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93–304PDF 2004

FY 2005 BUDGET PRIORITIES FOR THE

DEPARTMENT OF ENERGY

HEARING

BEFORE THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

APRIL 1, 2004

Serial No. 108–80

Printed for the use of the Committee on Energy and Commerce

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house

2

COMMITTEE ON ENERGY AND COMMERCE

JOE BARTON, Texas, Chairman

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

RALPH M. HALL, Texas

MICHAEL BILIRAKIS, Florida

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

RICHARD BURR, North Carolina

ED WHITFIELD, Kentucky

CHARLIE NORWOOD, Georgia

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi, Vice Chairman

VITO FOSSELLA, New York

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

CHARLES F. BASS, New Hampshire

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

DARRELL E. ISSA, California

C.L. ‘‘BUTCH’’ OTTER, Idaho

JOHN SULLIVAN, Oklahoma

JOHN D. DINGELL, Michigan

Ranking Member

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

LOIS CAPPS, California

MICHAEL F. DOYLE, Pennsylvania

CHRISTOPHER JOHN, Louisiana

TOM ALLEN, Maine

JIM DAVIS, Florida

JANICE D. SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

BUD ALBRIGHT, Staff Director

JAMES D. BARNETTE, General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

(II)

C O N T E N T S

Page

Testimony of:

Abraham, Hon. Spencer, Secretary, U.S. Department of Energy ................. 15

Additional material submitted for the record:

Abraham, Hon. Spencer, Secretary, U.S. Department of Energy, response

for the record ................................................................................................. 68

(III)

(1)

FY 2005 BUDGET PRIORITIES FOR THE

DEPARTMENT OF ENERGY

THURSDAY, APRIL 1, 2004

HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC.

The committee met, pursuant to notice, at 9:30 a.m., in room

2123, Rayburn House Office Building, Hon. Joe Barton (chairman)

presiding.

Members present: Representatives Barton, Hall, Upton, Stearns,

Gillmor, Whitfield, Norwood, Shimkus, Wilson, Shadegg, Buyer,

Radanovich, Bass, Walden, Terry, Ferguson, Rogers, Issa, Otter,

Sullivan, Dingell, Markey, Boucher, Brown, Eshoo, Stupak, Engel,

Wynn, Green, McCarthy, Strickland, Capps, Doyle, Allen, Davis,

Schakowsky, and Solis.

Staff present: Mark Menezes, majority counsel; Bob Meyers, majority counsel; Jason Bentley, majority counsel; Bob Rainey, fellow;

Peter Kielty, legislative clerk; Bruce Harris, minority counsel; and

Sue Sheridan, minority counsel.

Chairman BARTON. The committee will come to order.

Today we’re here to hear from the Secretary of Energy on the Department of Energy’s pending budget request and any other issues

that he wishes to put before us.

The Chair would recognize Mr. Dingell for a unanimous consent

request.

Mr. DINGELL. Good morning, Mr. Chairman.

I have a unanimous consent which you and I have discussed. It

have discussed it with the members of the minority.

It is as follows, and I ask unanimous consent to this effect: For

the purposes of this meeting alone that members be limited in

their opening statements to 1 minute; that subsequently each of

them will receive the appropriate amount of time under rules, i.e.,

5 minutes for questions or such further comments as may be appropriate.

That is the unanimous consent request subject to just a couple

of things I want to say.

One, we would expect if this time does not make it possible to

receive the full testimony of the Secretary or the opportunity of all

members on both sides to ask questions and so forth, that we

would expect that the Secretary would come back. And second of

all, to have a clear understanding that this does not change or

amend the rules of the committee. It is simply a unanimous consent request for this day’s business only.

Chairman BARTON. Observing the right to object.

2

Mr. DINGELL. I certainly yield to my——

Chairman BARTON. And I will not object, but I want to let all the

members of the committee know that I take my duties as chairman

of this committee, you know, absolutely seriously. And it is not my

intent nor will I unilaterally violate any of the rules.

I was led to believe until last week that we actually had a rule

that said all members of the committee had a right to give a specified opening statement. It turns out that at least in the opinion of

the Parliamentarian and the majority counsel that it is not a right,

it is a tradition. I want to maintain the traditions also. But on rare

occasions when we have Cabinet secretaries or other special situations that have limited time, I will work with Mr. Dingell to determine the best way to maximize everybody’s opportunity to have

some input.

So as long as everybody understands that accepting this unanimous consent request does not set a precedent and does not acknowledge a subordination of the chairman’s rights of recognition,

I will not object. And we will get this worked out. We are going to

get with the Parliamentarian, with both majority and minority

counsel and make sure we understand what the rules are, what the

rights are. And those will be honored scrupulously.

So with that, is there an objection to the gentleman from Michigan’s unanimous consent request? Hearing none, so ordered.

The Chair would recognize himself for 1 minute.

Mr. Secretary, we are glad to have you here today. This is an important hearing. As you know, energy is in the news today. This

committee and the House of Representatives passed a comprehensive energy bill. The committee passed the original bill last spring.

We passed the Conference Report right before Christmas, and yet

today the other body has yet to see fit to move that bill.

Energy prices are at, or near, all time highs. Consequently, we

need to focus on our energy policy. We also need to focus on your

Department’s budget.

I want to commend you on what you have done in the management of the Department of Energy. You are one of the few Cabinet

Secretaries that has taken managing the Department to heart, and

the Office of Management and Budget has given your leadership at

the Department very high marks for what you have done.

So I look forward to hearing from you. And, obviously, we look

forward to having a full discussion in the question and answer period.

[The prepared statement of Hon. Joe Barton follows:]

PREPARED STATEMENT OF HON. JOE BARTON, CHAIRMAN, COMMITTEE ON ENERGY

AND COMMERCE

The hearing will come to order. One of the first decisions I made upon becoming

Chairman of the Committee was to exercise our Constitutional duty to review the

budget requests of cabinet departments within our jurisdiction. Thus far, the full

Committee has heard from Secretaries Thompson and Evans and today we’ve invited Secretary Abraham of the Department of Energy to address DOE’s budget for

FY 2005.

We have heard from the Secretary and his office on several critical items this

Congress: of course on the energy bill, but also the August blackout, Yucca Mountain, and a number of oversight matters. But the Energy Department also performs

a wide range of services for our country, from modernizing our nuclear weapons

stockpile to the development of energy efficiency technology and renewable energy.

I think it important to recognize your accomplishments, Mr. Secretary; I understand

3

OMB has announced that your Department has made the most progress in fulfilling

the President’s Management Agenda by creating cost-saving synergies to enhance

performance while meeting the Department’s missions. Considering the challenges

facing your Department, that is quite a feat and you and your staff should be complimented.

Today, Mr. Secretary, you bring us the largest DOE budget in history and we look

forward to hearing from you as to why that’s the case.

Chairman BARTON. With that, I would recognize the gentleman

from Michigan for 1 minute.

Mr. DINGELL. Mr. Chairman, I thank you.

Welcome, Mr. Secretary.

Mr. Chairman, I hope that this hearing—first of all, I commend

you for the hearing.

Second, I hope that the hearing will focus very carefully and that

the Secretary will assist us on a number of questions. One, the

question of enacting electric reliability legislation and, with the administration’s support, that being done separately.

Two, the need of the administration to job own OPEC and OPEC

members and whether that has in fact been done because I believe

that is extremely important.

I also hope that we will address seriously the problem of reform

of Yucca Mountain funding where monies belonging to the public

are being dissipated improperly by the Congress and by the Budget

Committee and the Appropriations Committee.

I also would like to see us address this morning problems associated with accelerated clean-up at defense waste sites and other

similar facilities. Also facility security and worker safety. These are

important matters which need to be address and I hope we an explore today.

Thank you, Mr. Chairman.

Chairman BARTON. Thank you.

Without objection, all members’ written statement will be made

a part of the record.

The Chair is now going to recognize any members who seeks recognition to give a 1-minute opening statement.

The Chair would recognize the distinguished subcommittee chairman of the Energy and Air Quality Subcommittee, Mr. Hall of

Texas.

Mr. HALL. Mr. Chairman, I have no opening statement.

Chairman BARTON. The Chair would then recognize Mr. Markey

for an opening statement. Okay. Mr. Markey passes.

The Chair would then recognize Congresswoman Wilson for an

opening statement.

Ms. WILSON. I will pass, Mr. Chairman.

Chairman BARTON. Okay. The Chair would recognize Mr. Brown

of Ohio for an opening statement.

Mr. BROWN. Thank you, Mr. Chairman. I will limit to 1 minute

as you request.

America’s energy future is taking shape, Mr. Secretary, in Ohio

a national leader in fuel cell technology research. That is why I

strongly support your FutureGen proposal to build a coal fueled

emissions free fuel cell power plant. I look forward to working with

you to make FutureGen a reality.

4

I also support the President’s proposal to increase funding for

EnergyStar. We should be doing more by providing Federal rebates

to consumers who choose EnergyStar labeled products.

But though high natural gas prices are hurting manufacturers,

the President proposes to cut funding for programs that help manufacturers save money by saving energy. That is a mistake we in

Congress must correct. We know what has happened in your part

of the country, my part of the country; Michigan, Ohio, the entire

Great Lakes area with loss of manufacturing jobs. The President

seems to be missing the boat on this part of dealing with that problem and other areas also in manufacturing.

The Energy Information Administration projecting record gasoline demand and low gas inventories, the Energy Department must

act to protect consumers. I urge you to meet this spring with oil

company executives to make certain that inventories are sufficient

to protect consumers from the price effects of unanticipated supply

disruption.

Mr. Secretary, I am glad you are here. Thank you.

Chairman BARTON. Does the gentleman from Arizona wish to

make an opening statement?

Mr. SHADEGG. I do, Mr. Chairman.

Chairman BARTON. The gentleman is recognized for 1 minute.

Mr. SHADEGG. Mr. Secretary, I want to thank you for being here

today and for presenting yourself for questioning by our committee.

I want to compliment you on the efforts of you and the administration to address the energy issues facing our Nation.

In May 2000 the administration released a comprehensive national energy policy which made over 100 separate recommendations to address all aspects of the energy equation.

In the summer of 2001 you worked with the committee and the

House to pass H.R. 4, the Energy Policy Act of 2001 with a wide

range of issues proposing to boost energy oil product, gas and electricity and implement energy conservation programs and efficiency

programs.

Last spring you worked with us again to pass even more legislation, more comprehensive legislation the Energy Bill H.R. 6.

We appreciate your efforts to address these issues.

I know there will be questions today about the Strategic Petroleum Reserve, and I am anxious to get into that discussion.

But I want to compliment this administration. Obviously, a lot

of things that you have put on the table have not yet become law

or have been defeated as a result of the deliberations of the U.S.

Congress, and those things have had consequences. Now that we

face extremely high oil prices and——

Chairman BARTON. The gentleman’s time has expired.

Mr. SHADEGG. [continuing] I share my colleagues’ concern that

we work to try to hold down gasoline prices as we go forward.

I thank you for being here.

Chairman BARTON. The gentleman from Massachusetts now recognized for 1 minute opening statement.

Mr. MARKEY. President Bush gets quite a bit of advice about how

to deal with OPEC oil cartel. Here is a plan I really wish that he

had taken to heart prior to yesterday’s announcement. ‘‘What I

think the President ought to do is he ought to get on the phone

5

with the OPEC cartel and say we expect you to open your spigots.

One reason why the price is so high is because the price of crude

oil has been driven up. OPEC has gotten its supply act together

and it is driving up the price like it did in the past. And the President of the United States must job own OPEC members to lower

the price.’’ Great advice. Who offered it? It was candidate George

W. Bush back in January 2000 to Bill Clinton. Unfortunately,

President George W. Bush does not seem to have listened. Instead

of getting OPEC to turn on the spigot, President Bush has failed

to prevent OPEC from turning off the spigot that powers the American economy.

The Bush Administration’s failed energy policies are already forc- ing consumers to pay a Bush gas tax of $24 billion a year that

could rise to $32 billion by the summer unless President Bush gets

OPEC to start producing more oil instead of reducing by a million

barrels of oil at a point where the economy of the world is in trouble.

Chairman BARTON. I thank the gentleman from Massachusetts.

Does the gentleman from New Hampshire wish to make an opening statement?

Mr. BASS. Yes, Mr. Chairman.

Chairman BARTON. The gentleman is recognized.

Mr. BASS. The comments of my friend from Massachusetts notwithstanding, Mr. Secretary energy should not be about Republicans versus Democrats in an election year. It should not be about

liberals versus conservatives, and it is not. Energy policy is about

developing a unified bipartisan strategy that involves foreign policy

and the balanced development of energy resources that meet the

needs which are unique and interesting of all regions of the country.

And I am looking forward to working with you and this committee if we do not have an energy bill in the near future to develop a plan that will be of interest to regions such as the northeast.

And I yield back.

Chairman BARTON. The gentleman from Michigan wish to make

an opening statement?

Mr. STUPAK. Yes, Mr. Chairman.

Chairman BARTON. The gentleman is recognized.

Mr. STUPAK. Mr. Chairman.

Mr. Secretary, I recently read a Florida paper which suggested

creating a renewable energy trust fund using revenue derived from

an energy postage stamp similar to the breast cancer research

stamp. The special stamp would cost more than a regular postage

stamp with the extra revenue awarded to universities for the research and development of clean, renewable energy sources such as

hybrid cars and alternative fuels, the goal being energy independence by 2014. This is similar to what the government asked of

Americans during World War II. The government asked them to

buy war bonds, grow victory gardens. Now we should ask them to

buy energy stamps to help free us from foreign oil, which again is

linked to our national security.

And with that, I would yield back. I will be interested in hearing

your comments.

6

Chairman BARTON. We thank the gentleman.

Does the gentleman from New Jersey wish to make an opening

statement?

Mr. FERGUSON. I do, Mr. Chairman.

Chairman BARTON. The gentleman is recognized.

Mr. FERGUSON. Thank you, Mr. Secretary for being here.

I was listening to my friend from Massachusetts talk about the

failed energy policies of the Bush Administration. It has got to be

April Fool’s Day, because many of the important energy policies of

the Bush Administration have never been put into law because of

those in the Congress, those in this committee, those on the House

floor and in particular our friends in the Senate who have sought

to stymie the energy policies of this administration from being put

into law.

Clearly, this administration and Secretary Abraham and others

have worked like dogs for 3 years to try and implement an energy

policy which was lacking for 8 years under the previous administration. It seems to me that many of the energy problems and the

situations that we are facing today could have been helped had we

put an energy policy in place 1 or 2 or 3 years ago. It is my hope

that we will continue to work today with the Secretary and our

friends in the Senate to implement an energy policy which this administration had put forward 3 years ago, more than 3 years ago.

Thank you, Mr. Chairman.

Chairman BARTON. Does the gentleman from New York wish to

make an opening statement?

Mr. ENGEL. Yes, thank you, Mr. Chairman.

I believe that the administration must do everything in its power

pure and simple to bring down the prices of gasoline. I think it is

quite disingenuous to suggest that if the energy bill had passed in

the Senate, somehow that would have effected the prices of gasoline.

I know the energy bill would reward polluters and do a lot of

other things, but I do not really see it bringing down the prices of

gasoline. And that is the No. 1 priority for the American people.

A few days ago OPEC announced it will cut production. Our supposed allies in the Middle East are once again squeezing the American consumers. If that does not prove the point that we must find

innovative ways to become an energy independent Nation, I do not

know what will.

It has been a quarter of a century since we increased CAFE

standards. In that time we have seen a revolution in medical technology, telephone and wireless equipment and the creation of a little thing called the Internet. We have some very bright engineers.

So I find it absolutely impossible to believe that the automotive engineers have not been able to improve engine efficiency.

I think that we have to have high better insulating materials for

walls and windows, a much more aggressive effort to deploy super

conductors in the market. And the energy policy of this country, we

also need to think a lot about conservation.

Chairman BARTON. The gentleman——

Mr. ENGEL. And finally I want to say——

Chairman BARTON. The gentleman’s time is expiring.

7

Mr. ENGEL. [continuing] that the Federal Government should

not—I urge the Federal Government to put a temporary hold on

purchasing more oil for the Strategic Petroleum Reserve, and I join

my colleague from Virginia and dozens of other members who said

that.

Thank you, Mr. Chairman.

Chairman BARTON. I thank the gentleman from New York.

Does the gentleman from Michigan wish to make an opening

statement?

Does the gentlelady from California wish to make an opening

statement, Ms. Eshoo?

Ms. ESHOO. Thank you.

And good morning, Mr. Chairman and Mr. Secretary. Welcome.

I am very glad that you are here to discuss the administration’s

budget request. But of course this is an opportune time to talk just

a little bit in our opening statements about national energy policy.

What I want to direct my comments very quickly at, and other

members have done this as well, is the issue of gasoline prices and

what is happening at the pump. They are high all over the country.

I am a Californian. Last weekend, just maybe three blocks from my

home, $2.25 a gallon for regular. $2.25 a gallon for regular.

So this is hitting people hard. And I do think that there are some

things that we can do, both short term and long term.

Everyone in California including our new Governor, the entire

California delegation, bipartisan California congressional delegation and even EPA scientists know that the waiver to improve air

quality in our State would certainly help to lower costs. We need

to act on that waiver, and we need your assistance in doing that.

I carried legislation with a former member from this committee

from Southern California——

Chairman BARTON. Okay. The gentlelady’s time is expiring.

Ms. ESHOO. And I hope, Mr. Secretary, that you will take a very

close look at the letter that we have sent to you. It is not to cure

the entire problem, but it certainly will go a long way.

Thank you.

Chairman BARTON. The gentlelady’s time has expired.

The gentleman from California, Mr. Issa, is recognized for 1

minute.

Mr. ISSA. Mr. Secretary, I would echo parts of my colleague from

California’s comments that it is important that California be allowed to formulate less expensive clean fuels as soon as possible.

I would note that that is in the Energy Bill, and hopefully we will

soon see that waiver brought about.

But what I am going to be very concerned to get a feel for is with

the Federal Government buying 160,000 barrels a day for the Strategic Petroleum Reserve and past experience of unloading 30 million barrels in order to try to reduce prices and finding that it only

reduced prices by about .01 cent a gallon; whether or not this is

really going to make a material difference in what we all admit is

a refining capacity problem leading to higher prices. And, hopefully, you can deal with that and then in the remaining seconds

that we all have, help us understand the impending natural gas

shortage.

Thank you. I yield back.

8

Chairman BARTON. The gentleman from Texas, Mr. Green, is recognized for 1 minute.

Mr. GREEN. Thank you, Mr. Chairman.

And as we know, energy prices are having a major impact on our

economy today, not only our constituents at the pump, but particularly in the economy of the Gulf Coast where I represent where

natural gas prices are threatening the chemical manufacturers to

use natural gas as a fed stock, plus the price of just heating our

homes and cooling our homes.

The Washington Post on March 17 ran a front page business section article with headline ‘‘Chemical Industry in a Crises: Natural

Gas Prices Are Up, Factories Are Closing And Jobs Are Vanishing.’’

My concern is we are going to see the same thing happen to the

chemical industry that happened in a lot of our other basic industries.

The article cited an industry executive saying we have the highest natural gas prices in the world and U.S. businesses have lost

$50 billion in business to foreign competition. The industry has lost

over 100,000 jobs not just in Texas, but Ohio, New Jersey, West

Virginia and other manufacturing states.

I support H.R. 6, the comprehensive energy package, and I would

hope the Senate would find the votes to pass it. It is not as good

as I would like for energy production, but it is the best we could

do.

An example of the bill, I would hope that the administration’s——

Chairman BARTON. The gentleman’s time has expired.

Mr. GREEN. [continuing] decision to hold off on exploration in the

eastern Gulf of Mexico.

Thank you, Mr. Chairman.

Chairman BARTON. I thank the gentleman from Texas.

Does Mr. Otter wish to make an opening statement.

The gentlelady from Missouri?

The gentleman from Oklahoma wish to make an opening statement?

Mr. SULLIVAN. Thank you, Mr. Chairman.

And thank you, Secretary for being here today and testifying before us. And I look forward to hearing your 2005 energy priorities.

Yesterday, OPEC announced its decision to cut oil production by

1 million barrels a day. And this just highlights the need for a comprehensive energy policy that we have heard from many people

today.

Over 50 percent of our energy comes from foreign sources, and

a large percentage of that comes from areas that we have carpet

bombed recently. I think it’s asinine that we rely on that much.

We need an energy policy, one that spurs domestic production

and increases our refining capacity. They are running at almost

full capacity.

As you know, Mr. Secretary, we have not built a refinery in nearly 30 years. This is an important issue to Oklahoma as 100,000

people are employed by the energy industry. It is especially important to my independent producers and royalty owners. I think that

all Americans are now realizing the importance of this industry

9

with the increasing prices at the pump. I look forward to hearing

your testimony and, again, thank you for being here today.

Chairman BARTON. The gentlelady from California, Ms. Capps,

wish to make an opening statement?

Ms. CAPPS. Yes, Mr. Chairman.

Chairman BARTON. The gentlelady is recognized.

Ms. CAPPS. Mr. Secretary, I believe the administration is dead

wrong to call for passage of H.R. 6 to address our energy problems.

It would not help. According to the Energy Department this policy

would actually increase gas prices. Gas prices need to come down,

not go up and here are a few ways to make that happen.

First, the President should grant California the 2 percent oxygenate waiver as Governor Schwarzenegger and the bipartisan

California delegation have been asking. According to the Petroleum

Industry Research Foundation unnecessary RFG standards add up

to 20 cents a gallon.

Second, we should stop adding to the Strategic Petroleum Reserve when oil prices are so high. We should buy oil for the SPR

when prices are low, not when they are sky high.

And finally, the administration should press OPEC to raise output and lower prices. Back in 2000 then Governor Bush called for

more administration jawboning of OPEC countries to bring down

oil prices. Today he needs to follow his own advice.

I yield back.

[The prepared statement of Hon. Lois Capps follows:]

PREPARED STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF CALIFORNIA

Thank you, Mr. Chairman.

With gas prices at record levels and rising, the economy still struggling, and a

summer of potential electricity blackouts possible, energy issues remain at the forefront of our agenda.

I am disappointed that Congress didn’t pass responsible energy legislation in the

last session.

I am not, however, disappointed the energy bill that came out of the House did

NOT become law.

H.R. 6 did just about everything but promote a responsible national energy policy.

The bill was loaded down with billions in subsidies for the oil, gas, coal and nuclear industries.

It would have weakened key environmental laws, restricted states’ ability to protect their coasts, and given immunity to producers of the known groundwater contaminant and gasoline additive MTBE.

And the bill would have had virtually no impact in several key areas like reducing

global climate change or keeping gas prices affordable.

Indeed, the Energy Information Agency noted that HR 6 would have virtually no

effect on gasoline prices.

We should pass the noncontroversial parts of the bill—like Mr Dingell’s electricity

reliability standards—and stop holding them hostage to the more loathesome provisions.

As for the skyrocketing gas prices, I have a few suggestions...

First, the President should grant California the waiver from the 2% oxygenate

standard. According to the Petroleum Industry Research Foundation, without a

waiver California’s gas prices will be as much as 20 cents a gallon higher.

Gov. Schwarzenegger, former Gov. Davis and virtually the entire bipartisan California delegation has been asking for this waiver for the last 5 years.

Just yesterday, Reps. Waxman, Eshoo, Solis, Lofgren and I renewed this request

to the President.

Second, we should stop adding to the Strategic Petroleum Reserve when oil prices

are so high. Not only would that send a signal to OPEC that we will take steps

to combat the cartel’s illegal manipulation of oil prices—it would be good for taxVerDate 11-MAY-2000 10:11 Jul 01, 2004 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6621 93304.TXT HCOM1 PsN: HCOM1
10

payers as well. We should be buying oil for the SPRO when prices are low . . . not

when they are sky high.

Finally, the Administration should press OPEC to raise output and lower prices.

Yesterday’s New York Times notes that the ‘‘United States is placing ‘very little’

pressure on Saudi Arabia and other OPEC countries to keep production up.//

Diplomacy is often best conducted behind closed doors, but OPEC decision to cut

production by a million barrels illustrate another failure of the Administration.

And we clearly have to take some steps for the long term, the most important

being one this Committee unwisely shot down—raising the automobile fuel efficiency

standards.

The National Academy of Sciences has concluded a significant improvement in the

miles-per-gallon performance of cars and trucks over the next ten years is possible.

Higher efficiency standards would result in real fuel savings, benefitting consumers and the economy, reducing our dependence on foreign oil, and enhancing the

competitiveness of our auto industry.

I yield back the balance of my time.

Chairman BARTON. I thank the gentlelady.

Mr. Whitfield wish to make an opening statement? Okay.

The gentleman from Pennsylvania wish to make an opening

statement?

Mr. DOYLE. Yes. Thank you, Mr. Chairman.

Mr. Secretary, welcome.

As you know, Mr. Secretary, I voted for the Energy Bill in this

committee and on the House floor, but I have to tell you I am very

concerned with the state of DOE’s budget because it seems we are

in the process of decimating a lot of our core R&D programs at the

Department. And I just think government has to play a role in encouraging the development of technologies that have a public benefit but are too risky for the private sector to take on alone. But

it seems like we are making significant cuts in places that should

be priorities like distributed generation, fossil energy and other

core R&D programs.

We hear a lot about the price of gasoline here. I will tell you, forget about sending a man to Mars. Let us put our energy and money

and resources into this hydrogen fuel cell project, not robbing Peter

to pay Paul or we are taking from other parts of the budget. Put

some real money into the program, make that our mission to Mars

and we can tell OPEC to eat their oil. That is what we should be

doing in this country and be doing it right away.

Thank you, Mr. Chairman.

[The prepared statement of Hon. Mike Doyle follows:]

PREPARED STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF PENNSYLVANIA

I want to thank Chairman Barton for calling this hearing, I look forward to hearing from Secretary Abraham today and thank him for being here.

I’m very concerned with the state of the DoE budget as it seems to me that they

are in the process of decimating our core R & D programs at the department. I believe that the government must play a role in encouraging the development of technologies that have a public benefit but are too risky for the private sector to take

on alone. Yet we are making significant cuts in places that should be priorities like

distributed generation, fossil energy, and other core R & D programs.

This short-sighted approach is the exact opposite of the direction we should be

moving in. Rather then declaring that we want to make a manned expedition to

Mars a national priority, President Bush and Secretary Abraham should be declaring that our national priority will be to strive for energy independence in this country. Imagine how our foreign policy would be positively effected if we didn’t have

to rely so heavily on foreign oil. Imagine how our gas prices would benefit if we

weren’t captive to OPEC. Imagine how our environment would benefit if we exVerDate 11-MAY-2000 10:11 Jul 01, 2004 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 93304.TXT HCOM1 PsN: HCOM1
11

panded the diversification of our energy portfolio and developed the ways to make

our native energy supply sustainable.

We have great advantages in this country in that we have a fantastic base of natural resources that many countries don’t, but we also have a great advantage in

that we have the intellectual capacity to do achieve so much more if we would simply make a commitment to achieving energy independence. Then we would devote

the resources necessary to achieve this admirable goal.

Unfortunately the DoE budget once again proves that this is far from what we

are doing. By decimating our support for distributed generation—by slashing our

fossil energy and core R & D programs—we are actually doing the opposite. I’m sure

the Secretary would cite the FutureGen program as an example of how the administration is trying to be forward thinking but that argument is simply not borne out

by the facts.

More and more people I talk to seem to think FutureGen is little more then a

short term political strategy and has not been clearly thought thru. There is no new

money being put into this program. All that’s happening is they are simply robbing

Peter to pay Paul as the Future Gen program sucks up already allocated monies

that would be better spent as part of the core R & D programs.

So believe me I’m frustrated as I see these shell games being played. I’m frustrated that the Bush administration is decimating important R & D programs and

not establishing realistic and attainable goals for our energy future. I truly hope we

can find some ways to address these priorities in the future.

Chairman BARTON. I doubt it would taste very good.

The gentleman from Georgia wish to make an opening statement?

Mr. NORWOOD. Thank you very much, Mr. Chairman.

No, other than to welcome the Secretary. We are delighted you

are here. Thank you for that.

And thank you for having the hearing.

Chairman BARTON. Okay. The gentleman from Maine wish to

make an opening statement?

Mr. ALLEN. Yes. Thank you, Mr. Chairman.

Mr. Secretary, we are glad you are here.

Gas prices are rising, demand is up here and around the globe.

The New York Times reports recently that Saudi Arabia may not

have reserves that will be large enough to deal with the projected

global demand in the future, yet this administration seems to want

to drill its way out of this problem. But we have only 3 percent of

the known oil reserves, and we consume 25 percent of the world’s

fossil fuels.

I believe this administration needs to turn its attention to significant efforts to reduce consumption of fossil fuels to emphasize renewables. And with respect to the budget that you are about to

present us, I really ask you to look again at the robust nuclear

earth penetrator, $485 million through fiscal year 2009 that will do

nothing either for our national security or for our energy situation.

Thank you.

Chairman BARTON. Does the gentleman from California, Mr.

Radanovich wish to make an opening statement?

Mr. RADANOVICH. Just briefly, Mr. Chairman.

Chairman BARTON. You will be recognized.

Mr. RADANOVICH. I want to welcome to the Secretary to the hearing. I am looking forward to your testimony. And while we are talking about California, I would request the administration’s help on

getting a new refinery in California so we are not always subject

to a small supply of the boutique fuels that are required there. So

any help that you can be on getting another refinery in California

to solve this problem, would be just wonderful.

12

Thank you very much.

[The prepared statement of Hon. George Radanovich follows:]

PREPARED STATEMENT OF HON. GEORGE RADANOVICH, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF CALIFORNIA

Thank you, Chairman Barton for having this hearing. I want to welcome you

again Mr. Secretary. I look forward to your testimony.

Unfortunately, energy is becoming all too scarce and all too expensive. We are

paying record prices for gasoline. In my home state of California, those prices may

well go much higher as we enter the summer driving season and face the temporary

halt in production to change over to the array of summer blends mandated by Environmental Protection Agency.

There are 24 different blends of unleaded gasoline required by law for different

states and different times of the year, and if there is a shortage of gasoline in one

area, gasoline can’t be interchanged easily between various parts of the country.

Also, nearly half of all American refineries have been shut down in the last 30 years

and no new facilities have been built due to confusing environmental standards.

This means we must import more refined petroleum products, such as gasoline and

diesel fuel, sending those refining jobs overseas and causing prices to increase.

The comprehensive energy bill now before Congress makes a commitment to alternative energy production and would launch numerous initiatives to provide abundant, affordable energy in America. In my district For example, the fuel cell project

in Yosemite National park could progress at a much faster pace providing a cleaner

environment. It would also reauthorize important programs like the Energy Savings

Performance Contracts (ESPC) that has saved millions of taxpayer dollars in wasted

energy costs, provided substantial environmental benefits such as reductions in

greenhouse gas emissions, and created thousands of local jobs at energy efficiency

project sites across the country.

