U.S. GOVERNMENT PRINTING OFFICE

55–148CC WASHINGTON : 1999

DEPARTMENT OF ENERGY’S PROPOSED BUDGET

FOR FISCAL YEAR 2000

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER

OF THE

COMMITTEE ON COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

FEBRUARY 24, 1999

Serial No. 106–54

Printed for the use of the Committee on Commerce

(

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COMMITTEE ON COMMERCE

TOM BLILEY, Virginia, Chairman

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

MICHAEL G. OXLEY, Ohio

MICHAEL BILIRAKIS, Florida

JOE BARTON, Texas

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

Vice Chairman

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

BRIAN P. BILBRAY, California

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

CHARLIE NORWOOD, Georgia

TOM A. COBURN, Oklahoma

RICK LAZIO, New York

BARBARA CUBIN, Wyoming

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

JOHN D. DINGELL, Michigan

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RALPH M. HALL, Texas

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

RON KLINK, Pennsylvania

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

THOMAS C. SAWYER, Ohio

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

THOMAS M. BARRETT, Wisconsin

BILL LUTHER, Minnesota

LOIS CAPPS, California

JAMES E. DERDERIAN, Chief of Staff

JAMES D. BARNETTE, General Counsel

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

SUBCOMMITTEE ON ENERGY AND POWER

JOE BARTON, Texas, Chairman

MICHAEL BILIRAKIS, Florida

CLIFF STEARNS, Florida

Vice Chairman

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

ED WHITFIELD, Kentucky

CHARLIE NORWOOD, Georgia

TOM A. COBURN, Oklahoma

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

ED BRYANT, Tennessee

ROBERT L. EHRLICH, Jr., Maryland

TOM BLILEY, Virginia,

(Ex Officio)

RALPH M. HALL, Texas

KAREN MCCARTHY, Missouri

THOMAS C. SAWYER, Ohio

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ALBERT R. WYNN, Maryland

TED STRICKLAND, Ohio

PETER DEUTSCH, Florida

RON KLINK, Pennsylvania

JOHN D. DINGELL, Michigan,

(Ex Officio)

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C O N T E N T S

Page

Testimony of:

Moniz, Ernest, Under Secretary of Energy; accompanied by Michael

Telson, Chief Financial Officer, Department of Energy ............................ 11

Material submitted for the record by:

Department of Energy, responses for the record ........................................... 57

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DEPARTMENT OF ENERGY’S PROPOSED

BUDGET FOR FISCAL YEAR 2000

WEDNESDAY, FEBRUARY 24, 1999

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

The subcommittee met, pursuant to notice, at 10 a.m., in room

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

presiding. Members present: Representatives Barton, Stearns, Largent,

Whitfield, Norwood, Rogan, Shimkus, Wilson, Pickering, Bryant,

Ehrlich, Bliley (ex officio), Hall, McCarthy, Wynn, Strickland, and

Klink.

Staff present: Kevin Cook, science advisor; Donn Salvosa, legislative clerk; Sue Sheridan, minority counsel, and Rick Kessler, minority professional staff. Mr. BARTON. The subcommittee will come to order.

The Chair notes the presence of a quorum. We’re going to go

ahead and begin, and hopefully, we will have Mr. Hall or one of

our minority members appear before our opening statements are

concluded.

Today’s hearing is on the Department of Energy’s proposed budget for fiscal year 2000. This morning, we’re going to examine the

Department of Energy’s budget request. The Department of Energy

has a wide-ranging set of missions, from cleaning-up contaminated

sites here in the United States, to ensuring the reliability of our

nuclear arsenal, to conducting the research and development to

bring our energy systems into the 21st century. We have a number of energy issues that are important to the

subcommittee. We need to see if the Department’s proposed budget

reflects the interests and priorities of the Congress and this particular subcommittee.

It’s probably too much to expect that we’re on identical courses,

but it’s reasonable to expect that we’re on parallel tracks moving

in the same directions. If our paths diverge significantly based on

this hearing, then we’ll have to take the appropriate steps in conjunction with the Department. At the top of the subcommittee’s priority list is nuclear waste.

Spent fuel continues to accumulate at reactor sites around the

country. Potential liability of the Federal Government continues to

grow because of the Department’s failure to take acceptance of that

waste, and the Department still says that the earliest it can expect

to open a permanent repository is the year 2010. That is simply unacceptable. Just 2 weeks ago, we held a hearing on H.R. 45, legislation that

would accelerate acceptance of spent fuel by establishing an interim storage facility. H.R. 45 would protect consumers by halting

the diversion of ratepayer fees into other Federal programs, and it

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would strengthen the permanent repository funding by ensuring a

funding stream that matches project requirements.

To this date, the Department does not support H.R. 45, and the

President has indicated that he will veto this legislation. The administration apparently takes this position because it believes that

an interim storage will somehow jeopardize the Department’s efforts on a permanent repository.

The Chair does not share the Clinton administration’s view on

that particular issue. I think it’s time that we shed some light on

the status of the permanent repository. Several of our witnesses 2

weeks ago expressed a lack of confidence whether the Department

could really meet its promised 2010 date for opening the repository.

It turns out that that lack of confidence appears to have been well

placed.

It is the Chair’s understanding that the Department’s basic repository program faces serious funding shortfalls. At historical

funding levels, and with the existing caps in place on the fees collected from the ratepayers, the Department of Energy will not have

sufficient funds to open the repository in the year 2010. Meeting

the 2010 schedule will require some real budget sleight of hand

and some very rosy assumptions regarding future appropriations.

The DOE assumes that they will be able to tap into 100 percent

of the fees collected from the rate payers, when in recent years

they have been to access only approximately 15 percent of those

fees. The Department also assumes a 150 increase in Defense contribution to the repository. I think this last assumption is not wellfounded.

Based on the above information, it looks like the only thing that

will be open in 2010 is, unfortunately, the wallet of the Federal

taxpayer, since the Department will be paying out billions of dollars of damages since they haven’t taken control of the repository.

I intend to explore this problem in more detail in the question

and answer period, but I am troubled to learn that the repository

program does not rest on a firm financial foundation. I am hoping

to hear from Secretary Richardson in the near future, both on the

funding problem, and to learn whether he has a constructive alternative to offer in lieu of H.R. 45.

I am also concerned about the approach to energy security, as reflected in the Department’s budget request. In terms of real prices,

oil is cheaper now than it was just before the oil crisis in the mid1970’s, and by some calculations, may be as cheap as the 1950’s

and early 1960’s. The impact of these low prices may be of only

academic interest to those here inside the Beltway; but to Mr. Hall

and myself, who come from an oil-producing State, we know very

well what impact these low prices have on the people in the oil-producing regions of the country.

Our reliance on cheap imported oil continues to grow, and we

run the risk of losing some of our essential domestic capability to

locate and develop new oil and gas resources. I am pleased that we

are no longer selling off oil from the strategic petroleum reserve,

and will be interested in what other measures the Department is

taking to improve our energy security. I note that our lead witness

did bring a handout on that problem, and I’ll certainly take a serious look at that booklet.

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The Department’s budget request is in many ways a reflection of

its ability to manage and oversee its programs. As Chairman of the

Subcommittee on Oversight and Investigations in the last Congress, I reviewed several DOE programs in detail. I held hearings

to review privatization contracting at Pit 9 and at Hanford. The delayed cleanup of spent nuclear fuel is stored dangerously close to

the Columbia River at the Hannaford site. The Office of Environmental Management’s failure to employ innovative environmental

technologies which could have saved taxpayers $20 billion in cleanup costs.

We also looked at problems with performance-based incentive

contracting and the Department’s questionable funding of molten

metal technology.

At each of these hearings, the subcommittee identified poor management by the Department that resulted in additional cost to the

taxpayers. This year, as we review the DOE budget, we’re going to

be checking to see if the Department is making progress in those

areas.

The committee has a number of other interests, from climate

change, to nuclear energy, to environmental cleanup, and I am sure

that other members will go into those subjects in some detail as

they question our witnesses. We are anxious to learn more about

the Department’s activities. We welcome Dr. Moniz, who has appeared before my Oversight and Investigation Subcommittee on numerous occasions, and look forward to your testimony.

Not seeing Mr. Hall here yet, does Mr. Norwood request an opening statement? Okay. The Chair would recognize Mr. Norwood for

a brief opening statement.

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

this hearing on the Department of Energy’s budget proposal for fiscal year 2000.

As you know, Mr. Chairman, my district is contiguous to the Savannah River site, the most impressive field site in the DOE complex, and roughly 8,000 of my constituents currently work at that

site, which has been a vital part of our community since World War

II. I spent my first few years here in Congress fighting layoffs that

were inevitable as the results of the end of the cold war; and now

I want to make sure that the site is not only properly equipped to

clean up after 40 years of defense buildup, but also is prepared for

any new missions it may be qualified to handle.

On that note, I commend DOE for its wise selection of SRS for

the majority of the plutonium distribution mission that was recently awarded. While I am pleased to see that DOE’s environmental management budget for fiscal year 2000 looks good, and

that the site should not anticipate any major layoffs, I will have

some questions for Dr. Moniz regarding the Department’s recent

selection of a commercial reactor at the Tennessee Valley Authority

to meet our country’s future tritium supply.

My other concerns today, Mr. Chairman, will revolve around the

ongoing saga of the Clinton administration’s unwillingness to accept its responsibility to deal with our country’s spent fuel problem,

and a DOE budgetary proposal to eliminate funding for transmission and power purchases for the power-marketing administrations.

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As you may know, the Southeastern Power Administration is located in my district, and provides power to many of my constituents. Eliminating appropriations for transmission and power purchases will thoroughly disrupt the power supply for many non-profit electric distributors. As a matter of fact, does DOE realize that

its budget proposal could disrupt the power supply of preference

customers in Secretary Richardson’s home State of New Mexico

who are served by its P.M.A.? I hope he’s not planning on running

for Senate any time soon. But, I guess he could always run for Senator Moynihan’s seat.

