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[Senate Hearing 109-31]
[From the U.S. Government Publishing Office]

                                                         S. Hrg. 109-31

                       DAVID K. GARMAN NOMINATION
=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   TO

NOMINATE DAVID K. GARMAN TO BE UNDER SECRETARY FOR ENERGY, SCIENCE AND 
                ENVIRONMENT OF THE DEPARTMENT OF ENERGY

                               __________

                             APRIL 6, 2005

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

                               _____

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21-392                 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

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator from New Mexico................     2
Craig, Hon. Larry E., U.S. Senator from Idaho....................     1
Garman, David K., Nominated to be Under Secretary for Energy, 
  Science and Environment, Department of Energy..................     2
Murkowski, Hon. Lisa, U.S. Senator from Alaska...................     2

                                APPENDIX

Responses to additional questions................................    15

 
                       DAVID K. GARMAN NOMINATION

                              ----------                              

                        WEDNESDAY, APRIL 6, 2005

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:25 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Larry E. 
Craig presiding.

           OPENING STATEMENT OF HON. LARRY E. CRAIG, 
                    U.S. SENATOR FROM IDAHO

    Senator Craig. Good morning, everyone. The committee will 
come to order.
    We are here this morning to consider the nomination of 
David Garman to be the Under Secretary for Energy, Science and 
Environment. Of course, Dave is no stranger to us. He has 
served both on this committee and as chief of staff to our 
former chairman, Senator Frank Murkowski, as well as in 
numerous other positions both in Senate offices and at the 
Department of Energy.
    Anyone who has worked with him I think knows that he is a 
highly competent, devoted public servant. We are indeed 
fortunate to have someone of his caliber willing to accept the 
position for which he is being considered.
    Mr. Garman, David, welcome to the committee for this 
hearing to consider your nomination. I want to thank you for 
your willingness to continue to serve the President and our 
country.
    The rules of this committee which apply to all nominees 
require that they be sworn in in connection with their 
testimony. So if you would please rise and raise your right 
hand.
    I do solemnly swear that the testimony--I should say: You 
do solemnly swear that the testimony you are about to give to 
the Senate Committee on Energy and Natural Resources shall be 
the truth, the whole truth, and nothing but the truth.
    Mr. Garman. I do.
    Senator Craig. Please be seated.
    Before you begin your testimony, I will ask you three 
questions that are addressed to each nominee before the 
committee. The first is: Will you be available to appear before 
this committee and other Congressional committees to represent 
departmental positions in response to issues of concern to the 
Congress?
    Mr. Garman. I will.
    Senator Craig. Are you aware of any personal holdings, 
investments, or interests that could constitute a conflict or 
create an appearance of such a conflict should you be confirmed 
and assume the office for which you have been nominated by the 
President?
    Mr. Garman. Mr. Chairman, my investments, personal 
holdings, and other interests have been reviewed both by myself 
and the appropriate ethics counselors within the Federal 
Government. I've taken appropriate actions to avoid conflicts 
of interest. There are no conflicts of interest or appearances 
thereof to my knowledge.
    Senator Craig. Are you involved or do you have any assets 
held in blind trust?
    Mr. Garman. No, I do not.
    Senator Craig. Before I ask you, Dave, for your statement 
and the introduction of any family you may have with you, are 
there any members of the committee that would like to make any 
opening comment?

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

    Senator Bingaman. Mr. Chairman, let me just say that I 
strongly support Dave Garman's nomination for Under Secretary. 
I think he is extremely well qualified. We are fortunate, as 
you said, to have him willing to serve and continue serving in 
government, and I hope that we can very quickly confirm his 
nomination.
    Senator Craig. Thank you.
    Senator Murkowski.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman, and I too want 
to reiterate my support for the nomination of Mr. Garman. We 
have had a long relationship over many years and he has been a 
friend to my State, and I look forward to working with you in 
your new capacity.
    Mr. Chairman, I am not going to be here probably more than 
5 minutes this morning. I do have some questions I would like 
to submit to Mr. Garman for the record as they relate to the 
natural gas pipeline and to gas hydrates specifically. But 
again, I do want to give my complete and wholehearted support 
for the nomination of Mr. Garman.
    Thank you.
    Senator Craig. Well, thank you. Questions, yours and 
others, will be submitted to the nominee for his response, I am 
sure prior to moving his nomination to the floor.
    Senator Murkowski. Thank you.
    Senator Craig. Thank you.
    David, with that let me turn to you. You are certainly free 
to introduce who you would like and the committee looks forward 
to hearing your statement.

 TESTIMONY OF DAVID K. GARMAN, NOMINATED TO BE UNDER SECRETARY 
   FOR ENERGY, SCIENCE AND ENVIRONMENT, DEPARTMENT OF ENERGY