It has been a dozen years since we passed a comprehensive energy bill. It is time

Republicans and Democrats pull together—not apart—and pass a comprehensive energy bill that will lower gasoline prices and protect Americans and their jobs. Done

right, we can produce hundreds of thousands of new jobs. It’s time to work together

in our common interests to lower gas prices.

Thank you very much for this opportunity to speak. Mr. Secretary, I look forward

to your testimony and I look forward to your help in solving some of the national

energy problems.

Chairman BARTON. Does the gentleman from Florida wish to

make an opening statement?

The gentleman from Nebraska wish to make an opening statement?

The gentlelady from Illinois wish to make an opening statement?

Ms. SCHAKOWSKY. Thank you, Mr. Chairman.

I completely agree that we need a comprehensive energy policy,

but not one in which the centerpiece is drilling in the Arctic wilderness, more resources for big oil and little for 21st century solutions

for clean energy.

Yesterday OPEC decided to cut production by 4 percent, a move

that would increase gas prices here in the United States. And according to the President’s Press Secretary, ‘‘The President has still

not called OPEC leaders about the issue.’’ Unfortunately, in the

short term we still need to deal with foreign oil, and it seems to

me that the President ala the quote that Mr. Markey made, needs

to do some job owning, needs to be talking to OPEC and not just

waiting for that call to be made.

In Chicago gas prices at many places are above $2 a gallon. We

are heading into the summer driving seasons. These exorbitant

prices are putting a squeeze, not only on my constituents but our

entire economy and we need to do something about it now.

Chairman BARTON. We thank the gentlelady.

Does the gentlelady from California, Ms. Solis——

13

Ms. SOLIS. Thank you, Mr. Chairman.

And welcome, Secretary Abraham to our committee.

First, I would just like to issue that we are concerned very much

about gasoline prices in California. In fact, in my District where I

live unemployment rates are 7.8 percent. They have been like that

for 3 years. Gasoline prices are at $2.36 for regular. So we have

been going through this pinch for a long time.

And my question is what is your administration doing, your

agency, to help us bring down those costs for our consumers? Are

we looking at conservation? Are we looking at renewable energy as

well?

Last week, also, we had a very, very warm week in California

where we were also hit with a shortage of electricity. So we had

somewhat our first blackout that we have not experienced since

2003, May 2003. So I would also like to ask you about what electricity reform is ongoing now for the State of California to provide

us with relief. Because as you know, that will hurt business and

our consumers in our District. So I would just ask you those two

questions and hope that you will respond.

Thank you.

Chairman BARTON. I thank the gentlelady.

The distinguished chairman of the Telecommunications Subcommittee Mr. Upton is recognized.

Mr. UPTON. Well, thank you, Mr. Chairman. I have a full statement for the record.

I would just welcome Mr. Secretary from our home State of

Michigan.

A couple of things I would like you to focus on. One is Yucca

Mountain status, the nuclear waste storage facility there. Boutique

fuels, obviously this is an important thing as we look at rising gas

prices in the midwest.

The refinery fire that I understand that they had in Texas as

well.

Hydrogen fuel, as my colleague from Pennsylvania raised that as

the co-Chair of the Auto Caucus with Dale Kildy from Michigan.

Hydrogen fuel cell technology is very important as we look to lessen our reliance on foreign energy. And I look forward to your testimony and the ability to engage in a number of questions.

I yield back.

[The prepared statement of Hon. Fred Upton follows:]

PREPARED STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF MICHIGAN

Mr. Chairman, I commend your having this hearing today. I think it is very important that this committee exercise its oversight over the Department of Energy

and its budgetary priorities.

My personal budgetary priority over at the Department of Energy is getting the

Yucca Mountain Nuclear Waste Storage Facility in place so that we have a permanent, monitored and guarded storage place for our nation’s nuclear waste. I will

admit to having a district interest in this in that I have two nuclear power plants

within 40 miles of each other right on Lake Michigan. I have long thought that it

is important to get this waste away from environmentally sensitive areas when its

useful life for power production is spent and I have worked very hard to get this

site in place. Post September 11, this is more than just an environmental issue. It

is a national security issue and it could now be an issue of life and death. The opponents of Yucca say we haven’t had enough study; we haven’t spent enough money.

14

We have spent nearly $15 billion in taxpayer dollars and decades in time getting

this site ready.

I hope that Secretary Abraham will give us an update on the status of this important site. I know that hailing from the Great State of Michigan, he understands this

issue as well as I do and I know it has been a priority for this administration. I

would like to know what the plan is for the Yucca Mountain site in this budget year.

I am also interested in funds that are programmed for work in nanotechnology

research and development. In a time when our nation is losing some of the traditional manufacturing jobs, new developments in nanotechnology offer some hope of

the next industry to emerge. I know that the Department of Energy has been interested in pursuing this science, and I would like to hear where they are on that

issue.

Finally, and this is not necessarily a budget question, but I am very concerned

about the rising costs of fuel—both home heating and gasoline. I am interested in

knowing what, if anything is included in the budget proposal to address this critical

issue for my constituents.

Thank you Mr. Chairman and Mr. Secretary, I look forward to hearing today’s

testimony.

Chairman BARTON. Mr. Strickland of Ohio is recognized for 1

minute.

Mr. STRICKLAND. Thank you, Mr. Chairman. I will be brief.

Mr. Secretary, in case I do not get to ask this question later, I

just want to let you know that I am concerned and I believe my

friend from Kentucky, Mr. Whitfield is concerned as well, about the

Department’s lack of benefits continuity for the workers at the

Portsmith and Paducah sites under the most recent cleanup ARFP.

In the past, regardless of party, DOE has provided equitable treatment of the workforce at DOE nuclear sites.

For example, when USEC was privatized, it was required to assume that pre-privatization collective bargaining agreements in

place with the workforce under Lockheed Martin.

Mr. Secretary, I hope to ask you later why the Department

seems to be stripping workers at Pickton and Paducah of the right

to pension continuity and existing collective bargaining agreement.

And I welcome you, sir. I am glad you are here. Thank you for

coming.

Chairman BARTON. Is there any other member seeking recognition to give an opening statement? Seeing none, all members written statements will be made a part of the record.

[Additional statement submitted for the record follows:]

PREPARED STATEMENT OF HON. MARY BONO, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF CALIFORNIA

Mr. Chairman: While I understand that the subject of today’s hearing will center

on the Department of Energy’s budget priorities for FY 2005, I would like to direct

my comments more towards the ongoing issue of high gasoline prices.

Californians are hurting. We are paying more at the pump than any other state.

While I understand that issues like the oxygenate waiver and state regulations add

to the burden, it still seems as if our costs are still higher than the national average.

Yesterday, the Organization of Petroleum Exporting Countries (OPEC) agreed to

cut production by 4 percent. I certainly appreciate your statement of disappointment

and am pleased that the Administration is working on this issue with all due diligence. Still, I fear what this cut in production can further do to exacerbate the situation.

Another concern of mine has to do with refining capacity, specifically in California. Although over the last three weeks, the average pump price in California has

fallen 3.3 cents a gallon, we are going into a sixth straight week of more than $2

a gallon at the pump. Limited refining capacity is certainly a factor in this and I

would appreciate hearing your comments on this matter.

15

Another fact we must face is that we also need to do more at home on developing

and opting for alternative fueled vehicles. Americans love their SUVs and gasoline

powered cars, so we also need to be working on reducing our dependence on foreign

oil by moving towards other fuel supplies. The President has certainly made an effort to lead the way with his FreedomCAR proposal and I look forward to working

with the Administration on this and any other efforts related to this cause.

As far as budget priorities are concerned, I would like to encourage the Department to support the Renewable Energy Production Incentive. This is an initiative

that not only needs to be reauthorized, a provision of which is in the stalled energy

bill, but also needs adequate funding to make it a viable program.

Thank you Mr. Chairman. I look forward to hearing Secretary Abraham’s testimony.

Chairman BARTON. And we would now recognize the distinguished Secretary of Energy for such time as he may consume.

I see, Mr. Secretary, that you have the distinguished Deputy Secretary behind you and the Under Secretary and the head of EIA.

So we have all of the brain trust from the Department of Energy.

Not that you will need it, but it is good that they are all here, too.

So we welcome you, and recognize you to give us your thoughts

on our energy policy.

STATEMENT OF HON. SPENCER ABRAHAM, SECRETARY, U.S.

DEPARTMENT OF ENERGY

Mr. ABRAHAM. Mr. Chairman, first of all, thank you for having

us here today.

Congressman Dingell, it is good to be back with both of you and

the committee.

I would begin, Mr. Chairman, by offering our congratulations to

you in your position as chairman. And also to express collectively

on behalf of all of us at the Department our best wishes to Congressman Tauzin as he recovers. We enjoyed very much working

with him in this committee over the last several years, and look

forward to do the same with you as well.

Obviously, today I am here to discuss our budget for the Department for 2005. I have a very long statement, and in the interest

of time would prefer to just have that submitted for the record and

just make——

Chairman BARTON. Without objection.

Mr. ABRAHAM. [continuing] a short comment or two on some of

the highlights.

At $24.3 billion, this year’s budget is the largest in the history

of the Department. I think it reflects the confidence that the President has in the work which we are doing, as well as the importance

of the missions of this Department. It builds on a number of successes which we have achieved over the past 3 years.

And I want to just make a point here to all of you that a number

of you have facilities in your Districts, how proud we are of the

work that the Department’s men and women have done on behalf

of the American people in addressing national energy and economic

security challenges.

After 3 years on this job I can surely say that the people who

work at this Department are very dedicated and very effective in

the work they do. I am very proud to be part of that workforce. And

I think a testament to the dedication and the hard work which

they have done is the recent announcement that you alluded to,

Mr. Chairman, by the Office of Management and Budget that the

16

Department of Energy ranked first among Cabinet level agencies

and the implementation of the President’s management agenda.

Those scorecard evaluates all of the departments in such areas as

financial management and human capital, e-government and a variety of others. And it recognized our Department as leading the

pack. So, obviously, we are all proud of that. But, again, it would

not happen but for the people who are on the front lines.

As I said, my written statement goes into a lot of details about

our budget request. I just would like to spend a minute or 2 discussing some of the highlights of the work which is reflected in

that budget.

First, I would just say that this budget request fully funds the

Department’s security and safeguards effort. A top priority is making sure that our complex is safely and securely operated. And this

budget fully addresses the requirements which have been identified

in the revised design-basis threat, the post-September 11 analysis

of potential threats against which we must protect our sites and

our materials across the country.

Obviously, the world changed on 9/11 and a number of actions

we have taken at the Department since then reflect that basic fact.

For instance, we have increased the budget for security and safeguards by about 35 percent since 2002. We have made some significant managerial changes in the leadership of the security forces at

our facilities. And we have a current high level review of security

procedures being conducted by some of the Nation’s top military

and civilian experts.

We are also taking steps, significant ones, toward modernizing

and rebuilding our defense weapons complex which was in very bad

shape just a few years ago. We have launched a large scale capital

improvement program to rebuild decaying infrastructure and at the

same time we are working to restore defense capabilities.

For instance, we are on schedule to have a new fully certified

plutonium pit enter the stockpile for the first time by fiscal year

2007. First time in many years.

In addition, we are continuing our major investments in projects

designed to maintain the reliability of the stockpile through our

stockpile stewardship efforts.

The budget request also supports our efforts to develop cutting

edge technologies to address the Nation’s energy challenges. Our

energy efficiency and renewable energy budget request in particular seeks more money and nominal dollars than Congress provided either last year or any prior year for the past two decades.

It includes investment for research and development to improve energy efficiency and reliability in buildings, transportation and industry as well as to reduce the cost of renewable energy technologies like wind, solar, geothermal and biomass.

The EERE budget request also supports our hydrogen efforts,

and we are strongly pursuing 21st century hydrogen fuel cell technologies to try to transform the way Americans drive and to reduce

our nation’s growing dependence on foreign sources of energy.

President Bush unveiled this program, as you will recall, in last

year’s State of the Union. Since that announcement we have engaged partners in the energy and automotive industries as well as

17

State and local governments. And we have moved forward with

critical hydrogen fuel cell research and development.

Probably the most important new development at this stage is

that we have brought together all of the major countries interested

in hydrogen to work in a formal partnership on hydrogen issues to

stretch our research dollars. And we are hoping to establish workable codes and standards on an international basis through this

collaboration on pre-competitive research and development. Without question, this we believe will tremendously accelerate the coming of the hydrogen revolution by many years.

In the meantime, we are committed to developing cleaner more

efficient use of fossil fuels through projects such as our clean coal

technologies program and the FutureGen program.

FutureGen as was commented by at least one of the members earlier, is a 10-year $1 billion program designed to create the

world’s first zero emission fossil fuel plant. I little more than 12

months we have made some great progress on this project and we

expect continued progress in fiscal year 2005. When it is operational, this will be the cleanest fossil fuel fired power plant in the

world.

We are also exploring clean coal and advanced carbon sequestration technologies both as a part of FutureGen and beyond. Carbon

sequestration is not a glamorous topic, necessarily, but in my opinion it is an extremely important area for us to focus on. And the

demonstrated potential of carbon sequestration has convinced us to

fully pursue its promise.

Another top Presidential initiative is weatherization. The National Energy Policy which we released in 2001 pledged to increase

funding for weatherization by $1.4 billion over 10 years in order to

weatherize a total of 1.2 million low income homes. That is more

than twice as many homes as would have been weatherized before

we made that commitment. And this year’s budget request keeps

us on track to, at least in our submissions, fulfill that commitment.

The budget also requests the highest funding level in the history

of our Department for our environmental management programs

consistent with our effort to try to accelerate the cleanup of contamination at cold war era nuclear weaponsites. At the beginning

of the administration, as I think the committee knows the time

table for this cleanup at all the sites, it was basically except for

those that were already on an accelerated program launched in the

previous administration of the three sites that were rapidly moving

toward completion, in all the rest of the complex the goal was 70

years. We felt that it was unfair for the communities in these other

parts of the country to have to wait until the grandchildren or

great grandchildren of people who lived there today before the full

completion of these projects. And so we are working hard to, and

consistent with safety issues, accelerate the completion of these

sites to reduce that timeframe by we hope 35 years.

And, incidentally, because of the reduction in the maintenance

and security costs that would accompany that, we can actually reduce some of the bill along the way.

I would also like to just say a few words about our nonproliferation efforts with Russia and more broadly. We have worked very

closely with our counterparts in the Russian Federation and have

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been successfully accelerating and expanding the work we do there

to secure dangerous nuclear materials. We have enjoyed a number

of successes. And by the end of fiscal year 2005 our material and

protection program will have secured 41 of 64 nuclear warhead

sites and will have secreted 37 percent of some 600 metric tons of

weapons useable nuclear material in the former Soviet Union.

Meanwhile, we are working with the Russian government on

shutting down the last remaining plutonium production plants,

plutonium power plants and replacing their electricity production

with coal burning power plants. This will end the annual of 1.2

metric tons of weapons grade plutonium, a nonproliferation triumph, I think.

Finally, our Department also of course contains the Energy Information Administration. And their work continues to equip Congress and our Department with the accurate information which we

use to work on a number of our programs. We are requesting a 5-

percent increase for EIA in 2005, which will provide the Federal

employee pay raise and maintain the other ongoing data analysis

activities there so they can continue their outstanding work.

Mr. Chairman, I really could go on a great length for a budget

of this size and because the scope of this committee covers so much

of the budget. But in the interest of time, I would yield at this

point and, obviously, look forward to answering the committee’s

questions.

[The prepared statement of Hon. Spencer Abraham follows:]

PREPARED STATEMENT OF HON. SPENCER ABRAHAM, SECRETARY, U.S. DEPARTMENT

OF ENERGY

Good Morning Mr. Chairman and Members of the Committee. I am pleased to appear before you today to discuss the President’s FY 2005 budget request for the Department of Energy. At $24.3 billion in gross budget authority, the FY 2005 budget

request is the largest in the history of the Department.

This budget request builds on a number of successes we have had over the past

three years. I am very proud of what we have accomplished in terms of fulfilling

the President’s management vision for this Department and also what we have

achieved for the national, energy, and economic security of the American people.

The Office of Management and Budget (OMB) recently announced that DOE has

made the most progress among cabinet-level agencies in the implementation of the

President’s Management Agenda. OMB recognized the Department as the cabinetlevel agency ‘‘leading the pack with regard to management improvement.’’

In addition to the progress we have made on management and mission definition,

we have made great progress in a number of our program areas. We have implemented changes that have fundamentally reformed DOE’s Environmental Management program. Complex-wide, we have taken an approach to accelerated cleanup

that says we will not allow the legacy of the work done in the weapons complex to

be part of a community’s burden for future generations. At the beginning of this Administration, the timetable for completing cleanup at all sites was 70 years. Today,

we have implemented reforms to accelerate completion of the cleanup program by

35 years, saving American taxpayers as much as $50 billion and perhaps even more.

Another area where we have made tremendous progress is ensuring that nuclear

power remains part of the Nation’s fuel mix. Two years ago, the Administration and

Congress made the decision to move forward with the Yucca Mountain project, a

permanent nuclear waste repository in Nevada. The Yucca Mountain project is on

schedule to accept waste in 2010. There is still much work to be done—at the site,

at the Nuclear Regulatory Commission, and throughout the country—but at the end

of the day America will finally have a long-promised, safe repository for nuclear

waste.

The Yucca Mountain project goes hand-in-hand with other steps we have taken

to ensure nuclear energy plays an important role in our future energy mix. Our scientists are pursuing an advanced fuel cycle to significantly improve fuel performance, energy utilization, and proliferation resistance for nuclear reactors. We are

19

also working internationally to develop the next generation of nuclear technologies

to take us to the next level in terms of efficiency, reliability, and security.

In addition to advanced nuclear research, we are pursuing other new technologies

to meet future energy and environmental challenges. These are transformative technologies that will change the way we think about how we use and produce energy.

We are pursuing a path toward a ‘‘hydrogen economy’’—with affordable zero emission fuel cell vehicles, abundant production sources, and safe storage and transportation of hydrogen. We are developing carbon sequestration which, when used in

conjunction with advanced power production technologies, promises to ensure that

this country’s 250-year coal reserves can be used without concern about environmental impact.

We have also aggressively pursued international cooperation in order to advance

our initiatives. In a variety of areas, especially those that relate to climate change,

we have been able to create partnerships with other countries to develop the Department’s cutting-edge science and technology.

Last November, the International Partnership for the Hydrogen Economy brought

together 15 countries and the European Union to work together on fuel cells and

other energy technologies for the future. In June, the Carbon Sequestration Leadership Forum brought 13 countries together to begin working on ways to sequester

greenhouse gas emissions from fossil fuels.

We have expanded international partnerships on the energy production side as

well. We have developed much stronger relationships with countries like Russia and

others in the Caspian region, in Africa, and in South America that have the potential to be major suppliers of gas and oil for the 21st century. As important as it

is to have a diverse mix of fuel, it is equally important to have a diverse set of

sources from which we acquire that fuel. In December we hosted a conference on

liquefied natural gas, or LNG, bringing together all of the world’s major gas-producing countries to discuss increasing U.S. access to gas imports. It was an extremely successful conference, one that will help produce the fuels we need in the

21st Century.

Finally, we have made a lot of progress on safety and shoring up the security of

the Department’s complex. Much of our Department’s work is of a highly skilled nature and deals with dangerous materials. Many of our facilities are located near

populated communities. Given these facts, it is clear that safety has to be of paramount concern for everyone at DOE. We have done a good job of driving that message home.

The same goes for security. Our Departmental mission is national security. We

cannot be said to be fulfilling that mission with any confidence unless we can guarantee security at our facilities. We are attempting to do that. We have increased

the security budget by about 35 percent since FY 2002. We have made significant

managerial changes in the security leadership at our facilities. We have revised and

are implementing the Design Basis Threat, which is the post-September 11th analysis of potential threats against which we must protect DOE sites and materials

across the country. And we have a high-level review of security procedures being

conducted by some of the Nation’s top military and civilian experts.

Our FY 2005 budget proposal seeks to continue and build on our successes. It includes unprecedented funding increases to hasten the cleanup of the Cold War environmental legacy, to construct a permanent nuclear waste repository at Yucca

Mountain, to deliver on essential nuclear-related defense requirements, to provide

for energy security by exploring the promise of hydrogen and fusion, and to promote

basic science research to ensure America’s technological preeminence well into the

future.

ENERGY

Turning to the energy budget, the Department is requesting $2.7 billion for energy resource programs in FY 2005. An important element of all our energy programs is making current forms of energy use more secure, more efficient, and more

environmentally benign. At the same time, we are preparing long-term energy solutions that will eventually make questions of supply and environmental effects obsolete. The Administration’s energy portfolio takes a long-term focus through investments in hydrogen use and production, electricity reliability, and advanced coal and

nuclear energy power technologies. Investments in these pivotal areas honor a commitment to strengthen the Nation’s energy security for the near-term and for generations to come.

Hydrogen holds tremendous promise to help meet our Nation’s future energy challenges. In FY 2005, the Department’s Office of Energy Efficiency and Renewable Energy is at the forefront of implementing the President’s Hydrogen Fuel Initiative.

20

The Department is requesting $227 million for hydrogen activities. That figure includes $173 million in the Energy Efficiency and Renewable Energy program, $29

million in the Science program, $16 million in the Fossil Energy program, and $9

million in the Nuclear Energy program.

The budget includes an investment of $544 million for R&D to improve energy

efficiency and reliability in buildings, transportation, and industry, and $375 million

for R&D to reduce the cost of renewable energy technologies such as wind, solar,

geothermal, and biomass, as well as to promote deployment of renewable technologies. The Energy Efficiency and Renewable Energy budget also includes $291

million to fulfill the President’s commitment to increase funding for the Weatherization Assistance Program by $1.4 billion over ten years. The FY 2005 request would

weatherize 119,000 homes in calendar year 2005.

This budget invests $447 million for the President’s Coal Research Initiative to

dramatically improve the efficiency and environmental protections being developed

for coal burning power production. Of that figure, $287 million will go to the President’s Clean Coal Power Initiative, including the ambitious FutureGen program.

The Department launched FutureGen in FY 2004. This cost-shared, $1 billion

project will create the world’s first near zero-emissions fossil fuel plant. When operational, FutureGen will be the cleanest fossil fuel-fired power plant in the world.

Continuing on the discussion of fossil energy, the Strategic Petroleum Reserve

and Northeast Home Heating Oil Reserve are key elements of our nation’s energy

security. Both serve as resource options for the President to use to protect U.S. citizens from disruptions in commercial energy supplies.

The President has directed DOE to fill the Strategic Petroleum Reserve (SPR) to

its full 700 million barrel capacity. The mechanism for doing this—a cooperative effort with the Minerals Management Service to exchange royalty oil from federal

leases in the Gulf of Mexico—is working well. We have been able to accelerate fill

from an average of 60,000 barrels per day at the start of the President’s initiative

to a rate of 130,000 barrels per day.

Because of the President’s ‘‘royalty in kind’’ initiative, we have achieved the Reserve’s highest inventory level ever, now at 650 million barrels. Our goal remains

to have a full inventory of 700 million barrels by the end of calendar year 2005.

The FY 2005 budget for the SPR is $172.1 million, all of which is now in our facilities development and operations account. We do not require additional funds in

the oil acquisition account because charges for transporting ‘‘royalty in kind’’ oil to

the SPR are now the responsibility of the oil supplier.

We are requesting $5 million for the Northeast Home Heating Oil Reserve, the

same level as last year. The two-million-barrel reserve remains ready to respond to

a Presidential order should there be a severe fuel oil supply disruption in the Northeast. A key element of this readiness is a new online computerized ‘‘auction’’ system

that we implemented to expedite the bidding process. Installing and testing the electronic system (including tests with prospective commercial bidders) have also been

major elements of the Fossil Energy program’s role in implementing the ‘‘e-government’’ initiatives of the President’s Management Agenda.

Nuclear energy remains a critical component of the Nation’s energy portfolio and

a significant part of America’s energy future. The budget request for the Department’s nuclear energy programs in FY 2005 is $410 million. These programs work

to address essential requirements to develop advanced nuclear power technologies

for deployment. The FY 2005 nuclear energy budget request also reflects the establishment of the Idaho National Laboratory. This new laboratory will serve as the

Nation’s primary center for strategic nuclear energy research, development, demonstration, and education. It will lead the Department’s investigation of a new type

of nuclear power plant that is proliferation-resistant and melt-down proof—the next

generation nuclear power plant. It is our objective that the Idaho National Laboratory becomes the world’s premier nuclear energy technology center within a decade.

The widespread blackout of August 2003, affecting an area with 50 million people

across eight states and one Canadian province, was a strong reminder that our Nation’s electricity grid has vulnerabilities and weaknesses which need to be addressed. Energy reliability is imperative. To this end, DOE requests $91 million to

modernize and expand our national electricity transmission grid. Included within

this request is $5.5 million for the new Gridworks program and $5 million for the

Gridwise program. These initiatives will improve electricity reliability by bringing

innovation in information technology and transmission hardware into operational

electric systems. The budget request for Other Defense Activities includes $10.6 million for Energy Security and Assurance activities to complement the efforts undertaken by the Office of Electric Transmission and Distribution and the activities of

the Department of Homeland Security.

21

ENVIRONMENT

All of our scientific research is designed in part to meet our Nation’s environmental challenges. In that regard, DOE’s work on hydrogen, clean-coal technology,

or next generation nuclear technology comes as readily to mind as our renewable

energy research. This commitment to the environment includes taking action to address the environmental legacy of our past work, particularly building the nuclear

weapons complex that helped win the Cold War. We need to cleanup the contamination caused by the production of nuclear weapons and. We also need to do right by

former weapons employees who may have become ill as a result of their work at

nuclear facilities. And we must act to ensuring our Nation is equipped to safely handle future high-level nuclear waste generated by the use of conventional nuclear

power as well as the continued production of nuclear weapons.

DOE is prepared for these responsibilities through our Environmental Management program, and the work at Yucca Mountain. Our FY 2005 budget requests $8.6

billion to meet our various environmental-related objectives. Within that, we are

seeking over $7.4 billion for the Environmental Management program. This is the

most funding ever requested for this program. This budget reflects the peak year

of DOE’s investment strategy for accelerated cleanup. The budget also includes a

$350 million proposal to reserve funds pending the satisfactory outcome of uncertainties associated with a recent court ruling dealing with our authority to classify

certain lower-activity waste from reprocessing (Waste Incidental to Reprocessing)

under the Atomic Energy Act of 1954.

To better focus Environmental Management funds on actual cleanup activities,

the FY 2005 budget includes several program shifts from environmental management to other programs within the Department. The Department’s accelerated

cleanup strategy has led to the creation of two new organizations outside of Environmental Management—the Office of Legacy Management and the planned Office

of Future Liabilities. Transferring responsibilities to these new offices enables the

Environmental Management program to complete its current cleanup scope, and allows other Departmental programs to focus on their primary missions.

The budget includes $66 million for the Office of Legacy Management to manage

post-environmental-cleanup activities. This organization demonstrates the Department’s long-term commitment to manage requirements relevant to closure sites beyond the completion of remediation.

The budget also includes $8 million for the Office of Future Liabilities to address

various cleanup activities at sites with continuing missions. The FY 2005 budget

provides funds to pay for and manage environmental liabilities for sites not currently assigned within the Department. This is a planning office to address various

future cleanup activities at sites with continuing missions. The FY 2005 budget provides funds to plan for environmental liabilities not currently assigned within the

Department.

The FY 2005 budget includes $43 million within the Environment, Safety and

Health program to accelerate the processing of applications by employees of DOE

contractors who may have become ill as a result of their work at DOE facilities. This

is a matter of doing what’s right and taking care of those whose labors helped secure our safety. With this budget request, we are making good on implementing a

three-year program to completely eliminate the backlog of applications at DOE by

the end of 2006.

One of the most significant and long-standing commitments addressed in this

budget is funding to establish a permanent nuclear waste repository at Yucca Mountain. In order to remain on schedule to begin operation in 2010, the FY 2005 budget

requests $880 million for Yucca Mountain repository activities. This is key to ensuring the future use of nuclear power in this Nation. It is also key to helping us complete the cleanup of our weapons facilities and to consolidate high-level nuclear

waste in one safe, secure location. This request enables us to finalize the license application for construction of the permanent repository, as well as other activities associated with construction and with developing a transportation system to Yucca.

We plan to submit a license application to the Nuclear Regulatory Commission by

December 2004.

The Yucca Mountain project is moving toward a second phase, one which will require a significant financial commitment to accomplish. The FY 2005 budget request

includes a legislative proposal to reclassify currently mandatory receipts to the Nuclear Waste Fund as discretionary, to offset the amount appropriated for geologic

repository activities. In FY 2005, the Department proposes that $749 million in fees

collected from utilities for the purposes of the Nuclear Waste Fund be used to offset

FY 2005 non-defense appropriations in support of design and other Yucca Mountain

22

activities. This proposal will help ensure that the Department will have the financial resources needed to accomplish an undertaking of this scope.

Throughout the entire budget request is funding for one of our highest priorities,

safeguarding and securing DOE’s sites and facilities. The FY 2005 budget includes

$1.38 billion for all DOE safeguards and security programs to address additional requirements identified as a result of the revised Design Basis Threat.

Within the total amount requested for safeguards and security activities, approximately $707 million will support activities to safeguard nuclear weapons facilities.

About $265 million will support activities that protect the Cold War nuclear waste

material being cleaned up at our environmental cleanup sites.

In addition, we are committing approximately $73 million to support the continued safeguards and security activities at our scientific laboratories and facilities. We

are requesting $255 million to support the development of DOE-wide security policies as well as to provide physical security for DOE Headquarters. The FY 2005

budget request also includes $58 million to support safeguards and security activities at the new Idaho National Laboratory for nuclear energy R&D. Moreover, $25

million will fund the Department’s cyber security activities administered by the Department’s Chief Information Officer, while an additional $109 million within the

amounts mentioned above will fund DOE-wide cyber security measures.

ENERGY INFORMATION

The Department through the Energy Information Administration (EIA) is being

increasingly called upon to provide timely energy information and analysis on ongoing and topical energy issues to assist the Administration and Congress in deliberations regarding national and international energy policy, markets and investments.

To that end, we are requesting $85 million. The FY 2005 funding will provide for

the Federal employee pay raise and maintain the other on-going data and analysis

activities, allowing EIA to continue disseminating accurate and reliable energy information and analyses to inform energy policy-makers.

