U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

56–739 PDF 2010

S. HRG. 111–477 

DOE BUDGET FOR FISCAL YEAR 2011 

HEARING 

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

TO

RECEIVE TESTIMONY ON THE U.S. DEPARTMENT OF ENERGY’S BUDGET 

FOR FISCAL YEAR 2011 

FEBRUARY 4, 2010 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 
(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico, Chairman 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

EVAN BAYH, Indiana 

DEBBIE STABENOW, Michigan 

MARK UDALL, Colorado 

JEANNE SHAHEEN, New Hampshire 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JOHN BARRASSO, Wyoming 

SAM BROWNBACK, Kansas 

JAMES E. RISCH, Idaho 

JOHN MCCAIN, Arizona 

ROBERT F. BENNETT, Utah 

JIM BUNNING, Kentucky 

JEFF SESSIONS, Alabama 

BOB CORKER, Tennessee 

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

MCKIE CAMPBELL, Republican Staff Director 

KAREN K. BILLUPS, Republican Chief Counsel 
(III) 

C O N T E N T S 

STATEMENTS 

Page 

Bingaman, Hon. Jeff, U.S. Senator From New Mexico ........................................ 1 

Chu, Hon. Steven, Department of Energy ............................................................. 3 

Murkowski, Hon. Lisa, U.S. Senator from alaska ................................................ 2 

National Association of Royalty Owners (NARO) ................................................. 41 

APPENDIX 

Responses to additional questions .......................................................................... 49 

(1) 

DOE BUDGET FOR FISCAL YEAR 2011 

THURSDAY, FEBRUARY 4, 2010 

U.S. SENATE, 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

Washington, DC. 

The committee met, pursuant to notice, at 10:02 a.m. in room 

SD–366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 

chairman, presiding. 

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. 

SENATOR FROM NEW MEXICO 

The CHAIRMAN. All right. Good morning, everyone. 

The purpose of today’s hearing is to receive testimony on the fiscal year 2011 Department of Energy budget. 

We want to thank Secretary Chu for testifying today on the Department’s 2011 budget, and I compliment him and his staff for 

their timely and thorough budget. That has been a tradition in the 

Department of Energy and very much carried forward this year. 

Given our stark fiscal climate, I appreciate the President’s commitment to the continued development of clean energy programs 

that will help the United States be competitive in the world economy. The Department continues to support renewables and conservation, as well as electricity delivery and transmission, but as 

in past years, I am concerned about the proposal to zero out research for oil and gas development, especially in light of the recent 

natural gas discoveries here in the United States. 

The nuclear energy research budget is headed in the right direction by integrating it as part of a portfolio of low carbon energy 

sources. 

There is an increase for the Energy Information Administration 

that, in my view, is long overdue. 

Finally, the Department has taken the lead on innovative energy 

research and development by proposing $300 million in funding for 

ARPA-E, the Advanced Research Projects Agency for Energy, as 

well as creating centers or hubs in energy storage, energy-efficient 

buildings, and nuclear reactor simulation, similar to the Joint Bioenergy Institute, which I visited with Secretary Chu a year or so 

ago. 

Again, we thank you for appearing before the committee today 

and we will have questions after your statement. But first, let me 

call on Senator Murkowski. 
2 

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

FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Thank you, Secretary, for sitting before us this morning. I appreciate your contributions. 

Last week at the President’s State of the Union, he remarked on 

energy. My take on it was it appeared to present a more centrist, 

kind of an all-of-the-above approach to the energy policy. For example, he called for increasing support for additional nuclear energy, 

as well as for oil and gas production. This was certainly a welcome 

change from my perspective, expanded beyond the ‘‘renewable only’’ 

mantra that we have been hearing from the agencies. 

With the budget request that we received on Monday, I already 

see a disconnect between last week’s speech and some agencies’ 

budget priorities. 

I will start first with nuclear. I am certainly very pleased to see 

additional funding for the loan guarantee program that Congress 

established in 2005, but I am frustrated that DOE has still not 

issued a loan guarantee for nuclear power. I hope that we can expect the first one shortly. 

Perhaps more troubling to me is the Department’s plan to withdraw its Yucca Mountain application from the NRC with prejudice 

within the next 30 days. This leaves us without a viable repository 

option at this point and it exposes taxpayers to billions in liability 

for the Government’s breach of contract. 

Some agencies’ budget requests are also inconsistent with the desire to increase the Nation’s energy security through domestic oil 

and gas production. Not only does the budget request propose to 

cancel a $71 million project that would add needed capacity to the 

Strategic Petroleum Reserve, it contains substantial tax and fee increases for domestic oil and gas producers. These policies are clearly not designed to spur more domestic production. 

The budget request also appears to pick winners and losers within the renewable industry. I was pleased personally to see the additional funding slated for geothermal activities. However, while the 

Department calls for significant funding increases for both solar 

and wind activities, it cuts funding for hydropower. In fact, hydropower, which provides emissions-free baseload power and has tremendous job potential is the only renewable resource to see a slash 

in funding this year. 

I am also concerned that DOE is asking for a budget increase on top of the $37 billion in additional stimulus funds that it received. 

As of yesterday, the DOE Web site showed that it has spent just 

$2.1 billion of those funds in the past year, just slightly more than 

the $1.8 billion increase that has been proposed for its baseline 

budget. DOE had authority to spend a total of $63 billion last year, 

but did not come close to that level. At a time of record debt and 

another year with a record deficit, we should ask ourselves if the 

Department truly needs authority to spend more this year when we 

know that DOE is having difficulty spending the money that it already has. 

Finally, on a more parochial note, perhaps I am disappointed 

that the administration is not working to improve energy technology and energy efficiency efforts in cold-climate States like Alas-
3 

ka, particularly since last year’s budget terminated funding for the 

Arctic Energy Office. 

I know that we will have an opportunity this morning, Mr. 

Chairman, to get into these issues with a little more detail. 

Again, I want to thank Secretary Chu for being with us. 

The CHAIRMAN. Mr. Secretary, why don’t you go ahead with your 

statement, and then we will have questions. 

STATEMENT OF HON. STEVEN CHU, SECRETARY, 

DEPARTMENT OF ENERGY 

Secretary CHU. Thank you, Chairman Bingaman, Ranking Member Murkowski, members of the committee. I am glad to have the 

opportunity to discuss the President’s fiscal year 2011 budget request for the Department of Energy. 

President Obama stated, ‘‘The nation that leads the world in creating new sources of clean energy will be the Nation that leads the 

21st century global economy.’’ I fervently share this view. The 

President’s fiscal year 2011 budget request for $28.4 billion for the 

Department of Energy will help position the United States to be a 

global leader in the new energy economy. The budget request 

makes much-needed investments to harness the power of American 

ingenuity. This request will create clean energy jobs, expand the 

frontiers of science, reduce nuclear dangers, and help curb carbon 

pollution that threatens our planet. The President’s budget request includes an investment of $2.4 

billion in energy efficiency and renewable sources of energy. It also 

promotes innovative energy efficiency and renewable energy 

projects through $500 million in credit subsidy that will support $3 

billion to $5 billion in lending. It expands the Advanced Manufacturing Tax Credit by $5 billion to help build a robust domestic 

manufacturing capacity for clean energy technologies. Through this 

budget, we will increase research, demonstration, and deployment 

of wind, solar, and geothermal energies, make buildings and homes 

more efficient, develop energy-efficient vehicles, and pursue carbon 

capture and sequestration. 

Nuclear energy must also be part of our clean energy mix. Our 

budget request includes an additional $36 billion in loan guarantee 

authority for the nuclear power sector to help construct the first 

nuclear plants in decades, as well as $495 million for nuclear energy research and development. 

We have many technologies in hand today to begin the transition 

to a low-carbon economy, but we will need breakthroughs and better technology to meet our long-term goals. The budget request invests in basic and applied research. It puts us on a path of doubling the funding for science, a key Presidential priority. 

The budget request supports the Department’s three new complementary approaches to marshaling the Nation’s brightest minds 

to accelerate energy breakthroughs. 

The Department will continue funding the three Energy Innovation Hubs introduced in fiscal year 2010. In addition, we are proposing a new hub to dramatically improve batteries and energy 

storage. 

The Energy Frontier Research Centers program will be expanded 

to capture new and emerging opportunities. 
4 

In the fiscal year 2011 budget, we also include $300 million for 

ARPA-E. 

We are requesting $55 million to start the RE-ENERGYSE initiative to help educate the next generation of scientists and engineers. 

In addition to the health of our economy and our planet, the Department of Energy is focused on the safety and security of our 

people. Last April in Prague, President Obama outlined an ambitious agenda to address the greatest threat to global security, the 

danger of terrorists getting their hands on nuclear weapons or the 

material to build them. The Department is requesting a significant 

increase, more than $550 million in new funding, for the NNSA Defense Nuclear Nonproliferation Program to help meet the President’s goal of securing all vulnerable nuclear materials around the 

world in 4 years. 

The President has also made it clear that as long as nuclear 

weapons continue to exist, it is essential we ensure the safety, security, and effectiveness of our nuclear stockpile. With the $7 billion in funds we have requested, we can upgrade our infrastructure 

that has been allowed to decay over the past decade, support the 

cutting-edge work of our national labs, and recruit the skilled work 

force that we need. 

The budget also protects public health and safety by cleaning up 

the environmental legacy of our Nation’s nuclear weapons program. 

Additionally, it instructs the Department to discontinue its application to the U.S. Nuclear Regulatory Commission for a license to 

construct a high-level waste geologic repository at Yucca Mountain. 

On Monday, the Department filed a motion with the NRC to stay 

all proceedings for 30 days. During this time, we will file a formal 

motion to withdraw the application. 

To deal with our nuclear waste management needs, the administration has brought together a range of experts to conduct a comprehensive review of the back end of the fuel cycle. The Blue Ribbon Commission announced last week, co-chaired by General Brent 

Scowcroft and Congressman Lee Hamilton, will provide recommendations for a safe, long-term solution. We also propose 

breaking down artificial stovepipes and merging the Office of Civilian Radioactive Waste Management with the Office of Nuclear Energy. 

Finally, we are committed to being good stewards of the taxpayers’ money. For example, we have eliminated more than $2.7 

billion in tax subsidies for oil, coal, and gas industries. This step 

is estimated to generate more than $38.8 billion in revenue for the 

Federal Government over the next 10 years. 

To further our reform agenda, the budget request also includes 

$2 million to establish a new management reform initiative. This 

initiative will report directly to me and will receive close personal 

attention. 

Building a clean energy future will not be easy, but it is necessary for our economy and our security. As a scientist, I am optimistic and I believe we can meet this challenge and lead the world 

in the 21st century. 
5 

President Obama and I are looking forward to working with this 

committee and this Congress to build a stronger, safer, and more 

prosperous future. 

I am pleased to answer any questions at this time. 

[The prepared statement of Secretary Chu follows:] 

PREPARED STATEMENT OF HON. STEVEN CHU, SECRETARY, DEPARTMENT OF ENERGY

Chairman Bingaman, Ranking Member Murkowski, and Members of the Committee, thank you for the opportunity to appear before you today to discuss the 

President’s Fiscal Year 2011 budget request for the Department of Energy. 

President Obama has stated, ‘‘The nation that leads the world in creating new 

sources of clean energy will be the nation that leads the 21st century global economy.’’ I fervently share this view. The President’s FY 2011 budget request of $28.4 

billion will help position the United States to be the global leader in the new energy 

economy. The budget request makes muchneeded investments to harness the power 

of American ingenuity. This request will create clean energy jobs, expand the frontiers of science, reduce nuclear dangers, and help curb the carbon pollution that 

threatens our planet. As part of this Administration’s commitment to fiscal responsibility, the Department of Energy is also proposing several program reductions and 

terminations. 

American Recovery and Reinvestment Act 

The FY11 budget request builds on the investments in the American Recovery 

and Reinvestment Act. Through the $36.7 billion the Department received from the 

Recovery Act, we are putting Americans to work, while helping to build a clean energy economy, spur energy innovation, and reduce our dependence on oil. We’ve 

begun to make our homes and offices more energy efficient, modernize our grid, and 

invest in key renewable energy projects. Getting this money out the door quickly, 

carefully, and transparently has been and will continue to be a top priority for me. 

FY11 Budget Supports Strategic Priorities 

To continue the progress we have made, the FY11 budget request supports the 

Department’s strategic priorities of: 

• Transitioning to a low-carbon economy by developing and deploying clean and 

efficient energy technologies, increasing generation capacity and improving our 

transmission capabilities; 

• Investing in scientific discovery and innovation to find solutions to pressing energy challenges and maintain American economic competitiveness; and 

• Enhancing national security by ensuring the safety, security and effectiveness 

of the nuclear stockpile without testing. The budget request also includes funds 

to work with our international partners to secure vulnerable nuclear material 

around the world within four years, and advance our nuclear legacy cleanup. 

These strategic priorities will be enabled by a continued commitment to improving 

the management and fiscal performance of the Department. 

Energy 

To transition to a low-carbon future, we must change the way we generate and 

use energy. The President’s budget request invests in clean energy priorities, including an investment of $2.4 billion in energy efficiency and renewable sources of energy. It also promotes innovative energy efficiency and renewable energy projects 

through $500 million in credit subsidy that will support $3 to $5 billion in lending. 

It expands the Advanced Manufacturing Tax Credit by $5 billion to help build a robust domestic manufacturing capacity for clean energy technologies. Through this 

budget, we will increase research, demonstration, and deployment of wind, solar and 

geothermal energies; make buildings and homes more efficient; develop energy efficient vehicles; and pursue carbon capture and sequestration. 

Nuclear energy must also be a part of our clean energy mix. During his State of 

the Union address last week, President Obama said, ‘‘To create more of these clean 

energy jobs, we need more production, more efficiency, more incentives. And that 

means building a new generation of safe, clean nuclear power plants in this country.’’ The President and I are committed to restarting our domestic nuclear industry. 

Our budget request includes an additional $36 billion in loan guarantee authority 

for the nuclear power sector to help construct the first new nuclear plants in decades, as well as $495 million for research and development to support the competi-
6 

tiveness, safety and proliferation resistance of nuclear energy in the United States 

and abroad. 

Innovation 

We have many technologies in hand today to begin the transition to a low-carbon 

economy, but we will need breakthroughs and better technologies to meet our longterm goals. The budget request invests in basic and applied research and puts us 

on the path to doubling funding for science, a key presidential priority. We are also 

requesting $55 million to start the RE-ENERGYSE initiative to help educate the 

next generation of scientists and engineers. 

The budget request also supports the Department’s three new, complementary approaches to marshalling the nation’s brightest minds to accelerate energy breakthroughs. 

The first approach is the Energy Innovation Hubs. The Hubs are multidisciplinary, goal-oriented, and will be managed by top teams of scientists and engineers 

with enough resources and authority to move quickly in response to new developments. They are to be modeled after laboratories such as MIT’s Radiation Laboratory, which developed radar during World War II, and Bell Laboratories when it invented and developed the transistor. Ideally, this work will be conducted under one 

roof. The Department will continue funding the three Energy Innovation Hubs introduced in FY 2010. In addition, we are proposing a new Hub to dramatically improve batteries and energy storage. 

The second approach is the Energy Frontier Research Centers. The EFRCs are 

mainly university-based, problem-oriented research. We have identified key scientific barriers to energy breakthroughs, and we believe we can clear these roadblocks faster by linking together small groups of researchers across departments, 

schools, and institutions. 

The third funding approach is the Advanced Research Projects Agency—Energy 

(ARPA-E). ARPA-E is technology-oriented. We are seeking the boldest and best 

ideas for potentially transformative energy technologies and funding them to see if 

they work. The FY 2011 budget request includes $300 million for ARPA-E. 

Security 

In addition to the health of our economy and our planet, the Department of Energy is focused on the safety and security of our people. Last April in Prague, President Obama outlined an ambitious agenda to address the greatest threat to global 

security—the danger of terrorists getting their hands on nuclear weapons or the material to build them. The Department is requesting a significant increase in the 

budget—more than $550 million in new funding—for the NNSA Defense Nuclear 

Nonproliferation program to help meet the President’s goal of securing all vulnerable nuclear materials around the world in four years. 

The President has also made clear that, as long as nuclear weapons continue to 

exist, it is essential that we ensure the safety, security and effectiveness of our nuclear stockpile. With the $7 billion in funds we have requested, we can upgrade our 

infrastructure that has been allowed to decay in the past decade, support the cutting-edge work of our National Labs, and recruit the skilled workforce we need 

today and in the future. Over the next five years, we intend to boost this funding 

by more than $5 billion. Even in a time of tough budget decisions, we must make 

this investment for the sake of our security. 

The budget also protects public health and safety by cleaning up the environmental legacy of the Nation’s nuclear weapons program. Additionally, it instructs 

the Department to discontinue its application to the U.S. Nuclear Regulatory Commission for a license to construct a high-level waste geologic repository at Yucca 

Mountain. On Monday, the Department filed a motion with the NRC to stay all proceedings for 30 days. During this time, we will file a formal motion to withdraw the 

application. 

Both the President and I have made clear that Yucca Mountain is not an option. 

To deal with our nuclear waste management needs, the Administration has brought 

together a range of experts to conduct a comprehensive review of the back end of 

the fuel cycle. The Blue Ribbon Commission announced last week, and co-chaired 

by General Brent Scowcroft and Congressman Lee Hamilton, will provide recommendations for developing a safe, long-term solution to managing the Nation’s 

used nuclear fuel and its nuclear waste. 

As part of our comprehensive strategy to restart the nuclear industry, we also 

propose breaking down artificial stovepipes and merging the Office of Civilian Radioactive Waste Management into the Office of Nuclear Energy. 
7 

Management 

Finally, in order to transform the way Americans generate and use energy, we 

must transform the Department itself. As part of the Obama Administration’s reform agenda, the budget request includes $2 million to establish a new Management 

Reform initiative to provide strategic direction, coordination and oversight of reform 

initiatives. This initiative will report directly to me and will receive close personal 

attention. We made important reforms when we began to implement the Recovery 

Act, and now we need to institutionalize those reforms and apply them across the 

Department. 

Additionally, we are committed to being good stewards of the taxpayers’ money. 

As we developed the budget, we looked to eliminate or reduce programs where we 

could. For example, we eliminated more than $2.7 billion in tax subsidies for oil, 

coal and gas industries. This step is estimated to generate more than $38.8 billion 

in revenue for the federal government over the next 10 years. 

Building a clean energy future won’t be easy, but it is necessary for our economy 

and our security. As a scientist, I am an optimist, and I believe that we can meet 

this challenge and lead the world in the 21st century. 

HIGHLIGHTS OF THE FY2011 DEPARTMENT OF ENERGY BUDGET

The Department’s Fiscal Year (FY) 2011 budget request of $28.4 billion, a 6.8 percent or $1.8 billion increase from FY 2010, supports the President’s commitment to 

respond in a considered, yet expeditious manner to the challenges of rebuilding the 

economy, maintaining nuclear deterrence, securing nuclear materials, improving energy efficiency, incentivizing production of renewable energy, and curbing greenhouse gas emissions that contribute to climate change. Together with the American 

Recovery and Reinvestment Act of 2009 (Recovery Act) and FY 2010 budget, the FY 

2011 budget request supports investment for a multi-year effort to address these 

interconnected challenges. 

The FY 2011 budget builds on the $36.7 billion in Recovery Act funding. By the 

end of FY 2010, the Department expects to obligate 100 percent and outlay roughly 

35-40 percent of Recovery Act funds. In developing the FY 2011 budget request, the 

Department has taken these investments into account. Recovery Act investments in 

energy conservation and renewable energy sources ($16.8 billion), environmental 

management ($6 billion), loan guarantees for renewable energy and electric power 

transmission projects ($4 billion), grid modernization ($4.5 billion), carbon capture 

and sequestration ($3.4 billion), basic science research ($1.6 billion), and the establishment of the Advanced Research Projects Agency—Energy ($0.4 billion) will continue to strengthen the economy by providing much-needed investment, by saving 

or creating tens of thousands of direct jobs, cutting carbon emissions, and reducing 

U.S. dependence on oil. 

The President’s FY 2011 Budget supports our three strategic priorities: 

• Innovation.—Investing in science, discovery and innovation to provide solutions 

to pressing energy challenges 

• Energy.—Providing clean, secure energy and promoting economic prosperity 

through energy efficiency and domestic forms of energy 

• Security.—Safeguarding nuclear and radiological materials, advancing responsible legacy cleanup, and maintaining nuclear deterrence 

These strategic priorities will be enabled by a continued commitment to management excellence: 

• Management: Transforming the culture of the Department with a results-oriented approach 

Innovation: Investing in Science, Discovery and Innovation to Provide Solutions to 

Pressing Energy Challenges 

As President Obama made clear in his remarks to the National Academy of 

Sciences in April 2009, the public sector must invest in research and innovation not 

only because the private sector is sometimes reluctant to take large risks, but because the rewards will be broadly shared across the economy. Leading requires assembling a critical mass of the best scientists and engineers to engage in missionoriented, cross-disciplinary approaches to addressing current and future energy 

challenges. To develop clean energy solutions and maintain nuclear security, the Department must cultivate the science, technology, engineering, and mathematics 

workforce of the next generation. The FY 2011 budget request of $55 million for REENERGYSE (Regaining our ENERGY Science and Engineering Edge) supports K20+ science and engineering education. 
8 

With every initiative the Department undertakes, sound science must be at the 

core. In FY 2011 the Department will increasingly emphasize cross-cutting initiatives to link science throughout the Department, specifically with energy and national security programs. These cross-cutting initiatives will enhance science capabilities to create knowledge and innovative technologies that can be brought to bear 

on national energy and security issues, leverage world-class science and engineering 

expertise to establish global leadership as clean energy innovators, and employ useinspired research to reduce the cost and time to bring technologies to market at 

scale. The Department believes that it will deliver solutions more quickly and efficiently through our efforts to break down the traditional stovepipes and operate in 

a more integrated and coordinated manner. The FY 2011 Budget continues to address the President’s priorities in an integrated and efficient manner, and to deliver 

results for the American taxpayer. 

The Department continues its strong commitment to basic research and supports 

the President’s Plan for Science and Innovation by requesting funding for the Office 

of Science at $5.1 billion, a 4.4 percent or $218 million increase from FY 2010. The 

FY 2011 budget request will support the training of students and researchers in 

fields critical to national competitiveness and innovation, and will support investments in areas of research essential for a clean energy future. The President’s Plan 

commits to doubling Federal investment in basic research at select agencies. The 

Department supports an overarching commitment to science by investing in basic 

and applied research, creating new incentives for private innovation and promoting 

breakthroughs in energy. 

To help achieve the game-changing breakthroughs needed to continue leading the 

global economy, the FY 2011 budget request includes $300 million for the Advanced 

Research Projects Agency—Energy (ARPA-E). Introduced in FY 2009, ARPA-E is responsible for enabling specific high-risk and high-payoff transformational research 

and development projects. Beyond simply funding transformational research that 

creates revolutionary technologies, ARPA-E is dedicated to the market adoption of 

those new technologies to meet the Nation’s long-term energy challenges. This funding, along with the $400 million made available through the Recovery Act, will provide sustained investment in this pioneering program. 

The Department will continue funding the three Energy Innovation Hubs introduced in FY 2010 to focus on developing fuels that can be produced directly from 

sunlight, improving energy efficient building systems design, and using modeling 

and simulation tools to create a virtual model of an operating advanced nuclear reactor. In addition, DOE is proposing a new Hub to focus on batteries and energy 

storage. Each of these Hubs will bring together a multidisciplinary team of researchers in an effort to speed research and shorten the path from scientific discovery to technological development and commercial deployment of highly promising 

energy-related technologies. 

Complementing the Hubs, the Department proposes expanding the Energy Frontier Research Centers in FY 2011 to capture new, emerging opportunities by furthering its scientific reach and potential technological impact by competitively soliciting in two categories: discovery and development of new materials critical to 

science frontiers and technology innovations, and basic research for energy needs. 

Energy: Providing Clean, Secure Energy and Promoting Economic Prosperity 

through Energy Efficiency and Domestic Forms of Energy 

In Copenhagen, President Obama emphasized that climate change is a grave and 

growing danger. The imperative now is to develop the capacity to confront the challenges climate change poses and seize the opportunity to be the global leader in the 

clean energy economy. Meeting the Administration’s goal to reduce carbon emissions 

by more than 80 percent by 2050 will be achieved by addressing supply and demand 

through increased energy efficiency, renewable generation, and grid modernization, 

as well as improvements in existing technologies and information analysis. An important tool that will continue to be used to address these issues will be loan guarantees. The Department’s FY 2011 budget request, building on the FY 2010 budget 

and the Recovery Act, invests in the research, development, and deployment of technologies that will position the United States to lead international efforts to confront 

climate change now and in the future. The long-term economic recovery will be sustained by these continued investments in the new energy economy. 

• Loan Guarantees 

The Loan Guarantee Program Office (LGPO) is a vital tool for promoting innovation in the energy sector across a broad portfolio of clean and efficient energy technologies. In FY 2011, the Department is requesting funding and authority to support approximately $40 billion of innovative energy technology development. During 
9 

FY 2010, the LGPO streamlined the application review process. In FY 2011, the Department will continue to accelerate the availability of loans to leverage private sector investment in clean energy projects that will save and create jobs and stimulate 

the economy. 

• Energy Efficiency 

In August 2009, President Obama said, ‘‘If we want to reduce our dependence on 

oil, put Americans back to work and reassert our manufacturing sector as one of 

the greatest in the world, we must produce the advanced, efficient vehicles of the 

future.’’ In FY 2011, the Department will promote energy efficiency in vehicles technologies, at $325 million. No less important to achieving the President’s stated ambitions is decreasing energy consumption through developing and advancing building technologies ($231 million) and industrial technologies ($100 million). Federal 

assistance for state-level programs, such as State Energy Program grants ($75 million, a 50 percent increase from FY 2010) and Weatherization Assistance grants 

($300 million, a 43 percent increase from FY 2010), will help States and individuals 

take advantage of efficiency measures for buildings and homes, lower energy costs 

and greenhouse gas emissions, and develop an ever-evolving, technically proficient 

workforce. 

• Clean, Renewable Energy Generation 

The FY 2011 budget request will modernize the Nation’s energy infrastructure by 

investing in a variety of renewable sources such as solar ($302 million), wind ($123 

million), water ($41 million), hydrogen ($137 million), biomass ($220 million) and 

geothermal ($55 million). These sources of energy reduce the production of greenhouse gas emissions and continue the pursuit of a clean energy economy built on 

the next generation of domestic production. The Department is also continuing to 

promote domestic clean energy through the four Power Marketing Administrations, 

which market and deliver electricity primarily generated by hydroelectric dams. 

• Grid Modernization 

In support of the modernization of the electricity grid, the President’s FY 2011 

Budget requests $144 million for research and development to improve reliability, 

efficiency, flexibility, and security of electricity transmission and distribution networks. The ‘‘Smart Grid’’ will integrate new and improved technologies into the energy mix, ensuring reliability, integration of renewable energy resources, and improving security. 

While investing in energy efficiency, renewable energy generation, and grid modernization are fundamental steps necessary for creating a clean energy economy; investing in the improvement of existing sources of energy will provide a bridge between current and future technologies These technologies are already a major segment of the energy mix and will play a critical role in providing a solid foundation 

that will make possible the creation of this new economy. 

• Safe and Secure Nuclear Energy 

Nuclear energy currently supplies approximately 20 percent of the Nation’s electricity and 70 percent of the Nation’s clean, non-carbon electricity. The request for 

the Office of Nuclear Energy includes $495 million for research, development, and 

demonstration in addition to investments in supportive infrastructure. Work on advanced reactor technologies, fuel cycle technologies, waste management, and crosscutting technologies and transformative concepts will help ensure that nuclear energy remains a safe, secure, economical source of clean energy. The Department will 

also promote nuclear energy through the Loan Guarantee Program, which is requesting an additional $36 billion in loan authority for nuclear power in FY 2011 

(for a total of $54.5 billion). 