I do appreciate you making the effort to be with us today, gentlemen, and I look forward to talking with you about these and many

other issues.

Thank you very much, Mr. Chairman.

Mr. BARTON. I thank the gentleman from Georgia. Does the

gentlelady from New Mexico wish to make a brief opening statement? Does the gentleman from Kentucky wish to make a brief

opening statement? And I missed the gentleman from Tennessee,

but we’ll let the gentleman from Kentucky go, and then we’ll get

back to Mr. Bryant.

Mr. WHITFIELD. Thank you very much, Mr. Bryant. Mr. Chairman, I want to thank you for hosting our annual hearing on the

fiscal year 2000 Department of Energy budget proposal. All of us

look forward to hearing from Dr. Moniz about the Department’s

plans to help secure our Nation’s energy future.

I have the privilege of representing the workers at the Paducah

Gaseous Diffusion Plant, 1 of only 2 uranium enrichment plants in

the country. With the privatization of the U.S. Enrichment Corporation, the former government corporation which operated the

Paducah and Portsmouth plants, the future of those workers is

quite uncertain.

The Ohio and Kentucky delegations have been meeting regularly

with DOE staff to ensure full implementation of the provisions of

Public Law 105-204, legislation I introduced with Senator McConnell, to ensure that all amounts accrued on USEC’s books for the

disposition of depleted uranium hexafluoride, will be used to treat

and recycle that by-product by constructing two plants for that purpose—one at Paducah, and one at Portsmouth.

The plan and proposed legislation to implement the law’s provisions to dispose of this uranium were supposed to be set forth in

the fiscal year 2000 budget. While I understand that DOE will soon

put out an Expression of Interest and Request for Proposal, I am

concerned about the amount of time it has taken the Department

to move ahead with full implementation of the provisions of Public

Law 105-204.

Even under the best-case scenario, it’s clear that these plants

will not be up and running in time to mitigate the job losses we

already know are forthcoming, especially with the continued importation of enriched uranium from Russia.

And, of course, Secretary Richardson was in Paducah just a few

months ago, and made the announcement that they would proceed

with those plants, and that it would be a part of the fiscal year

2000 budget—which it is my understanding it is not.

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But we hope to hear more from Dr. Moniz about this issue, and

I hope that you will be able to give us your assurance of DOE’s

commitment to move forward with the full implementation of Public Law 105-204.

With that, I yield back the balance.

Mr. BARTON. I thank the gentleman. We now recognize the gentleman from Tennessee for a brief opening statement.

Mr. BRYANT. I thank the Chair, and welcome our distinguished

panel. In the interest of time, I will simply submit any statement

that I might have for the record.

Mr. BARTON. Thank you. Does the gentleman from California

wish to make a brief opening statement?

Mr. ROGAN. Mr. Chairman, thank you. Very briefly, I want to

thank you for calling this hearing, and just touch on one quick

point.

My one concern in the President’s budget is the DOE’s lack of ac- tivity on nuclear waste disposal. The budget itself provides $370

million for the Yucca Mountain Nuclear Waste Repository project,

but makes this funding contingent upon postponing depositing materials there until the year 2010. As recent court cases have held,

the Department of Energy is responsible for not accepting this

waste by the beginning of the year, per Federal law. Therefore,

funds must be allocated to accelerate acceptance, to avoid liability.

It doesn’t appear that any such provision has been made in President Clinton’s budget.

As there is a good deal of nuclear waste which must be handled

in California, it is key that a repository effort be accelerate for public safety. It may be worthwhile to request an update at some point

on the Department of Energy’s progress on the Yucca Mountain

site. Further, I believe the DOE must make an effort to describe

its long-term plans to make this repository functional.

With that, Mr. Chairman, I thank you again. I yield back the

balance of my time.

Mr. BARTON. I thank the gentleman. The gentleman from Maryland is recognized for a brief opening statement. Okay. The gentleman from Oklahoma, Mr. Largent.

Mr. LARGENT. Thank you, Mr. Chairman. I just want to say that

I’m pleased as I come this morning and see the Department of Energy and Secretary Richardson’s statement on America’s oil, our

strategic resource. We need to make sure that the plight of the domestic oil and gas producers in this country is addressed. It’s an

immediate concern—just last year, the industry itself lost 30,000

jobs; in the 10 years, the number’s approaching a half a million

jobs.

We are losing our ability to produce oil in this country, and it

is a real—it’s not just a colloquial interest for Oklahoma, which I

represent—it’s a national security issue that we have to address.

And so, I look forward to working with the Secretary of the Department of Energy, with this committee, in addressing the real concerns that we have—particularly coming from an oil-patch State—

of losing our ability and capacity to produce oil in this country.

Thank you.

Mr. BARTON. We thank the gentleman. The Chair concurs with

that concern.

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[Additional statements submitted for the record follow:]

PREPARED STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF FLORIDA

Thank you, Mr. Chairman. I appreciate this opportunity to hear more about the

specifics of the Department of Energy’s Fiscal Year 2000 budget.

I understand that the primary mission of the Office of Civilian Radioactive Waste

Management is to develop a permanent geologic repository for the disposal of spent

reactor fuel and high-level nuclear waste. DOE requested $370 million in new budget authority for FY 2000, a modest increase over FY 1999 of $12 million. Still, this

may not be enough money to adequately fund the project at the Yucca Mountain

site. Because the payments of utility ratepayers into the Nuclear Waste Fund are

expected to soon be over $649 million, I would like to know if, in this budget, these

fees will be diverted to other federal programs.

In Florida, we have five nuclear units which provide about 19 percent of the

state’s electricity generation. The benefits of this fuel source are clear: the use of

nuclear energy has reduced Florida’s carbon dioxide emissions by 96.7 million metric tons since 1973.

However, these benefits have not come without a price. Since 1983, consumers of nuclear-generated electricity have contributed over $649 million to the federal Nuclear Waste Fund. This fund was to finance nuclear waste management beginning

in January 1998. However, the Department of Energy’s failure to meet the January

1998 deadline to begin storing used nuclear fuel clearly violates the federal agency’s

contract with electric utilities operating Florida’s nuclear power plants.

I am concerned that this budget revealed little effort on DOE’s part to meet this

obligation. I look forward to hearing more about DOE efforts to address this issue.

Thank you.

PREPARED STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF ILLINOIS

Mr. Chairman, as always, I am delighted to be here this morning. Thank you for

holding this important hearing. I believe it is important for the Congress and the

Administration to sit face to face, at the very least, once a year to discuss how we

are spending the taxpayers dollars. Though we do not always see eye to eye I do

appreciate the good efforts of the Department and its dedicated public servants.

I will have questions regarding our energy security, particularly about the small

oil producers in my district. I am also very concerned about the growing liabilities

to the department regarding commercial nuclear waste. I believe the Department

has lost two court cases recently and I am curious as to how they plan to pay for

these liabilities. I imagine these liabilities will be paid out of the Department’s

budget. Last, but by no means the least, I am also going to be looking for an update

on the Department’s progress regarding Public Law 105-388, which extended several programs under the Energy Policy and Conservation Act. This reauthorization

had language which I drafted in conjunction with Chairman Barton last year to enhance and promote the alternative fuels program established under EPACT. I am

looking forward to this hearing today and I know Dr. Moniz will do his very best

to answer our questions. Good Morning, Dr. Moniz. I yield back, Mr. Chairman.

PREPARED STATEMENT OF HON. TOM BLILEY, CHAIRMAN, COMMITTEE ON COMMERCE

Thank you, Mr. Chairman. This is an important hearing, as it provides our Members with an opportunity to review in detail the Department of Energy’s budget request for Fiscal Year 2000, and it provides the Department with an opportunity to

explain and justify to us the roughly $18 billion dollars that it has requested for

the coming fiscal year. Many of the difficult issues before us in the 106th Congress

deal with energy programs. This budget hearing will help us determine whether the

priorities of the Department are consistent with the priorities of the Congress.

My priorities on energy issues are clear and simple. First, we must move forward

with legislation to open up the electric utility industry to retail competition. Everyone now acknowledges the benefits that consumers will realize from opening our

electricity markets to competition—the question is not whether electricity restructuring is a good idea, but how much of a role the Federal government should play

and how quickly we should proceed with restructuring.

A number of States are already pursuing restructuring, with varying degrees of

success. These are commendable efforts, but not all States are moving forward to

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deregulate their electricity markets with the same enthusiasm. It is becoming obvious that the States cannot do this alone. The States cannot address the interstate

commerce issues that arise in restructuring, nor can they address the host of Federal statutes that define the present Federal role in electricity. To assure a level

playing field, and most importantly, to assure a fair deal for all consumers, Federal

action is required.

I have tasked Chairman Barton to develop legislation that will permit consumers

to choose their electric supplier, that will promote competition among electric suppliers, and will remove existing barriers to interstate commerce in retail electricity

markets. I trust that we will have the full cooperation of the Department of Energy

in our efforts.

My other priority is solving the problem of spent fuel and high-level nuclear

waste. The Department recently released a Viability Assessment that shows us that

the technical problems are solvable. The challenges we must now confront are not

the technical ones—Congress and the Administration must now come to terms with

the financial, legal, and political aspects of this problem.

Under the current DOE plan, the permanent repository will not be able to begin

accepting spent fuel until, at the earliest, the year 2010. That date is, quite simply,

over a decade too late. That is not the deal we made with the American people back

in 1982, when Congress and the President promised that the Federal government

would begin accepting spent fuel starting on January 31, 1998. That date has come

and gone, and we are still here debating this issue. The courts have already spoken

on this question, and have held that DOE has an unavoidable, binding obligation

to take this spent fuel. If DOE persists in adhering to a schedule that won’t allow

the repository to open until 2010, it is just compounding the potential financial liability facing the Federal government.

All of us here today, both from the Congress and from the Administration, have

a responsibility to the American people to solve this problem. We must ensure that

the permanent repository is on firm financial footing and that it is proceeding towards the earliest possible completion date. In addition, we must explore alternatives that would allow DOE to take possession of spent fuel at an earlier date,

placing it in interim storage until the permanent repository opens.

