talking 
about trying to maximize the effort that had been going along 
fairly well by the United States and other countries, with 
reference to the kind of dangerous materials like plutonium and 
trying to gather up all those materials.
    I need assurance from you, which I'm sure you will give us, 
that you will push as Secretary of Energy for a conclusion to 
this agreement with the Russians to get this huge plutonium 
agreement implemented. I'm concerned about sooner or later 
losing this huge nest egg of money, $200 million sitting out 
there to get this job done. I say it because I know you know, 
but I just want you to tell the committee that you will pursue 
it.
    The State Department is cooperative. They aren't always as 
interested in pursuing things. I shouldn't say that. They also 
find more reasons to not reach conclusions than you all. You've 
lost, or will lose soon, the best person you have over there in 
this area. I'm very sorry about that. If you know what I'm 
talking about, you might take a look. That's a very, very bad 
loss.
    Now, as part of all this, we have a MOX fuel project. 
You're aware of that?
    Secretary Bodman. Yes, sir.
    The Chairman. That's historic for America. Could you kind 
of give us a timetable for the record on MOX, the plant that 
we're building?
    Secretary Bodman. Well, the issue, as you're aware, sir, 
has been related to our getting an agreement with our Russian 
counterparts as to the definition of liability in the 
construction that is anticipated to occur in Russia as a part 
of this process. And we have recently made a proposal to the 
Russians that seems to have at least gone part way to relieving 
that delay.
    We find ourselves, as with a lot of these projects that I'm 
responsible for, with an intersection between the legal 
requirements on the one hand and the engineering requirements 
on the other hand. And therefore, we can't proceed until we 
have the legal agreement that will enable us to go forward in 
an acceptable way.
    So you certainly have my commitment, sir, that I will be 
working diligently with our colleagues in the State Department 
to--I already have spent a day with my counterpart on the 
Russian side, and we're going to continue to try to work on 
this issue and see if we can't get this pushed through.
    It is hard. I mean, the Russians have their own----
    The Chairman. No question.
    Secretary Bodman [continuing]. Pace, and own way of doing 
things, and so I don't want to make any promises. The only 
thing I can promise is that I'll work very hard on it.
    The Chairman. Well, Mr. Secretary, my experience has been 
that one of the ways in the past that you can make progress 
with the Russians is to get to know the people that you're 
working with. I mean, they have a--for some reason, maybe it's 
justified in their history or culture, it's very much easier to 
deal a short distance than long distance, and that's why some 
of our people had success.
    Sig Hecker, who I introduced to you in Los Alamos----
    Secretary Bodman. Yes.
    The Chairman. He's kind of the breakthrough man, because he 
spent enough time to get to know all these people. They all 
know him--you know, he can call them on the phone and they know 
who it is and they're willing to talk.
    We put in some new people, and you know, it takes time. We 
don't know how long it takes the Russians to arrive at a 
conclusion that they're talking to the right person and where 
it belongs in their bureaucracy. So you will find that out, but 
I think your willingness to meet this early is terrific news.
    Secretary Bodman. I appreciate your advice, sir.
    The Chairman. A little trivial item, but it kind of 
disturbs me. We have an Office of Nuclear Energy Research 
Programs. Now, I don't understand why the President's budget 
requests $1 million for the National Academy of Science to 
undertake an evaluation of that office. You might not even know 
about that.
    Secretary Bodman. Well, I do know that there is a request 
or an intention at least of pursuing the evaluation of the Gen 
IV technology, and it may be that's what the NAS requirement 
is. I don't know.
    The Chairman. Well----
    Secretary Bodman. I will be happy to get you something 
more.
    [The information follows:]

    The FY 2006 Budget requests funding for the National Academy of 
Sciences, to undertake a comprehensive, independent evaluation of the 
nuclear energy program's goals and plans, and to validate the process 
for establishing program priorities and oversight (including the method 
for determining the relative distribution of budgetary resources). The 
evaluation will result in a comprehensive and detailed set of policy 
and research recommendations and associated priorities (including 
performance targets and metrics) for an integrated agenda of research 
activities that can best advance NE's fundamental mission of securing 
nuclear energy as a viable, long-term commercial energy option to 
provide diversity in energy supply. An interim evaluation will be 
completed in time to inform NE's 2008 budget planning, with a final 
report completed before May 2006.

    The Chairman. We're going to have to appropriate this 
thing--it happens to be I'm the chairman of the appropriating 
subcommittee, and I won't put this in if you all don't convince 
me that it's for that. I'm not going to have them look at the 
whole office of Nuclear Energy Research unless you tell me 
there's something to be looking at. I don't want it delayed by 
something like this.
    Secretary Bodman. All right, sir.
    The Chairman. So, if you'll have your staff let us know.
    Secretary Bodman. I'll be happy to do that.
    The Chairman. My last one, but before I submit it, I want 
to say everything isn't bad in this budget. You know, we 
haven't talked about the nuclear energy research and 
development programs, there's a significant increase, the 
initiatives on research for nuclear--while some small ones have 
been zeroed out, clearly the advanced fuel cycle initiative is 
in good shape, the NP 2010, 83 percent increase. That's pretty 
good. I don't know how much faster we can go.
    For a change, Yucca Mountain was funded right, although not 
at enough money. At least we don't have to spend all our other 
program money for Yucca, which we can't do. So we're grateful 
that that's in the budget.
    The hydrogen fuel initiative is pretty good. You could have 
cut that $80 or $90 million and paid for some of these other 
things, but I think the priority is right.
    Fossil fuel energy, not bad, an 18 percent increase. 
Incidentally, those all come to the Appropriations Committee 
now in one place instead of it going to two subcommittees. All 
of those will come to the----
    Secretary Bodman. That's great.
    The Chairman. I think it's good for the country. For me 
it's good to know that we don't go one way here and another way 
there.
    Now, my last issue has to do with----
    Secretary Bodman. If I could just say so, I'm happy that 
you find certain aspects of the budget positive. That's good.
    The Chairman. Thank you. They put pretty much all of Energy 
in one place, not quite, but that's good enough.
    One last issue that is not necessarily parochial, but would 
seem small, because it has to do with small business and small 
business set-asides, shouldn't be burdening a Secretary with 
it. But it's the kind of issue that will burden you if those in 
charge don't take care of doing it right.
    So there are two or three issues that are tough. One, the 
DOE is going to be rated as an inferior participant in giving 
out small business contracts, which means they're going to be 
deficient in small business contracts to the minority, because 
they're going to rub shoulders.
    Now, part of that is because the DOE has very large M&O 
contractors, and they're judging the performance excluding the 
M&O contractors. Now, I can't fix that yet. I'll fix it in 
appropriations if we can't find a way, and I urge that you try 
to find a way. I don't know how, but get the government 
together and say, we can't do this.
    Second, it seems that in response to some problems in the 
small business set-aside evaluation, that the NNSA is proposing 
to bundle contracts. Now, I thought our President told us for 
the purpose of small business, in particular minority small 
businesses, that we wouldn't bundle, even though it was 
slightly more efficient, to the detriment of small business.
    Your NNSA people in Albuquerque and Los Alamos are moving 
in that direction. I don't like to go over there and tell them 
what I think. I'm telling you what I think. I hope you'll tell 
the Ambassador, who in turn will tell those people, that we 
need some real justification for this bundling, which makes 
less small business opportunities.
    So the whole package I'm talking about is small business, 
and you have somebody in charge. I hope you will just tell him 
that the Senator doesn't want to cart them up here, but I will. 
We'll have a hearing with them if they want to, because we've 
got to fix these, and we're willing to work on it. Senator 
Bingaman's willing to work on it. So I leave you with that.
    Secretary Bodman. I think they'd rather have me here, sir, 
than to have them there, so we'll go to work on it.
    The Chairman. I hope so. So we're going to close the 
hearing. I ask consent that Senator Salazar, who was indisposed 
with other business, that he be permitted to place his 
statement in the record as well as others, and that Senators be 
allowed to submit questions. We hope that you will answer them 
within a reasonable time, you and your staff. I appreciate your 
willingness to work with us. We're in recess.
    Secretary Bodman. I look forward to it, sir.
    [Whereupon, at 12:04 p.m., the hearing was adjourned.]

                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

    Responses of Secretary Bodman to Questions From Senator Domenici

                             LOS ALAMOS RFP

    Question 1. Secretary Bodman, as I noted in my opening remarks, I 
am deeply concerned with the Los Alamos Draft Request for Proposal. The 
Department must assure that the bidding process is fair and does not 
have the unintended consequence of causing a mass exodus of our best 
scientists from the lab.
    Mr. Secretary, will you actively involve yourself in the RFP 
process as soon as possible and work to make job retention and 
scientific research a top priority?
    Answer. Yes, I have been actively involved in the Los Alamos 
National Laboratory (LANL) procurement since my confirmation as 
Secretary of Energy. I have met with Ambassador Brooks and the Chairman 
of the Source Evaluation Board to review this critical procurement to 
understand the employee issues, industry perceived barriers to 
competition, and what the SEB is doing to address these matters. I have 
made recruitment and retention of critically skilled employees my top 
priority and will continue to stay involved with the process to make 
sure that we strengthen LANL and its scientific capabilities to enhance 
science in the national interest while ensuring a fair and open 
competition.

                        SMALL BUSINESS BUNDLING

    Question 2. Mr. Secretary, I understand that DOE is last among 
federal agencies in terms of compliance with the small business 
contracting goals set by the Administration. I also recognize this is a 
result of policy that prohibits the Department from counting small 
business sub contracts let by the M&O contractors.
    To address this shortfall, NNSA has proposed an initiative to take 
$100 million in procurement from each of the three NNSA labs and bundle 
them to be offered by either the Albuquerque Service Center or 
Headquarters.
    Both Sandia and Los Alamos place at least 45% of their subcontracts 
with small business--well over the SBA required level of 23%.
    If, however, NNSA insists on consolidating a large number of 
contracts I am concerned that this will have a serious impact on small 
business in New Mexico the economy and State tax receipts.
    It is likely to impact the labs through a reduction in LDRD funding 
and may reduce NNSA mandated small business goals negotiated by each 
lab.
    This program is ill conceived and poorly executed as the 
procurement targets have varied widely as have the goals and terms 
proposed by NNSA.
    I am aware that the Department has negotiated a one-year grace 
period in which to achieve this goal.
    In light of this grace period, can you please explain why you have 
insisted that the NNSA proceed with this proposal despite strong 
objection by the labs?
    Answer. While the NNSA has not instituted a grace period for 
implementing the Tri-Lab initiative, it has planned a phased 
implementation. The NNSA agreed to wait until fiscal year 2006 for full 
implementation of funding aspects of the initiative. During fiscal year 
2005, the laboratories were allocated the funding associated with Tri-
Lab actions to be placed directly by the NNSA. Funding was transferred 
to the Service Center as procurement actions were accomplished. By 
doing so, LDRD funding, fee bases, and indirect cost pools were not 
impacted. NNSA and its laboratories are exploring alternative funding 
mechanisms for future years. Working closely with the laboratories, the 
NNSA has identified potential contract opportunities that will result 
in obligations between $10 to $20 million in additional federally 
awarded small business contracts for the current fiscal year.
    The expectation that DOE and NNSA can award 23% of the NNSA budget 
to small businesses when more than 80% of the DOE/NNSA budget is 
obligated to Management and Operating contracts presents a real 
challenge. Nevertheless NNSA continues to strive for increases in the 
amount of prime contracting dollars awarded to the Small Business 
community, and we are working to support the 23% federal-wide goal. In 
the absence of relief as to how NNSA account for its contribution to 
Small Business contract awards, by recognizing that the subcontracts of 
our M&O contractors are providing substantial mission opportunities for 
Small Businesses, the NNSA has undertaken an innovative strategy to 
increase small business acquisition opportunities that can be counted 
as SBA and the Office of Federal Procurement Policy have mandated as 
prime federal contract awards, and that is consistent with commercial 
best practices of strategic sourcing and enterprise-wide buying. The 
NNSA initiative to jointly work with its laboratory contractors to 
identify requirements that can be awarded directly by the NNSA to small 
businesses is an innovative strategy by which the NNSA will be able to 
generate additional prime contract small business awards.
    Question 3. Mr. Secretary, I understand that DOE is last among 
federal agencies in terms of compliance with the small business 
contracting goals set by the Administration. I also recognize this is a 
result of policy that prohibits the Department from counting small 
business sub contracts let by the M&O contractors.
    To address this shortfall, NNSA has proposed an initiative to take 
$100 million in procurement from each of the three NNSA labs and bundle 
them to be offered by either the Albuquerque Service Center or 
Headquarters.
    Both Sandia and Los Alamos place at least 45% of their subcontracts 
with small business--well over the SBA required level of 23%.
    If, however, NNSA insists on consolidating a large number of 
contracts I am concerned that this will have a serious impact on small 
business in New Mexico the economy and State tax receipts.
    It is likely to impact the labs through a reduction in LDRD funding 
and may reduce NNSA mandated small business goals negotiated by each 
lab.
    This program is ill conceived and poorly executed as the 
procurement targets have varied widely as have the goals and terms 
proposed by NNSA.
    I am aware that the Department has negotiated a one-year grace 
period in which to achieve this goal.
    The GAO is currently reviewing DOE subcontracting rules for a 
report later this year. Would you agree to put off execution of the 
Tri-lab bundling proposal until the GAO completes their work and 
submits its recommendations?
    Answer. Further implementation of the Tri-Lab initiative is planned 
for the next fiscal year. As they become available, I will ensure that 
findings and recommendations from the GAO will be thoughtfully 
considered and integrated as appropriate into our small business 
program planning. However, NNSA efforts to directly award certain 
contracts to small business in FY2005 must continue as these actions 
are close to completion and not proceeding could result in delays that 
might have an adverse impact on laboratory programs.
    As a matter of clarification, the Tri-Lab initiative involves 
federal award of individual requirements to small businesses as well as 
strategically consolidating requirements of a similar nature for award 
to small businesses. The initiative does not constitute contract 
bundling, as that term is defined in Part 2 of the Federal Acquisition 
Regulation. ``Bundling'' or ``bundled requirement'' refers to the 
consolidation of two or more procurement requirements for goods or 
services into a solicitation of offers for a single contract that is 
likely to be unsuitable for award to a small business concern. The 
unsuitability may be due to the diversity, size, or specialized nature 
of the elements of the performance specified, the aggregate dollar 
value of the anticipated award, the geographical dispersion of the 
contract performance sites, or any combination of these factors.
    Question 4. Mr. Secretary, I understand that DOE is last among 
federal agencies in terms of compliance with the small business 
contracting goals set by the Administration. I also recognize this is a 
result of policy that prohibits the Department from counting small 
business sub contracts let by the M&O contractors.
    To address this shortfall, NNSA has proposed an initiative to take 
$100 million in procurement from each of the three NNSA labs and bundle 
them to be offered by either the Albuquerque Service Center or 
Headquarters.
    Both Sandia and Los Alamos place at least 45% of their subcontracts 
with small business--well over the SBA required level of 23%.
    If, however, NNSA insists on consolidating a large number of 
contracts I am concerned that this will have a serious impact on small 
business in New Mexico the economy and State tax receipts.
    It is likely to impact the labs through a reduction in LDRD funding 
and may reduce NNSA mandated small business goals negotiated by each 
lab.
    This program is ill conceived and poorly executed as the 
procurement targets have varied widely as have the goals and terms 
proposed by NNSA.
    I am aware that the Department has negotiated a one year grace 
period in which to achieve this goal.
    Can you please guarantee that this proposal will not impact current 
small business contracts in New Mexico and not negatively impact the 
LDRD program at each of the labs this year and following years?
    Answer. The Tri-Lab initiative does not impact current small 
business contracts in New Mexico. Current laboratory small business 
contracts in New Mexico will continue through their contractually 
scheduled completion dates. Once completed requirements would be 
subject to competitive award. I expect the initiative to have a 
positive impact on future small business opportunities as current 
contracts with large business are awarded to small businesses.
    In fiscal year 2005, the laboratories have been allowed to transfer 
funding for individual contract actions, thereby avoiding impact on 
LDRD funding. Minimizing or avoiding any impact on LDRD programs in 
fiscal year 2006 and beyond is being addressed as part of planning for 
further implementation of the Tri-Lab initiative in fiscal year 2006. 
The NNSA is actively working with the laboratories to identify 
alternative funding mechanisms. I am confident that accounting system 
issues associated with LDRD accruals in future years will be adequately 
addressed to avoid negatively impacting LDRD programs at each of the 
labs.
    Question 5. Mr. Secretary, I understand that DOE is last among 
federal agencies in terms of compliance with the small business 
contracting goals set by the Administration. I also recognize this is a 
result of policy that prohibits the Department from counting small 
business sub contracts let by the M&O contractors.
    To address this shortfall, NNSA has proposed an initiative to take 
$100 million in procurement from each of the three NNSA labs and bundle 
them to be offered by either the Albuquerque Service Center or 
Headquarters.
    Both Sandia and Los Alamos place at least 45% of their subcontracts 
with small business--well over the SBA required level of 23%.
    If, however, NNSA insists on consolidating a large number of 
contracts I am concerned that this will have a serious impact on small 
business in New Mexico the economy and State tax receipts.
    It is likely to impact the labs through a reduction in LDRD funding 
and may reduce NNSA mandated small business goals negotiated by each 
lab.
    This program is ill conceived and poorly executed as the 
procurement targets have varied widely as have the goals and terms 
proposed by NNSA.
    I am aware that the Department has negotiated a one-year grace 
period in which to achieve this goal.
    Do you believe that M&O subcontracts to small businesses should be 
included in the Department of Energy's overall small business 
procurement calculation?
    Answer. Yes, including M&O subcontracts in the overall small 
business procurement calculation would provide a more accurate 
portrayal of the total level of small business contracting accomplished 
within the NNSA budget expenditures.
    I do not think the current small business procurement calculation 
is the right way to calculate accomplishments. Because of the manner in 
which NNSA achieve their program mission accomplishment, the vast 
majority of the NNSA budget is spent on, and through, the 
Administration's unique management and operating contract arrangements. 
Small Business goals are predicated on proposing a ``goaling'' that is 
based on realistic opportunities for Small Business concerns. The 
operation of our National Laboratories and Nuclear Weapons Plants, for 
example, are not considered realistic opportunities for concerns that 
are classified as ``small businesses.''

                         PLUTONIUM DISPOSITION

    Question 6. Mr. Secretary, I am pleased that the Administration has 
been able to resolve the internal debate over liability associated with 
the Plutonium Disposition program and has made an offer to the 
Russians. As I understand it, the U.S. and Russian delegates are 
continuing their negotiations in good faith. I remain cautiously 
optimistic that this matter will be resolved in the near term.
    Unfortunately, this inaction has led to [a] year long delay to the 
program. I have received a letter from you, Mr. Secretary, explaining 
that the project will not meet the MOX production goal of January 2009. 
The letter explained that the NNSA must restructure the project 
schedule and funding requirements.
    Can you please provide the Committee with an update as to the 
status of the liability negotiations and the new timetable for the MOX 
fuel project?
    Answer. Although the start of construction of the U.S. and Russian 
mixed oxide (MOX) facilities has been delayed due to the liability 
issue with Russia, I am optimistic that the issue will soon be resolved 
and that site preparation will begin in FY 2005 and full construction 
will begin in FY 2006.
    In late January, we submitted a potential path forward to the 
Russians. We have had high-level meetings in Moscow on February 17 and 
18 and March 21 and 22, 2005, and we are hopeful that this issue will 
be resolved before President Bush and President Putin meet again in 
early May.
    Question 7. Mr. Secretary, I am pleased that the Administration has 
been able to resolve the internal debate over liability associated with 
the Plutonium Disposition program and has made an offer to the 
Russians. As I understand it, the U.S. and Russian delegates are 
continuing their negotiations in good faith. I remain cautiously 
optimistic that this matter will be resolved in the near term.
    Unfortunately, this inaction has led to [a] year long delay to the 
program. I have received a letter from you, Mr. Secretary, explaining 
that the project will not meet the MOX production goal of January 2009. 
The letter explained that the NNSA must restructure the project 
schedule and funding requirements.
    Will the delays affect the FY 2006 budget request?
    Answer. Construction of the U.S. and Russian MOX facilities has 
been held up over a disagreement over liability for U.S. work performed 
in Russia. We are currently negotiating this issue with Russia and hope 
to have a resolution within the next few months.
    As a result, DOE is currently planning to begin full construction 
of both the U.S. and Russian MOX facilities in FY 2006 and has asked 
for $339M for the U.S. MOX facility construction in the FY 2006 budget 
request.
    These funds will be essential to place large construction contracts 
and begin equipment procurements to support the start of construction 
at the Savannah River Site. Any significant cut in this request will 
prevent the program from putting in place these critical contracts and 
will delay the start of operations of the MOX facility.