• Clean and Abundant Fossil Energy 

The world will continue to rely on coal fired electrical generation to meet energy 

demand. It is imperative that the United States develop the technology to ensure 

that base-load electricity generation is as clean and reliable as possible. The Office 

of Fossil Energy will invest $438 million in the research and development of advanced coal-fueled power systems and carbon capture and storage technologies. This 

will allow the continued use of the abundant domestic coal resources in the U.S. 

while reducing greenhouse gas emissions. 

Accurate energy information and analysis play a critical role in promoting efficient energy markets and informing policy-making and strategic planning. This 

budget requests a total of $129 million for the Energy Information Administration, 
10 

the statutory statistical agency within the Department, to improve energy data and 

analysis programs. 

Security: Safeguarding Nuclear and Radiological Materials, Advancing Responsible 

Legacy Cleanup and Maintaining Nuclear Deterrence 

• Reduces the Risk of Proliferation 

In an April 2009 speech in Prague, the President called the threat of nuclear proliferation ‘‘the most immediate and extreme threat to global security’’ and announced his support for a new international effort to secure all vulnerable nuclear 

material around the world within four years. The FY 2011 budget for the NNSA 

Defense Nuclear Nonproliferation program supports this effort, recognizing the urgency of the threat and making the full commitment to global cooperation that is 

essential to addressing this threat. The budget provides $2.7 billion in FY 2011, and 

$13.7 billion through FY 2015 to detect, secure, and dispose of dangerous nuclear 

and radiological material worldwide. This request is an increase of 26 percent or 

$550 million from FY 2010. The budget supports cooperative nonproliferation initiatives with foreign governments and the effort and expertise to forge them into durable international partnerships, achieving the objective of a world without nuclear 

weapons. The budget continues the installation of radiation detection equipment at 

international border crossings and Megaports, significantly expands materials protection and control security upgrades at selected sites in foreign countries to address 

outsider and insider threats, and accelerates the pace of highly enriched uranium 

research reactor conversions with an urgent focus to develop the capability to 

produce the medical isotope molybdenum-99 in the U.S. using low enriched uranium. The FY 2011 budget request provides $4.4 billion over five years for Fissile 

Materials Disposition including the construction of U.S. facilities for the disposition 

of U.S. weapons-grade plutonium in fulfillment of our commitment with the Russian 

Federation under the Plutonium Management and Disposition Agreement of September 2000, and provides the first $100 million of a $400 million U.S. commitment 

to advance the construction of plutonium disposition facilities in the Russian Federation. The FY 2011 budget request also supports a funding increase for Nonproliferation and Verification Research and Development for new technologies in 

support of treaty monitoring and verification. 

• Leverages Science to Maintain Nuclear Deterrence 

The FY 2011 budget request advances the Department’s commitment to the national security interests of the United States through stewardship of a safe, secure 

and effective nuclear weapons stockpile without the use of underground nuclear 

testing. As the role of nuclear weapons in our Nation’s defense evolves and the 

threats to national security continue to grow, the focus of this enterprise must also 

change and place its tremendous intellectual capacity and unique facilities in the 

service of addressing other challenges related to national defense. NNSA is taking 

steps to move in this direction, including functioning as a national science, technology, and engineering resource to other agencies with national security responsibilities. NNSA must ensure our evolving strategic posture places the stewardship 

of our nuclear stockpile, nonproliferation programs, counterterrorism, missile defenses, and the international arms control objectives into one comprehensive strategy that protects the American people and our allies. Through the NNSA, the Department requests $7.0 billion for the Weapons Activities appropriation, a 9.8 percent or $624 million increase from the FY 2010 appropriation. This increase provides a strong basis for transitioning to a smaller nuclear stockpile, strengthens the 

science, technology and engineering base, modernizes key nuclear facilities, and 

streamlines the enterprise’s physical and operational footprint. 

These investments will enable execution of a comprehensive nuclear defense strategy based on current and projected global threats that relies less on nuclear weapons, yet enhances national security by strengthening the NNSA’s nuclear security 

programs. This improved NNSA capability base will mitigate the concerns regarding 

ratification of the follow-on Strategic Arms Reduction Treaty and the Comprehensive Test Ban Treaty. The FY 2011 request for Weapons Activities has four major 

components. The request for Stockpile Support increases, reflecting the President’s 

commitment to maintain the safety, security and effectiveness of the nuclear deterrent without underground nuclear testing, consistent with the principles of the 

Stockpile Management Program outlined in Section 3113 (a)(2) of the National Defense Authorization Act of Fiscal Year 2010 (50 U.S.C. 2524). The request for 

Science, Technology and Engineering increases by over 10 percent, and provides the 

funding necessary to protect and advance the scientific capabilities at the U.S. nuclear security laboratories supporting the stockpile and broader national security 

and energy issues. The budget request for Infrastructure supports the operation and 
11 

maintenance of the government-owned, contractor-operated facilities in the nuclear 

security enterprise, as well as special capabilities for secure transportation and construction. The security and counterterrorism component of the budget provides for 

physical and cyber security in the NNSA enterprise, as well as emergency response 

assets and NNSA’s focused research and development contribution to the Nation’s 

counterterrorism efforts. 

• Advances Responsible Environmental Cleanup 

The FY 2011 budget includes $6 billion for the Office of Environmental Management to protect public health and safety by cleaning up hazardous, radioactive legacy waste from the Manhattan Project and the Cold War. This funding will allow 

the program to continue to accelerate cleaning up and closing sites, focusing on activities with the greatest risk reduction. 

As the Department continues to make progress in completing clean-up, the FY 

2011 budget request of $189 million for the Office of Legacy Management supports 

the Department’s long-term stewardship responsibilities and payment of pensions 

and benefits for former contractor workers after site closure. 

The Administration has determined that the Yucca Mountain repository is not a 

workable option and has decided to terminate the Office of Civilian Radioactive 

Waste Management. The core functions and staff to support efforts under the Nuclear Waste Policy Act to meet the obligation of the Government will transfer to the 

Office of Nuclear Energy by the end of FY 2010. 

Management: Transforming the Culture of the Department with a Results-Oriented 

Approach 

In order to transform the way Americans use and produce energy, we must transform the Department of Energy. The Department is committed to strengthening its 

management culture and increasing its focus on results. The implementation of the 

Recovery Act provided the Department with an opportunity to continue to refine 

best practices in management, accountability, operations, and transparency. These 

best practices will be applied in executing the FY 2011 budget. 

To achieve our strategic priorities, the Department requests a net of $169 million 

for Departmental Administration. These funds, along with resources in individual 

program offices, will help transform key functional areas such as human, financial, 

project, and information technology management. The request includes $2 million 

for Management Reform within the Office of the Secretary, which will provide the 

Department with strategic direction, coordination, and oversight of reform initiatives. 

DEPARTMENT OF ENERGY FY 2011 PROGRAM OFFICE HIGHLIGHTS

Office of Science: Supporting Cutting-Edge Foundational Scientific Research 

The Department of Energy’s Office of Science (SC) delivers discoveries and scientific tools that transform our understanding of energy and matter and advance 

the national, economic, and energy security of the United States. SC is a primary 

sponsor of basic research in the United States, leading the Nation to support the 

physical sciences in a broad array of research subjects in order to improve energy 

security and address issues ancillary to energy, such as climate change, genomics, 

and life sciences. In FY 2011, the Department requests $5.1 billion, an increase of 

4.4 percent over the enacted FY 2010 appropriation, to invest in science research. 

The FY 2011 request supports the President’s Plan for Science and Innovation, 

which encompasses the entire SC budget, as part of a strategy to double overall 

basic research funding at select agencies. As part of this plan, the budget request 

supports the training of students and researchers in fields critical to our national 

competitiveness and innovation economy, and supports investments in areas of research critical to our clean energy future and to making the U.S. a leader on climate 

change. 

SC is addressing critical societal challenges and key missions of the Department 

of Energy through significant improvements in existing technologies and development of new energy technologies. SC will accomplish this by: (1) sustained investments in exploratory and high-risk research in traditional and emerging disciplines, 

including the development of new tools and facilities; (2) focused investments in 

high-priority research areas; and (3) investments that train new generations of scientists and engineers to be leaders in the 21st century. The FY 2011 budget request 

supports all three of these investment strategies. 

Two of the four Energy Innovation Hubs being requested in FY 2011 are through 

the Office of Science; these Hubs will bring together teams of experts from multiple 

disciplines to focus on two grand challenges in energy: (1) Fuels from Sunlight, a 
12 

Hub established in FY 2010 and (2) Batteries and Energy Storage, a new Hub in 

the FY 2011 request. 

The Energy Frontier Research Centers (EFRC) program will be expanded in the 

FY 2011 request to capture new, emerging opportunities by furthering its scientific 

reach and potential technological impact. New EFRCs will be competitively solicited 

in two categories: discovery and development of new materials that are critical to 

both science frontiers and technology innovations, and basic research for energy 

needs in a limited number of areas that are underrepresented in the 46 original 

EFRC awards. 

The FY 2011 request for the U.S. ITER Project ($80 million, a decrease of $55 

million from FY 2010) is a reflection of the pace of ITER construction as of the end 

of 2009. The Administration is engaged in a range of efforts to implement management reforms at the ITER Organization and accelerate ITER construction while 

minimizing the overall cost of the Construction Phase for the U.S. and the other 

ITER members. 

The Office of Science supports investigators from more than 300 academic institutions and from all of the DOE laboratories. The FY 2011 budget request will support 

approximately 27,000 Ph.D.s, graduate students, undergraduates, engineers, and 

technicians. Nearly 26,000 researchers from universities, national laboratories, industry, and international partners are expected to use SC scientific user facilities 

in FY 2011. 

Advanced Research Projects Agency—Energy: Transformational Research and Development 

The FY 2011 budget request includes $300 million for the Advanced Research 

Projects Agency—Energy (ARPA-E), a program launched in FY 2009 that sponsors 

specific high-risk and high-payoff transformational research and development 

projects that overcome the long-term technological barriers in the development of 

energy technologies to meet the Nation’s energy challenges, but that industry will 

not support at such an early stage. An essential component of ARPA-E’s culture is 

an overarching focus on accelerating science to market. Beyond simply funding 

transformational research creating revolutionary technologies, ARPA-E is dedicated 

to the market adoption of those new technologies that will fuel the economy, create 

new jobs, reduce energy imports, improve energy efficiency, reduce energy-related 

emissions, and ensure that the U.S. maintains a technological lead in developing 

and deploying advanced energy technologies. 

Office of Energy Efficiency and Renewable Energy: Developing and Deploying Clean, 

Reliable Energy 

The Office of Energy Efficiency and Renewable Energy (EERE) strengthens the 

energy security, environmental quality, and economic vitality of the U.S. through 

the research, development, demonstration and deployment (RDD&D) of clean energy 

technologies and generation and advances in energy efficiency. EERE’s activities are 

critical to creating a low carbon economy and sustaining strong economic growth 

and job creation while dramatically reducing greenhouse gas emissions and energy 

imports. EERE programs link advances in basic research and the creation of commercially successful products and services to ensure delivery to the marketplace for 

general use and implementation. 

The FY 2011 budget request of $2.4 billion, an increase of 5 percent over FY 2010, 

is aimed at accelerating revolutionary change in the Nation’s energy economy. The 

request includes programs associated with meeting the President’s goals of investing 

in the next generation of clean energy technologies, vehicles and fuels, and energy 

efficiency measures that reduce energy use in Federal agencies and the industrial 

and building sectors. 

Clean, Renewable Energy Generation 

The FY 2011 budget request continues to work to transform the Nation’s energy 

infrastructure by investing over $650 million in a variety of renewable sources of 

electrical generation such as solar ($302 million, a 22 percent increase over FY 

2010), and wind ($123 million, a 53 percent increase over FY 2010), as well as deploy clean technologies to reduce our dependence on oil. The request includes expansions on Concentrating Solar Power, biopower and off-shore wind, which will provide 

new, additional avenues for clean energy development and deployment. These technologies will reduce the production of greenhouse gas emissions and revitalize an 

economy built on the next generation of domestic production. 

Energy Efficiency 

The Department implements a number of efforts to increase energy efficiency and 

conservation in homes, transportation, and industry. The FY 2011 budget requests 
13 

$758 million to accelerate deployment of clean, cost-effective, and rapidly deployable 

energy conservation measures in order to reduce energy consumption in residential 

and commercial buildings, and the industrial and Federal sectors. The Department 

will invest $231 million in the Building Technologies program, a 16 percent increase 

over FY 2010 for built environment R&D. Federal assistance for state-level programs such as State Energy Program grants ($75 million) and Weatherization Assistance Program ($300 million), will continue to help citizens implement energy 

conservation measures, lower energy costs and greenhouse gas emissions, and build 

a technical workforce. The FY 2011 request also includes $545 million to accelerate 

research, development and deployment of advanced fuels and vehicles to reduce the 

use of petroleum and greenhouse gas emissions. The FY 2011 budget complements 

the Recovery Act funding for these programs ($3.1 billion for State Energy Programs, $5 billion for Weatherization Assistance, $2 billion for Advanced Battery 

Manufacturing and $400 million for Transportation Electrification). 

Office of Electricity Delivery and Energy Reliability: Moving Toward a More Intelligent Grid to Power the Digital Economy 

The FY 2011 budget request for the Office of Electricity Delivery and Energy Reli- ability (OE) budget is $186 million, an increase of 8 percent over FY 2010. These 

funds will build on the ‘‘Smart Grid’’ investments and other activities. 

The ability of the United States to meet the growing demand for reliable electricity is challenged by an aging power grid under mounting stress. Despite the increasing demand for reliable power brought on by the modern digital economy, the 

power grid in the U.S. has suffered from a long period of underinvestment. Much 

of the power delivery system was built on technology developed over 50 years ago 

and thus responds to disturbances with speed limited by the technology of that period. This limitation increases the vulnerability of the power system to outages that 

can spread quickly and impact whole regions. Breakthroughs in digital network controls, transmission, distribution, and energy storage will make the power grid more 

efficient, alleviating the stress on the system, as well as enable greater use of clean 

and distributed energy sources. The return on these investments will come from a 

reduction in economic losses caused by power outages and the delay or avoidance 

of costly investment in new generation and transmission infrastructure. The budget request provides $144 million for research and development, which 

supports development of technologies that will improve the reliability, efficiency, 

flexibility, functionality, and security of the Nation’s electricity delivery system. It 

accelerates investment in energy storage capabilities and funds two new research 

initiatives: Advanced Modeling Grid Research, to develop grid-modeling capabilities 

using the large volumes of data generated by advanced sensors deployed on the grid; 

and Power Electronics, to develop new power control devices in collaboration with 

universities. The proposal also continues to support the development of ‘‘Smart 

Grid’’ technologies and cyber security systems for the power grid. 

The budget request continues support for Permitting, Siting, and Analysis ($6.4 

million) to assist States, regional entities, and other federal agencies in developing 

policies and programs aimed at modernizing the power grid; and for Infrastructure 

Security and Energy Restoration ($6.2 million) to enhance the reliability and resiliency of U.S. critical infrastructure and facilitate its recovery from energy supply 

disruptions. 

Office of Environmental Management: Reducing Risks and Making Progress 

The mission of the Office of Environmental Management (EM) is to complete the 

safe cleanup of the environmental legacy brought about from over six decades of nuclear weapons development, production, and Government-sponsored nuclear energy 

research. This cleanup effort is the largest in the world, originally involving two million acres at 107 sites in 35 states, dealing with some of the most dangerous materials known to man. 

EM continues to pursue its cleanup objectives within the overall framework of 

achieving the greatest comparative risk reduction benefit and overlaying regulatory 

compliance commitments 14 and best business practices to maximize cleanup 

progress. To support this approach, EM has prioritized its cleanup activities: 

• Activities to maintain a safe and secure posture in the EM complex 

• Radioactive tank waste stabilization, treatment, and disposal 

• Used nuclear fuel storage, receipt, and disposition 

• Special nuclear material consolidation, processing, and disposition 

• High priority groundwater remediation 

• Transuranic and mixed/low-level waste disposition 

• Soil and groundwater remediation 

• Excess facilities deactivation and decommissioning 
14 

The FY 2011 budget request for $6.0 billion will fund activities to maintain a safe 

and secure posture in the EM complex and make progress against program goals 

and compliance commitments, including reduction of highest risks to the environment and public health, use of science and technology to reduce life cycle costs, and 

reduction of EM’s geographic footprint by 40 percent by 2011. EM continues to move 

forward with the development of the capability for dispositioning tank waste, nuclear materials, and used nuclear fuel. The budget request includes the construction 

and operation of three unique and complex tank waste processing plants to treat 

approximately 88 million gallons of radioactive tank waste for ultimate disposal. It 

will also fund the solid waste disposal infrastructure needed to support disposal of 

transuranic and low-level wastes generated by high-risk activities and the footprint 

reduction activities. In addition to the FY 2011 budget request, EM will continue 

to expend the $6 billion in Recovery Act funding provided by Congress to complete 

lower-risk footprint reduction and near-term completion cleanup activities. 

EM carries out its cleanup activities with the interests of stakeholders in mind. 

Most importantly, EM will continue to fulfill its responsibilities by conducting cleanup within a ‘‘Safety First’’ culture that integrates environment, safety, and health 

requirements and controls into all work activities to ensure protection to the workers, public, and the environment, and adheres to sound project and contract management principles. EM is also strengthening its project and planning analyses to 

better assess existing priorities and identify opportunities to accelerate cleanup 

work. Working collaboratively with the sites, EM continues to seek aggressive but 

achievable strategies for accelerating cleanup of discrete sites or segments of work. 

In addition, functional and cross-site activities such as elimination of specific 

groundwater contaminants, waste or material processing campaigns, or achievement 

of interim or final end-states are being evaluated. 

After the EM program completes cleanup and closure of sites that no longer have 

an ongoing DOE mission, post closure stewardship activities are transferred to the 

Office of Legacy Management (LM). LM also receives sites remediated by the U.S. 

Army Corps of Engineers (Formerly Utilized Sites Remedial Action Program) and 

private licensees (Uranium Mill Tailings Radiation Control Act, Title II sites). Post 

closure stewardship includes long-term surveillance and maintenance activities such 

as groundwater monitoring, disposal cell maintenance, records management, and 

management of natural resources at sites where active 15 remediation has been 

completed. At some sites the program includes management and administration of 

pension and post-retirement benefits for contractor retirees. 

The Administration has determined that developing a repository at Yucca Mountain, Nevada, is not a workable option and has decided to terminate the Office of 

Civilian Radioactive Waste Management (RW). The Nation needs a different solution for nuclear waste disposal. As a result, in 2010, the Department will discontinue its application to the U.S. Nuclear Regulatory Commission for a license to 

construct a high-level waste geologic repository at Yucca Mountain and establish a 

Blue Ribbon Commission to inform the Administration as it develops a new strategy 

for nuclear waste management and disposal. All funding for development of the 

Yucca Mountain facility and RW will be eliminated by the end of FY 2010. The Administration remains committed to fulfilling its obligations under the Nuclear Waste 

Policy Act. The Office of Nuclear Energy will develop an integrated approach to improve the waste management options for the Nation and support the Blue Ribbon 

Commission. Ongoing responsibilities under the Nuclear Waste Policy Act, including 

administration of the Nuclear Waste Fund and the Standard Contract, will continue 

under the Office of Nuclear Energy, which will lead future waste management activities. 

Innovative Technology Loan Guarantee Program and Advanced Technology Vehicle 

Manufacturing Program: Supporting Investment in Innovation and Manufacturing 

To encourage the early commercial production and use of new or significantly improved technologies in energy projects, the Department is requesting an additional 

$36 billion in authority to guarantee loans for nuclear power facilities and $500 million in appropriated credit subsidy for the cost of loan guarantees for renewable energy systems and efficient end-use energy technology projects under section 1703 of 

the Energy Policy Act of 2005. The additional loan authority for nuclear power 

projects will promote near-term deployment of new plants and support an increasing 

role for private sector financing. The additional credit subsidy will allow for investment in the innovative renewable and efficiency technologies that are critical to 

meeting the Administration’s goals for affordable, clean energy, technical leadership, 

and global competitiveness. 
15 

The FY 2011 budget also requests $58 million to evaluate applications received 

under the eight solicitations released to date and to ensure efficient and effective 

management of the Loan Guarantee Program. This request will be offset by collections authorized under Title XVII of the Energy Policy Act of 2005 (P.L. 109-8). 

The Advanced Technology Vehicle Manufacturing program requests $10 million to 

support ongoing loan and loan monitoring activities associated with the program 

mission of making loans to automobile and automobile part manufacturers for the 

cost of re-equipping, expanding, or establishing manufacturing facilities in the 

United States to produce advanced technology vehicles or qualified components, and 

for associated engineering integration costs. 

Office of Nuclear Energy: Investing in Energy Security and Technical Leadership 

The Department is requesting $912 million for the Office of Nuclear Energy (NE) 

in FY 2011—an increase of 5 percent over the FY 2010 enacted level. NE’s funding 

supports the advancement of nuclear power as a resource capable of meeting the 

Nation’s energy, environmental, and national security needs by resolving technical, 

cost, safety, proliferation resistance, and security barriers through research, development, and demonstration as appropriate. 

Currently, nuclear energy supplies approximately 20 percent of the Nation’s electricity and over 70 percent of clean, non-carbon producing electricity. Over 100 nuclear power plants are offering reliable and affordable baseload electricity in the 

United States, and they are doing so without air pollution and greenhouse gas emissions. NE is working to develop innovative and transformative technologies to improve the competitiveness, safety and proliferation resistance of nuclear energy to 

support its continued use. 

The FY 2011 budget supports a reorganized and refocused set of research, development, and demonstration (RD&D) activities. This program is built around exploring, through RD&D: technology and other solutions that can improve the reliability, 

sustain the safety, and extend the life of current reactors; improvements in the affordability of new reactors to enable nuclear energy to help meet the Administration’s energy security and climate change goals; understanding of options for nuclear 

energy to contribute to reduced carbon emissions outside the electricity sector; development of sustainable nuclear fuel cycles; and minimization of risks of nuclear 

proliferation and terrorism. 

NE is requesting $195 million for Reactor Concepts Research, Development and 

Deployment. This program seeks to develop new and advanced reactor designs and 

technologies. Work will continue on design, licensing and R&D for the Next Generation Nuclear Plant to demonstrate gas-cooled reactor technology in the United 

States. The program also supports research on Generation IV and other advanced 

designs and efforts to extend the life of existing light water reactors. In FY 2011, 

NE will initiate a new effort focused on small modular reactors, a technology the 

Department believes has promise to help meet energy security goals. 

The FY 2011 request includes $201 million for Fuel Cycle Research and Development to perform long-term, results-oriented science-based R&D to improve fuel cycle 

and waste management technologies to enable a safe, secure, and economic fuel 

cycle. The budget also requests $99 million to support a new R&D program, Nuclear 

Energy Enabling Technologies, focused on the development of cross-cutting and 

transformative technologies relevant to multiple reactor and fuel cycle concepts. The 

Crosscutting Technology Development activity provides crosscutting R&D support 

for nuclear energy concepts in areas such as advanced fuels and reactor materials 

and creative approaches to further reduce proliferation risks. The Transformative 

Nuclear Concepts R&D activity will support, via an open, competitive solicitation 

process, investigator-initiated projects that relate to any aspect of nuclear energy 

generation including, but not limited to, reactor and power conversion technologies, 

enrichment, fuels and fuel management, waste disposal, and nonproliferation, to ensure that good ideas have sufficient outlet for exploration. The Energy Innovation 

Hub for Modeling and Simulation will apply existing modeling and simulation capabilities to create a ‘‘virtual’’ reactor user environment to simulate an operating reactor. NE will also continue its commitments to investing in university research, international cooperation, and the Nation’s nuclear infrastructure—important foundations to support continued technical advancement. 

Office of Fossil Energy: Abundant and Affordable Energy for the 21st Century 

The FY 2011 budget request of $760 million for the Office of Fossil Energy (FE) 

will help ensure that the United States can continue to rely on clean, affordable energy from traditional domestic fuel resources. The United States has 25 percent of 

the world’s coal reserves, and fossil fuels currently supply 86 percent of the Nation’s 

energy. 
16 

The Department is committed to advancing Carbon Capture and Storage (CCS) 

technologies in order to promote a cleaner and more efficient use of fossil fuels. In 

addition to significant Recovery Act funds, Advanced CCS with $438 million requested in FY 2011 is the foundation of the Department’s clean coal research program which seeks to establish the capability of producing electricity from coal with 

near-zero atmospheric emissions. In addition, $150 million of FE’s $760 million request will be used to promote national energy security through the continued operations of both the Strategic Petroleum Reserve and Northeast Home Heating Oil Reserve programs. These programs 

protect the Nation and the public against economic damages from potential disruptions in foreign and domestic petroleum supplies. 

The National Nuclear Security Administration: Ensuring America’s Nuclear Security 

and Reducing the Global Threat of Nuclear Proliferation 

The National Nuclear Security Administration (NNSA) continues significant efforts to meet Administration priorities, leveraging science to promote U.S. national 

security objectives. The FY 2011 President’s budget request is $11.2 billion, an increase of 13 percent from the enacted FY 2010 appropriation. The FY 2011-2015 

President’s Request for the NNSA is a significant funding increase over FY 2010 

levels, reflecting the President’s priorities on global nuclear nonproliferation and for 

strengthening the nuclear security posture of the United States to meet defense and 

homeland security-related objectives: 

• Broaden and strengthen the NNSA’s science, technology and engineering mission to meet national security needs 

• Work with global partners to secure all vulnerable nuclear materials around the 

world within four years 

• Work towards a world with no nuclear weapons. Until that goal is achieved, ensure the U.S. nuclear deterrent remains safe, secure and effective 

• Transform the Nation’s Cold-War era weapons complex into a 21st century national security enterprise 

• Provide safe and effective nuclear propulsion for U.S. navy warships 

The FY 2011 budget request of $7.01 billion for the Weapons Activities appropriation provides funding for a wide range of programs. Some activities provide direct 

support for maintaining the nuclear weapon stockpile, including stockpile surveillance, annual assessments, life extension programs, and warhead dismantlement. 

Science, Technology and Engineering programs are focused on long-term vitality in 

science and engineering, and on performing R&D to sustain current and future 

stockpile stewardship capabilities without the need for underground nuclear testing. 

These programs also provide a base capability to support scientific research needed 

by other elements of the Department, to the federal government national security 

community, and the academic and industrial communities. Infrastructure programs 

support facilities and operations at the government-owned, contractor-operated 

sites, including activities to maintain and steward the health of these sites for the 

long term. Security and counterterrorism activities leverage the unique nuclear security expertise and resources maintained by NNSA to other Departmental offices 

and to the Nation. 

The Weapons Activities request is an increase of 9.8 percent over the FY 2010 

enacted level. This level is sustained and increased in the later outyears. The multiyear increase is necessary to reflect the President’s commitment to maintain the 

safety, security and effectiveness of the nuclear deterrent without underground nuclear testing, consistent with the principles of the Stockpile Management Program 

outlined in Section 3113 (a)(2) of the National Defense Authorization Act of Fiscal 

Year 2010 (50 U.S.C. 2524). Increases are provided which directly support of the nuclear weapon stockpile, for scientific, technical and engineering activities related to 

maintenance assessment and certification capabilities, and for recapitalization of 

key nuclear facilities. The President’s Request provides funding necessary to protect 

the human capital base at the national laboratories -including the ability to design 

and certify nuclear weapons—through a stockpile stewardship program that fully 

exercises these capabilities. Security and nuclear counterterrorism activities decrease about 3 percent from the FY 2010 appropriated levels, leveraging the continuing efficiencies in the Defense Nuclear Security budget. 

The FY 2011 request for Defense Nuclear Nonproliferation is $2.7 billion, an increase of 25.8 percent over the FY 2010 appropriation. The increase is driven by the 

imperative for U.S. leadership in nonproliferation initiatives both here and abroad. 