This Subcommittee has already held a hearing on legislation which would accomplish these goals. We want Secretary Richardson to testify on this question, and

then we plan to mark up this legislation and take it to the floor of the House. Dr.

Moniz, I hope you and your staff are ready to roll up your sleeves and work with

us in a constructive manner to solve this problem. We need to show the American

people that this government keeps its promises.

I look forward to hearing the Department’s testimony, and I thank Chairman Barton for holding this hearing.

PREPARED STATEMENT OF HON. RALPH M. HALL, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF TEXAS

Thank you, Chairman Barton, for calling this hearing and giving us the opportunity to hear from the Department of Energy and to review their budget request

for Fiscal Year 2000. I want to also extend a welcome to our witness, Under-Secretary Moniz, along with his staff.

We have several pressing issues facing this Committee in the next year, and we

are hopeful that we will gain the cooperation of both the Department, and the Administration in working toward the resolution of these issues. First in my mind, the

question looms as to whether and for how long the Administration will continue to

oppose all reasonable efforts at reaching a consensus on an appropriate opening

date for storage of spent nuclear waste at Yucca Mountain. While the Administration indulges in last minute attempts to discourage action towards the goal of opening this waste site, judgements grow both in size and in numbers, and the taxpayers

and the rate payers get hit with the bill.

Of course, being from an energy producing state, I remain concerned about the

continued plight of the independent oil and gas producers. This entire industry has

felt the devastating impact of low priced foreign imports coupled with the reversal

of our former trade policy with Iraq. While the Administration sees fit to permit the

purchases of oil from this terrorist country, in the name of humanitarian assistance,

it would seem appropriate that the Administration take both an humanitarian, and

a national security interest in doing more to provide assurances to our own domestic, independent producers.

These folks are facing ‘‘no turning back’’ decisions about capping wells. Once this

happens, not only will multigenerational small and family owned businesses be deVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00010 Fmt 6633 Sfmt 6621 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
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stroyed, but we as a nation will be throwing ourselves at the mercy of foreign powers who will then decide how much our consumers should pay for a monopolized

commodity. As a matter of logic, and as a matter of patriotism, the Administration

must place our national security above foreign humanitarian ventures in Iraq.

Finally, I want to say that I am hopeful that we will be hearing from the administration in the near future on their legislative recommendations for an electricity restructuring bill.

Again, I want to thank you Mr. Chairman, for calling this hearing today, and I

yield back the balance of my time.

PREPARED STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NEW JERSEY

Thank you Mr. Chairman. I welcome Dr. Moniz back before our subcommittee

today.

I want to highlight some areas of the budget that are of interest to me. For instance, I’m pleased to see the Department of Energy’s (DOE) FY2000 request of

nearly $1.2 billion (which represents a 28% increase) to research, develop and deploy energy efficient and renewable energy technologies. This amount includes $399

million for DOE solar and other renewables programs (a 19% increase over last

year). An additional $47 million has been made available for renewables through

DOE’s science program, as well. These are the programs of the future and it makes

sense to invest in them today.

I also see that the Department’s FY2000 request includes $32 million for the Federal Energy Management Program (FEMP), which is important because the Federal

Government is the nation’s largest single energy user. The FEMP program helps

identify, finance, and implement energy efficiency and renewable energy projects in

federal facilities, resulting in conservation of energy resources and billions of dollars

in savings each year.

Along these lines, I also support the DOE overall budget request of $1.1 billion

for the climate change technology initiative for all DOE climate-related research &

development activities.

In the same vein, I’m glad that the administration is again requesting funding

for its fusion energy program. In addition to the importance of fusion energy that

we’ve discussed in previous years, particularly in light of current events, successful

development of fusion will address the ever-present threat of international conflict

over energy resources and could play an important role in reducing or altering atmospheric CO2 emission levels that contribute to global climate change. The Princeton Plasma Physics Laboratory (in my state of New Jersey) contributes to new and

innovative approaches to fusion energy. For these reasons, I believe that funding for

fusion energy sciences should be increased from last year’s enacted level of $223

million to $260 million in FY2000. Ten million of this $260 million should be directed toward the Tokamak program at Princeton University for Decontaminating

and Decommissioning (D&D) the Tokamak Fusion Test Reactor (TFTR). The President’s Council of Advisors on Science and Technology has recommended that the fusion energy sciences be funded at $270 million.

I also wish to address the administration’s request for the nuclear waste disposal

program. Last week, a DOE representative testified for the first time that there is

not enough money in the nuclear waste fund to pay for both interim and permanent

nuclear waste storage facilities. DOE has not planned to build nor provide money

for an interim facility, nor is it planning for such an eventuality in the near future.

Thus, DOE has requested $370 million in new budget authority for FY2000, but this

may still not be sufficient to fund permanent and interim storage and the related

studies. And yet, ratepayers are expected to pay over $630 million into the nuclear

waste fund in FY2000. In addition, the Administration is requesting the release of

an additional $39 million that has been held in reserve until authorized for use by

Congress. This amount was intended for interim storage, when DOE was considering this concept back in the 1980s, but this sum is now being requested to help

pay for the ongoing scientific investigative work at Yucca to further determine the

site’s suitability for permanent storage. If H.R. 45 were enacted into law, it appears

funding for interim storage would be severely lacking and that the permanent site

could face even greater delays due to funding problems. Moreover, I continue to be

concerned that this administration—like previous administrations and some here in

Congress—has become addicted to ratepayer money as a source of deficit reduction.

Another issue that is going to require increasing U.S. attention is the management and cleanup of spent fuel and radioactive waste in Russia. I recently spoke

on this topic at an international conference. It is not enough to support counter-proVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00011 Fmt 6633 Sfmt 6621 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
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liferation activities alone. We must also assist Russia in properly dismantling, storing, disposing, and cleaning up from the legacy of its nuclear arsenal buildup. To

this end, I am pleased to see that the budget request for nonproliferation and national security activities includes $30 million for the new nuclear cities initiative.

This program will help employ Russian scientists in civilian research endeavors,

hopefully to begin to address the drastic environmental and health problems facing

Russia as a result of its nuclear buildup. I hope that DOE will continue to devote

substantial resources to these activities as time goes on, because the consequences

of inaction will be global. In addition, better coordination and management activities

needs to occur at the highest levels of our administration. I am pleased that the

Consortium for Risk Evaluation with Stakeholder Participation (CRESP) led by the

Environmental and Occupational Health Sciences Institute in New Jersey is working to clean up several nuclear sites in the U.S. in cooperation with the DOE. Perhaps their efforts could be expanded to provide international assistance in the future.

In closing, I look forward to working with you to ensure that we see concrete

progress in all of these program areas. Thank you, Mr. Chairman.

PREPARED STATEMENT OF HON. TED STRICKLAND, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF OHIO

Thank you Mr. Chairman. And, I would like to thank the Under Secretary for

coming to the Hill today to address a range of budget concerns and answer questions held by many of us on the Energy and Power Subcommittee. Specifically, Mr.

Under Secretary, I have a number of questions regarding the ongoing work at the

Portsmouth, Ohio Gaseous Diffusion Plant and very serious concerns about the Department’s progress in developing its depleted uranium hexafluoride program. As

you know, the United States Enrichment Corporation or USEC, Inc. operates the

two gaseous diffusion plants in the nation—one of which is in my district. These

plants were initially built by the federal government to process uranium for national

defense purposes during the Cold War. Now, they process uranium for purchase by

the commercial nuclear power industry.

As you also know, Mr. Under Secretary, last July, the Congress passed and the

President signed into law P.L. 105-204. The successful passage of this legislation

was possible through a terrific bipartisan and bicameral effort and I would like to

thank my colleague from Kentucky, Mr. Whitfield, for his active support of that legislation. Furthermore, I would like to express my appreciation for the guidance provided by the leadership of the Commerce Committee, Chairman Bliley and Mr. Dingell and of course, the advice of their dedicated staff.

Briefly, P.L. 105-204 secured almost $400 million from USEC, which sits in an

account at the Department of Treasury, for the development of a program to convert

and stabilize more than 9000 canisters of depleted uranium hexafluoride generated

and stored at both the Portsmouth, Ohio and Paducah, Kentucky sites. I regret to

say that I have serious reservations about the commitment of the Department’s Nuclear Energy Office to meet the statutory requirements under P.L. 105-204. Requirements, which I might add, share a remarkable amount of bipartisan support from

both the states of Ohio and Kentucky.

I also have reservations about the role of USEC as the Executive Agent under

the Russian-Highly Enriched Uranium Agreement. This past July USEC was sold

in an initial public offering. As a private industry, USEC, Inc. serves as the Executive Agent for the Russian-HEU Agreement with the responsibility for purchasing

specific quantities of Russian uranium. USEC’s role as the Executive Agent for the

Russian-HEU Agreement directly conflicts with the corporation’s responsibility to

meet requirements outlined in the Energy Policy Act of 1992 and the USEC Privatization Act of 1996. One such condition was the continued operation of the gaseous

diffusion plants in Portsmouth and Paducah. During the process of privatizing

USEC, I repeatedly reminded officials in the Administration, including the Department of Energy, that the corporation’s function as Executive Agent for the HEU

Agreement would result in decisions that may adversely affect the continued operation of the gaseous diffusion plants and therefore violate the statutory terms and

conditions established by Congress. Furthermore, I was seriously troubled that either the workers and communities in southern Ohio would suffer tremendously or

potentially an incredibly important foreign policy objective would not be met. Neither option was or is acceptable to me.

In an effort to address the issues raised during privatization of USEC, DOE entered into two Memoranda of Agreement with USEC to provide $66 million for the

liabilities arising out of the disposal of depleted uranium generated by USEC prior

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to privatization and the maintenance of depleted uranium tails transferred to DOE

from USEC through fiscal year 2004. A primary objective of the Agreements is to

mitigate job losses by offering displaced workers with retraining and a hiring preference for the maintenance and disposition of the depleted uranium hexafluoride

canisters located at Portsmouth and Paducah.