                           NUCLEAR POWER 2010

    Question 8. The Nuclear Power 2010 program was conceived to be a 
cost sharing arrangement between the department and utilities to test 
the still untested licensing process for new plants in our country. I 
have real concerns regarding what I see as a pattern of ``foot-
dragging'' in the leadership of the NP 2010 program. Last year in 
November, awards we made to two energy utility consortia's--those 
monies have not yet been disbursed. I understand some changes have been 
made in the membership of the consortia and this needs to be reflected 
in the final agreements with the department. However, we are into our 
fifth month since the awards were announced by the department. Will you 
give me your assurance that you will use your vast knowledge of best 
corporate practices and move the cooperative agreement process between 
the department and utility consortia to conclusion in the very near 
future? We have real momentum for the first time in three decades on 
the course of new plants, I would dismayed to think our own Department 
of Energy is the major impediment at the beginning of this historic 
process.
    Answer. The Department is moving with diligence to issue the 
Nuclear Power 2010 cooperative agreements and associated FY 2005 
funding to the industry. It is our firm desire to keep the momentum on 
new nuclear plants progressing toward deployment.
     The Dominion Energy decision to change its selected reactor 
technology to the General Electric ESBWR design caused the Department 
and industry to re-evaluate project cost, cost share, and annual 
funding in both the Dominion Energy and NuStart projects. This is due 
in part to the fact that the GE ESBWR reactor design is part of both 
projects. In addition, NuStart requested additional FY 2005 funds to 
accelerate the Westinghouse AP-1000 work scope. Both of these 
conditions required re-submittal of detailed cost information by both 
reactor vendors to the Department. In addition, intellectual property 
rights terms and conditions required complex and lengthy negotiation 
with the reactor vendors. The Department reached agreement on the terms 
and conditions for the cooperative agreements during the week ending 
March 11, 2005. Dominion signed and accepted the cooperative agreement 
on April 4, 2005 while NuStart is expected to sign in late April 2005.
    Question 9. What do you see as the three main issues facing U.S. 
generating companies who might wish to build new nuclear plants?
    Answer. The most important issues facing power companies in the 
U.S. that are considering building new nuclear power plants include:

   Licensing and Commissioning Uncertainty--The Nuclear 
        Regulatory Commission (NRC) licensing process, 10CFR Part 52, 
        for siting, building and operating new nuclear power plants has 
        never been previously used or demonstrated. This licensing 
        process needs to be exercised to assure power companies the 
        regulatory process is effective and efficient. In addition, 
        there remains uncertainty whether this new NRC ``one-step'' 
        licensing process could be contested in court through 
        intervention after the plant has been completed and prior to 
        beginning operation, potentially leading to long and costly 
        delays.
   Financial Uncertainty--The cost and duration to build a new 
        nuclear power plant in the United States is unclear. Some power 
        companies are interested in Generation III+ advanced light 
        water reactor designs that have the potential to offer 
        improvements in economics and safety over existing designs. 
        These reactor technologies have never been built before and 
        engineering remains to be completed. In addition, there is some 
        uncertainty regarding how long these designs will take to 
        construct. Reactor vendors estimates have been evaluated by 
        construction companies but as of yet have not been built in the 
        United States.
   Uncertainty on Disposition of Spent Nuclear Fuel--Power 
        companies do not expect the spent nuclear fuel disposition 
        issue to be resolved prior to building new nuclear power 
        plants, however a clear disposition path and progress on that 
        path needs to be clearly evident before power companies would 
        likely make a build decision.
   Accident Indemnification--Renewal of Price-Anderson accident 
        indemnification law is required by power companies before new 
        nuclear plants would be built in the U.S.

    Question 10. The President said last Wednesday, February 23, in 
Germany that he believed building more nuclear power plants in the U.S. 
would help the country cut its dependence on foreign sources of energy. 
Do you believe DOE is providing enough support to achieve this 
objective?
    Answer. The Department is providing the support necessary to deploy 
new nuclear power plants in the United States. For instance, through 
the Department's Nuclear Power 2010 program, we will continue to 
partner with private industry, with the goal of demonstrating the 
untested NRC regulatory processes for siting, constructing and 
operating new nuclear power plants. Three Early Site Permit 
demonstration projects are underway with site approval applications 
under consideration by the NRC. Approval of these three sites is 
expected in 2006. The Department is also supporting demonstration of 
the combined Construction and Operating License (COL) process under 
cooperative projects with Dominion Energy and NuStart Energy consortia. 
These COL demonstration projects will develop applications for and 
obtain NRC approval for at least two COLs. In addition, two advanced 
standardized reactor designs, the Westinghouse AP1000 and the General 
Electric ESBWR will be certified and the first of a kind engineering 
completed as part of these projects.
    In addition, looking further into the future, the Department's 
Generation IV Nuclear Energy Systems program is making progress in 
developing advanced nuclear energy technologies aimed at producing 
emissions-free, cost-competitive electric power and hydrogen.
    With these and other important activities, we believe the 
Department is paving the way for a vibrant and substantial nuclear 
energy future.

                                HYDROGEN

    Question 11. What are DOE's plans and schedule for developing 
nuclear plant production of Hydrogen as a transportation fuel?
    Answer. As part of the President's Hydrogen Fuel Initiative, the 
Department's Nuclear Hydrogen Initiative will conduct research and 
development on enabling technologies and demonstrate hydrogen 
production processes that are compatible with nuclear energy systems. 
This research plans to progress through successively larger-scale 
experiments until 2017, when the program expects to operate a nuclear 
hydrogen production plant capable of producing hydrogen at a cost 
competitive with other transportation fuels. This research is closely 
coordinated with the research and development activities of the other 
DOE Hydrogen Program offices--Energy Efficiency and Renewable Energy, 
Fossil Energy, and Science--and with the Generation IV Nuclear Energy 
Systems Initiative.
    Major accomplishments expected in FY 2006 for the Nuclear Hydrogen 
Initiative include:

   Complete thermal optimization and characterization of the 
        sulfur-iodine thermochemical cycle and high-temperature 
        electrolysis laboratory-scale experiments.
   Complete flowsheets, economic analyses, and system designs 
        for laboratory-scale experiments of high-potential alternative 
        thermochemical cycles.
   Complete initial assessment of codes and standards 
        applicable to a hydrogen production facility coupled to a 
        nuclear reactor.

    Question 12. What is the impact on natural gas prices and the 
environment of moving to a hydrogen economy?
    Answer. There are many different future scenarios for a hydrogen 
economy with many different potential impacts on natural gas prices and 
the environment.
    On the environment: A hydrogen economy will improve criteria 
emissions since hydrogen use is so clean (especially when used in a 
fuel cell). The impact on CO2 emissions depends on how the 
hydrogen is produced. The Department of Energy is emphasizing 
technologies that will produce hydrogen from domestic resources with 
low CO2 emissions. These include use of coal with carbon 
capture and storage, renewable energy, and nuclear technologies. Use of 
natural gas without carbon capture and storage (likely in the early 
phase of a hydrogen transition) would have a more-or-less neutral 
effect on CO2 emissions.
    On natural gas prices: This is also highly dependent on future 
hydrogen scenarios. Also, there is a natural feedback between natural 
gas prices and technology choice. For example, if there is competition 
between using coal with carbon capture and storage or natural gas with 
carbon capture and storage, higher gas prices would tend to favor the 
use of coal. In the early stages of transition to a hydrogen economy, 
there would be a switch from petroleum use to natural gas use and this 
would tend to have a downward influence on crude oil and petroleum 
product prices and an upward influence on natural gas prices. However, 
as advanced technologies for producing hydrogen are introduced, there 
could be a significant downward influence on natural gas prices. For 
example, the development of coal technologies to produce both hydrogen 
and electricity could bring about less use of natural gas (and lower 
natural gas prices) as this technology would become more competitive in 
the electric power sector.
    In summary, any specific answer to this question would depend on 
the path of future hydrogen development that can not be predicted with 
any reliability. What can be said is that the Department of Energy is 
emphasizing technology development that will result in the production 
of hydrogen from low-emission and domestic energy resources especially 
emphasizing renewable energy, clean-coal technologies, and nuclear 
technologies. A hydrogen economy based on these technologies would 
significantly reduce criteria emissions and CO2 emissions 
and would tend to reduce gas use (and therefore gas prices) in the 
electric power sector.

                             NUCLEAR ENERGY

    Question 13. In the President's Budget Request, there is $1 million 
for the National Academy of Sciences to undertake an evaluation of the 
Office of Nuclear Energy's research programs.
    What can you tell me about this request, in detail?
    Answer. The FY 2006 Budget requests funding for the National 
Academy of Sciences, to undertake a comprehensive, independent 
evaluation of the nuclear energy program's goals and plans, and to 
validate the process for establishing program priorities and oversight 
(including the method for determining the relative distribution of 
budgetary resources). The evaluation will result in a comprehensive and 
detailed set of policy and research recommendations and associated 
priorities (including performance targets and metrics) for an 
integrated agenda of research activities that can best advance NE's 
fundamental mission of securing nuclear energy as a viable, long-term 
commercial energy option to provide diversity in energy supply. An 
interim evaluation will be completed in time to inform NE's 2008 budget 
planning, with a final report completed before May 2006.
    The budget request for Environmental Management is cut by half a 
billion dollars. The budget justification for this reduction cites that 
the clean-up work at Rocky Flats and Fernald is set to be completed 
soon.
    Question 14. Are these two sites going to be cleaned up this year? 
Are they on schedule? Would you say these are success stories for the 
program?
    Answer. Funding in the FY 2006 budget request will allow Rocky 
Flats and Fernald to remain on track toward project completion and site 
closure in 2006. Rocky Flats and Fernald are just two examples of 
success stories resulting from EM's accelerated risk reduction and site 
closure initiative.
    With respect to the Rocky Flats success story, EM is on schedule to 
complete the safe cleanup and closure of an entire former nuclear 
weapons production site. Early forecasts estimated that it would take 
more than 60 years and $37 billion to complete a site closure. In 
implementing a reformed EM cleanup program, the Rocky Flats site is now 
on track to be finished in 2006, at a total cost of approximately $7 
billion. When the cleanup is completed, in which more than two million 
55-gallon drums equivalent of radioactive waste materials will have 
been removed, the site will be transitioned to a National Wildlife 
Refuge under the auspices of the U.S. Fish and Wildlife Service, 
turning the 16,000+ acre reserve from a perceived public liability to a 
public asset.
    Fernald is also an example of EM's success in safely accelerating 
risk reduction and site closure. In FY 2000, Fernald's site closure 
date was projected to be 2009. As the project progressed through the 
early phases of decontamination and demolition of the former uranium 
processing operations, EM and its contractor reassessed the cleanup 
goals of the site. As a result of reforms implemented at the Fernald 
site, in June 2003, the project was restructured to be completed by 
2006. The Fernald Closure Project is on track toward project completion 
and site closure in 2006, if we are able to disposition the wastes in 
Silos 1 and 2. We continue to work on a path forward for these wastes. 
When completed, much of the 1,050-acre Fernald will be transitioned to 
a public nature preserve.
    This budget number reflects the Administrations goal of having 31 
sites remediated by 2025. After 2025, 6 sites will require further 
remediation work.
    Question 15. What are those six sites? What are their projected 
cleanup dates?
    Answer. As of the end of FY 2004, the Department had completed 
cleanup of 76 of 114 contaminated sites. By the end of 2025, the 
Department's goal is to complete cleanup of an additional 32 sites, 
bring the total number of DOE sites completed to 108 out of 114.
    After 2025, five sites will remain to be completed. The five sites 
and their planned completion dates are listed below.

------------------------------------------------------------------------
                                                               Projected
                            Site                                year of
                                                              completion
------------------------------------------------------------------------
Nevada Test Site............................................     2027
Tonopah Test Range Area.....................................     2027
Idaho National Laboratory...................................     2035
Waste Isolation Pilot Plant.................................     2035
Hanford (Richland and Office of River Protection)...........     2035
------------------------------------------------------------------------

    In addition, we have not finalized the scope of the Paducah (sixth 
site) to 1confirm whether or not this will extend beyond 2025.

                             YUCCA MOUNTAIN

    Question 16. You have testified that DOE's submission of the 
construction license application to the Nuclear Regulatory Commission 
which had been planned for December 2004 is now anticipated to take 
place by the end of calendar year 2005.
    Are you confident that the Department will submit the license 
application in 2005?
    Answer. We remain hopeful that EPA's work in promulgating the 
standard will be contemporaneous with our work on the license 
application and that both will be ready by the latter part of the year. 
We have a draft of the license application. We are making improvements 
to the analysis and presentation of information to meet our objective 
of completing preparation of a high quality license application by the 
end of this calendar year.
    Question 17. What factors could jeopardize this schedule?
    Answer. As you are aware, the schedule is dependent on external 
factors outside the Department's control, which can impact the 
program's ability to move forward. Two examples of these external 
factors are the finalization of the Environmental Protection Agency's 
radiation protection standard and securing adequate resources to 
support programmatic requirements.
    Question 18. In particular, when would a draft revised radiation 
standard have to be issued by EPA for DOE to meet this schedule?
    Answer. We remain hopeful that EPA's work in promulgating the 
standard will be contemporaneous with our work on the license 
application and that both will be ready by the latter part of the year. 
The timing of the issuance of a draft standard would need to be 
consistent with the finalization of the standard this year.
    Question 19. Could legal or regulatory challenges to a revised EPA 
standard impact the timing of license application?
    Answer. It is not expected that legal or regulatory challenges to a 
revised EPA standard will impact the Department's ability to submit the 
license application to the Nuclear Regulatory Commission.
    Question 20. The FY 2006 budget request is significantly lower than 
forecast in last year's submission. To date, the Administration has not 
provided out-year projections for funding requirements for the project 
from 2007 and beyond. Does the Administration anticipate that funding 
requirements will increase dramatically for the program in FY 2007 
following submission of the license application?
    Answer. The Administration anticipates that funding requirements 
will increase dramatically for the program in FY 2007 following a 
submission of the license application. The Department recently provided 
two illustrative ten-year funding profiles to various Congressional 
Committees that estimated the total amount of funds that are needed for 
the program from Fiscal Year 2006 through the opening of the 
repository. Both estimates were approximately $12.5 billion. Those are 
preliminary profiles subject to revision, and do not necessarily 
represent the policy of the Administration. It should be noted that if 
adequate and timely funding is not provided the program's schedule and 
costs will be significantly impacted.
    Question 21. To what extent is the ability to increase program 
funding within constrained overall budgets dependent on reclassifying 
the way that the Nuclear Waste Fund is scored in the budget process?
    Answer. The program needs stable and sufficient long-term funding 
to implement our Nation's radioactive waste management policy. The 
current procedure used to score Nuclear Waste Fund revenues does not 
encourage the appropriation of the full amount of the fees received 
annually because the receipts do not directly offset the appropriation 
for the repository program. Reclassification of the annual receipts 
into the Nuclear Waste Fund addresses this issue. The Administration 
remains interested in pursuing an alternative funding mechanism for the 
repository program. Schedules and cost estimates for the repository 
program do assume stable and adequate funding. Without a change to the 
funding mechanism program funding shortfalls are likely. Such 
shortfalls, in turn, will cause significant delays in repository 
construction and eventual operations threatening the very existence of 
the repository.
    Question 22. The FY 2006 request includes an increase of nearly $55 
million for project Transportation activities including completion of 
the rail alignment EIS, issuing a contract for Nevada rail, and 
continued work on cask and railcar design and certification. For many 
years, transportation activities have been deferred as budgets were 
reduced from the Administration request.
    How critical are these activities to maintaining program schedules 
and what would be the impact if this funding was not provided in FY 
2006?
    Answer. Developing the capability to accept and transport spent 
nuclear fuel and high-level waste to repository facilities is a 
critical activity as the Department moves forward. Transportation 
activities, such as developing the Environmental Impact Statement for 
the rail line and engaging States in transportation planning 
activities, have begun in earnest. A reduction in funding will likely 
impact our ability to implement a key element of the waste management 
system.

                             YUCCA MOUNTAIN

    Question 23. It was reported in the Press on late Tuesday that a 
senior official with the department said that the repository wouldn't 
be open until the 2012-2017 time-frame. Director Chu who recently left 
the program said that the repository would open in the 2012 time frame. 
There are 66 law suits by utilities pending against the department; one 
has been settled for $300 million until 2010. The department and the 
federal treasury according to a February 14 article in the LA Times 
said that by some estimates, the federal government could bear 
penalties and costs of $60 billion if Yucca Mountain is never built.
    What is the correct timeframe for the repository to open? Can you 
provide to the committee an estimate or even your best guess on what 
all the lawsuits may cost the federal government if the repository 
doesn't open until 2017?
    Answer. The 2010 deadline is no longer feasible. As we indicated in 
last year's testimony, if the program did not receive its full request 
of $880 million, it would be unable to meet the goal of beginning waste 
acceptance in 2010. As you know, we did not receive the full funding 
amount and so now we are re-evaluating the program's schedule. The 
Department's efforts in this area are complicated by the Court's remand 
of the 10,000-year time period in the Environmental Protection Agency's 
radiation protection standard and by the ongoing need for stable 
funding. We also need predictable and adequate program funding to allow 
access to the funds provided by the utilities, and the ability to start 
construction of various non-nuclear facilities prior to construction 
authorization. When these issues are resolved, we will then be in a 
position to establish a better estimate for opening the repository.
    As we have not yet developed a firm schedule for the opening of 
Yucca Mountain, the Department has not yet developed an updated 
estimate of the potential liability to which the government may be 
exposed as a result of the delay in spent fuel acceptance. Our prior 
estimate of $2 to $3 billion was based upon beginning receipt at Yucca 
Mountain in 2010. The utilities have estimated that they might incur 
additional costs for each year of delay beyond 2010, and they will 
likely seek compensation from the United States in litigation. The 
courts have not yet determined federal government liability, but the 
potential exposure could be in the billions.

                    CLEAN COAL TECHNOLOGY/FUTUREGEN

    Question 24. Mr. Secretary, in reviewing the Fossil Energy aspects 
of the DOE Budget, it is clear that the priority focus is on promoting 
clean coal and carbon sequestration efforts.
    Would you please tell us about the progress made so far under the 
Clean Coal Power Initiative and FutureGen programs, and what the level 
of industry participation has been like in FutureGen?
    Answer. There is indeed priority being placed within the Coal 
Program to develop clean coal technology options that would eliminate 
the environmental concerns associated with the use of coal, our most 
abundant, low cost energy resource. The Clean Coal Power Initiative 
(CCPI) and the FutureGen initiative, together with the base coal R&D 
program, have near-, mid-, and long-term goals to that end. Five out of 
six CCPI Round 1 projects have commenced and one is still under 
negotiation. Four CCPI Round 2 projects were recently selected and 
awards are currently being negotiated.
    The success we have had over the last 30 years in developing our 
present clean coal technology base (through basic research, CCT and 
CCPI programs), has now allowed us to reach for what was unimaginable 
30 years ago-zero emission coal technology.
    The 30 years of research, in partnership with industry and 
academia, have allowed us to embark on the FutureGen initiative, which 
aims to establish the technical and economic feasibility of essentially 
zero emission plants. U.S. utilities and coal producers representing 
over 20% of U.S. coal-based electricity generation and over 40% of U.S. 
coal production have formed a consortium-the FutureGen Alliance-and 
pledged $250 million in cash to pursue the project as a public/private 
partnership. Negotiations between DOE and the Alliance are underway to 
finalize the cooperative agreement to pursue the project. There has 
also been an outpouring of support from State governments for 
FutureGen.
    Question 25. What reasons supported the decision to reduce funding 
by 20% for the new Office of Electric Transmission and Distribution? 
Have the goals of that office changed?
    Answer. The FY 2005 comparable appropriation of $120.2 million 
reflects the merger of the Office of Energy Security and Assurance into 
the Office of Electric Transmission and Distribution (OETD), consistent 
with the funding Congress provided in the Consolidated Appropriations 
Act, 2005. Approximately $19.3 million of OETD's FY 2005 appropriation 
is for activities of the former Office of Energy Security and 
Assurance.
    The FY 2006 budget request of $95.6 million is a 19 percent 
reduction to the FY 2005 enacted level for these programs. However, the 
FY 2005 enacted level includes $51 million in Congressionally-directed 
activities. When the FY 2005 level is adjusted for this, the FY 2006 
President's request reflects a slight increase.

                      OIL AND GAS R&D TERMINATION

    Question 26. How will termination of the oil and gas technology 
program affect progress made by private companies in these areas?
    Answer. Much of the Department's oil and natural gas research and 
development is jointly funded by industry and the government. It was 
determined that the industry has the capacity to pursue this research, 
especially in light of the current strong economic performance of the 
industry.

                             FOSSIL ENERGY

    Question 27. The U.S.-China Energy and Environmental Center was 
zeroed out. What did that program do? Is there another program at DOE 
or another agency that promotes cooperation between the U.S. and China 
on energy and environmental challenges?
    Answer. The U.S./China Energy and Environmental Technology Center 
works to facilitate the export of American goods and services to 
China's growing power industry, with its focus on increasing the market 
share of U.S. clean coal technologies.
    The 2006 Budget provides $1 million for International Program 
Support, with activities including enhancing the expansion of cleaner 
energy technology power systems in the Pacific Rim. The 2006 Budget 
also provides $1 million for Coal Technology Export, which works to 
facilitate the development and deployment of Zero Emissions 
Technologies for fossil fuels internationally, with partnerships to 
advance environmental protection by promoting deployment of cleaner 
energy power systems.