EIA’s base program includes the maintenance of a comprehensive energy database, the maintenance of modeling systems for both near and mid-term energy market analysis and forecasting, and the dissemination of energy data and analyses to

a wide variety of customers in the public and private sectors through the National

Energy Information Center.

EIA continues to aggressively expand the availability of electronic information

and upgrade energy data dissemination, particularly on the EIA website. The increased use of electronic technology for energy data dissemination has led to an explosive growth in the number of its data customers and the breadth of their interests, as well as an increase in the depth of the information distributed. Since establishing a FY 1997 goal to increase the number of users of its website by 20 percent

annually, EIA has either met or exceeded this commitment in each of the succeeding

years. In FY 2003, EIA accomplished a 23-percent increase as compared to FY 2002,

delivering more than 2,600 gigabytes of data.

CONCLUSION

The Department’s FY 2005 request reflects the accomplishments of the last three

years, the successes, and the many changes. This request charts a focused course

of investment for the Nation’s future—one guided by a cohesive mission and targeted performance metrics. Making all of this work are the extremely talented men

and women of the Department of Energy which include some of the world’s top engineers and scientists. It is a privilege to work alongside them on a common mission.

It is an honor to serve a President who has provided this vision of what this Department can—and will—accomplish in FY 2005 and beyond.

Thank you. This concludes my formal statement. I would be pleased to answer

any questions you may have at this time.

Chairman BARTON. Thank you, Mr. Secretary.

The Chair is now going to recognize himself for the first 5 minute

question round.

I believe you were in the U.S. Senate in 1995, is that not correct?

Mr. ABRAHAM. Yes.

Chairman BARTON. Okay. And do you recollect who the President

of the United States was in that year?

Mr. ABRAHAM. Yes.

Chairman BARTON. Who was it?

23

Mr. ABRAHAM. You are asking tough ones here, Mr. Chairman.

I did not prepare for these. President Clinton.

Chairman BARTON. President Clinton. And we do something each

year, or try to, called budget reconciliation. In 1995 when President

Clinton was the President in budget reconciliation, both Houses of

Congress passed a Budget Reconciliation Bill that included drilling

in ANWR. Do you recollect what President Clinton did to that bill?

Mr. ABRAHAM. I believe it was vetoed.

Chairman BARTON. He vetoed it.

Now, what if he had not had vetoed it and what if we had drilled

in ANWR, and what if they really have found that there is 1 million to 2 million barrels of oil per day that could be coming to the

lower 48, do you think that would mean we would have higher gasoline prices or lower gasoline prices?

Mr. ABRAHAM. Well, obviously, had that process began in 1995,

there would be development there. The estimates that we have are

that there would be at this point substantial production, somewhere ranging up as high a million barrels a day, perhaps more.

Obviously, that would have a huge impact on our domestic energy

supply at this point.

Chairman BARTON. So, I mean, there is a case that had President Clinton accepted the will of the Congress in the mid-’90’s, it’s

arguable that we would be paying much less, although energy

prices would still be high, gasoline prices would still be high, but

we certainly would not be paying the prices that we are paying

today for gasoline.

If we were to pass an ANWR drilling program and send it to

President Bush, what would your recommendation be to him.

Would you recommend that he veto it?

Mr. ABRAHAM. Well, Mr. Chairman, I think you know that the

President included ANWR in the energy plan which was produced

in 2001 and, obviously, still support that provision.

Chairman BARTON. And I think you know, Mr. Secretary, that

the House passed ANWR and the other body refused to accept the

wisdom of the House. And so that the pending bill that is in the

Senate now, the Conference Report on Energy, the Comprehensive

Energy Bill, does not have an ANWR provision in it.

Mr. ABRAHAM. Right.

Chairman BARTON. With regards to that bill, I know you are very

well aware that the House of Representatives passed a Comprehensive Energy Bill last spring. The Senate passed an energy bill in

late summer. We went to conference with the other body. The Conference Report came out, the House has passed the Conference Report, the Senate still has not passed the Conference Report.

Do you think the pending Conference Report on Comprehensive

Energy Bill would help our Nation’s energy security or hurt it?

Mr. ABRAHAM. Well, obviously, Mr. Chairman we would like to

see Congress pass a Comprehensive Energy Bill. We look forward

to working with you and with other members of this committee and

your counterparts to try to get that done this year. I can’t stress

enough how important I think that is to address some of the issues

that have been raised today.

We have spent—I have spent and many members of this committee a lot of time over the last several years to try to get this

24

done. You know, every time it seems I come here there is some different energy challenge. The last time I was here, it was right after

that blackout. We talked then about the need to address provisions

that would help us to deal with electricity reliability. Today members want us to address America’s dependence on foreign old. We

need a comprehensive bill that include provisions to handle all of

these different challenges. And we need that legislation.

Chairman BARTON. Mr. Secretary, I know that you also want a

clean environment and you have talked about the President’s hydrogen initiative. I would assume that you support the clean coal

technology program in the Comprehensive Energy Bill which would

for the first time allow the Federal Government to help retrofit

some of the older coal fired power plants with the latest available

control technology so that we keep those jobs in the United States

and keep that energy being produced in the United States. I would

assume that you would support that part of the bill?

Mr. ABRAHAM. We do. And, you know, a number of folks in their

comments earlier mentioned the challenge we have with regard to

natural gas prices and some of the other issues that were raised.

We need a diverse mix of fuels. Coal has to be a key part of our

long term electricity production.

The challenge we have with coal is not having coal. We have got

plenty of coal. It is making sure that we can use it and use it as

safety as possible. And the clean coal programs that we have

launched and that the Congress has been working on are important, imperative really in my view, to keeping the coal component

of our electricity product in intact.

Chairman BARTON. And my time has expired, but my final comment, I know that you support strongly the bill that we just introduced to free up the Nuclear Waste Fund so that we can use it to

construct the repository at Yucca Mountain.

Mr. ABRAHAM. Right.

Chairman BARTON. We have introduced that bill here in the

House on a bipartisan basis. And we would encourage you and the

President to support that.

Mr. ABRAHAM. We support it strongly, and look forward to working with you to secure not only its passage in the House, but its

passage in the Senate.

Chairman BARTON. Thank you, Mr. Secretary.

And I do want to commend you for being willing to come before

the committee. Of all the Cabinet Secretaries, you have been the

most willing to come. We had several that have never been before

the committee until recently, but you have and we appreciate that.

Mr. ABRAHAM. Thank you, Mr. Chairman.

Chairman BARTON. The Chair would recognize the distinguished

gentleman from Michigan, Mr. Dingell for 5 minutes for questions.

Mr. DINGELL. Mr. Chairman, I thank you.

I will be submitting some letters to the Secretary asking questions about certain matters down there. And I would ask unanimous consent that those be inserted in the record at the appropriate place.

Chairman BARTON. Without objection, so ordered.

Mr. DINGELL. Mr. Secretary, am I correct in understanding that

you and your staff have been directly involved in the U.S. Canada

25

Task Force looking into the blackout last August and that the task

force November 2003 interim report found that a number of

NERC’s voluntary reliability rules were violated and that these violations contributed significantly to the extent of the blackout?

Mr. ABRAHAM. Yes. That was the conclusion of our interim report. And we are nearing the finishing of the final report. And we

have not departed from that conclusion.

Mr. DINGELL. Thank you, Mr. Secretary.

Now, with regard to legislation. Do you believe that the Congress

should enact legislation making NERC’s rules mandatory and enforceable?

Mr. ABRAHAM. I believe they should, yes.

Mr. DINGELL. Do you believe that if we fail to do so, we have put

the country at significant risk of additional blackouts?

Mr. ABRAHAM. I know that you strongly share this view that this

is very important to do. We think that this, like some of these

other provisions, needs to be done and needs to be part of a comprehensive bill.

Mr. DINGELL. Now, Mr. Wood the Chairman of the Federal Energy Regulatory Commission said he would support reliability legislation to stand alone in the event a comprehensive bill failed to

pass. Do you join him in that position?

Mr. ABRAHAM. You know, Congressman, I have been advocating

a comprehensive bill for a long time.

Mr. ABRAHAM. I know we do.

Mr. DINGELL. And I want to address what we are going to do

about the different parts of this. So would you support this standing alone if we cannot get a comprehensive bill?

Mr. ABRAHAM. My view remains what it has been when we have

talked in the past.

Mr. DINGELL. All right. So you are saying no?

Mr. ABRAHAM. I believe that if we indicate that we are ready

to——

Mr. DINGELL. Mr. Secretary, with all respect, I have a limited

amount of time.

Mr. ABRAHAM. I know.

Mr. DINGELL. And I must respect it.

I understand that the administration’s legislative proposal on

Yucca Mountain funding applies only to future ratepayer contributions to the Nuclear Waste Fund. And I am concerned about hijacking of past payments into the fund by the Budget Committee. I

would note that the legislation must also assure that the $14 billion balance in the fund is used to support the Yucca Mountain

program. If Congress settled for anything less, it would be explicitly and implicitly writing off ratepayers’ past contribution.

Now, Mr. Secretary, one: Do you agree with that? And two, does

the administration support legislation ensuring that all ratepayer

contributions to the Nuclear Waste Fund, past and present, are appropriated for their intended purpose?

Mr. ABRAHAM. Congressman, at this point we have focused on

the revenues that are going to be coming in the future because we

feel that that is the first step in this process.

Mr. DINGELL. And so you are writing off prior contributions——

Mr. ABRAHAM. No, not writing off.

26

Mr. DINGELL. [continuing] that have been rated by OMB and the

Budget Committee and the Appropriations——

Mr. ABRAHAM. Not writing them off. Because, as you know, we

are being sued in——

Mr. DINGELL. Well, you are being sued and you have to protect

those funds or else they are going to be dissipated by a Congress

willing to spend those monies for other purposes.

Mr. ABRAHAM. Well, I could not agree more. And we felt the first

step in this process should be to amend the provisions so that the

funds in the future——

Mr. DINGELL. You would not oppose, though, going to get all of

those monies, would you?

Mr. ABRAHAM. Well, we need to secure them at some point. And

we have not developed——

Mr. DINGELL. And I would assume the sooner the better, because

I would note that the full $14 billion in the Waste Fund to Yucca

Mountain, if we put that all in the project could then be funded for

10 additional years without any additional ratepayer contributions

and you would probably get rid of the lawsuit that you mentioned.

Is that not true, Mr. Secretary?

Mr. ABRAHAM. Well, I do not know if we would get rid of the lawsuits, but certainly moving forward and demonstrating that we are

going to finish the project——

Mr. DINGELL. Do you disagree with the statement that I made?

Mr. ABRAHAM. Well, I am not——

Mr. DINGELL. Yes or no.

Mr. ABRAHAM. I do not know that I disagree with it. I would be

happy to answer in greater detail for the record——

Mr. DINGELL. All right. I would, but if you disagree with me——

Mr. ABRAHAM. [continuing] but I certainly——

Mr. DINGELL. [continuing] Mr. Secretary, now please tell me.

Now, I note yesterday the White House said it was disappointed

by OPEC agreeing to cut back on their production. Has the President or the President not begun a process of jawboning the OPEC

countries with regard to product and opening the spigot instead of

closing it down and increasing prices? Has the White House done

anything about that?

Mr. ABRAHAM. Congressman, the statement that the President

issued yesterday also indicated that the administration has been

stressing to big producers that high energy prices are unacceptable.

Mr. DINGELL. Has the President called any of the OPEC countries to tell them to open up the spigot or not?

Mr. ABRAHAM. Conversations between the President and other

members of the administration——

Mr. DINGELL. I am not asking about his communications to you.

I am asking about his communications to the OPEC countries. Has

he job owned the OPEC countries to produce more oil or not?

Mr. ABRAHAM. The President and members of the administration

have had contact. The President and members of the administration regularly discuss issues with countries who are part of OPEC.

Mr. DINGELL. No, no, no. Have you told OPEC to open the spigots or not?

27

Mr. ABRAHAM. I indicated in the statement that the President released yesterday that we have stressed to big producers that high

energy prices are unacceptable.

Mr. DINGELL. And I am pleased that he is distressed. What has

he done?

Mr. ABRAHAM. Well, that is among the issues which have been

conveyed.

Mr. DINGELL. Mr. Secretary——

Chairman BARTON. The gentleman’s——

Mr. DINGELL. [continuing] your responses are superb and very

senatorial, and I want to thank you for your visit here today.

Mr. ABRAHAM. Well, you know, I grew up in Michigan and had

some excellent guidance from the entire delegation, members from

both sides who are here today.

Chairman BARTON. The distinguished former chairman’s questions were excellent and well put, as well.

The distinguished chairman of the Energy and Air Quality Subcommittee is recognized for 5 minutes.

Mr. HALL. Thank you, Mr. Chairman.

Mr. Secretary, while gasoline prices sore and people are complaining and very concerned and most of these questions that you

will be asked will be probably evolving around that, all that time

there’s an energy bill that languishes over there in the other body

that we are waiting for some relief from them, relief for youngsters

who may have to go fight a war if we do not solve the energy problems, waiting for answers that allow us to drill in the ultra-deep

areas. And I think you are familiar with the ultra-deep provisions

of that bill.

Are you also familiar with the fact that we have passed the

ultra-deep last session, passed the negotiation stage and it has

been accepted as we have this time, but we still don’t have an energy bill? And what are we, two votes ahead away from it? That

is reportedly——

Mr. ABRAHAM. The bill that is the Conference Report——

Mr. HALL. And it is a watered down bill that they are looking

at over there now.

I think your office has recently analyzed the potential impacts of

that provision in H.R. 6. For the record, it is the Ultra-Deep Water

and Unconventional Natural Gas Supply Research and Development Program. And the conclusion of the analyze was that the program would result in substantial increases in natural gas and oil

production. And our calculations indicate that the increased Federal royalties that will result from the supply increases contemplated by DOE analysis would pay for the program over a 10-

year period, substantially pay for it. And as you know, DOE’s Office of Fossil Energy conducts gas and oil supply research. For example, the Fossil Energy Office was instrumental in providing up

front research funding and direction for coal bed methane, which

now accounts for about 9 percent of our domestic natural gas production.

So my question is could you comment further on the value of

DOE’s research and development to increased gas and oil supplies

with the effect of the ultra-deep provision being in the law?

28

Mr. ABRAHAM. Well, I think those efforts are very positive. We

face as you know, Congressman, a huge natural gas demand increase that as far as we look out into the future will continue. We

have on one hand in recent years, obviously, posed a lot of regulations on industries and so that that has made natural gas a growing part of our energy mix, many would say the fuel of choice. Even

as we have constrained our ability to produce as much as we want,

and frankly a lot of the best areas have already been well tapped

here in America. Just to give the committee some perspective,

there was a time when we produced all the natural gas we needed

here in America for America. In recent years, Canada has become

an increasing supplier. We have actually had to import.

And just to give the committee an issue that we are working on

that we will be working on, I am sure, together; the National Petroleum Council at my request in March 2002 did a long term natural gas survey concluded in the finish of their report last September that in the year 2025 we would only be able to supply—and

this is with some optimistic assumptions such that an Alaska pipeline would come into play, we would only be able to supply about

75 percent of our natural gas demand here in North America. And

that we would be, obviously, in need of greater imports.

And so we are working on these issues. Looking at liquid natural

gas and other possible ways to make up that different. But also it

is important that we keep the fuel supply diverse by making sure

that coal and other electricity sources, the renewable energy

sources will be tapped.

Mr. HALL. Well, I thank you.

And, as you know, the EIA analysis of this provision in H.R. 6

forecasts substantial increases in supply from an R&D of approximately, I think, $50 million per year. And the program in H.R.

Conference Report that is there now as it is written now, however,

is about $150 million a year program. Is it fair to assume that a

larger research program would result in even a greater supply response than that identified in DOE’s analysis?

Mr. ABRAHAM. It is possible.

Mr. HALL. But that is highly likely, is it not?

Mr. ABRAHAM. It is possible. Obviously, you know in all of these

research areas we try to identify that research that we think will

not be performed in the private sector that has the best yields for

us. And we hope that our programs will be so successful.

Mr. HALL. Yes. I like ‘‘likely’’ better than I like ‘‘possible.’’

Secretary ABRAHAM. All right. Likely.

Chairman BARTON. The gentleman’s time has expired.

Mr. HALL. I thank you, Mr. Secretary.

Chairman BARTON. The distinguished ranking member of the

subcommittee, Mr. Boucher is recognized for 5 minute.

Mr. BOUCHER. Well, thank you very much, Mr. Chairman.

And Secretary Abraham, I would like to join with the chairman

and other members in welcoming you here today. And thank you

for the time you are taking with us.

I am also very concerned about how natural gas prices and the

effect of these prices on residential consumers of natural gas, approximately one-half of the homes in America are heated with natVerDate 11-MAY-2000 10:11 Jul 01, 2004 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6602 93304.TXT HCOM1 PsN: HCOM1
29

ural gas, upon industrial users of natural gas, upon farmers and

others who are gas dependent in our economy.

Mr. Greenspan visited this committee during the summer of last

year in order to express his concern about the affect of extraordinarily high natural gas prices on the economic recovery and he

laid before this committee a challenge to try to find some alternatives to either increase natural gas supply or to divert natural

gas users to other fuels.

I am particularly concerned about high natural gas prices and

the effect on electric utilities, notwithstanding the fact that natural

gas prices reached a peak of $7 per million BTUs earlier this year,

a record high I think. Your Energy Information Administration is

still predicting that of the approximately 1600 new electricity generating plants that will be constructed around the country during

the coming 20 years, at least 80 percent of those are going to be

fueled with natural gas, further increasing demand and obviously

holding the potential for dramatic additional increase in price to

the disadvantage of everybody else who uses gas.

And so my question to you is what can we do in order to encourage electric utilities in particular to rely on another fuel? And coal

is the obvious alternative. We have 250 years of future supply in

the country. Coal is consumed at approximately one-half the price

of natural gas and it is the obvious thing for this Nation to do. Saying it is fairly easy, achieving that objective is somewhat more difficult.

So my question to you this morning is use this opportunity, if

you would, to tell us how we can go about go about encouraging

electric utilities to use more coal and to rely to a lesser degree upon

natural gas?

Mr. ABRAHAM. Well, I would like to rejoin my earlier comments

about clean coal technology and really put that in perspective.

You make an excellent point in terms of the coal reserves that

we enjoy in this country. The question is can we use them and use

them in a way that is safer.

The rest of the world has many of the same challenges. China

and India and other countries with huge coal reserves are going to

use their coal. We are going to use our coal. Can we do it better

and safer?

And one of the reasons that the President made a decision which

was in our energy plan to increase clean coal technology by $2 billion over 10 years to dramatically increase that share was to try

to address these challenges, both in terms of the way we would be

able to make existing types of coal generation safer, but also to develop technologies of the future.

I mentioned the FutureGen program and Congressman Brown

mentioned it as well. We see this as an extremely important

project. It is a huge approximately $1 billion 10-12 year program

that is designed to do three things. One is through a coal gasification process to produce electricity. Second, to fully separate and

sequester the pollutants including carbon so that there are no

omissions so it truly is a cleaned fired operation. And as a byproduct, produce hydrogen that can be then used in fuel cells, we hope

then to power motor vehicles or stationary power sources.

30

And we think if we can perfect these technologies over the next

decade, in a cost competitive fashion, that we can then provide the

coal industry with the kind of long term approach that would make

the use of coal continue to be a very important component. As you

know, it is 50 percent of production today.

Mr. BOUCHER. We have in the Energy Bill, H.R. 6, in the Con- ference Agreement approximately $3 billion in tax credits both investment tax credits and production tax credits that would be directed toward electric utilities that utilize a new generation of

clean coal technology. And this provision is designed to encourage

electric utilities both to retrofit existing plants, but more importantly to build new coal fired facilities and be able to do so in a

way that is truly affordable to them. Can I expect the strong support of the administration for that provision?

Mr. ABRAHAM. Congressman, I think as we have indicated in a

number of different letters to Congress that we are very—we have

been concerned from the beginning about the size of the tax component of an energy bill. In our energy plan we identified a series of

tax provisions approximately $8 billion of provisions, primarily in

the area of renewable energy and energy efficiency that we felt

were the appropriate number of provisions. That remains our position today. We are concerned about the total cost, and we tried to

identify what we thought were the right priorities.

We believe that the work we are doing on clean coal technology

is the right way to help business and to encourage the development

of coal, and that has been our priority.

Chairman BARTON. The gentleman’s has expired.

Before I recognize Mr. Upton, if the facts are, Mr. Secretary, that just extending existing tax provisions in the tax code, over $8 billion does the President support letting existing tax incentives expire?

Mr. ABRAHAM. You know, Mr. Chairman, we have tried to give

Congress on numerous occasions a sense of the size of the tax package that we think is preferable. And, obviously, we have spent a

lot of time looking at the kinds of tax issue that could be used to

be part of our energy plan, identify the ones we thought were the

best. We recognize Congress plays a role in this process, too, and

that the ones that we think are the best may not be the ones that

emerge in a bill. But we are concerned about the total of cost of

energy legislation and——

Chairman BARTON. Well, we are willing, as you know, to work

with the President and yourself and the Treasury Secretary on the

tax provisions. But we do not want to be put in a position of supporting the President on new tax provisions for hydrogen and others at the expense of letting existing tax provisions expire. And

some of the oil and gas provisions, the coal provisions, even some

of the wind, renewable, those are existing provisions.

Mr. ABRAHAM. Right.

Chairman BARTON. And over a 10-year period, you know, we

have put a number out there, the current bill and the Conference

Report is scored at $30 billion, the President’s recommend is at $8

billion. But that is a 10-year score. So $30 billion over 10 years is

$3 billion a year. Eight billion dollars over 10 years is over

$800,000 billion. And I would just encourage you if we can get the

31

other body to act responsibly, which is always a hope, that we have

a meeting of the minds on the cost because we do want to get a

bill.

Mr. ABRAHAM. Well, obviously as you know, Mr. Chairman, we

appreciate that Congress plays a part in this, too. We have identified our energy plan and what we think would be sufficient and,

you know, the process will certainly be one that we work with you

on.

Chairman BARTON. Thank you, sir.

Mr. Upton is recognized for 5 minutes.

Mr. UPTON. Thank you, Mr. Chairman.

And, Mr. Secretary, we do need a Comprehensive Energy Bill. I

share your frustration. I think that there will be hell to pay if we

do not get a Comprehensive Energy Bill out of the Senate before

too long it passes. Allegedly, they do have the votes to pass the bill,

they just do not have the 60 votes to break the filibuster. As I look

back at Dingell’s question, reliability standards are very important.

It was an important element of the Energy Bill and, frankly, the

blackout that we experienced in much of the midwest and northeast last year was the spark to get this bill going. And I wish that

the reliability standards had been a little bit stronger, maybe quite

a bit stronger, but at least we made a step in the right direction.

For those that talk ANWR, ANWR is part of this bill. We had

the votes in both the House and the Senate to include it, but it was

taken out to make it more bipartisan and to make sure that we actually get the bill out, particularly when we had the conditions that

were imposed as part of that settlement.

I look at boutique fuels as the summer is coming to have 20 to

25 different perhaps boutique fuels all impacted the supply line

and the cost of getting those fuels to folks, particularly in the midwest, it only raises the prices. It does not lower them.

I look at the incentives for hydrogen fuel and the things that we

have in this legislation.

And other alternative fuels. I am a big supporter with many of

my colleagues on ethanol, which I happen to believe is a win/win/

win. I mean not only taking down the reliance on foreign fuels, but

it helps our farmers and obviously helps with the clean air debate

as well.

Natural gas prices. I have got some consumers in my District

where their natural gas prices went up five figures from 1 year to

the next. And, again, in that legislation by building a new pipeline

coming down from Alaska, the natural gas prices are probably five

times more volatile than gasoline prices.

And like it or not, I happen to believe that the failure to pass

a Comprehensive Energy Bill shows the rest of the world that we

cannot get our own house in order. And how is that we can job own

effectively with folks on the other side of the pond when we cannot

get our house in order? And I think a Comprehensive Energy Bill

would help us as we try to get the other OPEC nations on board

and trying to increase their production and try to help the worldwide economy and not just here.

But I have a couple of questions before my time expires. What

is your estimate as to what the gas prices will be on the three

next—well, we are close to Easter, but Memorial Day, Fourth of

32

July and Labor Day? Where do you see the gasoline prices at the

pump nationwide taking us under the current conditions?

Mr. ABRAHAM. The most recent Energy Information Administration’s analyses for the summer period, and that right now is projecting a $1.74 average nationwide.

Mr. UPTON. $1.74. So you actually predict that it is going to go

down?

Mr. ABRAHAM. Well, that is over a period. We do not do it sort

week-to-week, so I cannot give you that analyses.

Mr. UPTON. In my own——

Mr. ABRAHAM. I am giving you for the summer.

Mr. UPTON. —Fred Upton estimate throughout my parts of my

District, it is already about a $1.80. So you think it is going to actually come down a little bit?

Mr. ABRAHAM. You know, our Department has——

Mr. UPTON. I am a good shopper.

Mr. ABRAHAM. Congressman, I only have the data that the way

it is collected by the EIA. That is their most recent short term energy forecast for us.

Mr. UPTON. When was the last refinery built in this country, oil

and gas refinery built in this country?

Mr. ABRAHAM. It was built in, I believe, the early 1970’s.

Mr. UPTON. Now, I know that there was fire this last week in

Texas, as I recall. Do you have any estimate in terms of how long

that refinery is going to be out of business?

Mr. ABRAHAM. I do not. I would be happy to submit for the

record whatever we can learn about that. Maybe someone here who

has some—I guess I am told by told that it actually is up and operational again.

Mr. UPTON. Okay. What is your estimate in terms of what our

natural gas prices are going—have there been any forecasts in

terms of where we are going to be this next fall?

Mr. ABRAHAM. I am not sure if I have got it right here, but I

think it is going to remain in a range $5.00 or higher.

Mr. UPTON. Okay. Thank you very much.

Yield back my time.

Chairman BARTON. Thank you, the gentleman from Michigan.

The gentleman from Massachusetts is recognized for 5 minutes.

Mr. MARKEY. Thank you.

Welcome, Mr. Secretary.

Today is April Fool’s Day. OPEC is making a fool of the United

States. We have 130,000 young men and women over in that region, and yet those OPEC ministers are meeting and have decreased by 1 million barrels the amount of oil they are giving us.

That is oil they were producing yesterday, but today they are saying they are not going to produce for the United States economy.

We have an economic security crises in our country. We have lost

2.5 million jobs over the last 4 years and OPEC is only now going

to increase dramatically the pressure on our economy, even as we

are trying to sacrifice with young American men and women’s lives

for the security of that region.

My question to you, Mr. Secretary, is how many of the OPEC

leaders has President Bush personally called to ask them to turn

33

on the spigots of oil rather than turning off the spigots of oil as

they are doing today?

Mr. ABRAHAM. The President and others of us are on an ongoing

basis in contact with not just OPEC countries, but other oil producing countries.

Mr. MARKEY. Who has the President called personally?

Mr. ABRAHAM. We do not comment on the specifics of our conversations.

Mr. MARKEY. Has the President personally called the leaders of

any of the OPEC nations and asked them to not cut back on the

production of oil?

Mr. ABRAHAM. As the President indicated in his statement yesterday, we have been stressing—he has been stressing to big producers that high energy costs are unacceptable.

Mr. MARKEY. Has he talked to the leaders of any of the OPEC

nations personally and asked them not to run off spigots of oil?

Mr. ABRAHAM. He has been in touch on an ongoing basis with the

leaders of the countries in OPEC, among the messages and some

of these discussions obviously involve other issues as well——

Mr. MARKEY. As he asked the head—has he asked the leader of

Saudi Arabia not to turn off the spigots of oil production because

it would hurt the American economy?

Mr. ABRAHAM. I am not going to comment on the specifics of his

discussions. I will just simply indicate what he indicated in his

statement yesterday.

Mr. MARKEY. Do you know if he called the head of Saudi Arabia

and asked him not to——

Mr. ABRAHAM. I know that he has had conversations with all of

the leaders of OPEC. And in context—well, at least most of the

leaders, some of the leaders of OPEC as, you know, are from countries like Iran and Libya with whom we really do not have much

dialog. But I know he has been in contact with them on a variety

of issues. And yesterday’s statement I think speaks for itself.

Mr. MARKEY. Well, you know, the American consumer is being

tipped upside down by OPEC with money being shaken out of their

pockets everyday at the gas pump. And it is going to have a profound impact on the American economy. So I think the American

public has a right to know whether or not jawbone these leaders.

Which of the OPEC leaders, Mr. Secretary, have you personally

asked not to turn off the spigots of oil?

Mr. ABRAHAM. I have been in contact on a regular basis with the

leaders of most of the OPEC countries on these issues.

Mr. MARKEY. Did you talk to the leader of Saudi Arabia and——

Mr. ABRAHAM. No, I did not.

Mr. MARKEY. You did not?

Mr. ABRAHAM. Not to the leader. No, I did not.

Mr. MARKEY. Who in your administration has talked to the leader of Saudi Arabia and asked him not to turn off the spigots of oil

to the United States?

Mr. ABRAHAM. Conversations with the leaders of Saudi Arabia

have taken place, Congressman. We do not comment on the specific

discussions, and I certainly am not going to comment on what

other Cabinet members might or might not have had discussions

34

with the Crown Prince. But I can assure you that the message has

been sent very clearly, which was released yesterday.

And I just might say, you know, we are focusing on OPEC, and

that is an issue which, as we indicated yesterday, we are very disappointed with the decision they made yesterday and, obviously,

are evaluating what we might—as we do after everyone of their decisions when——

Mr. MARKEY. Mr. Secretary, OPEC is price gouging the American

public. This is oil they were producing yesterday and now they are

not producing it, even as we see stories of young Americans who

are being killed on a daily basis in the Middle East.

Mr. ABRAHAM. Well, Congressman, I would just——

Mr. MARKEY. I mean, it is absolutely morally wrong for OPEC

to take advantage of the United States as we are providing our

young men and women, an American treasure, from our taxpayers

to protect that region that they then put a double tax on the American economy by cutting back on the oil that they have been producing over the last year in order to further extract this incredible

price out of the American people.

Mr. ABRAHAM. Congressman, let me just say a couple of things.

First of all, what matters in this arena is not just what people say

but what they do. Right now the OPEC quota is stated to be 24.5

million barrels a day, the production is over 25 million barrels a

day.

Yesterday after this decision was announced, the price of oil actually went down, not up. And a lot of the analyses that was in the

trade journals today talked about the fact that there were was deep

questions about whether any production reduction was——

Mr. MARKEY. Mr. Secretary, you should deploy the Strategic Petroleum Reserve. The President of the United States should deploy

Strategic Petroleum Reserve. This is our economic security. They

are threatening the economic security of our country. They are putting a dagger at the heart of our capacity to create a new jobs by

imposing this huge new oil tax on our people, and the President

must jawbone OPEC to get that tax off the backs of the American

public.