I worked closely with officials in the Administration, including the Department of

Energy, to ensure that the dedicated workforce and families long committed to supporting our nuclear industry would not now find themselves left out in the cold at

the declared end of the Cold War. I cannot overstate how important this $66 million

is to southern Ohio and western Kentucky. My district simply has not enjoyed the

economic recovery that the rest of the state of Ohio and much of the nation enjoys.

For this reason, I urge you to empower the appropriate DOE officials to move forward on a plan for spending this $66 million in as expeditious a manner as humanly

possible.

Finally, but not of least importance, I must make you aware of an annual funding

battle I undertake with a number of my colleagues from both sides of the aisle. I

am confident you are well aware of the good work done by the Worker and Community Transition Office. This office exists to to minimize layoffs and assist communities affected by the Department’s shift from weapons production to other missions.

The Department continues to work toward closure of numerous sites throughout the

complex which will ultimately lead to the dislocation of workers.

The Portsmouth and Paducah sites are undergoing a tough transition to a privately managed operation. This process, too, will result in a significant reduction in

the workforces at the gaseous diffusion plants. In fact, USEC, Inc. recently issued

a press release announcing its second round of reduction in force which will involve

approximately 250 employees at the Portsmouth and Paducah sites. This comes

shortly after the completion of round one in November 1998 which resulted in 259

layoffs shared by the two sites. The Worker and Community Transition Office must

have adequate funding to continue to help workers affected in Ohio, Kentucky and

throughout the DOE complex.

I must add that these significant layoffs at the gaseous diffusion plants become

particularly alarming when we acknowledge that USEC, Inc. is limited to annual

layoffs at the sites because of an Agreement it has with the Department of Treasury. Under the Treasury Agreement USEC, Inc.. must keep its annual workforce reductions for each of the next two years to 250 people between the two gaseous diffusion plants. However, in July 2000, that Treasury Agreement expires and USEC,

Inc. will no longer be limited in its workforce reductions. I have heard projected

numbers of future layoffs and for this reason, the Worker and Community Transition Office absolutely must be ensured adequate funding to provide the necessary

resources to minimize the potential economic impacts of privatization and restructuring.

I have taken enough time to provide some background for the questions I have

prepared to ask today. I appreciate your time and cooperation and I look forward

to hearing your answers to my inquiries. Thank you.

Mr. BARTON. Dr. Moniz, we will welcome you to the subcommittee. Before we let you begin, the Chair announces that all

members not present have the requisite number of days to put a

written statement in the record if they so wish, unless there’s an

objection. Hearing none, so ordered.

We’ll put your statement in its entirety; we’re going to recognize

you for such time as you may consume, and at the conclusion of

your statement, unless Mr. Telson wishes to also make a brief

statement, then we’ll begin to ask questions.

Welcome, Dr. Moniz.

STATEMENT OF ERNEST MONIZ, UNDER SECRETARY OF ENERGY; ACCOMPANIED BY MICHAEL TELSON, CHIEF FINANCIAL OFFICER, DEPARTMENT OF ENERGY

Mr. MONIZ. Thank you, Mr. Chairman and members of the subcommittee, for the opportunity to appear before you today to discuss the fiscal year 2000 budget request for the Department of Energy.

11

I will just note, given your earlier reference, Mr. Chairman, that

I will be leaving this evening for your home State—for a pleasant

day, I’m sure, tomorrow. In fiscal year 2000, the Department requests $17.8 billion dollars

for all of its science energy research, energy security, environmental quality, and defense activities. This is slightly less than the

amount appropriated last year.

Let me provide a very brief overview of the Department’s four

principal mission areas: In science, our main goal is to ensure that

the Nation’s preeminent scientific infrastructure successfully meets

the missions and goals the Nation has set for the Department of

Energy. In turn, the Nation’s scientific community depends on

DOE, and on our laboratory system, to maintain U.S. leadership in

an extensive range of research disciplines. In particular, the Department has a unique responsibility for designing, building and

operating an extensive set of facilities for over 15,000 scientists and

engineers across the Nation. For example, this year’s budget supports critical initiatives in material science—for example, construction of its palatia neutron source—and in high-end computing for

science and engineering the scientific simulation initiative.

These are examples of key enabling technologies for science, and

for our country’s economy in the future. Our request for science

funding for fiscal year 2000 is $2.8 billion, an increase of 5.1 percent.

In national security, the Department plays a critical role, by ensuring the safety, security, and liability of our nuclear arsenal, and

by reducing the dangers of the spread and use of weapons of mass

destruction. The Department is maintaining the nuclear stockpile

safely and reliably, without testing, thereby supporting a comprehensive test ban while sustaining the nuclear deterrent.

The Department also plays a central role in securing nuclear materials and know-how in the former Soviet Union, in support of

America’s non-proliferation goals.

The technological strength of the Department’s laboratories is

being used to protect America from the threat of weapons of mass

destruction. The Department’s $6.3 billion request—$6.2 billion request, excuse me—for national security programs, is an increase of

4.1 percent over the fiscal year 1999 appropriation.

In environmental quality, the Department’s task is to continue to

make progress in cleaning up the environmental legacy of the cold

war, while minimizing the risks to human health and safety. Our

goal is to finish the clean-up job at most of our sites by the year

2006, while systematically addressing the persistent challenges at

our largest clean-up sites in accordance with various regulatory

agreements. DOE’s strong science and technology base, and our capacity to conduct inter-disciplinary, leading-edge R&D, will help up

accomplish our clean-up goals. Furthermore, we will continue to

work toward resolving the scientific and technical issues surrounding the important problem of disposal of spent nuclear fuel,

both civilian and military.

The Department is requesting $5.9 billion for the Office of Environmental Management—roughly $100 million more than the current year. We are also requesting $409 million for the Office of Civilian Radioactive Waste Management, which is needed to complete

12

the work identified in the viability assessment, as necessary to be

able to make a suitability determination about Yucca Mountain in

2001.

In energy resources, the Department of Energy is the lead agency in the administration’s commitment to abundant, affordable, secure and clean energy, and to electricity restructuring. Energy is,

as you know, the life-blood of our economy. The Department is advancing a broad R&D portfolio to improve the efficiency of, and reduce the emission from, fossil fuel use; to advance the development

of economical renewable technologies; and to provide nuclear energy options that are passively safe, proliferation-resistant, and

waste-minimizing.

At the same time, energy use is at the core of some of our most

pressing environmental challenges—smog and particulate emissions, acid rain, global warming. Once again, DOE’s policy initiatives and energy R&D portfolio, which focuses attention on increasing energy efficiency, will simultaneously help us sustain a strong

economy and improve environmental quality. The Department will

work with Congress to advance electricity sector restructuring,

which will bring lasting benefits to all Americans, to the economy,

and to the environment.

The Department’s request for programs comprising the Energy Resources Business Line is $2.3 billion—an increase of roughly 2

percent.

In the little time I have remaining, I’d like to just highlight some

of our initiatives in the energy resources area. First, the Secretary

has led a wide range of initiatives to enhance America’s energy security. These follow four basic strategies, and are summarized in

the briefing material that we provided you this morning.

One, is to enhance America’s energy security, including actions

such as Federal royalty oil for the petroleum reserve—commercial

storage in the petroleum reserve.

The second strategy is to preserve domestic oil and gas production capacity, suspension of reduction requirements for stripper oils

on Federal lands, royalty relief on Federal lands, Petroleum Technology Transfer Council crisis assistance to independents.

A third involves trying to help lower costs of production, access

to problem-solving technologies for independents, advanced technologies for improved recovery from endangered reservoirs, energyefficient technologies for oil production, administrative and accounting relief on Federal lands.

And finally, fourth strategy of improving government methods for

making decisions. That is, improve coordination with other Federal

agencies, and dialog with industry, States and Congress.

I have brought with me, again, today, a short summary of these

strategies.

Turning to electricity restructuring—very briefly—this, of course,

is not a budget initiative—as you know, we strongly support restructuring, to ensure that U.S. consumers receive the benefits of

economically efficient energy production, and that the production

and transmission sectors are encouraged to maximize their efficiency.

The administration supports the progress that is being made toward promoting retail competition in the utility industry. Our analVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00015 Fmt 6633 Sfmt 6602 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
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ysis indicates that competition will benefit consumers in the economy, to the tune of roughly $20 million per year, and that it will

also be good for the environment. Approximately 20 States have enacted legislation, or promulgated regulations, that either have led

or will lead to the implementation of retail competition programs.

The Department believes it is important to act sooner rather

than later to complement what is going on at the State level, and

stands ready to work with Congress to get the job done.

As Under Secretary, one of my main responsibilities is to ensure

that all the R&D activity supported by DOE, or performed by our

laboratories, serve the missions and goals set out for the Department. To do this, we are organizing, over the past year, all of our

R&D activities at DOE into a comprehensive portfolio, and assessing whether the portfolio is well-balanced to meet the Department’s

mission needs. We are in the last stages of developing the DOE

R&D portfolio. I hope to share it with you within weeks.

This will be the first time the Department publishes a document

that will provide in one place a clear description of our entire research portfolio, organized around their support for the Department’s strategic goals. The document will describe our current

R&D activities and accomplishments, it will be a basis for assessing how balanced the portfolio is for long-term pursuit of our strategic goals, and it will be a tool for helping to plan for future investments through road-mapping.

In the energy resources R&D portfolio, there are many examples

in our fiscal year 2000 budget request that point to the future. I’ll

just name a few—they include Vision 21 Powerplex, carbon sequestration R&D, the partnership for a new generation of vehicles, the

nuclear energy research initiative—and one I’ll comment on just

briefly—the scientific simulation initiative, where we will develop

a new program to develop large-scale, high-end computing simulation capabilities of chemical reactions, fluid dynamics, and heat

transfer, associating with combustion, in order to facilitate the

rapid design of improved combustion devices.