                    CLEAN COAL TECHNOLOGY/FUTUREGEN

    Question 28. Mr. Secretary, it is clear to me that the nation will 
rely more on our vast coal resources not just for the generation of 
electricity but potentially for natural gas substitutes and even diesel 
fuel.
    Would you please explain to the Committee how the Clean Coal 
Technology program and the FutureGen program will help us meet our 
energy needs in the short, mid- and long-term?
    Answer. The Clean Coal Technology program is a government and 
industry co-funded effort to provide technical and operational data of 
innovative coal technologies demonstrated at commercial scale. 
Beginning in 1985, the Department administered five competitive 
solicitations selecting projects with the potential to satisfy the 
requirements of the energy markets while improving the environmental 
performance of coal based technologies. To date, more than thirty 
projects have been successfully completed, providing the marketplace 
with valuable performance experience and data for a variety of 
applications.
    The Fiscal Year 2006 budget supports the Department's continuing 
effort to fulfill President Bush's 10-year, $2 billion commitment to 
clean coal research, with funding for the President's Coal Research 
Initiative (CRI) of $286 million, a $13 million increase over the 2005 
enacted level. The 2006 Budget brings the total requested funding for 
clean coal research to $1.6 billion over five years, on pace to exceed 
the President's ten-year pledge by more than 50 percent.
    The coal research program provides a balanced portfolio that 
focuses on near-, mid- and long-term goals. In the short term, the 
Clean Coal Technology program is developing affordable environmental 
technologies, such as mercury controls, for both existing and new coal-
fired power plants. For the mid-term, the program is advancing much 
cleaner, more efficient options for new power plants, such as 
gasification-based and advanced combustion technologies. In the long-
term, the program is working towards zero emissions, high efficiency 
power plants--with low-cost carbon sequestration--as embodied in the 
research goals of the President's FutureGen Initiative.
    The FutureGen program aims to establish the capability and 
feasibility of co-producing electricity and hydrogen from coal with 
essentially zero emissions, including carbon sequestration and 
gasification combined cycle, both integral components of the coal-
fueled power plant of the future. The co-production of hydrogen will 
also support the President's call to create a hydrogen economy and fuel 
pollution free vehicles.
    The clean coal technologies and FutureGen support America's long-
term energy security and meet our future energy needs by advancing 
technologies that can use coal, our most abundant low-cost domestic 
energy resource, cleanly, efficiently and affordably.
    Question 29. Mr. Secretary I am also very concerned about our 
existing generating plants. At the moment the U.S. gets just over half 
of its electricity from coal fired power stations. Many of those plants 
are nearly three decades old.
    What role do you envision the Department playing in efforts to 
replace or re-power our existing fleet of coal-fired power plants?
    Answer. The principal Departmental goal guiding research into coal 
power is the following: Create public/private partnerships to provide 
technology to ensure continued electricity generation and hydrogen 
production from the extensive U.S. fossil fuel resource, including 
control technologies to permit reasonable-cost compliance with emerging 
regulations, and ultimately, by 2015, zero emission plants (including 
carbon) that are fuel-flexible, and capable of multi-product output and 
energy efficiencies over 60 percent with coal and 75 percent with 
natural gas.
    The technology options include:

   Emission control technology that can be retrofitted to 
        existing plants or can be used on replacement plants.
   New, clean and efficient electricity generation technology, 
        such as integrated gasification combined cycle (IGCC) that can 
        be used to repower or replace existing power plants.
   And, in the long-term, development of essentially zero 
        emission technology (such as FutureGen) that could replace 
        existing plants as well as be used for new capacity additions.

    As part of this development effort and to accelerate the commercial 
introduction of these technologies, the Department has competitively 
and on a cost-shared basis, partnered with industry to demonstrate 
these technologies on a commercial scale under the Clean Coal Power 
Initiative.
    Recently, under this initiative, two IGCC and two mercury and other 
pollutant control technologies were selected for demonstration.
    Question 30. I realize that it is difficult to see very far into 
the future of the federal budget. But my colleagues and I are very 
concerned that new coal related technology is developed and deployed as 
rapidly as possible.
    Can you assure us that the Department is committed to full and long 
term support for the development and deployment of new clean coal 
technologies?
    Answer. I can assure you that the Department is committed to full 
and long term support for the development and deployment of new clean 
coal technologies. We consider clean coal as a vital and strategic, 
low-cost domestic resource needed to ensure the Nation's future energy 
security. The Department would also like to see advanced coal related 
technologies developed and deployed as rapidly as possible so that we 
can realize the public benefits from their investment. The path to 
success is to pursue a diverse coal research portfolio of technologies. 
In that regard, our coal research program focuses on advanced clean 
coal technology development that progresses from fundamental to applied 
research and eventually to the point of demonstration.
    The coal research program provides a balanced portfolio that 
focuses on near-, mid- and long-term goals. For the short term, the 
coal research program is developing affordable environmental 
technologies, such as mercury controls, for existing coal-fired power 
plants. For the mid-term, the program focuses on advancing much 
cleaner, more efficient options for new power plants, such as 
gasification-based and advanced combustion technologies. In the long-
term, the program is working towards zero emissions, high efficiency 
plants--with low-cost carbon sequestration--as embodied in the research 
goals of the President's FutureGen Initiative.
    Question 31. I realize that it is difficult to see very far into 
the future of the federal budget. But my colleagues and I are very 
concerned that new coal related technology is developed and deployed as 
rapidly as possible.
    Can tell us briefly how the Department views the path to success in 
this regard?
    Answer. The Department would also like to see advanced coal related 
technologies developed and deployed as rapidly as possible so that we 
can realize the public benefits from their investment. The path to 
success is to pursue a diverse coal research portfolio of technologies. 
In that regard, our coal research program focuses on advanced clean 
coal technology development that progresses from fundamental to applied 
research and eventually to the point of demonstration. These 
demonstrations are conducted through the competitive Clean Coal Power 
Initiative where our industry partners must cost share at least 50 
percent of the funding. This partnership investment is one of the key 
indicators of industry's commitment to deploying the technology. In 
addition, partners selected under the CCPI program must submit a 
commercialization plan to get the technology into the market place. 
Finally, there is a repayment provision on the government's investment 
through the commercial sale of the technology.
    The coal research program provides a balanced portfolio that 
focuses on near-, mid- and long-term goals. For the short term, the 
coal research program is developing affordable environmental 
technologies, such as mercury controls, for existing coal-fired power 
plants. For the mid-term, the program focuses on advancing much 
cleaner, more efficient options for new power plants, such as 
gasification-based and advanced combustion technologies. In the long-
term, the program is working towards zero emissions, high efficiency 
plants--with low-cost carbon sequestration--as embodied in the research 
goals of the President's FutureGen Initiative.
    Question 32. The President has stated that his administration is 
committed to reducing Carbon emissions significantly through voluntary 
processes and through rapid development of new technologies to control 
not only Carbon, but the criteria air pollutants--SOX, 
NOX, and Mercury.

   In addition to its research on Sequestration, what other 
        efforts does the Department have underway to promote cleaner 
        use of all forms of energy?

    Answer. DOE supports these efforts that promote cleaner use of all 
forms of energy, not just coal:

          Clear Skies Initiative: In 2002, President Bush first 
        proposed ``Clear Skies'' legislation, a multi-pollutant 
        legislative proposal to reduce emissions of sulfur dioxide, 
        nitrogen oxides, and mercury from electricity generators, and 
        to improve air quality throughout the country. Using a proven, 
        market-based approach, Clear Skies would cut emissions of 
        pollutants from electric utilities by nearly 70 percent when 
        fully implemented. This historic proposal will bring cleaner 
        air to Americans faster, more reliably, and more cost-
        effectively than under current law. Although Clear Skies is the 
        preferred approach, the administration is pursuing a regulatory 
        path to achieve many of the same health and clean air benefits. 
        This approach includes the Clean Air Interstate Rule, the Clean 
        Air Mercury Rule, EPA's Clean Diesel rules, and other clean air 
        programs.
          Clean Air Interstate Rule: DOE collaborated with EPA in the 
        development of the final Clean Air Interstate Rule (CAIR), a 
        rule that will ensure that Americans continue to breathe 
        cleaner air by dramatically reducing air pollution in 28 
        eastern states. By 2015, CAIR will provide health and 
        environmental benefits valued at over 25 times the cost of 
        compliance. CAIR will permanently cap emissions of sulfur 
        dioxide (SO2) and nitrogen oxides (NOX) 
        in the eastern United States. When fully implemented, CAIR will 
        reduce SO2 emissions in 28 eastern states and the 
        District of Columbia by up to 70 percent and NOX 
        emissions by over 60 percent from 2003 levels.
          Reduction in Diesel Emissions: In May 2004, the Bush 
        Administration finalized a rule that will dramatically reduce 
        pollution from heavy-duty diesel engines used in construction, 
        agricultural, and industrial equipment. Soot and NOX 
        emissions from diesels will decrease by more than 90 percent by 
        mid-2014, and the sulfur content of diesel fuel will be cut 99 
        percent by mid-2014. EPA has finalized new emission standards 
        for non-road diesel engines used in construction, agricultural, 
        and industrial operations. EPA also is proposing a more than 99 
        percent reduction in the sulfur content of fuel used by these 
        engines. The proposed emission standards would achieve a 
        reduction in particulate matter (PM) and nitrogen oxide 
        (NOX) levels of more than 90 percent. This will 
        significantly improve the air quality for Americans nationwide.
          Mercury Emissions: On March 15, EPA issued the first-ever 
        federal rule to cap mercury emissions from coal-fired power 
        plants. This rule makes the United States the first country to 
        regulate mercury emissions from coal-fired power plants. When 
        fully implemented, these rules will reduce utility emissions of 
        mercury by nearly 70 percent.
          Tax Incentives for Renewable Energy and Hybrid and Fuel-Cell 
        Vehicles: The President has called for tax incentives totaling 
        $3.6 billion through 2010 to spur the use of clean, renewable 
        energy, and energy-efficient technologies, such as hybrid and 
        fuel-cell vehicles, residential solar heating systems, 
        renewable energy produced from landfill gas, wind, or biomass, 
        and efficient combined heat and power systems.
          Climate Change: President Bush has committed America to 
        meeting the challenge of long-term global climate change by 
        reducing the ratio of greenhouse gas emissions to economic 
        output by 18 percent by 2012 compared to 2002. To support this 
        commitment, the Bush Administration is carrying out a 
        comprehensive, innovative program of domestic and international 
        initiatives to:

                  (1) Improve our understanding of the science of 
                climate change. The President's FY 2006 budget includes 
                $181 million for the Climate Change Research Initiative 
                (CCRI), a -$36 million decrease from 2005. The CCRI 
                focuses on reducing significant uncertainties in 
                climate science, improving global climate observing 
                systems, and developing resources to support 
                policymaking and resource management.
                  (2) Encourage near-term voluntary and cost-effective 
                emissions reductions. In February 2003, President Bush 
                announced that leading firms from 12 major industrial 
                sectors and the membership of the Business Roundtable 
                have committed to work with four Cabinet agencies (DOE, 
                EPA, DOT, and USDA) to reduce greenhouse gas emissions 
                in the next decade. Participating industries included 
                America's electric utilities; petroleum refiners and 
                natural gas producers; automobile, iron and steel, 
                chemical and magnesium manufacturers; forest and paper 
                producers; railroads; and the cement, mining, aluminum, 
                and semiconductor industries.
                  (3) Develop transformational energy technologies to 
                substantially reduce greenhouse gas emissions in the 
                longer term. The United States is sponsoring, with 
                international and private-sector partners, a $1 
                billion, 10-year demonstration project to create the 
                world's first coal-fueled, near-zero-emissions 
                electricity and hydrogen power plant (FutureGen). This 
                project is designed to dramatically reduce air 
                pollution and capture and store greenhouse gases. 
                Through the President's Hydrogen Fuel Initiative, the 
                first car driven by a child born today could be powered 
                by pollution-free fuel cells that emit no greenhouse 
                gases.
                  (4) Build international partnerships with developed 
                and developing nations alike in a global, long-term 
                effort to work on climate change issues.

          Control technology research: The Office of Fossil Energy 
        conducts a broad research and development program to develop 
        cleaner, more efficient, and less expensive technologies to 
        produce electric power from coal. Under the Innovations for 
        Existing Plants program, the Department is developing advanced 
        pollution control technologies for mercury and NOX, 
        improvements in power plant byproduct (ash and scrubber sludge) 
        recycling, and technologies to reduce power plant water 
        consumption.

    This office also conducts R&D on advanced power cycles such as 
Integrated Gasification Combined Cycle (IGCC), which have the potential 
to dramatically reduce air pollution and water consumption from coal-
fueled electricity generation plants, and which are considered more 
amenable to carbon capture than conventional power systems.
    DOE/Fossil Energy also manages the Clean Coal Power Initiative 
(CCPI), a program to demonstrate, at commercial scale, advanced 
environmental control technologies for power plants, and advanced low 
emitting power plants.

                     CLEAN COAL EMISSIONS RESEARCH

    Question 33. Can you explain for the Committee what the 
Department's objectives are with respect to this research and what 
steps you will take to move sequestration technologies toward 
commercialization?
    Answer. Our aim is to have technologies which are safe, effective 
and economical by 2015. We believe that these technologies may be able 
to prevent hundreds of millions of tons of carbon from entering the 
atmosphere. Our cost goal is to achieve technologies which can be done 
at $10 per ton of carbon. I should emphasize that, although we do not 
have these technologies available today, the research in this area is 
very promising. We need aggressive R&D to realize our goals. For 
example, we intend to continue extensive sequestration field testing to 
demonstrate the effectiveness of this technology.
    Question 34. What are your expectations regarding the amount of 
time that will be needed beyond the coming fiscal year?
    Answer. As stated in our last answer, our aim is to have 
technologies which are safe, effective and economical by 2015. We 
believe that these technologies may be able to prevent hundred of 
millions of tons of carbon from being released to the atmosphere. Our 
cost goal is to achieve technologies which can be done at $10 per ton 
of carbon. I should emphasize that, although we do not have these 
technologies available today, the research in this area is very 
promising. We need aggressive R&D to achieve our goals.
    Mr. Secretary, a number of organization involved in energy 
efficiency issues express concern about the development of some of the 
Department's energy efficiency standards. Given the need for all to use 
energy more efficiently it strikes me that worthwhile standards for 
appliances and other equipment should be developed as expeditiously as 
possible.
    Question 35. What plans might be under consideration that would 
accelerate energy efficiency standards?
    Answer. The delays experienced in the completion of the 
Department's priority efficiency standards rulemakings are of concern 
to me. They have been caused by a number of factors, including the many 
complex analyses required by the governing statutes and DOE's 
commitment to involve stakeholders during all stages of the standards 
development process. I have directed that we accelerate those parts of 
the standards-setting process that are within our control. The 
Department takes its rulemaking responsibilities seriously, and we will 
work to accelerate the standards setting process.

                           OFFICE OF SCIENCE

    Question 36. Mr. Secretary, I am disappointed to see the 
President's budget would decrease finding [sic] to the Office of 
Science by nearly 4 percent. The Office of Science is the largest 
source of government support for research in the physical sciences. 
Although we are clearly in a period of budget constraints, I question 
whether cuts in physical science research are in the long-term 
interests of the United States.
    The Office of Science budget request also reflects a higher 
priority placed on operating funds for scientific user facilities than 
on grants to researchers. In fact, the Office of Science budget 
proposes a 10 percent cut for research grant funding overall. What are 
the reasons for the larger cuts in research grant programs relative to 
user facility operating funds? Do you expect this trend to continue in 
future years?
    Answer. After congressionally-directed projects, several of which 
are unrelated to the Office of Science mission, are excluded from the 
FY 2005 appropriation, the overall decrease for the Office of Science 
in the FY 2006 request is 1.6%. In this overall budget climate, and 
considering the President's commitment to cut the deficit in half by 
the end of his term, I feel the Office of Science has been treated 
quite fairly in this budget. We are positioning the Office of Science 
for the future, with investments in new facilities needed to stay at 
the forefront of science. However, these investments in facilities and 
their operations have short-term consequences affecting our ability to 
fund research. Facility operations are not reduced as much as research 
in FY 2006 primarily because we have several new facilities coming on 
line. The Spallation Neutron Source at Oak Ridge National Laboratory 
will begin operations in FY 2006, as will 4 of the 5 Nanoscale Science 
Research Centers: the Center for Nanophase Materials Sciences at Oak 
Ridge National Laboratory, the Center for Integrated Nanotechnologies 
at Sandia and Los Alamos National Laboratories, the Molecular Foundry 
at Lawrence Berkeley National Laboratory, and the Center for Nanoscale 
Materials at Argonne National Laboratory. The Spallation Neutron Source 
will provide the most intense-by an order of magnitude-neutron beam in 
the world for cutting-edge research, while the Nanoscale Science 
Research Centers will provide tools found nowhere else in the world for 
exploration at the atomic level, offering huge potential for the 
discovery of entirely new ways to build materials. Over the next 
several years, we will work to ensure that an appropriate balance 
between research and facility operations is maintained.
    I feel strongly that, for the long-term benefit of our nation, we 
must achieve a greater parity between funding of the physical sciences 
and funding of other fields of science. For instance, medical science 
will depend upon basic research results from the physical sciences to 
continue to achieve the extraordinary advances for which we all hope.
    Mr. Secretary, the President's budget provides $259 million in 
total funding. Much of the basic research to support the hydrogen 
initiative is done through the Basic Energy Sciences (BES) program 
within the Office of Science. The budget proposes $32.5 million for BES 
research to support the Hydrogen Fuel Initiative.
    Question 37. Enormous gaps remain between our present technical 
capabilities in hydrogen production and storage, and the capabilities 
required for a competitive hydrogen economy. Given the need for basic 
research to generate breakthroughs, does the budget for the Hydrogen 
Fuel Initiative focus enough on basic research?
    Answer. The Department recognizes the significant gaps between 
present technical capabilities and what would be required for a 
competitive hydrogen economy. The proposed budget request of $32.5 
million for basic research is commensurate with the targeted efforts, 
and it maintains an appropriate balance with the applied research and 
development efforts within the Hydrogen Fuel Initiative.

                        COAL RESEARCH INITIATIVE

    Question 38. The President's budget proposes $286 million for the 
Coal Research Initiative in FY06. This figure includes $18 million for 
the industry cost-shared FutureGen program, to develop a zero-emission, 
coal-fired power plant capable of producing both electricity and 
hydrogen. Some of the technologies included in the FutureGen program, 
such as integrated gasification combine cycle systems, are relatively 
close to commercial readiness. The technologies needed for carbon 
capture and storage are less fully developed.
    Does it make sense to apply the same cost-sharing provisions to all 
of the technologies included in FutureGen, regardless of their state of 
development?
    Answer. No, FutureGen follows general cost-sharing guidelines 
similar to those applied to all our research activities and projects. 
For basic research, cost-sharing in the range of zero to 20 percent is 
sought from the participant. For applied research and development 
activities and projects the cost-sharing is in the 20 to 50 percent 
range. For demonstration projects such as in the Clean Coal Power 
Initiative the cost-sharing requirement is over 50 percent. Depending 
on the state of development of the technologies being tested in 
FutureGen, e.g., whether in a research and development stage or 
demonstration, the cost-sharing follow the guidelines as applicable.
    The President's funding request for Industrial Technologies is 56.5 
million, a reduction of $18.3 million from FY 05.
    The Industrial Technologies Program seeks to reduce the energy 
intensity of the U.S. industrial sector through research, development, 
validation, and deployment of energy efficient technologies and 
operating practices. The current budget purposes to focus less on 
specific energy intensive industries--such as forest and paper 
products, metals, glass, and chemicals--than it has in recent years.
    Question 39. Why does the Department propose to decrease energy 
efficiency efforts in specific, key industries that provide basic 
materials? Aren't these the industries that should be emphasized in 
energy conservation efforts, to maximize the return on our Federal 
investment?
    Answer. Because industry is less likely to invest in R&D toward 
long term energy-savings technologies, our Industrial Technologies 
Program is focusing on a fewer number of higher-risk, higher-reward 
technologies, and our budget reflects that. Fortunately, the industrial 
sector of the economy is already quite energy efficient, since it has 
an economic incentive and the financial means to reduce energy use as a 
component of its overall cost of production.
    Question 40. What are the consequences on U.S. commercial 
development and global competitiveness if High Temperature 
Superconductivity R&D is not funded adequately?
    Answer. The President's FY 2006 request for High Temperature 
Superconductivity R&D supports a robust program. The consequence of a 
lower program level would be delay, or even loss, of the ability to 
develop advanced technologies needed to modernize and expand the 
Nation's electricity system. Higher capacity, efficient high 
temperature superconducting (HTS) power cables, transformers, 
generators and other equipment is now being developed to support the 
reliable, affordable electricity supply underpinning economic growth 
and security. Inadequate funding would cause a loss in the scientific 
and manufacturing leadership we now hold and would reduce participation 
by U.S. companies in serving the $20 billion/year market for HTS power 
equipment estimated by 2020. Global competition from active HTS 
programs in Europe, Japan, China and South Korea is intense. For 
example, this year, Germany's Hannover Fair will feature a 
``Superconductivity City'' special exhibit.

                            FUSION SCIENCES

    Question 41. The request for Fusion R&D is up 6 percent to $290 
million overall. Funding for ITER, the international partnership to 
build a large-scale fusion reactor, is up $50.6 million to $56 million. 
I am concerned that as our financial obligations to ITER increase as 
the project moves forward that these increases not be offset by 
decreases in the overall budget for fusion science. Without a strong 
base for fusion science in the United States, we will bring little to 
the table to share with our partners as ITER moves forward.
    I have no objection to participation in ITER, but only if the 
administration is serious about the commitment. I do not regard flat 
Science and Fusion Energy budgets as demonstrating serious commitment.
    If our commitment for ITER is really $500 million, our spending on 
this must ramp up in each of the next few years. When will we see a 
serious commitment for ITER wherein its budget does not jeopardize our 
Science Programs and other opportunities in fusion science?
    Answer. The Total Project Cost for ITER as shown in the President's 
FY 2006 Budget is $1.122 billion. The profile for the U.S. 
Contributions to ITER project, also shown in the FY 2006 Budget, does 
increase in the next few years. In the FY 2006 Budget, we are looking 
toward the future to assure that cutting edge research facilities will 
be available for the fusion community. As the Department develops its 
FY 2007 budget, we will pay close attention to the balance between the 
research and the facility development portions of the Fusion Energy 
Sciences program.