Chairman BARTON. The gentleman’s time has expired.

The chair would ask unanimous consent before recognizing Mr.

Whitfield to put into the record the actual production record of

OPEC for the last 91⁄2 years. Is there objection? Hearing none, so

ordered.

The Chair would indicate, and we will make copies of this available to all members, that since January 1995 OPEC’s production

has fluctuated from a little under 25 million barrels a day to a little over 29 million barrels a day. As of mid-January it was at 27

million barrels a day.

I support Mr. Markey’s suggestion that we do everything possible

to maximize OPEC production, but we should have what the record

actually is on their production.

Mr. WYNN. Mr. Chairman?

Chairman BARTON. The gentleman from Maryland seeks recognition.

Mr. WYNN. Regarding that exhibit, the Secretary just suggested

that actual production exceeds reported production. And I wanted

35

to inquire as to whether that report that you are about to enter is

consistent with the Secretary’s statement that production is higher

than reported or if in fact it is as reported, which would indicate

that we can expect lower production starting today?

Chairman BARTON. This report, this chart, and we will get a copy

of the chart, and it is it from the Energy Information Administration, has the actual quota or it has the regular—it has the official

quota and then I think it has the actual production. We will get

the specific answer to that. And it is general knowledge that OPEC

produces above their stated quotas. But we will get you that specific information.

Mr. WYNN. Thank you, Mr. Chairman.

Chairman BARTON. Yes. And all members, there have been a

number of suggestions and obviously we are going to honor these,

all members will have the opportunity to provide written questions

to our witness today.

The gentleman from Kentucky is recognized for 5 minutes.

Mr. WHITFIELD. Mr. Chairman, thank you.

And, Mr. Secretary, thank you for joining us this morning and

listening to our concerns.

I wanted to reiterate the comments made by my colleague Mr.

Boucher and emphasize once again the importance of coal. It is our

most abundant resource. It is our most economical resource and it

can go a long way in helping alleviate some of our energy challenges. And we do hope that the Senate would take action because,

as has already been indicated, we do have the production tax credit

and the investment tax credit for clean coal technology in that bill.

But I would also like to express a concern. I know your fossil research and development budget for 2005 it appears that you are requesting $447 million, but it is my understanding that $237 million

of that is being taken away from the FutureGen initiative which

started out as a $1 billion project over 10 years and the industry

was going to put in $200 million initially, and now we have ten

coal companies willing to put in $250 million. The government was

going to initially put in $800 million; that’s down to about $500

million now. And now we are taking money from FutureGen and

moving it over to the fossil R&D budget instead of asking for new

monies.

And it seems to me with coal potentially playing such a vital

role, that it is sort of getting the shortchanged here. I recognize

that you have a limited budget, but I wanted to make that comment.

Mr. ABRAHAM. Well, if I just would say, I mean FutureGen is

coal, it is all about coal.

Mr. WHITFIELD. Right.

Mr. ABRAHAM. And so, you know, we have added that to our

clean coal technology program. It is not a decreasing of other

things, it is a new component of it which we think will ultimately

serve this Nation’s coal production capabilities very well.

Mr. WHITFIELD. But I had the impression that you were taking

money away from FutureGen and it is the reverse? Okay.

Mr. ABRAHAM. Well, let just quickly go over for you. You know, the FutureGen program we have costed out at about $950 million.

Mr. WHITFIELD. Right.

36

Mr. ABRAHAM. The Federal Government will be providing $500 million in basic technology research and another $120 million in

carbon sequestration work that will be done accompanying the program for about $620 million total. The private sector, as you indicated, will contribute about $250

million. And we expect already based on the success we have had

working with international partners on carbon sequestration and

clean coal, that there will be an interest and contributions from the

international community that will be the final component.

Mr. WHITFIELD. And you are hopeful that that will work out?

Mr. ABRAHAM. I believe it will. We had the first meeting of the

Carbon Sequestration Forum last year. We brought, literally, 14

major coal producing countries to the United States. They have

joined with us in a joint carbon sequestration set of research efforts. And we think that there is a lot of interest in what we are

doing on FutureGen.

Mr. WHITFIELD. And I want to thank also, Mr. McSlarrow and

Mr. Card because they are working with us on these RFPs for the

new cleanup and infrastructure contractors at Portsmouth and Paducah. But Mr. Strickland referenced this earlier, representing Paducah and Portsmouth, we feel like that the employees there are

being treated differently to their detriment on the pension and retiree health benefits, and also the requirement for community reinvestment. They are being totally treated different in terms of the

RFP at the Mound facility.

And from my knowledge, that has never been done before. So I

am anxious to continue working with Mr. McSlarrow and Mr. Card,

and hopefully we can correct that issue.

Mr. ABRAHAM. I know, and Congressman Strickland mentioned

in his opening statement his concern, which we are aware of. And

others who share these communities have expressed it. We are

hopeful that we can work together with all of you, as well as obviously the folks on the ground. I know that several proposed ideas

have been now presented to us. We are trying to work our way

through that. And as you noted, the Deputy Secretary has taken

on this issue directly so that we have in our own office high level

focus on it.

Mr. WHITFIELD. Thank you.

Mr. HALL [presiding]. All right. Gentleman’s time expired.

The Chair recognizes the gentlelady from California, Ms. Eshoo

for 5 minutes.

Ms. ESHOO. Thank you, Mr. Chairman.

Again, Mr. Secretary, welcome. It is nice to see you.

Just a couple of observations. I am just glancing at the chart that

was placed in the record, and what I’m struck with is that regardless of the production level, we are very dependent upon it. And I

think that is really what the operational factor is in discussing national energy policy today or anytime any Secretary of Energy

comes to appear before the committee.

Certainly our people are feeling the real punch at the pump right

now. But my constituents continually ask and press on the following issue: What are we doing to prepare ourselves in this century to be less dependent? I do not share conspiracy theories about

going to war singularly for oil, but we would not be there if they

37

had fields of broccoli, most frankly. And so I think today’s discussion really has to center upon what we can do so that our country,

the United States of America, is less dependent on this. This is not

a pretty picture and it was uncomfortable I think for everyone to

hear hard cold facts as Mr. Markey pressed very hard on this. But

again, this chart I think the real story to this chart is that whether

it is up, down or sideways in terms of what OPEC produces and

what their levels, is that we high level of dependence.

Another observation. The administration’s energy bill is stuck

over in the other body on a bipartisan basis. this is not one party

that is holding it up. I mean, as you know, your party has the majority. I know that they have different rules over there, but there

is bipartisan opposition to the bill. And it has been said, and I believe that it is so, that if the administration dropped the MTBE Liability Safe Harbor Provision that other parts of the bill could

move.

So you can tell where I am going. Would you support a bill without an MTBE provision?

And I also want to get on the record that the Energy Information

Administration has estimated that the Energy Bill cold add as

much as 8 cents to the cost of each gallon of gasoline and that the

Energy Bill will not have an effect on our dependence relative to

imported oil. So besides an Energy Bill that has a price tag, obviously, $23 billion to the American people and which adds $140 billion to consumers’ bills, what is the administration offering to help

solve our energy problems in the short term and in the long term?

It is a big question, but I think that is the question that is on the

minds of the American people. And I do not think they look at

these issues, Mr. Secretary, as whether it is a Republican Energy

Bill or a Democratic Energy Bill. They know that we cannot be

about yesterday. We have the capacity in terms of technology and

moving toward those kinds of things that are going to take us away

from fossil fuels.

What is the administration’s short term given where the bill is

stuck so that there really is not any national energy policy and

long term? What are you willing to change to make things work,

especially with this new layer of what OPEC is doing to us and the

barrel of the gun, so to speak, economically that we are looking

down?

Mr. ABRAHAM. Congresswomen, thank you for the question.

Mr. Chairman, I note there is only about 40 seconds left, but this

is going to take a little more than that if I might to answer.

Mr. HALL. The Chair recognizes you for a full answer. It was a

good long question.

Mr. ABRAHAM. Right. It was a good long question.

Let me just talk about the process going back to day one and

where I see our future challenges and how we are trying to address

them.

When we took office, the one thing that was abundantly clear—

and look, I was a member of the Senate when we did not develop

an energy plan and we did that on a bipartisan basis. The previous

administration did not develop an energy plan. We did not have

one.

38

President Bush in his first week asked us to put together a series

of recommendations for his consideration. In May 2001 we put

forth 105 recommendations, many of which we have already been

implementing through the executive branch on a variety of levels.

It was designed to look not just at the short term, but the midterm,

the long term. Some of those components could not be done by Executive action only, which is why we have been pressing for the

passage of an energy bill.

And I know there is disagreements on some of these components.

We all, you know, have our philosophies. And I, obviously, would

make the case for the inclusion of things in that bill that are not

even in it and were referenced earlier, including the production of

oil in Alaska as we see what our dependence has become. But we

have been moving forward to implement that plan.

Now, one of the issues you raised how do we get out of this dependence, and we need to do that. You are absolutely right. Today

we import 54 percent of our oil. Back during the oil embargo in

1973 it was 33 or 36 percent. But in 20 years it is going to be nearly 70 percent. How do we address that?

We concluded, therefore, the energy plan and actions that we

would take needed to be focused on the exact same issue you

raised; the technology options to this country. At the top of the list

we concluded was the development of motor vehicle fueling systems

that did not require oil, which is how the hydrogen program really

was launched. And we are fully committed to that program as are

a lot of members of this committee on both sides of the aisle and

the same is true in the Senate. We need to pass an Energy Bill in

part so that we can get the authorization to fully implement the

hydrogen program.

It is going to take time. It is a complicated process to reduce the

cost of hydrogen production and fuel cell technology so that the vehicles we would develop could be competitive. People will not buy

a hydrogen vehicle if it costs a lot more. They will not buy it if they

can’t be guaranteed they can drive home after they have left home.

We have to have a fueling infrastructure. It is going to take time.

We made a decision after the professional career folks in our Department worked very, very hard that over the first 5 years this

program would need about $1.7 billion in investment. We are working hard to secure that funding. We need to focus it on a roadmap

we have developed. And I am very pleased, as I said in my statement, that we have been able to bring for the first time the automotive and the energy industries together to chart that progress so

that we are working in parallel.

Part of the problem we have had, people have been talking about

hydrogen for a long time. The problem has been that on the one

side people have said well we will build the car when they have

the fueling system. And on the other side they had said we will

build the fueling system when you have the car. And so we are

making good progress, because now we have people working on a

parallel track and we have got an international partnership that is

working on it as well.

And in my personal opinion, more than anything else, that is the

way we break this dependence. Because you can produce hydrogen

here at home from renewable sources, from coal, from as I said earVerDate 11-MAY-2000 10:11 Jul 01, 2004 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6602 93304.TXT HCOM1 PsN: HCOM1
39

lier, from nuclear energy; from a variety of possible sources. And

we are letting research go on in all of those areas. We are very optimistic that we can transition to a hydrogen economy by 2020 so

that we in fact are in a situation where the market of motor vehicles are going to be hydrogen driven.

But there are a lot of other components of this energy plan that

have been implemented as well. One of the first things we focused

on was our efforts to try to help work around the world in places

other than the traditional sources of oil production, to increase production.

Back then Russia was producing about 6 million barrels—I am

going too long? Could I answer for the record, maybe, a little bit

more, Mr. Chairman, to elaborate because there really is a lot that

I think we are doing here.

Mr. HALL. Go ahead and finish. Finish in another minute, and

30 seconds is already gone.

Mr. ABRAHAM. Well, I began to talk about the international efforts. They are producing I think a lot of success in places in the

world that had not traditionally produced or were not producing as

much. We are working closely with our counter parts in West Africa, in the Caspian region in Russia so that in fact in the interim

there is a more diverse world marketplace.

And let me just say one statistic for the record. A lot of focus

today on OPEC. OPEC produces about 26 million barrels a day.

The total world production per day is 82 million barrels of oil.

OPEC is one-third; not 50, not 70, not 90 percent. It is one-third.

And our goal is to work very hard to increase the share from other

parts of the world. But we also need to recognize that demand is

growing, too, and that is one of the real challenges. It is growing

here. Our economy is strengthening, that means more demand. But

in China, in Asia as you know, there is a lot of competitors.

And so I would love to answer more for the record. I will rest.

Thank you, Mr. Chairman.

Mr. HALL. Thank you.

The Chair recognizes the gentleman from Georgia, Mr. Norwood

for 5 minutes or so.

Mr. NORWOOD. Well, Mr. Chairman, you have to admit, that was

a senatorial answer if I have ever heard one.

Mr. Secretary, I have a couple of questions that I would like to

pose to you and then when I get those out, perhaps turn it over

to you to answer.

Now, on February 3 of this year a group of southern Governors,

including Governor Purdue of Georgia, sent the President and you

a letter expressing concern over the nature and pace of certain recent initiatives at the Federal Energy Regulatory Commission that

have the potential to greatly increase the cost to electric consumers

in Georgia, and indeed through the southeast. And with unanimous

consent, I would like to offer that letter for the record, Mr. Chairman.

As you aware, Chairman Wood is pursuing these initiatives even

though Congress is currently still considering the administration’s

proposed Energy Bill that places significant limitations on the

Commission’s authority in this particular area. I am quite puzzled,

frankly, by the fact that Chairman Wood who is certainly a memVerDate 11-MAY-2000 10:11 Jul 01, 2004 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6602 93304.TXT HCOM1 PsN: HCOM1
40

ber of this administration and as recently as last year has expressed his full support for the carefully crafted provisions in the

electricity title, he is proceeding today as if all those provisions

never existed and were never supported by this administration.

Mr. Secretary, I know that you have stated publicly that you

support voluntary regional organizations and you and other senior

Administrative officials were very, very helpful in crafting the provision in the Energy Bill that delays the so called standard market

design rulemaking at FERC. While I know that FERC is an independent agency within the Department, I believe that given your

overall responsibility to ensure a sound energy policy in this country, you can and should remain involved in helping FERC as it

deals with individual cases before it to balance the relevant policy

imperatives. This cooperative relationship with regards to policymaking between FERC and DOE certainly has been practiced in

other administrations, both Republican and Democratic. And I’d

like in a second for you to comment briefly on that, and perhaps

longer in writing.

Second, I would appreciate it if you would take a minute and explain to this committee why it is important that the plutonium pit

facility come into being? You have noted in your remarks that

hopefully by 2007. But I think it would be useful for us to understand what the point and purpose of that pit facility is. Then we

have anything left, I have a gasoline question or two.

Mr. ABRAHAM. Well, I will make sure to talk long again.

Well, first, with regard to our views, we have indicated that we

favor regional transmission organizations but on a voluntary basis.

We think that these are going to be much more successful if that

is the method by which it comes about because we need to respect

the differences between regions.

I would just say, and I will be happy to expand on this for the

record, that we do work with Chairman Wood in discussions on

these issues. Obviously, passage of an Energy Bill would address

this issue most directly and clearly, for a variety of reasons, is a

preferable course.

With regard to plutonium pit production, I would just say to the

committee very simply this: We as a country stopped producing

plutonium pits, the primary trigger on our nuclear warhead some

time ago. All of the other nuclear weapons countries continue to

have this capability. The United States is the only one which does

not. We have no plans to build new nuclear weapons.

The arsenal, the stockpile however is getting older and there is

some issues about how long the existing stockpile warheads will remain reliable. So at some point the components have to be refurbished or replaced. So if we want to maintain the stockpile, it is

essential that we ultimately have the capacity to produce on a larger scale basis the plutonium pit. And, you know, this is a case of

simply restoring capabilities, not of expanding capabilities, but to

make sure that our nuclear deterrent remains fully effective. And,

obviously, if we ever reached a point where that were not the case,

it would imperil national securities. So we believe it is a very critical investment, and we intend certainly to continue moving forward with it.

41

Mr. NORWOOD. Well, it is a national security problem. And that

is something I think we need to keep saying.

Mr. HALL. The gentleman’s time has expired.

The Chair recognizes Mr. Stupak from Michigan, 5 minutes.

Mr. STUPAK. Thank you.

You know, the chairman started off questioning about what happened back in 1995. I do not mean to go back and rehash old history, but I just find it sort of ironic that back in 1995 many Republicans, in fact when you were in the Senate, actually called for

elimination of the Department of Energy. So if that would have

gone forward, would we not have a more disjointed energy policy

than what we have right now if we did not even have a Department of Energy?

Mr. ABRAHAM. Well, as you well know, I was a co-sponsor of that

legislation and have been repeatedly asked by Members of Congress in every committee hearing I think I have ever attended, and

this may be the first time in this one. When I learned the error

of my ways, you know, I certainly would subscribe to the theory

that the Department’s functions are very important, and part of it

is because Congress did reorganize the Department later in that

decade in an effort that I supported and I think has made it a

much more successfully functioning agency since.

Mr. STUPAK. I know a lot of it was said back then that there was

a lot of contracting out, especially under nuclear waste cleanup.

And that still remains today, right?

Mr. ABRAHAM. Right.

Mr. STUPAK. Is that an efficient way of doing it, do you believe

or——

Mr. ABRAHAM. Yes. The size of these projects are, in our judgment and I think by the previous administration as well, are going

to be effectively addressed if a large contractor familiar with this

kind of work, to the extent you can be, is in charge.

Mr. STUPAK. Okay. And is it going fairly—in your estimation is

the nuclear cleanup going well?

Mr. ABRAHAM. Well, I indicated earlier one of the things that

bothered me when I took the job was that I learned that in three

of our sites, two in Ohio one in Colorado——

Mr. STUPAK. Right.

Mr. ABRAHAM. [continuing] we were on an accelerated path to

correct the communities and the others weren’t. And I think we are

making progress, although you know we cannot shorten them as

much as we have the first three. But that we are making progress

to reduce risk instead of just manage it. And that it is an important transition.

Mr. STUPAK. And you are satisfied with the contract completion

on these and the performance of the contractors?

Mr. ABRAHAM. Mostly. But believe me, each contract is kept—you

know, we watch these closely and we do have issues where we have

to find new contractors, and that will continue.

Mr. STUPAK. Yes. We spent a lot of time on oversight investigation on that issue, that is why I asked.

Mr. ABRAHAM. Yes. That remains a challenge.

Mr. STUPAK. Let me ask you this question, I hear a lot about this

when I am back home doing my town hall meetings as I will be

42

in the next 2 weeks: Back in November President Bush ordered the

filling of the SPR to its capacity of roughly 700 million barrels of

oil principally through the royalty and kind acquisition of crude

from Federal off shore leases. Deliveries are scheduled through October 2004. On March 11 in its debate on this budget resolution,

the Senate called for a suspension of those deliveries and a sale instead of 53 million barrels of the royalty in kind oil to be used for

deficient reduction and increased homeland security funding. And

this is at odds with the President’s order, which he is requiring

that they continue to be filled.

In the past, Presidents have released oil from SPR to try to stabilized gas prices, and as we see them coming back on the rise

again many people are asking why are we not doing it. And the

things I am hearing back home is, ‘‘Well, we do not want to do it

because it is good for the President and his buddies to keep the oil

and gas prices high.’’ There is other concerns that we do not do it

because homeland security, our security at our oil supplies and gasoline supplies around the country is not as successful or not as secure as we would like them to be. Or third, the President is planning some kind of a conflict after the election, war whatever you

want to call, and we are hoarding all of our oil and gas.

What of the three are correct? What would you advise me to tell

the folks back in Michigan, since you know them as well as I do?

Mr. ABRAHAM. It’s answer No. 4, none of the above.

Mr. STUPAK. None of the above. But what is the answer? Why

do we not release the SPR?

Mr. ABRAHAM. I would love to answer that question. And let me

just say that none of the options that you mentioned are correct.

Frankly, if we wanted to help oil companies, we would let them sell

the oil at the prices that they could sell it for today, they would

make a lot more money.

Mr. STUPAK. But are you not taking oil and gas out of the supply

line?

Mr. ABRAHAM. Let me talk about first the rationale and then

what the impact would be if we ceased filling.

Mr. STUPAK. Sure.

Mr. ABRAHAM. Because I think this is important for us all to discuss.

After 9/11 the President made a decision, and let me say on a

bipartisan basis there was a strong support for it; that we should

take the reserve which has a capacity of 700 million barrels and

fill it. We only had about 540 million barrels. And so the President

decided we should do it.

He also said let us do this in a way that has the least disruptive

impact on the oil market. And we concluded the best way to do it

was to take the oil which has to be given to the government——

Mr. STUPAK. The royalties?

Mr. ABRAHAM. The royalties. Take that royalty oil and use it on

a very gradual basis; on such a slow basis in fact that it is going

to take about 3 years for that 150 million barrel fill to occur. We

knew that if we did it very transparently, very slowly and very predictably that it would have a minimum impact in terms of price.

And I will get to that in a minute.

43

But what we also realized was that this country faces many

threats in the world, and that our national security is very much

at risk if we had no fallback position. If we did not fill this reserve,

in our judgment, to its full capacity we would be taking a risk that

if something happened, if the supply of oil were disrupted I do not

think any of us on either side of the aisle would be able to explain

very easily to constituents who were at either at that point waiting

in gasoline lines or paying huge, huge amounts of money for black

market gas or something of that sort. And we think it is important.

We do not know what might happen in the major oil supplying

parts of the world, but we need in an era of terror, in the wake

of 9/11, to fill this reserve. And that is why we are doing it, for national security reasons.

But we also had the Energy Information Administration do an

analysis of what the impact on price is. And here’s the thing I just

want to emphasize. Everyday in this world we produce 82 million

barrels of oil. We are filling the reserve at about 120,000 barrels

a day, a tiny percentage.

The EIA analyzed this very vigorously and concluded that the

impact if we ceased to fill it would be about as high as 2 cents and

perhaps less than .01 per gallon. And we feel that in the interest

of national security that that is a tradeoff that is worth having.

And that is why we are doing it and why we do not think the impact is as some has suggested.

Mr. STUPAK. So it would go back to a security issue then?

Mr. HALL. The gentleman’s time has expired.

Mr. ABRAHAM. Yes, it is totally to maintain a reserve if a disruption, a significant disruption in supply occurred in the world America will have a 700 million barrel reserve to fall back on in the

event that something happens somewhere to disrupt. And we have

obviously seen that happen.

Mr. HALL. The gentleman’s time has expired.

I might pass on to you, you are giving information. Let me give

you just a little information about how to answer that question

about doing away with the Department of Energy.

Several years ago a group of us Texans went west trying to nominate Lyndon Johnson instead of Jack Kennedy. And Mr. Rayburn

gave us an answer that Kennedy was absolutely too young to be

President. Three months later after Kennedy was nominated, Mr.

Rayburn was making a speech for him and was asked about that.

And he said ‘‘Do not be stupid. He is 90 days older now.’’

All right. The Chair recognizes Mr. Shimkus.

Mr. SHIMKUS. Thank you, Mr. Chairman.

And I know that we have been sitting through this. I just want

to make sure that the Secretary knows that there are obviously

some folks who believe in the standard market design and the Energy Bill and making sure that we have an expanded transmission

grid that can move power across our country. And so in regards to

my friend from Georgia, those of us who think that the FERC has

to move in a manner.

The Strategic Petroleum Reserve, I was not going to talk on that,

but being a Reservist active in the military that is to run our war

machines. And a perfect example of what is going on now. We are

totally over reliant on imported oil. What happens if the importaVerDate 11-MAY-2000 10:11 Jul 01, 2004 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6602 93304.TXT HCOM1 PsN: HCOM1
44

tion stops? How do we—without an Energy Bill and with our marginal oil wells running dry with no access to Federal lands, without

ANWR where in the world are we going to get the fuel to run the

Abrams tanks, the Bradley fighting vehicles and our fighters? And

so that is why we cannot use the SPR for market manipulation. We

have to use it for the strategic aspects of the defense of this country.

And know Chairman Barton, we have been over this numerous

times and everybody wants to dip into it. But it is there for national security——

Mr. STUPAK. Would you yield on that point?

Mr. SHIMKUS. No. Because I only 5 minutes so I want to keep

moving.

Mr. STUPAK. Just quickly. If it is for the war machine, as we all

think, is there another war that we are fighting——

Chairman BARTON. The gentleman from Illinois has the time.

Mr. SHIMKUS. Thank you.

It was reported that there was cheering in the OPEC board room

when the Senate killed ANWR and Clinton also vetoed it in 1995.

Killing ANWR should be viewed as a 1 billion barrel per day additional crude oil to the United States.

High prices are a simple result of supply and demand. If you

want to stop the cheering in the OPEC board rooms, do you not

think, Mr. Secretary, that we would: (1) Want to open up our country to exploration in ANWR and do you not think we really want

to pass an energy bill?

Mr. ABRAHAM. Yes, I do. Congressman Upton actually said it

very well a few minutes ago when he talked about the consequence

of us not taking actions. And the signal that I think is sent when

that happens is a strong signal. I think it is interpreted that we

are not willing to do things that we have to do to be more on the

right track in terms of energy. And whether it is the ANWR or it

is the comprehensive bill itself, I think it gives other people a sense

that we are not going to prepare ourselves.

And so, obviously, for a variety of reasons that deal with the substance of that bill, I think it needs to be passed. And, obviously,

this bill does not include ANWR, but we have made that case

many, many times. People, some discount how important it is. But,

again, as Chairman Barton I think indicated, we are talking about

a million barrels a day potentially after it is up and fully developed. We are talking about today OPEC reducing production, if

they actually do it, of a million barrels a day as something we find

undesirable. We are talking about ANWR, that is a million barrels

a day as well.

Mr. STUPAK. Thank you, Mr. Secretary.

And the last thing I want to mention is, and we have talked numerous times and I want to do it also publicly, we have met with

the Assistant Secretary for Fossil Mr. Maddox. FutureGen is a

huge provision. It sends all the right schedules based upon the debate we just were talking about; getting clean burning fuels and

being able to have our own supply of energy resources.

So with that, there is going to be really a handful of States that

are really going to be competitive. I would like your assurances

45

that we are going to make a real scientific geological research on

really working with the consortium on deciding of FutureGen.

Mr. ABRAHAM. Well, we will. And, obviously, the consortium will

play a pretty key role in the citing issue as well, as you know. I

mean, this is the way the process works. As I said, there is no really more exciting in my judgment clean coal project than that one,

and we are looking forward to moving it ahead.

Mr. STUPAK. Thank you.

I yield back, Mr. Chairman.

Chairman BARTON. Thank the gentleman.

The gentleman from Texas, Mr. Green is recognized.

Mr. GREEN. Thank you, Mr. Chairman.

And, again, thank you for your patience, Mr. Secretary. And let

me just say on my side of the aisle, I find it amazing that we are

blaming OPEC for lowering their allowable, but yet we are buying

back leases in California. Even in the Great Lakes, Canada produces natural gas but we do not produce it on the U.S. waters. We

cannot even build windmills in Massachusetts and add on the eastern Gulf of Mexico that has some very productive area that we are

taking off the shelf.

So all these people complaining about OPEC maybe ought to look

in our back yard and see how we can deal with it in our domestic

product. That is typical from a Texas, I admit. And let me bring

something else up that you may hear unusual from a Texan, is the

high natural gas prices.

For years we loved them. But in all honesty, we have a problem

in our country because our success with natural gas. It is cleaner

burning, not only for heating our homes and cooling our homes, but

also with the prices for the chemical industry. And our major problem in the chemical manufacturing base is our consumers—and

also our consumers gas furnaces.

Our energy legislation would help, but frankly I wanted the Energy Bill to do much more for domestic production.

Let me ask about the one idea is the drilling technologies. And

we had some things in the Energy Bill to help us not put as many

holes in the ground and yet find as much product. And yet I see

the administration in their request for funding for DOE cut oil and

gas programs overall by 10 percent in the 2005 budget, and particularly important the petroleum exploration and the production of

research program was cut by about 84 percent in the administration’s proposal.

I want to see what we can again because, again, I believe we

ought to—if you want to fight OPEC, then let us produce energy

locally instead of having it be imported, rather it be oil now or natural gas in the future.

Mr. ABRAHAM. Well, first of all, I share your view. There is different opinion on a lot of these issues. And I am not here today to

try to persuade people on another side of some of these debates

that they are wrong. That debate will continue and we will have

that at another time. But when you do, there are a lot of factors

out there. And when you constrain your ability to produce at home,

whether it is gas or oil, it obviously has an impact. When you have

a set of rules and regulations in place that have effectively discouraged the development of a new refinery in this country for 30

46

years, that impacts on price, it impacts on our ability to—especially

when we have so many different fuel types. And that is a factor,

too.

I think your points are very well taken.

I will just comment on the oil and gas budget, if I could. One of

the things which does take place within the administration is an

annual evaluation of the effectiveness of the various research and

develop programs within each department.

For 2 years in a row the R&D program for oil and gas has received an ineffective evaluation by Department of Management and

Budget. And let me say that there are—we have a variety of

grades, including adequate and—although we have superior, but

this is the one area really in my Department that just has not received those grades, of any minimal level of effectiveness.

I am not sure I say that totally share that view, but that is the

grade that they have received. So we are in the process of trying

to retool and get these programs into a category where they would

be easier for us to come to Congress and the American people and

say that we want more support. Because it is kind of hard. I feel

uncomfortable asking for budget for programs that receive those

ratings that is higher than I did last year. It just would be hard,

in my judgment, to make a case for that.

Mr. GREEN. Well, Mr. Secretary, I am almost out. I have 1

minute left.

And I agree, but I want to make sure because we spend a lot on

research in our country. And even though I want a program to be

effective, but I also want to make sure we continue to do that research so we can get more bang out of our buck. And Department

of Energy has a purpose for that, but for the research and again

with the decreasing supply.

Mr. ABRAHAM. I agree.

Mr. GREEN. Let in my last 40 seconds talk about the filling of

the SPR. I have concern about that. One, with the higher price we

are paying for filling the SPR. My goal for many years was to try

and use the SPR when the oil was $10 a barrel and so we could

take care of some our producers who are very low end producers,

our shipper wells, to keep them in business because they were shut

in those wells at $10 a barrel. And, granted, it is created for national security. But on the other hand, we need to—hopefully we

would fill it when the prices are low and then use it when the

prices are high.

Mr. ABRAHAM. Well, I appreciate it. I know others in this committee share that view.

Just to clarify, Mr. Chairman, for the record that this reserve is

a national security reserve to make it possible if there is a disruption in supply to this country to give the people in America access

to oil. It is not to fuel a war machine. It is not to fight a war. It

is to protect the American consumers.