Improved efficiency of such devices may provide savings of up to

$26 billion in fuel costs, and approximately 2.7 gigaton reduction

in carbon emissions for internal combustion engines alone. Just an

example of the kind of return we anticipate as being possible from

our basic science investments.

The budget we have submitted attempts to balance many competing demands—from the scientific and national security communities, from industry, and from communities that surround and

host our facilities—within current budgetary constraints. We believe this budget—along with some of the essential policy initiatives I have outlined—achieves this balance, and we ask for your

support.

Thank you again for the opportunity to testify this morning, Mr.

Chairman, and I would like to introduce Dr. Mike Telson, the Department’s Chief Financial Officer. Also, we are accompanied by

several key program staff and would be please to answer any questions subcommittee has regarding our 2000 budget.

[The prepared statement of Ernest Moniz follows:]

14

PREPARED STATEMENT OF HON. ERNEST MONIZ, UNDER SECRETARY OF ENERGY,

DEPARTMENT OF ENERGY

Thank you, Mr. Chairman, and Members of the Subcommittee, for the opportunity

to appear before you today to discuss the FY 2000 budget request for the Department of Energy.

In FY 2000, the Department requests $17.8 billion dollars for all of its science,

energy research, energy security, and defense activities. This is slightly less than

the amount requested last year. This request supports the Departments activities

in four business lines:

• National Security: $6.228 billion

• Energy Resources: $2.318 billion

• Environmental Quality: $6.452 billion

• Science: $2.844 billion

This budget request, and the programs it supports, reflect the Administration’s

agenda to meet the challenges of the 21st century. The research and development

capabilities of the Department of Energy place it at the forefront of many of the

technological advances that will define the next millennium. ‘‘Science, Security, and

Energy: Powering the 21st Century’’ is more than just the theme of our budget request this year; it defines the unique contributions that DOE has been making, and

will continue to make, towards improving the lives and the security of all Americans. Attached to this testimony are concise summaries of the budget requests for

each of our programs.

DOE’S MISSIONS

In National Security, DOE plays a critical role by ensuring the safety, security,

and reliability of our nuclear arsenal, and through our efforts, to reduce the dangers

of the spread and use of weapons of mass destruction (WMD). The Department is

maintaining the nuclear stockpile safely and reliably without testing, thereby supporting the Comprehensive Test Ban while sustaining the nuclear deterrent. The

Department also plays a central role in securing nuclear material and knowhow in

the Former Soviet Union, in support of America’s non-proliferation goals. The technological strength of the Department’s laboratories is being used to protect America

from the threat of weapons of mass destruction.

In Energy Resources, DOE is the lead agency in the Clinton Administration’s commitment to abundant, affordable, secure, and clean energy, and to electricity restructuring. Energy is the lifeblood of our economy. The Department is advancing

a broad research and development (R&D) portfolio to improve the efficiency of, and

reduce the emissions from, fossil fuel use; to advance the development of economical

renewable technologies; and to provide nuclear energy options that are passively

safe, proliferation resistant, and minimize waste.

At the same time, energy use is at the core of some of our most pressing environmental challenges: smog and particulate emissions, acid rain, and global warming.

Once again, DOE’s policy initiatives and energy R&D portfolio—which focuses attention on increasing energy efficiency—will help us to sustain a strong economy with

ample and clean energy resources. The Department will work with Congress to advance electricity sector restructuring, which will bring lasting benefits to all Americans, to the economy, and to the environment.

In Environmental Quality, the Department’s task is clear. We will continue to

make progress in cleaning up the environmental legacy of the cold war nuclear

weapons program, and we will do so while minimizing the risks to human health

and safety. Our goal is to finish the cleanup job at most of our sites by the year

2006, while systematically addressing the persistent challenges at our largest cleanup sites, in accordance with various regulatory agreements. The scientific and technical issues involved in meeting this challenge are among the most complex of any

environmental cleanup job anywhere in the world. DOE’s strong science and technology base, and our capacity to conduct interdisciplinary, leading edge R&D, will

help us to accomplish our cleanup goals. Furthermore, we will continue to work towards resolving the scientific and technical issues surrounding the disposal of spent

nuclear fuel.

In Science, our main goal is to ensure that the nation’s preeminent scientific infrastructure successfully meets the missions and goals that the nation has set for the

Department of Energy. At its heart, DOE is a science agency. Each of DOE’s mission areas relies on cutting edge science and technology to achieve its objectives.

And the nation’s scientific community depends on DOE and the DOE laboratory system to maintain U.S. leadership in an extensive range of research disciplines. In

particular, the Department has a unique responsibility for designing, building, and

15

operating an extensive set of user facilities for basic and applied research, serving

over 15,000 scientists and engineers across the nation.

As Under Secretary, one of my main responsibilities is to ensure that all the research and development activities supported by DOE, or performed by DOE’s laboratories, serve the missions and goals set out for the Department. To do this we

are organizing all R&D activities at DOE into a comprehensive portfolio, and assessing whether this R&D portfolio is designed optimally to meet the Department’s mission needs. We are in the last stages of developing the DOE R&D Portfolio. This

portfolio will describe and analyze, for each of the four business lines, how the overall goals of the Department are supported by the specific R&D activities carried out

in each program, and will facilitate discussions with the Department’s stakeholders.

NATIONAL SECURITY

The Department’s $6.228 billion request for National Security programs is an in- crease of $244 million over the FY 1999 appropriation. The FY 2000 request for

Weapons Activities is $4.531 billion; this includes $2.286 billion for the Stockpile Stewardship program and $2.071 billion for the Stockpile Management program.

The Stockpile Stewardship program is a science-based program designed to ensure

the safety, security, and reliability of the nuclear deterrent without underground

nuclear testing. Critical to the success of this effort is the Accelerated Strategic

Computing Initiative (ASCI), which is developing state-of-the-art supercomputers

and associated applications.

Another important component of this program is the National Ignition Facility

(NIF), a 192-laser beam facility under construction at Lawrence Livermore National

Laboratory, that will advance not only our understanding of the physics of nuclear

weapons, but will also advance mankind’s knowledge in fusion and basic science.

The Stockpile Management program request includes $170 million for the tritium

program, which will be used to develop the irradiation services option chosen by

Secretary Richardson, and to complete design work on the accelerator option in

order to preserve it as a ‘‘back-up’’ capability. The $767 million dollar budget for Nonproliferation and National Security is an

increase from $697 in FY 1999. This does not include separate requests for Intelligence ($36.1 million) and Counterintelligence ($31.2 million—$18.6 in new budget

authority). We are asking for $221 million for Nonproliferation Research and Development to develop technologies for detecting nuclear explosions, detecting the production of different forms of WMD, countering chemical and biological weapons that

could be released in our cities, and aiding federal, state, and local law enforcement

agencies. Our request also includes $30 million for the Initiative for Proliferation Preven- tion and $30 million for the Nuclear Cities Initiative. These programs are designed

to ensure that Russia’s most experienced scientists and technicians can be gainfully

employed at a time when they are highly sought after by rogue nations and terrorist

organizations.

The Fissile Materials Disposition program includes a request for $200 million to

provide storage for U.S. weapons usable uranium and plutonium, while providing

a technical basis for similar actions by the Russians. The Department recently announced that Savannah River is the preferred site for the Pit Disassembly and Conversion Facility (FY 2000 request of $28.8 million) and the Mixed Oxide Fuel (MOX)

Fabrication facility ($12.4 million). The Worker and Community Transition program request is $30 million. This will

allow the Department to facilitate earlier site closures and to promote the reindustrialization of excess facilities. The result should be long term savings approaching

$1 billion. The program also makes it possible to move to more efficient contracting

mechanisms while utilizing the skills of the existing work force. In the case of Oak

Ridge, for example, we were able to avoid immediate severance liabilities of up to

$45 million.

ENERGY RESOURCES

The three key elements of DOE’s Energy Resources mission are energy security,

clean energy, and electricity industry restructuring. The Department of Energy continues to play a major role in helping to ensure the Nation’s energy security and

responding to both U.S. and world energy demand and the environmental consequences associated with energy production and utilization. And just as end of the

Cold War left us with significant new national security challenges, the current international energy and economic situation bring with them new energy challenges.

While it may be of benefit to U.S. consumers, the international oil market has

created significant problems for producers. Low prices and abundant near-term supVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00018 Fmt 6633 Sfmt 6621 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
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ply will exacerbate the decline in higher cost domestic production while making investments in new energy supply and increased efficiency less attractive. This has

the potential to increase U.S. dependence on imported oil and increase our vulnerability to future price increases and supply shortages. The Department and the Administration are moving to address these challenges on several fronts.

First, in December, the Secretary appointed an internal Emergency Oil Task

Force to develop a balanced oil action plan to enhance America’s energy security,

preserve domestic oil production capacity, lower the cost of production and to explore other actions government can take.

To enhance America’s energy security, we have developed a plan for using 28 million barrels of Federal Royalty Oil to fill the Strategic Petroleum Reserve (SPR)

from off-shore oil production in the Gulf of Mexico. We also offered unutilized SPR

capacity for long term commercial storage with storage fees to be paid in oil to increase the inventory. These steps reduce the vulnerability of the U.S. economy at

tremendous cost savings to the taxpayer. To help lower the costs of production, we just committed $18 million for a technology-driven, industry cost-shared program to improve oil recovery from endangered domestic reservoirs. We also kicked off a program to assist small independents—those with less than 50 employees—that have specific production problems,

ranging from reservoir characterization to environmental compliance. We are working with other agencies and the Administration to suspend production for stripper

oil wells on federal lands. These steps prevent premature abandonment of important

well capacity, maintain domestic production and preserve oil and gas and small

business infrastructure.

To lower the cost of production, we are announcing plans to expand the use of

energy-efficient technologies to lower the cost of oil production. We are inaugurating

a pilot program for on-line oil and gas permitting for state agencies. We are aggressively pursuing improved recovery from high-potential reservoirs, and we have requested a 3.2% increase in oil technology research and development for FY 2000—

a modest reversal of the historic pattern of annual reductions, but a reversal nonetheless.