In addition to the programs funded solely by the NNSA, our programs support the 

Department of Energy mission to protect our national security by preventing the 

spread of nuclear weapons and nuclear materials to terrorist organizations and 
17 

rogue states. These efforts are implemented in part through the Global Partnership 

against the Spread of Weapons and Materials of Mass Destruction, formed at the 

G8 Kananaskis Summit in June 2002, and the Global Initiative to Combat Nuclear 

Terrorism, launched in Rabat, Morocco, in October 2006. 

The FY 2011 President’s request for International Nuclear Materials Protection 

and Cooperation reflects selective new security upgrades to buildings and areas that 

were added to the cooperation after the Bratislava Summit, additional Second Line 

of Defense sites, and sustainability support for MPC&A upgrades. The Global 

Threat Reduction Initiative increases by 68 percent in support of the international 

effort to secure vulnerable nuclear materials around the world within four years. 

The Fissile Materials Disposition program increases by 47 percent reflecting continuing domestic construction of the MOX Fuel Fabrication Facility and the Waste 

Solidification Building, as well as design documentation for a related pit disassembly and conversion capability. A portion of the funding increase results from 

the transfer of funding associated with the latter activity from the Weapons Activities appropriation starting in 2011. The President’s request of $1.1 billion for Naval Reactors is an increase of 13.3 

percent over the FY 2010 appropriated level. The program supports the U.S. Navy’s 

nuclear fleet, comprised of all of the Navy’s submarines and aircraft carriers, including 52 attack submarines, 14 ballistic missile submarines, 4 guided missile submarines, and 11 aircraft carriers. These ships are relied on every day, all over the 

world, to protect our national interests. Starting in FY 2010, there are major new 

missions for the NNSA Naval Reactors program. A significant funding increase is 

requested for the OHIO Class submarine replacement and for the related activity 

which will demonstrate new submarine reactor plant technologies as part of the refueling of the land-based prototype reactor. R&D is underway now, and funding during this Future Years Nuclear Security Program is critical to support the long manufacturing spans for procurement of reactor plant components in 2017, and ship procurement in 2019. Resources are also included in FY 2011 to support commencement of design work for the recapitalization of used nuclear fuel infrastructure. 

The Office of the Administrator appropriation provides for federal program direction and support for NNSA’s Headquarters and field installations. The FY 2011 request is $448.3 million, a 6.5 percent increase over the FY 2010 appropriation. This 

provides for well-managed, inclusive, responsive, and accountable organization 

through the strategic management of human capital, enhanced cost-effective utilization of information technology, and integration of budget and performance through 

transparent financial management practices. 

Management: Transforming the Culture of the Department with a Results-Oriented 

Approach 

To transform the way Americans use and produce energy, we need to transform 

the Department of Energy. Because the mission of the Department is vital and urgent, it must be pursued using a results-oriented approach that is safe, fiscally responsible, and legally and ethically sound. The Department has developed strong 

management and oversight capabilities during implementation of the Recovery Act, 

and these lessons will be applied to the FY 2011 budget. The budget request of $337 

million for corporate management includes $75 million for the Office of Management, $102 million for the Office of the Chief Information Officer, $43 million for 

the Inspector General’s office, $62.7 million for the Office of the Chief Financial Officer, $37 million for the Office of General Counsel, and $2 million for Management 

Reform within the Office of the Secretary. The Management Reform effort will provide the Department with strategic direction, coordination, and oversight of management initiatives. The primary mission of this new office is to identify operational 

efficiencies to free up resources for priority mission activities. The Department is 

also requesting $12 million for a new Acquisition WorkforceImprovement initiative 

which will be utilized to increase the size and improve the training of our acquisition professionals. 

The Department’s human capital management efforts are focused on an integrated approach that ensures human capital programs and policies are linked to the 

Department’s missions, strategies, and strategic goals, while providing for continuous improvement in efficiency and effectiveness. 

To accomplish this goal, the Department will develop different strategies to attract, motivate and retain a highly skilled and diverse workforce to meet the future 

needs of the Nation in such vital areas as scientific discovery and innovation. 

To improve stewardship of taxpayer dollars, the Department will continue to issue 

audited financial statements in an accelerated timeframe and provide assurance 

that the Department’s financial management meets the highest standards of integrity. The Department’s FY 2009 financial statements were reviewed by independent 
18 

auditors and received an unqualified opinion. This was made possible by implementing an aggressive plan to mitigate and remediate a number of financial management challenges that were identified by the Department and its independent 

auditors. In addition, the Department continues to strengthen the execution of program funding dollars by having regular execution reviews that will ensure funding 

is processed, approved and spent quickly and responsibly. The Department in FY 

2011 will continue its effort to build and improve its integrated business management system. 

The Department is continuing to make progress in improving project management 

and is implementing an action plan with scheduled milestones and aggressive performance metrics. The focus of the action plan is to successfully address the root 

causes of the major challenges to planning and managing Department projects. The 

action plan identifies eight measures that, when completed, will result in significant, measurable, and sustainable improvements in the Department’s contract and 

project management performance and culture. 

To improve financial performance in project management, the Department has increased the use of Earned Value Management (EVM) techniques within program offices. These techniques objectively track physical accomplishment of work and provide early warning of performance problems. A certification process was instituted 

for contractors’ EVM systems to improve the definition of project scope, communicate objective progress to stakeholders and keep project teams focused on achieving progress. Currently, 70 percent of the Department’s capital asset projects have 

certified EVM systems. 

The Department continues to strengthen information technology management by 

consistent execution of robust IT Capital Planning and Investment Control oversight 

and reporting processes designed to ensure successful investment performance, including the use of EVM Systems as appropriate, and the remediation of poorly performing investments. Through the establishment and use of an Enterprise Architecture that aligns to the Federal Enterprise Architecture, the Department has ensured that all IT investments follow a comprehensive Modernization Roadmap. 

The Department continues to take significant actions to improve its cyber security 

posture by implementing its Cyber Security Revitalization Plan to address longstanding, systemic weaknesses in the Department’s information and information 

systems. Specifically, the Department seeks to ensure that 100 percent of operational information technology systems are certified and accredited as secure and 

that the Department’s Inspector General has rated the certification and accreditation process as ‘‘satisfactory.’’ Additional steps will be taken to ensure that electronic classified and personally identifiable information are secure. 

The CHAIRMAN. Thank you for that statement. 

Let me start and just mention an issue that I will not ask you 

to respond here, but to flag it for you because it is one of concern. 

Last year, the administration had proposed zeroing out the upgrade for the Los Alamos Neutron Science Center, and we had the 

head of the NNSA testifying before the Strategic Subcommittee of 

Armed Services this last year and the Energy and Water Appropriations Committee to the effect that keeping that facility operational was essential to maintaining our stockpile. So I have a concern that the proposal is continued this year to zero out that upgrade of that facility. I will try to get with you and try to understand better the position of the Department on that in the next few 

days, if I can. 

Let me move to one of the overall issues that I think Senator 

Murkowski talked about and I know is a difficult one to manage, 

and that is how does the funding that was provided in the stimulus 

bill or the recovery bill relate to the funding levels you are now requesting in this new budget in particular areas? 

One example I would ask about is this year’s budget increases 

funding for grid energy storage research, which I think is a very 

good idea. Maybe you could explain to us how these funds, these 

new funds that are being requested, would complement or relate to 
19 

the demonstrations already underway under the Recovery Act in 

that area. 

Secretary CHU. Yes, I would be delighted to. 

Much of the Recovery Act funding on the smart grid is more toward to the user side. This is using the technology and piloting and 

demonstrating the technology that could be used for load leveling 

and things of that nature. 

But as we increase our renewable energy, renewable energy is 

transient. Sometimes the wind stops blowing and the sun stops 

shining. Our experience has shown that once you go over 20–25 

percent, even if you have a large-scale distribution system, you still 

need to integrate into that large-scale storage. So what we would 

like to do is begin—and we have started this already. Within our 

Bonneville Power Administration and WAPA to try to develop 

plans to anticipate. When we get to that large fraction and go beyond that, we will need to integrate storage. That is why we are 

requesting these funds. 

The CHAIRMAN. Let me ask about this carbon capture and sequestration task force. I think President Obama announced recently, when he spoke to the National Governors Association, that 

he would be asking the Department of Energy and EPA to develop 

an interagency task force on the issue of carbon capture and sequestration and how that can be brought into a reality. 

Could you elaborate on the role you see the Department of Energy playing in this activity and outline what this task force would 

be all about? 

Secretary CHU. The task force that would be co-chaired by EPA 

and DOE has a goal to get the technology developed so that we can 

begin to get rid of the barriers toward beginning a routine deployment of CCS in 10 years. That requires a lot of things, but the Department of Energy, because of our strong technological base, is 

going to be playing a role both in the continuation of deployment 

of technologies today; and we also have a very aggressive research 

program to see if we can begin to improve upon the things that we 

know today in the capture part, and we also have a very aggressive 

program in the storage part. You need to demonstrate in different 

geological sites around the United States that the carbon can be 

stored safely, securely, and for long periods of time. 

But it shows the commitment that we believe given the coal resources in the United States, and quite frankly the coal resources 

of the world, that this is something we have to do. It is a very important part of decreasing the carbon emissions in the world. 

The CHAIRMAN. Senator Murkowski. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Secretary Chu, let me start here with nuclear this morning. I understand that under the terms of the Nuclear Waste Policy Act, you 

are required to notify Congress of the reasons why the Yucca 

Mountain site is to be terminated. The statement that is contained 

basically is pretty simple. It says President Obama zeroed out 

Yucca funding in his budget. I am wondering when we might expect to get that rationale. Hopefully, it will be more instructive 

than just that the President has zeroed it out. 
20 

With Yucca Mountain off the table, from the administration’s 

point of view, how do you intend to handle the issue of the fees 

that are imposed on utilities for the nuclear waste fund? 

Secretary CHU. First, the whole intent of the Blue Ribbon Commission and the whole intent of our strategy coming in was that 

we know a lot more than we did in 1982 and subsequent years 

when the Nuclear Waste Act was written. So we have assembled 

a team of very distinguished people, you know, experts in the 

science and technology, geology, political leaders, to look at what 

we know today, but also to look at what we know about the coming 

decades. The NRC has stated repeatedly that dry cask storage will 

be safe for a half a century or more. This will give us time to look 

at better solutions than what was being done at Yucca Mountain. 

So we are still wanting to move forward. We do not think the 

pulling of the Yucca application means that we are at a standstill 

regarding moving forward, but I do believe there are better solutions and that is the intent of the Blue Ribbon Commission. 

Senator MURKOWSKI. How do you deal with the fees that continue to be imposed? 

Secretary CHU. Yes. So we are required to constantly review 

whether the fees collected are appropriate, and we will continue to 

do so. So that has not really changed at all. 

Senator MURKOWSKI. Let me ask you about hydro. I mentioned 

this in my opening statement. The administration will be pushing 

hydro because—this is your words—‘‘an incredible opportunity and 

it is actually the lowest cost clean energy option.’’ I absolutely 

agree with you. 

When we look at the jobs that are associated, the National Hydropower Association figures that there are upwards of 700,000 cumulative and direct and indirect jobs that can be created working 

with potential hydropower. To me it seems like a pretty good investment these days, yet, when you look at the budget, this is the 

one area of renewables where we are seeing cuts, a significant cut, 

20 percent, from what Congress approved last year. 

Can you speak to the discrepancy in funding? I mentioned that 

solar and wind certainly seem to be the favored child. What is the 

situation with hydropower? 

Secretary CHU. Actually my feeling—hydro is no different. I do 

think it is a very valuable resource and I would be glad to work 

with you and talk with you about that as we formulate the budget. 

We continually have to make tough choices, but I do believe that 

hydro is an important part of the mix. There are projects in hydro 

that have not been fully utilized, and this has nothing to do with 

large new hydro projects but just improving the efficiency of what 

we have today, plus tapping hydro storage which was for flood control, but where we can tap into that as well, again to me with a 

minimal environmental impact. But I will be happy to work with 

you on that. 

Senator MURKOWSKI. I would like to pursue this more. I would 

like to know whether or not the funds that will be made available 

for hydro will be divided or disbursed between the more conventional hydro projects, and then you have the emerging technologies. 

In Alaska, we are interested in looking at the potential for ocean, 

tidal, in-river, hydrokinetic. But again, these are opportunities that 
21 

we would like to consider ways to pursue them. But when you see 

the substantial reductions in this area, it causes us to question 

whether or not we have that level of support from the administration. So I would love to talk to you some more about it. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Udall. 

Senator UDALL. Thank you, Mr. Chairman. 

Good morning, Secretary Chu. 

Let me just start by making a couple of comments, in particular, 

focus on the budget. I know you have made some difficult choices 

in concert with the President. You have balanced the needs of clean 

energy technologies which have so many important opportunities 

for us. I support the President’s freeze on discretionary spending, 

so in the end, it is about setting priorities. But thank you for your 

hard work in that regard. 

I did also want to mention that I am pleased to see the investment in nuclear research and development programs, particularly 

the emphasis on small modular reactors. I introduced a bill late 

last year. We consulted with the Department of Energy. The ranking member and the chairman graciously cosponsored that legislation. So I look forward to moving forward in that particular area 

because there is real potential with modular nuclear reactors. 

Let me turn to the home front. The National Renewable Energy 

Laboratory is based in Colorado. We are very proud of that facility. 

I want to thank you for including the final construction funds for 

the Energy Systems Integration Facility. As you know, it will serve 

as a point of coordination and collaboration on clean technology integration. 

Everywhere I go, I hear that the University of New Mexico is on 

the cutting edge and the University of Alaska, the University of 

North Carolina, and Vermont. Every university, particularly the 

State systems, are excited about the potential. That is what we 

want. We want this race to the top, to borrow a phrase from the 

education world. I think this point of attention at the Renewable 

Energy Lab will serve us well. 

Let me turn to the gap that you are well aware of between 

science and applied research. I know you have made that a focus 

of your efforts. Could you update us on your efforts to assure that 

key labs like NREL are achieving that goal? 

Secretary CHU. First, the two under secretaries relevant in this, 

Kristina Johnson, the under for energy, and Steve Koonin, the 

under for science, are working very closely together. They have a 

very good relationship. A lot of the issues that were traditionally 

stove-piped in, let us say, the applied area, lots of discussions now 

with the Office of Science. The Office of Science has, in the past, 

developed a very rigorous review process that is being ported over 

to the other areas so that we can improve the decisionmaking process. It is not bad, but I think there is always room for improvement. The integration of a lot of the things. For example, in the 

Office of Science, they could be focused on many of the research 

needs that will enable one to actually think of much more dramatic 

breakthroughs. That is being integrated more closely with the more 

applied areas. Those applied areas also include the beginning of piloting and deployment. 
22 

So this remains something that is a central concern and focus for 

us because there is very little time, if you look at what we have 

to do by mid-century. We have to accelerate the deployment from 

the laboratories and universities and national labs into pilot programs and into the marketplace, being picked up by the private 

sector. So there are many, many discussions both formal and informal after work—I have to admit sometimes lubricated with 

‘‘biofuels’’—where the leadership are really trying to say, OK, what 

can we do now because we have control for the entire value chain 

of this. So it is something I would be glad to talk about in detail, 

but it is something we remain very focused on. 

Senator UDALL. Your mention of biofuels—I know that there 

have been concerns at various points, as we have worked to encourage more biofuels, that one of the problems we might have are the 

producers might want to drink the biofuels rather than use them 

in their automobiles or trucks. 

[Laughter.] 

Secretary CHU. Carrying charges. 

Senator UDALL. I hear my Arkansan friend down here chuckling 

about that. 

In the remaining time, the chairman talked about storage, and 

we had a very important hearing late last year on the potential of 

storage which both involves transmission and production. You are 

doing some work on modeling of the grid to better understand how 

we incorporate that storage. Do you have the necessary personnel 

and resources to really dig deep into that opportunity? 

Secretary CHU. We can always use more, but certainly, for example, the administrator of the BPA—I had a phone conversation 

with him about a month ago. He is very eager to look at integrating power generation with wind. The BPA, the Bonneville 

Power Administration, is 20 percent wind and 80 percent hydro. 

They have good hydro storage potential. They also actually have, 

it turns out, good compressed air storage potential. So I said this 

is great. You have my full backing. Push on this. 

ARPA-E is looking at storage, not at the scale of hydro storage 

or compressed air storage, but certainly storage for large buildings 

and things. These are liquid metal batteries. Within a few years, 

we will know the prospect of increasing megawatt-hour storage by 

a factor of 10—because of that it would have a profound impact on 

the reliability of our electrical systems. It could mean that you 

could really have, in areas like the western part of Alaska, which 

are off-grid—you can actually develop renewables and you have a 

practical source of electricity off grid. 

So it is very exciting and it actually makes it much more feasible 

to use photovoltaics generating the capacity. If you can have in a 

building that scale of storage, that means you can actually put on 

much more capacity on your rooftop. 

So going forward, storage is a very important part of getting us 

to low carbon fuels. 

Senator UDALL. Thank you. I look forward to working with you 

particularly in this area. Thank you. 

The CHAIRMAN. Senator Burr. 

Senator BURR. Thank you, Mr. Chairman. 

Mr. Secretary, welcome. Thank you for your testimony. 
23 

You said that we know more now and that there are better 

choices than Yucca. Now, I happen to be one that has felt that 

Yucca as a planned site was—we are way past that. But tell me 

exactly. What do we know now? 

Secretary CHU. I would be delighted to. 

Let me give you an example. I do not want to prejudge what the 

Blue Ribbon Commission is going to be doing. 

Senator BURR. No. I am trying to get you to justify for me why 

we need a blue ribbon panel if we know it. 

Secretary CHU. Because I think I know something but I am 

smart enough to realize that I certainly know far from everything, 

and to get a distinguished bunch of people together to really look 

over all the things that are going to be anticipated—I cannot personally—— 

Senator BURR. Mr. Secretary, you and I both know that a new 

nuclear plant is a lot of money, $8 billion average. Many of the applications that are in are investor-owned utilities. They are going 

to do this in a combination of Government-guaranteed loans and 

shareholder investment. Do you think we are going to maximize 

the build-out of nuclear until we have resolved what we are going 

to do about nuclear waste? 

Secretary CHU. No. We are going to have a solution to nuclear, 

the back-end fuel issue. I think scientifically we are going to have 

a solution to that, and I think given that, then there is no reason—— 

Senator BURR. When? 

Secretary CHU [continuing]. To be a little bit tepid. 

Senator BURR. When? 

Secretary CHU. We have decades. As the NRC said, there is 

going to be at least a half a century. 

Senator BURR. But temporary storage does not meet the requirement for shareholders to aggressively invest in the build-out of nuclear generation. As long as the Government loans are in place, we 

will probably have activity to build out. I personally believe that 

that is not enough nuclear generation plants for the future. So if 

we build out 2 dozen and then we stop, where are we better off 

than the fact that we have not built any for decades? 

Secretary CHU. The intent of the loans and the reason the administration asked for more loan guarantee authority is to get 7 to 

10 nuclear powerplants started. By that time, there is enough confidence in the investment community and the utility community to 

let the private sector take over. So the intent is not to stop at 7 

to 10. The intent is to start it and let the private sector then take 

it over. 

Senator BURR. Mr. Secretary, I make the case to you if the private investor community does not see an answer to the storage— 

permanent storage, not temporary storage—of nuclear waste, they 

will feel they might be in some way responsible for that storage 

and at the whim of a future administration that decides, well, you 

know what Secretary Chu—the path he was headed on really was 

not the right one because what we know today is we ought to bury 

this in the ground. 
24 

We have got to pick a path and go for it. We either know something and we should do it or we are going to kick this can down 

the road which, quite frankly, I am getting tired of doing. 

But let me just say this. You are the one that is going to have 

to tell ratepayers that there is not a plan for permanent storage 

but they are going to continue to be soaked by the Federal Government, a required payment through their utility bill to fund the 

storage. I find that unacceptable, to be quite honest with you. They 

have been paying into this for years and they got nothing. We do 

not even have a plan now as to where we are going to go. We are 

going to set up another commission. 

So I encourage you, whatever commission we set up, would you 

make sure that the timeline for their decision is as quick as possible? Before they start, share with them what we know now so we 

give them a starting point. 

Secretary CHU. I would be delighted to do that and am beginning 

to do that. 

Senator BURR. Good. 

Secretary CHU. Let me just very briefly say that the two cochairs of this commission want to push ahead as rapidly as possible, and I share their enthusiasm. 

Senator BURR. In Washington-speak, that can be at a snail’s 

pace, and I hope we will not use Washington. 

Mr. Secretary, the administration has proposed a 7 percent budget increase. When matched with the stimulus package, the way I 

calculate it, that is an 80 percent increase. Is that justifiable right 

now? 

Secretary CHU. I believe it absolutely is justified. The administration said that—across the board, if you take out defense and the 

social programs, they were holding to a flat budget. 

Now, the fact that the Department of Energy has gotten increase 

just reflects the priorities in nonproliferation, in national security. 

There is also a 2.8 percent—— 

Senator BURR. In national security, we are decreasing the funding of the SPR 43 percent. The SPR is there to provide us that access to petroleum if, in fact, the Middle East is cutoff. We are decreasing funding 43 percent. 

We are not increasing funding of transmission. You have talked 

about the smart grid. But if you go to the northwest of Texas and 

you see a windmill farm, you see a third of the windmills turning 

and two-thirds not down for maintenance, down because the transmission lines will not handle that amount of generation moving it 

to a grid. But we have not targeted specifically more money to get 

electricity from a generated point to a grid. We are focused on the 

grid. 

I would only suggest to you that whether it is wind or whether 

it is solar or whether it is another renewable, if we are not going 

to invest in the right areas, then we are not going to be able to tap 

successfully what the country can do. 

Any comment on that? 

Secretary CHU. Let me speak very briefly on the SPR. The projections now the EIA is giving us that the U.S. oil, the traditional 

oil, going forward will remain flat. Our increase in transportation 

fuel will increase, but it will be taken up by biofuels. 
25 

So we have a statute that says we need a reserve that allows 90 

days of import protection, and we think that the current SPR gives 

us that. So that is why we are decreasing the budget. We had an 

up-tick in the budget to move one of the caverns. That is an environmental issue. But the feeling is that the U.S. petroleum is adequately protected. 

Senator BURR. I thank the chairman who has been extremely patient. I will stay around for a second round. 

But I would only make this comment. I think when this decision 

was made, the five heads of our intelligence organizations and law 

enforcement did not say to Congress that they had 100 percent confidence that there would be an attempt to attack us in the next 6 

months. Now, I am not sure exactly how that computes, but I 

would only say that it should suggest to all the Members of the 

Senate that the world is not a safe place. The Middle East is not 

a stable region, and the likelihood is there might be an interruption and that may or may not last more than 90 days. So I thank 

you. 

The CHAIRMAN. Senator Sanders. 

Senator SANDERS. Thank you, Mr. Chairman. 

Secretary Chu, thanks for being with us and thank you for the 

great job that you are doing. 

You know, sometimes we forget and we do not look at the big picture, but I think since Richard Nixon there has been a vision in 

this country and discussion in this country about the need to break 

our dependency on foreign oil. Right? People have been talking 

about energy independence for decade after decade after decade. 

Obviously, we have a very long way to go, but I think it would 

be unfair not to acknowledge that in the last year we have made 

the bolder steps forward than we have in the history of this country. 

When Senator Burr talks about large increases in the energy 

budget, he is right. I applaud that because the time is long overdue 

that we end the insanity of spending $350 billion every single year 

supporting Saudi Arabia, getting involved in wars for oil rather 

than moving to energy independence. I note that in this budget, 

solar is increased by 22 percent, wind by 53 percent, geothermal 

by 25 percent, $300 million more for weatherization, and $75 million more for the State energy program. I think all of that is exactly the right thing to do. 

I have a concern, in fact, that we are perhaps getting into a very 

dangerous area by adding another $36 billion in loan guarantees 

for new nuclear plants. I know that many of my friends are good 

conservatives and they tell us to get the Government out of 

everybody’s life, but somehow when it comes to the Government 

supporting nuclear energy, well, I guess that is a pretty good thing. 

If it is such a good idea, why is the private sector not jumping in? 

The answer is it is risky business. It is risky business. 

But I do want to mention that this $36 billion in loan guarantees 

for new nuclear plants comes on top of an existing $18.5 billion 

that has not yet been used. From the taxpayers’ perspective, it 

means that the CBO has told us the risk of default on new nuclear 

plants is above 50 percent. 
26 

So my own feeling is nuclear is probably the most expensive way 

to generate new energy. It is, in fact, risky. I applaud you and the 

President for beginning to put a whole lot of money into sustainable energy and energy efficiency, but I think, in fact, that is the 

future of America and not nuclear. 

Let me ask you, Mr. Secretary. Talk to us a little bit about some 

of the breakthroughs that you anticipate, that you see are coming 

in solar. For example, Ken Salazar has talked not infrequently 

about the potential of solar thermal providing a substantial part of 

electricity in this country. We are beginning, I think, to make some 

progress. Can you give us a report on that? 

Secretary CHU. Sure. There are two types of solar for generating 

electricity: solar thermal and photovoltaics. There are new ways of 

getting much more efficient, first, higher temperatures, tracking to 

get higher temperatures in solar thermal, concentrated solar. Solar 

thermal has the advantages that you can store for about a day the 

heat, newer fluids that allow these things to be more efficient. In 

photovoltaics, the cost continues to go down, the costs of modules. 

The solar modules themselves have now gone below $2. 

Senator SANDERS. Can I interrupt you—I am sorry—just to ask 

you this question? At what point do you think solar would be competitive with the more conventional energy technologies? Are we 

closing in on that gap? 

Secretary CHU. We are closing. Right now it does need subsidy 

help, but my hope is that especially in photovoltaics, for example, 

because it compliments so nicely the need for electricity during hot 

summer days, once we get an integrated module plus inverter 

micro-integrated—because the inverters, the electronics, actually 

do not last as long as the modules themselves, plus thin film—I see 

once we get that going, the price will really come down. At $2 an 

installed watt, certainly a $1.50 an installed watt, then I see all 

sorts of things popping up without subsidy. 

Senator SANDERS. We do not have to worry about burying waste 

from solar energy. Is that not right? We do not have to spend billions of dollars figuring out how we get rid of that toxic—— 

Secretary CHU. Actually some of the thin film ones we have to 

be good about recycling the materials. 

Senator SANDERS. Right, but not exactly radioactive waste. 

Talk a little bit, if you might. I think there is widespread agreement that the most cost effective way of going forward in energy 

is energy efficiency. You are familiar with the PACE program. Can 

you say a word about what you see the potential for that concept? 

Secretary CHU. We are working with other agencies, particularly 

Shaun Donovan’s HUD. The idea is that energy efficiency we believe really does save money, but there are hurdles and one of the 

hurdles is the initial investment if you need $3,000 or $4,000. So 

PACE says a local jurisdiction, a town or a city, can volunteer. A 

homeowner says I want to do my house. We will increase your 

property tax. You get the money at a low interest loan. Your 

monthly payment of increased mortgage rate or property tax, for 

example, is less than what you are saving on energy. So it pays for 

itself. 

Senator SANDERS. Mr. Chairman—Mr. Acting Chairman, I would 

just hope that we pay attention to this because one of the impedi-
27 

ments to moving forward aggressively in energy efficiency is that 

people do not have the $5,000 or $10,000 to retrofit their home. By 

giving them the flexibility of paying it off through a few dollars 

more in property taxes, while they are saving money on their electric bill, is very clearly, I think, a win-win situation. 

Thank you very much, Mr. Secretary. 

Senator DORGAN [presiding]. Senator Sanders, thank you. 

Senator Lincoln. 

Senator LINCOLN. Welcome, Secretary Chu. We are glad to have 

you at the committee, and I certainly enjoyed working with you. I 

appreciate the great job that you are doing. 

I would like to echo my colleague from Alaska’s comments about 

hydro. It is very important in a State like ours where we have a 

tremendous amount of fast-moving water, and it has been a great 

source of energy for us in the State of Arkansas and I think something that we have managed well and would encourage you to look 

at that. Senator Murkowski brought up the cuts in hydro. 