    Mr. Garman. Thank you, Mr. Chairman, and I would like to 
introduce just two people. With me today is my wife Kira, to 
whom I'm most grateful for allowing me to continue in public 
service in a capacity that, frankly, sometimes presents some 
personal burdens for her and challenges for our young family.
    Secretary Bodman of course supported my nomination to the 
White House and President Bush may have nominated me, and this 
committee and the Senate will yet determine whether or not I am 
confirmed. But it was my wife Kira at the very outset of this 
process who gave her unqualified consent and support, without 
which I would not be sitting here today for this purpose. So I 
am very grateful for that.
    Senator Craig. I think we all understand how that works.
    [Laughter.]
    Mr. Garman. Also with me is my mother-in-law, Bonnie 
Finkler, of Arlington, Virginia. My parents had hoped to be 
here, but a last minute health issue prevented that, but we're 
thinking of them as well.
    It is an honor for me to appear today as the President's 
nominee to be the Under Secretary of Energy. Having spent 
nearly 21 years serving the Senate in a variety of positions 
for two Senators and two committees, including this committee, 
and having testified before Congress at least 33 times and 
before this committee 7 times by our count, I trust I'm not 
much of a mystery to anyone here. Therefore, I'll briefly 
outline what I hope to focus on as Under Secretary should I be 
confirmed under the leadership of the President and Secretary 
Bodman.
    The law is clear, Mr. Chairman, with respect to a key 
responsibility of the Under Secretary of Energy. Title 42, 
section 7132, of the U.S. Code says that, in addition to the 
duties that the Secretary shall prescribe, and I quote, ``The 
Under Secretary shall bear primary responsibility for energy 
conservation,'' unquote.
    The law is rarely so explicit in its description of the 
responsibilities for sub-cabinet officers. Thus, while some may 
find it unusual that no Assistant Secretary for Energy 
Efficiency or Conservation, as it used to be called, has ever 
been nominated to serve as Under Secretary, I view this as an 
unprecedented opportunity to carry on what I have learned as 
the Assistant Secretary into the Office of the Under Secretary 
and to serve in accordance with the law's direction.
    Beyond that responsibility, I hope to assist Secretary 
Bodman and Deputy Secretary Sell in institutionalizing new 
management and rigor and information-based decisionmaking 
capability at the Department of Energy. As you know, the 
Department is divided between two major sets of line 
organizations. The national security side of the Department is 
comprised of the National Nuclear Security Administration, 
which is about a $9.2 billion enterprise.
    The other side of the Department, the side for which I will 
bear responsibility if confirmed, is what we refer to as ESE, 
for Energy, Science, and Environment. ESE embodies nearly $14 
billion worth of work on an annual basis, mainly comprised of 
energy research and development, demonstration, deployment, 
environmental cleanup, legacy management, radioactive waste 
management, and other activities.
    Now, the NNSA side of the Department functions as a 
cohesive single organization. The ESE side of the Department 
thus far does not. It's comprised of institutional stovepipes 
and, speaking candidly, we face a continuing challenge in 
overcoming the difficulties this presents. For example, we have 
not done as good a job as we should of coordinating the 
activities of ESE offices. We have not done as good a job as we 
should in performing the crosscutting analysis we need to 
justify our budgets to the Congress. We have not done as good a 
job as we should in presenting information to the Secretary and 
the Deputy Secretary for timely decisions, nor have we 
consistently had the means to bring the best information to 
bear in support of those decisions.
    In short, we have not undertaken sustained strategic 
management to the degree that we could or should. I do not mean 
to sound overly critical of the Department or the fine work 
that it has accomplished. Indeed, the Department has made great 
strides in many of these areas over the last 4 years. By one 
measure, the President's management agenda, DOE is one of the 
top performing and perhaps the most improved agency in the 
government.
    Having said that, I believe that it is the expectation of 
everyone in this room that DOE can do better, and I know that 
Secretary Bodman has made it abundantly clear to all of us 
inside the Department that DOE will do better.
    With the steadfast support of this committee, the Senate, 
and the Congress as a whole and with Secretary Bodman's strong 
leadership, I truly believe the Department is entering a time 
of remarkable opportunity. I am humbled and enthusiastic about 
the prospect of being a part of the Department at this exciting 
time and I am grateful for the committee's prompt consideration 
of my nomination.
    I'm pleased to answer any questions the committee may have, 
either today or in the future, and I thank you, Mr. Chairman.
    [The prepared statement of Mr. Garman follows:]
Prepared Statement of David K. Garman, Nominated to be Under Secretary 
       for Energy, Science and Environment, Department of Energy
    Mr. Chairman, Senator Bingaman, and members of the Committee, it is 
an honor for me to appear today as the President's nominee to be the 
Under Secretary of Energy.
    Having spent nearly 21 years serving the Senate in a variety of 
positions for two Senators and two Senate Committees, including this 
Committee, and having testified before the Congress at least thirty 
three times, including seven occasions before this Committee, I trust I 
am not much of a mystery to anyone here. Therefore, I will briefly 
outline what I hope to focus on as Under Secretary, should I be 
confirmed, under the leadership of President Bush and Secretary Bodman.
    The law is clear, Mr. Chairman, with respect to a key 
responsibility of the Under Secretary of Energy. Title 42, section 7132 
of the U.S. Code says, that in addition to the duties the Secretary may 
prescribe, ``(T)he Under Secretary shall bear primary responsibility 
for energy conservation.''
    The law is rarely so explicit in its description of 
responsibilities for sub-cabinet officers. Thus, some may find it 
unusual that no Assistant Secretary for Energy Efficiency (or 
Conservation as it used to be called) has ever been nominated to serve 
as Under Secretary. I view this as an unprecedented opportunity to 
carry what I have learned as Assistant Secretary for Efficiency and 
Renewable Energy into the Office of Under Secretary, and to serve in 
accordance with the law's direction.
    Beyond that responsibility, I hope to assist Secretary Bodman and 
Deputy Secretary Sell in institutionalizing new management rigor and 
information-based decision making capability at the Department of 
Energy (DOE).
    As you know, the Department is divided between two major sets of 
line organizations. The national security side of the Department is 
comprised of the National Nuclear Security Administration, with about a 
$9.2 billion annual budget.
    The other side of the Department, the side for which I will bear 
responsibility if confirmed, is what we refer to as ``ESE'' for Energy, 
Science and Environment. ESE embodies nearly $14 billion of work we 
undertake each year in energy research and development, demonstration 
and deployment; environmental cleanup, legacy management, radioactive 
waste management and other activities.
    The NNSA side of the department functions as a single organization. 
The ESE side of the Department, thus far, does not. It is comprised of 
institutional ``stovepipes,'' and speaking candidly, we face a 
continuing challenge in overcoming the difficulties this presents. For 
example:

   We have not done as good a job as we should in coordinating 
        the activities of the ESE offices.
   We have not done as good a job as we should in performing 
        the crosscutting analysis we need to justify our budgets to the 
        Congress.
   We have not done as good a job as we should in presenting 
        information to the Secretary and the Deputy Secretary for 
        timely decisions, nor have we consistently had the means to 
        bring the best information to bear in support of those 
        decisions.
   In short, we have not undertaken sustained, strategic 
        management to the degree that we could or should.

    I don't mean to sound overly critical of the Department or the fine 
work it has accomplished. Indeed, the Department has made great strides 
in many of these areas over the past four years. By one measure, the 
President's Management Agenda, DOE is one of the top performing and 
perhaps the most improved agency in the Government.
    Having said that, I believe the expectation of everyone in this 
room today is that DOE can do better. Secretary Bodman has made it 
abundantly clear to all of us inside the Department that DOE will do 
better.
    With the steadfast support of this Committee, the Senate and the 
Congress as a whole, and with Secretary Bodman's strong leadership, I 
truly believe the Department is entering a time of remarkable 
opportunity. I am humbled and enthusiastic about the prospect of being 
a part of the Department at this exciting time, and I am grateful for 
the Committee's prompt consideration of my nomination.
    I am pleased to answer any questions the Committee may have, either 
today or in the future.
    Thank you, Mr. Chairman.