                      STRATEGIC PETROLEUM RESERVE

    Question 42. How important is it to increase SPR capacity from the 
current 700 million barrel capacity to 1 billion barrels. What effect 
will such an increase have on our nation's import protection?
    Answer. The Strategic Petroleum Reserve affords the nation 
strategic insurance against a severe energy supply disruption. It 
enhances the nation's energy security, economic security, and elements 
of national security and helps meet our international obligations. The 
effect expansion of the SPR would have on the nation's import 
protection would depend on many variables including world oil demand 
and world oil supply.

                             SPR CONDITION

    Question 43. Mr. Secretary, would you please comment on the current 
condition of the maintenance, exercises and testing that allow the SPR 
to maintain its operational readiness?
    Answer. The SPR is fully operational and capable of delivering 4.4 
million barrels of crude oil per day to the U.S. market with oil 
deliveries commencing as early at the 13th day after a Presidential 
finding that an emergency situation exists.
    To ensure that their state of readiness is maintained, sites 
conduct routine and major maintenance, tabletop exercises to review 
procedures and checklists, inspection of facilities and equipment, 
training, and systems test exercises.
    We have every confidence the SPR facilities at all four storage 
sites and all of our employees will be ready to draw down and sell our 
oil inventory in an orderly, safe and secure fashion in the event of 
direction from the President.

                          SPR BUDGET REDUCTION

    Question 44. Additionally, I would be interested in your thoughts 
on how a 2.2 percent budget reduction in FY 2006 for the Strategic 
Petroleum Reserve would impact such readiness.
    Answer. The small reduction in the FY 2006 budget from FY 2005 will 
have no impact on the high state of Strategic Petroleum Reserve 
readiness. The reduction is a result of a lower level of scheduled 
major maintenance projects from year to year and to the scheduled 
completion of oil fill activities during FY 2005.
    The President's FY 2006 budget requests only $500,000 for the DOE 
Hydropower program, a 90% decrease from FY 2005 funding levels. This 
funding will enable the Department to terminate the program and 
transfer the research, development, and demonstration results to 
industry.
    DOE's Hydropower program is a joint program between DOE and the 
hydropower industry that began approximately 10 years ago with matching 
industry funds. The program has mainly focused on the Advanced 
Hydropower Turbine, which is designed to improve fish passage, increase 
hydropower project efficiency, and result in power output increases.
    Question 45. It is my understanding that full scale testing has 
just begun on the Hydropower Program's Advanced Hydropower Turbine at 
the Wanapum Dam in Washington.
    Why has the Administration recommended to cut the Department's 
hydropower budget by 90% in FY 2006 and to eliminate the program at the 
end of the Fiscal Year--particularly when testing at the Wanapum Dam is 
now underway?
    Answer. The Department is fully funding this four year project to 
test a new design hydropower turbine at the Wanapum Dam. Field testing 
of the turbine is scheduled to complete early in the summer of 2005. FY 
2006 activities will focus on analysis of test results, completing 
final reports, and distributing the information to industry. With the 
completion of these activities, the program will be complete, and no 
additional resources will be needed.
    Question 46. Does the Department believe this Program has achieved 
useful results? Is Industry likely to continue this Program in light of 
DOE's withdrawal from it?
    Answer. Yes. The hydropower program has achieved significant 
technical accomplishments in the area of turbine research. We believe 
that industry is well positioned to continue the Department's efforts 
at this point.
    Question 47. Is DOE currently the only Federal agency engaged in 
researching hydropower's role as a low-cost, renewable, domestic source 
of clean energy?
    Answer. The U.S. Army Corps of Engineers, U.S. Bureau of 
Reclamation, Bonneville Power Administration, Western Area Power 
Administration, and Tennessee Valley Authority all conduct hydropower 
research activities.

                    Power Marketing Administrations

                       MARKET-BASED RATE PROPOSAL

    The President's FY 2006 Budget proposes a dramatic overhaul of the 
traditional PMA financing structure for the Southeastern Power 
Administration (``Southeastern''), the Southwestern Power 
Administration (``Southwestern''), the Western Area Power 
Administration (``Western''), and the Bonneville Power Administration 
(``Bonneville'').
    The President's Budget proposes that all of the PMAs, including 
BPA, phase in the use of market-based rates to their customers. The 
Administration seeks to end the alleged subsidy to preference customers 
and argues that this is not a proposal to privatize the PMAs. The 
Administration proposes that any rate increase be capped at 20% per 
year.
    Question 48. As I understand the proposal, the cost of electricity 
sold from federal dams could increase as much as 20% per year until the 
rates are at an undetermined market level. Also, while the 
Administration claims these rate increases will be gradual, OMB's 
revenue assumptions show a 41% increase in revenues from the PMAs. 
Isn't it hard to have a ``gradual'' rate increase with that type of 
target? What does the Administration consider a ``market rate'' for 
electricity?
    Answer. With the exception of BPA, the PMAs generally make up less 
than 5% of the power purchased by consumers in the areas they serve. 
Because of this relatively small proportion of electricity retailers' 
power the PMAs provide, even substantial increases in rates charged by 
WAPA, SWPA, and SEPA will have only a small affect on end users. The 
Administration is sensitive to the impact on end users and has stated 
that in no case would any household receive an increase of more than 
20% in a year. While the Administration's proposal is projected to 
result in $12.4 billion in Federal deficit reduction over the next ten 
years, the average consumer is expected to only see a slight increase 
in their power bill. In fact, preliminary estimates point to average 
annual increases far less than the proposed 20% cap--less than a 4% 
average annual increase over the six-year adjustment period for end 
users of the PMAs. This results in less than an eighty cents average 
increase in the total monthly power bill for PMA end users in 2006.
    The Administration is continuing to work on drafting the 
legislative proposal discussed in the budget. Therefore, it would be 
premature for me to address how ``market rates'' will be set under that 
proposal.
    Question 49. Has the Office of Management and Budget conducted any 
precise studies regarding the impact of raising electric rates in 
various electric markets?
    Answer. No, only preliminary assessments using data from PMAs and 
Government Accountability Office studies have been made about the 
potential impact of the proposal in the President's budget.
    Question 50. How do you respond to the claim made by public power 
that market rate proposals are simply backdoor, discriminatory taxes, 
which would fall inequitably upon rural America?
    Answer. PMA rates have been held low for a number of years. The 
proposal calls for PMAs to gradually increase their rates toward market 
prices in the different regions that they serve. Therefore, PMA 
customers would simply pay a similar price to what is being charged by 
other electric utilities. Because many distributors buy power from a 
variety of different suppliers, this proposal would result in only a 
small gradual increase in average customer rates for most customers, 
thus, we believe, having only small overall effects on the economic 
activity in those parts of the Nation that currently receive PMA power.
    Question 51. As you know, the federal projects providing 
electricity to the PMAs are multipurpose projects. In addition to 
electricity then, these projects provide water for fish and wildlife, 
navigation, irrigation, recreation, and other uses. How will the advent 
of market-based rates impact these other project purposes? Proponents 
of public power fear that the government would hold the water it 
currently has the flexibility to release in order to maximize the price 
of power sold on the market. Please respond.
    Answer. The PMAs, in coordination with the generating agencies (US 
Army Corps of Engineers and Bureau of Reclamation), will continue to 
schedule hydropower within requirements set by the generating agencies, 
which balance the projects' multiple purposes. For example, under 
normal operating conditions, the generating agencies determine project 
operational (water release) limits including flow targets, pool 
elevation targets, and minimum and maximum water release limits for 
various time periods based on flood control, navigation, and 
environmental requirements. The generating agencies may also establish 
``ramp'' rates that govern the rate of change of the water releases or 
pool elevations. Within these operating requirements, the PMAs can 
exercise water release flexibility in order to optimize the benefits of 
the power generated.
    Because all of the projects are operated to satisfy multiple uses, 
and none of the PMAs exercise sole and exclusive control over dam 
operations, the PMAs would have limited ability to hold water for the 
purpose of maximizing revenues. Any increase in price potentially may 
stimulate more efficient use of hydroelectric power, but may also 
stimulate increased usage of thermal electric generation and the 
related environmental consequences.
    Question 52. According to public power advocates, many current 
customers find PMA power attractive because of the price only--not 
because it is a hydropower resource. If the PMAs were to charge market-
based rates, isn't it possible that power customers may forgo purchases 
of PMA power, thereby undermining a reliable revenue stream for the 
Federal Government?
    Answer. For Bonneville, Southeastern, and Western, some existing 
customers that own or have access to generation at prices below 
prevailing market levels may terminate their contracts for hydropower 
sold by these PMAs. Other existing customers would likely retain their 
hydropower contracts. I believe that hydropower priced at a market 
level and that becomes available as a result of contract terminations 
would be sold to interested existing customers, potential new 
customers, or into regional spot markets for energy. Generally 
speaking, under normal water conditions, the revenue stream should not 
be adversely impacted.
    However, Southwestern guarantees only a limited amount of firm 
hydroelectric energy associated with the firm capacity that is sold to 
its customers because of the characteristics of the hydroelectric 
plants in its marketing area. Because this firm energy is limited, 
Southwestern's customers already must acquire firm energy from non-
Federal resources to satisfy the total requirement to serve their 
loads. To assure that this firm energy will be available when needed, 
the customers may have to purchase some redundant firm capacity. As 
Southwestern's rates approach market levels, the apparent total cost to 
use Federal power will likely be above market because of the redundancy 
required to incorporate Federal power into each customer's power 
portfolio. There is the potential that Southwestern power may become 
unmarketable under a firm power marketing plan, which would likely 
result in Southwestern marketing its power on the spot market. Even 
selling power on the spot market, it is virtually certain that 
Southwestern would be able to find customers willing to purchase the 
energy offered for sale. However, the price obtained for that amount of 
power might be less than if it were sold under a firm power sales 
contract, which would have a negative impact on its revenue stream.

   Responses of Secretary Bodman to Questions From Senator Alexander

                   FUNDING FOR THE PHYSICAL SCIENCES

    Question 1. DOE's Office of Science is the primary federal funding 
source for research in physical sciences, but its budget request is 
down -3.8% from last year ($3.60 B to $3.46 B). The base R&D program is 
down 8% and 2000 fewer scientists and engineers will be funded by the 
Office of Science next year. Because our economic competitiveness 
depends on our ability to stay ahead of the science and technology 
curve, how do you foresee the U.S. staying competitive when R&D 
investments in the physical sciences--especially in the brainpower that 
drives innovation--are in decline?
    Answer. The President's FY 2006 budget request will maintain U.S. 
scientific leadership within the current budget climate. In order to 
achieve that goal, difficult decisions had to be made in prioritizing 
research funding and facility construction and operations funding. This 
request will provide continued opportunities for U.S. science and 
scientists to remain at the cutting edge in FY 2006 and beyond. In FY 
2006, the Office of Science will complete construction and commence 
operations on the Spallation Neutron Source, a facility that should 
make the U.S. a leader in materials science for more than a decade. We 
will complete construction and begin operations at four nanotechnology 
centers, and we will near completion on a fifth. We will also operate 
two twenty teraflop capability supercomputers at Oak Ridge and operate 
an upgraded capacity computing center for a broad range of science 
users at the National Energy Research Scientific Computing Center 
(NERSC) facility at Lawrence Berkeley National Laboratory. We expect to 
begin fabrication of components for the ITER project, the next major 
step on the challenging path toward eventually developing fusion as a 
viable energy source. We will begin construction of the Linac Coherent 
Light Source at the Stanford Linear Accelerator and will continue R&D 
on the Rare Isotope Accelerator and on the International Linear 
Collider.
    The Office of Science is responsible for long-term, high-risk, 
high-payoff facilities and programs aligned with DOE missions. We 
support the research of approximately 23,500 graduate students, post 
docs, and faculty, and our facilities are used by more than 19,000 
researchers each year. We are the primary source of support for 
physical science research in the U.S., providing 42% of federal 
funding. Our FY 2006 budget request, we are confident, will continue 
U.S. leadership in user facilities in a broad range of fields of 
scientific endeavor and will help improve U.S. economic 
competitiveness.

                     ADVANCED SCIENTIFIC COMPUTING

    Question 1. I am supportive of the United States regaining 
leadership high end computing. In 2004 DOE ran an open solicitation to 
select the team to lead this effort and I'm proud to say the Oak Ridge 
National Laboratory and its partners were selected and the home of the 
new facility is ORNL's Center for Computational Sciences. The 
facilities plan for the Office of Science ranks this as the #1 domestic 
priority, second only to the international fusion project yet the 
budget does not reflect a commitment to this goal
    The total request for Advanced Scientific Computing Research is 
down $25M dollars, funding for the Center for Computation Sciences is 
down $42M but the request includes two new starts totaling about $21M. 
Could you explain the reasons behind starting two new programs (for 
SciDAC teams) within the advanced computing budget while failing to 
find funds to keep high performance computing effort on track at Oak 
Ridge National Laboratory?
    Answer. The principles behind the budget decisions are to deliver 
the most science for the Nation given the funds available. The Advanced 
Scientific Computing Research (ASCR) budget includes $13 million for 
research and evaluation prototype computers and $8 million for a new 
competition for Scientific Discovery through Advanced Computing 
(SciDAC) institutes. The research and evaluation (R&E) prototype 
activity has been a part of the ASCR budget for a number of years. In 
FY 2005 the Center for Computational Sciences (CCS) will complete the 
evaluations that were funded in prior years. Therefore, we will solicit 
proposals for new R&E prototypes in FY 2006. This type of activity was 
strongly endorsed in the Federal Plan for High End Computing, which was 
published by OSTP last May. The new competition for SciDAC institutes 
will increase the scientific potential of our investments in applied 
mathematics and computer science and respond directly to the direction 
in the ``Department of Energy High-End Computing Revitalization Act of 
2004'' to establish high end computing software development centers for 
Leadership Class Computing.
    Question 2. With the funding levels requested, will the U.S. still 
be on pace to regain and sustain international leadership for open-
scientific Leadership-Class computing at the 100 Teraflop level and 
beyond?
    Answer. The President's FY 2006 request for the Advanced Scientific 
Computing Research program is $30 million over the FY 2004 President's 
Request and $3 million over the FY 2005 President's Request for the 
same program, reflecting the priority of this effort in a fiscally 
constrained budget. The funding in these years positions the Department 
to deliver a leadership class computer for open science within this 
decade.
    Question 3. According to the Federal Plan for High-End Computing 
issued by a Task Force consisting of all Federal agencies with a stake 
in high-end computing ``. . . Leadership Systems are expensive, 
typically costing in excess of $100 million per year to procure and 
Operate . . .'' Given the Department's commitment to Leadership-Class 
computing, would you provide insights as to why the budget request is 
1/4th that level ($25 M)?
    Answer. The budget of the Office of Science must balance a number 
of elements to deliver the best science for the nation within the 
current fiscal constraints. The $25 million for the Oak Ridge National 
Laboratory Leadership Class Computing effort will enable researchers to 
operate a 20 teraflop Cray X1e and a 20 Teraflop Cray XT3 (better known 
as Red Storm) computer as leadership class resources for open science. 
These computers will be allocated through an open process to a small 
number of teams that are positioned to deliver new science on these 
platforms. This multiple machine approach was what ORNL proposed and 
what won the competition in FY 2004. The two systems will be the 
largest systems of their type available to the open scientific 
community in the U.S. They will provide more science than one large 
system because some applications, such as plasma physics and global 
change, perform significantly better on the X1e than on the XT3 while 
other applications, such as materials science and chemistry, can 
deliver more science per dollar on the XT3.

                EXTERNAL REGULATION OF THE SCIENCE LABS

    Question 4. Have you had a chance to consider the House Science 
Committee's inquiry regarding external regulation of safety and health 
issues at DOE's 10 science labs? If so, what are your initial thoughts 
on the idea?
    Answer. I plan to take a fresh look at safety, including the 
proposal for external regulation of the 10 DOE Science Laboratories. I 
firmly believe that the Department must continue to improve safety at 
its laboratories. The safety record of the 10 DOE Science Laboratories 
is very good, however, and has reflected steady improvements over the 
past several years under the leadership of the Director of the Office 
of Science, Dr. Raymond Orbach, who has made safety his first priority. 
I will review the merits of external regulation of the Science 
Laboratories with him and other advisors, including the senior 
leadership of the Nuclear Regulatory Commission and the Occupational 
Safety and Health Administration.

                             FUSION ENERGY

    Question 5. The funding request for Fusion Energy Sciences is up by 
about $16M but that increase and more are requested for the ITER 
project. In order to support the request for the international ITER 
project, the domestic fusion research would be cut by $34M and loss of 
high-tech jobs. Is it wise to cut our domestic programs considering the 
current delays in the ITER project?
    Answer. If an agreement can be reached on the ITER site in the next 
few months, then it will be possible to proceed on the schedule assumed 
in the FY 2006 Budget, which envisions completing the preparatory work 
in FY 2005 and the first half of FY 2006. That would allow us to make 
profitable use of the funds requested for the Major Item of Equipment 
project that is the U.S. Contributions to ITER project. Participation 
in the ITER project will provide a major enhancement to our scientific 
capabilities, thereby strengthening the U.S. Fusion Energy Sciences 
program.
    ITER itself will be a major fusion experiment addressing the 
central scientific issue of burning plasma physics. We are reorienting 
the domestic program and have added funds, above the FY2005 level, so 
that the total effort directed toward plasma science issues, including 
ITER, is increased. ITER is an investment in the future that will 
enormously strengthen the plasma physics experimental capability 
available to the U.S. fusion science community. We need to ensure that 
the U.S. fusion program continues to be on the cutting edge of fusion 
science, now and in the future, and this budget supports that goal.

                        Y-12 PLANT MODERNIZATION

    Question 6. During the recent confirmation hearing, you commented 
on the importance of modernizing the Y-12 National Security Complex in 
Oak Ridge, Tennessee. Unfortunately, the President's Budget for FY 2006 
significantly cuts or under funds key modernization activities. Can you 
provide your perspectives on this situation?
    Answer. Modernization of the Y-12 Nuclear Security Complex is a 
major priority of the Department of Energy. Recent changes to the 
Design Basis Threat (DBT) have caused us to re-think our strategy for 
modernizing Y-12. Our plans for implementing the new strategy were 
insufficiently developed to justify a more detailed request. Changes to 
our strategy now include:

   Uranium Processing Facility (UPF): Completion date is 
        tentatively set for 2013. Previously we had planned on 
        modernizing the production facilities using a phased approach 
        over a longer time line. However, the changing security 
        environment has caused us to make significant changes to our 
        strategy and to accelerate our previous schedule in getting 
        authorizations for the pending construction and startup of the 
        UPF. We are relocating all special nuclear material production 
        into a smaller, upgraded security perimeter with enhanced 
        defensive features.
   Highly Enriched Uranium Materials Facility (HEUMF): We are 
        accelerating the HEUMF project within acceptable risk levels to 
        attain completion in 2008, which will allow relocation of 
        material into the facility in 2009.
   Weapon dismantlement activities and materials processing 
        programs are accelerating their transformation of special 
        nuclear material into forms and volumes suitable for moving 
        into HEUMF.
   Security Improvements Project: Will include critical 
        security upgrades for the interim period and critical security 
        aspects of the final UPF-HEUMF Special Nuclear Materials 
        Complex.

    These changes are in addition to the previous baseline that 
included HEUMF, parts of each of the items above, the Beryllium 
Capabilities Project, an alternatively financed production interface 
complex and public interface facility, and the start up of the 
Purification Facility Project. The Facilities and Infrastructure 
Recapitalization Project (FIRP) supports this baseline and the changes 
above with a variety of upgrades and replacements to Y-12's 
infrastructure systems, including the compressed air system, a life 
extension to the steam plant, potable water system improvements and the 
electrical distribution systems.
    Future projects within the Y-12 modernization program currently in 
the early stages of planning include Depleted Uranium/binary 
Consolidation, Command and Control Complex, and consolidation of 
special materials and general manufacturing. We are also planning for a 
Decommissioning and Demolition program to stabilize and tear down aging 
facilities. Funding to support these projects will be requested as the 
plans mature sufficiently.
    Question 7. Mr. Secretary, as you know, the June 2002 Agreement 
between DOE and USEC committed DOE to support the construction of a new 
uranium enrichment facility in Ohio using American Centrifuge 
technology. USEC, in turn, committed to test and manufacture 
centrifuges in Tennessee and deploy the American Centrifuge Plant in 
Ohio on a mutually agreed schedule while continuing production 
operations at the Paducah, Kentucky enrichment plant. I am encouraged 
to see that the $3.4 billion invested by the taxpayer in centrifuge 
technology will finally come to fruition. Significant progress has been 
made by USEC in deploying the American Centrifuge technology, but a 
long term lease of the DOE centrifuge facilities in Ohio, and a 
centrifuge technology license, both of which have been under 
negotiation for over a year, have not been completed.
    Would you commit to seek closure on the long term centrifuge lease 
and the technology license between DOE and USEC by the end of March of 
this year? This would support the deployment schedule agreed to by both 
parties, would help meet U.S. energy security needs and provide 
centrifuge-related jobs in Tennessee and Ohio.
    Answer. The development and deployment of the Government's uranium 
enrichment technology at the DOE's Portsmouth Gaseous Diffusion Plant 
site in Piketon, Ohio, is the direct result of a June 2002 Agreement 
between the Department and United States Enrichment Corporation (USEC). 
In that Agreement, USEC committed to firm milestones for USEC's 
deployment of advanced enrichment technology in order to secure a new, 
more economic source of domestic uranium enrichment.
    To date, USEC has met, or exceeded, its deployment milestones. The 
next Agreement milestone most related to the current lease and 
technology license negotiations is in January 2007, when USEC is to 
secure a financing commitment for an initial commercial plant. We 
appreciate that the successful conclusion of the long-term lease 
negotiations well in advance of that January 2007 milestone is critical 
to meeting the milestone, and we are confident that will be achieved.
    Because our objective is to develop a mutually acceptable lease and 
technology license that will endure for the life of the commercial 
plant's Nuclear Regulatory Commission license (50+ years), careful 
drafting and consideration of a myriad of issues is required. The long-
term lease and license negotiating teams have made substantial progress 
to date, but there are still a number of important issues that require 
resolution. It would not be prudent for DOE to commit to closure of the 
negotiations by the end of March. We will complete negotiations as 
expeditiously as possible consistent with protecting the Government's 
interests.
    To help ensure that USEC's GCEP deployment milestones are not 
impaired by the pace of the GCEP long-term lease or license 
negotiations, DOE took several actions. In 2002, DOE authorized the 
contractor that manages and operates the Oak Ridge National Laboratory 
for the Department to enter into an expanded Cooperative Research and 
Development Agreement with USEC so that USEC could have access to the 
GCEP program scientists and technology that had previously been 
Government-funded so USEC could further develop the GCEP technology. 
Additionally, in February 2004, DOE granted USEC a temporary lease 
through 2009 to selected GCEP areas at Portsmouth so it could freely 
pursue its ``Lead Cascade'' activities. The Lead Cascade is already 
licensed by the NRC, and USEC plans to incorporate the Lead Cascade 
into the commercial enrichment plant when it is licensed. The 
Department also is actively engaged in a program to accelerate DOE's 
cleanup of the GCEP facilities to help accommodate USEC's deployment 
plans.