And, again, if we lived in a world that was trouble free, it would

certainly be the right thing to do to weigh—and in fact, the Department has in the pre-9/11 period been very, I think, effective at trying to buy at the right times. But the President, and we all have

made a decision, that the national security requirements of having

this filled dictated moving ahead.

47

We did cease deliveries for a while last year when there was a

disruption when Venezuela had their strike. But we do believe having the reserve filled is critical at a timeframe that we have set.

And I would also note I think in the Energy Bill Congress passed

that the Congress established a 1 billion rather than 700 million

barrel capacity as an authorization. And that may, obviously, if an

Energy Bill passes be something for us to consider at that point.

Chairman BARTON. The gentleman’s time has expired.

Before I recognize the gentlelady from New Mexico, I want to

make the Secretary perfectly understand that as chairman of this

committee I do not support using the Strategic Petroleum Reserve

to manipulate prices. That it is not its purpose. I totally support

the President and your position that it is a Strategic Petroleum Reserve. And under the law we do not have severe supply disruption

that effects the national security interest of the United States of

America so we should not be releasing oil from the Reserve.

I have been consistent in that policy. I was consistent in berating

the Clinton Administration when they did release some of the oil,

a small amount, I think 8 million barrels in the year 2000.

I think you are hearing from a majority on both sides of the aisle

today, though, that the practice of continuing to fill the Reserve

with royalty and kind, while certainly you are not buying it, you

are only accepting oil, that oil could be sold and those proceeds go

to the general revenue, or for what other purpose the President

and the Congress would agree. That would have a moderating, albeit perhaps minimum moderating influence on prices.

So the debate is not about taking oil from the Reserve. The debate is about whether we should continue to fill it as has been

pointed out repeatedly. Mr. Green just said when prices are low,

buy and fill it up. When prices are high, take the royalty as cash

and if nothing else, reduce the deficit.

But we support the President’s decision not to.

Mr. ABRAHAM. Well, again, the value of reducing the deficit is

not one we discount or find of low priority. But in a world where

we are virtually all the time these days, we see evidence of terror,

we see concerns about stability in oil producing parts of the world.

It is our view that the national security priorities here outweigh

the revenue gaining opportunities at this time.

Chairman BARTON. I understand.

Mr. ABRAHAM. And I know others have different views. But all

I can say is this: If something did happen and that reserve is not

filled, and we need it, I think all of us are going to feel that we

should have done it. And that is our goal.

Chairman BARTON. And we have the authorization to expand the

Reserve to 1 billion barrels because of Mr. Green and Mr. Barton

and Mr. Hall and I think everybody on this committee on both

sides of the aisle. So we are totally with you on that.

Ms. Wilson?

Ms. WILSON. Thank you, Mr. Chairman. Like others on this committee, I support a balanced long term energy plan for this country

that reduces our reliance on foreign supply and that increases conservation and protects the land that we love.

I do find occasionally this morning that I felt like I was not in

the United States, but in wonderland. Because you, Mr. Secretary,

48

were being criticized for not jawboning your counterparts half way

around the world, I do not think that begging is a substitute for

an energy policy. And my colleague from Massachusetts would not

even have to make a long distance call to jawbone some of his colleagues in the U.S. Senate so that we would not have to go hat in

hand to OPEC to provide for our energy needs. It is amazing to me

that we have 27 United States Senators writing to the President

of the United States who oppose an energy policy and are holding

it up with a filibuster saying you have to do more to have OPEC

turn on the spigot. Well, let us change our policies so that we do

not have to be over a barrel with OPEC.

I wanted to ask you, Mr. Secretary, some questions about natural

gas in this country. As you know, 10 percent of the natural gas

used in American comes from the State of New Mexico. And I was

talking to a head of an exploration company recently. He made a

comment that was probably sadly true. He has exploration all over

the United States, but also overseas. And he said that when they

assess political risk for explorations the top area of political risk is

actually on United States Federal lands. They would much rather

explore overseas because there is lower political risk even in countries that we would all think are largely unstable.

This has a huge impact on our economy and on jobs potentially

moving overseas to be closer to sources of natural gas to make fertilizer or packing materials, or glass or textiles or chemicals or

pharmacueticals. I worry very much about the cost of natural gas

being driven up by lack of access to Federal lands.

I wanted to ask you what are you doing, both yourself and with

your colleagues on the Cabinet, to ease access to Federal lands and

what do we as a Congress need to do to make sure that we have

adequate supplies of natural gas? All of us are encouraging natural

gas use, but not easing access to the supplies.

Mr. ABRAHAM. Well, first of all, you have identified one of the

challenges. And I referenced it before when I said that we have

with regard to natural gas simultaneously regulated ourselves in

the direction of greater demand and at the same time, we have

through everything through land use planning issues, roadless

areas, BLM wilderness issues, Endangered Species Act; a variety

of things that have had an impact on where we can produce. And

these are debates tha are probably going to continue here on the

Hill for a long time, but we ought to be cognizant of the implications. And that is why we are trying to diversify the sources of energy, even as we are also trying to make it possible for more natural gas production here.

One of the things we have been working on is to try to expedite

the permitting process. That is not in our Department, obviously.

It is over in Interior, and I know that they have been making

progress in terms of trying to make the permit process as comprehensive as it is supposed to be, but conducted in a timeframe

that allows for people to make the decision in terms of moving forward and investing in these kinds of project. So that is, I know, a

priority of theirs. I am sure they have other things that they are

engaged in in this area, and maybe for the record I will seek some

input from them to address this as well.

Ms. WILSON. Thank you.

49

The other question I had concerned your budget and the advanced fuel cycle initiative. Of course, this is the initiative that

looks at nuclear fuel cycles, both intermediate and long-term, that

will reduce the amount of storage we need for spent fuel, as well

as helping to reduce the potential for proliferation. And you reduced it pretty significantly in your budget and I wondered why?

Mr. ABRAHAM. Well, it does not reflect a lack of interest in this

area. We did, however, because in putting this budget together we

had a lot of tough choices to make, put more focus on the generation 4 nuclear reactor program, because we thought that that had

at this time an area where we needed to increase our funding, to

try to move in the direction of working with our international partners on the development of what we see as the next step in terms

of nuclear energy in this country.

One of the things that we are interested in is developing a new

fourth generation design for reactors that would be melt down

proof and safer and more proliferation resistent. And so we sort of

shifted some monies in that direction from some other programs.

We think that the advance fuel cycle program is important. We

will continue to advocate it, and that is why we launched it in the

first place but that is really the choice that we made.

Ms. WILSON. Thank you, Mr. Chairman.

Chairman BARTON. Thank you. The gentlelady’s time has expired.

The gentlelady from Missouri, Ms. McCarthy is recognized.

Ms. MCCARTHY. Thank you very much, Mr. Chairman Mr. Secretary, I wanted to acknowledge your statement concerning your

pride in DOE employees working in facilities around the country.

And thank you for visiting my DOE Kansas City plant run by Honeywell. I share your pride in the 2800 hard working men and

women in the plant and the good work that they do for the country.

Mr. Secretary, the Kyoto Protocol was negotiated by more than

160 nations in December 1997, and I was there as part of a bipartisan congressional delegation.

I wondered, I’ve been closely involved in this issue since my time

in the Missouri legislature, and I could not help but notice that

there is little mention of global warming issues in your testimony

or your budget. The request of 1.2 percent increase in efficiency in

renewables and 1.2 percent increase in funding for science and

technology does not suggest any priority for homeland security

matters, if nothing else, making us more energy independent. So

I wondered if you would share with us what the administration

and you, what steps you are taking in order to wean us from the

traditional fuels on which we rely internationally and more on our

indigenous resources that will give us some homeland security for

the future?

Mr. ABRAHAM. Well, let me talk generally about our view on

these issues that relate to green gas emissions and how we have

tried to address them.

First and foremost, as you know, the President established a

very robust objective in terms of carbon intensity reduction over

the next 10 years starting in 2002 for the goal of reducing our carbon intensity—or increasing the intensity, improving the carbon intensity by 18 percent. That is a very ambitious goal.

50

Ms. MCCARTHY. Is that part of the 1.2 percent increase in efficiency in renewables in the budget or——

Mr. ABRAHAM. No, no, no. That is the amount of carbon produced

by each——

Ms. MCCARTHY. I know that, but I am looking at a budget. I am

wondering where in the budget that falls? Is it in the science and

technology 1.2 percent——

Mr. ABRAHAM. Well, that is the standard. How we achieve it is

included in a variety of things in the budget. Let me talk about

them.

Ms. MCCARTHY. Thank you, sir. Appreciate that.

Mr. ABRAHAM. The hydrogen research program, which I talked

about at great length earlier, is designed to try to transition us

from the use of internal combustion engines as the operating system for motor vehicles to——

Ms. MCCARTHY. Yes. And, Mr. Secretary, there is some concern

in the scientific community about how much energy it takes to

produce the hydrogen relief. And so that is a concern.

Mr. ABRAHAM. The well to wheels differential in terms of greenhouse gas omissions is about a 60 percent increase if we used as

a feed stock, natural gas. We intend to use other feed stocks as

well. And the efficiency is a 50 percent well to wheels improvement

in efficiency. And that is if we use natural gas.

If you look at our budget, the largest share of our hydrogen production budget for research as to what would be the best sources,

actually using renewable energy——

Ms. MCCARTHY. Other countries seem to have done the research

for us in many of these areas on renewables. So I guess I will go

back to my question: The request is a mere 1.2 percent increase for

efficiency in renewables and a mere 1.2 percent increase for science

and technology. You are requesting a 12.5 percent increase in funding to modernize privately owned and operated electricity delivery

systems for more reliability. I am not arguing that point. The grid

does need modernization, but it is privately owned. I just wonder

if you would speak to——

Mr. ABRAHAM. Not all privately owned, but——

Ms. MCCARTHY. I wonder if you would speak to how we can become more secure as a Nation on indigenous energies.

Mr. ABRAHAM. In this budget from the standpoint of climate

issues we are proposing over the next 5 years a $1.7 billion investment in hydrogen. We are investing $2 billion over 10 years in

clean coal technology. We are investing $900 million plus or from

the government side $620 million in the FutureGen program. All

of which are designed to address these environmental and climate

issues.

The cumulative package of climate science work in the Department of Commerce, in our Department and climate related R&D

over just the next 5 years dwarfs what the rest of the world is

doing combined.

And one of the things I can tell you I am very excited about is

we have put together two international consortia: one on carbon sequestration, one on hydrogen where all the countries that you have

referenced, those who are interested and many of whom who are

51

Kyoto signatories are joining us to stretch this research effort any

further.

But I tell you what, I am very proud whenever we have these

meetings because when I talk about what the United States research investment in GHG related technology is, everybody else

says ‘‘Gee, I wish we were doing that much.’’

In my judgment, the progress is going to be—there are only two

ways we are going to address effectively the issue of greenhouse

gas emissions. We are either going to develop these technologies or

we are going to see economics slump because the only choice you

have got is to do less in your country or find a way to do what we

want to do to build our economies in a way that does not emit

these——

Ms. MCCARTHY. I know we are running out of time, Mr. Secretary.

I really appreciate your response and hope you will also consider

carbon trading in that package in the future.

And, Mr. Chairman, I yield back.

Chairman BARTON. Thank you. Thank the gentlelady from Missouri.

The gentleman from Arizona, Mr. Shadegg, the distinguished

Majority Whip is recognized for 5 minutes.

Mr SHADEGG. Thank you, Mr. Chairman.

Mr. Secretary, thank you for being here. As I said in my opening

statement, I appreciate your comprehensive energy policy, but because of the comments of some of my colleagues from Michigan and

several other States focusing on the gasoline issue that confronts

us right now, I would like to focus my question on the question of

gasoline prices and gasoline supply.

In the Arizona Republic, my home paper, an interesting letter

appeared yesterday. We have a gasoline price problem in Arizona

right now. Gasoline prices in my District are about $1.95 a gallon.

I drive two cars that take too much gas. But I thought this point

was well taken. He wrote that in the fall of 1985 gasoline cost

$1.19 a gallon. According to the American Institute for Economic

Research costs of living calculator, a $1.19 in 1985 is equal to $2.05

in 2004. Basically his point is we may be unhappy with the gasoline prices right now, and I certainly am, but that in point of fact

it has not gone up as much as under an inflation analysis as it

should have.

Have you looked at that issue and is that your consensus?

Mr. ABRAHAM. Sure. And a large part of it is tax, as you know.

Notwithstanding that on a inflation adjusted basis gasoline prices

have done quite well compared to other commodities, including especially liquid commodities. We are concerned about these prices,

as you are, which is why we are trying to look at short, mid and

long term efforts. That is why we are working on an international

basis to try to expand the trading opportunities we have to bring

oil products here. Why we are looking in the mid term on things

like ANWR. Why we are looking in the longer term on hydrogen.

Because we want to get ourselves out of a situation which the dependence and the prices are, in fact, in any way spiking in fashion

that hurts American taxpayers.

52

Mr SHADEGG. I want to turn next to this issue of the Strategic

Petroleum Reserve. My colleague, the chairman of the committee,

discusses articulately when you ought to be buying. But you have

been beaten up today for the fact that you are buying and that the

implication politically, at least, is that you ought not to be buying,

you ought to be selling.

My information says that the Clinton Administration in 2000

sold 8 million barrels out of the Reserve to deal with a price issue.

Do you happen to know how much that effected price?

Mr. ABRAHAM. Well, I think it depended. In the immediate wake

of that, I think it was a total of 30 million either traded or sold.

The immediate reaction was a drop of several dollars——

Mr. SHADEGG. No. My understanding is the overall price was .01

per gallon.

Mr. ABRAHAM. Well, I am not sure. I would have to check the

data. But it corrected fairly quickly to a smaller amount.

But there is no question. I mean, if you took oil from the Reserve

and released it, if your goal is price—is to manipulate price, you

can do it to some extent. But that is not what the Reserve is for.

And as I have tried to emphasize today, Mr. Chairman, we believe

in the era against the challenges we have internationally that the

supply of oil to this country might be disrupted at some point. And

if it was, we need to have the maximum ability to respond.

Mr. SHADEGG. Well, I would simply like to point out that you can

only effect it by one penny a gallon, that seems to me to be a pretty

insignificant amount to tradeoff for strategic.

Mr. ABRAHAM. Right.

Mr. SHADEGG. I have got some other questions I want to get to

before I run out of time.

It seems to me that you mentioned to it and my constituents are

not very cognizant of it, but you mentioned the effect of increased

demand by China on the oil produced in this world. I guess I would

like to have you address that issue, and then I want to ask one

more question if I might.

Mr. ABRAHAM. Right. There are a lot of factors that effect the

price of gasoline and oil. I mean, we have talked today a lot about

OPEC, obviously. But the demand in the world is going up. U.S.

economy has been stronger, so just to put this in perspective,

worldwide production today is 3 million barrels more per day than

it was a year ago.

One of the fundamental disagreement we have I think with

OPEC is that we see demand continuing to escalate and at a higher level then at least they have publicly indicated they view it to

be. And China and Asia are a major part of that increase. It is not

just in the United States. Their economy and really their society

is evolving into one in which more and more motor vehicles and

other uses of oil are occurring. And that is not going to change. So

I think it will continue——

Mr. SHADEGG. One of my colleagues, Mr. Markey said that he

viewed OPEC as tipping upside down the American consumer and

shaking us, and I think extorting money from us was the essence

of his comment. It seems to me that many people are focused on

ANWR as the place where we are not producing oil now. But it

seems to me an argument can be made that many other policies

53

of the United States where we preclude production in many other

places; my colleague from New Mexico just talked about Federal

lands. I guess I would like you to cite for me some of the places

where we could be producing but we are simply not, both oil and

natural gas.

Mr. ABRAHAM. Right. Well, obviously, there is restrictions on exploration off shore, as you know, that mostly effects gas, a little bit

of oil. There are a lot of other things that go into this equation.

You know that three major States effected an MTBE ban that

went into effect in January of this year, and that has obviously had

an impact on price.

The complicated questions that relate to the rules and regulations for refinery expansion has kept I think a great deal of refinery capacity from being developed. The investments there have

been held up. We have attempted to address it by clarifying these

new source review rules, as you know. And that is hung up in court

for maybe a long time, I do not know. But all of this combines.

And I realize, as I have said repeatedly, there is a lot of debate

on these issues but every one of these is a part of the challenge.

And if you are constraining either the refining ability, the production off shore, the production in ANWR; all of these things on one

side of the equation while your economy and Nation grow, regardless of what is going on anywhere else in the world, it puts a strain

on the market.

And today inventories, just to compare, for oil and gasoline, commercial inventories, are 16 million barrels higher that they were a

year ago. And yet because of demand increases, the market is

tighter. And we have to recognize that is a positive thing that we

have a growing economy. But we have to meet these challenges. In

the mid and long term, I think there are ways like I have described, hydrogen for example, that we think will be the alternative. But that does not, obviously, mean we have that available

for tomorrow.

Chairman BARTON. The gentleman’s time has expired.

Mr. SHADEGG. Thank you.

Chairman BARTON. The gentlelady from California, Ms. Capps

recognized.

Ms. CAPPS. Thank you, Mr. Chairman.

Secretary Abraham, I would like to continue this conversation

about gasoline prices, if we may.

On Tuesday, White House spokesman Scott McClellan talked

about the President’s Energy Bill which is pending before Congress, and he said ‘‘We would not be in this situation right now if

Congress had acted on what the President had proposed 3 years

ago.’’

For those of us who have worked on the Energy Bill, this is a

baffling statement, and I want to ask you if you believe that gasoline prices would be lower if Congress had passed the Republican

Energy Bill?

Mr. ABRAHAM. Well, his plan, the President’s plan which you referred to which included a variety of components I think would

have clearly made a different. And let me just—you know, there is

the renewable fuels provision, the hydrogen provisions——

Ms. CAPPS. By now we would be seeing lower——

54

Mr. ABRAHAM. I am just talking about the components that will

make a comment here.

Ms. CAPPS. Yes.

Mr. ABRAHAM. And then I want to culminate with one, the boutique fuels provisions that are in the bill I think are important. An

ANWR, obviously, we have talked about. But as I said earlier, and

Congressman Upton said it better than me, there really is I think

a question of what the message is if you do not do these things.

And the message we have sent, whether it was on the decisions

that related to ANWR the 1990’s or that related to the Energy Bill

now, is a message that has I think directly impacted other countries’ decisions in terms of what they have done. And I think it has

had an impact on gasoline prices.

Ms. CAPPS. Well, let me just follow up by saying that the Department of Energy’s Information Administration has published an

analysis of the Energy Bill in February of this year, and I am sure

you are aware of some of the findings. They found that this Republican Energy Bill would increase gasoline prices, not reduce them.

In fact, California’s prices would increase an additional 8 cents per

gallon if this plan had been adopted. And I wonder if you have information that would suggest that this is incorrect?

Mr. ABRAHAM. The problems California confronts and is challenged by we have talked about a little bit already. You have

unique constraints there that, you know——

Ms. CAPPS. But this report was about the Nation’s gasoline

prices.

Mr. ABRAHAM. As I have said, I believe if we had shown our seriousness of purpose in moving ahead and beginning to put our energy security on a track to be addressed, if we had done that in

the right timeframe particularly if we had done it as early as the

1995 veto on ANWR, but even since 2001 that you would have an

impact——

Ms. CAPPS. Do you think I could an answer to the question do—

you think this is incorrect?

Mr. ABRAHAM. I do not think that that is the only thing that

would matter because I believe the broader question of the message

that we have sent has had a negative impact in terms of other decisions that affect the price.

Ms. CAPPS. But you are not disputing this?

Mr. ABRAHAM. I do not dispute the EIA analyses of anything.

Ms. CAPPS. Okay. All right.

Mr. ABRAHAM. They are our agency that we look to, and I have

quoted them here today.

Ms. CAPPS. All right. I know you have.

If I could continue again about one thing I brought up in my

opening remarks, and that is the suggestion about ways to reduce

gasoline prices, and one that I would like to ask you to consider

since I am a representative from California. Since the beginning of

this year the U.S. EPA has provided relief to both New Hampshire

and Arizona from the Clean Air Act oxygenate requirements. This

is an important step that provides these States with flexibility that

could reduce gasoline costs for their consumers. However, the Environmental Protection Agency has not yet granted California’s request for similar relief. And I have a letter from Governor

55

Schwarzenegger which he has written to EPA asking for approval

of this request, a bipartisan delegation has also requested it.

This is what he said: ‘‘Simply put, the Clean Air Act oxygen mandate slows environmental improvement, raises costs and is no

longer required to ensure substantial and sustained ethanol use in

California.’’

So my question to you with the last minute that I have is to obtain your assurance that you will bring this up with the President.

California motorists, my constituents, are suffering due to the administration’s neglect in this matter, and that could change today

if you would take this issue to the President and urge him to focus

on it and help California.

Mr. ABRAHAM. Well, let me say I am aware. I had occasion to be

in California in February and I was immediately confronted

with——

Ms. CAPPS. Highest gas prices in the Nation.

Mr. ABRAHAM. And that was before other prices in other regions

had gone up, and I know obviously what that means.

I would be glad if you would make a copy of the letter available.

Ms. CAPPS. Be happy to do it.

Mr. ABRAHAM. Or whatever additional issues you would like me

to convey on, I will be happy to do that. It is my understanding

that EPA is seriously looking at this request, and I would be happy

to go to the White House but also to EPA to pass along these concerns and discuss them with them.

Ms. CAPPS. Thank you very much.

Mr. ABRAHAM. Thank you.

Ms. CAPPS. I yield back.

Chairman BARTON. We thank the gentlelady from California.

The gentleman from California, Mr. Radanovich is recognized.

Mr. RADANOVICH. Thank you, Mr. Chairman. Appreciate the

yielding of time.

And again, Mr. Secretary, welcome to the committee on the hearing.

And I want applaud the suggestion from my colleague from California on the 2 percent oxygenate waiver. I think that is important

from California, but also do need to stress that in California, you

know, because we want to keep our environment clean we have a

special fuel that changes three times out of the year, a boutique

fuel without the ability to produce things because we have not had

a refinery in California for the last 25 years to produce the fuels.

They are in short supply. And that is why I was out there a week

ago and paid $2.39 a gallon for gas in my part of the State. So, you

know, while we do need help from the administration, I do need to

stress that California needs to increase not only its storage capacity, but its refining capacity in order to accommodate these boutique fuels at an economic price.

But if I may, Mr. Secretary, I would like to talk about two other

things. One very briefly would be the issue of biomass, especially

in the central valley part of the United States where there is the

potential for the development of fuels from this product.

I am a little bit disappointed that the administration requests

about $13 million less for biomass and biorefinery systems are indeed an issue. Can you explain the decrease?

56

Mr. ABRAHAM. Sure. Yes, in comparison to our request last year,

it is actually an increase. One of the things that happened in the

context of the biomass budget during the appropriations process

was that substantial number of earmarked projects were included.

And I am not going to make an editorial comment one way or another on earmarks. But those are not typically what we would put

into our funding request to Congress. If you eliminate the earmarks, what you will see is a very substantial increase in terms

of the budget we are proposing from the unearmarked appropriation from last time around.

We view biomass research as a very important part of our renewable energy portfolio which we are working on. And certainly intend to fight hard to keep that budget as strong as we can.

Mr. RADANOVICH. Okay. Thank you for that answer. Because, as

you know, that the U.S. has required about 5 billion gallons extra

of ethanol use over the next 8 years and in our system in California with storage and delivery mechanisms that’s not available,

so we do need alternate fuel research and funding to create the alternate fuels.

If I may, though, too bring up one another issue and that is

maybe you can tell me a bit about your opinion on the energy savings performance contract program and how it works? Because I

know that this is supported by the administration as an energy

saving enterprise and through the cost cutting efforts of the Senate

we are having a problem.

Mr. ABRAHAM. Well it is a program which we think is a very valuable part of our Department, and I think it is a very positive program. We endorse it.

The problem, as you probably know, is that the CBO as scored

this a substantial scoring and, obviously, in the effort to try to get

energy legislation moving ahead there is concern about its inclusion because it suddenly puts a pretty big price tag.

OMB does not score this. And so there is a disagreement between

those two agencies. But the fact that it has not been reauthorized

is of concern to us because we think it is a program which we

should have in the future. And I look forward to working, assuming

an Energy Bill begins to move ahead here, to look to people to see

if there is any way we can address it.

Mr. RADANOVICH. Okay. The issue is not being able to account

into the budget the saving aspects of this program, like the cost

savings of it, is that not right?

Mr. ABRAHAM. Well, I think what my understanding is, yes, that

is basically the issue is that there is now a scored cost for it which

there had not been previously.

Mr. RADANOVICH. Yes. Does the administration believe that this

program saves taxpayers dollars and provides savings?

Mr. ABRAHAM. Yes, and I have expressed that in a number of

hearings because I think it has wide support both in our administration and here on both sides of the aisle.

Mr. RADANOVICH. Right. All right. Thank you, Mr. Secretary.

Chairman BARTON. The gentleman yield back the balance of his

time.

We are going to recognize the gentleman from Maine, Mr. Allen

for 5 minutes.

57

Mr. ALLEN. Thank you, Mr. Chairman.

And, Mr. Secretary, thank you for being with us today.

One of the reasons given for the rise in gasoline prices recently

is that we have too many fuel blends in too many places.

Back in the 107th Congress we saw a reasonable proposal with

three key aspects to address this problem: (1) repeal the 2 percent

oxygenate requirement; (2) increase the use of ethanol, and; (3) ban

MTBE nationwide.

Now, this Congress has taken a different approach. We removed

the MTBE ban, we added a direct subsidy to MTBE manufacturers

and we added a liability waiver for MTBE. And since, by all accounts, these additions are a part, a large part of the problem in

moving the Energy Bill forward, and with that I would just call

your attention to New England.

In New England every single Senator, Republican and Democrat,

voted against the Energy Bill. Twenty of 22 Members of Congress

from New England voted against the Energy Bill.

So the question, Mr. Secretary, is light of all this does this administration support removing this poison pill MTBE, these provisions, from the legislation in order to improve its chances of passage?

Mr. ABRAHAM. We have not endorsed that provision. We have not

taken a position on it. I recognize there are two different—I mean,

when we are trying to get a bill through there are a lot of issues.

We do not always take a position on every one. We have not taken

one on that either in the energy plan or in the statements of administration position in part because we recognize we are going to

have to try to work with both sides to work this out. We realize

it is obviously been a significant part of the challenge to getting an

energy bill passed.

That said, we obviously do endorse the renewable fuels provisions that do in fact phaseout MTBE in the legislation.

Mr. ALLEN. Thank you.

Let me turn to a different subject. I worry sometimes about obsessions. Obsessions with missile defense or Iraq or tax cuts that

seem to be to those who hold them, they make contrary information

difficult to accept.

Let me talk about the robust nuclear earth penetrator. I do not

know that anyone else has brought this up. But in your fiscal 2005

budget you have dramatically increased the amount of money running out through 2009, $485 million over those years. And the

budget documents show this program moving into what are called

6.3 activities which are development, engineering, completed warhead design in fiscal 2008 and so called 6.4 activities production,

engineering, design adopted for production, manufacturer system

created. And those are the shorthand in 2009.

Mr. ABRAHAM. Right.

Mr. ALLEN. And a March 8 CRS report concluded that ‘‘The fiscal

year 2005 request document seems to cast serious doubt on assertions that RNEP is only a study.’’

Now can we ask North Korea and other countries not to develop

nuclear weapons when we are developing a new nuclear weapon

ourselves, it certainly looks like that’s what we are doing, and

when there is I would argue a very unlikely this is weapon that

58

would ever used in the actual world? I understand a case can be

made for one or two instances in which you might want to have it.

But it is hard to imagine any President using a tactical nuclear

weapon of this kind in the future. So why half a billion dollars to

a program that is not likely to be used in the future?

Mr. ABRAHAM. Well, let me just start back with the nuclear posture view which Congress requested us to conduct. We conducted

that and identified looking out what was thought were in the 21st

century, the sorts of threats that would be confronted by the

United States and what we thought needed to be done to address

it. It called for a very significant number of changes in terms of the

nuclear strategy as well as conventional weapon strategy, as well

as other areas in the process.

One of the things which emerged from that inquiry and was part

of the nuclear posture review was the concern about hard deeply

buried targets as a possible issue in terms of our need for capabilities to address in the 21st century. And what happened was this:

The conclusion was that there might be a variety of ways to address this. And so research is being conducted both in our Department as well as in the Defense Department, some on this approach,

the use of a nuclear weapons and some on conventional weapons.

Mr. ALLEN. Mr. Secretary, my time is up. But would you agree

this goes beyond merely studying the problem?

Mr. ABRAHAM. No. No, I would not. Let me tell you what we are

doing. We are still doing the study. We were underfunded so the

study is going to be—unless we are fully funded this year, we will

not even finish the study in the timeframe we had.

We are required, however, to produce in our budgets on these defense programs out year funding and we concluded that it was appropriate so that there would be no misunderstandings or accusations later that we were suppressing information to indicate what

the costs would be if a decision was made to go to a 6.3 timeframe

or the 6.3 level activity, engineering activity. That cannot happen

unless Congress approves it, No. 1.

No. 2, we have not even finished the study to determine whether

or not the modification of either the 61 or the 83 would be appropriate as an effective device or the appropriate device. All of that

will take place. There will be no movement to fund anything in the

engineering phase without the appropriate action being taken that

Congress has set up. But we are going to and wish to at least do

the study to determine whether or not this is appropriate.

And in terms of—all I would just say is that that is our job and

we also feel it is our job under the law to produce the out year

numbers in the event a decision by Congress were made to go forward so that that information would be done.

Chairman BARTON. Okay. The gentleman’s time has expired.

The gentleman from Indiana, Mr. Buyer is recognized for 5 minutes.

Mr. BUYER. Thank you.

Mr. Secretary, No. 1, I concur with your nuclear posture review.

No. 2, the development of our weapons systems are based on the

threats, not only presently but that for which we depict over the

horizon. When our enemies go deep with their manufacturing and

the storage capacities of chemicals and biologicals and we know

59

where they are, it is foolish for us not to figure out to access them

and to destroy them. That is foolish. Not only for the protection of

our country, but that of our allies.

We know who those countries are, in particular Libya for example. No one should be surprised that Mr. Qaddafi, not only having

watched what occurred in the Middle East and for the fact that

this administration has taken the position to develop such a tactical nuclear device to go after these weapon systems is a wake up

call to Qaddafi.

So No. 1, anyone that wants further information with regard to

the threats across the horizon, should contact their CIA and get the

briefing.

No. 2, I am going to ask this of you and I want you to think

about it, and then I am going to tell you personal observation and

experience. I would like for you to reflect, Mr. Secretary, on what

your one, two, three is. When you look back and say all right what

have been the positive contributions of the Department of Energy

since you have held this position, I want to know what your one,

two three is?