    Senator Craig. Well, Dave, thank you very much for those 
opening comments. You used the phrase several times ``we have 
not done as good a job as we should,'' and to that I would say 
yes, yes, and yes again, and I'm pleased to see you being as 
frank and open as you have been in the realities of what exists 
in the Department. Yet, at the same time I concur, we have seen 
substantial improvement there.
    Let me hit an issue that is of particular interest to me 
and then a couple of others. You have heard Senator Murkowski 
express her concern on a couple of issues, so I'm sure some 
questions will be coming your way that you can turn around 
right quickly.
    I'm talking about cellulose ethanol commercialization. I 
use this as an example because I believe it is in part one of 
those problems in a sense that you've expressed. I believe 
you're aware that a company called Iogen has developed a 
technology that enables them to produce ethanol from 
agricultural wastes such as wheat straw and corn stalks. 
They've demonstrated their technology in a 50,000 gallon 
facility that is producing ethanol for sale every day. Now 
Iogen wants to build, start building commercial scale ethanol 
plants that will produce up to 50 million gallons of ethanol 
per year. Those plants would provide as much as $15 to $20 of 
additional revenue per acre for farmers who are selling them 
wheat straw or corn straw and create literally hundreds of 
quality jobs in rural America.
    The ethanol from those plants would reduce our dependence 
on foreign oil and reduce our emissions of greenhouse gases. 
USDA has estimated that existing residues from farming 
activities could support hundreds of such plants and could 
offset 10 percent or more of our foreign oil consumption.
    As you know, Iogen has gotten substantial financial backing 
from a multinational oil company, Shell Oil, to develop this 
technology. Despite this, it cannot get a commercial loan for 
the project because lenders will not go near new technology.
    So that's how I use that as an example. Like some others, 
this technology is trapped in what some might call a 
technological valley of death, because it can't get the next 
step, if you will, the time when it has passed research and 
development phase and is yet not commercially proven. In this 
valley of death, government grants are useless and commercial 
loans are out of reach.
    How can the U.S. Government step up to commit and 
accelerate the advent of this or other types of really very 
credible technologies? That would be one question? And how can 
we bring this new demonstrated technology, if you will, across 
the valley of death and into production if it is as good as now 
it clearly appears it is?
    Mr. Garman. Thank you for that question. Actually, the U.S. 
Department of Energy and the U.S. Department of Agriculture 
jointly have determined that we have a resource of probably 1.3 
billion tons of agricultural residues that could constitute a 
very important new energy source for home-grown energy in the 
form of cellulosic ethanol. The energy storage value of this 
cellulosic material is probably in the realm of or equivalent 
to $20 per barrel oil.
    The challenge and the cost is to take that resource from 
the field, transport it to the location where it can be 
processed, and the costs of those processing technologies to 
turn that cellulosic material into a fermentable sugar that can 
be turned into ethanol liquid fuel.
    Iogen, the company you mentioned, I have met with in the 
past and in fact am meeting with them again, as I recall, next 
week in my current capacity as Assistant Secretary to better 
understand how close they are on the technology. It is our 
belief at the Department, our current belief--and we're open to 
being proven wrong--but our current belief is that the 
technologies that exist today are probably only capable of 
delivering roughly $2 to $2.50 per gallon ethanol.
    Now, Iogen may have a breakthrough that we are not aware of 
and if they are we're very open to exploring with them 
concepts, and with the Congress. I know you have proposed 
amendments in another committee to enact a loan guarantee 
program, and we would like to explore those sorts of 
opportunities with you.
    But we're very open-minded. We share the view that 
cellulosic material can take us further than corn ethanol can 
and can make a major contribution in addressing our dependence 
on foreign petroleum. Automakers from General Motors on are 
very enthusiastic about the prospects. They didn't used to be, 
but they are now because they see the potential of 85 percent 
ethanol blend in vehicles and how that can make a contribution 
today.
    Senator Craig. Consistent with that and our concern to 
become less dependent on foreign sources, Dave, last week 
energy analysts at Goldman Sachs released a report in which 
they stated their belief that oil markets may have entered the 
early stages of what they called a super-spike, a super-spike 
period that could drive oil prices to over $100 a barrel. The 
analysts stated that speculative activity on the part of hedge 
funds and other non-industry participants have contributed to 
price volatility, but does not account for any sustained raise 
in oil prices.
    What do you believe are the primary factors that have 
contributed to the sustained rise in oil prices and what in 
your opinion can we do to address this problem?
    Mr. Garman. I think it is becoming clear that the super-
major oil companies are not replacing their reserves and that 
the total global reserves are--or I should say, the 
additional--we used to be in a mode where production capacity 
was increasing in the realm of four to five million barrels per 
day each year. Last year I believe we were only able to add a 
couple of million barrels to daily production capacity.
    This suggests to some that we are potentially entering a 
period of depletion. The analysts are all over the board on 
that question. Some have argued that the majors have based 
exploration and production budgets on historical prices, which 
are more in the line of $18 to $20 per barrel oil. But Chairman 
Greenspan suggested yesterday in a speech that E&P production 
budgets were being reassessed in the majors and that new 
frontier drilling, new capabilities, were being explored 
actively.
    There's the potential that the western African fields could 
be coming on line and new capabilities in Baku and in Russia 
have potential that could force a downward pressure on prices. 
Also, I thought it was noteworthy that Chairman Greenspan noted 
that conservation was beginning to take hold. Anecdotally, one 
only needs to open their newspaper every morning and see the 
rebates and offers being presented for purchasers of SUV 
vehicles. They're not moving as well as smaller, fuel efficient 
vehicles today.
    Clearly, conservation and efficiency has a tremendous role 
to play. I think the fleet of 200 million automobiles on the 
roads of just U.S. highways alone consume 11 percent of the 
planet's production right now. So as consumers choose in the 
face of these higher prices more efficient vehicles, those who 
can choose to make that choice, that is, we have the capability 
of bringing some downward pressure on those prices.
    But it is a very important consideration and warning shot 
for us to all take into consideration and why the President's 
plan is to look at things such as cellulosic ethanol in the 
short term, ethanol, corn ethanol, in the very short term, and 
completely new alternatives such as hydrogen in the long term.
    Senator Craig. Well, let's talk about hydrogen. The 
President's budget provides $259 million in total funding for 
hydrogen fuel initiative. Much of the basic research to support 
the hydrogen initiative is done through the basic energy 
sciences program within the Office of Science. Basic energy 
science is funded at $32.5 million in support of the hydrogen 
fuel initiative. Our current capabilities in hydrogen 
production and storage are not adequate to the task of 
establishing a hydrogen economy.
    Is the support for basic research in the hydrogen fuel 
initiative sufficient to generate the breakthroughs that are 
required or even that allow us to legitimately and publicly 
talk about hydrogen as an alternative?
    Mr. Garman. Yes, I believe it is, as long as we're being 
honest with the American people, as we have been, about the 
time scales that are involved here. The President said in his 
2003 State of the Union Address that a child born today should 
be able to purchase a hydrogen vehicle when he or she is ready 
to drive. So we're talking about the 2018, 2020 timeframe 
before you actually see affordable vehicles in the show room.
    There are some, General Motors and Ballard Fuel Cell 