In another action to preserve our domestic production, the Department is exploring possibilities for targeted tax relief. Such relief would have to be cost-effective

and would require budget offsets. Any tax relief proposal would require the concurrence of the rest of the Administration, and the passage of legislation by the Congress.

Second, the Department has moved very aggressively to reshape the way in which

we make technology investment decisions to maximize our national return on those

investments. Throughout the Department, and especially within the civilian research and development sector, we have initiated technology ‘‘road-mapping.’’ The

process involves cooperative discussions between the Department and industry sectors to determine technology needs and the types of research and development activities needed to address them. These roadmapping efforts serve two purposes.

They act as a catalyst for the industry to develop an effective R&D roadmap, and

they help us to identify those investments which are most appropriate for the government to make. When appropriate, we are requiring significant cost-sharing with

industry to ensure marketplace of the research agenda and a concomitant predisposition to deployment of the new technologies.

We have also requested increases in funding to develop and deploy new, energy

efficient technologies that would not otherwise receive adequate private-sector backing in the face of historically low energy prices. These investments make good economic sense, and good environmental sense. The FY 2000 budget includes a 20 percent increase, or $209 million, to fund energy efficiency and renewable energy programs.

Third, we strongly support legislation to restructure the electricity industry to ensure that U.S. consumers receive the benefits of most economically efficient energy

production and that production and transmission sectors are encouraged to maximize their efficiency.

The Clinton Administration supports the progress that is being made towards promoting retail competition in the electric utility industry. Our analysis indicates that

competition will benefit consumers and the economy to the tune of $20 billion per

year, and that also it will be good for the environment. The Department of Energy

will soon be forwarding an updated version of the Administration’s Comprehensive

Electricity Competition Plan to Congress. This revised legislation will retain the

basic framework of encouraging retail electric competition, but providing the states

and unregulated municipal and cooperative utilities the flexibility they need to ‘‘opt

out’’ if they determine that competition would not be beneficial to their consumers.

Under the leadership of Secretary Richardson, the Department has been engaged

17

in an effort to fine-tune the legislation the Administration sent to Capitol Hill last

year to: (1) make the bill more consumer friendly, and.; (2) address issues which

were not contained in the original proposal (e.g., the role of federal utilities in a

competitive environment).

Approximately 20 states have enacted legislation or promulgated regulations that

either have led or will lead to the implementation of retail competition programs.

Almost every other state has the matter under active consideration. While the states

are playing a primary role in the move towards competition, Federal action is necessary to remove the statutory impediments that currently exist and also to ensure

that interstate electricity markets are sufficiently competitive and reliable. The Department believes that it is important to act sooner rather than later to complement

what is going on at the state level, and stands ready to work with Congress to get

the job done.

Energy Efficiency and Renewable Energy

The Department’s Energy Efficiency and Renewable Energy Program has five

principal objectives: (1) to reduce U.S. reliance on imported oil through improving

efficiency and increasing the use of domestic renewable energy resources, (2) to

maintain U.S. technological expertise and competitive advantage in global energy

technology markets, (3) to minimize and reduce pollution attributable to energy consumption, (4) to develop and deploy technologies capable of reducing greenhouse gas

emissions, and (5) to align the strategy for development of efficiency and renewable

energy technologies with the new demands of a deregulated electricity market.

The FY 2000 funding request for the Department’s Energy Efficiency and Renewable Energy programs includes an increase of $209 million for a total of $1.2 billion.

Key results supported by the FY 2000 budget request include:

• Power. Improve the performance, reduce the cost, and perform highly leveraged

field verifications of technologies that generate electricity from renewable energy resources in a highly competitive, restructured utility environment. Power

Technology programs are expected to replace up to 1.2 Quads of domestic primary energy by clean renewable resources, save consumers $1.4 billion, and reduce annual U.S. carbon emissions by nearly 24 million metric tons of carbon

equivalent by 2010. This is roughly equivalent to all the energy used for a year

in homes in Texas, our nation’s second largest state.

• Industry. Develop and facilitate the deployment of energy efficient technologies

in partnership with the most energy intensive industries. Investments are expected to save up to 1.5 Quads, $6 billion, and 29 million metric tons carbon

equivalent (MMTCE) annually by 2010. This is roughly equivalent to all the industrial energy used for a year in Pennsylvania, the fifth largest state in the

nation.

• Transportation. The Partnership for a New Generation of Vehicles (PNGV) will

support development of technologies needed for an 80 mpg family automobile,

and more efficient small and heavy trucks. DOE Transportation programs are

expected to save up to one million barrels per day of oil, $9.9 billion, and reduce

carbon 25 MMTCE annually by 2010. This is roughly equivalent to the oil-based

fuels used in a year for transportation in Florida, the third largest state in the

nation.

• Buildings. Work with industry, states, and other key partners to develop and implement energy efficient buildings and building technologies and programs leading to savings of up to 2.3 Quads, $16 billion, and 36 MMCTE annually by

2010. This is roughly equivalent to all residential and commercial building energy use in Texas in a year. In addition, the program will weatherize nearly

77,000 low income homes.

• FEMP. Accelerate efforts to deliver federal energy savings through $5 billion

worth of Energy Savings Performance Contracts (ESPCs) with the private sector under the Federal Energy Management Program (FEMP). Also accelerate

utility financing and procurement of energy efficiency products to achieve a 30

percent reduction in federal energy efficiency. FEMP programs are expected to

save up to 0.1 Quads, $400 million, and 1.2 MMCTE annually by 2010.

Fossil Energy

The FY 2000 Fossil Energy R&D request is $364 million, which includes the use

of $11 million in prior year balances for a total operating budget of $375 million,

a decrease of 2.4%. One of the key components of the Fossil Energy R&D request

is the development of the ‘‘Vision 21 Powerplex’’—the power plant of the future. This

includes modular technologies that could be integrated into a non-polluting energy

producing facility, such as membranes for the low-cost separation of oxygen and

other gases. The high efficiency of Vision 21 Plants (60 percent for coal and 75 perVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00020 Fmt 6633 Sfmt 6621 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
18

cent for gas) could, by 2030, reduce greenhouse gas emissions globally by 370 million tons of carbo per year. Sequestration R&D could lead to low cost options for

reducing U.S. emissions by an additional 250 million tons of carbon during the same

time frame. The economic benefits of Vision 21 Plants, through savings in electricity

costs to consumers, could reach $5-15 billion annually by 2030. In addition, lower

cost emission control technologies could save $5 billion annually by 2010.

Within the Clean Coal Technology Program, the Department is requesting the net deferral of $246 million in funding until FY 2001 and beyond. This is due to changes

in project plans for pending projects that do not need to be funded at previously expected levels at this time. During FY 2000, the Department expects to complete

demonstration of the third integrated gasification combined cycle project at Pinion

Pine and to continue operations at the Polk project. Activities at these two Clean

Coal Technology projects will provide the engineering foundation for a new generation of powerplants with efficiencies in the 60 % range. We have also proposed $164 million to operate America’s energy security insur- ance policy—the Strategic Petroleum Reserve—without selling oil, including $5 million to ensure adequate resources to operate the Reserve at its maximum draw

down rate during an emergency. We recently announced programs to use royalty oil

and facility leasing to increase the amount of oil stored in the Reserve. In addition,

we are completing upgrades of Reserve facilities, and by the end of FY 2000, the

Strategic Petroleum Reserve will have completed a comprehensive systems refurbishment to assure physical system capability through the year 2025.

Key results supported by the FY 2000 budget request include:

• Coal R&D. Start construction of a clean, advanced coal fire power system—part

of the final phase of the Low Emissions Boiler Program (LEBS) to be completed

in 2001. The system will use newly developed high temperature filtration processes for superior environmental performance and provide the foundation for a

new generation of highly efficient, supercritical steam power plants. Complete

subscale testing of a high temperature air furnace technology for use in highly

efficient, indirectly-fired combustion power systems and in Vision 21 Power

Plexes. Complete initial laboratory tests of novel gaseous separation (O2, H,

CO2) technologies to provide low cost options for Vision 21 Power Plexes. Identify candidates for low-cost gas purification technologies to support zero emissions goal of Vision 21 Power Plexes. • Natural Gas and Oil R&D. Continue the scale-up development of ceramic membranes for gas-to-liquids processing; continue implementing the President’s

Committee of Advisors on Science and Technology (PCAST) recommendation for

a methane hydrates recovery program; and continue development of advanced

diagnostics and imaging technologies for highly fractured and bypassed gas reservoirs and endangered domestic oil reserves. Continue support for National

Laboratory partnerships with industry and the Petroleum Technology Transfer

Council. Initiate Preferred Petroleum Upstream Management Practices

(PUMP). Continue a restructured advanced gas turbine program for the 2001

introduction of ‘‘quantum leap’’ turbines, continue scale-up tests of a solid oxide

fuel cell, and continue cost-reduction R&D for molten carbonate fuel cell technologies.

• Naval Petroleum and Oil Shale Reserves. Continue to operate NPR3 and to

finalize equity determination activities on NPR1.

• Strategic Petroleum Reserve. Maintain a highly reliable level of operational

readiness. Complete oil skimming and decommissioning at Weeks Island. Initiate the long term monitoring of Weeks Island to assure mine stability. Test

major SPR systems in the post-Life Extension program era at all sites. The addition of $5 million to the SPR Petroleum Account will assure the capability to

sustain drawdown operations.

• Clean Coal Technology. Continue prior cost-shared commitments to 20 projects

projected to be active in FY 2000.

Nuclear Energy

The FY 2000 request for Nuclear Energy programs is $269.3 million, a $6 million

increase from FY 1999. The Department’s request includes $25 million for the ‘‘Nuclear Energy Research Initiative.’’ NERI supports peer-reviewed research and development in advanced technologies that can address some of the barriers to the longterm use of nuclear power in the United States. NERI will explore advanced technologies associated with areas such as proliferation-resistant reactor and fuel technologies, small and high efficiency reactor systems, and methods for greatly enhancing safety and minimizing wastes. The Nuclear Energy request also includes $30

million for the Fast Flux Test Facility at the Department’s Hanford Reservation.