Now I want to relay to you a personal observation and experience. My observation is is that as a country coming out of the 1973

oil embargo, that was our wake up call. I think President Carter

did very well in his efforts to create the department for which you

supervise. The country got away from the blueprint that Mr. Carter

tried to steer for a country.

During the post-Gulf War era our country being very narcissistic,

which is part of our downside of our character, did not care about

the recession in the Gulf States. In order to pay for infrastructure

to run their own countries, they were chasing production all the

way to $9 a barrel. You see, we did not care about that in our country. We got away from conservation. We went for the biggest,

baddest unmanageable automobile to go down the road ad did not

care about their plight.

Now for a personal experience. With regard to the issue of job

owning. As a subcommittee chairman of the Armed Services Committee, I was tasked to then meet with OPEC. The former chairman, who is a University of Michigan graduate is who I met with.

This is what happened.

I met with the gentleman to deliver a message in 1998, but this

was the first time now that the Middle East States were able to

get a hold of their economies. So what did they do? They decreased

production. We had a huge spike in gasoline prices. The same furry

that you hear today is what occurred in 1998. So I go and meet

with them. And I said here’s the message. The United States provided for the peace and security of this region of the world. If you

want to bring back an equilibrium price for oil, we would be more

than happy to bring you to balance, but let us do this over time

incrementally.

Do you know what he said to me? He said to me this, I am going

to paraphrase, but this is very close: He said Congressman, I could

take every oil tanker in the world and send them to your shores,

but you neither have the refinery capacity nor the storage capacity,

nor the pipelines to get it to where you need. Nor do you do exploration and drilling domestically to care for your own country.

60

Now, I assume you, Mr. Secretary, I did not like that message

coming from OPEC. But what he was saying was look in the mirror.

So your message to us that you want to engage and work with

Congress for a national energy policy, I applaud your leadership.

Because as a super power we need a broad based and balanced

portfolio with regard to our sources. And so I want to compliment

you.

Now let me turn and please tell me what are your top three successes as Secretary.

Mr. ABRAHAM. At the risk of having a variety of assistant secretaries unhappy because I will have neglected something in their

area, let me do this in two categories.

On one side of our building our defense programs, I think we

have accomplished two very important things. On the one hand, we

have begun to rebuild both the infrastructure as well as restore the

capabilities of our defense programs. We are making significant

progress so that we can once again provide for the reliability, safety and security of our nuclear stockpile. And that meant refurbishing buildings that were breaking, it meant restoring capabilities that have been part of a lot of debates here on Capitol Hill

ranging from the one we just had about RNEP to other important

capabilities that we are looking at.

In addition on the defense side of the building I mentioned in my

earlier comments, we have made, I think, quite important progress

in terms of accelerating and expanding our nuclear nonproliferation

programs with Russia and have expanded that beyond Russia, the

former Soviet Union states as well as the rest of the international

community especially as it relates to radiological devices.

On the other side of the building the energy science, environmental side, I am very pleased with the progress we have made on

the technology R&D. I have mentioned today at great length the

hydrogen program and the FutureGen program and others that I

think are going to be transformational technologies, changing the

way we produce and use energy in the 21st century. And I am

pleased that we are making good progress to take our program for

cleaning up these weaponsites from one that is 70 years in duration to one that will be shorter so that the communities involved

will have their nuclear waste remediation program done in the lifetime of people there today so those communities can move on in a

positive fashion.

So I think those are the ones that come to mind. Others I will

remember and submit for the record——

Chairman BARTON. Thank you.

The gentleman’s time has expired.

The gentleman from New York, Mr. Engel recognized for 5 minutes.

Mr. ENGEL. Thank you, Mr. Chairman.

And welcome, Mr. Secretary. Usually having served in the Senate you can appreciate this. Usually when witnesses come they

have to endure 3 minutes of opening statements from everyone and

we cut it down by two-thirds for you.

Mr. ABRAHAM. I appreciate it very much.

Mr. ENGEL. It is really good. I knew you would.

61

Obviously, everyone’s frustration is the fact that gasoline prices

are going up sky high. OPEC made a decision to cut the production

and all the newspapers and radio stations are all reporting that

that means gas prices are going to go up even more. There is really

anger out there on the streets. I am not telling you something, obviously, that you do not already know. But it is frustrating that we

seem to be accepting this and not fighting back harder.

I heard that the President was going to appeal to Kuwait and the

UAE to see if we can reverse it. You know, we have other countries

there such as Saudi Arabia which purports to be a great ally of the

United States, but I think just sticks to us every chance it gets.

We were told that one of the benefits of the invasion into Iraq

would be that ultimately we would have more oil flowing. Iraq is

far, far away from anything like that.

I joined by colleague, as I mentioned in my opening statement,

Mr. Goodlatte of dozens of other House members in both parties

sending the White House a letter urging that the government put

a temporary hold on the purchase of more oil for the Strategic Petroleum Reserve, and that has not been done.

All these things sort of come together where perhaps in itself

would not effect oil prices, but put together perhaps we could at

least get the feeling that we are fighting back and we are pushing

this back.

I would like your comments on anything I said. And I want to

just also add that I have an article here which I would like to ask

the chairman for unanimous consent to put into the record.

Chairman BARTON. Without objection.

Mr. ENGEL. Which says crude oil plunges on Senate Strategic Petroleum Reserve vote. And it says that New York crude oil futures

fell after the U.S. Senate voted to sell oil intended for the Nation’s

Strategic Petroleum Reserve making more crude available to the

Nation’s refiners.

Is that not their way that we could help to push down the price

by using the Strategic Petroleum Reserve?

Mr. ABRAHAM. Well, let me say this, first of all I do not mean

to be flip, but prices of oil actually fell yesterday after the OPEC

announcement. And this marketplace is one I do not pretend to understand fully, but I know lots of different factors come into play.

I will talk about the Reserve again. I mentioned it a few minutes

ago, but I think it is important to reiterate where we are coming

from here. Because this is a very legitimate question.

We made a decision after 9/11 that the Reserve should be filled

to its full capacity, and I was immediately in the wake of 9/11, I

was hearing from people on both sides of the aisle, both political

parties, lots of different—people strongly urging us to do that. And

when we made the decision, the President directed me to fill this

Reserve and he said figure out a way to do this that has the most

minimal impact on the price of oil. We could have gone out and

begun buying, literally buying oil and filling the Reserve as has

sometimes been done. We did not do that. Instead, we decided to

use—to transfer the oil that is owed us as part of the royalty payments that people pay for using Federal lands or offshore areas

and slowly filling it at a rate 120 thousand barrels a day. It is

62

1 California, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Michigan, Minnesota, Missouri, Nebraska, New York, Ohio, South Dakota, Washington, and Wisconsin. 2 EIA, 2003 California Gasoline Price Study—Final Report, November 2003. http://

www.eia.doe.gov/pub/oillgas/petroleum/analysislpublications/caprice/caprice.pdf

going to take 3 years to put the 150 million barrels into the Reserve.

Our Energy Information Administration has done a very detailed

analysis of the impact on price. And they say if we were to cease

the fill, if we were to defer the fill, it would have as much as 1 or

even 2 cents per gallon impact maximum. And just to put that in

perspective, when we did defer filling, that was pretty much the

impact.

But the question that we consistently have to address is is the

national security value of doing this sufficiently important for us

to keep doing it. And we have answered that yes, because in our

judgment if there were a significant supply disruption in the world,

if suddenly something happened somewhere, the American people

do not need to be put in a position where we are not fully prepared

to deal with it. And the best we can be is to have the full Reserve

in place.

And so that is the argument that we have made. And I think the

national security issues here outweigh everything else, given the

fact that the EIA estimate on price is that it would be, as I said,

1 to 2 cents maximum.

Chairman BARTON. The gentleman’s——

Mr. ENGEL. Mr. Chairman, I know my time is running out. But

I just would like to commend the Secretary. If I could just have 10

seconds more for sponsoring the American Jewish Congress U.S.

Department of Energy Conference on Energy and Dependence for

Democracies that took place in Jerusalem, Israel last August. I

think expanded cooperation with Israel on development of new energy technologies could provide substantial benefits to our own energy sector. So I wanted to throw that in.

Thank you, Mr. Chairman.

Mr. ABRAHAM. And thank you. We thought that was a valuable

conference.

Chairman BARTON. We thank you.

Mr. Secretary, I am going to have to leave to give a speech. And

I am going to turn the gavel over to Mr. Hall. But I want you to

provide for the record any analysis that your Department has

about the effect of the MTBE ban in the States that have implemented that ban on prices of gasoline in those States. You have

mentioned in response to questions higher costs for gasoline in

New York, Connecticut and California which possibly could be partly because of the ban of MTBE in those States.

So, if you could provide that for the record, I would appreciate

that.

[The following was received for the record:]

To date, 18 States have passed legislation to ban the use of methyl tertiary butyl

ether (MTBE) in gasoline.1 California, New York, and Connecticut are most affected

by the MTBE ban because of the amount of reformulated gasoline (RFG) used in

those States that would need to substitute other gasoline blending components or

additives for the MTBE. The Energy Information Administration (EIA) provided an

analysis on the California gasoline price in 2003,2 which included an assessment of

63

3 EIA, Preparation for Meeting New York and Connecticut MTBE Bans, October 2003. http:/

/www.eia.doe-gov/pub/oillgas/petroleum/analysislpublications/mtbebans/mtbebans.pdf 4 EIA, Short-Term Energy Outlook—April 2004. http://www.eia.doe.gov/steo 5 EIA, Summary Impacts of Modeled Provisions of the 2003 Conference Energy Bill, February

2004. http://www.eia.doe.gov/oiaf/servicerpt/pceb/pdf/sroiaf(2004)02.pdf

the MTBE ban and other factors contributing to the 2003 gasoline price hikes in

California. EIA also prepared a study last fall on the preparation for meeting the

MTBE bans in New York and Connecticut.3 Neither study projected the price impacts on gasoline solely from the MTBE bans in those States because of the complexity of many other related issues. EIA’s monthly updates of the Short-Term Energy Outlook (STEO) 4 indicated that the high gasoline prices nationwide since last

winter have been mainly the result of a combination of 1) high world oil prices, 2)

historically low gasoline inventories, 3) strong gasoline demand due to a recovering

economy, and 4) more stringent low sulfur requirements for gasoline. At the national level, EIA provided in a recent study the price impacts of the proposed nationwide MTBE ban in the Conference Energy Bill (CEB) 5 The study estimated that

the net impact of a nationwide MTBE ban in 2015 would increase the average price

by 1.8 cents per gallon for all gasoline and 5.4 cents per gallon for the RFG, on top

of the current 18-State MTBE bans. In addition, the termination of the ethanol tax

credit in 2011 would also add another 1.2 cents per gallon for all gasoline and 2.7

cents per gallon for the RFG by 2015.

Mr. ABRAHAM. We will be glad to look into it. I mentioned just

that those things all have happened in this last couple of months,

and there are many factors in play.

Chairman BARTON. I am going to turn——

Mr. SHIMKUS. Mr. Chairman? Mr. Chairman, would you consider

the benefits of ethanol as keeping prices down in that analysis?

Chairman BARTON. You can ask him for that if you wish. And,

as you know, I support the compromise.

Mr. SHIMKUS. We are a great team, Mr. Chairman. Thank you.

Chairman BARTON. So, we do appreciate your appearance today.

And, again, I want to compliment you that you have—no I know

there are other people. I am just going to leave. And before I go

I want to compliment you on your openness and accessibility to the

committee. It is appreciated.

Mr. ABRAHAM. Thank you, sir.

Chairman BARTON. I am going to turn the gavel over to Mr. Hall.

I recognize Mr. Ferguson for 5 minutes.

Mr. FERGUSON. Thank you, Mr. Chairman.

Thank you, Mr. Secretary, for being here and for sitting through

a lengthy questioning. We appreciate your appearance, and certainly appreciate your leadership and the President and the administration’s leadership on energy issues. It is not shocking, I guess,

that politics sometimes seeps its way into the discussion and debate on these issues. You have been involved in politics for longer

than I have been, so I am sure you understand and know how that

works.

We have heard some suggestions today by some that the energy

policies of the Bush Administration have been unsuccessful. I

would, of course, suggest that many of the energies polices of the

Bush Administration have never made it into law. They have never

actually had an opportunity to be implemented because of opposition by some on this committee, others in the House, many of our

friends on the other side of the Capitol in the Senate, including

Senator Kerry whose of course making—trying to score political

points on these issues as well.

64

And my friend from New York just said a couple of minutes ago

that he suggested that you and the Energy Department and the administration are not fighting back hard enough against some of

those who are, perhaps he feels not treating us fairly or in terms

of defending American consumers and those in this country who

may be being harmed by high oil prices or energy prices or efficiency or whatever else. I would suggest that those who are fighting against, maybe those who we have been fighting against are in

this country.

There are those in the Congress and those who have worked so

hard to prevent an Energy Bill from passing, who have worked to

prevent the energy policies of this administration from being implemented. Those are, unfortunately, the folks who end up fighting

against as we are trying to work for the American consumer and

others in this country.

Mr. Secretary, I would just ask you to reflect if you would for a

couple of minutes on, you know, there is a great deal of various recommendations as you know that you put together at the President’s request back in 2001 that were incorporated in the various

energy policies and legislative initiatives that have passed the Congress, that have passed this House and this committee. I am interested in particular in electricity. Obviously this began—it is not too

long ago that we had rolling blackouts in California, we had a

major blackout in the northeast in my area of the country last

year. How our electricity infrastructure in this country would benefit from the proposals contained within the energy legislation

which you had supported last year? And second, on of course the

oil situation that we face now with gas prices.

Clearly we know that raising gas taxes is not a part of the equation of helping to afford gas prices at the pump. We heard lots of

examples today of high gas prices, some have even supported raising gas taxes by .50 a gallon which to me seems exactly the wrong

direction that we ought to be going in this country.

If you would just reflect for a couple of minutes on how simply

passing the Energy Bill which has been stymied in the Congress,

how would it impact these two important areas?

Mr. ABRAHAM. Well, first let me just say I think that the best

way to fight back is the term that was last used, is for Congress

to pass an Energy Bill for us to demonstrate our resolve in addressing our energy security challenges. And I think, among other

things, the world would recognize that we are going to do the right

things that we need to do.

I will tell you, there is no question in my mind that demonstrating that we are going to build vehicles that run on hydrogen

will send a pretty strong signal to the rest of world including countries that are producers.

And just to address the two things you mentioned specifically.

First, we do not support an increase in gasoline taxes. The administration I think very clearly does not support that proposal.

I think the provisions, a variety of provisions on electricity that

are contained in the Energy Bills are important.

Congressman Dingell earlier made an excellent, I think, discussion about the reliability provisions. We need to have enforceable

reliability standards in place so that we can keep the folks who are

65

involved in the use of the electricity grid operating in a high level

of conduct and be able to enforce anyone who departs from that.

And I do not want to imply a lot of people are, but obviously we

did have the blackout study.

We also need to maintain diversity in terms of the electricity production side of the equation.

I mentioned earlier my concerns about natural gas, demand

going up, price accordingly. We saw today in the papers an indication that just alone is beginning to shift attention back to coal. We

need to diversities of all these fuels to produce electricity.

We also need to recognize that the transmission grid needs to

work, and not just a reliable fashion but with the most modern

technology.

And I am excited about a lot of the provisions in our energy

budget this year that would address some of these issues. We have

got some great work going on in our transmission and distribution

division on super conductivity, on provisions that would allow us

to engage in research to both increase the soft as well as the hardware components efficiency and intelligence so that we can modernize the grid.

Mr. Chairman, thank you.

Mr. FERGUSON. My time is up.

Thank you, Mr. Secretary, for your leadership.

Thank you, Mr. Chairman.

Mr. HALL [presiding]. To Secretary, you can filibuster your playing schedule if you want to.

The Chair is going to recognize the gentleman from Florida for

5 minutes or less.

Mr. STUPAK. Or less? All right. Thank you, Mr. Chairman.

Well, when you come down to almost the last speaker, Mr. Secretary, everything has been said. But I notice on the first page of

your testimony that you are leading the pack with management

improvement. And I think perhaps you have had an opportunity to

talk about, but your agency is over $24 billion a year from the staff

information we have. And while the cost of energy is going up, it

appears the cost of your Department is going up, too. Now, obviously, you can make the argument for homeland security and research and could go on and on. But there has been some prodigious

increases in the Department of Energy, and we have seen that.

This is a department that we did not even have before President

Jimmy Carter.

In looking through the different increases, you are asking for a

4.5 percent increase overall, but in the area of corporate management you are asking for a 4.6 percent increase. In the inspector

general area you are asking for a 5.8 percent increase.

I guess what I would like to hear from you is why you need such

large increases? We had inflation at 1.8 percent. Surely with the

Department doing over $24 billion a year if you are asking for large

increases in certain areas, I think it would be important that you

justify those areas.

Now, I know in other areas, you have environment, you have an

9.5 percent increase. You have also a 12.5 percent in electric transmission and distribution. Now, perhaps, that is one that we could

all agree upon. Maybe the environment, I do not know. But with

66

corporate management, I assume this is something that could really be more efficient. So I see almost a 6 percent—almost 5 percent

increase of these. I thought I would give you an opportunity to explain it.

Mr. ABRAHAM. Well, thank you. I am glad to finish on that topic.

Part of it is, I think, just the difference between—you know, we

have been consistently seeking certain levels and Congress topically does not give us what we want in this area, but we have resubmitted at approximately the same levels that we have been asking for previously. And we fully expect during the process of this

budget that we will see some adjustment in our requests and what

Congress wants.

On the other hand, we also have found that there are some of

these areas, and inspector general is one and probably one of the

few Cabinet agencies maybe that does not mind the work. In fact

works—very much appreciates the work of the inspector general.

We do not feel we should be underfunding that independent analysis that we receive that helped us refine our programs better.

We have also in some instances with regard to corporate management been able to consolidate work in the management level at

the top.

Mr. STUPAK. Well, would that not mean your request would be

lower if you have consolidated?

Mr. ABRAHAM. But what I mean is that where we have been able

to take work that was being spread out across the field and reduce

the total cost of management by improving the quality of the work

and the work being done at the Department itself.

Mr. STUPAK. Are any of your departments underfunded? In other

words, are you asking for money that is just the cost of living or

are they increasing?

Mr. ABRAHAM. No. I mean, some of our programs, as I was castigated about earlier, have been significantly reduced in funding

from the levels Congress has suggested.

Mr. STUPAK. Okay.

Mr. ABRAHAM. One that we talked about earlier this morning

was oil and gas research where because the evaluations of those

programs was that they were ineffective, we have come in with a

much lower budget than the previously enacted level.

But we do have some things. Just to put something in perspective, Congressman, in several of the program areas, Yucca Mountain being a principal example, are ones where we are at the point

where we are moving from a lot of research and design work to actually beginning the——

Mr. STUPAK. The implementation and that requires more money?

Mr. ABRAHAM. [continuing] full implementation. And the same is

true in the environmental management area where we have programs where we are trying to accelerate. And let me just give you

a sense of how we are actually going to save money.

Mr. STUPAK. Good.

Mr. ABRAHAM. Because we believe that in the environmental

management area when we accelerate the cleanup, when we reduce

the risk and shorten the timeframe as I hope we will do over which

we will be cleaning up our various sites, the maintenance, security

and overhead costs reflect about half of the long term cost of these

67

programs. By shortening the timeframe of the cleanup by 35 years,

we will dramatically reduce those out year costs that were associated with simply maintaining a site.

Mr. STUPAK. Okay. I am going to just ask, give you just a general

comment in conclusion. With the Energy Bill sort of in limbo in the

Senate, has your Department thought about as a strategic move

what a scaled down energy bill that you would consider at all? Are

there some components that you and your staff—I know you do not

want to talk about it because you want the Energy Bill.

Mr. ABRAHAM. No, no.

Mr. STUPAK. And we want the Energy Bill.

Mr. ABRAHAM. Right.

Mr. STUPAK. And our Chairman spent so many hearings doing it.

But is it a possibility? You know, it is better to get something than

nothing. Is there some kind of scaled down——

Mr. ABRAHAM. Well, I mean we are pretty much on record as

wishing to see the tax provision scaled down substantially.

Mr. STUPAK. Okay.

Mr. ABRAHAM. We believe that the energy plan the President developed called for about a $7 to $8 billion tax component. So the

number that is in this bill is much larger than we would endorse.

That would be the main area, I would think, that we would focus

on. There may be others as well. But that is one where we very

publicly have expressed——

Mr. STUPAK. Okay. And my time has expired.

Thank you, Mr. Chairman.

Mr. HALL. Mr. Secretary, we thank you.

In closing, I have a question but I am not going to ask you to

answer it, but I am going to put it in the record. It is in 1992 the

Congress passed legislation intended to lessen our dependence on

foreign oil. And as you know, section 502 of that legislation established goals that to my knowledge the goals are still in effect, but

we are no where near meeting the goals.

And based on the information available on the Energy Information Administration website I think that for the most recent year

for which data is available, non-petroleum fuels made up less than

3 percent of the total module fuel consumption in the country with

additives to gasoline compromising most of that amount.

I would like to ask some questions about the value of substituting non-petroleum fuels for gasoline and diesel and what we

can do to get on track toward meeting those goals, and whether or

not a 30 percent decrease in demand for gasoline to fuel light duty

motor vehicles increase or decrease skyrocketing gasoline prices;

that would be part of your answer to some of the other questions

that have been asked. And one way to reduce it is the suggestion

that the use of gasoline and diesel is through natural gas vehicles.

Being from Texas, I think natural gas out to be the fuel of the future.

And you know, Garland, independent school district, has used

natural gas for their school buses for probably 20 years with no

problems and a savings of 15 to 18 to 20 percent.

So those are things. And on the NGV cost, natural gas vehicles

carry a higher cost because of limited production. And if we could

68

get them in use, I think we could see high fuel use fleets moving

to NGVs.

So those are some of the questions that we have here. And in

light of all this, my question is what is the Department doing to

promote the use of natural gas vehicles in fleets around the country and, more importantly, the age old question why are you not

doing more?

And with that, I really want to thank you.

Mr. SHIMKUS. No, Mr. Chairman. I did not mean to speak, but

that is why you wait until the last second is to just to make sure

that the——

Mr. HALL. I am through.

Mr. SHIMKUS. The reason why I mentioned to Chairman Barton

was that it is our understanding that gasoline price increases in

areas like New York and Connecticut which are now using ethanol

blended RFG have been lower than in other even conventional gasoline markets. And that is why it really ties into what Chairman

Hall said and Chairman Barton on this analysis. Because in California’s debate, if they displace their reformulated fuel 6 percent,

they are really going to have a huge escalation of gasoline prices.

And that should be part of the data. That is why we need an energy bill.

And I want to make sure that the ag guys always have a seat

at the table at the final debate.

So thank you. Mr. Chairman.

Mr. HALL. Yes. In closing, we want you to look at the budget request for 2005. There is nothing for NGV related R&D. We want

you to look at that and maybe make some requests. We have usually given more than had been requested.

With that, I really want to thank you on behalf of the committee

both Democrats and Republicans. You have been very resourceful.

I have been in and out of here like everybody else has, but the time

I have been here you have handled your job very well. A great

member of the Cabinet. Fine Secretary. And a good friend. We appreciate you.

Mr. ABRAHAM. Thank you, Mr. Chairman.

Mr. HALL. With that, we are adjourned.

[Whereupon, at 12:38 p.m., the committee was adjourned.]

[Additional material submitted for the record follows:]

RESPONSE FOR THE RECORD OF HON. SPENCER ABRAHAM, SECRETARY, U.S.

DEPARTMENT OF ENERGY

QUESTION FROM REPRESENTATIVE COX

Elimination of Weapons Grade Plutonium

Question 1. Mr. Secretary, I have been informed that the Department of Energy

(DOE) has assumed responsibility from the Department of Defense for shutting

down three plutonium-producing reactors in Russia. As I understand it, Phase I construction contracts for baseline development were signed last year with Washington

Group International and Raytheon Technical Services for the Seversk and

Zheleznogorski projects, respectively. The project’s budget is $500 million, but I have

been told that early cost estimates still under review are expected to be $1 billion.

What is your Department considering to keep this project on track? Concurrent

funding of both projects? International funding? Or perhaps increased U.S. government funding? Are you talking to both contractors about increasing efficiencies and

reducing costs, and seeking other financial sources to help finish this projects in the

timeframe of 2008-2011?

69

Answer 1. In December 2002, the Elimination of Weapons Grade Plutonium Production (EWGPP) Program reached its first Critical Decision (CD-0), Justification of

Mission Need. The cost estimate used at this point was $466 million (a mid-point

of the $370-$550 million cost range). This preliminary, unvalidated estimate came

with the program when it was transferred from the Department of Defense in FY

2002. The preliminary estimate was based on an unvalidated Russian study conducted in 2000/2001 and was never escalated to account for a number of external

factors such as: It did not include: (1) Russian inflation; (2) escalation to construction mid-point; (3) the costs of U.S. and Russian integrating contractors; and (4) devaluation of the U.S. dollar.

In December 2003, we completed the first top-to-bottom assessment of the program cost and schedule. We are working with the Russians, both U.S. contractors,

and a team of independent fossil fuel plant experts to assess the validity of the topto-bottom review and to find ways to reduce costs. We have made progress on all

fronts. The team of experts is reviewing the estimates and will issue a report shortly, a list of cost-reduction options is being evaluated, and the Government of Switzerland will host a conference on international participation in the fall.

The program is reviewing the preliminary Russian designs for the planned fossil

fuel replacement plants and validating cost estimates for the projects. As more of

the engineering design work is completed, refined overall cost and schedule will be

developed for the replacement fossil fuel plants. Detailed designs and cost-reduction

evaluations will be completed by the end of December 2004, at which time firm cost

estimates will be provided to the Congress.

QUESTIONS FROM REPRESENTATIVE HALL

Question 1. Would a thirty percent decrease in demand for gasoline to fuel light

duty motor vehicles increase or decrease skyrocketing gasoline prices?

Answer 1. There are three major price components to be considered in assessing

the impact of a hypothetical 30 percent decrease in gasoline demand on gasoline

prices: the cost of crude oil, refining margins, and gasoline taxes. Timing considerations are also critical, as outlined below.

Were U.S. gasoline demand to instantly fall by 30 percent, or roughly 2.7 million

barrels per day, there would be significant excess refining capacity. Refining margins would be expected to fall, tending to lower gasoline prices. Depending on decisions made by major petroleum exporting countries regarding their production levels, there could also be a reduction in crude oil prices, which would also tend to

lower gasoline prices. However, state and Federal revenues from existing gasoline

taxes would also fall by 30 percent, reducing funding for highway construction and

other activities financed with these revenues. Potential adjustments in tax rates to

address this shortfall would tend to raise gasoline prices.

Perhaps a more realistic scenario is one in which the 30-percent reduction in demand occurred gradually, rather than instantly. In this case, refiners and producers

would probably be reluctant to make investments to meet today’s level of demand

given the expectation of sharp reductions in future demand that would turn any

new capacity investments into excess capacity. In such a scenario, the immediate

effect of an expected 30 percent decrease in demand would be to raise, rather than

reduce, gasoline prices.

Over time, the transitional effects of a gradual 30-percent reduction gasoline demand would come to be dominated by longer-run impacts. Given projected growth

in gasoline demand, the 30 percent reduction translates into 3 to 4 million barrels

per day lower gasoline demand between 2010 and 2025. Almost all of this reduction

would come from import reductions. Unless oil-exporting countries adjust their production to keep oil product prices steady, world petroleum prices would be expected

to decline, which would reduce gasoline prices. Refining capacity should equilibrate

to the new demand conditions, so there is no reason to expect the lower demand

level to affect the refining margin component of prices. Impacts on the tax component of prices would depend on policy decisions regarding how to address the lower

level of tax revenue resulting from the lower level of gasoline demand.

Question 2a. In light of all this, my question is: what is the Department doing

to promote the use of natural gas vehicles in fleets around the country and, more

importantly, why isn’t it doing more?

Answer 2a. The Department promotes the use of alternative fuels, including natural gas, through its Clean Cities program. Approximately 80 coalitions are working

to accelerate the deployment of various types of alternative fuel vehicles and alternative fuel infrastructure. Many of these coalitions embrace natural gas as their

fuel of choice.

70

Because natural gas requires a greater financial and technical investment than

other fuels to ensure success, a significant portion of the Clean Cities resources has

been dedicated to this fuel. Each year, the Clean Cities program awards roughly

half its budget in grants to coalition stakeholders through the State Energy Program (SEP) Special Project Grants for alternative fuel projects. Approximately 65%

of the SEP special project money in FY 2002, and 75% in FY 2003, went to natural

gas projects. In addition, over half of the Clean Cities technical assistance projects

were designed to solve natural gas issues.

The President and the Department are committed to the development of a hydrogen economy. We have chosen to focus available funding on the research and development of hydrogen fuel cell vehicles and infrastructure. The Department believes

that the Nation’s transportation system of the future will run on clean, safe hydrogen fuel and has aligned its resources according to that vision. The level of funding

requested to promote today’s alternative fuels, including natural gas, is therefore

appropriate relative to our national energy priorities, the mission of this Department, and the level of expected public benefits, which is an important consideration

within the Administration’s R&D investment criteria.

Question 3. Mr. Secretary, I believe the replacement fuels program I mentioned

at the outset is largely a voluntary effort coordinated by DOE through its Clean Cities program. If I am not mistaken, I think that the grants you just mentioned are

provided through that program. Yet, as important as it is for this country to lessen

its dependence on foreign oil, and that can only be accomplished by reducing the

use of gasoline and diesel in motor vehicles, it seems to me that the amount of

money you have requested for the Clean Cities program is way too little. In fact,

hasn’t the pattern been over the past few years for you to request less and less

money for this program and Congress to keep adding money back because of its importance.

Answer 3. The Department’s request for the Clean Cities budget has been fairly

consistent over the past few years. The Clean Cities program uses about half its

budget to operate its core program, while the remaining funding is awarded to coalition stakeholders in the form of grants for alternative fuel hardware projects. This

is a formula that appears to be working. The program receives more State Energy

Program special project grant applications than any other program and continues

to receive applications for Clean Cities designation from new coalitions. This pattern

indicates that we are effectively leveraging our resources and devoting the right

amount of funding to this activity. In addition to requiring significant cost sharing

from our grant recipients, we are also investigating partnership opportunities with

the Federal Highway Administration and the Environmental Protection Agency to

enable us to leverage funding to an even greater extent.

Question 4.