Company, quite publicly have said, we think we can do it sooner 
than that. And there are others, of course, that say, no, it's 
going to take decades and decades for that kind of transition 
to occur. So the Department and the administration is in the 
middle of I guess the spectrum of opinion out there.
    We believe we have--the President in his $1.2 billion 
initiative over the first 5 years, it's a very robust budget 
that is targeted at the largest technical obstacles that 
confront us. One of the primary, in fact I would say the only, 
obstacle I believe where we have a true basic research show-
stopper to overcome is in the area of hydrogen storage, storing 
enough hydrogen on board the vehicle. It's probably going to 
require a new technology or a new material that we currently do 
not possess, and we will need a technological breakthrough 
emerging from the basic sciences. That is why over the past 3 
years our funding in just the basic science part of the 
hydrogen program has gone from zero to $29 million to $33 
million in that span. We recognize that need.
    Senator Craig. What, if any, are DOE's plans to schedule 
and schedule for developing nuclear plant production of 
hydrogen as a transportation fuel?
    Mr. Garman. We are looking now at the process. There are 
several processes that are quite promising as potential 
hydrogen production from nuclear energy. One of course is high 
temperature electrolysis, one is conventional electrolysis, the 
third is thermochemical water splitting using a sulfur iodine 
or other cycle that requires the high heat of a nuclear reactor 
or even concentrated solar power as a potential as well.
    But we are looking at that process today. We can generate 
that high heat for other means, through other means, just for 
the purposes in the laboratory. But we will need over the long 
term a diverse source of hydrogen from as many different 
primary energy inputs as possible, and hydrogen from nuclear is 
one of the things that we think is very, very important for the 
long term.
    Senator Craig. As you know, just before the recess Chairman 
Domenici and I hosted a meeting of nuclear generating 
utilities, the Secretary, and folks from OMB, and also from 
Council of Economic Advisers and Wall Street financiers, to 
demonstrate to this administration not only the desire on the 
part of the private sector, but the sense of urgency that is 
growing in the private sector to have a feasible technology for 
base load development for the out years and the need to plan 
now and, if you will, pour concrete soon in getting themselves 
in line for the growth that is coming.
    I just came out of California, where I hosted an energy 
conference on transmission this last--well, on Sunday and 
Monday. California is growing again. It is recuperating under 
new leadership. It senses the need to produce energy and 
facilitate its movement. Yet it's going to need a thousand 
megawatts of new power a year literally starting now into the 
foreseeable future if it is to grow as it would like to grow to 
sustain itself. Of course, the California economy is a 
significantly big chunk of the U.S. economy and I think all of 
us recognize that.
    In that context, I understand that last week one of the two 
nuclear consortia finally had their cost-sharing agreement 
signed by the Department for the Nuclear Power 2010 program.
    What do you see as the principal issues facing U.S. 
generating companies who might wish to build new nuclear 
plants?
    Mr. Garman. Regulatory certainty and the ability, the 
proven ability of the Federal Government to accept the waste 
are the two things that I think create a pause in investment. I 
think that the proven ability of modern nuclear plants, what we 
call Generation 3 Plus plants, to effectively compete in a 
level playing field look pretty good to investors. But they 
would like to see regulatory certainty. They would like to--we 
haven't gone through--we haven't test-driven the new NRC 
process yet and somebody has to be the first.
    NP-2010 is designed to do that. We are also looking at 
other potential incentives that might need to be in place. 
Might I say that your leadership and the meeting that you held 
several weeks ago has created quite a discussion inside the 
administration and this problem is being looked at very 
fervently at this very moment.
    Senator Craig. Well, that leads to my next question, 
because that was our intent, to create, not a discussion, but 
action. The President said in February in Germany that he 
believed building more nuclear power plants in the United 
States would help the country cut its dangerous dependence on 
foreign sources of energy. In the context of what we've been 
asking this morning in questioning, it's increasingly more 
urgent, if you will.
    Do you believe that DOE needs to do more in providing 
enough support to achieve this objective? And if so, do you 
have sufficient authority to provide that support?
    Mr. Garman. I'm sorry, I missed the front part of that 
question.
    Senator Craig. Do you believe that DOE needs to do more in 
providing enough support to achieve the objectives, the 
objectives of the President, the needs of the industry, the 
needs of the economy now? And if so, do you have--do you have 
sufficient authority to provide that support?
    Mr. Garman. I believe that we do have sufficient 
authorities. I believe we have the will to act. I don't think 
I'm betraying any confidences when I state publicly that 
yesterday there was a cabinet meeting and there were two issues 
on the President's mind. One of them was energy.
    Let me stress that this is an issue that is getting the 
attention of the President on a daily basis and the President 
on a daily basis. It is a multifaceted issue, that every aspect 
of our energy use needs to be looked at and considered. We're 
talking about baseload electricity for the future growth of 
California or our continued reliance on foreign oil.
    We have the tools. The Congress has provided the Department 
with a variety of tools over the years in its organic act and 
other provisions of law that give us great latitude if we have 
and are able to develop a bipartisan, bicameral consensus to do 
it.
    I believe that there are provisions in a comprehensive 
energy bill that would be quite useful to us and that's been 
under discussion and I know that this committee has been 
working on it for so hard, for so long and so hard, that you 
would just like to see it done, and so would we. So the 
provisions in some of these discussion drafts that have been 
about and the provisions in the bill that's being talked about 
between Senator Domenici and Senator Bingaman to try to achieve 
that consensus are among the new authorities that could be 
useful to us and as a very important demonstration of 
bipartisan will to act in the area of energy.
    It is very difficult to pass an energy bill and we haven't 
done it since 1992. Even in 1992, some of the tough issues we 
decided to forego, tough issues such as new efficiency 
standards for automobiles and new production from the Arctic 
National Wildlife Refuge. We punted. So I think we need to take 
on those issues, help the American people understand that there 
aren't easy answers or silver bullets in solving our energy 
problems, and we have to go at it in a multifaceted way.
    We need to have the collective political will, not just on 
the part of the administration, but Democrats and Republicans 
and independents in the Congress, to come with us to solve 
these problems.
    Senator Craig. A couple more comments and questions here 
and then, David, we can conclude. Let me talk about Yucca 
Mountain for a moment. I think everyone in the room has read 
the news accounts of the emails sent between U.S. Geological 
Survey employees in the late 1990's regarding the water models 
they were working on at the Yucca project. I'm not going to ask 
questions about the emails. I understand that the Inspector 
General of both the Departments of Energy and Interior are 
conducting investigations on the content of the emails and the 
potential impact, if any, on the program. We should allow those 
two offices to do their work and save speculation, I think, for 
now.
    However, last month I asked Secretary Bodman and Deputy 
Secretary Sell to provide this committee the status update on 
the Yucca project. Can you please ensure that you will get us 
this update, that includes the scheduled milestones that are to 
be completed this year, as soon as possible?
    Mr. Garman. I will work to do that, yes, sir. Let me say 
that there is a great deal of uncertainty with regard to the--
you know, the Department is dependent on the actions of other 
agencies and we're--of course, as you know, the courts remanded 