There are some interesting studies and industries. I know there 

is a group out of Massachusetts that is looking at putting the ability to capture the energy of moving water at the bottom of the rivers and some other different technologies out there. So I hope you 

will not give up on that. I think it is important for many of our 

States and it is something that we have access to. We may not 

have as much of some of the other renewables. We certainly have 

a little bit of everything, and that is a good thing. 

Senator Burr brought up the nuclear issue. I guess one of my 

questions there would be to what extent is the administration committed to the discussion of possibilities for nuclear reprocessing 

technologies. That never was brought up. 

Secretary CHU. It is a possibility. But again, right now what we 

have I do not think is proliferation-resistant and I know it is not 

financially viable only because of looking at the experience of 

Japan and their reprocessing which is about a factor of 2.5–3 over 

budget. This is going north of $20 billion. 

Senator LINCOLN. But other countries are. That is why Japan 

shipped it somewhere to have it reprocessed. 

Secretary CHU. They are, but their experience in these new reprocessing plants is that they are way over budget. 

Senator LINCOLN. We can learn from that experience. 

Secretary CHU. Right. 

Our budget and our intent is to do research in reprocessing. 

There are other ways as well. For example, if we can develop oncethrough burning, which is actually what we call a much deeper 

burn, so that you can extract up to 30 percent of the energy from 

a once-through cycle, that would be transformative because we are 

extracting less than 1 percent of the energy content now. 

Senator LINCOLN. It is amazing. I have toured several nuclear facilities, and when they have showed that to me and I have actually 

seen it, you are exactly right. I mean, there seems like there is a 

lot of waste that goes out. 

Secretary CHU. Right. There is a large volume. So that is decreasing the amount of waste by a factor of 30. 

So I think we are going to be looking at all those things. It has 

to be proliferation-resistant. It has to be economically viable. 
28 

Again, to either of those things, it is not clear what the path is, 

but that is what research is about. 

Senator LINCOLN. Right. Would you agree that the reprocessing 

or the extension of what we are able to capture out of the leftover 

energy that we are not using could be a part of the competitiveness 

that you mentioned that is important in our nuclear industry? 

Secretary CHU. Yes. We are looking—first, the real, very basic research stuff, I think, the Department of Energy simply has to support. But once it looks as though the private sector is getting interested, then it becomes a partnership with the private sector. Again, 

our view is that there are a lot of new ideas out there. These ideas 

have been popping up only in the last 5 years, 10 years. So it is 

a new day in town in terms of what the possibilities are. 

Senator LINCOLN. Obviously, maximizing that resource is going 

to be what makes it more competitive, I would assume. 

Just quickly, how quickly do you think you can move forward 

with the construction of these nuclear powerplants? 

Secretary CHU. Despite appearances, we are working very, very 

hard on, first, getting the loan guarantees for SET. There are 

bumps in the road, but I have to say there have been times when 

I have been talking with the CEOs of the various companies on an 

every third or fourth day period trying to nurse these things along. 

Senator LINCOLN. So that $40 billion that you requested for 

there—is that going to help accelerate the loans? 

Secretary CHU. What it does is it allows us to more in the pipeline. The original $18.5 billion could, at most, do three to four new 

reactors. It has been our feeling, the feeling of the National Academy of Sciences, that you need more than that to give the confidence these things can be built on time, on budget. Once you have 

that, then we believe the financial markets, the rate commissioners 

say, OK, there is enough confidence. We know we can do this and 

we can build these things in a timely manner without excessive 

delays. At that point, we hope the private sector picks it up. 

Senator LINCOLN. Good. I hope you will share with us the ways 

that you feel like you have improved on that loan guarantee program and what else you have got in store for that because we want 

to see those resources out there as quickly as possible. I appreciate 

it because I think there are a lot of folks out there that are looking 

forward to the opportunity of being able to get moving on that. 

Particularly, I will certainly associate with the gentleman from 

Colorado. Biofuels are critical for us in rural America, but particularly in States like Arkansas. We want to work with you from the 

standpoint of the Agriculture Committee on how agriculture can 

really play a successful role in being a part of that. 

Secretary CHU. Thank you. 

Senator DORGAN. Senator Lincoln, thank you very much. 

Mr. Secretary, are you having a good time? The reason I asked 

the question is you received the largest venture capital sum in the 

history of humankind when the Congress gave you $36 billion in 

the economic Recovery Act and you have wide latitude really with 

the use of that money to go out and change our energy future. So 

are you having a good time doing that? 

[Laughter.] 
29 

Secretary CHU. Yes. Let me just say in some of the loans, the 

1703 loans, the way the statutes are configured—we cannot fund 

some of the things we would like to fund. So that is why in the 

new budget, we are asking for $500 million so that we can help 

those loans because otherwise a lot of the more progressive, more 

daring things we simply cannot fund. 

It is a very different story with the nuclear loans because they 

are self-financed. They don’t really take something out of the 

Treasury. 

But the short answer to your question is it is an incredible opportunity. You probably know Jonathan Silver, a very good man. We 

have started to put together only in this last year a very good team 

of people. It has got a very central focus. So we went from 0 to essentially, I think it is, now up to 11, and we think we can increase 

this. 

Senator DORGAN. You were hamstrung by not getting the nominations through the Senate very quickly, and we recognize that. 

But I do think that you have the opportunity to play a very 

transformative role in this country’s energy future. 

I want to ask you a series of questions, if I might. I have got four 

or five. I will do it quickly. 

FutureGen. Have you decided what you want to do with 

FutureGen? If you have not, when will you, do you think? 

Secretary CHU. We are working very closely with the FutureGen 

Alliance. So we hope within a couple of weeks, but certainly by 

mid-March we can get a decision on that. But I think they are 

working very hard. We clearly want them to put together a successful package, but it really remains to be seen. 

Senator DORGAN. What I hear is you are forward- leaning on 

FutureGen. Is that what you are saying? I am trying to understand 

whether FutureGen is going to happen or whether some other approach is going to be used. 

Secretary CHU. The issue here is the cost and whether the Alliance—I mean, they need some new partners. They are getting 

some of those partners. I think Senator Durbin has been very helpful in that respect. But there are still issues regarding that. We do 

not want a huge overhang into the future on our budget. 

Senator DORGAN. One of the issues that I am very interested in 

as chairman of the appropriations subcommittee that funds these 

issues is the beneficial use of CO2. We know that CO2 is a problem. 

We want to have a lower carbon future. As we try to understand 

what to do with CO2, part of it is the opportunity for beneficial use, 

that is production of algae as an example, enhanced oil recovery as 

an example, and there are others, the fellow that has figured out 

how to create concrete by mineralizing the flue gas and containing 

the CO2. 

Give me your assessment of beneficial use of CO2 as a potential 

solution to a lower carbon future? 

Secretary CHU. It is certainly a partial solution. To the list you 

just named, I would add methane coal bed production. Carbon dioxide will displace the methane and you can recover more natural 

gas. We have a research program, methane hydrate recovery. We 

are eager to get on with an experiment. This is research in Alaska 

for that. How do you extract natural gas which we see as transition 
30 

fuel? There are only two sources of energy that can be turned on 

fast enough when the wind stops blowing because we will probably 

only get about an hour or 2 lead time to say it is tapering off, and 

that is hydro and natural gas. So natural gas is going to be an important part of this. So we are continuing to do research on that. 

Senator DORGAN. I would just observe the wind does not stop 

blowing in North Dakota, by the way. 

[Laughter.] 

Senator DORGAN. I want to ask you about the issue of transmission. The bill that we created here and I hope will get to the 

floor at some point will help create the interstate highway of transmission capability. We have tried to deal with the issue of planning, siting, and pricing, which are the impediments. One of the 

things I am interested in—is there new technology out there on 

transmission wires because we are using the same old technology 

for 50 and 70 years. I know there have been some advances, but 

if there is some new technology that allows us to make these corridors much more capable, that would be helpful. 

Then second, attached to that, in order to electrify the vehicle 

fleet in this country with the 1 million vehicles on the road by 

2015, which I believe is the administration’s goal, we are going to 

have to maximize renewable energy. That means getting energy 

from where the wind blows and the sun shines and then putting 

it on the wires to move it to the load centers. 

So give me your sense of the technology of transmission, and 

then do you believe we are on the road to 2015 really having a million vehicles moving toward an electrified vehicle fleet? 

Secretary CHU. There is not a radical technology, but there is 

continual improvement. We are going to better materials for the 

wires so you can have more current carrying capability with less 

weight. There is an evolution toward much higher voltages which 

is what you will really need to bring the renewable resources to the 

population centers. 

This is one of those things that really gets in my craw that China 

is now leading the world in the highest voltage transmission lines, 

whereas it was the United States that introduced electricity transmission distribution systems with Thomas Alva Edison. 

There are some technologies that we are investing in that have 

to do with creating very high voltage DC that you can actually take 

down. Usually DC is only one-way. You generate here. You port it 

a long distance. You bring it down. If we have the technologies that 

can drop it down the way we do AC—but this requires some technology development in the high frequency switching of these very 

high voltages and high power. So that is something we are investing in. 

Senator DORGAN. Just finally, are you positive about an electric 

drive future and 1 million vehicles by 2015? 

Secretary CHU. Positive? I do not know about that. But I have 

a bet with Larry Summers regarding that. I think there will be a 

reasonably large deployment. 

Senator DORGAN. Can you describe the wager? 

[Laughter.] 

Secretary CHU. No. It is a private one between he and I that I 

may or may not win. 
31 

But in any case, it is something that is a very important part of 

what we see in the energy future, namely that we want to electrify 

personal vehicles, especially the short-haul stuff, and that is a very 

important part of it. 

Senator DORGAN. Mr. Secretary, let me just say for myself—and 

I think for some others as well—I am really pleased that you are 

where you are. I think you are a man for this moment, and this 

needs to be a transformative time for energy. So thanks for your 

work. 

Senator Shaheen. 

Senator SHAHEEN. Thank you, Mr. Chairman. 

I would just echo your comments. I think we are all very excited 

that you are at the Department of Energy. It is really encouraging 

to see some of the steps that are being taken. I just visited the New 

Hampshire Electric Cooperative, and they are working with a grant 

they got through ARRA to do smart meters, and they are going to 

have some very interesting data and, I think, show what a difference it makes when we do have those new technologies and 

make them available to consumers, that consumers are going to respond and be more efficient. 

One of the other programs that got a lot of money through the 

Recovery Act was the EECBG program, and that is something that 

has also been very popular in New Hampshire, a small State with 

lots of small communities. Demand has been six times greater than 

the available funds. 

So can you talk about what you hope can be done to follow up 

on those grants made available through the Recovery Act? 

Also, one of the concerns that we have heard from local communities is that a lot of the innovation that is coming is coming 

through local governments, school districts, municipalities, and 

small towns. They find it hard to access assistance. They are not 

sure where to go in the Department to get help or to share the information and the innovation that they are doing. 

So can you also talk about your vision for responding to those 

small governments? 

Secretary CHU. OK. First, there is a new program that is being 

stood up, and what we are doing is we are helping the cities, the 

towns. We are helping them say if you do these certain things, you 

will not trigger a NEPA review. So we are working with EPA and 

CEQ on what are categorical exclusions. If you do this, this, and 

the other thing, you do not need a NEPA review. A NEPA review 

could trigger an environmental impact statement. Once you go 

down that road, then you are seeing delays of a year, a half year, 

or more. So we are doing that. We are giving them language, essentially template language, that says you need to do this. 

We have worked with our historical preservation societies. It is 

very common sense, but it needed to be done. If you are in a historical site, anything that you do, caulking, insulation, anything that 

is invisible to the outside, you do not have to have them review it. 

There is a blanket agreement that says you are good to go. 

So many of the things that would introduce delays, especially to 

a local community which is not used to dealing with some of these 

things, we are trying to say if you do it this way, you can bypass 

that. 
32 

Also, when they want to design a request for a proposal, which 

is allowed under EECBG, again some of our local people are not 

used to this. So we are now saying here is an example of a proposal, a template of a proposal, that would be good to go, that satisfies all the legal requirements. If you mimic and copy the form of 

this proposal, that saves a lot of staff time, a lot of staff uncertainty. 

Finally, we have made it known, in talking with the NARUC 

people, that we want to be responsive within 24, at most, 48 hours. 

So we have hotlines. We have Web sites. We have e-mail. Just email us if you have a question. We will respond. So it is a very fast 

turnaround. We are doing all those things. 

We are looking at our site offices to make sure that our site offices are doing the work flow in the most efficient way possible so 

that there is no hang-up in our site offices. So everywhere down 

the food chain, we want this money out as fast as possible because 

it is fundamentally jobs, as well as saving money faster. 

Senator SHAHEEN. Thank you, and we appreciate that we are 

now over the hump in terms of getting the ARRA money out. That 

is very helpful. 

One of the things that we also have a lot of in New Hampshire 

is biomass. We are the second most heavily forested State in the 

country. As you know, biomass can be helpful not just in providing 

electricity through utilities but also in providing heat. So that combined thermal use is something that we think is important so that 

we make use of biomass for both. 

Can you talk about what the Department is thinking about in 

terms of the future of thermal energy? 

Secretary CHU. Sure. There are several areas that can be used 

for biomass. One, of course, is transportation fuel, both the gasification of the biomass which would allow you to gasify waste products, wood chips, wheat straw, things like that to make very clean 

fuel. When you gasify, you take the carbon dioxide you sequester. 

There are enzymatic ways of doing this. Co-firing. So we are now 

beginning to invest in what it would take to treat biomass, blend 

it in with conventional fossil fuel so that you can actually generate 

electricity. 

Now, the good news here is that once we start capturing the carbon from this, the fact that the plant has sucked a lot of the carbon 

dioxide out of the atmosphere—you capture the carbon from, let us 

say, a mixture of coal or natural gas—let us say coal and biomass. 

This becomes environmentally very friendly if you sequester that 

carbon dioxide. So the co-use of biomass in electricity generation by 

burning and capturing the carbon is something we are beginning 

to invest in and trying to get that going. 

So there is a whole wide range of things. This is just taking advantage of some of the natural resources of the U.S. The agricultural resources of the U.S. are enormous. The amount of agricultural waste that is not being used, that is eventually—you know, 

microbes turn it into carbon dioxide and methane and it goes back 

into the atmosphere. We can begin to capture a lot of that energy. 

If we sequester it, this becomes slurping carbon dioxide out of the 

atmosphere, which is, quite frankly, something we will need. 

Senator SHAHEEN. Thank you. 
33 

Senator DORGAN. Senator Stabenow. 

Senator STABENOW. Thank you, Mr. Chairman. 

Thank you also, Secretary Chu. I would echo others who have 

said that we are very appreciative of your leadership and the work 

of the Department of Energy. I would say on behalf of our State, 

in Michigan, that we appreciate that you have been a partner with 

us, and we are seeing results. There is much more to do, but I 

think we have turned a real corner. Thank you for that. 

You have spoken earlier about China, and I am sure that you 

saw in the New York Times a very concerning article talking about 

China leading the global race to make clean energy. We know they 

are, right now, investing about $280 million a day, I am told. So 

we are in a real race in order to have those jobs here and our own 

energy independence. 

The article talked about vaulting their competitors in Denmark, 

Germany, Spain, and the U.S. to be the largest maker of wind turbines, the largest maker of solar panels. Going on, they were 

quoted as saying most of the energy equipment will carry a brass 

plate ‘‘made in China.’’ So I hope that our effort is all about seeing 

the words ‘‘made in America.’’ That is what we want to see happen. 

So to that end, I wanted to ask you about several different programs that have been positive in the Recovery Act and how you see 

them going forward. 

First is battery technology. We know we have had a very significant investment in the Recovery Act. We in Michigan are seeing at 

least six new manufacturing facilities, different companies that are 

opening advanced battery manufacturing. But I am noticing that 

we do not have additional dollars in this budget going forward in 

a significant way. Battery technology, of course, is also critical for 

the development of wind and solar and other alternative energy. 

So I am wondering if you could speak about where you see our 

efforts going forward on investing in battery technology. 

Secretary CHU. We have a number of programs in the development of new technologies. In fact, one of the things we are proposing is a hub, one of our research hubs, on inventing still better 

batteries that can really transform. The advanced battery manufacturing is a very important part of the program. Where the dollars 

are most useful, I think, is looking at inventing in the radically 

new things that will guarantee that we are going to not only recapture leadership in battery manufacturing, but also will be pushing 

the frontier. 

The lithium ion battery technology was one of those things not 

invented in Japan. It was invented actually in the U.S., but more 

perfected in Japan. 

So we are putting in a hub. We are putting in a lot of other 

things. The RB is looking at battery technologies. So I think, again, 

can we invent the radically new things? 

I think with this emphasis—responding to Senator Dorgan’s 

question, the electrification of personal short- range vehicles is one 

very good way of decreasing our foreign oil dependency. It is a very 

clean system. You know, getting carbon out of the transportation 

sector is clearly the hardest thing that we have, and fuel efficient 

batteries and biofuels are the way. 
34 

Senator STABENOW. If I might just expand on that. As you know, 

I have legislation, working with a colleague, Congressman Peters 

in the House, the Advanced Technology Vehicles Act, that would 

focus us not only on small vehicles but on larger vehicles as well 

because we know that we have a tremendous opportunity with our 

larger vehicles, trucks, and so on. In fact, in Michigan, we are developing large batteries to be able to address those efforts. 

So I am wondering what efforts are happening in the Department to focus on vehicles, specifically larger vehicles and trucks so 

there are more energy savings, carbon emission savings? 

Secretary CHU. We have a new initiative, the Super Truck Initiative, where we think we can get perhaps 30 percent better efficiency out of our long-haul trucks, largely aerodynamics, a little bit 

of auxiliary power, more efficient heat recovery in diesel engines. 

But a lot of it is going to actually come out of aerodynamics. But 

we think 30 percent is achievable. 

The good news is—because the turnover in the truck fleet is faster, and so this is, again, something where you can see a much faster—and because the trucking industry is so tuned to the cost of 

fuel, to the economics of it, the adoption of a new technology that 

really pays for itself will be faster. 

Senator STABENOW. I know I have run out of time. I would just, 

first, thank you for the administration’s strong support and your 

strong support for the manufacturing tax credit, what we call 48(c). 

The $5 billion increase is absolutely critical for us. I look forward 

to working with you as the author of the language that is called 

section 136 retooling loans of the energy bill of 2007. I look forward 

to working with you on how we may continue that effort as well. 

We have put a number of things in place that I think are very significant, the industrial technology program, a number of things. I 

was pleased to see additional money there as well which is probably the fastest way to increase our energy efficiency and reduce 

carbon emissions. 

I think we are on the right track. I would just urge, working with 

us, that you continue to advocate for the level of resources that are 

needed for us to be able to win this race that we are in. Thank you. 

Secretary CHU. Thank you. 

Senator WYDEN [presiding]. I thank my colleague. 

Secretary Chu, welcome. It is good to have you back. As you will 

recall, the last time you were here, I talked a bit with you about 

particularly expanding exports, expanding exports of wind turbines, solar panels, and renewable energy products around the 

world, largely because of the way you framed the issue. You said 

in the past—and I quoted Dr. Chu to Dr. Chu that one of the great 

economic challenges was making sure that we got some of those export markets, and I look forward to following up on that with you, 

particularly the developments with the Department of Commerce 

and the Trade Representative because I think nailing down that relationship, knocking some heads frankly, if you have to, is going to 

be essential. 

What has happened since our last conversation is the President 

of the United States at the State of the Union set a goal of creating 

2 million jobs by doubling U.S. exports over the next 5 years. Now, 

it is going to be very hard to attain that, I think, very worthwhile 
35 

goal unless we tap these markets overseas for renewable energy 

products in the export area. 

So my first question to you is, what specifically do you intend to 

do in light of the President’s announcement for creating 2 million 

jobs, doubling U.S. exports over the next 5 years? What are you 

going to do at the Department specifically to help the President attain that objective? 

Secretary CHU. What we do is we support the research, the development, and the piloting, and finally deployment of new technologies, particularly energy technologies. I think we are still 

viewed in the world as the developers of some of the best high technology sectors. There is an overall strategy that we are a player in. 

We are not the major player, as you said. It is Commerce and Ron 

Kirk’s office. 

We are trying to get it so that, first, the companies in the U.S. 

have more confidence that they can export the highest technology 

stuff and you do not look under the hood and copy it. We are working with countries to say how important it is that they abide by 

patents, abide by intellectual property. But again, a large part of 

that is a mixture of State and other things. We are working with 

Defense and with State on export control. A lot of this is out-ofdate. So they are looking at those things. 

Again, to the extent that we can help Commerce in saying what 

are the things that we can export that are really not a threat to 

our national security—and so we have an active working relationship with Secretary Locke in Commerce through our Policy and 

International Affairs with David Sandalow. But mostly what we do 

is we develop stuff that we hope the rest of the world will want 

and buy. 

Senator WYDEN. Respectfully, Mr. Secretary, I think you would 

have given me that answer before the State of the Union. What I 

want to know specifically is what new steps are going to be taken, 

and let me walk you through at least one that is in your bailiwick 

and I sure would like to see changed. 

In approving applications for the Green Manufacturing Tax 

Credit—that is 48(c) of the tax code, and this is an area where the 

Department of Energy plays a critical role in approving projects 

that qualify for these credits—is the Department going to set in 

place new rules and new criteria that can help us make sure that 

we would be making products for the foreign demand? 

In other words, I do not see, frankly, the Department moving. 

This is an area where you all clearly have a leading role to play. 

In fact, the IRS said we do not know a whole lot about this. We 

are going to make sure that folks who do can run it. If you all do 

not take steps now in an area that I think is particularly fertile 

for exports, I guess I am going to have to introduce a piece of legislation—and I serve on the Finance Committee—and work there 

and here to get this changed. But I think foreign demand ought to 

be a big factor in how those tax credits are awarded. 

Do you agree? If so, what is going to change to make sure additional steps, in light of the President’s announcement, are taken 

now? 
36 

Secretary CHU. I agree with you. I think this is part of our economic prosperity, that we have to increase our foreign exports, and 

I will be glad to work with you on that. 

But specifically what were you—— 

Senator WYDEN. Does the Department give in the award of these 

credits any consideration for foreign demand for the goods and the 

producers? I mean, here is an opportunity for you to go out and 

take a statute and, in effect, under what I believe is your current 

authority—you can go out and say we are going to give these credits to people that are serious about exporting and exporting in an 

area where there is foreign demand. Right now, there is no criteria 

in this statute, and if you all do not put out a new set of criteria 

that boosts the role of exports in 48(c), the Green Manufacturing 

Tax Credit, I guess I am going to have to try and write a law that 

requires you to do it. I do not want to do that. I would like to Dr. 

Chu, somebody I like and respect, just go out and knock heads, get 

this done, and allow us to get it done quickly. 

Secretary CHU. Let us start with I would be glad to work with 

you on this. I think anything that contributes to the manufacturing 

and economic prosperity of the U.S. I am fully in favor of. So I will 

be glad to work with you on that. 

Senator WYDEN. So you will commit this morning to doing this 

and moving this up as a priority for these credits, 48(c), without 

the Congress having to move with legislation? 

Secretary CHU. I will commit to looking at and working with you 

and your staff to seeing what type of loan authorities we can do 

and the tax credits we can give that will enhance the manufacturing and the wealth generation in the United States. This sounds 

like we are in line and we are in sync with this. 

Senator WYDEN. Can you get back to me within 45 days on what 

specifically the Department will do in that area, 48(c), to beef up 

the prospect that more of those credits will go to American companies that are exporting to meet the foreign demand for renewables? 

Secretary CHU. I will commit to getting back to you in 45 days. 

[The information follows:] 

The goal of the Advanced Energy Manufacturing Tax Credit (48C) Program is to 

help make the United States globally competitive in long-term, high-end manufacturing jobs and to increase access to affordable renewable energy for future generations. The U.S. Department of Treasury is responsible for implementing the 48C 

program, in consultation with the U.S. Department of Energy. 

The 48C Program provides a 30 percent tax credit for investments in new, expanded, or re-equipped advanced energy manufacturing projects. Neither the legislation (Section 1302 of the American Recovery and Reinvestment Tax Act of 2009) nor 

the Notice (2009-72) distinguished between foreign and domestic customers of 48C 

recipients. 

Under the 48C Program, all 48C applicants are required to demonstrate commercial viability and to submit a business plan listing confirmed or potential customers. 

Some successful applicants indicated a foreign market for their manufactured product, while other successful applicants indicated a domestic market. In providing consultation to the U.S. Department of Treasury, the U.S. Department of Energy did 

not distinguish between foreign and domestic markets. Rather, the key factor was 

the reasonableness of the assumptions and claims of any market for the manufactured product. Applications were scored against four criteria: job creation; greenhouse gas avoidance; technological innovation/commercial deployment; and shortest 

time to completion of the project. 

Senator WYDEN. Very good. Thank you. 

My colleague from Alaska, Senator Murkowski. 
37 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Mr. Secretary, the chairman inquired briefly about stimulus dollars and I would like to pursue that just a little bit further. As of 

yesterday, the Department of Energy Web site showed that we 

have about $2.1 billion of the stimulus funds that was actually 

spent. As I understand it is about 6 percent of what the Department has received, and we understand that to be the third lowest 

rate for any Federal agency. 

I appreciated Senator Dorgan’s comments about are you having 

fun with it, because you really did as the Department get an incredible amount of Federal funding directed to you. It is one of 

those ‘‘be careful what you ask for, you might get it,’’ and then you 

got to deal with it. There is frustration on this side, but I know 

that there has been frustration on yours as well as to how you 

make that happen. 

What I am trying to determine is you have a goal of moving 

those dollars out. There is not a discrepancy, but there is a clear 

difference between obligating and spending those dollars. Part of 

my objection to what we saw with the stimulus was timely, targeted, temporary, and we are at that point where we are seeing 

that it is really very difficult to spend those Federal dollars within 

that 2-year period. 

I want to ask you, because there is a lot of discussion now about 

another stimulus or a jobs bill, and I do not know what it may look 

like. I understand that we may be learning in matter of days in 

terms of what will be included with a new stimulus or a jobs bill. But with the nearly $32 billion that is yet unspent, how do you 

deal with the backlog of funds that you have? Recognizing that you 

are very likely, as I understand a second infusion with a jobs bill 

coming forward, is this a situation where you need to say stop already? Or what is going on within the Department as we reconcile 

these 2? 

Secretary CHU. Sure. I think I agree. I mean, we are disappointed in the amount of money costed. I can just go down the 

list. 

Weatherization, $5 billion. This is a formula. We give it to the 

States. The States are widely variant in how they are getting the 

money out. There are some States who have costed over 20 percent. 

Other States have costed essentially zero. As we became aware of 

that, we are now sending people out to the States and those agencies and trying to help them get moving. I mean, this is a State 

agency or State agencies that are supposed to—this is true of 

weatherization. This is true of the State energy programs, the 

EECBG. 

I talked a little bit about the rules that are required, and we are 

trying to give both the State and the local organizations templates 

that say, OK, if you do this, we can move along much faster because many of these organizations with the local organizations are 

not used to dealing with this magnitude of money or dealing with 

some of the Federal rules. 

The loans. We started with essentially very, very—‘‘skeleton’’ is 

not really the word—staff. We now have a dedicated loan official 

building up the staff. We talk to him maybe twice a week on how 

do you get these—these are very complex loans, lots of things to 
38 

negotiate. There are other parts of the Federal Government that 

have to chime in on this, Treasury and OMB as well. So all these 

things we feel we are moving on. It is certainly less than what I 

hoped initially, but things are moving along. 

Senator MURKOWSKI. I appreciate that, and I think we are looking very carefully at what you have been able to actually spend 

down and where that has gone. We are talking about this second 

tranche if you will, a second stimulus or a third. I do not know 

what number we are on. But how will you spend more when you 

still have $32 billion that is yet hanging out there? I appreciate the 

difficulty in advancing it, but at some point, is it not better to say, 

wait a minute, we cannot take on more within the Department of 

Energy? 