    Responses of Secretary Bodman to Questions From Senator Bunning

                               CLEAN COAL

    Question 1. The Department of Energy has proposed $50 million for 
the Clean Coal Power Initiative, which starts new projects every 2 
years. Many in the industry believe that almost $300 million will be 
needed for the next set of projects that will start next year. The 
Department of Energy's Fiscal Year 06 budget falls short of that goal. 
Is the Department going to be able to provide adequate and full funding 
of the clean coal power initiative projects with this year's low 
funding request?
    Answer. The Fiscal Year 2006 budget supports the Department's 
continuing effort to fulfill President Bush's 10-year, $2 billion 
commitment to clean coal research, with funding for the President's 
Coal Research Initiative (CRI) of $286 million, a $13 million increase 
over the 2005 enacted level. The 2006 Budget brings the total requested 
funding for clean coal research to $1.6 billion over five years, on 
pace to exceed the President's ten-year pledge by more than 50 percent.
    Within the President's Coal Research Initiative, the Clean Coal 
Power Initiative (CCPI) is a key component of the National Energy 
Policy to address the reliability and affordability of the Nation's 
electricity supply, particularly from its coal-based generation. The 
Fiscal Year 2006 Budget request includes $68 million for CCPI, $50 
million of which is for demonstration projects and $18 million for 
FutureGen, the world's first near-zero emissions coal-fueled power 
plant. The Department believes the FY 2006 request is adequate to 
maintain the overall schedule of the Clean Coal Power Initiative.
    The $50 million allocated for the cooperative, cost-shared CCPI 
demonstration program between government and industry will be devoted 
to continuing the rapid demonstration of emerging technologies in coal-
based power generation, which should accelerate commercialization by 
the private sector.
    The CCPI's FutureGen research program will establish the capability 
and feasibility of co-producing electricity and hydrogen from coal with 
essentially zero emissions, including carbon sequestration and 
gasification combined cycle, both integral components of the coal-
fueled power plant of the future. In addition to scheduled financing of 
$18 million for FutureGen in Fiscal Year 2006, the Budget also includes 
a commitment to FutureGen beyond 2006, by proposing $257 million to 
become available in 2007 to provide the Federal share of FutureGen for 
several years. This sum corresponds to unexpended funds available from 
prior years' clean coal projects.
    Question 2a. The DOE proposes transferring leftover Clean Coal 
Power Initiative funding--approximately $257 million--to the FutureGen 
program and then defers using that money until next year.
    If Congress provides DOE this deferral funding, what will DOE do 
with it in later years?
    Answer. The Fiscal Year 2006 budget request for FutureGen asks for 
$18 million to fund the project in Fiscal Year 2006 and for an advanced 
appropriation of approximately $257 million that will be used to fund 
the FutureGen project in subsequent Fiscal Years. According to the 
initial project cost estimates presented in the table below, $257 
million will fund the FutureGen project for Fiscal Years 2007, 2008, 
2009, and into 2010.

----------------------------------------------------------------------------------------------------------------
                                                                                                     FY
                                                 FY  FY  FY  FY   FY   FY   FY  FY  FY  FY  FY  FY  16-   Total
                                                 04  05  06  07   08   09   10  11  12  13  14  15   18
----------------------------------------------------------------------------------------------------------------
DOE Plant Funding..............................   9  18  18  50  100   89   57  33  23  26  34  39    4      500
Industry Plant Funding.........................   2   7   7  20   38   43   32  18  18  19  19  24    3      250
DOE/Industry (80 max/20 min) R&D--Sequestration                        24   24   4  34  34  ..  ..  ...      120
International Contributions....................               5    6    8   10  10  12  12   7   7    3       80
                                                ----------------------------------------------------------------
    Total......................................  11  25  25  75  144  164  123  65  87  91  60  70   10      950
----------------------------------------------------------------------------------------------------------------

    Question 2b. The DOE proposes transferring leftover Clean Coal 
Power Initiative funding--approximately $257 million--to the FutureGen 
program and then defers using that money until next year.
    Why does the DOE not take some of the leftover Clean Coal Power 
Initiative funding and fully fund that program instead of deferring 
funding for future years?
    Answer. The subject $257 million is from the earlier Clean Coal 
Technology (CCT) Demonstration Program, not from the Clean Coal Power 
Initiative (CCPI).
    There are two principal reasons why DOE has not conducted another 
Clean Coal Technology solicitation with the funds and is now proposing 
to use available funds for FutureGen:

          1. The funds only became available with the termination of 
        the City of Lakeland projects in 2003 and the CPICOR project in 
        2004. Prior to that time, most of the CCT appropriations were 
        committed to projects selected under the earlier CCT program 
        solicitations. Before the Lakeland and CPICOR projects were 
        concluded, DOE did not have sufficient uncommitted funds to 
        conduct a meaningful solicitation. Theoretically, DOE could 
        have attempted to prematurely terminate on-going CCT projects 
        to free-up money for a new solicitation. But that would have 
        been inconsistent with the long and successful history of the 
        program and could have been viewed as a breach by our 
        cooperative agreement recipients and stakeholders.
          2. Historically, Clean Coal Technology solicitations were 
        directed by language contained in the Interior and Related 
        Agencies Appropriations Act. The same is true for CCT's 
        successor programs, the Power Plant Improvement Initiative and 
        the Clean Coal Power Initiative. DOE did not have direction to 
        conduct another solicitation with the funds that became 
        available under the Clean Coal Technology program.

    DOE is now asking for a reprogramming of the available Clean Coal 
Technology funds. We believe the best use of the funds is for FutureGen 
as proposed. President Bush committed to invest $2 billion over 10 
years to fund research in clean coal technologies. The scope of this 
initiative included the CCPI, the FutureGen initiative, and other 
advanced clean coal technology development efforts. All facets of this 
program, from long-range research to commercial-scale demonstration, 
advance clean-coal technologies to the point that the marketplace will 
use them and benefits to society will be realized. The Department feels 
that the 2006 Budget funding distributions within the overall clean-
coal portfolio is the optimal approach at this time.
    Question 3. Five utilities in Kentucky have decided to not renew 
their contracts with TVA. These companies, however, are facing not 
having enough transmission because TVA does not want to continue 
providing it to them. I have pushed hard to allow utilities who wish to 
get out from underneath TVA and into a competitive market environment 
to be able to do so. Lack of transmission may force these utilities and 
others to stay with TVA's higher rates because they can't afford new 
transmission. FERC has a pending case regarding this issue with East 
Kentucky Co-operative. Does FERC have any authority to help these 
utilities?
    Answer. FERC has authority under Sections 210, 211, and 212 of the 
Federal Power Act to order TVA to establish interconnections and 
provide transmission service to parties seeking such service, provided 
certain criteria are met. One such criterion provides that when an 
electric utility, such as TVA, is prohibited from selling power outside 
a specific area, it cannot be ordered to provide transportation 
services to another entity if the electric energy to be transmitted 
will be consumed within the area. This means that the scope of FERC's 
authority with respect to the concerns of the five Kentucky utilities 
depends on the circumstances of the individual utility and the actions 
the utility wishes to take.
    Question 4. The President's budget proposes granting FERC 
jurisdiction over TVA's transmission system, similar to that which FERC 
has over public utilities. TVA also is not subject to FERC jurisdiction 
for its rates, charges, and terms, and therefore, is not subject to any 
oversight other than by themselves and Congress. Placing TVA under FERC 
would require it to be subject to the same regulatory requirements as 
other utility companies. What do you think of FERC overseeing TVA for 
how it operates its transmission grid and how it charges its customers 
for wholesale electricity?
    Answer. It is important to operate TVA's transmission system under 
rules that ensure nondiscriminatory access for all market participants. 
Therefore, the Administration proposes granting FERC jurisdiction over 
TVA's transmission system.
    Question 5a. The award of the cleanup contract at the Paducah plant 
has been appealed which has further delayed the new contractor from 
taking over cleanup at the site. The delay in obtaining a new 
contractor and other factors may have slowed progress of cleanup at the 
plant.
    If funding is leftover from the previous year for cleanup at the 
Paducah plant, what does DOE do with that money? Does DOE apply 
leftover funds to the next fiscal year?
    Answer. Funding for the cleanup at the Paducah Plant is 
appropriated under the Non-Defense Environmental Services Non-Closure 
Environmental Activities account and the Uranium Enrichment 
Decontamination and Decommissioning Fund. In both of these 
appropriations, according to Congressional language, the funds ``remain 
available until expended.'' This means that any prior year funds which 
are not expended during the fiscal year in which they are appropriated 
will be available in the future years for that particular project. 
However, in some years the congressionally mandated reductions direct 
the Department to take proportional reductions against each program, 
project, or activity. This means that no project or activity is exempt 
and therefore may not have the full ``leftover'' funds which were 
originally appropriated.

                            PADUCAH CLEANUP

    Question 5b. Do you know if Paducah will have any leftover cleanup 
funds from Fiscal Year 05?
    Answer. At this time in FY 2005, it is premature to predict funding 
that could be left at the end of the fiscal year.
    Question 5c. Is Paducah still on target to meet the accelerated 
cleanup deadlines?
    Answer. Yes, we are on track to meet overall accelerated cleanup 
deadlines.

                      COMMUNITY TRANSITION FUNDING

    Question 6. The DOE has again proposed to zero out funding for the 
Office of Worker and Community Transition. This program has the mission 
of ensuring that communities can redevelop and sustain themselves 
following the shutdown of a DOE facility. In anticipation of the 
closure of the Paducah Gaseous Diffusion Plant scheduled for 2010, my 
constituents in Paducah have worked hard to find ways to transition 
their community through this difficult time. They rely on funding from 
the DOE to help make this happen. Last year when you zeroed out this 
funding, I was able to add some funds in another appropriation program 
for the Paducah transition. But this is not adequate and does not 
consider the other communities across the country who need help with 
their transition. What do you feel DOE's role should be in assisting 
community transition? What will you do to make sure that Paducah and 
similar communities who were previously promised DOE funding can 
successfully transition past the large impact of a DOE plant closing?
    Answer. The community transition program was started to mitigate 
the economic impacts on nearby communities caused by work force 
reductions brought about by the end of the Cold War. The funding 
assisted these communities in diversifying their economies by expanding 
or creating new businesses in the communities. To date, the Department 
has provided funding of approximately $255 million for the community 
reuse organizations (CROs) across the country including $10.6 million 
for the Paducah Area Community Reuse Organization (PACRO). The 
Department has provided assistance to affected communities that has 
resulted in the creation or retention of over 45,000 jobs. The 
Department considers the mission of the community transition program to 
be complete.
    The Office of Legacy Management (LM) which incorporated the 
functions of the former Office of Worker and Community Transition will 
continue to provide technical assistance to PACRO and other CROs; and 
will work with those that want to establish a personal property 
transfer program. A personal property program uses DOE excess property 
to help attract new businesses or expand existing businesses in the 
community.

             FREON FOR THE PADUCAH GASEOUS DIFFUSION PLANT

    Question 7. I understand that USEC needs approximately 400,000 lbs. 
of Freon transferred from Portsmouth to Paducah to meet operational 
needs at the Paducah Gaseous Diffusion Plant. DOE has requested that 
the transfer not take place until various legal and policy issues can 
be resolved, DOE has been considering these issues since last July. Do 
you believe DOE will resolve this issue expeditiously?
    Answer. DOE representatives have been actively engaged in 
discussions with United States Energy Corporation (USEC) concerning 
USEC's request to use, at no charge, the federal government's Freon in 
the DOE-owned, and USEC-operated Paducah Gaseous Diffusion Plant (GDP) 
in Kentucky. USEC reports that over 400,000 pounds of Freon are 
released into the atmosphere annually from the Paducah GDP. 
Consequently, USEC has an annual requirement to replace lost Freon to 
sustain Paducah plant operations. We expect to respond in the near 
future to USEC's request for the transfer of 400,000 pounds.

            POWER MARKETING ADMINISTRATION (CO-OP QUESTION)

    Question 8. The Administration has proposed to raise the power 
rates for Power Marketing Administrations, including the Southeastern 
Power Administration (SEPA). The proposal increases the cost of 
electricity sold from federal dams 20% per year until the rates are at 
an undetermined market level. Much of this power goes to rural electric 
cooperatives that operate at cost and so will have to pass it on to 
their consumers in the form of a rate increase. Western and Eastern 
Kentucky counties would be affected by this rate hike. This comes just 
when the tax cuts are starting to help constituents. Why is the 
Administration essentially putting a new tax on electricity for my 
constituents?
    Answer. The average consumer is expected to only see a slight 
increase in their power bill. Preliminary estimates point to a less 
than 2% average annual growth rate in the total power bill for the 
average SEPA, SWPA and WAPA consumer over the adjustment period. PMA 
rates have been held low for a number of years. The proposal calls for 
PMAs to charge closer to the respective market prices in the different 
regions that they serve. Therefore, your constituents should pay no 
more than the rates charged by other electricity providers in the 
market.

    Responses of Secretary Bodman to Questions From Senator Bingaman

                     LOS ALAMOS NATIONAL LABORATORY

    Question 1. When you went to Los Alamos, you stated your commitment 
to a new contract for the laboratory that would, in your words, 
``maintain--or even enhance--the scientific capabilities of the 
laboratory.'' I think that you have put your finger squarely on what 
should be the point of the whole exercise--to strengthen Los Alamos and 
its scientific capabilities. And I think you would agree with me that 
in a laboratory, the principal asset is the technical staff--the 
scientists, engineers, and technicians who produce new knowledge and 
apply it. Yet the latest set of changes that DOE has proposed in the 
contract process seems to be greatly unsettling to precisely the people 
who are the scientific capability of the lab. For example, even if the 
University of California wins the competition, it will have to create a 
new pension and benefits system for the laboratory, under contract 
guidance to reduce benefits so as to eventually be about average for 
other institutions deemed to be comparable to Los Alamos. For existing 
workers, this means that they might have to retire to lock in their 
benefits under the current system, including retiree health benefits. 
Up to 2500 employees at Los Alamos could potentially be in this 
retirement class, and I am informed that hundreds may already have 
taken the first steps in the process of retiring as a result of all the 
uncertainty that is hanging over the laboratory.
    a. If you wanted to keep the best senior scientists now on the 
staff, does it make sense to present them with a decision in which they 
have to retire to preserve their pension and health benefits? Is it 
really a good idea to force the laboratory's top and senior scientists 
to actively consider and take steps to prepare to retire, if you really 
want them to stick around to work on critical national security 
problems?
    b. You have publicly committed to us that you wouldn't reduce the 
benefits for existing workers at the laboratory. How does this 
commitment match up with the new contract guidance to reduce benefits 
to an average level? Again, if you want the best mid-career personnel 
to stay at the lab, does it make sense to greatly reduce their 
benefits?
    c. One way to reduce costs while maintaining the level of benefits 
to existing workers is to have a different and reduced set of benefits 
for new scientists and engineers hired at the laboratory. How would you 
propose to attract the best and brightest to Los Alamos with merely 
average benefits? Or, if they are going to be in the lower tier of a 
two-tier benefits system? Doesn't industry make above average offers to 
attract above average people? Why shouldn't DOE?
    Answer 1a. I am committed to ensuring that the contract competition 
results in an enhanced capability to perform science at LANL and meet 
mission requirements. In addition, I fully agree that maintaining a 
highly qualified staff at LANL is critical to the future success of the 
Laboratory. It is the Department's intent to end up with pension and 
health benefit plans under the new contract that are so similar to the 
existing plan that current employees will elect not to retire.
    The most recent proposal of the SEB to require a stand-alone 
pension plan was precipitated by an industry perceived barrier to fair 
and open competition. The requirement that the offeror establish a 
separate corporate entity and a stand alone pension plan is similar to 
Sandia National Laboratories (SNL), and other Departmental National 
Laboratories, has proven to be a successful model for SNL and others in 
their ability to recruit and retain a world class workforce. 
Establishment of a separate corporate entity and a stand alone pension 
plan will also enhance the Government's ability to ensure continuity of 
benefits in future competitions and minimize any future employee 
concerns. Although a stand-alone pension plan will be required, the 
plan must be substantially equivalent, including current University of 
California Retirement Plan (UCRP) age factors and will apply to current 
employees that transfer to the new contract. None of the potential 
offerors expressed concern about this requirement during the second 
round of one-on-one discussions with the SEB or in their written 
comments to the SEB white papers.
    The final Request for Proposal (RFP) will require the contractor to 
provide LANL employees and retired LANL employees with benefits 
substantially equivalent to those in effect under the current contract. 
In its contractually required review of the benefits package, the NNSA 
will utilize a panel of experts to assure that benefits are 
substantially equivalent and will provide for employee input to the 
NNSA prior to finalizing negotiations with the contractor. In addition, 
employees will be offered an extended transition period to allow them 
time to carefully review and assess the equivalency between their 
existing pension and health benefit plans with the substantially 
equivalent new plans. It is to be expected that current employees are 
exploring their options with their existing pension and health 
benefits. I'm confident that the stand alone pension plan will (1) be 
very attractive to the existing workforce, (2) allow retention of the 
scientific and engineering workforce, (3) provide for a smooth 
transition to the new operator of the laboratory, and (4) provide for 
transportability in future contract competitions.
    Answer 1b. I am still committed to protecting the benefits of 
existing employees at LANL and the RFP is written to do that. As 
described above, the new contractor must establish substantially 
equivalent pension and health benefits for existing employees that 
transfer to the contractor. Existing workers who transfer to the new 
contract will not be included in any benefit value study hence ensuring 
their benefits will continue to be substantially equivalent to what 
they now have. I believe that the RFP has been crafted in a manner that 
when employees, during the transition period, review their options they 
will opt to remain at LANL continuing the culture of scientific 
excellence we've come to expect.
    Answer 1c. For new employees hired under the new contract, the 
Department wants the contractor to consider developing a total 
compensation package that is market driven and that will allow the 
Laboratory to recruit and retain critical scientific and engineering 
skills, and develop the next generation of scientific and technical 
talent necessary to assure that LANL continues to perform world class 
science. The Department considers market driven to be competitive in 
comparison to the Laboratory's best in class comparator companies and 
institutions as determined by the benefits value study. While aggregate 
benefits in the range of 100-105 are considered average, it is 
important to note that this average is based on benefits of best in 
class comparator companies consisting of some of our Nation's most 
premier companies and institutions which equates to above average to 
outstanding total compensation packages. In addition, the contractor is 
expected to develop and implement incentives that are common in 
industry to attract and retain critically skilled employees. DOE 
contractors have experience in recruiting best in class scientific and 
technical talent, utilizing this concept, at other National 
Laboratories including SNL.
    Question 2. The decision that DOE will have to make about the Los 
Alamos contract is pretty consequential to the Department's future. I 
am concerned that the Source Evaluation Board that is driving this 
process to date is not giving a lot of evidence they understand the 
complex dynamics of running an institution that depends so much on a 
very highly educated and qualified technical workforce.
    a. Would you agree that integrating that perspective into the final 
decision is important?
    b. How might you strengthen that part of the decision-making 
process?
    c. I believe that, as Secretary, you can be the Selection Official 
who makes the final call--would you consider playing that role with 
this contract?
    Answer 2a. Yes. The Department understands the complex dynamics of 
managing the nation's nuclear weapons complex. The Source Selection 
Official will ensure that his decision reflects all of the 
considerations set out in the solicitation. The NNSA has staffed the 
SEB with highly qualified, seasoned career employees that bring 
extensive, diverse, and relevant experience to the SEB; they have no 
preconceived bias about the outcome of the competition. The SEB 
recognizes the key role that LANL serves in leading enhanced 
communication, cooperation and integration across the nuclear weapons 
complex. The SEB also appreciates the Laboratory's need for a highly 
educated and qualified technical workforce; has taken numerous steps to 
address the human resource issues raised by the workforce in order to 
retain the LANL workforce needed to support world class science and 
technology at the Laboratory; and, has followed recommendations of the 
National Academy of Sciences and other nationally recognized science 
organizations in developing the RFP.
    Answer 2b. The SEB has created four advisory panels comprising 
science and technology, business, laboratory operations and security. 
The panel members are Federal experts well versed in their technical 
disciplines and in all aspects of the Laboratory's operations. For 
example, all of the science and technology panel members are Ph.D.s and 
are the responsible federal program managers accountable for most 
aspects of LANL's science and technology missions. Therefore, the SSO 
will be provided with the best information possible that has been 
gathered by the SEB using these experts to assist in the decision 
making process. I have full confidence in the SEB that Ambassador 
Brooks has designated to staff this procurement. Their experience and 
qualifications spans the full spectrum of Laboratory mission and 
operations.
    Answer 2c. No, I do not believe that I need to be the SSO. The 
Department will ensure the Source Selection Official (SSO) has the 
experience and integrity to ensure that appropriate perspectives are 
taken into account when the final decision is made.
    Question 3. One concern that my staff has heard from managers at 
Los Alamos and other labs is that the NNSA is making them implement 
``earned value'' as a major metric for fundamental research. In 
response to this requirement from DOE, managers at the lab are spending 
an inordinate amount of time trying to figure out how to force-fit the 
concept of ``earned value'' into the management of discovery-oriented 
work. ``Earned value'' would certainly be a useful way to manage a 
construction project--say, building a parking garage.
    a. Do you think ``earned value'' really should be a principal 
metric for managing fundamental research, such as the Science or 
Engineering Campaigns in the Stockpile Stewardship Program?
    b. Can you look into this problem and fine-tune the requirements 
NNSA is giving in this respect?
    Answer. The National Nuclear Security Administration (NNSA) has 
spent the past few years improving program and project management 
discipline in all of its activities. The portfolio of tools includes 
the Planning, Programming, Budgeting and Evaluation processes, the 
five-year national security plan (FYNSP) budgeting discipline, and 
project management tools such as ``earned value''. The NNSA has not 
required ``earned value'' analysis for fundamental research, although 
we have applied it successfully for some campaign activities. A good 
example is the Pit Manufacturing and Certification campaign that 
experienced past difficulties with predicting and maintaining schedules 
and costs that were needed to support stockpile deliverables. The NNSA 
decided to ``projectize'' this campaign, which has led to a baseline 
and improved predictability in cost and schedule. At this time, a 
similar project-level schedule and management approach is being 
developed for the Inertial Confinement Fusion campaign's ignition 
activity to achieve similar benefit.
    The tool may have wider application in the future. At this time, 
the NNSA has not required project management and earned value for 
campaign activities, but contractors may still choose to apply such 
enhanced management in order to achieve similar goals internally. We 
are also establishing a uniform management concept for Defense Programs 
work. This includes a review of all of our research and development 
with respect to activities that may most benefit from ``enhanced 
management'' such as earned value reporting. These efforts are all 
aimed at assuring the program activities are properly managed by Los 
Alamos.