the radiation release standard to EPA for further rulemaking. 
We are hopeful that EPA can complete that rulemaking this year, 
which puts us in the position of making a licensing application 
shortly thereafter, and we're proceeding with the preparation 
of that license to the extent we can.
    Of course, with these new revelations of potential issues 
with the emails and quality assurance with the hydrological 
models, we have to look back at that and ensure that the 
decisions we've made remain sound.
    Let me take this opportunity to characterize what lies 
before the Department and the Federal Government in making its 
case to the Nuclear Regulatory Commission. Some have sort of 
viewed this process as a speeding train leading to an 
inevitable conclusion. I think it's something of the opposite. 
The burden of proof is on the Department before the NRC to 
prove that public health and safety of a repository, resulting 
from a repository, would be maintained. That is a stiff burden 
of proof and we have to ensure that we are ready to make that 
case to the NRC.
    That is the focus of our efforts, and we're working very 
closely with the Environmental Protection Agency toward that 
end.
    Senator Craig. Well, I agree with you it's not a speeding 
train with a foregone conclusion.
    Can you address specifically the shortcomings the NRC 
identified in the Department's earlier license support network 
submission?
    Mr. Garman. I can do that for the record.
    Senator Craig. Okay.
    Mr. Garman. Let me just say that this is an unprecedented 
thing, where you take literally millions of records and pages 
of material and put it in the public domain for consideration. 
No one has ever done something like this before. We had 
millions of documents up on the web available for public 
scrutiny last summer, and just the time it takes for NRC to go 
through and catalogue these things through its computer search 
engine takes months and months.
    So this is an unprecedented thing. Nobody's done it before, 
and any identified shortcomings in the licensing support 
network we will work hard to correct.
    Senator Craig. Last, Dave, Secretary Bodman made some 
comments this week on the NGNP. What can I draw from those? 
Sounds like he doesn't support it. How can you clarify that for 
me?
    Mr. Garman. Sure. Let me try to describe what you saw, both 
in our budget submission and what Secretary Bodman reportedly 
said yesterday, I understand, at a speech. The Department of 
course is trying to do a lot with nuclear energy in a very 
short time. We inherited a program that I think had been 
virtually zeroed out around 1997.
    Senator Craig. That's right.
    Mr. Garman. And we have been trying to grow that program 
with, of course, the designation and launching of a new 
national laboratory in Idaho, with the pursuit of the Nuclear 
Power 2010 initiative, and with the pursuit of the Generation 4 
initiative, with embedded in that the next generation nuclear 
plant, which we would hope to build in Idaho at the lab some 
day.
    What you saw in our budget and what you see in Secretary 
Bodman's statement on this subject is that internally in the 
administration we have not yet made the case to the Office of 
Management and Budget and the White House that the out year 
funding requirements for the NGNP are in place. We believe 
we've made a decision about the technology, the very high 
temperature gas reactor technology that's appropriate for the 
purposes, and we believe we know what we want to do and we know 
where we want to do it. We have to convince the rest of the 
administration that this is the right thing to do and that we 
can accommodate these new initiatives inside the budget climate 
that we're faced with.
    So what Secretary Bodman I believe is saying and what I 
would echo is that, while we can't give you an absolute 
guarantee about the time line or pace of construction of the 
next generation plant in Idaho, that is our intent and our hope 
and we hope to prevail in those budget deliberations that will 
come in the out years.
    Senator Craig. Well, thank you, David. The chairman and I 
will attempt to assist you in causing that to happen.
    I appreciate your forthrightfulness as we deal with these 
issues and the working relationship we have had and will have 
and will need to have as we work through what I think the 
Congress might accomplish this year, a comprehensive energy 
policy. Certainly the move to get some of our reserves into 
production as it relates to ANWR, we may have at least hurdled 
a portion of that general procedural obstacle with the budget 
resolution.
    Last, I do believe if you don't have a sense of urgency or 
the Secretary doesn't, he ought to get one, and there ought to 
be a little midnight oil burned in the Department. I didn't get 
many phone calls from my constituency when gas hit $2 a gallon 
at the pump. I thought I would, but I didn't. What I did sense 
and what is happening out there is a tremendous dislocation of 
energy, of industry, as it relates to high gas prices--
hydrocarbons, the petrochemical industry, the fertilizer 
industry, the input costs of certain components of our 
industrial base and our economic base, agriculture being one of 
them. That's under way right now, and a rush to site LNG and a 
variety of other things are all being moved by this price.
    But my guess is if $50 a barrel oil is $2.10 gas at the 
pump and we get to $100 and that could be $4 gas at the pump--I 
don't know that you can effectively extrapolate it straight 
across--my guess is we're going to get more than phone calls. 
We're going to have the Mall down here full of very angry 
people, and they should be. And if we're not prepared for that 
and if this administration and your agency is not prepared to 
be proactive and responsive in attempting to deal with that and 
be able to clearly demonstrate it--we're starting to do so, but 
we'll probably need to accelerate it--then shame on us, because 
at that point my guess is the American public will have a right 
to blame someone, because that will have happened because of a 
failure to shape policy and ultimately build a program that can 
leverage those prices back down because of production 
capability.
    It's an interesting and important challenge. I hope the 
analysts at Goldman Sachs are wrong.
    Mr. Garman. So do I.
    Senator Craig. At the same time, we have to make the 
general assumption that we need to get even more busy than we 
are in trying to change some of those trends by getting this 
country back into production.
    I sensed, as I say, a substantial turnaround in the 
attitudes in California this past week. You may have been aware 
of the announcement that we facilitated with the four Governors 
to do mine mouth production in Wyoming and possibly Montana and 
to traffic it through a new transmission into northern and 
southern California and to complete a gridding system in the 
Pacific Northwest that hopefully will take out some of the 
bottlenecks that are current in the California and the regional 
system, that will be most helpful.
    That will not come without problems, obviously, and it's 
going to be awfully important to gain new technologies for 
clean coal electrical production in those States or there'll be 
less willingness to allow, if you will, a proliferation of 
facilities at mine mouth. But I think there's tremendous 
opportunity there and a willingness by all demonstrations of 
our meetings in San Diego this week of a willingness to get at 
the business of doing it.
    So that was pleasing, and in many instances, not all, the 
Department can be of assistance there to be proactive. 
Obviously, we have Interior and Agriculture and Federal Energy 
Regulatory Commission involved in certain efforts there that 
will have to come to play. But it was a positive gesture that a 
couple of years ago would never have happened. Now I think 
there's a recognition on the part of everybody that can play in 
the market and play by shaping policy that we ought to get back 
at the business of getting our country into production.
    So you will play a very valuable role in that with your 
tenure at the Department, and I look forward to working with 
you as we do that.
    Mr. Garman. Thank you, Senator Craig.
    Senator Craig. Thank you.
    Let me say that all additional questions for the record 
should be submitted to the Chief Counsel by 5 p.m. this 
afternoon. That way the nominee will be able to respond to them 
in a timely fashion as we consider his nomination to be moved 
to the floor.
    Again, thank you all very much for your time, and the 
committee will stand adjourned.
    [Whereupon, at 11:07 a.m., the hearing was adjourned.]
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