Secretary CHU. It depends on the flavors in the money. For example, in the 1603 tax credits, it does not require a request for proposals and evaluation of the proposals. It does not require a lot of 

things. It just requires us to say, OK, do you qualify for this tax 

credit. In those situations, the time from the time of application to 

the time where money is in the bank of the companies, I think it 

was an average of 20-some-odd days. If you have to ask a local 

agency or even a Federal agency to say you’ve got to put out a proposal, you have got to get a request for proposals, you have got to 

bring them in, the amount of the $36 billion or $34 billion—only 

$11 billion was, kaboom, here it is. Out of that $11 billion, a lot 

of it going to State agencies, we now have to help those State and 

local agencies spend the money. 

So a lot of the frustration I share with you. We are spending now 

a lot of our time trying to help the local agencies spend the money 

because just obligating the money to local agencies we anticipated 

is not enough. 

Senator MURKOWSKI. I appreciate your comments. I understand 

what you are saying, but I think it still takes me back to my initial 

concern where if you have $32 billion that remains unspent, you 

are seeking a budget increase to the Department this year, of about 

7 percent, at some point in time as a Department you would communicate with our Democratic colleagues that are building this jobs 

bill, you indicate pretty clearly we are maxed out over here in our 

ability to spend these dollars in a timely manner. That is what we 

are talking about with the jobs bill, how we get the money out the 

door today to make a difference. This is where so many of us have 

expressed real anxiety and frustration over that initial stimulus 

package because it was not timely, targeted, and temporary in so 

many of those areas that we were keyed on. 

I think in this Department we recognize that there is great opportunity, but again at a time when we are looking to reduce our 

budgets everywhere, I think we have to understand what is already 

authorized, your ability to spend it responsibly, not just spending 

the money so we can say we are spending the money. 

Mr. Chairman, my time has expired, but Mr. Secretary, I just 

want to add you mentioned the methane hydrate research up in 

Alaska. We have been excited about that for a period of time. I recognize that within the budget, we have zeroed out the unconventional fossil fuel budget that supports that methane hydrate. It is 

my understanding that you have moved that over to the Office of 
39 

Science, but again that budgetary amount that we were hoping for 

has been reduced from $50 million to $18 million. I think we recognize the vast potential that we have with methane hydrates. I 

would like to work with you on that. 

Thank you, Mr. Chairman. 

Senator WYDEN. Thank you, Senator Murkowski. 

We are joined by our colleague from Wyoming, Senator Barrasso. 

Senator BARRASSO. Thank you, Mr. Chairman. Excellent job this 

morning at the National Prayer Breakfast. 

Senator WYDEN. Thank you. 

Senator BARRASSO. Mr. Secretary, welcome back to the committee. Good to see you again. 

I had a couple of questions. I wanted to start with uranium, if 

I could. 

In the budget, the Department budget includes an increase of about $180 million for environmental cleanup at the Portsmouth 

facility in Ohio. We have talked about that in the past. It had to 

do with uranium and excess uranium and selling uranium, but it 

seems that it is now a line item in the budget. So it is my understanding that you then plan to discontinue the proposed transfers 

of excess uranium in fiscal years 2011 and 2012 and 2013. Is that 

correct? 

Secretary CHU. That is correct. We are shifting over the support 

of the cleanup from transferring uranium because we have statutes; we cannot affect the uranium markets that much. There are 

requirements that we do not go over a certain limit. So we had just 

decided simply to put it in the budget rather than to take our uranium and barter it. 

Senator BARRASSO. Thank you, Mr. Secretary. I am glad to hear 

that the Department recognizes the significant problems that these 

uranium transfers are having on domestic uranium producers. I 

think it is a very good recognition on the part of the Department 

and I think the Department needs to abide by the management 

plan that was put into effect. 

Do you know if the uranium transfers that are already planned 

for fiscal year 2010 are going to proceed as planned, and are there 

other plans in the making, other additional uranium barters? 

Secretary CHU. I do not know the full details of that, but again, 

we are very aware of the fact that there is a statute that says that 

we cannot put more than 10 percent out there. We do not want to 

go to 9.9 percent, and so that is essentially why we backed off on 

the Portsmouth barter. 

Senator BARRASSO. Thank you, Mr. Secretary. 

I would like to move, if I could, to the clean coal and the loan 

guarantee program. You have expressed your commitment to this 

committee and to me privately to clean coal numerous times. Yesterday, President Obama announced the formation of a clean coal 

task force. Your budget includes $36 billion for loan guarantees for 

nuclear, about $500 million in credit subsidies for renewable energy, but it contains nothing for clean coal and carbon sequestration under the loan guarantee program. So it does not seem to fit 

with what the administration said about its commitment to coal or 

the mission of the loan guarantee program. Can you explain that 

to me, Mr. Secretary? 
40 

Secretary CHU. It goes to what our new budget—it goes to what 

Senator Murkowski was saying. What we are asking for in this 

budget and in the stimulus is we looked at the things that are 

oversubscribed, we looked at the things where we know we can 

move the money more quickly. There is a part of the loan guarantee in fossil that was not all used. So we said, OK, we are moving that along, but there is no need to ask for more money in that 

because we had not used the authority given to us. But whereas 

other programs where there was a shortage by a factor of 3; RB, 

a shortage of a factor of 100, that we can get out very quickly. 

So those are the things we are asking for in the new economic 

loans and all those things, the things that we know we can move 

quickly. The things where if we have to work with middle people, 

the States, the local governments, that adds another layer of bureaucracy as part of this. 

So we have loan guarantees in fossil. 

Senator BARRASSO. Along that line, the Department has made a 

number of commitments under title 17, the loan guarantee program, for clean coal technology. 

Secretary CHU. Yes. 

Senator BARRASSO. Is there a timeline that you have for finalizing these existing commitments? Because there seems to be a 

holdup. 

Secretary CHU. Right now there are two title 17’s. There is the 

1703 and 1705. Again, I would love to talk to you and Senator Murkowski about what we are doing in detail so you can understand 

what we are doing that we are not dilly dallying. These are very 

complex agreements and we also need, again under the statutes, to 

negotiate. Each loan is a one-off that you have to negotiate with 

each company and each applicant. We also have to protect the taxpayer’s money. So there is not really a hang-up. 

Senator BARRASSO. I would welcome that opportunity to meet 

with you and work with you on that, Mr. Secretary. I just want to 

make sure there are no kind of White House appointees who are 

not confirmed by the Senate, as you have been, who are weighing 

in on these projects either directly to you or to your subordinates. 

I have concerns that we want to make sure that this moves 

through. 

Then finally, Mr. Secretary, just to bring to your attention, there 

is an oil field testing center in the Rocky Mountains called the 

Rocky Mountain Oil Field Testing Center. Your budget zeroes out 

the base funding stream for this program. It is in Wyoming. It 

stems from the President’s pledge to the International Climate 

Community at Copenhagen. I can tell you, Mr. Secretary, I think 

that killing jobs in the United States, which I believe this will do, 

to earn international applause is bad policy. This is a program that 

offers small businesses and ventures and students the opportunity 

to test technology and learn in a real-world situation. So if I could, 

Mr. Secretary, I will submit a couple of questions to you in writing 

on that program. Thank you, Mr. Secretary. 

Thank you, Mr. Chairman. 

Senator WYDEN. I thank my colleague. 

Mr. Secretary, I am going to also give you a couple of questions 

in writing, and if I could get a quick response, particularly in terms 
41 

of wave energy and advanced vehicles. Again, there are some questions in my mind about whether we are tapping all of our opportunities. For example, the Department’s advanced vehicle programs 

are aimed at cars and trucks. We have got state-of-the-art plug-in 

motorcycles and streetcars in Oregon. So I will submit those in 

writing. 

I am anxious to work with you personally on this matter that 

you are going to get back to me within 45 days on because that 

48(c) of the tax code is a trampoline in my view for us to be able 

to tap the opportunity, with foreign demand being so high, to get 

our renewable products overseas, and it can play a big role in the 

President’s laudable objective of increasing exports. 

Anything else you want to add? 

Secretary CHU. We submitted a budget. I heard a number of you 

have some misgivings about the budget. I would be glad to meet 

with you privately to discuss the rationale and come to solutions 

on these issues. 

Senator WYDEN. We always like to give you the last word, and 

I am sure colleagues will take you up on it. 

With that, the committee is adjourned and we will excuse you. 

[Whereupon, at 11:37 a.m., the hearing was adjourned.] 

[The following statement was received for the record] 

STATEMENT FOR NATIONAL ASSOCIATION OF ROYALTY OWNERS (NARO) 

NARO opposes certain items in the Department of Energy’s 2011 budget as described in the document entitled ‘‘Terminations, Reductions, and Savings: Budget of 

the U.S. Government Fiscal Year 2011,’’ as currently produced by the Office of Management and Budget. The following testimony describes our concerns that said policies will be harmful to America’s energy policy as a whole, and also to royalty owners. 

While NARO shares several policy concerns with the rest of the energy community, this testimony seeks to focus the Committee’s attention more acutely on percentage depletion for royalty owners, which is the only tax deduction many NARO 

members take on their mineral royalty income. As will be discussed, many of the 

royalty owners which NARO represents do not have the wealth, time, and resources 

that larger energy and mineral companies do. As a result, they have a more limited 

ability, compared to the rest of the energy community, to organize and inform legislators of their concerns. 

1. Who does NARO represent? 

We are the National Association of Royalty Owners (NARO) and represent the 

concerns of an estimated 8.5 million American private owners of oil and gas mineral 

and royalty interests. We live and vote in all 50 states, even though our producing 

minerals may be in Arkansas, New Mexico, North Dakota, Oklahoma, Pennsylvania, 

Texas, and Utah, Wyoming or any of the 33 producing states. NARO has been educating and advocating for mineral/royalty owners since our original incorporation 30 

years ago in 1980. 

The average NARO member is over 60 years old, widowed, and receives less than 

$500 in monthly royalties as a supplement to their social security retirement income. 

The majority (something over 70%) of the minerals in the U.S. are owned by individuals and leased to companies for development. Thanks to the efforts of one of 

our members, we recently took a snap shot of one ‘‘marginal’’ oil well (producing less 

than 15 barrels of oil per day) in Grady County Oklahoma. This one little well has 

over 300 individuals in 46 states receiving royalty payments from its production. 
42 

Remember, these are estimated numbers of royalty owners. The total number of 

mineral owners is much greater, as vast areas are unproductive or have not yet 

been explored and developed. 

2. A look back at the rationale for percentage depletion in U.S. history 

In 1913, the 16th amendment to the constitution made the Federal income tax 

a permanent fixture of American life. That same year, mineral/royalty owners, in 

accordance with the newly minted tax code, began to account for the depreciation 

of their mineral properties which resulted from the depletion of limited mineral reserves. Congress enacted this tax deduction so that mineral/royalty owners could deduct a ‘‘reasonable allowance for depletion of ores and all other natural 

deposits . . . ’’ which results from extraction. What follows is an explanation of the 

conception of percentage depletion, and illustrates the continued need for the percentage depletion allowance for mineral/royalty owners today. 

What is depletion? Put simply, in the context of taxation, it represents the depleting value of a limited reservoir of a non-renewable resource such as Natural Gas, 

Copper, Oil, etc. Tax liability in America has often been dependent on the value of 

the property being taxed. As the object of taxation changes in value, the tax liability 

changes accordingly. This is commonly accepted by federal and state governments 

with regard to all manner of property, whether brick and mortar, automobile value, 

etc. As an automobile depreciates, the tax rate is lowered in subsequent years. As 

the minerals are extracted from a given property, the reserves are depleted, and the 

value of that mineral interest depreciates, as should the tax liability. 

Percentage depletion replaced discovery value depletion, which had been adopted 

in 1918 as an incentive to find new oil supplies that were needed in World War I. 

Under discovery value depletion, tax on minerals such as oil and natural gas were 

assessed at the time the minerals were discovered, but that proved to be an inefficient and unsavory policy for mineral owners, producers, and governmental tax authorities alike. Among Discovery value depletion’s shortcomings; it resulted in 

lengthy, not to mention expensive, quarrels between taxpayers and tax administrators over the predicted quantity and value of the minerals, and the subsequent 

amount of depreciation that would occur from the depletion of reserves. 

Even if the quantity and composition of minerals in the ground can be known 

with relative certainty, the markets for energy sources like natural gas and oil are 

volatile. This has been abundantly demonstrated with the dramatic price fluctuations of oil and natural gas in recent years. These turbulent markets make it difficult to predict the overall value of mineral reserves, especially beyond one year. 

Beyond unpredictable markets, there were additional problems with discovery depletion. Even today, the science of interpreting seismic data and the drilling of exploration wells remain something of an art, albeit to a lesser extent than in previous 

decades. The accuracy of pre-extraction predictions on the quality and quantity of 

minerals can prove disappointing. However, the inability to know with certainty the 

total future value of oil or gas from a given mineral interest, and the quantity which 

is likely to be producible, results from more than just the imperfections of geological 

data analysis. The ‘producible’ quantity underground is unpredictable due to unknowable, yet inevitable changes in technology. The recent advances in horizontal 

drilling, and the impact it has had on hydraulic fracturing technology are a great 

example. 

In the last decade, horizontal drilling innovations have allowed us to more cheaply 

use hydraulic fracturing in layers of shale rock where natural gas was previously 

unreachable due to the cost of recovery. Due to these technological improvements, 

hydraulic fracturing in shale has grown at an almost stunning pace. This has con-
43 

tributed to an increase of more than 50% in proven reserves of shale gas in just 

one year, from 2007 to 2008 (the most recent year yet reported by EIA). These innovations have freed up so much previously unrecoverable gas that the U.S. is now 

sitting on an estimated 100 years supply of clean burning natural gas at current 

consumption levels. The U.S. is currently in serious contemplation about ways to 

ensure that our energy policies are environmentally responsible for our children’s 

future. The rapid leap forward in shale drilling technology, and the resulting massively increased quantities of clean burning, locally abundant natural gas, are game 

changers for U.S. energy policy. 

Because of the impossibility, both for taxpayer and tax administrator, of predicting the nature and timeline of technological advances, and the difficulty for both 

parties of defending variables like quantity of reserves, quality of reserves, and projected market value, congress eventually abandoned the practice of determining the 

discovery value of minerals for purposes of the depletion allowance. In 1926, congress simplified the process by allowing mineral/royalty owners the option to claim 

percentage depletion. 

To figure percentage depletion, you multiply a certain percentage, specified for 

each mineral, by your gross income from the property during the tax year. This simplified procedure has proved essential to encourage the production of dozens of different minerals, both energy related and not. The percentage of income from a producing mineral property which one can claim as a deduction to account for depletion 

is currently 15% for oil and natural gas, and higher for certain other minerals. For 

example, the current rate for sulfur, uranium, asbestos, lead ore, zinc ore, nickel 

ore, and mica is currently 22%. These flat percentages save on compliance costs for 

both tax payer and administrators, because it prevents the potentially lengthy battle with each individual mineral owner over the value of depletion for their particular property. 

3. Effects of the proposed eliminations on royalty owners 

Under current policy, if the mineral owner feels that the depletion percentage 

specified by statute is unfair for their property’s particular mineral profile, then 

they can still alternatively file for cost depletion. Large mineral interest owners 

such as energy companies are more likely to file for the cost depletion deduction. 

The reason for this is that they have already incurred the cost of a complex analysis 

of their mineral holdings as part of the process of exploration. 

Larger mineral interest owning entities have incentive to be reluctant to share information with smaller or individual mineral owners from whom they may need to 

lease or re-lease mineral rights. They consider this information proprietary and necessary to compete in the marketplace. When compelled by statute to share information, they still have an incentive to under represent the value of the minerals to 

these smaller mineral owners because they want to pay them the smallest royalty 

that can be negotiated. 

If small ‘mom and pop’ mineral owners have to rely exclusively on the energy 

companies to which they lease their minerals in order to obtain the estimated value 

of their minerals, then a common result would be an undervaluing of the minerals, 

resulting in an undervaluing of the cost of the depletion of their minerals. Percentage depletion acts as a hedge that protects these smaller royalty owners from the 

potential double disadvantage of receiving an undervalued royalty from an energy 

company and then having that loss compounded by a subsequent undervaluing of 

the cost of depletion. 

As previously mentioned, the average NARO member’s royalty income is five hundred dollars per month, with many getting considerably less. While collectively the 

minerals they own are of vast value, the minerals owned by a single individual are 

often relatively small in amount. A geological & reservoir assessment can be very 

costly for these small royalty owners. Geologists and engineers bill on an hourly 

basis, plus expenses, and it is hard to estimate the time an adequate assessment 

can take. Royalty owners cannot afford to see their income eaten up by the cost of 

independent geological & reservoir assessments, attorney’s fees, and accounting fees 

that can quickly accrue in the pursuit of claiming cost depletion. 

Also, as previously mentioned, the average NARO member is over 60 years old, 

and widowed. Some are apprehensive about the process of negotiating leases with 

energy companies. Percentage depletion is one tool that encourages these mineral 

owners to more strongly consider leasing their minerals for development. 

While percentage depletion is of primary concern for NARO members, we realize 

secondarily that ALL of the proposed tax law changes in the FY 2011 DOE budget 

that affect oil and gas industry decisions to drill—such as no longer being able to 

expense intangible drilling costs—affect owners of undeveloped minerals, by rendering their properties valueless. We additionally realize that elimination of credits 
44 

for marginal wells and tertiary recovery would result in the plugging of thousands 

of older wells and a subsequent loss of vital supplemental income for countless retirees. 

Several of our royalty owner accountants have looked at how the elimination of 

the depletion allowance will impact our elderly, low-income, royalty owners. We 

have found that in many instances, the elderly folks with incomes less than 50,000 

dollars annually will now have their Social Security benefits become taxable because 

of the elimination of the depletion allowance. This will lay an undue burden on 

these folks, to not only pay additional tax because of eliminating the depletion allowance, but they will be forced to pay additional tax on currently non-taxable Social Security benefits. 

We do not believe that congress’s intent is to put these additional tax burdens on 

our elderly royalty owners, many of whom already struggle to pay their current 

property tax, ad valorem tax, severance tax, state income tax, local tax, non-resident 

income tax, and federal income tax on their producing minerals. Regardless of intent, the proposed tax increases (via deduction eliminations) in the DOE budget 

WILL have that effect on many! 

Royalty owners are teachers, farmers, ranchers, homemakers, accountants, firemen, plumbers, retirees, dentists, small business owners, factory workers, engineers, 

pet groomers, widows, roofers, lawyers, policemen, florists, carpenters, bricklayers, 

and members of Congress; we are ordinary citizens, not multi-national corporations. 

We consider our mineral estates as assets to be managed and protected with responsible stewardship. For the majority of us, our minerals are part of a family legacy 

acquired through the hard work and sacrifices of our forbearers. Royalty income 

pays to educate our children, care for aging parents, and supplement salaried and 

Social Security income. We spend our money in our communities, give to our local 

charities and save for the future. Our financial benefits come solely from the mineral interests we own—deep under American soil. When those resources have been 

exhausted, the royalty income ends. 

4. America’s energy policy as a whole: 

A large portion of US Energy Secretary Steven Chu’s February 4th testimony to 

this Committee was dedicated to discussing the administration’s plans to parse out 

research and development funding for various spheres of technology that the administration has deemed to be inadequately advanced. This funding is hoped to further 

advance said technologies enough to enable a transition to widespread reliance on 

them as alternative energy sources. 

Though the dominate theme of his testimony was how investment can eventually 

improve alternative technologies, he did acknowledge, albeit sometimes indirectly, 

that we are not yet ready to abandon the energy sources that have become the 

workhorses of our economy. Let us first look at some of Secretary Chu’s comments, 

and then at some important facts that demand serious attention during the process 

of formulating a comprehensive energy policy and departmental budget; facts which 

have seemingly not garnered the attention due to them. 

A. Secretary Chu’s Testimony 

In Energy Secretary Chu’s testimony, he listed several challenges to the 

‘‘ . . . ability of the United States to meet the growing demand for reliable electricity.’’ He said that ‘‘ . . . we will need breakthroughs and better technologies to 

meet our long-term goals.’’ He expanded on the current limitations of these technologies during his discussion of DOE funded research groups called ‘‘Energy Innovation hubs.’’ 

He called for an additional EIH to be created to ‘‘... dramatically improve batteries and energy storage.’’ The call for such dramatic improvements is a vicarious 

admission of the gap between, on the one hand, our current level of technological 

attainment and our current infrastructure, and on the other hand, the level of technology and infrastructure thought to be necessary to substantially replace fossil 

fuels. 

Secretary Chu expressed hope that ‘‘Breakthroughs in digital network controls, 

transmission, distribution, and energy storage will make the power grid more 

efficient . . . ’’ Those dramatic increases in efficiency and storage technology would 

be necessary in order to more heavily rely on energy sources like wind and solar 

without intermittently suffering significant energy shortages. 

There is no doubt that these technologies will either improve eventually, or else 

other superior technologies not yet conceived will take their place. The problems 

are: First, on what timescale will these advances be made; second, what will be the 

specific quantitative and qualitative nature of these advances? Central planners and 
45 

prognosticators throughout history have struggled to grasp at, and have often fumbled with, predicting the answers to questions like these. 

Let us once again return to the example of hydraulic fracturing technology. Few, 

if any, could have predicted the pace of the current energy renaissance that has occurred in the last few years in regards to the recovery of clean burning natural gas. 

It has resulted from rapid strides in drilling technology. According to Secretary Chu: 

Due to research sponsored by DOE from 1978 to 1990 [which studied] 

methane, coal bed, and shale gas, that research was finally picked up by 

the oil and gas industries. In 1990, Schlumberger started investing in shale 

gas research. That has effectively doubled the gas reserves of the United 

States. 

It has been 32 years since DOE first researched shale gas, and 20 since 

Schlumberger began such research. Drilling for natural gas in shale has only become economically feasible within the last few years. The decades it took for shale 

hydraulic fracturing technologies to become economical should forewarn us not to 

be surprised at the untold decades to come before today’s alternative energy sources 

might become viable. 

In formulating our energy policies and budget, we would be wise to heed the old 

idiom: don’t put the cart before the horse. We must have viable alternatives BEFORE we consider abandoning the energy workhorses of our economic security. Putting the ‘‘green’’ ‘cart’ before the energy ‘horse’ is precisely what our energy policy 

would do if we simply fund research for, as of yet, unreliable energy sources, and 

simultaneously pull the rug out from under our conventional domestic energy industry (i.e. removing virtually every incentive they have to produce, as is being proposed in the DOE budget eliminations). 

B. Facing the facts as they are, not as some may wish them to be 

Throughout this winter season (2009-2010), wind turbines in Britain have produced only 20% of their capacity due to lower than average wind resulting from a 

colder than average weather pattern. They currently rely on wind for only 5% of 

their total power, but have been planning to rely on it to meet a quarter of their 

power demand within the next ten years, due in part to pressure from the E. U. 

If they had been reliant on wind for 25% of their demand during this winter, then 

the wind generation deficit wouldn’t just be an eyebrow raising note of caution, it 

would be an outright crisis, with dramatic, real, and painful human costs. 

Let’s examine, frankly and forthrightly, the energy situation as it exists. Alternative energy sources (i.e. not petroleum, nuclear, natural gas, or coal) accounted 

for 7.301% of total U.S. energy consumption in 2008 (the most recent year reported 

by EIA). Let’s temporarily remove hydroelectric from the discussion, since the U.S. 

is not building more hydroelectric dams. Let’s remove geothermal as well, since 

most available sources are already being exploited. Biomass is limited due to the 

limited acreage upon which to grow the fuels, and also because of concerns about 

the impact of large scale biomass crop production on global food prices as subsidized 

demand for the fuels makes them compete with food crops. We are essentially left 

with wind power and solar power as the only alternative ‘‘green’’ energy sources 

that are substantially expandable. 

Wind and solar/photovoltaic energy combined account for just 0.605% of our total 

energy consumption. Fossil fuels currently provide 83.436% of our energy consumption. Even if you remove the technological limitations and reliability issues from the 

equation (i.e. the wind intermittently not blowing or the sun not shining) you’re still 

left with a sobering fact: to replace fossil fuels, our wind and solar/PV generating 

capacity would have to be 137.91 times what it is today. 

From 2007 to 2008 according to EIA, U.S. wind generating capacity increased to 

provide an additional 0.173% of our energy needs. Solar capacity increased even 

more slowly, only providing an additional .01% beyond its previous levels. If we add 

the increases together, then at this combined increase of 0.183% share of total consumption per year, solar and wind combined could close the gap, and grow to replace fossil fuels in just over 455 years. 

Of course, 455 years is a bit ridiculous, as it assumes the growth rate seen in the 

last year of EIA data will be constant, which it obviously won’t. It also precludes 

increases in generating efficiency per installation, etc. There is no crystal ball that 

can tell us what will happen next year, let alone decades or centuries from now. 

But, for the sake of the argument, let’s say that we keep pumping hundreds of millions, or billions of dollars in subsidies a year into research and development for 

wind and solar. Can that timeframe be cut in half? Even at 10% of that figure we’re 

looking at half a century. While the 455 years figure is certainly an exaggeration 

because it factors in neither unquantifiable future changes in supply and demand, 
46 

nor unforeseeable future technological advances, it is nonetheless a thought provoking figure based on real performance data. 

The fact that solar energy generation has grown so slowly is quite disappointing 

considering the level of investment the government has been making. The federal 

government has been subsidizing solar energy for years, and the DOE’s proposed 

FY 2011 budget plans to invest 302 million of taxpayer dollars into solar energy. 

Subsidizing the solar industry seems to have had some kind of effect on their bottom line, because shipping of solar cells was up 280% from 2007 to 2008 according 

to EIA. Unfortunately, for all the investment of taxpayer dollars into solar, and notwithstanding the increased shipments of solar cells, that very same time period 

showed only the aforementioned increase of .01% more of total U.S. power consumption being provided by solar/pv. This is partly because solar is currently a MUCH 

more expensive way to create electricity than clean burning natural gas. Thus far, 

this seems to strain credibility as a good return on investment, at least for the short 

and medium term. 

5. The Need for Energy Independence 

The American public, our national security interests, and our economy have long 

demanded, and still demand three results from the energy policy of our elected officials: an abundant, affordable, and uninterrupted energy supply. The more secure 

our energy supply is, the safer we feel, and in fact, the safer we are. Certain policy 

analyses recently expressed by administration officials leave some room to question 

whether those three things are fully understood by our leaders. 

In Secretary Chu’s testimony, he repeated the mantra of ‘‘reducing U.S. dependence on oil’’ four times. While the search for alternative sources may have its merits, 

the fact remains, as Secretary Chu himself pointed out in his address to the 2010 

Washington Auto Show, that our ‘‘transportation fuels [are] almost totally dependent on petroleum.’’ 95% of our transportation fuels are from petroleum. 28% of the 

total energy used in the U.S. is used for transportation. 

Americans are going to purchase fuel for their vehicles somewhere, whether that 

supply is domestic or from abroad. Administration officials, including Secretary Chu 

and President Obama, have repeatedly talked about the need to break our addiction 

to foreign oil. An obvious step would be to maximize our domestic oil production. 

In testimony submitted to the Senate Finance Subcommittee on Energy, Natural 

Resources, and Infrastructure on Sept. 10, 2009, Alan B. Krueger, Assistant Secretary for Economic Policy and Chief Economist, U.S. Treasury department, said 

that ‘‘The domestic price of oil is determined by global supply and demand because 

oil is an internationally traded commodity.’’ He continued, saying ‘‘The relatively 

small U.S. share of global production means that any changes in domestic U.S. oil 

production will have a limited impact on the world supply of oil.’’ 

His focus on the ‘‘world’’ supply of oil myopically focuses on mathematical equations that in no way account for very real, legitimate national security concerns. The 

American people, and historically congress as well, have recognized the importance 

of maximizing the independence of an American supply. Although he painted a relatively rosy picture of the negative impact on domestic production that the proposed 

elimination of deductions will bring, he does concede that ‘‘on the supply side, a 

change in domestic producer costs could cause production to shift from domestic 

non-integrated producers to integrated domestic or foreign suppliers’’ of oil. 