Another question I have is with respect to the Department’s R&D efforts with respect to non-petroleum vehicles. We know all about the hydrogen vehicle program,

but let’s talk a little about your efforts with respect to natural gas vehicles. According to the Natural Gas Vehicle Coalition the NGV industry worked with DOE to

identify a multi-year program of R&D critical to increasing platforms, further improving emissions, increasing driving range and so forth. This program identified

more than 30 million of research needed per year. But, I look at your budget request

for ‘‘05 and there is nothing for NGV related R&D. Last year you requested only

about $800,000, and like the Clean Cities program, the Congress gave you more

than you requested because of the importance of this work. I think we’re trying to

send a message here and you’re not listening. I do not agree with the statement

in your budget analysis that there is no further need for NGV related research. I

do believe that we could find the money that is needed with your budget to fund

both Clean Cities and NGV related R&D at levels consistent with our need to meet

the goals I talked about earlier in the Energy Policy Act of 1992. Do you agree?

Answer 4. The Department of Energy has funded research and development on

natural gas engines, fueling systems, and fueling infrastructure technologies since

1989. The goal of these activities was to partner with industry to develop pre-commercial technologies with realistic market potential. The Department completed all

its basic component research activities on light-duty natural gas cars in the year

2000. We plan to complete our vehicle integration work for medium-duty natural

gas trucks in Fiscal Year 2004.

Numerous engines and vehicle platforms were developed as part of these efforts.

Today, several major engine, truck, and bus manufacturers offer natural gas powered vehicles as part of their commercially-available product lines. Since these vehicles are notably some of the cleanest and best performing on the road today, further

investment by the Department is not likely to advance the state of this technology

in any significant manner.

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QUESTIONS FROM REPRESENTATIVE WHITFIELD

Question 1. The Administration has requested $13.1 million for the former worker

medical screening program, but the designated amount for Paducah and the other

gaseous diffusion sites is not specified. Can you tell me the amount the Department

has reserved for the medical screening program at the gaseous diffusion plants and

if that amount covers the cost of the early lung cancer detection program specifically

established by law for workers at the GDPs? Answer 1. Included in the administration’s FY ‘‘05 health budget is $13.1 million

to support the Former Worker Medical Screening Program.

1) The budget allocates $4 million to fund PACE International Union and Queens

College to complete the medical screening program for GDP production workers

at the 3 GDPs in FY 2005. This amount covers the cost of the early lung cancer

detection program. 2) An additional $700,000 is allocated to fund the University of Cincinnati to continue medical screening for GDP construction workers from Portsmouth and Paducah.

Question 2. In a lead story in yesterday’s Louisville Courier Journal the headline

reads ‘‘Just One Sick Plant Worker Gets Aid.’’ The story was referencing the status

of DOE’s implementation of the energy worker compensation program for workers

who became ill as a result of exposure to toxic substances. I know your Department

has asked for another $33 million to expedite the processing of the 22,000 pending

claims, and I do support your proposed changes to the program with regard to using

a one rather than three-doctor review of cases, as well as increased compensation

for doctors participating in the program. However, I still believe that even if the Department can begin to process claims in a timely manner, at then end of the day,

as many as 50 percent of exposed workers who the Department has deemed worthy

of getting state compensation benefits cannot get those benefits because of the ‘‘no

willing payor’’ problem. Would you care to comment on that?

Answer 2. The Department understands the concerns regarding the so-called

‘‘willing payer’’ issue and is addressing these concerns through multiple efforts.

However, it should be noted that under the EEOICPA Part D program, DOE does

not make any determination of whether a worker is ‘‘worthy’’ of getting State compensation benefits, as your question implies. Rather, DOE and its Part D Physician

Panels determine whether, under standards set forth in DOE’s regulations and

without regard to any particular State’s workers compensation program requirements, a contractor worker has an illness that arose from exposure to a toxic substance at a DOE facility.

Your question raises three basic issues: one, the relatively few EEOICPA Part D

applicants who have received State workers compensation benefits as a result of the

Part D program; two, the number of Part D applicants who can reasonably be expected to have a ‘‘willing payer’’ of State benefits; and three, the ability of a Part

D applicant without a ‘‘willing payer’’ to receive appropriate State workers compensation. We understand that, to date, four Part D applicants have received State

workers compensation awards as a result of the Part D program. In the past three

months, the Department has issued positive Physician Panel findings to over 100

applicants; the panels are producing approximately 10 positive panel findings per

week. As these applicants seek State workers compensation and as we increase the

number and rate at which we process Part D applications, we expect a dramatic increase in State workers compensation awards made as a result of the Part D program. The Department is aggressively working to identify ‘‘willing payers’’ for Part

D applicants. Of course, applicants without ‘‘willing payers’’ are not precluded from

filing for and receiving State workers compensation benefits. These applicants are

simply in the same situation as all other applicants for State workers compensation

who are not part of the EEIOCPA Part D program.

In the cases where DOE is not able to issue a ‘‘do not contest’’ order and/or is

not able to reimburse the contractor, this does not necessarily result in an applicant

being precluded from receiving State workers compensation benefits. In fact, the applicant is simply in a standard State workers compensation proceeding, but does not

have the benefit of a ‘‘willing payer.’’

The Department plans to closely monitor the ‘‘willing payer’’ situation. It will be

many months before a statistically significant number of Part D cases will be completed through the States’ workers compensation processes and before it will be possible to draw reasoned conclusions about the ‘‘willing payer’’ issue and the benefits

provided by law. At that time, a preliminary assessment can be done as to both the

number of Part D applicants without a ‘‘willing payer,’’ and the impact the lack of

a ‘‘willing payer’’ has had on applicants who received positive Physician Panel determinations.

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ADDITIONAL RESPONSE FOR THE RECORD OF HON. SPENCER ABRAHAM, SECRETARY, U.S. DEPARTMENT OF ENERGY

QUESTIONS FROM REPRESENTATIVE MARKEY

Contacts with OPEC Oil Ministers

Question 1. Exactly how many of the OPEC oil ministers did you personally contact between the OPEC meeting in Algeria in February and the March 31, 2004,

OPEC meeting to ‘‘jawbone’’ them to reverse themselves and increase, not decrease

production? Who were they?

Answer 1. Since taking office, this Administration has maintained an ongoing

campaign of diplomacy with oil producers. We have consistently urged producers to

ensure that oil supply is sufficient to promote global economic growth. That means

ample supply at reasonable prices. We do not discuss the specifics of these conversations, but a staple of our message to producers has been our admonition to let the

free market be the referee on issues of supply, demand and price, and we have

strongly encouraged them to heed the market’s signals.

Oil Prices

Question 2. The April 1, 2004, Wall Street Journal reports that OPEC’s decision

to cut production breaks the cartel’s ‘‘years-old efforts to maintain price stability and

raises the prospect of greater volatility for consumers of oil and gasoline.’’ The Journal goes on to report that: ‘‘In 2000, OPEC informally promised to keep oil prices within a band of $22 to $28 for a basket of crude oil varieties. In return, major consuming countries

indicated they wouldn’t use strategic stockpiles of oil amid a supply crunch before OPEC had a chance to balance markets—But the OPEC basket is at more

than $31 a barrel now, and has been consistently above $28 a barrel for the

past 83 days.’’

In light of the fact that OPEC appears to have abandoned price stability as a goal

and instead seems bent on price gouging us, why aren’t you willing to take off the

gloves and turn on the spigot of the Strategic Petroleum Reserve to send OPEC a

message that if they won’t stabilize supplies and prices, we will?

Answer 2. The Energy Policy and Conservation Act, enacted in 1975, established

the Strategic Petroleum Reserve as a national security asset and authorized the Department to sell its oil if the President makes a finding that a ‘‘severe energy supply

interruption’’ exists. Despite persistently high prices, no supply disruption has occurred to justify such a Presidential finding. The Act envisions that markets will

balance the supply and demand of oil, and does not contemplate the drawdown and

sale of oil from the SPR for the sole purpose of affecting the market price. If traditional exporters choose not to accommodate demand growth at moderate prices, the

markets will elicit greater efficiency and more production from non-traditional

sources, to the long-term detriment of the traditional exporters. It is the Administration’s policy not to tap the Strategic Petroleum Reserve to suppress prices as long

as supplies are adequate, which they are at this time. Furthermore, in these very

uncertain times, we believe that our Nation’s national security will be best served

by having a full Strategic Petroleum Reserve in order to provide the maximum protection for the United States.

Impacts of National Energy Policy on Energy Consumption and Production

Question 3. According to your Department’s own Energy Information Administration, passage of the energy bill conference report would have a ‘‘negligible’’ impact

on energy consumption and production and on America’s reliance on energy imports.

At the same time, EIA reports that if the Republican energy bill is enacted into law

‘‘By 2015, however, the price increases [in gasoline] resulting from the bill accelerate, with ‘‘an increase of 3.0 cents per gallon in the average gasoline price and

8.1 cents per gallon in the average RFG price, relative to the Reference Case.’’ Can

you please explain why a bill that your own Department says is going to increase

gas prices by 3 to 8 cents a gallon is the solution to rising gasoline prices?

Answer 3. The transportation sector accounts for nearly 30 percent of total U.S.

energy consumption, and transportation costs have been rising, particularly as the

economy improves. Although the recent fuel price spikes concern the public and the

Administration, it is important to note that such increases have occurred many

times in the past. For instance, during 2000, fuel prices rose by 30 to 40 cents a

gallon from 1999 prices.

With regard to EIA’s analysis, the Department believes that the gasoline price differential of the energy bill reflected in the EIA analyses does not accurately portray

what is likely to happen. EIA’s base case analysis includes MTBE bans for only 17

States, while the Department believes that MTBE will essentially be banned for all

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gasoline after these State bans go into effect. Including this one assumption in EIA’s

base case would change the results of the energy bill analysis substantially. If one

were to also include the likely extension of the ethanol tax credit (or some incentive

similar in effect), one would effectively eliminate the entire gasoline price differential between the two cases. Additionally, the EIA analysis does not consider regional

or local price volatility that may occur during transitions from MTBE due to State

actions.

The Administration believes that the passage of comprehensive energy legislation,

coupled with the implementation of the recommendations of the President’s National Energy Policy (NEP) by the Executive Branch, will provide balanced longterm measures to address the domestic energy situation. We are pleased that many

NEP recommendations requiring Congressional action are included in energy legislation currently pending in Congress. For instance, provisions promoting greater energy efficiency and increased emphasis on energy technologies are included in pending comprehensive energy bills. Implementation of such approaches would help

make transportation fuels more affordable.

Unfortunately, some NEP recommendations, such as opening a small portion of

Alaska’s coastal plain to environmentally responsible oil and gas exploration and development, are not included in pending bills, such as the H.R. 6 Conference Report.

Hampering our ability to responsibly develop America’s domestic energy resources

will only contribute to our continued reliance on insecure foreign sources of energy

and contribute to price volatility.

The Administration continues to urge Congress to finish the job of passing comprehensive energy legislation, which, together with ongoing administrative implementation of NEP recommendations, would improve the Nation’s energy and economic security.

Nuclear Nonproliferation

According to the DOE budget documents, the Advanced Fuel Cycle Initiative ‘‘develops technologies that would enable the reduction of spent fuel volume and the

recovery of spent nuclear fuel’s valuable energy.’’ In other words—nuclear reprocessing. On February 11, 2004, President Bush announced new measures to counter the

spread of weapons of mass destruction, stating, ‘‘The world must create a safe, orderly system to field civilian nuclear plants without adding to the danger of weapons proliferation. The world’s leading nuclear exporters should ensure that states

have reliable access at reasonable cost to fuel for civilian reactors, so long as those

states renounce enrichment and reprocessing. Enrichment and reprocessing are not

necessary for nations seeking to harness nuclear energy for peaceful purposes.

Question 1. Don’t you think that telling other countries that they shouldn’t reprocess while requesting $46 million to develop new reprocessing technologies is just

like preaching temperance from a barstool?

Answer 1. The Department’s Advanced Fuel Cycle Initiative (AFCI) is conducting

research on advanced, proliferation-resistant spent fuel treatment technologies that

have the potential for extracting the valuable energy remaining in spent fuel and

reducing the long-term burden on future repositories. The AFCI program is working

to eliminate the proliferation risks associated with traditional nuclear fuel cycle approaches by developing alternative technologies that preclude the separation of attractive fissile materials. The spent nuclear fuel treatment technologies being developed by the AFCI program are also focused on the safe separation of specific elements from the spent fuel to reduce the volume and heat content of material requiring geologic disposal. The AFCI program is also investigating the development of

new fuels manufactured from selected transuranic elements for use in existing commercial reactors and future Generation IV reactors.

The assumption that AFCI advances reprocessing is incorrect. AFCI is designed

to reduce proliferation risks associated with traditional nuclear fuel cycle approaches, including spent fuel reprocessing, by developing alternative technologies

that do not involve the separation of fissile material in forms usable in a nuclear

weapon. AFCI, therefore, is entirely consistent with the President’s approach, which

aims to prevent the spread of sensitive nuclear facilities and technologies to an ever

wider group of states.

Question 2. While the DOE weapons activities request is 5.4% or $335 million

higher that the FY2004 appropriation, the nuclear nonproliferation budget is only

1.1% or $15 million higher than FY2004. Programs to help secure Russian navy nuclear weapons and Russian RADON nuclear waste sites, among others, are drastically cut. Does this budget mean that the Administration thinks building new U.S.

nuclear weapons is a higher priority that keeping nuclear weapons out of the hands

of dangerous regimes?

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Answer 2. The Administration is committed to nonproliferation and to ensuring

the continued safety, security, and reliability of the nation’s nuclear deterrent. The FY 2005 Request for the Office of Defense Nuclear Nonproliferation is $1.35

billion. Although this reflects only a 1% increase over FY 2004, funding for these

programs has increased by over 60% since FY 2001. In a constrained budget environment, a 1% increase represents the Administration’s commitment to our nonproliferation programs. In addition, the G-8 Global Partnership Against the Spread

of Weapons and Materials of Mass Destruction is helping further nonproliferation.

G-8 nations and the European Commission (EC) are engaging in nonproliferation

programs with Russia and other former Soviet states at the same time that the

United States is. To date, other G-7 nations and the EC have pledged about $7 billion toward their $10 billion goal to match the U.S. pledge of $10 billion. Most countries have already designated substantial portions of their pledges for specific programs and have launched new activities. Proliferation is a global problem and the

global community is stepping up to the challenge.

Presently, there are no requirements from the Department of Defense for the National Nuclear Security Administration to manufacture any new nuclear weapons.

In fact, no new nuclear weapons have been produced and added to the nation’s nuclear weapons stockpile since 1989. Funds from the Administration’s FY2005 budget

request will be used to ensure the continued safety, security, and reliability of the

nation’s nuclear deterrent through the stockpile stewardship program and without

the reliance on underground testing.

Robust Nuclear Earth Penetrator (RNEP)

Question 3. The budget request includes $485 million for the Robust Nuclear

Earth Penetrator bunker buster weapon over the next five years. This program was

originally sold to Congress as a $45 million, 3 year study, not a new nuclear weapons development program. Why is DOE now projecting it to be more than ten times

as expensive and extending to the end of the decade if it does not intend to go far

beyond a study and undertake actual weapons development?

Answer 3. In accordance with the National Nuclear Security Administration Act

as currently amended, NNSA submitted a five-year program of estimated expenditures and proposed appropriations. Only the proposed budget for FY 2005 was a request. Estimated expenditures for RNEP for FY 2006 and beyond were to preserve

options for the President and Congress in case the decisions were made to proceed

to engineering development and beyond. Proceeding beyond the study stage would

be wholly contingent on many factors, particularly including Department of Defense

requirements and Congressional approval. As currently planned, the study will be

completed in FY 2006. A new appropriation proposal will be submitted for FY 2006,

including new estimated expenditures for FY 2007-2010, to Congress with the FY

2006 President’s budget request.

Bunker Buster Program

Question 4. In May 2003, DOD Secretary Donald Rumsfeld said that the bunker

buster program ‘‘is a study. It is nothing more and nothing less. And it is not pursuing, and it is not developing, it is not building, it is not manufacturing, it is not

deploying, and it is not using.’’ Is this your view? If so, why does the DOE budget

request include a subsystem test and full system test in FY 2005 and a completion

of 100% of engineering development (Phase 6.3) by FY 2009?

Answer 4. The only requested activity and the only approved activity is the feasibility, design definition, and cost study (Phase 6.2/2A). In order for NNSA to estimate out year expenditures, as directed by Congress in PL 106-65, we must attempt

to predict the future for a five-year program. One part of that program that would

be a considerable expense could be development of the RNEP program if the Administration proposed and Congress approved moving beyond the study stage. We considered it both prudent and responsible to include those estimated expenditures in

out year projections. Along with those estimated expenditures, we are required to

describe what we expect to accomplish with those funds.

Full System Test

Question 5. The ‘‘subsystem test’’ and ‘‘full system test’’ that are planned for FY

2005 sound like development, not just research. Aren’t these tests really ‘‘engineering development’’ activities? What specifically is NNSA planning to do for bunker

busting testing and prototyping in FY 2005?

Answer 5. The subsystem tests and full system tests that are part of the feasibility study are sled track tests to assess the feasibility of the candidate nuclear explosive packages and associated components to withstand carefully controlled deceleration environments. The full system test will incorporate mock up nuclear components in a full size penetrator body but without a functioning guidance and control

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kit. These tests are a normal part of the feasibility study and are necessary research

for a complete and meaningful study as requested by the Nuclear Weapons Council.

Engineering development tests would be conducted in more realistic impact conditions with functioning guidance and impact controls. There are no plans to build any

prototypes or conduct any prototype testing during the feasibility, design definition,

and cost study.

Warheads

Question 6. According to the DOE budget documents, the full system test for FY

2005 is for ‘‘the proposed design’’. But I’m told there are two warheads being considered for the bunker buster, the B-83 and the B-61. Does this singular ‘‘proposed design’’ mean that NNSA plans to pick one of these two warheads in FY 2005? If so,

which one, and on which basis?

Answer 6. There is currently no decision to down select before the completion of

the feasibility study in FY 2006. The proposed design to be tested in FY 2005 is

to be based on the B83. A similar test with the proposed design for the B61 is

planned for early FY 2006.

Question on Fuel Cells

Question 1. Mr. Secretary, in previous testimony you’ve said that ‘‘Distributed

power systems, such as fuel cells, also can contribute to the overall reliability of

electricity supplies in the United States and help strengthen the security of our

energy infrastructure.’’ It is my understanding, however, that the DOE budget

for FY2004 for stationary fuel cells in the Office of Fossil Energy was $44.5 million,

a reduction of $16.5 million from an enacted level of $61 million. The budget request

for FY2005 for stationary fuel cells is $23 million, a cut of $43 million from the enacted level of $68.6 million. How can you ‘‘help strengthen the security of our energy

infrastructure’’ by decreasing the Fossil Energy fuel cell program by 66%?

Answer 1. The reduced funding in the 2005 budget request primarily reflects completion of development on near-term fuel cells (molten carbonate and tubular solid

oxide fuel cells). These fuel cells have reached the level of maturity where industry

on its own can take the final step towards commercialization. Completion of this

work results in a reduction of $23.6 million from the 2004 enacted level.

The FY 2005 budget request for fuel cells focuses on providing adequate funding

for the Solid State Energy Conversion Alliance Program (SECA), which is funded

at about the same funding level we requested in FY 2004, which is a reduction of

[$12 million?] from the 2004 enacted level.

Question 2. Why hasn’t the Administration lived up to its goal of ‘‘moving stationary fuel cells fairly quickly’’ by increasing the funding for stationary fuel cells

within the Fossil Energy Program?

Answer 2. The Administration is committed to its goal of developing clean, lowcost, reliable fuel cells that will be available for stationary power applications beginning in 2010, and will ultimately provide electric power for virtually all markets,

through the Solid State Energy Conservation Alliance (SECA) Program. Currently,

six Industrial Teams are aggressively pursuing different promising approaches to

meet the SECA goal of $400/kW. Additionally, over 40 research and development

projects that support the SECA industry teams are in place. Current progress is excellent, and increased funding would not significantly accelerate commercial deployment.

Questions regarding Wackenhut Corporation

You may be aware of the recently reported problems with Wackenhut at Oak

Ridge National Laboratory (ORNL) revealed by your Inspector General (IG) in January, and your IG’s March report on modifications to the core training curriculum

at department sites guarded by Wackenhut. I have looked more deeply into these

problems and discovered a long record of important security lapses at both nuclear

power and nuclear weapons-related sites:

• Security officers worked to the point of fatigue;

• Training deficiencies;

• Security lapses;

• Failed procedures;

• Retaliation against employees who voice their safety concerns.

These problems have one thing in common: Wackenhut was the contractor. I

would be glad to provide you with the full record.

Question 1. Have these problems been brought to your attention? What are you

doing to address them? If you are not taking any actions to resolve these problems,

why not?

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Answer 1. While NNSA is aware that some aspects of the identified problems

exist at our sites, we are not aware of any which have significantly impacted the

implementation of our contracts with Wackenhut. Our prime contracts with

Wackenhut at the Y-12 Plant at Oak Ridge and the Nevada Test Site include a

semi-annual performance evaluation cycle by the respective NNSA Site Offices, and

also undergo a comprehensive inspection by the Department of Energy Office of

Independent Oversight and Performance Assurance. The semi-annual performance

evaluation cycles allow NNSA to focus Wackenhut’s attention on immediate issues

or areas of particular interest. Performance elements such as those raised in this

question are included in the defined performance objectives. Our Y-12 Site Office

issued its most recent performance evaluation report on its Wackenhut contractor,

WSI-OR, in March 2004. While procedural inadequacies led to misconceptions about

performance testing, as documented in a DOE/IG report, there was no indication of

wide-spread or programmatic deficiencies in this area. NNSA is also preparing to

re-compete its Wackenhut contracts as the contracts terminate in the near future,

providing an opportunity for NNSA to challenge prospective bidders to propose, and

be held accountable for delivering, improved performance.

Question 2. Has the Department undertaken or do you plan to undertake a review

of Wackenhut’s track record as a contractor, if not, why not?

Answer 2. The DOE conducts continuous surveillance of contractor performance.

Contractor performance evaluations are formally made on the anniversary date of

contract award based upon performance criteria established in each contract. The

results of the IG investigations have been factored into these evaluations for

Wackenhut in each of the associated contractor performance evaluations. To date,

the DOE assessment of Wackenhut’s performance does not support the barring of

Wackenhut from bidding on future protective force contracts.

Question 3. Are you aware that Wackenhut’s Danish parent company is merging

with the British parent company of Argenbright (now called Cogniss), which was

barred from by the U.S. Government for a substantial period of time from doing security work due to its poor security and vetting practices? Argenbright provided security at the Washington Dulles and Newark International Airports on September

11, 2001 when terrorist hijackers got past security screeners to board planes that

crashed into the Pentagon and Western Pennsylvania. Do you plan to review the

impact of this merger? If not, why not? If this merger does take place, will you allow

former Argenbright managers to have a role in administering security at DOE nuclear sites?

Answer 3. NNSA is aware of the merger described in this question. Let me assure

you that NNSA will review all Foreign Ownership, Control or Influence (FOCI) documentation to ensure restrictions on foreign parent activities, to include visitation

to DOE/NNSA sites, are modified such that representatives of Argenbright (Cogniss)

have been adequately isolated from the WSI activities. This will ensure that the

Wackenhut contractors at our sites will continue to act as independent companies

with ‘‘proxy boards’’ in place to ensure that only the tie to the parent corporation

is the distribution of revenue.

Question 4. Alutiq LLC was recently awarded the security contract at Idaho National Engineering and Environmental Laboratory. Why was the contract for such

a sensitive site awarded to a company with limited previous experience as a security

provider? Is it DOE policy to award security contracts for such sensitive sites noncompetitively? If not, why was this contract awarded non-competitively? Are you

aware that Wackenhut may be added as a subcontractor to this contract on a noncompetitive basis? Is it DOE policy to allow such subcontracts to be awarded noncompetitively? If not, then what will you do to ensure that Alutiq competes the subcontract?

Answer 4. No contract has been awarded; however, the U.S. Department of Energy is committed to increasing the contracting opportunities awarded to small and

disadvantaged businesses. The Small Business Act specifically allows for qualified

small businesses to be awarded contracts non-competitively and we believe this to

be an important element in our overall strategy in increasing business opportunities

for small businesses in the United States. However, contracting for security expertise must be accomplished with great care. Thus, while DOE had previously indicated an intention to explore a sole source contract in the context of a small business set aside, I have discussed this issue with the Idaho delegation and I have directed my senior managers to review this matter. I expect to have their recommendation on how to proceed in the near future.

Question 5. Are you aware of three current civil cases filed in U.S. District Court

for the Eastern District of Tennessee emanating from Wackenhut Services’ Oak

Ridge contract and alleging employment discrimination (O’Neal, et al v. Wackenhut

Services, et al; Campbell v. Wackenhut Services; Sheard, et al v. Lockheed Martin,

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et al)? Has your department conducted an investigation of the allegations raised in

these cases? If so, what were the results of the investigation? If not, why not? Has

Wackenhut requested reimbursement for the legal fees and/or settlement charges

incurred in these? If so, for how much, and has the Department granted its request?

Answer 5. DOE is aware of the three named lawsuits filed against Wackenhut in

Federal District Court for the Eastern District of Tennessee. Litigation costs are

being reimbursed pursuant to two contracts with DOE (one contract with the NNSA

Y-12 Site Office and the other with the Oak Ridge Operations Office). The two

Wackenhut contracts are Time & Material contracts governed by the allowable cost

provisions of the FAR. The Wackenhut legal costs are reimbursed if the Contracting

Officer agrees that they are reasonable in amount in relation to the activities required deal with the proceedings and underlying cause of action so long as the costs

are not unallowable under FAR 31.205-47. Neither the FAR nor the contracts require or authorize DOE to ‘‘investigate’’ allegations made in complaints. The total

cost reimbursed to date for the three cases is $57,960.49 under the DOE ORO contract and $394,910.76 under the NNSA Y-12 Site Office contract.

Question 6. For the past 5 years, please list all legal disputes or administrative

complaints brought against Wackenhut related to its work as a DOE contractor. For

each such case, please list the date, DOE site involved, the nature of the case (including the name of the complainant and type of complaint), the resolution (where

applicable) and date thereof, the amount of legal fees and/or settlement charges requested by Wackenhut for reimbursement, and the amount of legal fees and/or settlement charges reimbursed by DOE.

Answer 6. Except for Sheard, O’Neal, and Campbell, DOE ORO and NNSA YSO

are not aware of any legal disputes or administrative complaints brought against

Wackenhut related to its work as a DOE contractor.

DOE Science

Question 1. The Science strategic goal budget, including basic science research,

suffers an overall decrease of 2%, or 2.2% without the use of prior year balances.

Compared to the 4.4% increase in funding for the nuclear weapons budget and the

4.6% increase in the Corporate Management budget, it appears that the Department

is shifting its priorities away from world-class scientific research. Does the Department remain committed to U.S. basic science research? If so, why do the budget priorities not reflect this commitment?

Answer 1. All budgets require difficult prioritization decisions to meet many competing needs in the Department. The Office of Science budget request reflects the

Administration’s continuing commitment to basic research in the Department. When

FY 2004 one time congressionally-directed projects are set aside, the FY 2005 Office

of Science budget increases $72,311,000 or 2.2% to ensure its continuing leadership

in physical science research and its unique research in genomics, climate change,

and supercomputing.

Question 2. Under the Basic Science program, funding supporting the Climate

Change Science Program (CCSP) receives only a 0.6% increase, less than the rate

of inflation. Does this effective cut in funding reflect a pre-conceived belief on the

Administration’s part that Climate Change is not occurring and does not need to

be scientifically investigated? If not, what is the reason for the cuts?

Answer 2. The Administration places a high priority on the basic science needed

to understand climate change. The Department continues to be among the top four

largest supporters of the Nation’s fundamental climate change research. Given the

overall need for fiscal responsibility, difficult choices were made to keep climate

change research funding level.

The President’s request maintains climate research on track to accomplish the

long term objective—deliver improved climate data and models for policy makers to

determine safe levels of greenhouse gases for the Earth system and, by 2013, substantially reduce differences between observed temperature and model simulations

at subcontinental scales using several decades of recent data.

Question 3. Funding for High Energy Physics increases only 0.5%, also less than

the rate of inflation. Does this effective cut represent a weakening of the Department’s commitment to fundamental physical science research?

Answer 3. The Administration recognizes that the physical sciences underpin advancements in all areas of research and maintains its commitment to physical

science research. Construction of the ‘‘Neutrinos at the Main Injector’’ project at

Fermilab is scheduled to be complete in FY 2005, and funding for this project declines, per the planned profile, from $12,426,000 to $751,000, freeing up $11,675,000

for High Energy Physics research and operations of user facilities. Thus, non-construction funding in High Energy Physics increases by 2.1% over the FY 2004 appropriation, providing strong support for operations and improvements at the

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Tevatron at Fermilab and for our continuing commitment to the Large Hadron

Collider project.

Question 4. Advanced Scientific Computing Research funding receives a 1.0% increase, still less than the rate of inflation. According to industry experts, the fastest

supercomputer in the world is currently at the Earth Simulator Center in Japan,

which is between 2 and 3 times the fastest American supercomputer. Does this effective cut in funding for advanced computing mean that the Department is comfortable with the U.S. not having the premier computing facilities in the world?

Answer 4. The goal of the Office of Science is leadership in computational science,

not simply the largest possible computer. We are moving aggressively to improve

the computational hardware capabilities we can provide our scientists. With the solicitation we initiated in February and the budget we submitted for FY 2005, we

should have world-class capability in early 2006. However, leadership in computational science depends on many factors, including raw hardware performance, sophistication of software and algorithms, and the scientific quality of the models

themselves. For example, our Scientific Discovery through Advanced Computing effort has increased the speed of some important applications by factors of 3 to 10.

The investments in computing hardware complement and build on these software

investments. Nevertheless, it is important to note that these computer investments

are made to advance science; and scientific progress, not teraflops, is the metric

with which we should concern ourselves.

QUESTIONS FROM REPRESENTATIVE GORDON

Medical Screening for Nuclear Workers at the X-10 and Y-12 Facilities

The Department of Energy has operated a medical screening program for current

and former workers who are at risk of occupational diseases from exposure to toxic

substances such as radiation, mercury, and solvents at approximately 12 nuclear

weapons sites over the past 6 years. The great thing about this DOE program is

that it is helping people who were put in harm’s way while they worked under

ultrahazardous conditions building weapons for the nation’s arsenal.

I understand Doe plans to start a medical screening program for the production

workers at the Y-12 and X-10 facilities in Oak Ridge. I am pleased that DOE has

taken this long overdue step. Workers at this site are particularly at risk from lung

cancer due to inhaling so many lung carcinogens.