                              Department of Energy,
               Congressional and Intergovernmental Affairs,
                                      Washington, DC, May 23, 2005.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: On March 8, 2005, David Garman, Assistant 
Secretary for Energy Efficiency and Renewable Energy, testified 
regarding ways to encourage the diversification of power generation 
resources.
    Enclosed are the answers to nine questions that were submitted by 
you, Senators Craig and Salazar for the hearing record. The answers to 
the remaining questions are in the clearing process and will be 
forwarded to you as soon as possible.
    If we can be of further assistance, please have your staff contact 
our Congressional Hearing Coordinator, Lillian Owen, at (202) 586-2031.
            Sincerely,
                                             Jill L. Sigal,
                                        Acting Assistant Secretary.
[Enclosures.]
                    Questions From Senator Domenici
    Question 1. Would a Federal credit and trading program create a 
double subsidy?
    Many of the eligible resources under most RPS programs also qualify 
for the federal production tax credit, which is equal to approximately 
1.8 cents per kWh. If we were to adopt a federal RPS with a 1.5 cent 
per kWh cost cap, dually eligible renewable resources could receive 
over 3 cents per kWh of subsidies. This is roughly the cost of 
generating electricity from coal or nuclear plants in many parts of the 
country. How can this double subsidy be justified and does it best 
serve consumers?
    Answer. The Administration opposes a national renewable portfolio 
standard and believes that those standards are best left to the States. 
A national RPS could raise consumer costs, especially in areas where 
these resources are less abundant. The Administration supports a 
renewable production tax credit as proposed in the FY 2006 Budget.
    Question 2. Will reliability suffer as a result of increasing 
reliance on generation sources like wind and solar that are 
intermittent, meaning they may not be available when needed? Will 
additional natural gas peaking capacity have to be added to deal with 
this problem?
    Answer. Substantial amounts of power from intermittent renewable 
generation sources can be integrated into electric grid systems with no 
decrease in reliability, but at some additional cost. The Department 
has supported several detailed power system studies showing that 
increasing use of wind generation does impose an additional cost (0.2 
to 0.5 cents per kilowatt-hour (kWh) for penetration of ten to fifteen 
percent) on the utility to assure reliability.
    Additional natural gas peaking capacity has not typically been 
required to increase use of intermittent generation sources. Grid 
systems operators have the ability to manage intermittent resource 
technologies to balance the power system and avoid reliability issues.
    Question 3. Does impending U.S. reliance on imported LNG have a 
beneficial effect on renewables, nuclear and domestic coal?
    Recently, Cambridge Energy Research Associates' Senior Director of 
North American Power Larry Makovich said that future LNG supplies in 
North America are critical in all scenarios for future electric power 
generation. CERA estimates that power sector needs will cause natural 
gas market demand to expand between 14% and 36% by 2020. CERA predicts 
an increased risk of higher costs, on-going uncertainty surrounding 
natural gas supply, a drive to bring new sources of gas supply to 
market and an opportunity for other power generation fuels and 
technologies-especially coal, renewables and even nuclear-to grow. Do 
you agree with this analysis?
    Answer. The Energy Information Administration (EIA) generally 
agrees with this analysis. In ETA's recently released 2005 Annual 
Energy Outlook (AEO2005), natural gas consumption from 2003 to 2020 
increases between 30 percent and 42 percent under alternative economic 
growth assumptions, with a 36 percent increase projected in the 
reference case. EIA also finds that a large part of the increase in 
natural gas supplies in all cases will come from increases in liquefied 
natural gas (LNG) imports. For example, in the reference case, 
increases in LNG imports between 2003 and 2020 account for 68 percent 
of the increase in total natural gas supplies. EIA believes that 
natural gas prices will increase to a point that electricity generation 
technologies that do not use natural gas, particularly new coal and 
renewable plants, will be more economically attractive. In the AE02005 
reference case, EIA projects that 32 gigawatts of new coal and 7 
gigawatts of new renewable capacity will be added by 2020. EIA does not 
expect new nuclear units to be economically competitive in that time 
frame in the reference case under current policies, since the 
relatively high capital costs of nuclear units are projected to 
outweigh their operating cost advantages. However, we expect that the 
continued operation and uprating of existing units will be very 
attractive.
                      Questions From Senator Craig
    Question 1. Do you see the need for the federal government to take 
an active role to bring demonstrated technologies--such as Iogen's 
cellulose ethanol production technology--out of the ``valley of death'' 
where they are languishing because commercial lenders will not finance 
the first-of-a-kind technologies? If so, do you think that loan 
guarantees could be a useful part of this strategy?
    Answer. The successful deployment of demonstrated technology is 
often the culmination of our research efforts. The Biomass Program is 
working with commercial lending institutions to determine the 
additional requirements needed to turn demonstrated technology into 
financially viable projects. Future cost-shared competitive 
solicitations aimed at demonstrating the technology to the satisfaction 
of commercial lenders will be pursued if they are determined to be 
priority activities that help the program meet its performance targets. 
Loan guarantee programs will not be successful if their underlying 
technology is not economically viable. It is not clear that cellulosic 
plants can yet be viable, even with a federal loan guarantee.
    Question 2. Our farmers produce quite a bit of wheat straw, corn 
stover and barley straw, rice straw and rice hulls as agricultural 
waste products. United States biotechnology companies are developing 
enzymes (cellulases) that will convert those waste products to energy 
and other products. What programs has DOE undertaken to help these 
companies move these biotech ethanol productions processes forward? 
What has DOE done to help speed the development of cellulase enzymes to 
convert wheat straw to bioethanol?
    Answer. Our Biomass Program works with the National Renewable 
Energy Laboratory, which has been an active partner with the two 
largest enzyme companies who have developed more efficient and cost-
effective enzymes to convert the cellulose in agricultural residues to 
sugars and subsequently to ethanol. The collaboration has resulted in a 
more than 80 percent reduction in the cost of enzymes per gallon of 
cellulosic ethanol between 2003 and 2004, resulting in a prestigious 
R&D 100 Award in 2004. Although these efforts have targeted corn 
stover, the most abundant agriculture residue nationally, this work can 
be directly leveraged toward future applications of other agricultural 
residues such as wheat straw.
    Question 3. We have solved many of the technical problems in using 
biotech enzymes to convert crop residues to bioethanol. The big 
remaining problem is the cost of constructing commercial scale 
biorefineries. How is DOE going to help our companies build these first 
generation biorefineries in the U.S.? What type of loan guarantees or 
financing mechanisms can DOE provide?
    Answer. The program reduces the technical risks by funding core 
research at the national laboratories and development projects via 
public/private partnerships to further reduce operational and equipment 
costs. Such risk reduction and cost improvements help attract investors 
to fund the construction of the new generation of biorefineries. I do 
not believe the Department has clear legal authority to provide loan 
guarantees for this purpose, nor do I believe it is appropriate at this 
time.
    Question 4. The New York Times has reported that Vice President 
Cheney is supporting clean energy production methods that use enzymes 
to convert waste products to energy. In the past, President Clinton had 
signed an Executive Order to begin a bio-based products and bio-energy 
initiative. What will the Bush Administration do under your leadership 
to build on these efforts to help us develop a carbohydrate-based 
economy?
    Answer. The Department continues to fund key areas of research 
identified in the Biomass Research and Development Act of 2000, which 
superseded President Clinton's Executive Order. In collaboration with 
other Federal agencies the Department's Biomass Program funds National 
Laboratory research and partnerships with industry and universities on 
projects in support of cost-competitive bio-refineries.
    Question 5. The USDA and DOE have been required by the Lugar/Udall 
legislation to set up a technical Advisory Committee made up of 
industry people to advise these agencies on advanced biomass conversion 
technologies. This biomass advisory committee has been in existence for 
few years. What kind of work product has it produced? Has DOE and USDA 
implemented the recommendations of this citizen's advisory panel?
    Answer. The Biomass Technical Advisory Committee established by the 
Biomass Research and Development Act of 2000 meets on a quarterly basis 
and has provided a number of advisory work products to both the 
Secretary of Energy and the Secretary of Agriculture.
    For example, the committee has documented a ``vision'' for the 
future of bio-energy and a ``roadmap'' on how to get there. The 
committee also provides an annual report that includes technical 
recommendations based on reviews of our biomass activities. In 
addition, the committee provides guidance on the conduct and contents 
of DOE/USDA joint solicitations.
    Both DOE and USDA work very closely with the committee and have 
implemented many of its recommendations.
                     Questions From Senator Bunning
    Question 1. Mr. Garman, the procurement process at the Department 
of Energy [DOE] has left the community of Paducah and the environmental 
cleanup program in limbo for over a year. In this particular case, DOE 
decided to make the procurement a small business award. They announced 
the procurement and began solicitation in October 2003, and proposals 
were submitted in the spring of 2004. From that point, it took another 
8 months for the DOE to evaluate 4 proposals, and then award a contract 
to a company in January 2005. Now a protest is delaying the award of 
the contract even further. It has been a year since DOE received the 
competitors' offers. The lengthy time period it has taken to award the 
contract has delayed Paducah Plant clean-up and has jeopardized the 
accelerated cleanup deadlines.
    Given the delay, how long is it going to take to award the Paducah 
Plant procurement contract in order to minimize the delay in clean-up?
    Answer. There were three protests filed against the award of a 