Assistant Secretary Krueger’s basic conclusion, all things being equal, was that 

the ‘‘world’’ supply of oil and gas and therefore the supply available in the U.S. 

should only be negligibly affected by any decline in domestic production resulting 

from the elimination of percentage depletion and other deductions. It is understandable how a trained economist could arrive at this result. The first thing learned in 

any economics class is the Latin phrase: Ceteris Paribus, meaning ‘‘All other things 

being equal.’’ Economists are trained to analyze hypothetical mathematical situations independently of harder to quantify human variables. If the ‘‘455 years’’ figure 

on the previous page seemed somehow suspect, then so too must Assistant Secretary 

Krueger’s apparent trust in the stability of our supply of oil from the rest of the 

world. Ceteris Paribus may be a useful academic exercise that assists with the understanding of certain economic philosophies (via studying them in a vacuum); but 

in this situation, all things are regrettably not equal. 

Of course the domestically produced supply does not seem as sizable when compared to the total world supply, but history is full of examples of supply chains, especially foreign supply chains, being suddenly and unpredictably interrupted for extended periods of time. To think that similar interruptions could not occur again in 

the future would be naive. In order to safeguard our ability to provide reliable and 

affordable energy, we must maximize our ability to produce energy domestically. 
47 

There seems to be a decent level of bipartisan agreement that we need to break 

our addiction on foreign oil, though there are disagreements on the most prudent 

way to do that. Other than maximizing our domestic oil production, and in light of 

the technological immaturity and expense of wind and solar, natural gas currently 

seems like the only viable alternative, and for several reasons. 

The EPA has stated that ‘‘natural gas is the cleanest alternative transportation 

fuel commercially available today.’’ The group NGV America says that the U.S. presently has around 1100 natural gas vehicle fueling stations, with about 50% open to 

the public. Around 1.5 million miles of natural gas pipelines are already in place 

throughout the country. This preexisting infrastructure would make it easier to deliver supplies to newly constructed filling stations well beyond those currently available. Also, natural gas is significantly cheaper, costing between half to one third the 

cost of gasoline. 

According to a report from the Edison Electric Foundation and the Brattle Group, 

building new combined-cycle natural gas plants to generate electricity is significantly cheaper in dollars per kilowatts of capacity added than building new plants 

for utilizing nuclear, solar, wind, or new coal-combustion (CSS). The report says 

building a new combined-cycle natural gas plant would cost $1000/KW of capacity 

added. The most expensive type of new plant would be solar, costing $6,600 for the 

same capacity increase. 

98% of the natural gas the U.S. uses comes from the U.S. and Canada. As stated 

earlier, there is likely enough in the U.S. for up to 100 years. There is relatively 

low cost for converting a conventional gasoline engine to run on it. It also burns 

much cleaner than petroleum and ‘‘twice as clean as coal’’ when burned for electricity. 

Secretary Chu’s testimony reports that DOE is ‘‘committed to being good stewards 

of the taxpayers’ money.’’ If that is true, then we sincerely urge the Committee, Secretary Chu, DOE, and the Administration at every level to support a budget that 

will support natural gas as an alternative energy source. 

6. Conclusions 

Secretary Chu did acknowledge in his testimony the continued need for conventional energy. He said that ‘‘The world will continue to rely on coal fired electrical 

generation to meet energy demand. It is imperative that the United States develop 

the technology to ensure that base-load electricity generation is as clean and reliable 

as possible.’’ Interestingly, in his 20 pages of testimony, secretary Chu failed to 

mention natural gas at all, other than to say: 

. . . we eliminated more than $2.7 billion in tax subsidies for oil, coal 

and gas industries. This step is estimated to generate more than $38.8 billion in revenue for the federal government over the next 10 years. 

In 1952, the President’s Materials Policy Commission examined percentage depletion, and concluded that: 

. . . no alternative method of taxation has come to the Commission’s attention or could be devised by the Commission which, in its judgment, 

promises to overcome these limitations and still achieve the desired results, 

particularly not without seriously dislocating well established capital values 

and other arrangements in the industries concerned, with highly adverse 

effects on supply. Taking the practical situation as it finds it, the Commission believes that any radical alteration of existing tax arrangements would 

be undesirable. 

The ‘‘limitations’’ they referred to are the imperfect allotments of the cost of depletion that can occur under percentage depletion. ‘‘Desired results,’’ in this case, refers 

to encouraging the production of American minerals in order to provide the energy 

to grow our economy and to provide a greater measure of independence and security. 

We believe the U.S. would presently be better served by a DOE budget which invests in maximizing domestic oil and natural gas production. We believe this because natural gas is cheap, locally abundant in supply, clean burning, and efficient. 

As a transportation and electricity generating fuel, it can work in tandem with currently imperfect and experimental technologies like wind and solar. When the wind 

isn’t blowing, the sun isn’t shining, or yet to be invented experimental energy storage systems malfunction, natural gas can provide us the uninterrupted electricity 

we rely upon, cheaply, and cleanly. Investing in the natural gas industry will buy 

us the time we need for the market to truly perfect alternative energy systems that 

are presently unreliable. 
48 

We take exception to the provisions in the DOE budget which propose to raise 

the tax burden on what are currently America’s only reliable energy sources by 

‘‘38.8 Billion’’ dollars over the next decade, which will slow domestic development. 

Those provisions include raising the tax burdens on many of America’s most vulnerable retired royalty owners. In our pursuit of an energy policy that encourages domestic production, we must not allow the smallest participants in America’s energy 

production to go unprotected from abuse by the larger ones. The protection that percentage depletion provides to them must, itself, be protected. 

The DOE budget will eliminate the percentage depletion deduction used by ‘the 

little guy,’ (AKA: small time royalty owners) while leaving the cost depletion deduction used by big energy companies untouched. Percentage depletion is an important 

incentive for domestic energy development, which helps supply the energy we need 

to drive our economy while making us less dependent on foreign sources of energy. 

It does this while simultaneously protecting small time royalty owners, who unlike 

‘big energy’ corporations, can’t afford to file cost depletion. The proposal to eliminate 

it should be removed from the DOE budget for fiscal year 2011. 

We appreciate the opportunity to provide the Committee with our thoughts and 

concerns on these issues and welcome any questions about this testimony or the 

sources we may have utilized. 
(49) 

APPENDIX 

RESPONSES TO ADDITIONAL QUESTIONS

RESPONSES OF HON. STEVEN CHU TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Los Alamos Neutron Science Center—As you know, the Administration has proposed zeroing out the upgrades for the Los Alamos Neutron Science 

Center. Last year, the Administrator of the National Nuclear Security Administration (NNSA) testified before the Strategic subcommittee of the Senate Armed Services Committee and the Energy and Water Appropriations Subcommittee that keeping the facility operational was essential to maintaining our stockpile. A facility upgrade was then authorized and appropriated as the most cost effective and timely 

means to achieve that. Why was it zeroed out this year and what are your thoughts 

on this? 

Answer. Los Alamos Neutron Science Center (LANSCE) continues to make an important contribution to the needs of the nuclear security enterprise and science 

users, and is expected to continue those roles in FY 2011. NNSA spends approximately $70M annually on LANSCE operations supporting stockpile management. 

Operation of LANSCE into the longer-term future would require significant funding 

for additional refurbishment. After receiving funding from the Congress for Project 

Engineering and Design (PED) in FY 2009 and FY 2010, we are using these funds 

to investigate the requirements to extend the life of the linac and improve its reliability. We are also considering a possible future expanded role in materials and nuclear science research, but have not yet revalidated the mission need for these potential future requirements. 

It is therefore premature to allocate additional funding within the budget request 

for linac refurbishment. The Secretary has asked NNSA to work with the Under 

Secretary for Science and the Office of Science to consider options for enabling the 

materials and nuclear science that are needed to sustain stockpile management and 

to enable scientific advances envisioned within the Department of Energy. We expect to complete this work in time to make recommendations as part of the FY 2012 

budget formulation phase. 

Question 2. International Engagement in Clean Energy Development—The Department is facilitating the development and adoption of clean energy technologies 

around the world in China and many other counties—can you please tell the committee about the Department’s strategy for international engagement and how that 

fits into the Agency’s larger mission? 

Answer. The Department is actively engaging the international community to address the challenges of long-term energy security and climate change, both of which 

require concerted global action. A major component of this engagement is the development and widespread deployment of clean energy technologies that can reduce reliance on imported oil, mitigate the worst effects of climate change, and help transition the United States to a clean energy economy. Through a variety of multilateral 

mechanisms, such as the Global Partnership of the Major Economies Forum on Energy and Climate and the International Energy Agency’s Climate Technology Initiative, the Department collaborates with international partners to increase investment in clean energy R&D and accelerate the diffusion of transformational low-carbon technologies and practices. Additionally, the recent launch of the Renewables 

and Efficiency Deployment Initiative (Climate REDI) seeks to promote the dissemination of renewable energy and energy efficiency technologies specifically in developing countries. On the bilateral front, the Department manages a broad portfolio 

of cooperative agreements with both developed and major developing countries, including China and India, which seeks to gain a better understanding of clean energy 

development through exchanges of information, sharing of best practices and lessons 

learned, and joint research. Through such widespread multilateral and bilateral cooperation, the Department is working to accelerate the transition to a sustainable 

low-carbon economy. 
50 

Question 3. Energy Information Administration—Can you explain in more detail 

the proposed increase for the Administration, particularly the financial markets initiative and improving the quality of data? 

Answer. The $18.2M increase above EIA’s funding level for FY 2010 improves its 

capability to close important gaps in energy information, strengthen analysis, and 

address significant data quality issues. Specifically: 

• $8.0M of the increase doubles the sample size of the 2011 Commercial Buildings 

Energy Consumption Survey, providing information critical to understanding 

energy use and performance measurement for energy efficiency programs. 

• $1.3M expands analysis of energy market behavior and data to address the 

interrelationship of energy and financial markets. 

• $3.1 M continues implementation of improvements in oil, gas, and electricity 

data coverage, quality and integration. 

• $1.9M supports upgrades to the National Energy Model, which would improve 

the ability to assess and project supply, demand, technology trends and policy 

affecting U.S. and world energy markets. 

• $1.5M initiates efforts to track and analyze the adoption of ‘‘Smart Grid’’ technologies and dynamic electricity pricing plans, which would improve the forecasting of electricity markets and assist policymakers in determining if policy 

goals were being met. 

A further description of plans for the financial markets initiative and energy data 

quality improvements is provided below. 

Energy and Financial Markets Initiative.—Launched in September 2009, EIA’s 

Energy and Financial Markets Initiative aims to improve energy market transparency, support sound policy and efficient markets, and increase public understanding—activities that are central to EIA’s mission. EIA’s traditional coverage of 

physical fundamentals such as energy consumption, production, inventories, spare 

production capacity, and geopolitical risks continues to be essential but, moving forward, EIA is also assessing other influences, such as speculation, hedging, investment, and exchange rates, as it seeks to fully understand energy price movements. 

EIA issued a Federal Register notice in January 2010 seeking public comments 

and recommendations for additional information needed to support analysis of financial markets and EIA’s traditional fundamental analysis. The additional funding 

requested in FY 2011 will allow EIA to take action based on the comments and recommendations it receives, through data purchases and/or new data collection efforts. 

It also would allow for increased analytical efforts focused on various aspects of financial markets and their interaction with energy markets, such as the possible impact of index funds on oil price formulation and the use of modeling techniques to 

assess the impact that investment flows from various entities might have on oil 

prices. 

Data quality.—EIA has requested additional funding for improvements in coverage, quality, and integration of oil, gas, electricity, and other energy data. This 

request reflects issues arising directly from EIA’s aging information technology infrastructure that is poorly adapted for keeping up with the changing information 

needs of policymakers, the broader energy industry and its associated markets. All 

aspects of developing and disseminating data have been affected, from maintaining 

survey frames (i.e., lists of possible respondents), to collecting and processing data, 

to analyzing the data once acquired, to providing information to the public. This 

funding will support a modernization effort to fill critical data gaps; update the statistical techniques used in data collection; better protect the integrity of data collected, processed and published; assure documentation of data processing decisions; 

and reduce lifecycle development and operating costs for EIA’s statistical programs. 

Question 4. Strategic Petroleum Reserve—Your budget does not request funds for 

the expansion of the Richton, Mississippi facility to expand to 1 billion barrels— 

could you explain your reasoning and if this could impact mitigation plans for future 

events that affect refinery production such as hurricanes along the Gulf Coast? 

Answer. The Administration is currently reviewing SPR expansion policy. While 

this review is occuring, the FY 2011 President’s Budget proposes the cancellation 

of $71 million in balances from prior years appropriated for expansion activities and 

use of these funds to partially fund the SPR’s budget requirements for FY 2011. 

Question 5. EERE—the budget proposes a level budget for biofuels of $220M, 

while switching the allocation funding from liquid to electricity production using biomass—are you concerned that this may take away the continuity for ensuring we 

have adequate funding for advanced biofuels which are the underpin the renewable 

fuels standard enacted into law in 2007? 
51 

Answer. This FY 2011 change in funding allocation is not expected to negatively 

affect efforts to support the commercialization of advanced biofuels to help meet renewable fuel standards goals. The Recovery Act funded the construction phase of 

one of the commercial-scale biorefineries. Taking this factor into consideration, the 

FY 2011 budget request supports the integrated biorefinery project funding needs 

through September 2011. 

The proposed biopower initiative will accelerate the development of advanced 

technologies to enable substituting biomass for coal in power generation. These advanced biopower technologies will have positive economic and environmental impacts for the existing utility industry, which would promote widespread commercialization. 

Question 6. Building Efficiency—The Senate is considering possible legislation 

(HomeStar) to encourage making residential buildings more energy efficient, which 

provides enhanced rebates for specific efficiency measures (insulation, heating and 

cooling systems, etc.) and for whole home energy savings retrofits. 

While you have not had the opportunity to review the legislation in detail are you 

supportive of such a policy? 

Answer. Yes, the Department supports a policy of encouraging homeowners to 

take action to make their homes more energy efficient. Residential energy efficiency 

improvements such as adding insulation, upgrading heating and cooling systems, 

and undergoing whole-home retrofits have multiple benefits. Benefits include: homeowners save money on utility bills; carbon emissions are reduced; and domestic jobs 

are created in the contractor/construction sector. 

Question 7. Carbon Capture and Sequestration Task Force—President Obama recently announced to the National Governors Association that he would be tasking 

the DOE and the EPA with developing an interagency task force for carbon capture 

and sequestration oversight. Could you please elaborate on your role and that of the 

DOE with this task force? Could you outline what the main function of this task 

force will be? Is the function more of an oversight role, regulatory design, or a technical consulting organization? 

Answer. The purpose of the Interagency Task Force on Carbon Capture and Storage is to develop a comprehensive and coordinated Federal strategy to speed the 

commercial development and deployment of carbon capture and storage technologies. The President determined that the Task Force should be co-chaired by designees from the Department of Energy and the Environmental Protection Agency. 

The Task Force has been directed to develop a proposed plan to overcome the barriers to the widespread, cost-effective deployment of carbon capture and storage 

(CCS) within 10 years, with a goal of bringing 5 to 10 commercial demonstration 

projects online by 2016. Ultimately comprehensive energy and climate legislation 

that puts a cap on carbon will provide the largest incentive for CCS because it will 

create stable, long-term, market-based incentives to channel private investment in 

low-carbon technologies. The Task Force plan should explore incentives for commercial CCS adoption and address any financial, economic, technological, legal, institutional, social, or other barriers to deployment. The Task Force should consider how 

best to coordinate existing administrative authorities and programs, including those 

that build international collaboration on CCS, as well as identify areas where additional administrative authority may be necessary. The Co-Chairs shall report 

progress periodically to the President through the Chair of the Council on Environmental Quality. 

Question 8. Carbon Capture and Sequestration R&D—There appears to be a continued commitment for carbon capture and sequestration research and development 

at Fossil Energy. The focus is mainly CCS couple with coal-fired electric utilities. 

Is there flexibility in the proposed budget for CCS applications to other energy intensive industrial applications, such as fuels refining, cement manufacturing, steel 

mills, etc? That seems to be a research & development area where rapid gains can 

be made at a more modest level of investment that could be conducted concurrently 

with the more coal-focus R&D. 

Answer. The Office of Fossil Energy has done extensive work in carbon capture 

and storage (CCS) related to fossil energy facilities. Since approximately half of the 

Nation’s electricity is produced by coal-fired power plants and coal has a greater 

emission of CO2 per unit of electricity produced than oil or natural gas, the emphasis on capturing carbon dioxide from this sector is essential. Electricity generation 

using carbon based fuels is responsible for over a third of the CO2 emissions in the 

U.S. and globally the amount of CO2 from other industrial sources is smaller than 

coal. However, since the storage of CO2 is generally indifferent to the source of CO2, 

obtaining CO2 from industrial sources is also an important pathway to pursue. 

Therefore, the Department recently released a Funding Opportunity Announcement for Industrial Carbon Capture and Storage from ARRA funding that will pro-
52 

vide over $1.32B for large-scale industrial CCS projects from industrial sources (cement plants, chemical plants, refineries, steel and aluminum plants, manufacturing 

facilities). Carbon capture technologies are being developed for all sectors and will 

continue to be pursued since many of the technologies developed will be applicable 

to both the utility and industrial sectors. 

Question 9. Oil and Gas R&D—There have been broad cuts to the oil/gas R&D 

programs at Fossil Energy (ultra deep program). In light of the growing interest in 

natural gas extraction from unconventional gas plays (shale gas, tight gas sands, 

and methane hydrates), is there any focus on environmentally safe extraction of 

these resources? 

Question 10. Geothermal—In light of the recent issues surrounding the enhanced 

geothermal project at Geysers in California, has this impacted the focus and goals 

of the geothermal program at the DOE? 

Answer. Enhanced geothermal systems (EGS) have enormous potential as a 

source of clean, renewable energy. The Department remains committed to achieving 

EGS technology readiness by 2015. As with any new technology, it needs to be fully 

developed and various technical and environmental issues need to be worked 

through. Also, as expected with any novel technology, new issues are constantly 

being identified as the research proceeds. 

For example, DOE is actively engaged in addressing seismic risk associated with 

underground energy activities. In 2004, DOE initiated development of the International Protocol for Induced Seismicity from geothermal development with the help 

of Lawrence Berkeley National Laboratory (LBNL) and the international seismic 

community. The work was informed by panels of international experts, and the first 

edition of the Protocol was published in 2008 and adopted by the International Energy Agency in 2009. DOE is committed to routinely updating the Protocol based 

on a better understanding of EGS technology, and all federally funded EGS projects 

are required to follow the protocol. 

DOE also continues to work with the geothermal industry, in coordination with 

LBNL, to ensure that the experiences gained from The Geysers site can help advance EGS throughout the world. 

Question 11. Grid Energy Storage—This year’s budget increases funding for grid 

energy storage research, which I support. Can you please explain how these funds 

will complement the demonstrations already underway under the stimulus? 

Answer. The work done through the America Recovery and Reinvestment Act 

(ARRA) emphasizes deployment, while the work supported through annual appropriations focuses on the technology research and development. The Department has 

selected 16 large-scale energy storage demonstration projects to receive a total of 

$189 million in ARRA funds. These projects will provide field tests of known technologies that will show the value of energy storage in a limited number of applications. Performance will be carefully monitored and technical and economic data will 

be collected in a database and made available to utilities to encourage further 

projects and aggressive deployment. 

The FY 2011 request for energy storage research will support further research 

and development, which is necessary to bring down costs and increase the reliability 

of storage devices. In FY 2011, new and existing storage devices will be extensively 

bench tested to provide utilities with reliable evaluations and assessments. Expanded collaborations with state energy offices and utilities will lead to additional 

demonstrations of new technologies and in new applications. Analysis studies will 

develop tools and methodologies to help utilities to optimally deploy storage facilities 

on the grid. 

Question 12. Hiring—The American Recovery and Reinvestment Act of 2009 resulted in an order of magnitude increase in funding for the Office of Electricity and 

Energy Reliability. The awards made under this funding in FY 2009 and FY 2010 

will require significant oversight and monitoring into FY2011 and later years. At 

the same time, the modernization of our electric grid is seen as the key enabler for 

achieving our clean energy and climate goals; the Office of Electricity and Energy 

Reliability is tasked with ensuring that that we will have the technology and knowhow to realize this ’smart grid.’ I am concerned that the requested funding levels 

for additional FTE’s in FY2011 falls short of what is needed to effectively provide 

oversight and monitoring of grants and cooperative agreements. Does the Office of 

Electricity have the necessary numbers of skilled FTE’s to aggressively achieve the 

vision of a modernized electric grid? 

Answer. The FY 2011 budget request for the Office of Electricity Delivery and Energy Reliability (OE) includes a $7.6 million increase to maintain the level of FTEs 

filled over the last two years with Recovery Act funding to support Recovery related 

activities, as well as additional FTEs to support the expanded non-Recovery related 

activities. The planned number of FTEs requested in FY 2011 will allow OE to have 
53 

the sufficient level of skilled, bench strength necessary to achieve the goals of the 

organization. 

Question 13. Appliances—You have requested a 14% increase for the appliance 

standards program. This will allow DOE to comply with the court settlement directing the Department to resolve the backlog of standards. However, Congress is currently considering legislation to modify the program and establish new or revised 

standards for many products. 

Has the department considered modifying its rulemaking schedule and priorities 

in light of likely Congressional action? For example, will the Department consider 

lowering the priority for rulemakings for standards for products Congress is considering setting a standard by statute, or exempting a class of products by statute? 

Answer. The Department is expanding and strengthening its ability to fulfill obligations under existing statutes. This includes increasing staff and analytical capabilities and reviewing possible new areas for standards available with existing authority. This expanded capacity will make it easier for DOE to move quickly in implementing any new legislation. If new legislation is passed into law, DOE will adjust schedules as necessary and reevaluate resource needs, priorities, and schedules. 

When legislation becomes law, the standards set by statute supersede DOE developed standards. Therefore, if Congress establishes legislation that exempts a product class, and that legislation becomes law, then DOE will adhere to the product 

class exemption. 

Question 14. Clean Tech Supply Chain—There is a growing awareness that many 

of our advanced energy technologies (e.g. electric vehicles, solar photovoltaics, and 

wind-turbines) depend upon elements whose future supply is predicted to be limited 

and/or restricted, such as indium and several of the rare earth metals. Could you 

discuss what actions the Department is taking to: 

(a) Ensure that there is adequate supply of these elements to meet future growth 

goals for clean energy technologies; and 

(b) Pursue research to identify and investigate alternative earth abundant materials and elements for use in clean energy technologies? 

Answer. The Department is keenly aware of the potential for supply constraints 

among a variety of materials crucial to the widespread development and deployment 

of clean energy applications. Although a number of these strategic elements, such 

as lithium and rare earth metals, exist in abundant and geographically dispersed 

reserves, most of their mining and processing are currently concentrated in only a 

few areas outside the United States. This reality presents particular vulnerabilities, 

most notably the potential for supply disruptions due to market fluctuations or adverse geopolitical developments. The Department is committed to actively monitoring the supply and availability of these strategic materials while exploring strategies to manage the risk of both short-and longterm supply disruptions, including 

through encouragement of diverse supply chains and alternative or substitute materials. For example, the Department’s Advanced Research Projects Agency—Energy 

(ARPA-E) recently provided funding for research into certain high energy density 

magnetic properties which may provide alternatives to the currently used neodymium-iron-boron magnets that utilize rare earth metals. The Department will continue to monitor this issue and work across Federal agencies to develop sustainable 

long-term solutions. 

Question 15. Hiring—In a special report by the Department of Energy’s Office of 

Inspector General entitled, ’Selected Department of Energy Program Efforts to Implement the American Recovery and Reinvestment Act,’ it was found that as of December 2009, the Office of Energy Efficiency and Renewable Energy had filled 

roughly half of the 288 positions using the direct hire authority authorized under 

the American Recovery and Reinvestment Act. The Office of Electricity and Energy 

Reliability had only hired about 36 percent of needed employees identified on its Recovery Act staffing plan. What steps is the Department taking to fill these additional positions? 

Answer. In addition to the special hiring authority for filling positions in the Offices of Energy Efficiency and Renewable Energy (EERE) and Electricity and Energy 

Delivery (OE) under the Recovery Act, the Department has recently been granted 

direct hire authority for certain other Recovery Act positions. This authority allows 

filling these positions on a time limited basis through September 30, 2011, and is 

available, along with the more specific authority granted for EERE and OE, to fill 

Recovery Act related positions. At this time, all Recovery Act hiring requests for 

EERE have been processed by the Office of the Chief Human Capital Officer. One 

hire for OE is currently in process. EERE and OE are currently re-evaluating their 

need for additional staff to support Recovery Act. 
54 

Question 16. Energy Innovation Hubs—In the FY2011 Budget request, a new Energy Innovation Hub centered on Batteries and Energy Storage is proposed. Could 

you please explain in greater depth: 

a) What will be the mission of the hub; and 

b) How this hub will interface with and add value to the energy storage research 

being performed within the Office of Science, the research, development, and demonstration work being carried out by the Office of Electricity and Energy Reliability 

and the Office Energy Efficiency and Renewable Energy, as well as ARPA-E? 

Answer. Today’s electrical energy storage approaches suffer from limited energy 

and power capacities, lower-than-desired rates of charge and discharge, calendar 

and cycle life limitations, low abuse tolerance, high cost, and poor performance at 

high or low temperatures. Many of these fundamental performance limitations are 

rooted in the constituent materials making up the storage system and in the fundamental physics and chemistry that govern the transport and storage of energy in 

the material. The research challenges are inherently multi-disciplinary. 

The Batteries and Energy Storage Hub will target science knowledge gaps that 

are preventing breakthroughs in technology platforms for both grid and mobile applications. Specifically, the Hub will address a number of research areas identified 

in the Basic Energy Science workshop report Basic Research Needs for Electrical 

Energy Storage. The Hub will expand our scientific base for synthesis of novel 

nanoscale materials with architectures tailored for specific electrochemical performance, develop new methodologies to characterize materials and dynamic chemical 

processes at the atomic and molecular level, and expand our competencies in simulation and prediction of structural and functional relationships using leading computational tools. 

The Hub’s ultimate technological goals are development of radically new concepts 

for producing storage devices from materials that are abundant and have low manufacturing cost, high energy densities, long cycle lifetimes, and high safety and abuse 

tolerance for a broad range of energy storage applications. The breadth and depth 

of the scientific challenges associated with these goals will require that the Hub integrate premier scientific talent from the disciplines of chemistry, physics, materials 

sciences, biology, and engineering. The engineering and manufacturing challenges 

will demand close consultation with industry. The Hub will provide an interdisciplinary, unified research framework for energy storage research, bringing fundamental 

and applied research teams together in a single coherent research program that will 

cross-fertilize activities to accelerate fundamental understanding, materials discovery, and progress towards commercialization of new energy storage technologies. 

RESPONSES OF HON. STEVEN CHU TO QUESTIONS FROM SENATOR MURKOWSKI

ALASKA-SPECIFIC

Question 1. Mr. Secretary, last year you came to Alaska with some fellow Cabinet 

members and saw firsthand how expensive diesel-fired electricity is in rural areas. 

The cost of energy in Alaska, especially in rural Alaska, averages about nine times 

more than in the Lower 48 states. For electricity rates to drop in rural Alaska, we 

need federal grant assistance to help with the high capital costs of installing renewable energy in isolated areas. 

In the 2007 Energy Independence and Security Act, Congress recognized this need 

and authorized such aid. Section 803 of the Act authorized a grants program to provide matching funding for renewable energy projects but, unfortunately, despite 

your recent visit this provision has yet to be funded. Would you support some funding to begin implementation of this authorized program? What else can the Administration do to help make renewable energy installation more affordable in places 

like Alaska? 