                           OFFICE OF SCIENCE

    Question 1. Mr. Secretary--the Office of Science is building five 
nanoscience centers which will be central to the United State's [sic] 
effort to lead the world in nanoscience. I recently traveled to Taiwan, 
and they already have one center operating. They have just finished 
another center next to it that will be four times the size of the 
center being built in New Mexico. These centers are located next to the 
Hsinchu science park which has over 350 industries in the semiconductor 
and display business generating $22 Billion in revenue. In addition, 
the center transfers 800 students into the Hsinchu science park 
annually, in addition to key scientific advances in semiconductor 
technology.
    Do you support a similar policy of insuring that these nanoscience 
centers strengthen the competitive posture of key U.S. sectors such as 
our optoelectronics industries (in particular solid state lighting)?
    Answer. The Nanoscale Science Research Centers (``nanoscience 
centers'') in the Office of Science have two primary goals: (1) 
advancing science at the nanoscale, and (2) making available to the 
broad scientific community state-of-the-art instrumentation and 
facilities in a wide range of subdisciplines encompassed by nanoscience 
and nanotechnology. The nanoscience centers were sited to take 
advantage of both the instrumentation within the centers themselves and 
the instrumentation of the host institution--the large x-ray, neutron, 
and electron-beam scattering user facilities that exist at all of the 
host institutions and the unique semiconductor and Micro-Electro-
Mechanical Systems (MEMS) fabrication facilities at the nanoscience 
center at Sandia National Laboratories/Los Alamos National Laboratory. 
Even now, prior to the commissioning and start of operations of the 
nanoscience centers, their leaders are reaching out to the scientific 
and technology communities, including industry. It is our hope and 
expectation that the nanoscience centers will play a key role in 
strengthening the competitive position of the U.S. in many industrial 
sectors including optoelectronics.
    Question 2. Mr. Secretary, as you are all too aware, the Office of 
Science is the nation's largest funding source for the physical 
sciences. This year the program had to significantly reduce the efforts 
of U.S. fusion researchers to meet our commitment to participate in the 
International Thermonuclear Experimental Reactor or ITER program. It is 
my understanding that this reduction is on the order of 35 percent for 
the use of U.S. fusion facilities.
    Do you expect this trend of increased commitment to ITER and less 
to U.S. facilities to continue in the out years?
    Answer. The cost profile for the U.S. Contributions to ITER 
project, as shown in the FY 2006 Budget, certainly does increase over 
the next few years. As the Department develops budget proposals for FY 
2007 and beyond, we will pay close attention to the balance between the 
research and the facility development portions of the Fusion Energy 
Sciences budget.
    Question 3. Mr. Secretary--in the ``Strategic Highlights'' volume 
of your Fiscal Year 2006 budget, page 7 shows a five year estimated 
projection for the Office of Science. This projection has it decreasing 
from $3.6 billion in this fiscal year to $3.36 billion five years out 
in Fiscal Year 2010. Just to keep pace with inflation at 3 percent, the 
Office of Science should have a baseline budget in Fiscal year 2010 of 
$4.17 billion--so that is a $570 million difference in 2010 between 
budget that simply keeps pace with inflation and the one estimated in 
this volume.
    Do you support this estimation and its steady decline in Science 
funding?
    Answer. As noted in the Strategic Highlights, those estimates ``are 
generated by formula and do not reflect program policy decisions.'' The 
Administration will review and propose an appropriate level of funding 
for FY 2007 and beyond through its normal annual budget process.

           EFFICIENCY--BUILDING CODES AND APPLIANCE STANDARDS

    Secretary Bodman--let me ask you about Building energy codes and 
equipment standards. A study conducted by the Lawrence Berkeley Lab for 
the National Commission on Energy Policy found that upgraded building 
codes and appliance and equipment standards could offset 25% of the 
projected increase in building energy consumption projected for that 
time period.
    Yet the budget proposes cuts ranging from 19% to 31% in DOE's codes 
and standards work. The appliance standards program is already woefully 
behind schedule in meeting the requirements of the Energy Policy Act of 
1992. Standards for at least 17 appliances are overdue. Many states are 
now adopting their own efficiency standards; manufacturers are 
concerned about these multiple, conflicting standards.
    Question 1. What do you plan to do to get this program back on 
track?
    Answer. The delays experienced in the completion of the 
Department's priority efficiency standards rulemakings are of concern 
to me. I have directed that we accelerate those parts of the standards-
setting process that are within our control. The Department takes its 
rulemaking responsibilities seriously, and we will work to speed up the 
standards setting process.

                      STATE ENERGY PROGRAM GRANTS

    Another example is the State Energy Program. The states leverage 
the funds provided by DOE to develop programs that promote energy 
efficiency and renewable resources and to provide energy emergency 
planning. Your own budget document states that the program achieves an 
annual energy cost savings of $7.23 for each $1 of federal funds.
    Question 2. What is the justification for cutting energy program 
grants to the states by over 7 percent?
    Answer. The President's budget sought $40.8 million in FY 2005 and 
$41.0 million in FY 2006 for the State Energy Program. We have 
maintained a consistent level of funding requests.
    The program was assessed using the Administration's Program 
Assessment Rating Tool (PART) and received a rating of Results Not 
Demonstrated, largely due to inability to demonstrate performance 
against a set of acceptable performance measures. The Department is 
working to develop such measures. The study estimating energy cost 
savings from the program, conducted by Oak Ridge National Lab, is based 
on extrapolations from limited data sets and includes important 
assumptions. The study is a useful start, but it does not meet OMB Peer 
Review guidelines. We are working to improve our estimate of program 
benefits.
    I would like to bring to your attention language in the FY2005 
Omnibus conference report directing USAID, in consultation with the 
Department of Energy and others, to develop a comprehensive strategy on 
reforestation in Haiti.
    In May of 2004, nearly 3000 Haitians were killed in flooding caused 
only by moderate rains. In September, then Tropical Storm Jeanne killed 
nearly 5,000 more Haitians. Storms in 2003 and 1998 also claimed many 
Haitian lives due to flooding. There is widespread agreement that these 
tragedies are directly linked to deforestation and that the 
deforestation is directly linked to the lack of energy alternatives to 
fuelwood.
    I specifically sought to have the language requiring USAID to 
consult with the Department of Energy included in the Omnibus report 
because I think we need some fresh thinking on alternative energy in 
Haiti and its critical role in any reforestation strategy. I think that 
this is something in which the Department of Energy should play an 
important role.
    Question 3. Will you commit to devoting some resources and staff 
expertise to the effort to develop that important report?
    Answer. We look forward to assisting the U.S. Agency for 
International Development (USAID) regarding the energy alternatives for 
the Republic of Haiti. We stand ready to provide USAID technical 
assistance to help devise a strategy for Haiti to use more alternative 
energy resources to meet its energy demand.

     Responses of Secretary Bodman to Questions From Senator Akaka

                   U.S. RADIOLOGICAL THREAT REDUCTION

    At a September 2004 hearing before this committee, the Director of 
the Office of Commercial Disposition Options, Office of Environmental 
Management, Ms. Christine Gelles, stated that DOE had located the 
responsibility for designating a permanent disposal facility for 
Greater-than-Class-C waste to Environmental Management, yet I cannot 
find evidence of this funding.
    Question 1. Is there funding in the DOE FY 2006 Budget for the 
activities needed to identify a permanent repository for GTCC sealed 
nuclear sources, such as activities relating to an environmental impact 
statement, and for the facility itself or a contract for disposal? If 
so, where and how much?
    Answer. DOE did not request funding in the FY 2006 Budget for the 
Greater-Than-Class C (GTCC) waste disposal activities because carryover 
funds (approximately $1.5 million) from prior years are sufficient to 
fund the ongoing GTCC Environmental Impact Statement (EIS) activities 
through FY 2006.
    Question 2. Can you please confirm, for the record, that the 
responsibility lies with Environmental Management and comment on DOE's 
progress and plans to identify a process and site for these wastes?
    Answer. The Office of Environmental Management is responsible for 
completing the Greater-Than-Class-C (GTCC) Environmental Impact 
Statement (EIS) and determining how the Department will meet its 
responsibilities for disposing of GTCC waste. Current efforts are 
focused on performing the necessary National Environmental Policy Act 
(NEPA) analyses, including the development of an EIS. This spring, we 
expect to issue an Advance Notice of Intent, which will request 
comments from the public and interested agencies about the proposed 
EIS, the preliminary range of disposal alternatives, and the potential 
issues related to DOE's decisions for this category of waste. In 
addition, we are in the process of developing updated inventories of 
commercial GTCC waste and comparable DOE waste, which is essential for 
analyzing potential disposal options. We also have entered into 
discussions with the U.S. Environmental Protection Agency and the U.S. 
Nuclear Regulatory Commission about their potential participation in 
the EIS as cooperating agencies. Upon completion of the EIS, DOE will 
issue a Record of Decision documenting how it intends to meet its 
responsibilities to dispose of GTCC low-level waste. The entire EIS 
process usually requires 1\1/2\ to 2 years from the issuance of the 
formal Notice of Intent (which is expected to be issued later in 2005) 
to the issuance of a Record of Decision.

                              GAS HYDRATES

    Question 1. The Natural Gas Research and Development program was 
rated ``Ineffective'' by the Program Assessment Rating Tool (PART), 
which was developed by the Office of Management and Budget, because it 
did not demonstrate clear results of research efforts. Were any 
individual programs in the Natural Gas Technologies area successful? If 
so, which ones?
    Answer. The PART evaluated the Natural Gas Technologies Program as 
a whole. The individual components of the program were not rated 
separately.
    Question 2. Given the recommendations of the bipartisan National 
Commission of Energy and comments within the Administration's own 
budget on the vast potential of gas hydrates as a source of energy, 
please explain why this is such a low priority in the DOE budget. Is it 
wise to discontinue all research in such an important area given our 
countries reliance on fossil fuels and the vast potential reserves that 
exist in the United States?
    Answer. Budget discipline necessitated close scrutiny of all 
Government Energy programs, using strict guidelines to determine their 
effectiveness and compare them to other programs offering more clearly 
demonstrated and substantial benefits. As a result, the 2006 Budget 
proposes to conduct orderly termination of the program in FY 2006. This 
is in line with our commitment to deliver results for the American 
taxpayer.
    Several other government agencies, specifically Minerals Management 
Service (MMS), U.S. Geological Survey (USGS), National Oceanic and 
Atmospheric Administration (NOAA), National Science Foundation (NSF), 
and Naval Research Laboratory (NRL), support gas hydrate-related 
research that is relevant to their missions. The Department of Energy-
Office of Fossil Energy is designated to lead the U.S. program by the 
Methane Hydrate R&D Act of 2000 (2005 reauthorization introduced by 
Senators Akaka and Murkowski). DOE is the only U.S. agency to focus on 
production technology. The DOE has historically had an annual budget 
about $10 million, and supports research and field studies with 
industry, universities and other government agencies.
    The USGS develops resource estimates and conducts seismic research 
for arctic and marine gas hydrates. USGS is also assisting MMS and BLM 
in developing a resource valuation methodology. USGS annual budget is 
about $1.2 million, primarily for USGS scientists' salaries.
    MMS is assessing the resource and value of hydrates for existing 
and future Outer Continental Shelf (OCS) leases and supports University 
of Mississippi Center for Marine Resources and Environmental 
Technologies. MMS annual budget is about $1 million for staff salaries, 
outside contractors and university researchers.
    NOAA focuses on environmental and global climate change aspects of 
gas hydrate. NOAA annual budget is less than $1 million, which funds 
access to NOAA and Navy submersibles and remotely operated vehicles for 
marine studies.
    NRL focuses on geophysical technologies to detect marine hydrates 
and participates in multinational seismic surveys and sample collecting 
(Chile, New Zealand). NRL annual budget is less than $1 million for 
salaries and some ship time.
    NSF does not have a gas hydrate program but supports gas hydrate 
research that is competitively selected in other research programs such 
as offshore geology or geophysics. NSF also funds ship time of the 
Integrated Ocean Drilling Program. NSF annual spending on gas hydrates 
is over $1 million.
    Question 3. Please provide a comprehensive accounting of all the 
funds dedicated to climate change research across all programs, 
initiatives, and line items (enacted in FY 2003 and 2004; and requested 
in FY 2005).
    Answer. The Department of Energy maintains a comprehensive 
accounting of all funds that contribute directly or indirectly to 
climate change science or technology. This accounting is done in 
support of the Administration's multi-agency climate change science and 
technology integration, planning and coordination initiatives, namely: 
(a) the U.S. Climate Change Science Program (CCSP), led by the 
Department of Commerce; and (b) the U.S. Climate Change Technology 
Program (CCTP), led by the Department of Energy. The Department of 
Energy's funding contributions to CCSP and CCTP, respectively, are 
shown on the two attached tables, as enacted for the Fiscal Years 2004 
and 2005, and as requested for Fiscal Year 2006. Criteria for including 
activities in the CCTP are quite broad (see attached). In general, 
activities that may lead to reduced, avoided, or sequestered greenhouse 
gas emissions are included. Both research and deployment activities are 
included in CCTP.
    The Office of Management and Budget submits to Congress annually a 
Climate Change Expenditures Report summarizing Federal spending on CCSP 
and CCTP. The report also includes funding for international assistance 
in support of climate change science, technology, or greenhouse gas 
reduction, as well as related tax incentives proposed in the 
President's Budget. This year's report is available on line at: http://
www.whitehouse.gov/omb/legislative/fy06_climate_change_rpt.pdf.

                   Attachment No. 1 to Question No. 3

October 14, 2003
       Climate Change Technology Program Classification Criteria
    Research, development, and deployment activities \1\ classified as 
part of the Climate Change Technology Program (CCTP) must be activities 
funded via discretionary accounts that are relevant to providing 
opportunities for:
---------------------------------------------------------------------------
    \1\ In this context, ``research, development, and deployment 
activities'' is defined as: applied research; technology development 
and demonstration, including prototypes, scale-ups, and full-scale 
plants; technical activities in support of research objectives, 
including instrumentation, observation and monitoring equipment and 
systems; research and other activities undertaken in support of 
technology deployment, including research on codes and standards, 
safety, regulation, and on understanding factors affecting 
commercialization and deployment; supporting basic research addressing 
technical barriers to progress; activities associated with program 
direction; and activities such as voluntary partnerships, technical 
assistance/capacity building, and technology demonstration programs 
that directly reduce greenhouse gas emissions in the near and long 
term.

   Current and future reductions in or avoidances of emissions 
        of greenhouse gases \2\;
---------------------------------------------------------------------------
    \2\ Greenhouse gases (GHGs) are gases in the Earth's atmosphere 
that vary in concentration and may contribute to long-term climate 
change. The most important GHG that arises from human activities is 
carbon dioxide (CO2), resulting mainly from the oxidation of 
carbon-containing fuels, materials or feedstocks; cement manufacture; 
or other chemical or industrial processes. Other GHGs include methane 
from landfills, mining, agricultural production, and natural gas 
systems; nitrous oxide (N2O) from industrial and 
agricultural activities; fluorine-containing halogenated substances 
(e.g., HFCs, PFCs); sulfur hexafluoride (SF6); and other GHGs from 
industrial sources. Gases falling under the purview of the Montreal 
Protocol are excluded from this definition of GHGs.
---------------------------------------------------------------------------
   Greenhouse gas capture and/or long-term storage, including 
        biological uptake and storage;
   Conversion of greenhouse gases to beneficial use in ways 
        that avoid emissions to the atmosphere;
   Monitoring and/or measurement of GHG emissions, inventories 
        and fluxes in a variety of settings;
   Technologies that improve or displace other GHG emitting 
        technologies, such that the result would be reduced GHG 
        emissions compared to technologies they displace;
   Technologies that could enable or facilitate the 
        development, deployment and use of other GHG emissions 
        reduction technologies;
   Technologies that alter, substitute for, or otherwise 
        replace processes, materials, and/or feedstocks, resulting in 
        lower net emission of GHGs;
   Technologies that mitigate the effects of climate change, 
        enhance adaptation or resilience to climate change impacts, or 
        potentially counterbalance the likelihood of human-induced 
        climate change; and
   Basic research activities undertaken explicitly to address a 
        technical barrier to progress of one of the above climate 
        change technologies.
   Greenhouse gas emission reductions resulting from clear 
        improvements in management practices or purchasing decisions.

          Note: Programs and activities presented for consideration can 
        include earmarks, but earmark descriptions and funding levels 
        must be clearly called out as such in the information provided. 
        Programs and activities funded by mandatory authorization 
        should not be included.