contract for Paducah Remediation Services, and I am advised that one of 
those protests has been withdrawn. We will continue to work very 
closely with the U.S. Government Accountability Office (GAO) and the 
two remaining companies whose protests remain. The GAO has called a 
hearing on April 12, 2005, and I am told that the GAO should provide 
the DOE with a ruling no later than May 11, 2005. The GAO could sustain 
the protests and require the DOE to go to discussions with the 
competitive range of bidders or the GAO could rule in favor of DOE and 
allow contract execution to begin. Until that ruling is provided or 
another course of action is decided, the cleanup at Paducah will 
continue under the Bechtel Jacobs contract which has been extended 
until August 30, 2005.
    Question 2. Because of the continuing appeal, is Paducah still on 
target to meet the accelerated cleanup deadlines?
    Answer. Yes. I am informed that we are still on track to meet 
overall accelerated cleanup deadlines.
                     Question From Senator Landrieu
    Question 1. How do you see the transition of superconductivity from 
research and development to commercial applications evolving, 
particularly at a time that our electrical transmission grid demands 
modernization?
    Answer. Over the next few years, I expect to see availability of a 
new type of superconducting wire (resulting from the Department's 
program) that will improve the performance/cost characteristics of the 
power equipment and facilitate the transition to commercial 
applications. We agree that availability of superconducting power 
cables and other devices would make an important contribution to the 
modernization of our electrical transmission grid and are working with 
equipment manufacturers and electric utilities to develop equipment 
that will improve reliability and raise grid capacity. The experience 
that they are gaining will be invaluable in putting this advanced 
equipment to use when commercial versions become available.
                     Questions From Senator Talent
    Question 1. What steps has DOE taken with regard to the high price 
of natural gas, particularly with respect to the expansion of energy-
related infrastructure, encouraging the development of liquefied 
natural gas facilities, and research and development related to new 
production and exploration technologies?
    Answer. The Department has supported the efforts of the Federal 
Energy Regulatory Commission (FERC) in its delegated responsibilities 
related to the siting of Liquefied National Gas (LNG) facilities. For 
example, I have testified in hearings before the Senate and the House, 
on behalf of the Department and the Administration, advocating for 
increased LNG importation facilities. We have also undertaken important 
LNG safety-related research. In addition to these efforts, the 
Department has undertaken a variety of steps to reduce demand through 
greater energy efficiency. These steps range from consumer awareness 
campaigns to achieve near term savings, to research and development on 
energy efficient appliances and buildings to achieve long term savings.
    The Department is proposing, in the President's FY 2006 budget, to 
close out its natural gas exploration and production R&D work. It is 
our view that high wellhead prices for natural gas provide industry 
with both the incentive and the means to undertake this kind of 
research on its own.
    Question 2. Please discuss the relative merits of site-based energy 
analysis. Are both analyses needed to get a full understanding of any 
decision affecting energy use or efficiency?
    Answer. Site v. source energy issues arise whenever a program or 
analysis uses a single unit of measure [e.g., British thermal units 
(Btus)] to represent multiple forms of energy. Btus or other measures 
of energy are used for a wide range of reasons. Since most forms of 
energy are, at least in theory, substitutable, Btus (or other common 
energy measures) are a good way of relating one form of energy use to 
others.
    By converting fuels from their physical units (e.g., gallons, cubic 
feet or kilowatt hours) to Btus, program managers, users and others can 
easily compare the relative magnitude of different energy uses (or 
energy sources) or develop common measures of energy efficiency (e.g., 
Btus per unit of output). For example, converting fuel oil and natural 
gas to Btus enables the direct comparison of the home heating 
requirements of gas-heated homes to oil-heated homes, and also enables 
the comparison of the energy used for home heating to the energy used 
in cars. Since the energy used in the production and distribution of 
oil and natural gas is small relative to the Btu content of the fuel 
ultimately used, the difference between the end-use energy and full 
fuel cycle energy content of these energy forms is small and is usually 
ignored. However, when electricity is added to the mix, the differences 
between site (end-use) and source (fuel cycle) energy become very 
significant.
    Since the energy content of the fuel used to generate electricity 
is approximately three times the energy content of electricity at the 
point of use, converting electricity at the point of use (i.e., 3412 
Btus per kilowatt hour) v. the point of generation (usually 10,000 to 
11,000 Btus per kilowatt hour) can have a major impact on the apparent 
significance of electricity demand. Using site energy conversion 
factors can understate the importance (economic and environmental) of 
electricity consumption relative to fuels directly consumed. On the 
other hand, using source energy conversion factors for electricity 
would appear to overstate the amount of heat energy being released at 
the point of use.
    When electricity is one of several energy forms being evaluated, 
the conversion method best suited for a particular application--site or 
source--will vary. In some cases, it may be appropriate to use both, 
but whenever fuels and electricity are being converted to Btus it is 
essential that the conversion method used--site or source--be clearly 
identified and explained.
    While using Btus--either site or source--to assess energy supply, 
use or efficiency can be very useful, it is important to keep in mind 
that energy policies and programs are usually intended to achieve more 
specific objectives, such as improving energy security (e.g., by 
reducing oil imports), reducing life cycle costs (e.g., by minimizing 
total capital and energy costs) or cutting greenhouse gas emissions (by 
reducing emissions of carbon dioxide). To determine progress toward 
these specific objectives, it is essential that energy supply and use 
also be assessed in terms directly relevant to these objectives (oil 
content, dollars or carbon-equivalent content of specific energy 
forms).
    Question 3. Please list each program that DOE manages or oversees 
that relies on site-based or source-based energy analysis and briefly 
explain why the relied-upon method is more appropriate.
    Answer. Fuels, electricity and other forms of energy are regularly 
converted into Btus in hundreds, if not thousands, of different DOE 
analyses, data bases, reports and programs. In each case, we do our 
best to describe why we are using the particular analytical method we 
have chosen. We would welcome hearing your concern about any analysis, 
database, report or program that you feel is using an inappropriate 
method, and would be pleased to consider any suggestions for 
improvement you might have.
    Question 4. Please provide an update on the status of Executive 
Order 13123, the Greening of the Government, which I understand 
incorporates source-based energy analysis.
    Answer. Executive Order 13123 set the goal of achieving a 35 
percent reduction in energy consumption (compared to a 1985 base) by 
2010 for Federal standard buildings, laboratories and facilities. Both 
site and source energy analysis is used. Since the issuance of the 
order, the Federal Government has achieved a 25.6 percent reduction in 
energy use for standard buildings compared to the 1985 base.
    The order also provided direction for establishing renewable energy 
and water conservation goals. The renewable energy usage goal calls for 
2.5 percent renewable energy usage as a percent of total Federal 
electricity consumption by 2005. The Federal Government is than 94 
percent of the way toward this goal and expect to meet it this year.
                    Questions From Senator Murkowski
    Question 1. Please explain how DOE will fund its responsibilities 
under the Alaska Gas Pipeline legislation during FY05. Please include 
an explanation of the status of any reprogramming initiative DOE plans 
to pursue.
    Answer. The Office of Fossil Energy is currently evaluating funding 
requirements to fulfill DOE's responsibilities in this area. We will 
notify Congress once these needs are fully identified.
    Question 2. Please explain how DOE will fund its responsibilities 
under the Alaska Gas Pipeline legislation in FY06.
    Answer. DOE management is committed to carrying out the 
responsibilities given by the Alaska Natural Gas Pipeline Act in FY06. 
We will notify Congress once these needs are fully identified.
    Question 3. Please provide an overview of the DOE's policies on how 
the United States can develop its vast methane hydrate resources.
    Answer. Industry is currently co-funding, with the DOE, several 
methane hydrate research and development (R&D) projects. However, the 
President's FY 06 budget did not seek funding for further oil and gas 
research given the constraints on discretionary federal spending and 
the ability of industry to fund its own proprietary R&D in light of 
high current market prices for hydrocarbons. However, I recognize the 
higher risk, longer term aspects of methane hydrate R&D, and am mindful 
of legislation that you have proposed to revitalize our R&D program in 
this area. Should I be confirmed, I will look forward to working with 
you and your staff to balance the need for this long term R&D with our 
need to restrain discretionary spending.
    Question 4. Please indicate whether DOE will support the Methane 
Hydrate Research and Development Reauthorization Act of 2005.
    Answer. The Administration's official position on this legislation 
will be developed in consultation with the White House and other 
federal agencies. While I cannot guarantee any particular outcome 
resulting from those deliberations, I personally understand the high 
risk, long term nature of methane hydrate research and development, and 
it is my own view that there is an appropriate role for federal 
involvement in such high risk, long term R&D.
    Question 5. Is it the Department's intention to provide continuing 
funding to the laboratory in the FY 06 budget?
    Answer. The President's budget did not request funding for the 
Arctic Energy Office in FY 2006. As with all other elements of the 
Office of Fossil Energy Oil and Natural Gas R&D program, the Department 
is proposing to close out the work in FY06.
    Question 6. Last year the University of Alaska Fairbanks, in 
conjunction with Silverado Green Fuels, perfected a new technique to 
take high moisture, low-sulfur coal like we have in huge abundance in 
Alaska at the Beluga field west of Anchorage on Cook Inlet and on the 
North Slope, and as is found in the Powder River Basin, place it in a 
pressure vessel to reduce the moisture while keeping the waxes so it 