However, I have an unresolved concern. Mr. Secretary, workers in Oak Ridge at

the K-25 facility, in Portsmouth, Ohio in the district of my friend Representative

Ted Strickland, and in Paducah, Kentucky in the district of my friend representative Ed Whitfield all have the benefit of an enhanced lung screening program that

is saving dozens of lives by detecting lung cancer at its earliest stages when tumors

can be removed before they spread. The workers at Y-12 and X-10 will not have this

life-saving technology made available to them, and this is a matter that they have

brought to my attention and the attention of others in the Tennessee delegation.

Question 1. Since these workers are at an increased risk of lung cancer, based on

health studies at these facilities, do you agree that it is an important priority to

assure that workers at Y-12 and X-10 have state-of-the-art early lung cancer screening as part of the DOE’s program?

Answer 1. As a component of its medical screening program for employees of the

Gaseous Diffusion Plants, DOE has offered an additional pilot effort: the use of the

spiral CT scan to check for early signs of lung cancer.

DOE will not be prepared to make a determination on the use of the spiral CT

scan for Y-12 and X-10 employees until a thorough external review has been completed on the costs and benefits of this screening tool in the Gaseous Diffusion Plant

employees. The PACE International Union and Queens College have not yet provided an analysis of CT scan findings in this population that could be shared with

an expert external review group.

DOE’s concerns about the use of the spiral CT scan for this purpose are based

on the fact that it has not been endorsed by any clinical screening standards setting

bodies as an appropriate lung cancer screening tool. A nation-wide National Institutes of Health study designated to answer this question is currently underway.

Question 2. I understand that DOE has allocated approximately $1.4 million for

FY ‘‘05 for the conventional medical screening programs for Y-12 and X-10. I also

understand that the added cost of early lung cancer screening is approximately $1.8

million. DOE has set aside $13.1 million in its budget for the medical screening programs. Could you commit to allocating an added $1.7 million out of that account

to make sure these workers are taken care of?

Answer 2. DOE has allocated approximately $700,000 in the FY ‘‘05 Health budget for the conventional medical screening programs for Y-12 and X-10. If a decision

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were made to proceed with the spiral CT scan following review of its use as a

screening tool, DOE would take appropriate action to ensure that additional resources were made available.

QUESTIONS FROM REPRESENTATIVE ESHOO

Impacts of National Energy Policy on Energy Production and Dependence

Question 1. On March 31, 2004, the White House issued a statement calling on

Congress ‘‘to pass a comprehensive national energy policy that will reduce our dependence on foreign sources of energy.’’ The Department of Energy’s Energy Information Administration (EIA) has reported that the Administration-backed Energy

Policy Act will have ‘‘negligible’’ effect on domestic production and on our dependence on imported fuel. EIA has also said that the bill’s ethanol mandate could add

as much as 8 cents to the cost of each gallon of gasoline. Based on EIA’s analysis,

how will passing this bill reduce our dependence on imported fuel and reduce consumers’ costs?

Answer 1. The transportation sector accounts for nearly 30 percent of total U.S.

energy consumption, and transportation costs have been rising, particularly as the

economy improves. Although the recent fuel price spikes concern the public and the

Administration, it is important to note that such increases have occurred many

times in the past. For instance, during 2000, fuel prices rose by 30 to 40 cents a

gallon from 1999 prices.

With regard to EIA’s analysis, the Department believes that the gasoline price differential of the energy bill reflected in the EIA analyses does not accurately portray

what is likely to happen. EIA’s base case analysis includes MTBE bans for only 17

States, while the Department believes that MTBE will essentially be banned for all

gasoline after these State bans go into effect. Including this one assumption in EIA’s

base case would change the results of the energy bill analysis substantially. If one

were to also include the likely extension of the ethanol tax credit (or some incentive

similar in effect), one would effectively eliminate the entire gasoline price differential between the two cases. Additionally, the EIA analysis does not consider regional

or local price volatility that may occur during transitions from MTBE due to State

actions.

The Administration believes that the passage of comprehensive energy legislation,

coupled with the implementation of the recommendations of the President’s National Energy Policy (NEP) by the Executive Branch, will provide balanced longterm measures to address the domestic energy situation. We are pleased that many

NEP recommendations requiring Congressional action are included in energy legislation currently pending in Congress. For instance, provisions promoting greater energy efficiency and increased emphasis on energy technologies are included in pending comprehensive energy bills. Implementation of such approaches would help

make transportation fuels more affordable.

Unfortunately, some NEP recommendations, such as opening a small portion of

Alaska’s coastal plain to environmentally responsible oil and gas exploration and development, are not included in pending bills, such as the H.R. 6 Conference Report.

Hampering our ability to responsibly develop America’s domestic energy resources

will only contribute to our continued reliance on insecure foreign sources of energy

and contribute to price volatility.

The Administration continues to urge Congress to finish the job of passing comprehensive energy legislation, which, together with ongoing administrative implementation of NEP recommendations, would improve the Nation’s energy and economic security.

MTBE ‘‘Safe Harbor’’ Provision

Question 2. The main reason that the Conference Report on the Energy Policy Act

is being filibustered by a bipartisan group of Senators is the inclusion of a ‘‘safe harbor’’ provision that exempts the producers of MTBE from liability. Does the Administration support the MTBE ‘‘safe harbor’’ provision?

Answer 2. The Administration has not stated a position on this issue. Whether

the comprehensive energy bill should contain an MTBE ‘‘safe harbor’’ provision and,

if so, what that provision should say are issues on which the House and the Senate

are going to have to work together to reach a compromise. The MTBE liability issue

arose during Congressional consideration of the comprehensive energy legislation,

and was not part of the President’s National Energy Policy.

Administration Position on SUV Tax Loophole for Small Businesses

Question 3. The 2003 tax cuts expanded a tax loophole that allows businesses to

claim a tax deduction for the purchase of SUVs weighing more than 6000 pounds.

Under the 2003 tax law, the deduction was increased from $25,000 to $100,000. The

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deduction for all other passenger vehicles is currently just over $10,000. The Joint

Committee on Taxation estimates that between 2003 and 2012 the SUV subsidy will

cost taxpayers $1.26 billion. Does the Administration support retaining the subsidy?

Would it support treating large SUVs the same way other passenger vehicles are

treated under the tax code?

Answer 3. The Administration supports the higher allowable dollar limit on expensing of small business investment costs, as enacted in the Jobs and Growth Tax

Relief Reconciliation Act of 2003. In its FY 2005 Budget, the Administration proposed making the new small business expensing limit permanent in order to encourage small business investments and to support tax simplification. The expensing of

large SUVs under this provision is a consequence of the inapplicability of the special

limits imposed on depreciation and expensing deductions for passenger automobiles.

This has been a longstanding issue that predates the latest expansion of the small

business expensing limit. The Administration is willing to work with the Congress

to arrive at a workable and fair policy in this area.

Office of Science

Question 4. Investment in basic science at the Department of Energy has stagnated and, in fact, declined in the face of inflation over the past several years. As

a result, the U.S. is at risk of losing its leadership role in the areas of physical, biological and environmental science. Will the Administration commit itself to substantially increasing funding for the Department of Energy Office of Science?

Answer 4. The Administration recognizes the importance of basic science at the

Department and in other agencies. The needs of the Office of Science have been balanced among many other competing needs within the Department. I appreciate your

support for these important programs, as funding for basic science is one of my personal priorities. I outlined an aggressive path to ensure America’s continued leadership in the physical sciences when I announced the Facilities for the Future of

Science: A Twenty-Year Outlook last November. As you know, however, many meritorious programs are competing for funding in a highly constrained budget environment, so I cannot prejudge the end result of this process. As budgets are developed,

it is up to the Administration and the Congress to determine where and how available resources will be allocated.

QUESTIONS FROM REPRESENTATIVE WYNN

Question 1. The FY 05 budget contains funding for the hydrogen programs to

reach key milestones in the hydrogen fuel initiative. What sort of funding obstacles

could stand in the way of reaching those milestones.

Answer 1. Three funding obstacles could stand in the way of reaching key milestones for the hydrogen fuel initiative:

1. Earmarks, especially where the recipient is identified, hurt our ability to competitively award research funding to organizations/persons with the best ideas and

capability. Approximately half of the FY 2004 Hydrogen Technology funding in

the Energy and Water Development appropriation is for Congressionally-directed projects, which eliminated the Department’s ability to fund any new research projects to overcome technical and economic barriers related to hydrogen

storage, production, delivery, infrastructure, and safety. Because of these earmarks, funding of three competitive solicitations in hydrogen production and delivery, storage, and infrastructure has been delayed until FY 2005 (subject to

congressional appropriations). This slips most of our interim milestones approximately one year, but it is too early in the program to slip the 2015 commercialization decision. However, additional earmarks in the FY 2005 appropriation

will cause further milestone delays and potential slippage of the 2015 decision.

2. An appropriation significantly below the FY 2005 request of $227 million would

have the same effect as described above. Additional slips in key milestones will

occur and the 2015 commercialization decision may be delayed.

3. A Continuing Resolution (CR) would prevent the Department from ramping up

research toward key milestones as planned. The Department’s FY 2005 request

for the Hydrogen Fuel Initiative of $227 million represents an increase of $68

million to expand research and development activities to meet technical targets

for the 2015 commercialization decision. A CR at the start of FY 2005 would

likely require us to operate at steady-state, i.e. at the FY 2004 appropriation

level of $159 million.

Question 2. Key barriers in the area of hydrogen storage and production need to

be used crossed before a hydrogen economy is a reality. What steps is the Department of Energy taking to ensure that colleges and universities train capable engineers and scientists who can help us cross those barriers?

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Answer 2. In the very near future, the Office of Energy Efficiency and Renewable

Energy will announce awards under two high priority solicitations for hydrogen

technology research and development. Approximately 30-40 projects (more than half

of the total awarded) will be awarded to universities through the ‘‘Grand Challenge’’

Solicitation for Hydrogen Storage. The Hydrogen Production and Delivery research

solicitation also included a special category developed specifically for universities.

Funds awarded under both of these solicitations will support graduate student research and post-doctoral research fellowships.

In conjunction with the State Technology Advancement Collaborative, DOE has

awarded funds to universities to create hydrogen technology learning centers. The

2004 projects involve three university partnerships—

(1) University of California at Davis, Rochester Institute of Technology, San Diego

Miramar College, and the Florida Solar Energy Center;

(2) University of Maryland and Virginia Polytechnic Institute; and

(3) North Carolina A&T State University, University of South Carolina, University

of Georgia, and University of Florida.

Each team is expanding its hydrogen and fuel cell activities and developing course

materials for their university students, as well as creating a ‘‘center’’ in which members of the local community, from school children to business executives, can learn

more about the hydrogen vision and fuel cell technology.

In addition, this year the Department partnered with the National Hydrogen Association and ChevronTexaco to hold the first annual hydrogen fueling station design contest for universities. Student teams developed the technical specifications;

conducted safety, economic, and environmental analyses; and created an education

and marketing plan for a hydrogen fueling station. Seventeen teams from the

United States and Canada submitted entries. The winning teams will be announced

at the 15th Annual Hydrogen Conference and Expo in Los Angeles on April 27. The

contest engages students from a variety of disciplines—engineering, architecture,

business, and marketing—in the hydrogen economy. It also provides opportunities

for students to have direct contact with the hydrogen industry, as well as for industry to experience students’ creativity.

DOE also manages the Graduate Automotive Technology Education (GATE) Program for universities. A new solicitation is expected this year, with funds to be

awarded in fiscal year 2005, to support curriculum development and graduate student research. The GATE Program supports fellowships and curriculum in a broad

range of advanced automotive technologies that will reduce the dependence of the

Nation’s personal transportation system on foreign oil and minimize harmful vehicle

emissions. We anticipate that hydrogen and fuel cells will be a major area of interest.

Question 3. Mr. Secretary, I am quite concerned about the lapse in authority for

the Energy Savings Performance Contract Program, a program that encourages the

public and private sectors to work together to make federal facilities more energy

efficient. The project has not been included in the latest version of the Energy bill

due to Congressional Budget Office’s score of the program. It is my understanding,

however, that the program has no budgetary impact. Does the Administration

‘‘score’’ this program? Why or why not?

Answer 3. The Administration strongly supports enactment, as soon as possible,

of legislation to extend the authority for Federal agencies to enter into Energy Savings Performance Contracts (ESPCs). We believe the legislation itself extending

ESPC authority should be considered budget neutral. The energy efficient technologies installed with ESPCs are paid for completely by private companies who

then recoup their investment and profit through the government’s energy bill savings resulting from the use of these technologies. The Office of Management and

Budget classifies all budget authority and outlays for ESPCs as absorbing discretionary resources.

Question 4. In Maryland, the average gasoline price is at a record high of $1.73

per gallon for regular unleaded. Analysts predict that prices will continue to increase over the next several months.

Last year, I proposed an amendment to the energy bill to boost funding [by $5

billion] for hydrogen fuel cells research and development and demonstration projects

to make hydrogen fuel cells cars a reality by 2010. However, the amendment was

rejected because my friends on the other side of the aisle rejected the amendment

at too costly. Is the Administration prepared to endorse my plan to wean U.S. drivers off gasoline and into an era of hydrogen-powered cars?

Answer 4. The Department worked with industry, academia, and other stakeholders devoting an entire year to developing a hydrogen roadmap—a realistic plan

to overcome the barriers and identify the paths forward to a hydrogen economy. The

Department studied the problems and examined several strategies, including a more

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aggressive plan with an earlier commercialization date. Our analysis showed that

the more aggressive path would be much more costly, and also more risky, because

it would not allow adequate time for the necessary research, development and demonstration learning cycles.

Our planning indicates that a 2015 commercialization date, assuming our budget

requests are fully funded and unencumbered by earmarks, is an ambitious but

achievable target. If, after early investments and a review of our progress, we conclude that it is possible to accelerate our efforts—we will. We will seek the funds

needed to do so, but only after we can ensure that additional resources will be spent

responsibly, and that we maintain a high probability of success. In the interim, promoting hybrid vehicles and other fuel-efficient cars is an excellent strategy to reduce

U.S. demand for foreign oil, and to develop the electric-drive technologies that will

eventually also be needed for fuel cell vehicles to be successful in the future.

Refining Capacity

Question 5. Currently, oil refineries are running at about 95 percent, or near capacity. If there is a disruption in the country’s refining production, prices are likely

to rise significantly. What is the Administration doing to increase refining capacity

so that we can avert price spikes?

Answer 5. The President’s National Energy Policy contains a number of recommendations to address refinery capacity, and supply and price of transportation

fuels for our economy. For example, the Administration has proposed and finalized

rules to make the New Source Review program work more efficiently and effectively.

These revisions have been challenged in the courts, however, and the effective date

for some of the revisions has been stayed. We believe that reforming the NSR program is important because it will provide greater certainty for the investment needed to modernize and improve the efficiency of our refining system.

Price spikes are typically caused by supply disruptions. In the case of any supply

disruption, the Administration will assess the situation and act, as warranted by

the situation and consistent with DOE’s legal authorities, to alleviate any restrictions on supply.

QUESTION FROM REPRESENTATIVE GREEN

Deliveries to the Strategic Petroleum Reserve

Question. Since last summer DOE has nearly tripled the rate at which the SPR

is filled: from 60,000 barrels per day in June, 2003 to 170,000 in March 2004. Over

this period, oil prices have risen and stayed at near record highs.

Major combat operations in Iraq ceased on May 1st, 2003, before SPR shipments

dramatically increased, so it would seem that the urgency to fill the SPR would

have lessened, rather than increased since then.

Since OPEC’s member states are notorious for cheating on their production

quotas, we should not give them too much credit for being able to adjust their production to accommodate SPR shipments.

Right now we have an immediate problem on our hands of extremely high gasoline prices, in large part because of high oil prices. I’m also concerned with releasing

oil from the SPR to manage price, but I think that Administration should reduce

deliveries, and put that oil into the market to take the pressure off.

How does the Administration explain DOE’s policy of increasing the SPR fill rate

to 170,000 plus barrels per day when crude prices remain at near record highs?

Is the option of ceasing or significantly reducing deliveries totally off the table for

this Administration?

Answer. The SPR is being filled primarily by the transfer of royalty oil from Federal offshore leases in the Gulf of Mexico. The rate of transfer is determined through

agreements reached with the Department of the Interior (DOI), which administers

Federal offshore leases and the collection of royalty payments. After November

2001, when the President directed that the SPR be filled to its 700 million barrel

capacity, the Department of Energy (DOE) and DOI negotiated an initial fill rate

of 60,000 barrels per day for a period of one year, with an eye on increasing the

volumes of royalty transfer oil in subsequent contract periods as DOI identified additional candidate leases to include in the program. The volumes increased to about

100,000 barrels per day, and then to about 115,000 barrels per day. For the period

April 1, through September 30, 2004, the rate is expected to be about 105,000 barrels per day. The daily figure referred to in the question is the actual volume being

delivered to the SPR and is a combination of new transfers from the Department

of the Interior to Energy plus shipments that had been deferred during 1999, 2000

and 2001. As of May 2004, all oil owed to DOE due to previous deferrals will have

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been received, and deliveries will reflect only the current contracted volumes of

about 105,000 barrels per day.

Although we are concerned about the Nation’s economy, we believe that filling the

SPR at these rates has only minimal impact on the market price of oil, especially

when compared with world production of 80 million barrels of oil per day. We also

believe that in a world where we continually see acts of terror aimed at disrupting

the world’s oil industry, the national security priorities of filling the SPR take precedence. We are filling at a modest rate and in a deliberate and transparent manner

that serves to maintain stability in markets, especially when compared with the

speculation which would be created if the Department of Energy were entering and

exiting the market in reaction to changing conditions. It is our intention to continue

filling the Reserve at a moderate rate until it reaches an inventory of 700 million

barrels in 2005.

QUESTION FROM REPRESENTATIVE STRICKLAND

Question. According to press reports and the GAO’s testimony in the Senate at

the end of March, it appears that DOE’s performance is lagging the Department of

Labor (DOL) in implementing the Energy Employees Compensation Program. Specifically, DOE has spent approximately $74 million on its responsibilities under this

compensation program and only one claim to date has been paid out of 23,000 filed.

Moreover, DOE has processed fewer than 2% of the claims it has received through

the physicians’ panels who evaluate causation.

By contrast, the DOL has paid out $800 million in benefits and medical care and

has processed over 95% of the claims within its area of responsibility under a separate title of EEOICPA—Subtitle B dealing with radiation-related cancers, beryllium

disease and silicosis.

Last year DOE told this Committee (March 5 hearing) it would speed claims processing, in part, by developing site profiles of toxic exposure at these nuclear sites

and use these generic assessments to expedite processing.

At the March 30, 2004, Senate Energy Committee hearing, it is my understanding

that the Under Secretary of Energy stated that DOE had decided not to perform

site profiles for speeding claims processing because it does not make sense from a

cost-benefit perspective. Thus, last year’s path forward has been discarded and a

new path forward has been proposed. In the meantime, paltry progress has been

made on the DOE’s caseload, and the commitments made last year before this Committee to move 100 claims per week through the DOE’s physicians’ panels have not

been honored. Indeed, DOE has only moved approximately 400 claims through its

doctors’ panels in the past 3 ° years since the law was enacted. And, it still remains

that many claims will never be paid because DOE lacks a willing payer.

Given the difficulties faced by the DOE, and the earnest desire of many members

to transfer this program to DOL so help can be provided to sick nuclear workers,

please advise why DOE opposes the transfer of this entire program to the Labor Department.

Answer. The Department opposes the transfer to DOL, because the problems we

have experienced in the Part D program will not be solved by moving to it to DOL.

DOE must still perform the field data collection, which requires the most time and

can be the most costly part of case development. Further, under the current statutory requirements, the most significant bottleneck—the Physician Panel process—

will not be improved by moving the program to DOL. In fact, unless other changes

are made to the law, a transfer to DOL would, at a minimum, halt case production

for several months. A transfer to DOL also would not address the issues raised regarding ‘‘willing payer’’ as these issues are created by the statutory language and

the contractual relationships between DOE and its contractors.

While the Department had a slow start, DOE has substantially improved its process, and has demonstrated the ability to successfully ramp up its processes. Physician Panel determinations have increased nine-fold (3 to 28) over the last six

months and case processing up to the Physician Panels has increased over threefold (35 to 115).

The Department has instituted a series of reforms to improve its performance,

highlights of which include:

• the revisions to DOE’s regulations which were issued as an Interim Final Rule

on March 17, 2004. The revisions are expected to double the productivity of the

Physicians Panel process;

• a reprioritization of work on Part D applications so as to expedite the processing

of the greatest number of cases and move to the front of the queue those applicants we believe are most likely to receive the greatest benefit from the Part

D program;

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• an aggressive, and multi-agency coordinated set of initiatives to recruit physicians; • proposed legislative changes to amend the EEOICPA statute to eliminate the pay

cap on physicians serving on Physician Panels and expand hiring authority for

them; and • Additional budget: Congress approved $23.3 million of the requested $33.3 million

appropriations transfer. These funds will provide for additional contractor support, staff and other resources needed to increase the rate of case processing

and Panel determinations.

For several reasons, we believe it is potentially misleading to compare the $74

million in appropriations to the number of cases processed through the panels to

date and the number of cases for which the applicants have received monetary compensation through the State workers compensation system. First, it is important to

understand that Part D does not authorize the Department of Energy to directly pay

claims. Rather, under Part D of the EEOICPA statute, State workers’ compensation

processes determine final compensation and DOE simply provides assistance to applicants in that process. Second, since the beginning of the program in FY 2001

through March 31, 2004, DOE has expended $58.3 million for the program. Besides

start up activities such as developing Rules, procedures, and electronic databases,

the DOE program has also:

• Processed over 40,000 employment verifications for DOL’s Part B Program;

• Researched and provided to NIOSH over 17,000 radiation exposure records, again

for the Part B program;

• Initiated work on over 15,000 Part D applications;

• Prepared for Physician Panel review over 3,500 Part D cases, essentially completing all DOE work for these cases; and

• Totally completed over 2400 Part D cases with final results sent to applicants.

Finally, with respect to site profiles, at the March 30, 2004, Senate Energy and

Natural Resources hearing on EEOICPA, the Under Secretary stated the rationale

for this decision:

. . . the term site profile is not clearly defined, but for the advocates of that, I

would say we have not yet engaged in a site profiling program. Our sites have

much information available, historical information, as to what contaminants existed in what buildings. We have not yet found there to be a cost benefit in our

opinion of conducting site profiles for the applicants that we’re looking at, because it would require diversion of substantial resources from the problem that

we’ve highlighted here [acquiring the resources to eliminate the backlog] into

that activity, and we don’t want to do that until we’re sure that there’s going

to be some payoff to the workers for doing that.

As the Under Secretary stated, there is no clear agreement about what constitutes

a ‘‘site profile’’ for the Part D program given the extreme breadth of illnesses and

potential agents. The Department’s analysis raises several questions and issues

with regards to site profiles for Part D. Data is unlikely to exist that would significantly improve the site data currently provided to the Physician Panels. Significant

technical hurdles exist in determining the data required for future determinations

and packaging this data to be useful in a majority of the cases the Physician Panels

review. In addition to the data and technical hurdles, the latest estimate for the cost

is $20 million or nearly half of the Part D FY05 proposed budget. This cost would

not only divert resources from providing our applicants with determinations but

would also lead to a significant delay in eliminating the backlog. In general, jobexposure matrices can be exceptionally difficult, labor intensive, and expensive, if

they are scientifically feasible at all.

QUESTIONS FROM REPRESENTATIVE DOYLE

Question 1. As a co-chair of the Distributed Generation Caucus I have seen the

tremendous advances in technologies ranging from stationary fuel cells to hydrogen

fuels and other sustainable and pollution free advances that we will be able to obtain in the near future. In your budget you slash funding for critical base programs

such as DOE’s core R&D programs. Why do you put such focus on unproven and

undeveloped technologies of the future at a primary cost to the continued development of technologies that will not only help us in the short term, but will bridge

the technological gap to attaining your long term goals?

Answer 1. In the case of distributed generation technologies, our FY 2005 request

has actually increased over the FY 2004 request. This is also true for our total renewable energy portfolio. The Office of Energy Efficiency and Renewable Energy

(EERE) funds a diverse portfolio of research and development (R&D) programs that

are designed to address the Nation’s short-, mid-, and long-term energy needs.

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Our longer-term research focuses on high-risk, high-reward activities because of

insufficient private investment in these areas. The large potential public benefits of

these technologies, including energy security and economic growth, warrant Federal

investment. The Department’s investment in hydrogen and fuel cell R&D stands out

as an example of the Federal government’s resolve to advance high-risk technologies

that have the potential to transform our energy and transportation infrastructure

and provide security, environment and health benefits for future generations.

Clean Coal, in relation to FutureGen and R&D cut

Question 2. Given the administration’s often stated goal of using clean coal as one

of the core pillars that will lead to national energy self-sufficiency, I find it hard

to believe that central programs to develop this resource have been cut by over 42%

in your current budget with even more funds being diverted to fund the conceptual

FutureGen program. Can you explain to me the benefit of slashing proven clean coal

programs, which have made notable strides in recent years, in favor of FutureGen,

a new, unproven and certainly untested concept?

Answer 2. The coal research funding request for FY 2005 is a balanced approach

that is expected to yield the most benefits, both near term and long term. DOE’s

coal research program integrates the base research and clean coal power initiative

(CCPI) (of which FutureGen is a part) on a technology roadmap that leads us to

an affordable, zero emission coal energy option. The budget request provides for critical research and demonstration of such research (when sufficiently mature) in the

CCPI projects. The Administration’s request also provides for a second round of

CCPI projects aimed at nearerterm commercial deployment. At the same time the

funding request provides for critical supporting research efforts to reduce risks and

costs for achieving the goals for FutureGen

FutureGen

Question 3. As I talk to my colleagues, members of industry, and my constituents,

I have found that one central issue continues to arise in regard to FutureGen. Simply put, it is a concept and goal without a clear plan that will lead to that goal being

achieved. Can you tell me when we can expect to see a clear and comprehensive

plan for the FutureGen program that takes in account not only the future funding

needs but the specific means by which you hope to achieve its technological goals?

How will we get to and what is the overall projected cost of this concept?

Answer 3. The FutureGen program plan was submitted to Congress on March 4,

2004. This report presents a clear and comprehensive plan for the FutureGen program, describing both the funding needs and the technical approach to meet the

FutureGen objectives. Specific technical performance parameters and goals are detailed in the plan. The report describes the Department’s intended path forward in

a joint government-industry FutureGen partnership, although the details of such a

partnership and the resultant path forward are subject to negotiation with a qualifying industry consortium.

As detailed in the plan, the overall projected cost for the FutureGen project is $950 million. DOE expects to contribute $500 million directly to the FutureGen

project, and $120 million will be funded through its Carbon Sequestration research

and development program. DOE will use its best efforts to achieve or exceed a minimum 80/20 cost share for the $120 million R&D from partners outside the consortium. International contributions to the FutureGen project are expected to be $80

million. As stated in the FutureGen report to Congress, DOE expects its industrial

consortium partners to contribute $250 million in cost sharing to fund the

FutureGen project.

FutureGen #2

Question 4. Since it was first proposed, FutureGen has received what I would describe as a mixed and skeptical response from the same industries who will need

to become active partners if the program will even have a chance to get off the

ground, let alone meet its stated goals. What specific actions can we expect to see

in the near term, other than diverting funds from core R&D programs, which will

help the program achieve its long-term objectives?

Answer 4. FutureGen was announced as a Presidential initiative on February 27,

2003. Since then, FutureGen has received strong support from states, industry, the

international community, and several environmental groups. In response to DOE’s

Request for Information in April of 2003 on the FutureGen initiative, a consortium

representing a broad cross section of the coal industry, comprised of companies that

generate over one-fifth of the coal -based electricity and produce over one-third of

the coal in the U.S., indicated an interest and willingness to partner with the government in this initiative. Congress appropriated $9 million for FutureGen in FY

2004. A FutureGen program plan was submitted to Congress on March 4, 2004, and

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presents the milestones, schedules and funding requirements to achieve the longterm objectives for FutureGen. In FY 2004, DOE plans to start the NEPA process,

enter into negotiations with the industry consortium, and proceed with the development of site selection criteria and process, and start preliminary design for

FutureGen.

Gas Hydrates

Question 5. Over the past decade, the US market for natural gas has grown tremendously due in large part to policies that Congress and the last two administrations have promoted. One aspect of this national demand is LNG, liquefied natural

gas, whose imports are expected to constitute an increasing proportion of our total

natural gas supply. Furthermore, if we can locate only 1% of gas hydrates we would

more than double America’s intake of natural gas. Can you explain to me why the

Administration has under-funded a program like gas hydrates whose potential is almost endless? And, do you foresee that programs such as this one will continue to

be under-funded despite the incredible potential they could achieve?

Answer 5. The FY 2005 budget request for hydrates is adequate and supports a

portfolio of R&D projects consistent with the program’s goals and the Administration’s R&D Investment Criteria. Although the FY 2005 Hydrates budget request is

below the FY 2004 appropriation, the requested $6 million is above both the FY

2003 and FY 2004 requested levels. . In FY 2004 and FY 2005, the Hydrates program will focus on ongoing joint projects in assessing the potential resources in the

Gulf of Mexico and in Alaska.

QUESTION FROM REPRESENTATIVE GONZALEZ

Natural Gas

Question. In view of the importance of natural gas for providing affordable, clean,

domestic energy for traditional heating and electric power applications, and the

most realistic source for hydrogen as we move toward a hydrogen economy, why

does the department’s FY 2005 budget request reduce the Natural Gas Technologies

budget for FY 05 to $26 million, $17 million below its $43 million FY 04 appropriation, cuts the Gas Hydrates Program by $3.4 million below the FY 04 level of $9.4

million, and provides no funding for the Natural Gas Infrastructure program ?

Answer. The Administration’s FY 2005 budget request for natural gas research

is at the same level as the FY 2004 request. In addition, the natural gas exploration

and production budget request and the gas hydrates budget request are above the

level in the FY 2004 request. The Department believes that this is the appropriate

level based on the priority placed on addressing the growing demand for clean energy with a portfolio of research in Clean Coal, LNG, Clear Skies, renewables, conservation and more.

Additionally, the natural gas program budget reflects the Program Assessment

Rating Tool (PART) scores, which rated this program as ineffective for the past two

years, although the scores improved from FY 2004 to FY 2005. However, the Department is committed to improving performance and is taking active steps to improve project planning and measuring effectiveness. We are in the process of an oil

and gas strategic planning initiative and are working with external groups to improve our benefits measures.

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