    Specific examples of climate change technology activities include, 
but are not limited to:

   Electricity production technologies and associated fuel 
        cycles with significantly reduced, little, or no net GHG 
        emissions;
   High-quality fuels or other high-energy density and 
        transportable carriers of energy with significantly reduced, 
        little, or no net GHG emissions;
   Feedstocks, resources or material inputs to economic 
        activities, which may be produced through processes or complete 
        resource cycles with significantly reduced, little or no net 
        GHG emissions;
   Improved processes and infrastructure for using GHG-free 
        fuels, power, materials and feedstocks;
   CO2 capture, permanent storage (sometimes 
        referred to as sequestration), and biological uptake;
   Technologies that reduce, control or eliminate emissions of 
        non-CO2 GHGs;
   Advances in sciences of remote sensing and other monitoring, 
        measurement and verification technologies, including data 
        systems and inference methods;
   Technologies that substantially reduce GHG-intensity, and 
        therefore limit GHG emissions;
   Voluntary government/industry programs designed to directly 
        reduce greenhouse gas emissions;
   Programs that result in energy efficiency improvements 
        through grants or direct technical assistance;
                   Attachment No. 2 to Question No. 3

     FY 2004 TO FY 2006 SUMMARY DOE BUDGET: BASIC ENERGY RESEARCH'S
  CONTRIBUTION TO THE CLIMATE CHANGE SCIENCE PROGRAM (CCSP), BY PROGRAM
                                  AREA
                             [$ in millions]
------------------------------------------------------------------------
                                                                FY 2006
            DOE/BER program               FY 2004    FY 2005    request
------------------------------------------------------------------------
Climate Change Prediction Program            $28.4      $27.2      $27.1
 (CCPP)................................
Atmospheric Radiation Measurement (ARM)      $44.3      $44.6      $46.3
 Program...............................
ARM UAV Program........................       $2.9       $2.7       $2.7
Atmospheric Science Program............      $14.4      $12.8      $12.6
Terrestrial Carbon Processes & Ocean         $15.4      $14.5      $16.6
 Carbon Cycle Research.................
Ecological Processes Research..........      $15.8      $18.7      $18.7
Human Interactions Research............       $8.1       $8.1       $8.1
                                        --------------------------------
    Total..............................     $129.3     $128.6     $132.1
------------------------------------------------------------------------

                   Attachment No. 3 to Question No. 3

               Table 4.--CLIMATE CHANGE TECHNOLOGY PROGRAM
                    Program Details by Agency/Account
         (Discretionary budget authority in millions of dollars)
------------------------------------------------------------------------
                                    FY 2004  FY 2005   FY 2006  $ change
                                     actual  enacted  proposed   2006-05
------------------------------------------------------------------------
Department of Agriculture
  Natural Resources Conservation         14       14        12        -2
   Service--Biomass R&D, Section
   9008 Farm Bill.................
  Natural Resources Conservation          1        1         1         0
   Service--Carbon Cycle..........
  Forest Service R&D--Inventories         0        1         1         0
   of Carbon Biomass..............
  Agricultural Research Service--         2        2         2         0
   Bioenergy Research.............
  Cooperative State Research,             5        5         7         2
   Education and Extension
   Service--Biofuels/Biomass
   Research, Formula Funds,
   National Research Initiative
   \1\............................
  Forest Service--Biofuels/               0        2         3         0
   Biomass, Forest and Rangeland
   Research.......................
  Rural Business Service--               23       23        10       -13
   Renewable Energy Program.......
      Subtotal--USDA \2\..........       45       48        35       -13
------------------------------------------------------------------------
Department of Commerce
  National Institute of Standards        10       10         7        -2
   and Technology (NIST)
   Scientific and Technological
   Research and Services..........
  NIST--Industrial Technical             18       20         0       -20
   Services, Advanced Technology
   Program \3\....................
      Subtotal--Commerce (NIST)          28       30         7       -22
       \2\........................
------------------------------------------------------------------------
Department of Defense
  Research, Development, Test and        15       51        43        -8
   Evaluation, Army...............
  Research, Development, Test and        17       11         7        -4
   Evaluation, Navy...............
  Research, Development, Test and         1        1         0        -1
   Evaluation, Air Force..........
  Research, Development, Test and        17       13        10        -3
   Evaluation, Defensewide--DARPA.
  Research, Development, Test and         2        0         0         0
   Evaluation, Defensewide--Office
   of the Secretary of Defense....
      Subtotal--DOD \2\...........       51       75        60       -15
------------------------------------------------------------------------
Department of Energy
  Energy Conservation.............      868      868       847       -21
  Energy Supply--Electricity             73      103        84       -19
   Transmission and Distribution..
  Energy Supply--Nuclear..........      309      394       416        22
  Energy Supply--Renewables.......      352      380       354       -27
  Fossil Energy R&D--Efficiency         455      388       405        17
   and Sequestration..............
  Science--Fusion, Sequestration,       333      371       399        28
   and Hydrogen...................
  Departmental Administration--           0        0         1         1
   Climate Change Technology
   Program Direction..............
      Subtotal--DOE \2\...........    2,390    2,505     2,506         1
------------------------------------------------------------------------
Department of the Interior
  U.S. Geological Survey--Surveys,        1        2         2         0
   Investigations and Research,
   Geology Discipline, Energy
   Program........................
------------------------------------------------------------------------
Department of Transportation
  Office of the Secretary of              4        1         0        -1
   Technology--Transportation,Poli
   cy, Research and Development...
  National Highway Traffic Safety         0        0         1         1
   Administration.................
  Research and Innovative                 1        1         1         1
   Technology Administration--
   Research and Development.......
      Subtotal--DOT \2\...........        5        1         2         1
------------------------------------------------------------------------
Environmental Protection Agency
  Environmental Programs and             89       92        96         4
   Management.....................
  Science and Technology..........       22       18        18         0
      Subtotal--EPA \2\...........      110      109       113         4
------------------------------------------------------------------------
National Aeronautics and Space
 Administration \4\
  Exploration, Science &                227      208       128       -80
   Aeronautics....................
------------------------------------------------------------------------
National Science Foundation
  Research and Related Activities.       11       11        11         1
                                   -------------------------------------
      Total \2\...................    2,868    2,989     2,865      -124
------------------------------------------------------------------------
\1\ FY 2004 funding for Cooperative State Research, Education and
  Extension Service--Biofuels/Biomass Research, Formula Funds, National
  Research Initiative is an estimate and may change based upon updated
  information as reported in the USDA Current Research Information
  System (CRIS).
\2\ Subtotals and table total may not add due to rounding. Subtotals and
  totals supersede numbers released with the President's 2006 Budget.
  Discrepancies resulted from rounding and improved estimates.
\3\ The FY 2006 President's Budget proposes termination of NIST's
  Advanced Technology Program.
\4\ Funding levels for NASA reflect full cost accounting. The decrease
  in NASA's CCTP number in FY 2006 is due to realignment within its
  Aeronautics Research areas.

     Responses of Secretary Bodman to Questions From Senator Wyden
    Secretary Bodman, at your confirmation hearing, you testified in 
response to my question that you would commit to meeting the existing 
Tri-Party agreement requirements to fully empty Hanford's leaking High-
Level Nuclear Waste tanks, which have already leaked over a million 
gallons of nuclear waste, and are spreading contamination towards the 
Columbia River.
    However, in releasing the Department of Energy's Budget Request for 
2006, you cited legal disputes over renaming High-Level Nuclear Waste 
and leaving waste in the tanks as the budget justification for cutting 
$267 million from Hanford clean-up funding. Despite your commitment to 
me to honor the Tri-Party Agreement, the Department continues to 
challenge requirements under Washington State law that the tanks be 
emptied and leaks cleaned up--which mirror the existing Tri-Party 
agreement.
    Question 1a. Will the Energy Department honor the existing 
agreements and legal requirements to remove as much waste as possible 
from Hanford's leaking High-Level Nuclear Waste tanks to meet the 99% 
standard in the Tri-Party Agreement?
    Answer. DOE remains committed to meeting all Tri-Party Agreement 
commitments, including these.
    Question 1b. If you're committed to full cleanup of the High-Level 
Waste Tanks, why did you cite disputes over leaving waste in the tanks 
as a basis for cutting clean-up funds?
    Answer. The Department requests funding needed to be successful in 
meeting its commitments, recognizing that uncertainties can limit 
cleanup activities. Budget requests are developed commensurate with 
these uncertainties. At Hanford there are legal uncertainties 
associated with tank closures that were brought on by Initiative 297 
(I-297) in the State of Washington. I-297 and related lawsuits have 
introduced uncertainties in the areas of waste importation; permitting; 
and waste retrieval management and disposal activities at Hanford. 
Additionally, since the State of Washington was not included in section 
3116 of the Ronald W. Reagan National Defense Authorization Act for 
Fiscal Year 2005, the Department is evaluating how to proceed. The FY 
2006 budget request takes into account these legal uncertainties. In 
addition, we have completed work associated with the waste tanks, 
including removing pumpable liquids from the single-shell tanks at 
Hanford.
    Question 2. The FY 2006 Budget Request for Hanford clean-up would 
cut spending by $268 million. Don't you agree that the public should be 
given a chance to comment on these cuts? Will you commit to hold public 
hearings on the Hanford clean-up budget in Portland and Hood River as 
has been the practice for the past several years?
    Answer. The public was able to comment on the FY 2006 President's 
budget at a Hanford Advisory Board (HAB) workshop held on March 9, 
2005. The public will also have the opportunity to comment on the 
Department's budget request at a HAB workshop and public meeting on 
budget priorities for FY 2007 currently scheduled for March 30, 2005, 
in Richland, Washington, as well as at other Hanford Advisory Board 
meetings held throughout the year in Yakima, Richland, and Seattle, 
Washington, and Portland, Oregon.

    Responses of Secretary Bodman to Questions From Senator Landrieu

                    PETROLEUM AND GAS R&D SUBMITTAL

    Question 1.  Within DOE's Fossil Energy Budget is the request for 
Petroleum and Gas (Supply) R&D. Please provide an explanation of each 
item under petroleum and gas R&D that was funded in FY 2005--what was 
the project specifically funded for in FY2005--a paragraph on each item 
will be helpful.

    Answer. The following provides the requested information.
                  Oil and Natural Gas FY 2005 Projects

                        NATURAL GAS TECHNOLOGIES

Exploration and Production
             Advanced Drilling, Completion and Stimulation
    In FY 2005, Deep Trek projects for high temperature electronics, 
super cement, and advanced Measurement While Drilling (MWD) will 
complete prototype development. Research in enhanced telemetry and 
active drilling vibration dampeners will be completed. Benchmarking of 
drilling fluids and bits for extreme High Temperature-High Pressure 
(HT-HP) environments will be completed. Participants include: NETL, APS 
Technologies, MASI Technologies, Honeywell, Schlumberger, E-Spectrum, 
Novatek, Mauer, Cementing Solutions, Terra Tek, GTI, TBD.
             Advanced Diagnostics and Imaging Systems
    In FY 2005, conduct work on projects selected in the Advanced 
Diagnostics and Imaging area, which investigate improved methods of 
imaging deep gas targets to improve industries success rate of finding 
new gas. A geologic play book for the Trenton-play in the Appalachian 
basin will be completed and work on resource assessments of deep plays 
in Alabama will be conducted. Participants include: 3DGeo, Paulsson 
Geophysical, WVU Research Corp, RSI, Technology Intl., U. Alabama, U. 
Texas (BEG), TBD.
             Multi National Laboratory/Industry Partnership
    In FY 2005, funding will conduct work on projects focused on 
advanced drilling, and MWD and Logging while Drilling (LWD) tools.
             Stripper Well Revitalization
    In FY 2005, DOE will conduct work on the National Stripper Well 
Consortium involving industry and the research community to investigate 
multiple technologies to improve stripper well production to prevent 
abandonment. In addition, DOE will support industry-led efforts in 
technology transfer through workshops and publications focused on the 
small- to mid-sized independents. Participants: Penn St. University.
             Technology Transfer
    In FY 2005, funding will conduct work on industry led efforts in 
technology transfer. Participants included: Petroleum Technology 
Transfer Council (PTTC).
             Deep Trek
    In FY 2005, conduct research on developing critical high 
temperature electronic components and an advanced high temperature MWD 
system needed by industry to drill and complete deep gas wells. 
Participants included: Honeywell, Schlumberger.
             Liquefied Natural Gas
    In FY 2005, DOE will conduct analyses of the economic impact of LNG 
supplies in the U.S. market and specific safety and security issues 
related to the delivery of LNG to terminals in the U.S. A federal task 
force will be established to streamline the LNG terminal approval 
process. Participants include: Conversion Gas Imports, GTI/University 
of Arkansas, New York State Electric and Gas, DOT/OPS, Coast Guard, 
MMS, FERC TBD.
             Arctic Research
    In FY 2005, conduct work through the Arctic Energy Office 
supporting natural gas development in Alaska.
Gas Hydrates
    In FY 2005, the program will conduct work on its assessment of gas 
hydrates to analyze seafloor stability and safety issues and the 
potential resource in the Gulf of Mexico through an ongoing joint 
industry project to collect deep stratigraphic cores from hydrate 
formations as well as continue the development of instrumented arrays 
for future deployment in the Gulf of Mexico. Characterization well 
sites will be prioritized in Alaska to assess the hydrate resource. 
Scientists at NETL and other national labs will conduct work on hydrate 
characterization. Participants include: Chevron Texaco, U. Mississippi, 
BP, U. Alaska, USGS, MMS, NOAA, NSF, NETL, National Labs.
Infrastructure
             Storage Technology
    In FY 2005, DOE will conduct work on an industry-led consortium in 
gas storage and conduct work on developing an advanced method for 
developing cavernous storage in carbonate formations. Participants: 
Penn State University and Clemson University.
             Delivery Reliability
    In FY 2005, conduct research on ensuring the reliability and 
integrity of the gas transmission and distribution network, developing 
smart automated inside pipeline inspection sensor systems, obstacle 
detection systems for horizontal boring applications for laying 
distribution pipelines, developing systems capable of detecting 
external force damage, developing technology to improve the efficiency 
for reciprocating and turbo compressors, and developing advance 
technology capable of determining pipeline wall integrity. Participants 
included SwRI, Tuboscope, NYGAS, GTI, Battelle, CSU, ARC, ANL, INEEL, 
LLNL, SNL, ORNL, PNNL, NETL.
Effective Environmental Protection
             Environmental Science
    In FY 2005, conduct work on targeted initiatives to define and 
solve specific problems in key focus areas, specifically: 1) 
environmental barriers to coal bed methane production, and 2) air 
quality issues affecting natural gas production. Develop objective, 
credible data for regulatory decisions as part of a program-wide 
environmental strategy for maintaining sustainable supplies of natural 
gas. Participants include: NETL, National Labs, TBD.

                  Oil and Natural Gas FY 2005 Projects

                             OIL TECHNOLOGY

Exploration and Production
    The program focuses on development of technologies to economically 
recover the oil remaining in mature fields by expanding the technology 
options for enhanced oil recovery. In FY 2006, the program will orderly 
terminate all Oil Technology activities.
             EOR/CO2  Injection
    In FY 2005, conduct work on short and long term efforts to enhance 
utilization of industrial CO2. The strategy is to increase 
the adoption of `best practices' to opportunities existing in the near-
term. Specifically, basin-wide strategies will be examined to identify 
ways to lower cost and accelerate infrastructure development to cost 
effectively deliver CO2 from industrial sites to candidate 
oil fields; this effort includes resolving potential permitting and 
regulatory issues. Participants include LBNL, LANL, NETL, TBD.
             Diversity of Global Oil Supply
    In FY 2005, conduct work on diversification of international 
sources of oil supplies through bilateral activities with nations that 
are expanding their oil industry, including Norway, Canada, Mexico, and 
others. Bilateral and multi-lateral work will include technology 
exchanges and joint research, development and demonstration under the 
Administration's North American Initiative and other international 
agreements. Participants to be determined.
             Advanced Drilling, Completion and Stimulation
    In FY 2005 conduct work on upgrades to the Advanced Cuttings 
Transport Facility that allow high-temperature/high-pressure 
experimentation on energized fluids (air, mist, gas assisted, foam, 
etc.) and synthetic drill fluids, cements, and transport of fluids in 
horizontal and inclined wellbores. Participants included: Northrop 
Grumman, University of Tulsa, DEA, APS Technology, Impact Technologies, 
National Labs, NETL.
             Advanced Diagnostics and Imaging Systems
    In FY 2005, conduct work on development of advanced reservoir 
diagnostics and imaging systems to optimize oil discovery and recovery. 
Develop quantitative engineering parameters that control rock-fluid 
interactions which impact oil production. Complete work on fundamental 
geoscience efforts focusing on geoscience/engineering reservoir 
characterization on naturally fractured reservoirs. Participants 
included: Cal Tech, Northrop Grumman, Univ of Houston, Univ of Kansas, 
CSM, Stanford Univ, Univ of TX @ Austin, Mich Tech, Univ of Illinois, 
MT BOM, NMIMT, Western Michigan Univ, Adv Resources, Wm Marsh Rice 
Univ, NETL.
             Multi-National Laboratory/Industry Partnership and 
                    National Laboratory Supporting Research
    In FY 2005, conduct work on the transfer of technologies that 
advance understanding of the characteristics and producibility from oil 
reservoirs. Participants included: National Labs.
             Reservoir Efficiency Processes
    In FY 2005, conduct work on development of improved gas flooding 
recovery methods and advanced the state-of-the-art in reservoir 
simulation. Participants included: NETL, Northrop Grumman, NMIMT, Univ 
of TX, Cal Tech, Univ of OK, Univ of Kansas, Univ of TX @ Austin, 
Stanford Univ, Correlations Company, Adv Resources Intl, Univ of Utah, 
Univ of Pitts, Univ of Houston, Univ of Oklahoma, TBD.
             Arctic Research
    In FY 2005, conduct research on the oxygen transport membrane being 
conducted at the University of Alaska, Fairbanks. Complete research in 
oil-related projects through the Office of Arctic Energy including 
tundra travel model for the North Slope of Alaska, characterization and 
alteration of wettability states of Alaskan reservoirs, and physical, 
biological and chemical implications of mid-winter pumping of tundra 
ponds. Participants included UAF, AK Dept. Natural Resources, TBD.
             Russia Technology Program
    In FY 2005, conduct work on the Russian Cooperative Research 
Program including one or more of the following technology focus areas: 
USGS-Russian Offshore Arctic Resource Assessment; World Bank Global Gas 
Flaring Initiative; Arctic Construction and Operations Technology 
Transfer Initiative; ``Full Value Chain'' Oil Spill Restoration; 
Prevention, and Response Program; and/or, U.S.-Russia Commercial Energy 
Summit Education Initiative. Participants: TBD.
Reservoir Life Extension/Management
             Domestic Resource Conservation
    In FY 2005, conduct work on the following elements: 1) Key 
technology prototype development, such as micro-hole technologies, for 
enabling improved access and minimizing environmental impact; 2) 
Technology transfer with special emphasis on independents; and 3) 
Policy analysis and planning to prioritize program efforts and provide 
policy evaluations to maximize impact on domestic oil recovery over a 
wide range of technological and economic conditions. Participants 
include PTTC, Northrop Grumman, CDO, Univ of Kansas, Penn State, NETL 
and TBD.
Effective Environmental Protection
    The Effective Environmental Protection focuses on technologies and 
practices that reduce the environmental impact of oil exploration, 
production, and processing while minimizing the cost of effective 
environmental protection and compliance. The program supports energy 
security by helping to overcome the environmental barriers that limit 
access to domestic resources. The program also supports the President's 
Clear Skies Initiative by reducing emissions from oil production and 
processing. In addition, the program supports the recommendations of 
the National Energy Policy by encouraging additional recovery from 
existing wells, providing technology to allow additional oil 
development on Federal lands and providing answers to environmental 
questions that are limiting oil exploration and production in the 
National Petroleum Reserve--Alaska. Activities have provided a complete 
examination of specific impact of produced water and the more general 
problem of water management. A detailed roadmap of the necessary 
actions has been presented in a public workshop for discussion and 
inclusion of stakeholder views. The overall objective has been to help 
balance the need to develop the Nation's energy resources while 
maintaining our environmental values. This program has filled critical 
information and technical gaps that are needed to meet the Nation's 
energy needs without sacrificing environmental quality.
             Environmental Science
    In FY 2005, conduct work on targeted activities to define and solve 
specific problems in key areas, specifically: 1) management of produced 
water and technology development that makes produced water a resource 
for beneficial uses; and 2) ensuring maximum sustainable access to oil 
resources on Federal lands. Participants include: KS State Univ, 
Northrop Grumman, TX-EES, Univ of N Carolina, Univ of TX at Austin, 
IOGCC, GWPC, CSM, CDO, NETL, LBNL, LLNL TBD.
    Question 2. Do you support the President's view for the 
modernization of America's transmission grid and the critical role to 
be played by superconductive transmission cables in this effort as 
outlined in the National Electric Delivery Technologies Roadmap report 
released last year.
    Answer. Yes. Last year we launched a superconductive cable that 
should result in first-of-a-kind cables being installed by electric 
utilities in Columbus, OH, Albany, NY, and Lond Island, NY. Each 
project will demonstrate the advantages offered by high capacity 
superconducting cables (3 times or more than that of conventional 
cables) in improving power flows and optimizing grid operations. Each 
cable is planned to be operated on the grid in 2006--but each have 
different designs addresses the formidable challenge of providing more 
power through the same right-of-way meeting customer's growing demands 
for more electricity. And, Columbus cable demonstrates the most compact 
3-phase cable in the world. The Albany cable is the first cable in the 
world to be tested using an improved type of superconducting wire being 
developed in the program. These cables offer strategic benefits to 
utilities and a potentially cost-effective means for repowering 
existing electric delivery infrastructure.

    Responses of Secretary Bodman to Questions From Senator Cantwell

    Question 1. Your electric transmission and distribution budget cuts 
budgets nearly 20% from the budget. These cuts compromise important 
initiatives underway with including projects underway in the Pacific 
Northwest with the Pacific Northwest National Laboratory. I strongly 
support these programs including GridWise and GridWorks programs and 
seek your support.
    Can you explain the cuts and justify how we can cut funding for 
these important programs given the necessity to ensure a reliable 
transmission system?
    Answer. The OEEA FY 2006 budget request of $95.6 million is a 19 
percent reduction to the FY 2005 enacted level. However, the FY 2005 
enacted level includes $51 million in congressionally-directed 
activities. When the FY 2005 level is adjusted for this, the FY 2006 
request reflects a slight increase.
    If we compare the President's FY 2005 request to the FY 2006 
request, the total amount requested for GridWorks and GridWise is the 
same. This reflects the Administration's continued commitment to these 
programs, and their potential contribution to the reliability of the 
electric grid.
    Question 2. As you may know, I sponsored legislation in the last 
Congress to support the Genomes to Life program at the Department of 
Energy. I strongly support an expanded program and development of 
research centers to support this goal. Last year, the Office of Science 
released a Twenty-Year Facility Outlook that included four Genomes to 
Life centers. The FY05 Energy and Water Development appropriation 
includes $10M to begin preliminary design of the first facility.
    Does this budget keep us on track to meet the 20-year strategy, 
including the four GTL centers and what specific progress will be 
accomplished in FY '06?
    Answer. Yes, this budget does keep us on track to meet the strategy 
for the 4 GTL centers described in the Twenty Year Facility Outlook. In 
FY 2006 we will continue fundamental research that will underpin 
technologies central to the first GTL facility and will complete the 
majority of the project engineering and design work. We have also 
received an application from the National Academies to review the 
Genomics: GTL program, including plans for the 4 facilities, and hope 
to have at least an interim review completed in FY 2005 or early FY 
2006.
    Question 3. The Environmental Molecular Laboratory at the Pacific 
Northwest National Laboratory opened its doors seven years ago and has 
experienced sustained growth in user participation. Today, over 2100 
scientists from the U.S. and around the world utilize EMSL's 
extraordinary capabilities. However, flat funding creates difficult 
challenges when investments need to be made in order to keep the 
instrumentation refreshed, bring on line new capabilities, and serve 
the user community.
    EMSL is the flagship user facility for the Office of Biological and 
Environmental Research. Can you provide specific explanation for 
cutting the Biological and Environmental Research portion of the PNNL's 
budget?
    Answer. I agree that the EMSL facility provides extraordinary 
capabilities for scientists around the world, and the flat funding 
provided for EMSL while other activities are reduced is a strong 
indicator of my support for this facility even within tight budgets. 
The Biological and Environmental Research Advisory Committee will 
conduct a thorough review of EMSL, for both science and user facility 
infrastructure in June. This review will help DOE and PNNL management 
set future priorities and resource allocations for the EMSL. Also, 
while the budget request for PNNL has been reduced by $2,205,000 from 
just over $84,319,000, I anticipate that PNNL will continue to compete 
successfully for new, merit-reviewed funding opportunities in FY 2006 
as it has in the past.
    DOE procurement decisions are being challenged and overturned.
    Question 4. What actions are you taking to improve the quality, 
fairness, timeliness, and success of the DOE procurement process, 
specifically for River Corridor and FFTF?
    Answer. The Secretary has ordered a review of the procurement 
process. This review is currently being conducted. We would be happy to 
meet with you after the review is completed and the Secretary has made 
his determination.