can then be remixed with water to produce a highly efficient fuel for 
boiler/power plants. Funding is currently being sought to build an 
actual demonstration plant in Fairbanks, taking coal from the Usibelli 
mine for testing to prove the economic viability of the fuel process. 
There is also another project to produce ultra clean diesel fuel and 
aviation gas for engines from coal. Syntroleum has been working to 
perfect this process with Usibelli and Alaska Native regional 
corporation. The process is of great interest to the military because 
of the fuel's promise of producing low emissions.
    What is DOE's willingness to provide funding for coal-related 
energy research and development in the FY 2006 and future years? Do you 
have any specific views on funding for these two projects?
    Answer. DOE strongly supports funding for coal-related energy 
research in FY 2006 and future years. With specific regard to coal fuel 
R&D funding, the President's FY 2006 Clean Coal Fuels budget request of 
$22,000,000 provides for funding of the coal activities to support the 
President's Hydrogen Fuel Initiative. The funding will be used to 
provide (1) advanced technology to produce high purity hydrogen from 
central station coal gasification plants, and (2) an alternative 
approach, utilizing high hydrogen content liquid fuels produced from 
coal-derived synthesis gas that can be reformed to hydrogen adjacent to 
the end-use. This pathway would utilize the existing liquid fuels 
infrastructure.
    Under this program, in March of this year, the Department 
competitively selected a proposal from Integrated Concepts and Research 
Corporation and Syntroleum Corporation to perform R&D directed at 
producing barrel quantities of Fischer-Tropsch diesel fuel from coal-
derived synthesis gas. This fuel will be produced at Syntroleum's 
Tulsa, OK facilities and up to 6,000 gallons used for vehicle 
evaluation tests in a coal producing state.
    While I was aware of the University of Alaska's interest in low 
rank coal fuel processes from my tenure as a Senate staff member, I was 
not aware of the new pressure vessel/remixing process you described or 
the use of Mr. Usibelli's coal for Fisher-Tropsch liquids. Should I be 
confirmed, I will look forward to learning more about these two 
activities.
    Question 7. I know of your interest in geothermal energy from your 
visit, several years ago to Alaska, to inspect potential geothermal 
sites in the state.
    Please explain DOE's perspective on research funding for 
demonstration projects to perfect geothermal energy projects, either in 
Alaska or elsewhere in the nation in the near future.
    Answer. Our Geothermal Technologies Program (GTP) supports 
geothermal energy projects throughout the U.S. Our approach is to fund 
projects that benefit the industry as a whole, provide essential 
results for long term research, and lead to achievement of our 
published strategic goals. For example, we recently selected, under a 
competitive ``Electric Power System Validation Solicitation,'' four 
different projects to demonstrate innovative technologies to generate 
electric power using lower temperature geothermal resources. These 
projects are located in Alaska, Idaho, Nevada, and New Mexico.
                     Questions From Senator Salazar
    Question 1. Mr. Garman, Colorado experienced significant social and 
economic turmoil due to the rapid boom and bust cycle of oil shale 
development in the 1980s. As DOE considers the various oil shale 
proposals, it is absolutely necessary for DOE and other federal 
agencies to work closely with Colorado's Department of Natural 
resources and representatives of local governments, as well as the 
environmental community, on any plans to develop oil shale. How will 
you do that?
    Answer. The Department of Energy has just begun to reexamine the 
feasibility of oil shale development as a viable source of domestic 
liquid fuel production. The Office of Petroleum Reserves, Naval 
Petroleum and Oil Shale Reserves published a report entitled Strategic 
Significance of America's Oil Shale Resources in the Spring of last 
year. That report outlines the attributes of the substantial oil shale 
resource in Colorado, Utah, and Wyoming and discusses potential 
commercial development. Among other things the report highlights the 
need for orderly and coordinated development should investment funds 
flow into the industry.
    Having met with your staff to gain an appreciation of some of the 
local sensitivities involved, I will work to try to ensure that we 
pursue an open process which involves local communities and interests 
should the Federal Government undertake an active role encouraging 
development of this resource.
    Question 2. I also believe that the vast majority of resources 
needed for oil shale R&D must come from industry and not the Federal 
government. Precious federal funding must not be diverted from 
renewable and energy efficiency efforts to focus on oil shale or fossil 
fuels. Do you agree with my assessment?
    Answer. We agree that the resources needed to conduct research and 
development and ultimately develop the oil shale resources of the 
country must necessarily come from industry. As we are in the very 
early planning stages of reexamining the oil shale resource, it is 
difficult to assess industry interest in research and ultimate 
commercialization. Currently we have no funding dedicated to oil shale 
research and development, and do not intend to divert funds from other 
research for that purpose.
    Question 3(a). As you are aware, Mr. Garman, the Rocky Flats 
project in Colorado continues to be of great interest to the State of 
Colorado and to your Department. I would like you to reaffirm the 
commitments by the Department of Energy concerning Rocky Flats to:
    Comply fully with state institutional control laws.
    Answer. The Department and other federal agencies support States 
adopting enforceable institutional control laws. These laws can save 
the taxpayers money and promote transfers of property. The Department 
and other federal agencies are actively working with States to assure 
that we can, to the extent legally permissible, comply with applicable 
state institutional control statutes. With regard to the Colorado 
statute, we have every intention of establishing institutional controls 
on the Rocky Flats site that are legally enforceable, run with the 
land, and are consistent with the requirements of the statute. We are 
coordinating our efforts with other affected federal agencies.
    Question 3(b). As you are aware, Mr. Garman, the Rocky Flats 
project in Colorado continues to be of great interest to the State of 
Colorado and to your Department. I would like you to reaffirm the 
commitments by the Department of Energy concerning Rocky Flats to:
    Complete the Department's cleanup mission at Rocky Flats by 
December 2005.
    Answer. I am informed that the Department is on track to meet its 
commitment to complete the cleanup mission at Rocky Flats in FY 2006.
    Question 3(c). As you are aware, Mr. Garman, the Rocky Flats 
project in Colorado continues to be of great interest to the State of 
Colorado and to your Department. I would like you to reaffirm the 
commitments by the Department of Energy concerning Rocky Flats to:
    Complete the timely transfer of the land to the National Wildlife 
Refuge system.
    Answer. The Department is working on the transfer of the Rocky 
Flats National Wildlife Refuge to the U.S. Department of Interior (U.S. 
Fish & Wildlife Service). The Memorandum of Understanding between the 
two agencies was published in the Federal Register on March 22, 2005, 
for a 60-day public comment period ending May 21, 2005. The Department 
will work with the U.S. Department of Interior to resolve the issues 
regarding the mineral rights under the Refuge, and any other issues 
that are raised as a result of public comment.
    Question 4. Mr. Garman, I want to take this chance to stress my 
desire to see that the National Renewable Energy Laboratory continues 
to be a high priority for the Department of Energy. I am very proud of 
this laboratory and know it holds great promise for our country. I 
would like your commitment to work to fully fund NREL each budget year.
    Answer. As the Assistant Secretary for Efficiency and Renewable 
Energy, I also have a great deal of pride in the National Renewable 
Energy Laboratory (NREL), its accomplishments, and its potential. While 
I cannot offer personal commitments with respect to future Presidential 
budgets, the Department of Energy has an extensive history of funding 
many critical research and development activities at NREL, and I have 
no plans to advocate a change in that approach.
    Question 5. If appointed, will your office convene a conference to 
establish an ongoing, self-sustaining public energy education and 
information program contemplated by the NEPD Group's recommendation? 
Could we expect such a meeting this year?
    Answer. We have undertaken a great deal of energy education 
activities in response to the National Energy Policy Development (NEPD) 
group's recommendation, but I share your view that much more could be 
done. Through Department of Energy and other agencies, we have 
supported extensive energy education programs at all levels, in all 
regions, and in all sectors. Activities include development of 
instructional materials, websites, field trips, and career education 
materials. DOE, directly and through the national labs, sponsors higher 
education, extension programs, and research programs for residential, 
commercial, agricultural and industrial energy users. Environmental 
Protection Agency, U.S. Department of Agriculture, and Department of 
Interior sponsor programs on resource conservation and protection. 
Federal agencies also work with the energy industry and trade 
associations to support educational programs on energy efficiency, new 
technologies, consumer safety, and environmental protection. But I take 
your point that these efforts could be better coordinated. As you know, 
the NEPD group recommended that these efforts be funded on a sustained 
basis by the energy industry. Should I be confirmed, I will be pleased 
to convene a meeting of industry and stakeholders to explore how we 
might undertake a sustained, coordinated energy education effort.
    Question 6. Assistant Secretary Garman, reducing electrical 
transmission losses over long distances would mean an increase in 
energy efficiency, and could result in significant energy savings. 
Could you comment on how combining renewable energy sources with a 
distributed generation system would positively benefit rural areas?
    Answer. Distributed generation technologies (microturbines and 
engines) can operate on renewable fuels such as bio-gas generated from 
animal waste to produce process heat and electricity for on-farm use. 
As well, combining renewable energy technologies, such as wind and 
solar, with distributed generation systems can provide customers with 
added reliability and environmental benefits. By producing power on 
site, these technologies can reduce energy costs and electrical system 
line losses, a particular problem for rural utilities that serve fewer 
customers-per-mile of distribution line than utilities in higher-
density areas.

                                    

      
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