The Department is currently evaluating future missions for the reactor and will

19

make a decision this spring on the future of the reactor. Funding at the request

level would be adequate to fund minimum surveillance and maintenance to keep it

in a safe and environmentally-compliant condition.

The Department is also evaluating the potential application of electrometallurgical treatment technology to some of our spent fuel challenges. Any decision to

use this technology will be based, in part, on the results of an ongoing National Research Council review, as well as on the completion of an Environmental Impact

Statement. The FY 2000 budget provides limited funding for this technology pending completion of this evaluation.

The Nuclear Energy budget also supports the Department’s radioisotope power

system production capability. These power systems are used by NASA and other

government agencies for deep space probes and other remote power applications.

The Department has adopted a strategy wherein the our budget is used only to

maintain physical and institutional capability to manufacture these systems, while

the cost of production will be charged to its federal agency ‘‘customers.’’ DOE is the

only source of these power science and technology systems, and the nation’s ability

to explore deep space depends on the availability of these systems.

The Nuclear Energy budget also supports production and distribution of isotopes

for medicine and research where no commercially available alternatives exist. The

FY 2000 budget request proposes to launch the Advanced Nuclear Medicine Initiative, to apply our unique expertise and capabilities in isotopes to advance nuclear

medicine technology. This initiative sponsors peer-reviewed research that would include using the Department’s large inventory of alpha-emitting isotopes to fight a

wide spectrum of illnesses.

The Office of Nuclear Energy has primary responsibility within the Department

for implementation of Public Law 105-204, which requires the Department to prepare a plan to begin construction of two depleted uranium hexafluoride conversion

plants at Portsmouth, Ohio and Paducah, Kentucky by January 31, 2004. Depleted

uranium hexafluoride is a residual product created from the operation of uranium

enrichment plants formerly operated by the Department and now operated by the

privatized U.S. Enrichment Corporation. The Department expects to publish a formal solicitation for expressions of interest (EOI) in construction of these plants

within the next week. The Office of Nuclear Energy is currently working to complete

the statutorily required plan to support plant construction. The Department expects

to transmit the final plan to the Congress this spring once responses are received

from the EOI.

Key results supported by the FY 2000 budget request include:

• Solve critical technology issues with existing nuclear plants.

• Conduct investigator-initiated, peer-reviewed innovative nuclear energy research

and development.

• Optimize the capability of existing nuclear power plants to contribute to the reduction in U.S. CO2 emissions.

• Develop and produce vital medical, research, and industrial isotopes and their related applications.

• Maintain the capability to produce safe nuclear power systems and related technologies for future space exploration.

• Support research and education programs at U.S. universities through grants, fellowships, and scholarships.

• Manage Nuclear Energy facilities and DOE research reactors in a safe, economical, and environmentally sound manner.

• Develop advanced technologies to treat DOE spent fuel.

• Implement a long-term management strategy for the Department’s depleted uranium hexafluoride inventory.

• Maintain and/or deactivate the Department’s surplus non-weapons nuclear reactor

sites.

ENVIRONMENTAL QUALITY

Environmental Management

The Department is requesting $5.9 billion for the Office of Environmental Management, including privatization, or roughly $100 million more than the current

year. Of this amount, all but $571 million is funded under ‘‘Atomic Energy Defense

Activities’’ as part of the Nation’s defense budget. The civilian portion of the budget

request includes environmental management activities at the Department’s civilian

research and production facilities as well as funding for the Department’s statutory

obligations for environmental restoration work at the West Valley facility in New

York, uranium mill tailings sites, and uranium enrichment facilities.

20

The FY 2000 request reflects our effort to maintain a stable program that provides sufficient resources to meet our multiple demands of risk reduction, compliance and mortgage reduction. Because of the complexity of the cleanup and waste

treatment operations, reliable and sustained funding is essential for performing the

extraordinarily complex planning required for these long-lead time projects. The

commitments based on this budget will be accelerated cleanup and closure, deployment of new technologies, and progress in resolving the nuclear waste backlog. We

have set very ambitious goals for closing several sites by the year 2006, including

a number of major non-defense projects including the Weldon Spring Site in Missouri, the Battelle Columbus Laboratory and the Mound Plant in Ohio, and the Energy Technology Engineering Center in California. By working towards our goal for cleanup, we not only reduce the hazards presently facing our workforce and the public, but also reduce the long-term financial

burden on the taxpayer. For every year that a site remains open because cleanup

has not been completed, we are paying a ‘‘mortgage’’ of necessary overhead for activities such as site security, facility operations, personnel, safety and other costs.

By completing cleanup sooner, particularly at sites where we have no other continuing missions, we can substantially reduce these overhead costs. The FY 2000

budget request is now fully structured to emphasize site closure and project completion.

We have made substantial progress towards this vision. We are completing site

cleanups. In FY 1998, we finished cleanup of an entire class of nuclear waste sites—

uranium mill tailings sites. Except for remaining ground water contamination, we

completed cleanup of 22 large uranium mill tailings sites as well as 5,300 ‘‘vicinity

properties,’’ including elementary schools and homes. This project included remediation of over 40 million cubic yards of contaminated soil and material, a volume that

would cover a football field with a mound of dirt four miles high. Also in FY 1998,

we completed the primary vitrification campaign of the high-level wastes at the

West Valley Demonstration Project in New York, ahead of schedule, and have begun

the vitrification of high-level waste tank heels which will continue through FY 2001. I previously discussed the Department’s responsibility for construction of conversion plants for depleted uranium hexafluoride resulting from the operation of uranium enrichment plants at Paducah, Kentucky and Portsmouth, Ohio. Decontamination and decommissioning of the uranium enrichment plants themselves, including a third plant located at Oak Ridge, Tennessee are funded out of the Uranium Enrichment Decontamination and Decommissioning Fund established by the

Energy Policy Act of 1992. This fund also is used to reimburse private-sector companies operating uranium and thorium processing sites for specified costs of environmental cleanup within statutorily defined limitations. The Departments FY 2000 request for these activities is $240.2 million—a $20 million increase over the current

year. The increase is entirely within the uranium enrichment portion of the fund. Within the Defense Environmental Management account, we are continuing work

on the clean up of the Department’s nuclear weapons complex. We continue to have

a goal of cleaning up several major sites, including Fernald, Rocky Flats, and

Mound, by the end of FY 2006, and to reduce the life-cycle cost of completing clean

up activities at our other environmental management sites. We are also continuing

with privatization projects at Carlsbad, Hanford, Idaho, and Oak Ridge. The Department will be submitting shortly its annual report to the Congress on the status of

these privatization projects. The Office of Environmental Management has been playing a lead role in the Department-wide effort to use roadmapping techniques to improve the way we develop

and manage science and technology programs. EM has constructed science and technology roadmaps at three levels: overall EM investments in science and technology

have been mapped in the EM R&D Program Plan that was released in November

1998; five problem area roadmaps have been built at the Focus Area level; and a

number of project level roadmaps have been developed, e.g., Hanford Vadose Zone

and Salt Treatment Alternatives at the Savannah River Site.

EM is applying systems engineering principles to develop these roadmaps on an

integrated, complex wide basis. This complex-wide integration effort, championed by

five Field Office Managers and the EM Assistant Secretary, was a winner of the

1998 Government Technology Leadership Award, sponsored by Government Executive magazine. Complex-wide integration activities, combined with science and technology roadmapping efforts, will strengthen the scientific and technical

underpinnings of the EM program and ultimately reduce the cost of the cleanup effort.

Office of Civilian Radioactive Waste Management

In December 1998, the Department completed, and submitted to the President,

the Congress, and the public the Viability Assessment of a repository at Yucca

21

Mountain. This assessment assembled, for the first time, information about all

major elements of the site and proposed repository design. Based on the results of

the Viability Assessment, the Department believes the scientific and technical work

at Yucca Mountain should proceed to support a decision by the Secretary of Energy

in 2001 on whether to recommend the site to the President for development as a

geological repository. The assessment also included a preliminary baseline design,

cost and schedule for completion of the proposed repository. For FY 2000, the Department is requesting $409 million, an increase of $51 million over the current fiscal year to fund the additional cost of these efforts. This includes $39 million of the

$85 million reserved in the fiscal year 1996 Defense Nuclear Waste Appropriation.

These funds will support continuation of technical evaluation of the site and refinement of engineering and design for the repository.

Under the current schedule, the Department would also complete and issue the

Final Environmental Impact Statement for the repository in the year 2000. If the

site is suitable, the formal recommendation of the site to the President would be

made in 2001 and submission of the license application to the Nuclear regulatory

Commission would occur in 2002.

SCIENCE

As I said earlier, the Department of Energy is, at its heart, a science and technology agency. Science and technology are not merely parts of this Department, they

are the foundation on which all the Department’s work is based. Our request for

science funding for FY 2000 is $2.8 billion, an increase of $138 million. Included in

this amount is $70 million for the Department’s role in the President’s Information

Technology for the 21st Century initiative. This investment will enable us to develop

and deploy new, far faster computers for advanced simulation. We call it the ‘‘Scientific Simulation Initiative,’’ or ‘‘SSI.’’ Our goal is to develop a multi-tera scale national computing infrastructure for solving complex scientific and engineering problems of national importance. We expect that this initiative, over the next five years,

will elevate simulation to a discovery tool alongside experimentation and theory.

These new simulation capabilities will be powerful tools to do things like design

new, clean combustion devices, develop new pharmaceuticals, explore new materials,

and improve our weather and climate research, reaffirming America’s leading role

in these fields.