                    SMALL BUSINESS DOE PROCUREMENTS

    Another major concern on the part of many of my constituents is 
whether DOE is implementing the President's directive to increase 
government procurements with small business.
    Question 5. What are you doing to improve and expand DOE 
procurements that benefit small businesses, particularly those based in 
the local communities most affected by contamination and which will 
suffer severe economic impacts when cleanup is done if local, 
sustainable businesses are not developed?
    Answer. We believe that the most-effective way to foster 
sustainable small business entities is to give them the opportunity to 
participate as prime contractors in providing critical mission-related 
services. To date, DOE is in the process or has completed five small 
business competitive procurements for site cleanup. In addition, DOE 
has awarded 22 small business contracts for decontamination, 
deconstruction and removal and remediation services as part of its 
Indefinite Delivery/Indefinite Quantity (IDIQ) contracting approach. 
The total value of all these contracts will be in excess of $1 billion.
    In contracts not set aside for small business firms, DOE has taken 
steps to increase small business participation in the cleanup program. 
For example, selection of cleanup contractors at larger sites is based, 
in part, on the extent to which small businesses participate in 
performance of the contract work scope. The request for proposal to 
clean up a large site requires the submission of a Small Business 
Subcontracting Plan that includes a minimum goal of 30 percent for 
small business subcontracting of the total contract value.
    Also, cleanup contractors at DOE sites have entered into Mentor-
Protege relationships with small businesses in the local community to 
develop and expand their capabilities and groom them to participate in 
future contract awards. Scheduled meetings are held locally to provide 
a forum for small business firms to learn more about the Department's 
contracting opportunities. In addition, Federal and site contractor 
Small Business Program Managers are available to counsel small business 
firms on an on-going basis.

                       SMALL BUSINESS CONTRACTING

    Question 6. Will you support efforts to expedite evaluations of 
procurement involving local small businesses-particularly since 
extended delays are especially harmful to small companies that don't 
have the resources to keep teams mobilized?
    Answer. Yes. I fully support the use of approaches that expedite 
the competitive procurement process, consistent with Government-wide 
procurement and small business policies. Accordingly, I will ensure 
that such approaches are employed to the maximum extent practicable in 
Department of Energy procurements. To this end, I have tasked the 
Department's Chief Acquisition Officer to review procurement actions 
reserved for small business participation to identify needed 
improvements in the process and promptly implement remedial actions.
    Responses of Secretary Bodman to Questions From Senator Corzine
    Question 1. Secretary Bodman, as I mentioned before, I am the only 
Senator on this committee from a state affected by the 2003 blackout. 
More than one million New Jerseyans lost power as a result of a power 
surge more than five hundred miles away. All in all, 50 million 
northeasterners were left in the dark.
    It quickly became clear that many sections of our national 
transmission infrastructure had not been keeping pace with the nation's 
increased demand for electricity. President Bush called the blackout a 
``wake-up call'' to modernize the electric grid. In the weeks that 
followed, everyone agreed that we needed increased development and 
deployment of new transmission technology.
    That is why I was shocked to learn that the President's budget cuts 
the Office of Electric Transmission and Distribution by nearly twenty 
percent. This is not just a minor belt tightening, this is an enormous 
reduction in our nation's ability to prevent another blackout.
    Every major research account within the office of Electric 
Transmission and Distribution has been cut: transmission reliability 
R&D has been cut by 41%, and the account responsible for transforming 
the power grid into a reliable, adaptive power network has been cut by 
25%. Furthermore, superconductivity research has been cut by nearly 20% 
and energy storage R&D has been cut by almost 25%.
    Secretary Bodman, considering the security, economic and public 
health impact of a catastrophic failure of the grid, what do you 
believe the role of the federal government should be in electricity 
reliability research and development?
    Answer. The FY 2006 budget request of $95.6 million is a 19 percent 
reduction to the FY 2005 enacted level for OEEA programs. However, the 
FY 2005 enacted level includes $51 million in congressionally-directed 
activities. When the FY 2005 enacted level is adjusted for this, the FY 
2006 request reflects a slight increase. and development.
    The Department created the Office of Electric Transmission and 
Distribution to lead the effort to modernize the Nation's grid. Since 
2003, we have devoted roughly $180 million to developing more reliable 
and efficient grid technologies, including High Temperature 
Superconductivity to make transmission more efficient, a real-time Wide 
Area Monitoring System for the Nation's Eastern Interconnect to make 
the grid more reliable, end-use demand response capabilities to relieve 
peak loading and reduce costs, and advanced energy storage technologies 
to make the grid more adaptable to demand. Two new activities have been 
developed that promise to better integrate advancing power 
technologies. First, GridWise develops real time controls, advanced 
communications and information software technologies for electric 
distribution and end use. Secondly, GridWorks develops advanced 
hardware technologies, including cables and conductors, substation and 
protective systems, power electronics, and sensors.

                         OFFICE OF SCIENCE CUTS

    Question 2. Secretary Bodman, as you are well aware, New Jersey is 
one of the nation's leading states in high-tech research. Princeton 
University and Rutgers University in particular, have been large 
beneficiaries of the Office of Science's laboratories and funding. The 
Princeton Plasma Physics Laboratory, one of our nation's leaders in 
developing fusion-based energy, continues to make breakthroughs with 
funding from the Office of Science.
    Over the past twenty years, funding for government research and 
development increased rapidly. Life sciences research at the National 
Institutes of Health has increased five-fold, and defense research at 
the Office of Science has declined in constant dollars.
    Secretary Bodman, can you explain what priority you place on 
physical sciences research? Do you agree that federal support for 
research in other science should continue to significantly outpace 
support for the physical sciences?
    Answer. We are all proud of the excellent work that has been done 
at the NIH to improve the health of all Americans and keep the U.S. 
pharmaceutical industry and our national healthcare system at the 
forefront of world medicine. That said, the Department of Energy's 
Office of Science also plays a key role in the biological sciences. We 
are the founder of, and an important participant in the sequencing of 
the human genome, and we also perform research at the nexus of physics 
and biology.
    The Office of Science is equally committed to support of research 
in many areas of the physical sciences. In the area of fusion energy 
research, for example, we expect to begin fabrication of components for 
the ITER project in FY 2006, which we hope will be the penultimate step 
to clean, economical and abundant fusion energy. Princeton Plasma 
Physics Lab will manage the U.S. contribution to ITER as well as 
continuing research on alternative concepts for fusion energy and on 
fusion theory.
    The Office of Science supports the fundamental science that 
provides the foundation for our nation's technological progress and 
economic competitiveness. Hence, we must always carefully balance the 
allocation of resources, especially in times of fiscal restraint. The 
Office of Science is responsible for long-term, high-risk, high-payoff 
facilities and programs aligned with DOE missions that maintain U.S. 
scientific leadership. We support the research of approximately 23,500 
graduate students, post docs, and faculty. Our facilities are used by 
more than 19,000 researchers each year. We are the primary source of 
support for physical science research in the U.S., providing 42% of 
federal funding. Our FY 2006 budget request, we are confident, will 
continue U.S. leadership in scientific user facilities in a broad range 
of fields of scientific endeavor, including the physical sciences.

                     YUCCA MOUNTAIN TRANSPORTATION

    Question 3. Secretary Bodman, although I have expressed 
reservations about the particular Yucca Mountain site, I do agree with 
you that the government must responsibly move forward on a national 
repository for spent nuclear fuel. Leaving the spent fuel at existing 
generator sites is simply not a sustainable solution.
    As you may know, I have been concerned with improving the security 
of our nation's railroad infrastructure. Transporting this waste from 
on-site spent fuel pools at Oyster Creek, Salem and Indian Point will 
likely require the radioactive material to travel on rail lines through 
11 of New Jersey's counties, and through the heart of two of its 
cities--Camden and Trenton. I am also pleased to learn that the 
Department's 16 percent increase in Yucca Mountain funding includes a 
renewed focus on nuclear waste transportation projects.
    In addition to the new rail cars and the Nevada rail line, will the 
Department be carrying out infrastructure improvements or inspections 
on existing rail lines that would be responsible for the transportation 
of nuclear waste? Do you believe that the rail lines on which this 
nuclear waste will travel merit extra scrutiny or inspections? If so, 
what should the Department of Energy's role be in ensuring the security 
of the nation's nuclear waste transportation infrastructure?
    Answer. Ensuring the safe and secure transportation of spent 
nuclear fuel from utility sites to the Yucca Mountain repository is one 
of the highest priorities of the Department's current activities. While 
we are focusing our efforts on the development of the Nevada Rail line 
and the acquisition of rail cars and transportation casks, we are also 
working closely with other Federal agencies to ensure that the national 
rail infrastructure will provide for the safe and secure transportation 
of these materials. Under current law, the Federal Railroad 
Administration is responsible for the safety and security of the rail 
infrastructure, rail equipment, rail operations and personnel. It is my 
understanding that the Federal Railroad Administration will continue to 
develop and enforce the requirements for rail line inspections, 
security personnel qualifications and training, and equipment design 
and inspection that will ensure the safe transport of spent nuclear 
fuel as well as the nearly two million railway tank car shipments of 
hazardous substances that occur each year.

    Responses of Secretary Bodman to Questions From Senator Salazar

                  ECONOMIC MODELS FOR RENEWABLE ENERGY

    Question 1a. Mr. Secretary, as I mentioned in my opening statement, 
I am very concerned about the economic models used by DOE to determine 
the costs and benefits of renewable energy and increased energy 
efficiency. Your estimates are based on numbers that do not hold up to 
inspection. For example, your model has oil prices at about $35 per 
barrel for the year 2005, even though actual prices are more than $50 
per barrel. The projected costs of renewable energy would compare much 
more favorably than current estimates allow if a credible model for oil 
and natural gas prices were used in the baseline assumptions.
    Could you please explain the discrepancy between the inputs to your 
economic models and actual prices for oil and gas?
    Answer. All energy markets are subject to considerable uncertainty 
and short-term, random perturbations that are difficult to predict. In 
recognition of this fact, the Energy Information Administration (EIA) 
publishes alternative projection scenarios to provide insight into a 
wider range of external market conditions, such as the uncertainties of 
world oil markets, than can be accounted for in the reference case 
projections. Alternative scenarios are also published that center 
around natural gas and renewable energy resource and technology cost 
uncertainties.
    The High B Oil Price scenario included in the Annual Energy Outlook 
2005 (AEO2005), for example, projects sustained oil prices at levels 
substantially higher than could be expected based on historical trends. 
Such cases indicate that, while high oil prices do tend to increase the 
use of cellulosic ethanol as an additive to gasoline (although this 
remains a relatively small contributor to automotive fuel supply), they 
have little impact on the bulk of renewable energy markets in the 
electric power sector, where oil is a minor fuel. In the Restricted 
Natural Gas Supply scenario included in the AEO2005, natural gas prices 
by 2025 are 30 percent higher than the reference case. Such conditions 
do result in somewhat more renewable electric generation, but other 
technologies, such as coal or even more efficient gas utilization, are 
also able to compensate for the higher prices, and can generally do so 
more cost-effectively than renewable resources.
    The oil price used in the National Energy Modeling System (NEMS) 
and reported in the AEO is the annual average U.S. refiner acquisition 
cost of imported crude (IRAC) oil, not the West Texas Intermediate 
(WTI) futures market benchmark price. The IRAC price is typically $5 
per barrel less than the WTI price that is frequently cited in the 
press as the current oil price. Recently, the spread between IRAC and 
WTI has exceeded $8 per barrel. Due to data preparation, model 
simulations, and analysis that are prerequisites to publishing the AEO, 
data inputs and other exogenous assumptions are finalized in September. 
The price published in the September Short Term Energy Outlook (STEO) 
is the basis for the 2005 oil price used in the AEO reference case. 
Because of the volatility in crude oil prices during Fall 2004, EIA 
also developed two alternative world oil price scenarios, with a 2005 
oil price of $43.63 per barrel, which is much closer to recent WTI 
prices, when combined with the $5 per barrel IRAC-to-WTI differential. 
As for natural gas, the 2005 price used in the NEMS model is the 
average wellhead price as reported in the September STEO. The gas price 
typically cited in the press is the Henry Hub price, which on average 
is 50 to 60 cents per million Btu (MMBtu) above the average wellhead 
price. Under the two higher alternative world oil price scenarios, 
natural gas prices in 2005 are higher by another 25 cents per MMBtu, 
and thus, when combined, the resulting natural gas price is much closer 
to recently quoted prices appearing in the media.
    Question 1b. Along these same lines, I am also wondering about your 
price forecast for wind energy over the next 15 to 20 years. My 
understanding is that the Department of Energy does not account for 
reductions in wind energy prices over time. Why not? Do you agree that 
with greater demand for capital equipment, wind energy prices should 
improve over time?
    Answer. Wind energy cost projections prepared by the EIA do account 
for reductions in wind energy costs as a direct function of growth in 
installed capacity. Consistent with observed market trends of the past 
5 to 10 years, reductions in the capital cost of wind power plants are 
assumed to be consistent with capital cost reductions in other mature 
electric power technologies, and decline at a rate of 1 percent for 
every doubling of installed capacity. Reduction in the overall cost of 
energy from wind power plants is mostly achieved in the EIA forecast, 
as it has been in recent market trends, through significant improvement 
in plant performance as measured by the annual capacity factor for new 
installations. Because wind energy is a highly capital-intensive 
technology, prevailing interest rates (which are not specifically 
correlated with wind capacity growth, but tend to increase over the 
projection period) also have a significant influence in the overall 
cost of energy, and may tend to mitigate forecast declines in the 
technology cost of wind. Because of the inherent uncertainties in such 
projections, EIA publishes an alternative scenario that assumes 
renewable energy technology costs decline an additional 10 percent from 
reference case projections by 2025.
    Although, as noted, wind technology costs do improve as a function 
of increased installations (``learning-by-doing'' or experience curve 
effects), the cost of exploiting the wind resource can reasonably be 
expected to increase as the best sites are utilized, leaving 
increasingly less desirable locations available for new development (a 
``supply curve'' effect). There are a number of factors specifically 
modeled by EIA to account for depletion of prime, low-cost wind 
resource areas, including: prevailing local wind speed, distance from 
existing local transmission lines, adequacy of the long-distance 
transmission grid, remoteness from infrastructure (such as heavy 
construction equipment, skilled workers, major roads, and properly 
rated bridges and underpasses), locally rough or difficult terrain, and 
decreasing contribution to reliable grid operations. Also, increases in 
demand for any capital good that occur in a very short time span can 
cause supply-chain bottlenecks and result in temporarily inflated 
installation costs. These ``short-term supply elasticity'' effects have 
been reported within the wind industry as they periodically respond to 
the expiration of key Federal subsidies, and are also accounted for in 
EIA modeling of wind and other electric power technologies.
    Question 1c. I would like you to have the EIA recalculate the 
projected costs for a 10 percent and a 20 percent renewable portfolio 
standard using a realistic model--one that incorporates an oil price 
floor of $40 per barrel in today's dollars. I would also like to see 
these calculations take into account a reasonable improvement in wind 
prices over time. I imagine this analysis will take little more than 
reprogramming the projected costs of oil and wind power and rerunning 
the calculation. Mr. Secretary, will you provide me with the results of 
that analysis in the near future?
    Answer. As noted above, EIA did publish an alternative scenario in 
the Annual Energy Outlook 2005 which assumed historically unprecedented 
long-term sustained oil prices measured in terms of the average U.S. 
refiner acquisition cost of imported crude (IRAC) of near $40 per 
barrel in today's dollars, but oil prices were not found to be an 
important factor in renewable penetration. Also, as noted above, wind 
cost declines used in the AEO2005 are based on a strong body of U.S. 
and international market data from the past 10 years, during which time 
period about three quarters of the total U.S. installed wind capacity 
has been brought online.
    The AEO2005 does include two sensitivity cases that evaluate the 
impact of key factors affecting the contribution from new wind plants. 
In the High Renewables case, renewable energy technology costs are 
assumed to decrease to a level 10 percent lower than achieved in the 
reference case by 2025. For wind, this results from both modest capital 
cost declines as well as significant additional performance 
improvement. Although this cost reduction results in a 25 percent 
increase in installed wind capacity by 2025 relative to the reference 
case, wind remains a minor contributor to overall electricity supplies 
in the U.S.
    In the Production Tax Credit (PTC) extension case, the PTC for wind 
and other renewable electricity resources is assumed to be extended for 
an additional 10 years beyond the current December 31, 2005, 
expiration. In this case, plants entering service through 2015 are 
eligible to receive the 1.8 cent per kilowatt-hour, inflation-adjusted 
credit for the first 10 years of plant operation. As a result, total 
installed wind capacity grows to 63 gigawatts by 2015. Although wind 
capacity does not grow between 2015 and 2025, by 2025, wind capacity is 
over five times greater than in the reference case and represents 3.7 
percent of total generation. While significant wind technology cost 
declines (basic installation cost reductions and performance 
improvements) do occur during the exceptional PTC-induced growth in the 
wind industry, these are generally out-paced by increases in wind 
resource costs as the lowest-cost resources are already exploited. This 
higher-cost wind must also now compete against lower cost alternatives, 
as the PTC-induced wind has already displaced some more expensive 
generation alternatives and suppressed some of the growth in the price 
of natural gas, a key electric generation fuel.
    Question 2. Regarding renewable energy research, in the president's 
2006 budget, funding for biomass research and development has been cut 
by more than 18% ($16.8 million). I believe this is a poor choice. 
Biomass offers significant potential as a future energy supply, both as 
a source of alternative fuels and as a source of electric power 
generation. America's goal of energy independence can not be achieved 
without investment in these technologies. For example, affordable 
cellulosic ethanol might be achieved in the next few years with proper 
research investment. This in turn would lead to a more robust economy, 
less dependence of foreign oil, and significant reductions in 
greenhouse gases.
    Given all of these achievable benefits, why has the biomass program 
been cut so significantly? Are the technical challenges to reducing the 
costs of cellulosic ethanol still a priority for DOE?
    Answer. We are seeking a healthy biomass R&D budget of $72.2 
million. While this is down from last year's appropriation of $88.1 
million, we believe this as an appropriate level of funding to achieve 
our performance targets, and in fact represents a significant increase 
when Congressionally-directed projects are excluded from the FY 2005 
enacted level.
    The Department maintains a robust program to overcome technical 
challenges and lower the cost of cellulosic ethanol. If we can bring 
down the cost of ethanol derived from materials such as agricultural 
and other waste products, the amount of ethanol we could produce 
nationally could increase dramatically.

                  OIL AND GAS RESEARCH AND DEVELOPMENT

    Question 3. The President's budget request eliminates all research 
and development (R&D) activities related to oil and gas exploration and 
production. DOE's oil and gas programs were funded by Congress in the 
current fiscal year at a combined total of $78.7 million. Under the 
President's proposed budget for DOE, these programs will only receive 
$20 million for program close-out. The termination of all technology 
support for the domestic oil and gas industry is a mistake. The prime 
beneficiaries of that R&D would have been independent domestic 
petroleum producers. These producers make up the majority of the 
industry operating onshore in the United States, producers who are too 
small to afford to conduct the kind of R&D that would help them to 
increase the productivity of their oil and gas operations. They rely 
heavily on the DOE program and on organizations such as the Petroleum 
Technology Transfer Council, that are supported by DOE. How does 
closing out such a program square with fostering American energy 
independence?
    Answer. The President's National Energy Policy (NEP) lays out a 
number of suggestions that will help to ensure that economic 
investments in needed resource development occur in a timely manner 
leading to an improvement in the world's access to oil and gas 
resources. Some of these are in the Energy Bill, whose passage is a 
high priority of the Administration. Others are administrative actions 
that are being pursued by the Department of the Interior, the U.S. 
Forest Service, and other agencies.
    Budget discipline necessitated close scrutiny of all Fossil Energy 
programs, using strict guidelines to determine their effectiveness and 
compare them to other programs offering more clearly demonstrated and 
substantial benefits. As a result, the 2006 Budget proposes to conduct 
orderly termination of the program. It was determined that the industry 
has the capacity to pursue this research, especially in light of the 
current strong economic performance of the industry. The Energy 
Information Administration (EIA) reports that the 28 U.S. major energy 
companies spent $370 million on oil and gas recovery research and 
development in 2003, the latest available data. This represents a 39% 
decline in five years (1998 spending was $606 million). An analysis of 
industry R&D spending (1997-2000), reported by the Interstate Oil and 
Gas Compact Commission, showed that the oil and gas service industry 
spent $631 million per year on technology. An analysis of EIA's 2000 
data found that about 24% of research expenditures were for basic and 
applied research; the remaining funds product development and technical 
services.

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