Question 2. As you know, last year I was extremely disappointed that the Administration zeroed out all funding for the Arctic Energy Office. That office, which had 

an annual budget of about $4-7 million, has done great work in Alaska over the previous seven years. Right now, as they close shop, they’re working on much needed 

renewable energy developments in the state. And yet, the Administration’s FY 2011 

budget request contains no new funding to continue cold-climate energy work. What 

is the Department willing to do in FY 2011 to improve energy technology and energy efficiency efforts in cold-climate states like Alaska? 

Answer. The Department’s commitment through the Office of Energy Efficiency 

and Renewable Energy is to continue support for the National Renewable Energy 

Laboratory’s efforts on the Transforming Energy in Alaska program. This effort will 

continue to support many opportunities that develop in Alaska including collabora-
55 

tion on the use of biomass for displacement of diesel heating fuel for U.S. Coast 

Guard bases throughout southeast and southcentral Alaska. 

Question 3a. The Department’s FY 2011 budget request zeroes out the unconventional fossil fuel budget that supported methane hydrate research. However, I understand that the Department is planning on continuing its methane hydrate research efforts in the Office of Science—Is that correct? 

Answer. Yes. In FY 2011, the Office of Science’s Basic Energy Sciences program 

will initiate a new research program in gas hydrates ($17,517,000). This program 

will study fundamental scientific questions surrounding methane hydrates: How do 

they form? What is their role in the global carbon cycle? What is their role in 

seafloor ecological systems? How extensive are they? How stable are they? In the 

short term, the program will also study hydrates via controlled in situ depressurization and physical, thermal, and chemical stimulation in the Arctic with supporting 

laboratory and numerical modeling to enable interpretation and extrapolation of results. Existing core sample data from the Arctic hydrate formations will provide the 

scientific information of how the hydrate structure sits in the pore space at various 

depths. The planned tests in the Gulf of Mexico in FY 2011 will take in situ core 

samples at various depths and locations for evaluation. Computer simulations will 

be compared with data from previous in situ tests. This activity will also support 

theory, multi-scale modeling and simulation, and experimental research in areas 

such as the intermolecular forces that govern the structure and properties of gas 

hydrates and studies of gas hydrates in the natural environment. 

Question 3b. I believe the request for methane hydrate research is FY 2011 is 

about $18 million. In the 2005 energy bill, Congress authorized up to $50 million 

a year for methane hydrates. Given the very positive review of methane hydrate research released just last week by the National Academy of Sciences, why isn’t the 

Department providing additional research funding for this area? 

Answer. Funds appropriated for this research have historically been less than the 

authorization level. Yet previous support has been essential in enabling the Department to establish industrial and international partnerships to tackle critical research and development objectives, as identified by several studies. The FY 2011 request is sufficient to enable our highest priority activities. 

Question 3c. I understand that there will be funding for an Alaskan North Slope 

test well within the Office of Science, is that correct? How much funding will be 

dedicated to that effort? 

Answer. Plans for several field tests are being developed and evaluated during FY 

2010. The results of these evaluations, along with the availability of funds in FY 

2011, will determine our future plans for field tests, including the Alaskan North 

Slope test. 

HYDROPOWER

Question 1. Mr. Secretary, last September at a Clean Energy Forum in Pennsylvania, you said we could add 70,000 megawatts of additional hydropower capacity 

by installing more efficient turbines at existing dams, increasing the use of pumpedstorage projects, and encouraging the use of run-of the-river turbines. You stated 

that the Administration ‘‘will be pushing this’’ because it’s an ‘‘incredible opportunity and it’s actually the lowest cost clean energy option.’’ A new jobs report from 

the National Hydropower Association estimates that there is upwards of 700,000 cumulative direct and indirect jobs that could be created by developing 60,000 

megawatts of potential hydropower by 2025. 

And yet, despite all this incredible potential, hydropower is the only renewable 

resource that takes a hit in DOE’s FY 2011 budget request. You’re seeking $41 million for ‘‘waterpower’’-a 20% cut from what Congress approved last year. 

Would you support providing more tax credits and grant aid for both small and 

large conventional hydropower development? How about providing incentives for 

pumped storage projects? 

Answer. Additional capacity and generation from conventional hydropower represents a potentially significant portion of the Nation’s future energy portfolio. The 

significance of hydropower capacity is exemplified by a recent Memorandum of Understanding signed by the Secretary of Energy and the Secretary of Interior and the 

Assistant Secretary of the Army on March 24, 2010 to promote the use of hydropower. 

The FY 2011 budget request identifies the resources necessary for the Department 

of Energy (DOE) to meet the goals and priorities for hydropower set by both Congress and the Administration. The FY 2011 budget request includes funds to assess 

the potential for incremental or new hydropower generation through capacity and 

efficiency upgrades and powering existing non-powered dams. DOE is also investing 
56 

in projects to improve methods for applying and valuing ancillary benefits of conventional and pumped storage hydropower assets to meet the needs of the Nation’s 

changing electricity grid. DOE’s Water Power program also received $31.7 million 

in Recovery Act funding which supports reequipping existing hydrokinetic facilities. 

Hydropower is currently treated differently than other renewable energy technologies in terms of Federal financial incentives and tax credits. For example, only 

certain types of hydropower that do not require the construction of new dams (either 

incremental capacity additions to existing facilities or run-of-river systems installed 

at licensed non-powerproducing dams) can receive either Production or Investment 

Tax Credits, while new hydropower facilities are not eligible. Qualified hydropower 

receives a Production Tax Credit worth 1.1 cents per kilowatt-hour, half the amount 

received by wind, geothermal, and other renewable energy resources. No tax credits 

or incentives are currently provided for pumped storage facilities. 

Question 2. Of the $41M requested by the department for hydropower, how much 

do you propose to spend on emerging hydrokinetic technologies? Where will your research efforts be directed? 

Answer. The Department of Energy (DOE) plans to allocate approximately half 

of its Fiscal Year 2011 appropriation for water power towards the research, development and promotion of emerging hydrokinetic technologies. In Fiscal Year 2011, the 

DOE plans to focus its efforts on seven key areas: 

1. System development, deployment and verification to improve device 

functionality and generate cost, performance and reliability data; 

2. Research tools to develop design codes and models necessary for supporting 

system development and testing; 

3. Ensuring adequate test centers and facilities are developed to generate and 

collect system data; 

4. Technology characterization to analyze and evaluate test data; 

5. Resource assessments to quantify energy availability and location; 

6. Studies and projects to evaluate and minimize key environmental risks to 

permitting and deployment of demonstration projects; and 

7. Economic analysis and market development to disseminate technology and 

resource data and integrate information into energy benefit and deployment 

models. 

SPR

Question 1. The President’s FY11 budget request proposes the cancellation of $71 

million from the Strategic Petroleum Reserve project planned for Richton, Mississippi to add capacity to the SPR. The SPR is roughly at a 727 million barrel capacity even though the 2005 Energy Policy Act calls for capacity to be expanded to 

1 billion barrels. When does the Administration plan to add additional capacity to 

SPR? 

Answer. The Administration is currently reviewing SPR expansion policy. 

Question 2. Also, in the Administration’s budget materials, you say that the FY 

2011 SPR request ‘‘provides for the assessment of energy efficiency and GHG control 

at SPR facilities to meet DOE goals for 15% LEED buildings by 2015, for application of wind/solar, and to lower GHG emissions of all DOE facilities.’’ Is the Department authorized to use money appropriated for SPR expansion for wind and solar 

activities? Please explain. Answer. The Department’s FY 2011 request for the SPR program includes $1 million to assess energy efficiency and GHG control opportunities at SPR facilities, i.e., 

the potential conversion of existing SPR buildings to LEED standard, the potential 

application of wind and/or solar technologies at the SPR sites, and identifying opportunities to lower GHG emissions from the SPR storage operations. 

The Administration’s FY 2011 budget does not propose the use of money appropriated for SPR expansion for wind or solar activities. The money proposed would 

be SPR operational funds used to assess the application of wind and/or solar technologies to SPR facilities, not for the funding of the Department’s wind and solar 

programs. 

STIMULUS FUNDING

Question 1a. I’d like you to provide clarification for some of the terms used to describe stimulus funding. On DOE’s website, there are three principal divisions: 

funds spent, funds awarded, and funds authorized. 

Can you explain what the term ‘‘awarded’’ means? Can you tell me how it differs 

from funds that have been obligated and actually disbursed to funding recipients? 

Can you tell me how much money has actually been obligated—meaning the Department is legally obligated to spend those funds? 
57 

Answer. The Department of Energy’s website ‘‘Energy.gov/Recovery’’ shows Recovery Act amounts authorized, awarded, and spent. In this case, authorized equates 

to funds appropriated to DOE in the Recovery Act; awarded equates to obligations; 

and spent equates to gross outlays or the amount of obligated funds that have been 

paid to contractors or grant recipients. 

As of February 22, 2010, of the $36.7 billion of DOE Recovery Act Funding, approximately $25.6 billion has been awarded, and $2.4 billion payments have been 

made to recipients. 

Question 1b. I’d like you to provide clarification for some of the terms used to describe stimulus funding. On DOE’s website, there are three principal divisions: 

funds spent, funds awarded, and funds authorized. 

Let’s take Smart Grid funding as an example. The stimulus authorized $4.4 billion, and the President announced $3.4 billion in grant awards last October. Shortly 

after that, the Department of Labor put out a press release touting a grant for Nevada that was part of the President’s announcement, which makes it seem like each 

actual grant generates several separate press releases. Can you tell us how much 

Smart Grid funding has actually been spent? How much has been obligated? And 

where you expect those numbers to stand at the end of 2010? 

Answer. In October 2009, the Department announced it had selected 100 projects 

for grants totaling $3.4 billion under the Smart Grid Investment Grant program, 

following a competitive process. Once selections were made, DOE began working 

with the selectees on the scope of work, terms and conditions, and other aspects of 

the grants. 

As of May 8, 2010, the Department has obligated more than $3.2 billion of the 

$3.4 billion allocated for the Smart Grid Investment Grant (SGIG) program. Final 

awards were initially slow, because the selected organizations raised a number of 

significant issues that had to be addressed. One of the most significant issues was 

resolved on March 10, 2010, when the Internal Revenue Service announced a determination on the tax treatment for grantees receiving SGIG awards. Under the revenue procedure, the Internal Revenue Service is providing a safe harbor under Section 118(a) of the Internal Revenue Code (IRC) for corporations receiving funding 

under the Smart Grid Investment Grant program. With the determination that 

Smart Grid Investment Grants to corporations are non-taxable, corporate utilities 

are able to launch their investments with a clear indication of the tax status of their 

projects. Now that this issue is resolved, the Department has been working expeditiously to complete awards, finalizing 86 of the 100 planned awards as of May 8, 

2009. 

By the end of FY 2010, the Department expects to fully obligate all Smart Grid 

Investment Grant funds. To date, a little over $2 million has been spent for technical support to implement the Smart Grid Investment Grant program. Spending 

will increase significantly over the next few months when all grants are awarded 

and work under the grants begins. 

NUCLEAR

Question 1. Please provide more detail on what types of technologies you expect 

the new Nuclear Energy Enabling Technologies program to develop and support. Is 

it necessary to have a new, separate program from the Reactor Concepts and Fuel 

Cycle programs to achieve these goals? 

Answer. The proposed Nuclear Energy Enabling Technologies program has three 

elements. The first element, Crosscutting Technology Development, supports multiple reactor concepts (existing and future) and will research technologies in four 

specific areas: reactor materials, advanced methods for manufacturing, new sensor 

technologies for monitoring material and equipment conditions in reactors, and proliferation risk assessment. 

The second element, Transformative Nuclear Concepts R&D, is much broader in 

scope and will support, via an open, competitive solicitation process, investigatorinitiated projects that relate to any aspect of nuclear energy generation including, 

but not limited to, reactor and power conversion technologies, enrichment, fuels and 

fuel management, waste disposal, and nonproliferation. This effort will encourage 

the identification and development of ‘‘outside the box’’ technology options in all aspects of the civilian nuclear energy program beyond what may be currently envisioned and to ensure that good ideas have sufficient outlet for exploration. 

The third element, the Energy Innovation Hub for Modeling and Simulation, is 

a specific example of the type of crosscutting, transformative activity that will enhance many research areas within NE, by applying existing modeling and simulation capabilities to create a ‘‘virtual’’ reactor user environment for engineers and scientists. 
58 

These activities are proposed under the new Nuclear Energy Enabling Technologies program to encourage innovative research relevant to multiple reactor and 

fuel cycle concepts, and pursue ‘‘out-of-the-box’’ options that offer the promise of dramatically improved systems across the full spectrum of nuclear energy. Where appropriate, these activities will be managed and executed in a matrix fashion, in coordination with the Reactor Concepts and Fuel Cycle program elements to efficiently 

support and facilitate the achievement of our program’s goals. 

Implementation under the proposed Nuclear Energy Enabling Technologies umbrella program will help avoid duplication of research effort; provide better coordination of research conducted in the specified areas; and bring the best research expertise from the national laboratories and universities to bear on common issues or requirements among the different reactor and fuel cycle technologies. Also, in conducting this research under a common program, more efficient use of appropriated 

funds is expected. 

Question 2. As its first regular appropriations request for ARPA-E, the Administration requests $300 million. Do you anticipate that $300 million will be the 

amount that is requested each year? 

Answer. ARPA-E received an appropriation of $400 million under the American 

Recovery and Reinvestment Act of 2009, and $15 million under the Omnibus Appropriations Act, 2009. In ARPA-E’s organic legislation, the America COMPETES Act 

of 2007 (42 USC 16538), Section 5012(m)(2) authorizes appropriations of $300 million for FY 2008 and ‘‘such sums as are necessary’’ for the subsequent two fiscal 

years. The FY 2011 request for ARPA-E is $300 million. Requests in future years 

will fund the most promising investment opportunities while maintaining the Administration’s commitment to fiscal responsibility. 

Question 3. The Nuclear Power 2010 program, which the Administration is not 

seeking continued funding for, provided assistance for the submission to the NRC 

of two construction and operating license (COL) applications for two reactor designs. 

The nuclear industry has maintained that delays in the NRC licensing process is 

one of their biggest obstacles to constructing new nuclear reactors and DOE involvement is necessary to move the process along. Is funding provided in the 2011 budget 

for COL assistance? 

Answer. No funding has been requested in the FY 2011 budget for construction 

and operating license (COL) assistance. The Department believes sufficient progress 

has been made on the NRC licensing review of the two COL applications sponsored 

by the Nuclear Power 2010 program. The Dominion Energy North Anna COL final 

environmental impact statement is expected in April 2010 and the safety evaluation 

report with no open items is expected in September 2010. The NuStart/Southern 

Company recently received their Early Site Permit, and the COL final safety evaluation report with no open items is expected in October 2010. Final hearings for 

both COL applications have not been set by the NRC, but are expected in early FY 

2011. 

The Department believes no further Federal funding of these projects is warranted and that industry can support the remaining reference COLA licensing activities for the AP1000 and the Economic Simplified Boiling Water Reactor 

(ESBWR). 

ENERGY STAR

Question 1. Within DOE’s FY 2011 budget request, you recommend the further 

promotion of Energy Star labels for major appliances such as windows, refrigerators, 

dishwashers and compact fluorescent lights. However, DOE staff has briefed Committee staff on transferring the promotion of these products to the EPA. Is it the 

Administration’s intent to transfer the promotion of Energy Star labels for these appliances from the Energy Department to the EPA? If so, what is the rationale? 

Answer. The Department of Energy (DOE) is transferring the marketing of ENERGY STAR 114 products to the Environmental Protection Agency as DOE enhances its technical work, including testing and verification in support of ENERGY 

STARS products. This arrangement of work uses agency resources effectively and 

builds upon the strengths of each agency. 

GEOTHERMAL

Question 1. I appreciate that the budget calls for a 25% increase for geothermal 

power development, given the great potential that hydrovent and enhanced geothermal systems have for developing carbon-free electric power. As you know, there 

is currently an EGS demonstration project in Alaska that could power up to 25 rural 

villages with low-cost geothermal power in the future. If EGS systems show prom-
59 

ise, what can we do to further efforts to commercialize and deploy geothermal in 

the future? 

Answer. The Enhanced Geothermal Systems (EGS) approach to geothermal power 

production is indeed promising, but it is not yet ready for large-scale commercialization and deployment. Commercialization of EGS will require: improving the science 

and engineering understanding of EGS; improvement and development of the technologies needed to access, evaluate, manipulate, and operate EGS reservoirs; and 

solving non-technical policy barriers. 

Improved scientific and engineering understanding of EGS is fundamental to scaling from demonstration level projects to commercially viable operations. Additionally, improved understanding of the scientific and engineering requirements for successful EGS is imperative to widening the geographic and geologic deployment of 

EGS in the future. Areas for improved understanding are wide ranging and include 

topics such as: understanding the response of in situ reservoir rocks (across physical 

scales) to EGS operations; development of robust computational algorithms and 

tools for modeling relevant coupled processes; adaptation and development of novel 

remote sensing methods and technologies; and other fundamental issues associated 

with manipulation of subterranean environment. 

The technological improvement and development for EGS deployment includes 

technologies that are known today, as well as others yet to be identified. It is well 

understood that many technologies employed in other industries (e.g., oil and gas) 

are applicable to EGS development but are not capable of operating in the extreme 

environments associated with potential EGS sites (e.g., high temperatures, hard 

rocks, corrosive fluids, etc.). Additionally, as the understanding of the science and 

engineering needs for EGS are expanded, technology needs will also be identified. 

Finally, the commercialization of EGS depends upon effective solutions to nontechnical policy barriers. Unlike solar and wind energy, the geothermal resource is 

largely hidden; incentives that act to mitigate risk to industry would help push EGS 

development forward. Simplified and standardized permitting processes would address significant barriers and bottlenecks in the site selection and development processes. Increased transmission availability will ensure that EGS developers are able 

to reach the grid. 

An improved understanding of the fundamental science and engineering needed 

to support EGS development, the tools and technology necessary to support its development, and supportive development policies would act to hasten the deployment 

of EGS as a source of carbon-free electric power. 

WIND

Question 1. The Administration is seeking $123 million for wind power research 

this year—that’s more than a 50% increase. Part of this is for the Department to 

undertake research and development work for offshore wind projects, correct? Does 

the administration’s initiative mean the Department does not require congressional 

authorization in this area? Will the Department be examining the use of dual platforms that would help offshore wave energy projects develop simultaneously? 

Answer. The Administration’s Fiscal Year 2011 budget request includes funding 

for activities that promote and accelerate responsible offshore wind power research 

and development (R&D). The Department of Energy (DOE) plans to partner in a 

demonstration offshore wind project to address the specific deployment barriers facing the first commercial projects. The DOE will also establish a national offshore 

wind research and development effort. The Energy Policy Act of 2005, Section 

931(a)(2)(B)(ii), authorizes DOE to conduct such a program. 

Furthermore, the proposed offshore wind R&D program will address additional 

issues of mutual interest to the offshore wind and wave energy industries. These 

issues include undersea transmission infrastructure, potential environmental effects, equipment marinization, and project siting. 

SOLAR

Question 1. The Administration’s FY 2011 budget request for solar is over $300 

million—a 22.4% increase from last fiscal year. Part of the rationale for this increase is to make solar energy cost competitive by 2015. How realistic is that goal? 

Please be specific as to PV and CSP technologies, and compare such costs to other 

technologies like nuclear, hydropower, coal, wind, and geothermal. Al. 

Answer. The 2015 goal is realistic and can be met across a significant portion of 

the U.S. in multiple markets. Specifically, with continued cost reductions, 

photovoltaics (PV) will become increasingly competitive in residential, commercial 

and utility scale markets, while concentrated solar power (CSP) will become increasingly competitive in utility scale markets. 
60 

1Denholm, et al. 2010. Break-Even Cost for Residential Photovoltaics in the United States: 

Key Drivers and Sensitivities. NREL technical report NREL/TP-6A2-46909 

When combined with the 30 percent Investment Tax Credit (ITC) passed by Congress in 2009, PV technology is currently competitive in a number of residential and 

commercial markets with a combination of high retail electricity prices, good solar 

resources, and/or local solar incentives. These markets include Arizona, California, 

Colorado, Florida, Massachusetts, New York, New Jersey, and Nevada. A recent 

study by the National Renewable Energy Laboratory examined the competitiveness 

of PV in residential electricity markets across the U.S. and found that achieving cost 

reductions in line with the Solar Program’s targets will lead to PV becoming broadly 

competitive first in the Southwestern and Northeastern states, and then in the 

Southeastern and Midwestern states by 2015.1

However, reaching the goal of grid parity without incentives will require a reduction in installed system prices of roughly 50-70 percent from 2009 benchmarked levels. While this level of cost reductions may appear ambitious, it is in line with recent industry trends and bottom-up engineering estimates of potential cost reductions through the PV supply chain. It is an achievable goal with continued and intensified funding in PV technology development, systems integration research and 

market transformation, all of which are major parts of the Department’s Solar Program. 

Similarly, the installed price for CSP systems, including the 30 percent Federal 

ITC, is currently at parity with the California Market Reference Price (MRP), the 

price paid in the California market for new peak generation resources. Being competitive with the MRP has contributed to significant growth in the number of CSP 

projects in the California market and throughout the Southwest. CSP systems are 

projected to reach parity with new peak and intermediate power generation prices 

in the Southwest without subsidies between 2015 and 2020. To reach parity with 

base load electricity prices without the need for subsidies, CSP systems will require 

approximately a 50 percent reduction in cost. This is projected to occur between 

2020 and 2030 with the introduction of thermal storage technologies and new CSP 

tower systems, both of which are major parts of the Department’s Solar Program. 

Even with expected cost reductions, PV and CSP technologies are still likely to 

be more costly in the 2015 time frame than some conventional technologies like nuclear, hydropower, and coal or some renewable technologies like wind and geothermal when you look at total lifecycle costs. These cost comparisons, however, do 

not fully capture the value provided by solar technologies through other factors such 

as reducing greenhouse gas emissions and environmental impacts, rapid construction times, scalability, and, with CSP, the ability to include low-cost thermal storage. PV systems are also the only conventional or renewable electricity technologies 

that can be deployed residentially which eliminates transmission infrastructure 

issues and also provides financing through mortgages and home equity loans. For 

these reasons, when combined with projected cost reductions, solar technologies will 

become increasingly competitive in a range of markets throughout the U.S. and will 

play an increasingly significant role in the U.S. energy mix in both the short-and 

long-terms. 

The major increase in funding for the Solar Program in FY 2011 includes two new 

initiatives. The PV Manufacturing Initiative is designed to help secure a strong U.S. 

manufacturing base by funding collaborative research through both university and 

industry partnerships. For FY 2011, $30 million is proposed for this initiative which 

will be leveraged with private sector funding. The Solar Demonstration Zone Initiative will provide the resources required to demonstrate leading edge CSP and other 

solar technologies. These demonstrations will provide a critical step in attracting 

conventional financing and allowing these technologies to bridge the commercialization ‘‘valley of death.’’ For FY 2011, $50 million is requested for this initiative which 

will also be leveraged with private sector funding. 

ENERGY EFFICIENCY

Question 1a. Over the past two months, my staff has repeatedly asked DOE for 

a detailed analysis of how it is allocating funding among the many energy efficiency 

programs it administers. My staff has not received a single reply, which is troubling 

because we have seen press reports that the Administration would like to create a 

new multi-billion dollar program, called ‘‘Cash for Caulkers’’ to move more money 

towards similar energy efficiency projects. 

Please provide me with a detailed analysis on how stimulus funds have been obligated and spent within the following energy efficiency programs: 

• The Weatherization Program 
61 

• Energy Efficiency and Conservation Block Grants 

• The State Energy Program 

• Energy Star Rebates 

• Any other program funded within ARRA, and under DOE’s jurisdiction, concerning energy efficiency 

Answer. The Department of Energy (DOE) is committed to ensuring that Recovery 

Act funds are obligated and outlaid in a timely manner. Of the approximately $15 

billion in Recovery Act funding allocated to energy efficiency projects, about 90% has 

been obligated as of April 9, 2010. Please see Attachment A for a project-level analysis of obligations and payments data of DOE’s energy efficiency projects receiving 

this $15 billion in Recovery Act funding as of April 9, 2010. Furthermore, to ensure 

that funds are being spent, DOE staff actively monitor and reach out to recipients. 

Continuous updates can be found at: http://www.gao.gov/recovery/. 

ATTACHMENT A

Question 1b. Over the past two months, my staff has repeatedly asked DOE for 

a detailed analysis of how it is allocating funding among the many energy efficiency 

programs it administers. My staff has not received a single reply, which is troubling 

because we have seen press reports that the Administration would like to create a 

new multi-billion dollar program, called ‘‘Cash for Caulkers’’ to move more money 

towards similar energy efficiency projects. 

Please also provide the funding implementation schedule for all remaining 

projects to be funded with ARRA monies, within each of the before referenced programs. 

Answer. Below is a summary of funding implementation as ofFebruary 25, 2010, 

unless otherwise specified. 

• The Weatherization Program—This project was 96 percent obligated as of April 

9, 2010. The remainder of funds is for two funding opportunity announcements 

(FOAs); one FOA for a Training & Technical Assistance Program and one FOA 

for a Consumer Rebate Program. Applications to the Training & Technical Assistance FOA are currently under review. A Request for Information for the 

Consumer Rebates FOA is under review. 

• Energy Efficiency and Conservation Block Grants: As of April 9, 2010 this 

project was 80 percent obligated. Approximately 14 percent of funds remaining 

to be obligated are part of a competitively selected portion of this program. The 

majority of the remainder of unobligated funding for this project is due to eligible entities (for the formula grants) which have not yet applied or entities which 

have withdrawn. The application deadline for this project is September 30, 

2010. 

• The State Energy Program: Nearly 100 percent of funds have been obligated for 

this project. 
62 

• Energy Star Rebates: One hundred (100) percent of funds have been obligated 

for this project. • Four other energy efficiency programs under the jurisdiction of the Office of Energy Efficiency and Renewable Energy comprise an additional $3.4 billion in Recovery Act funding: the Building Technologies Program, the Federal Energy 

Management Program, the Industrial Technology Program, and the Vehicle 

Technologies Program. About $2.7 billion, or 80 percent, of these funds have 

been obligated across 15 projects as of April 9, 2010. Further, an additional 

$173.5 million under the Vehicles Technologies Program is scheduled to be obligated by May 2010. Please see Attachment A for a project-level analysis of obligations and payments data as of April 9, 2010 for DOE’s energy efficiericy 

projects receiving Recovery Act funding, as well as estimated timeframes for obligating remaining funds. 

Question 1c. Over the past two months, my staff has repeatedly asked DOE for 

a detailed analysis of how it is allocating funding among the many energy efficiency 

programs it administers. My staff has not received a single reply, which is troubling 

because we have seen press reports that the Administration would like to create a 

new multi-billion dollar program, called ‘‘Cash for Caulkers’’ to move more money 

towards similar energy efficiency projects. 

I assume that DOE has a tracking mechanism on how ARRA funding is actually 

spent after it is awarded, and on what types of projects. Please provide the funding 

implementation schedule for each state, and when the money will actually be spent. 

Answer. The Department of Energy (DOE) has systems to track recipients’ use of 

Recovery Act funding. DOE expects funds for the State Energy Program (SEP), the 

Weatherization Assistance Program (WAP), and the Energy Efficiency Block Grant 

Program (EECBG) to be expended within three years. DOE has been working closely with state and local recipients to ensure awarded funds are being used appropriately and in a timely manner. As of February 25, 2010, DOE obligated to recipients 100 percent of funds for the SEP, 96 percent of funds for WAP, and 73 percent 

of funds for EECBG. 

In some cases, recipients received conditional awards that limit their ability to 

spend funds until certain conditions are cleared [e.g., National Environmental Policy 

Act (NEPA) determinations]. DOE is working with recipients to clear those conditions as expeditiously as possible. Recipients are making progress in obligating and 

expending these funds. For example, as of February 25, 2010: 

• States have obligated $777 million in SEP funds and expended about $60 million. DOE’s target is for states to obligate $1 billion of SEP funds by the end 

of March 2010 and $2.5 billion by the end of June 2010. As such, DOE also has 

targets of awarding 90 percent of strategy conditioned funding and making 75 

percent of NEPA determinations by the end of March. DOE is closely tracking 

progress towards achieving these targets. 

• Weatherization recipients have expended $573 million. DOE expects States to 

increase their rate of expenditure as weatherization activities ramp up in the 

spring and summer months; the months of greatest activity in cold weather 

states. 

• State and local recipients have expended $83.3 million under EECBG. DOE also 

has targets of awarding 90 percent of strategy conditioned funding and making 

75 percent of NEPA determinations by the end of March. DOE is closely tracking progress towards achieving these targets. 

Also, continuous updates to Recovery Act spending can be found at http:// 

www.energy.gov/alaska.htm and http://www.recovery.gov/Pages/home.aspx. 

Question 1d. Over the past two months, my staff has repeatedly asked DOE for 

a detailed analysis of how it is allocating funding among the many energy efficiency 

programs it administers. My staff has not received a single reply, which is troubling 

because we have seen press reports that the Administration would like to create a 

new multi-billion dollar program, called ‘‘Cash for Caulkers’’ to move more money 

towards similar energy efficiency projects. 

Finally, the DOE IG has recently issued reports on alleged ‘‘waste, fraud and 

abuse’’ within programs currently being funded by the stimulus. Please describe 

what you are doing to address the concerns that have been raised, and other implementation issues that have arisen within the programs you oversee, including State 

Energy Programs and funding within the Energy Efficiency and Conservation Block 

Grants that are related to ARRA funding. What are the concrete steps you are undertaking to address the alleged ‘‘waste, fraud and abuse’’ as well as other implementation problems, as you propose billions more to do similar programs? 

Answer. In response to the Inspector General’s recent reports on alleged waste, 

fraud, and abuse, senior and program management have established corrective ac-
63 

tion plans, with milestones, that include weekly reporting to monitor the progress 

of the corrective actions in satisfying the recommendations provided by the DOE IG. 

In addition, quarterly reporting on all corrective actions will be submitted to the Office of Risk Management and Office of Inspector General for review and comment. 

The Office of Risk Management is in regular and ongoing discussions with program offices to analyze current implementation status, risks, and controls to mitigate the possibility of waste, fraud, and abuse. On a monthly basis, the Department 

reviews each program’s progress towards meeting the goals and objectives of the Recovery Act, including risk assessments, financial status, and performance measures. 

In addition, the Office of Risk Management has participated in State, sub-grantee, 

and home visits in conjunction with the Office of Weatherization and Intergovernmental Programs (OWIP) that were led by the Recovery Act Team to assess the preparedness of the States for this expanded Recovery Act project. The Office of Risk 

Management continues to work with the program office by helping to develop the 

OWIP monitoring manual and the field monitoring questionnaire. 

CASH FOR CAULKERS

Question 1a. Over the last couple of months we have heard many press reports 

about a new program your Administration is developing called HOMESTAR, otherwise known as ‘‘Cash for Caulkers.’’ As of yet, we have not received any information 

regarding how it would be implemented, and who would run it. 

Please describe what outside groups have been involved in drafting the legislation. In addition, who provided the President’s Economic Recovery Advisory Board 

the language to create the program? 

Answer. An industry-led coalition calling itself the ‘‘Home Star Coalition’’ has 

been working to draft legislation that would create a program known as ‘‘Home 

Star.’’ The Department understands this coalition has been working closely with the 

Senate Energy and Natural Resources Committee as part of that drafting process. 

The Department is unaware of the specific authors on the President’s Economic Recovery Advisory Board (PERAB) report. 

Question 1b. Over the last couple of months we have heard many press reports 

about a new program your Administration is developing called HOMESTAR, otherwise known as ‘‘Cash for Caulkers.’’ As of yet, we have not received any information 

regarding how it would be implemented, and who would run it. 

Press reports indicate that the goal is to have this program be ‘‘quick and easy’’ 

like ‘‘cash for clunkers.’’ Before anyone knew it, the ‘‘cash for clunkers’’ program was 

oversubscribed, and Congress had to take an additional $2 billion from the DOE renewable loan guarantee program to pay for it. Do you have a plan for ensuring that 

the government doesn’t get on the hook more money than it can deliver? How? 

Answer. DOE is prepared to execute any program authorized and funded by Congress. DOE’s understanding is that such a program would receive a fixed appropriation and that the program would end once the appropriated funds have been expended. 

Question 1c. Over the last couple of months we have heard many press reports 

about a new program your Administration is developing called HOMESTAR, otherwise known as ‘‘Cash for Caulkers.’’ As of yet, we have not received any information 

regarding how it would be implemented, and who would run it. 

Is there a sufficient qualified workforce in place to do this type of home retrofit 

work? 

Answer. DOE has worked with the Environmental Protection Agency (EPA) for 

several years to support the Home Performance with ENERGY STAR® program, 

which works with contractors who deliver whole-home retrofits and quality assurance. This contractor workforce is continually expanding. In addition, the construction industry is currently experiencing very high unemployment due to the slowdown in new home construction. These trained contractors are available to enter 

into the home retrofit industry immediately. 

Question 1d. Over the last couple of months we have heard many press reports 

about a new program your Administration is developing called HOMESTAR, otherwise known as ‘‘Cash for Caulkers.’’ As of yet, we have not received any information 

regarding how it would be implemented, and who would run it. DOT had to scramble to find personnel to administer the ‘‘cash for clunkers’’ program, and the program was still overwhelmed. Trading cars is infinitely simpler than renovating the 

vast range of different housing and building types in the country. How will the Administration process the requests for funds? Who will be eligible to receive the 

funds? 

Answer. DOE has closely examined the Report to Congress from the ‘‘cash for 

clunkers’’ program, and is studying the payment processing mechanism used in that 
64 

program. DOE understands the Home Star Coalition is working on details within 

potential draft legislation. 

Question 1e. Over the last couple of months we have heard many press reports 

about a new program your Administration is developing called HOMESTAR, otherwise known as ‘‘Cash for Caulkers.’’ As of yet, we have not received any information 

regarding how it would be implemented, and who would run it. 

Is there a sufficient workforce to ensure quality assurance? How do you plan to 

monitor quality assurance to ensure that the work is being done, being done properly and will actually result in energy savings? How many additional government 

employees or contractors will be needed to do this? 

Answer. DOE has worked with EPA for several years to support the Home Performance with ENERGY STAR® program, which works with contractors who deliver whole-home retrofits and quality assurance. Based on lessons from this program, DOE is confident there are sufficient national providers of quality assurance 

to enable a scale-up of home retrofit work. The resources DOE would need to run 

a new home retrofit program would depend on the size of the program’s appropriation. 

Question 1f. Over the last couple of months we have heard many press reports 

about a new program your Administration is developing called HOMESTAR, otherwise known as ‘‘Cash for Caulkers.’’ As of yet, we have not received any information 

regarding how it would be implemented, and who would run it. 

How did you determine which retrofit products would be eligible for rebates? 

Answer. DOE understands that the industry-led Home Star Coalition has internally determined a suggested list for which retrofit products would be eligible for 

rebates in the draft legislation. 

Question 1g. Over the last couple of months we have heard many press reports 

about a new program your Administration is developing called HOMESTAR, otherwise known as ‘‘Cash for Caulkers.’’ As of yet, we have not received any information 

regarding how it would be implemented, and who would run it. 

Who will be eligible to provide the worker training for the program? Will programs developed by both union and non-union workers be eligible to provide the 

training and workforce within the short and long term horizon of the program? 

Answer. DOE is eligible to establish program rules on worker training based on 

the program’s standing authorization. 

Question 1h. Over the last couple of months we have heard many press reports 

about a new program your Administration is developing called HOMESTAR, otherwise known as ‘‘Cash for Caulkers.’’ As of yet, we have not received any information 

regarding how it would be implemented, and who would run it. Are individual 

homeowners eligible to obtain rebates if they do their own work on their home? 

Answer. This determination has yet to be made and will need to be addressed in 

the proposed legislation. 

Question 1i. Over the last couple of months we have heard many press reports 

about a new program your Administration is developing called HOMESTAR, otherwise known as ‘‘Cash for Caulkers.’’ As of yet, we have not received any information 

regarding how it would be implemented, and who would run it. 

How many types of jobs are created by each eligible retrofit (i.e. Window replacing, caulking, insulation, duct sealing etc.)? 

Answer. Based on DOE’s experience with the Weatherization Assistance Program, 

the following job categories are involved in the process of home retrofitting: carpenters, electricians, HVAC mechanics, plumbers, sheet metal workers, and weatherization workers. 

ENERGY STORAGE

Question 1. Is the Office of Science Energy Innovation Hub on Batteries and Energy Storage going to examine a broad spectrum of energy storage technologies and 

their potential impact for both mobile and stationary applications? 

Answer. Yes, the Hub will expand our Nation’s scientific base for synthesis of 

novel nanoscale materials with architectures tailored for specific electrochemical 

performance, develop new methodologies to characterize materials and dynamic 

chemical processes at the atomic and molecular level, and expand our competencies 

in simulation and prediction of structural and functional relationships using modern 

computational tools. The research will be applicable to both mobile and stationary 

applications with the detailed technological focus determined by the successful proposal team. 

Question 2. When does the Office of Electricity anticipate completing its roadmap 

for energy storage technologies? Will this roadmap look at all of the potential electric storage devices that could be used for electric grid applications? 
65 

Answer. The Department of Energy is in the process of preparing the roadmap 

for energy storage technologies. We expect it will be comprehensive in scope. 

Question 3. What role does DOE have in ensuring that energy storage technologies are sufficiently developed and demonstrated to allow for utilization of these 

technologies by the utilities? 

Answer. The Department has requested a significant increase in FY 2011 for energy storage activities in the Office of Electricity Delivery and Energy Reliability 

(OE), which has the lead within the Department for applied research, development 

and deployment of energy storage applications for the electric grid. OE focuses on 

bringing new technologies to commercialization, and works closely with utilities, 

state energy agencies, and technology providers to further deployment of storage 

technologies on the grid. OE conducts an ongoing program to develop, bench test, 

and field test energy storage devices for grid level energy storage. It also supports 

a testing facility at Sandia National Laboratories which determines the reliability 

and efficiency of new storage devices, so that utilities have reliable performance 

data on available technologies. Analytical tools are being developed to help utilities 

and Independent System operators (ISOs) understand cost/benefit relations of different technologies and to optimize placement of storage facilities on the grid. OE 

will also monitor the progress of the storage demonstration projects funded under 

the American Recovery and Reinvestment Act through site visits, reliability analysis, and coordinating data acquisition. Data obtained from these projects will be 

made available to utilities. 

While OE works directly with utilities on technology applications, other offices in 

the Department are engaged in research on energy storage that may eventually lead 

to technologies that can be deployed by utilities. The Office of Science conducts basic 

research in energy storage materials and the fundamental mechanisms that underpin electricity storage. The Advanced Research Projects Agency-Energy (ARPA-E) focuses on developing leapfrog solutions for high capacity, utility-scale energy storage 

applications. Also, the Office of Energy Efficiency and Renewable Energy evaluates 

where energy storage systems can support the application of renewable technologies 

it develops and sponsors demonstrations of on-site energy storage technologies to 

support renewables deployment. 

RESPONSES OF HON. STEVEN CHU TO QUESTIONS FROM SENATOR SHAHEEN

Question 1a. The FY 2011 budget proposes $50 million for a new large-scale biomass power program to help large utilities who are co-firing coal power generation 

with biomass or switching from coal to biomass. I support the use of biomass power, 

but I have worked in this Committee to ensure that we use these biomass resources 

as efficiently as possible. Burning wood to make power helps reduce emissions, but 

if 75-80% of that energy is lost in the form of waste heat we are wasting a very 

important natural resource. 

Can you tell me how this program will focus on thermal efficiency? 

Answer. The initiative will conduct research, development, demonstration and deployment of advanced biopower technologies to improve the efficiency of biomass 

power systems and promote and accelerate the commoditization of biomass. The initiative will include assessments of feedstock resources, feedstock logistics and sustainability. It will also include research, development and testing of conversion 

intermediates such as biochar, syngas, pyrolysis oil, and densified biomass in advanced technology systems capable of improved operating efficiency. The goal of this 

program would be to facilitate the building of biopower facilities and enable 

biopower generation with less than 30 percent losses in the form of waste heat. 

Question 1b. The FY 2011 budget proposes $50 million for a new large-scale biomass power program to help large utilities who are co-firing coal power generation 

with biomass or switching from coal to biomass. I support the use of biomass power, 

but I have worked in this Committee to ensure that we use these biomass resources 

as efficiently as possible. Burning wood to make power helps reduce emissions, but 

if 75-80% of that energy is lost in the form of waste heat we are wasting a very 

important natural resource. 

What policies need to change so we are not inadvertently encouraging large electric biomass facilities (usually only 25% efficient), while discouraging decentralized, 

more local use of woody biomass in community thermal applications (usually 75-80% 

efficient), such as in campuses, hospitals, schools and institutions? 

Answer. The Department is not aware of any current Federal energy policies that 

would inadvertently provide advantages for large biopower facilities and discourage 

smaller distributed facilities. 

Question 2a. The Energy Independence and Security Act (EISA) of 2007 included 

a provision Section 471—for Energy Efficiency and Sustainability Grants to help 
66 

communities, school districts and universities implement or improving district energy systems, combined heat and power systems, production of energy from renewable resources—like biomass—and develop sources of thermal energy. 

A number of communities across New Hampshire are clamoring for assistance to 

help design and build these systems and many of them will be powered with biomass. 

What is the status of implementing this program authorized in EISA? 

Answer. Section 471 of the Energy Independence and Security Act (EISA) of 

2007—entitled Energy Efficiency and Sustainability Grants and Loans for Institutions—authorized funding for Fiscal Year 2009 through 2013 in the amount of $250 

million annually for grants and $500 million annually for direct loans to provide institutional entities assistance in improving their energy efficiency and sustainability. Section 471 also included very specific requirements regarding the nature 

of grant activities, grant size, conditions for awardees, maturity of loans, and other 

implementing criteria. However, since the passage of EISA, Congress has not appropriated designated funding to implement Section 471 activities. Two Recovery act 

awards were made to ‘‘institutional entities’’ that fit the definition of EISA Section 

471, for approximately $29 million. The Recovery Funding Opportunity Announcement did not follow the selection criteria within Section 471 or the award funding 

maximums. With numerous competing priorities and without designated funding, 

the Department has not initiated any Section 471 activities. 

Question 2b. The Energy Independence and Security Act (EISA) of 2007 included 

a provision Section 471—for Energy Efficiency and Sustainability Grants to help 

communities, school districts and universities implement or improving district energy systems, combined heat and power systems, production of energy from renewable resources—like biomass—and develop sources of thermal energy. 

A number of communities across New Hampshire are clamoring for assistance to 

help design and build these systems and many of them will be powered with biomass. 

Why is the administration proposing a new program to help large-scale users of 

biomass power when we have laws on the books that haven’t been implemented yet? 

Answer. The Administration is considering a variety of technology options to reduce U.S. greenhouse gas (GHG) emissions. Biopower offers one renewable energy 

opportunity, among others such as wind and solar energy, to achieve GHG reductions. 

The Energy Policy Act of 2005 authorizes the Department of Energy to support 

research, development, deployment, and commercial application of biopower under 

Section 932 (Title IX, Subtitle C). The Department requested FY 2011 funding for 

a biopower program that is anticipated to result in highly efficient biomass power 

technologies applicable to both small-and large-scale power systems. The proposed 

biopower program is designed to help meet the Administration’s objectives for reducing GHGs, creating green jobs, and spurring new businesses and markets. Furthermore, it will accelerate the deployment of biopower technologies in support of potential future national renewable portfolio standards. Biopower is also an option for 

meeting state-level renewable portfolio standards. 

Question 3. EIA has projected an exponential increase in presently non-commercially available cellulosic ethanol production in the coming 2 decades, and virtually 

no (4%) increase in thermal use of biomass, which has proven, available technologies, in this same time period. Is this based on anything other than an assessment and projection of existing policies that are promoting that direction? 

Answer. EIA projects that the production of cellulosic biofuels will benefit significantly from both Federal and State-level programs that are already in place, including the Federal renewable fuel standard that includes a specific mandate for the use 

of cellulosic biofuels. The expected rate of technological change and projected world 

oil prices also play a role in the projection for increased cellulosic biofuels production 

in the Annual Energy Outlook 2010 (AE02010) reference case, which is based on 

current laws and regulations. By 2035, U.S. cellulosic ethanol production is projected to use 1,035 trillion Btus of biomass and provides approximately 3.6 percent 

of the liquid fuels supply in the United States. The production of other cellulosic 

motor fuels, such as biomass-to-liquids diesel fuel via the Fischer-Tropsch process, 

uses an additional 2,375 trillion Btu of biomass (see table below). 

Regarding the thermal use of biomass, it is unclear to what AE02010 projection 

the 4 percent figure in the question is referring. In fact, thermal uses of biomass 

in industry, and especially in the electric power sector, grow substantially in EIA’s 

AE02010 reference case projection. Biomass use in the industrial and electric power 

sectors combined is projected to increase by about 82 percent and be responsible for 

about 26 percent of the total increase in all biomass consumption between 2008 and 
67 

2035. Some of the increase in biomass consumption is spurred by State-level renewable portfolio standards. 

Question 4. In the Northeast, we now use 84% of the nation’s home heating oil. 

Yet current policy seems to encourage use of our forest resources inefficiently for 

electricity or liquid biofuels while leaving the heating oil scenario in place. 

Since heating oil is a transportation fuel, wouldn’t it make sense to displace as 

much of this as possible with the local forest resources used efficiently, freeing up 

that diesel fuel for on-road use? 

Answer. DOE’s Thermochemical Conversion Platform focuses on the conversion of 

biomass into renewable fuels such as diesel, jet fuel, gasoline, and heating fuel oil. 

These technologies, when implemented commercially, will use lower quality biomass 

such as forest thinnings and slash, agricultural residues, and possibly cleaned municipal solid waste. These types of processes will not put undue stress on the Nation’s existing forest or agricultural lands. The technologies being developed will be 

deployable within the current refinery infrastructure, thereby reducing the cost of 

the final fuel. These fuel products could directly replace their petroleum counterparts and contribute to displacing foreign oil, making the U.S. more energy independent while lowering greenhouse gas emissions. 

Question 5. Is forest and agricultural biomass densification for renewable thermal 

fuels considered a ‘‘renewable fuel refining and blending technology’’ and an eligible 

manufacturing technology under section 48C, the Advanced Energy Manufacturing 

Credit? 

Answer. The Department of Energy (DOE) would need specific information about 

the proposed project and the property it will manufacture to determine 48C eligibility. Information included in an application would need to describe what aspect 

of densification is being proposed as a project. For example, if a company proposed 

to manufacture equipment that would be used for densification of renewable thermal fuels, such an applicant would qualify, assuming it meets all other requirements. However, if the company simply operated densification equipment, the activity would not qualify for a Section 48C tax credit because it does not constitute a 

manufacturing technology. Notice 2009-72 Section 4 defines a Qualifying Advanced 

Energy Project as one that ‘‘re-equips, expands, or establishes a manufacturing facility for the production of specified advanced energy property.’’ Further, property that 

can be used for the refining or blending of any transportation fuel, not solely for 

the refining or blending of renewable fuel, is not eligible, as per Section 4.01(3). All 

of this is available online at http://www.energy.gov/recovery/48C.htm. 

RESPONSES OF HON. STEVEN CHU TO QUESTIONS FROM SENATOR BARRASSO

Question 1a. The Department of Energy budget request zeroes out the base funding stream for the Rocky Mountain Oil Field Testing Center in Wyoming. The justification says it is an effort to phase out support for fossil fuels. The proposal would 

result in job losses in Wyoming. 

RMOTC offers small businesses, inventors, and students the opportunity to test 

technology and learn in a real-world situation. The facility is being used to work 

on numerous issue, ranging from using geothermal energy to make oil production 

more energy efficient to train students from Casper College in wind energy and mechanical engineering. 

RMOTC must have a base funding stream to remain operational. 

Do you consider training students in renewable energy and mechanical engineering is a handout to the oil industry? 
68 

Answer. No, training students in renewable energy and mechanical engineering 

is not a handout to the oil industry; however, the Department does believe that the 

oil and gas industry is capable of training its workers without funding from the Federal government. The Department is confident that training for students in renewable energy technologies will continue through programs funded elsewhere within 

the Department, particularly from the Office of Energy Efficiency and Renewable 

Energy. 

Question 1b. The Department of Energy budget request zeroes out the base funding stream for the Rocky Mountain Oil Field Testing Center in Wyoming. The justification says it is an effort to phase out support for fossil fuels. The proposal would 

result in job losses in Wyoming. 

RMOTC offers small businesses, inventors, and students the opportunity to test 

technology and learn in a real-world situation. The facility is being used to work 

on numerous issue, ranging from using geothermal energy to make oil production 

more energy efficient to train students from Casper College in wind energy and mechanical engineering. 

RMOTC must have a base funding stream to remain operational. 

Do you think giving small businesses a chance to test their innovative technologies to make our energy cleaner is a bad thing? 

Answer. To the contrary, providing small businesses a chance to test their innovative technologies to make our energy cleaner is most beneficial. Through fully reimbursable (funds-in) agreements, RMOTC will contract with industry, academia, and 

other government agencies to field test and demonstrate oil and gas technologies, 

new environmental products, and focused energy efficient, geothermal and other renewable technologies as they relate to oil and gas operations. 

RESPONSES OF HON. STEVEN CHU TO QUESTIONS FROM SENATOR SESSIONS

Question 1. Over a year ago, this Committee asked you to provide us with the 

basis for the decision to eliminate Yucca Mountain as an option for our Nation’s geologic repository and you have repeatedly told us ‘‘we can do better.’’ In my opinion, 

that is not a basis for the decision. Why have you repeatedly avoid answering the 

question and fail to provide any new data or technical evidence as to why Yucca 

Mountain is now no longer suitable as a repository? 

Answer. The Administration has made a decision to bring the Yucca Mountain 

project to an orderly close. This decision reflects the Administration’s belief that we 

can find a better solution that achieves a broader national consensus. That is why 

we have convened the Blue Ribbon Commission; it will provide advice and make recommendations on alternatives for the storage, processing, and disposal of civilian 

and defense used nuclear fuel and nuclear waste. 

Question 2. The Office of Civilian Radioactive Waste Management is a statutory 

office under section 304 of the Nuclear Waste Policy Act, therefore what authority 

does the Department of Energy have to abolish this office absent a Congressional 

amendment to the Act? 

Nuclear Waste Policy Act [P.L. 97-425] 

Sec. 304. (a) ESTABLISHMENT.—There hereby is established within the 

Department of Energy an Office of Civilian Radioactive Waste Management. The Office shall be headed by a Director, who shall be appointed by 

the President, by and with the advice and consent of the Senate,...

(b) FUNCTIONS OF THE DIRECTOR—The Director of the office shall 

be responsible for carrying out the functions of the Secretary under this 

Act. The Director of the Office shall be directly responsible to the Secretary. 

(c) ANNUAL REPORT TO CONGRESS—The Director of the Office shall 

annually prepare and submit to the Congress a comprehensive report on 

the activities and expenditures of the Office. 

Answer. The Secretary of Energy has broad authority under section 643 of the Department of Energy Organization Act (‘‘DOE Organization Act’’) to ‘‘establish, alter, 

consolidate or discontinue such organizational units or components within the Department as he may deem to be necessary or appropriate.’’ (42 U.S.C. § 7253(a)) 

This authority is limited only to the extent that the Secretary seeks to abolish ‘‘organizational units or components established’’ by the DOE Organization Act, to the 

transfer of functions vested by the DOE Organization Act in any organizational unit 

or component, and as to the National Nuclear Security Administration. Section 304 

of the Nuclear Waste Policy Act established the Office of Civilian Radioactive Waste 

Management, but in doing so it did not amend the DOE Organization Act. (42 

U.S.C. § 10224) Because the Office of Civilian Radioactive Waste Management was 

not established by the DOE Organization Act and it is not part of the National Nu-
69 

clear Security Administration, the Secretary has unlimited authority to ‘‘alter, consolidate or discontinue’’ the Office of Civilian Radioactive Waste Management pursuant to Section 643 of the DOE Organization Act. 

Question 3. It is my understanding that the Department of Energy has issued 17 

separate Environmental Impact Statements which specifically define Yucca Mountain as the disposal pathway for high level waste. Are those Environmental Impact 

Statements still valid in light of your decision that Yucca Mountain is no longer an 

option? 

Answer. Each DOE Environmental Impact Statement takes into account the facts 

and circumstances as they exist at the time the document is produced. A change 

in those facts or circumstances does not render the EIS (or the Record of Decision 

which is based on the EIS) invalid. 

Question 4. Would you please describe to me the legal obligations that the Department of Energy has with regards to preserving the scientific information, core samples, studies, and research that the Department has conducted in connection with 

the licensing of Yucca Mountain? Can you tell me the status of the above mentioned 

items-are they being destroyed or preserved? 

Answer. In general, the Department will preserve all material in its Licensing 

Support Network databank in its current form during the pendency of the NRC proceeding and any appeals. In addition, the Department will preserve records and material produced in connection with the Yucca Mountain Project in compliance with 

federal requirements and consistent with DOE’s objective of preserving the scientific 

knowledge from the Yucca Mountain project. 

Specifically, the Department is required to comply with the records retention and 

disposition requirements of the Federal Records Act and related regulations. The 

Federal Records Act establishes the framework for records management programs 

in Federal agencies and prohibits the destruction of Federal records, except in accordance with the procedures described in Chapter 33 of Title 44 of the United 

States Code. These procedures allow for records destruction only under the authority of a records disposition schedule approved by the Archivist of the United States. 

Records schedules provide for specified retention periods, which are, in some cases, 

permanent—meaning that the records involved would never be destroyed. 

As noted above, the documents related to the licensing proceeding will be preserved during the current proceeding and through any appeals. The Department 

will comply with the Federal Records Act, NARA regulations, and NARA-issued or 

-approved records schedules for such items. Beyond that the Department will consider whether there are additional steps that it should take to ensure that the scientific knowledge gained from the Yucca project is not lost. For example, it has already been decided that a number of the scientific studies and research reports produced for the Yucca Mountain project will be retained permanently under the 

NARA-approved records schedule for our Office of Scientific and Technical Information (or OSTI). 

Question 5. The President’s FY 2011 budget request indicates that the Department of Energy intends to use the balance of FY 2010 funds for Yucca Mountain 

to close out the project. The President’s FY 2010 request did not seek funds to close 

out the project. Does the Department intend to submit a reprogramming request to 

this Committee for the specific purpose of closing out the Yucca Mountain Project? 

Answer. On February 17, 2010, the Department of Energy sent the Chairman of 

the Subcommittee on Energy and Water Development of the Committee on Appropriations a notification of its intent to reprogram funds for Yucca Mountain Project 

and program office termination activities within the Nuclear Waste Disposal and 

Defense Nuclear Waste Disposal appropriations. 

Question 6. The President requested an additional $36 billion in authority to guarantee loans for nuclear facilities (for a total of $54.5 billion) will these loans be released prior to the final report issued by the Blue Ribbon Commission? 

Answer. In announcing the establishment of the BRC on January 29, 2010, Secretary Chu directed the Commission to produce an interim report on its recommendations within 18 months and a final report within 24 months. The Commission’s work is not linked in any way to the operation of the Loan Guarantee Program and its timetable for issuing future loan guarantees for new nuclear power 

plants. A license from the NRC is one of the conditions that must be satisfied prior 

to issuance of a loan guarantee for each project. The Department of Energy is relying on the U.S. Nuclear Regulatory Commission (NRC) to determine if each reactor 

design fulfills the regulatory requirements for design certification and a construction 

and operating license. In granting a license for a new nuclear plant, it is up to the 

NRC to determine whether there is reasonable assurance that a permanent disposal 

facility will be found. 
70 

Æ