We will continue investing in other science programs that will have far reaching

benefits to all of the country’s and the Department’s research agenda. For example,

we are continuing development of the Spallation Neutron Source (SNS) at the Oak

Ridge National Laboratory. This state of the art neutron scattering facility will lead

to the development of stronger and lighter materials, more efficient motors, and increase our understanding of the structure of matter. The SNS is essential for restoring American leadership in neutron scattering, a core capability for materials

science.

It is important to emphasize here the contributions that the Science program

makes not only to the advancement of basic sciences in this country and the continuation of U.S. scientific leadership, but also the direct impact the science program has on the other three missions of the Department of Energy. Energy Resources, Environmental Quality, and National Security are all the beneficiaries of

the steady stream of discoveries and expertise from the DOE laboratory system, and

from the universities and industries who perform work funded by DOE.

DEPARTMENTAL ADMINISTRATION

The offices funded under the Departmental Administration appropriations account

provide headquarters with guidance and support of all operating elements of the Department including such as areas as human resources, administration, accounting,

budgeting, legal services, information management systems, congressional liaison

and public affairs. Management of program activities is funded by program direction

funding within each program budget. The Department is requesting $247.5 million

dollars for Departmental Administration, a $2.9 million decrease.

MANAGEMENT

Working with Congress, we have reduced our Federal employee workforce by 25

percent in less than four years. We’ve also reduced our contractor employment by

31 percent since its peak in 1992. But this streamlining has left gaps in important

skill areas. To resolve this, in December, Secretary Richardson announced a targeted effort to bring specialized skills into the Department as part of his ‘‘Workforce

21’’ initiative. One of the first steps taken was the development of an R&D TechVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00024 Fmt 6633 Sfmt 6621 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
22

nical Managers Initiative, which now includes a detailed action plan for improving

R&D technical management, to ensure the Department has the essential expertise

to carry out our missions in the future.

We are also taking a comprehensive look at the structure of the Department, looking for ways to improve efficiency, strengthen management, ensure accountability,

and improve reporting requirements. For example, we have restructured the Research and Development Council, which I chair, to integrate our research activities

across the Department. We have also reinvigorated the Laboratory Operations

Board to ensure that our government-owned, contractor-operated laboratories are

being managed effectively and are fully accountable to the Department.

CONCLUSION

The Department’s FY 2000 budget request of $17.8 billion will, if funded, allow

the Department to serve the American people effectively, in pursuit of its core missions:

• Advancing the frontiers of science and technology;

• Ensuring the security, diversity and affordability of America’s energy resources;

• Promoting national security, and keeping our nuclear weapons stockpile safe, secure, and reliable; and

• Cleaning up the environmental legacy of the Cold War.

The budget we have submitted attempts to balance many competing demands

from the scientific community, from industry, and from communities that surround

and host our facilities, within current budgetary constraints. We believe that this

budget, along with some of the essential policy initiatives I have outlined, achieves

this balance, and we ask for your support.

Thank you again for the opportunity to testify this morning. I would be pleased

to answer any questions the Subcommittee has regarding the FY 2000 budget.

U.S. Department of Energy

Office of Nonproliferation and National Security

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999

Comparable

Approp.

FY 2000

Request Change

Research and Development .................................................................................... $210.0 $221.0 $+11.0

Arms Control ........................................................................................................... 256.9 296.0 +39.1

International Nuclear Safety ................................................................................... 30.0 34.0 +4.0

HEU Transparency Implementation ......................................................................... 13.6 15.8 +2.2

Nuclear Safeguards ................................................................................................ 55.2 59.1 +3.9

Security Investigations* .......................................................................................... 30.0 30.0 0.0

Emergency Management ......................................................................................... 21.0 21.0 0.0

Program Direction ................................................................................................... 80.4 90.4 +10.0

Subtotal ................................................................................................................... $697.1 $767.3 +$70.2

Use of Prior Year Balances .................................................................................... -6.2 — +6.2

Offset to user organizations ................................................................................... -20.0 -20.0 0.0

TOTAL, Nonproliferation ........................................................................................... $670.9 $747.3 $+76.4

*Program Offices are providing funding for Security Investigations to be used for all contractor personnel in the field. For FY 1999, $20

million appropriated, plus $15 million per Congressional Notification letter; and for FY 2000, a request of $20 million.

KEY RESULTS SUPPORTED BY FY 2000 BUDGET

• Increases nuclear safety and threat reduction assistance to Russia and maintains

cooperation with the Newly Independent States (NIS) and Baltics to secure and

prevent the spread of Special Nuclear and other Weapons of Mass Destruction

materials and expertise.

• Continues development of technology upgrades for Comprehensive Test Ban Treaty monitoring and verification.

• Accelerates research and development of technologies for domestic response to

chemical and biological weapons threats.

• Sustains Nuclear Safeguards and Security and Emergency Management Programs, and supports Critical Infrastructure Program.

23

• Protects against inadvertent release of Restricted Data and Formerly Restricted

Data (P.L. 105-261), and continues the declassification process while protecting

our national security.

U.S. Department of Energy

Office of Nuclear Energy, Science and Technology

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999

Comparable

Approp.

FY 2000

Request Change

Nuclear Energy Research & Development

Advanced Radioisotope Power Systems ............................................................. $37.0 $37.0 $0.0

Test Reactor Area & Landlord Functions ........................................................... 6.8 9.0 +2.2

University Reactor Fuel Assistance and Support ............................................... 11.0 11.3 +0.3

Nuclear Energy Plant Optimization (NEPO) ........................................................ — 5.0 +5.0

Nuclear Energy Research Initiative (NERI) ........................................................ 19.0 25.0 +6.0

Total, Nuclear Energy R&D ................................................................................. 73.8 87.3 +13.5

Fast Flux Test Facility ............................................................................................. 30.0 30.0 0.0

Termination Costs ................................................................................................... 85.0 65.0 -20.0

Uranium Programs .................................................................................................. 35.4 41.0 +5.6

Isotope Production & Distribution .......................................................................... 21.5 21.0 -0.5

Program Direction ................................................................................................... 21.2 25.0 +3.8

Subtotal, Nuclear Energy .................................................................................... 266.9 269.3 +2.4

Use of Prior Year Balances ................................................................................ -3.5 0.0 +3.5

TOTAL, Nuclear Energy ............................................................................................ $263.4 $269.3 $+5.9

KEY RESULTS SUPPORTED BY FY 2000 BUDGET

• Solve critical technology issues associated with existing nuclear plants.

• Conduct investigator-initiated, peer-reviewed innovative nuclear energy research

and development.

• Optimize the capability of nuclear power plants to contribute to the reduction in

U.S. CO2 emissions.

• Develop and produce vital medical, research, and industrial isotopes and their related applications.

• Maintain capability to produce safe nuclear power systems and related technologies for future space exploration.

• Support research and education programs at U.S. universities through grants, fellowships, and scholarships.

• Manage Nuclear Energy facilities and DOE research reactors in a safe, economic,

and environmentally sound manner.

• Develop advanced technologies to treat DOE spent fuel.

• Implement long-term management strategy for the Department’s depleted uranium hexafluoride inventory.

• Maintain and/or deactivate the Department’s surplus nonweapons nuclear reactor

sites.

U.S. Department of Energy

Office of Defense Programs

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program FY 1999Comparable

Approp.

FY 2000

Request Change

Stockpile Stewardship

Core Stockpile Stewardship ................................................................................ $1,012.0 $1,153.9 $+141.9

ASCI/Stockpile Computing .................................................................................. 483.8 542.5 +58.8

Inertial Confinement Fusion ............................................................................... 503.4 465.7 -37.7

Technology Partnerships ..................................................................................... 43.0 22.2 -20.8

Education ............................................................................................................ 19.0 29.8 +10.8

24

U.S. Department of Energy—Continued

Office of Defense Programs

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999

Comparable

Approp.

FY 2000

Request Change

Infrastructure Construction ................................................................................ 64.7 72.1 +7.4

Subtotal, Stockpile Stewardship .................................................................... 2,125.9 2,286.2 +160.3

Stockpile Management

Core Stockpile Management ............................................................................... 1,639.4 1,552.0 -87.4

Enhanced Surveillance ....................................................................................... 81.5 85.3 +3.8

Advanced Manufacturing ................................................................................... 79.5 85.0 +5.5

Radiological/Nuclear Accident Response ........................................................... 76.2 77.6 +1.4

Tritium Source .................................................................................................... 167.0 170.0 +3.0

Materials ............................................................................................................. 27.9 28.4 +0.5

Subtotal, Stockpile Management ................................................................... 2,071.5 1,998.3 -73.2

Program Direction ................................................................................................... 249.6 246.5 -3.1

Subtotal, Weapons Activities .................................................................................. 4,447.0 4,531.0 +84.0

Use of Prior Year Balances .................................................................................... -47.0 0.0 +47.0

TOTAL, Weapons Activities ...................................................................................... $4,400.0 $4,531.0 $+131.0

KEY RESULTS SUPPORTED BY FY 2000 BUDGET

• Maintain confidence in the safety and reliability of the nuclear weapons stockpile

without nuclear testing

• Initiate manufacture of W88 pits for enduring stockpile

• Maintain National Ignition Facility schedule

• Demonstrate three-dimensional analysis of specific behavior of a nuclear weapon

primary

• Execute two subcritical experiments

• Dismantle approximately 375 weapons

• Begin implementation of the Secretarial decision to produce tritium in a TVA reactor including the start of construction of the tritium extraction facility and

maintaining an accelerator as a backup

U.S. Department of Energy

Office of Worker and Community Transition

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999

Comparable

Approp.

FY 2000

Request Change

Work Force Restructuring ........................................................................................ $9.4 $9.4 $0.0

Community Transition Assistance .......................................................................... 16.6 17.1 +0.5

Program Direction ................................................................................................... 3.9 3.5 -0.4

Subtotal, Worker & Community Transition ......................................................... $29.9 $30.0 $0.1

Use of Prior Year Balances .................................................................................... -1.7 0.0 +1.7

TOTAL, Worker and Community Transition ............................................................. $28.2 $30.0 $+1.8

KEY RESULTS SUPPORTED BY FY 2000 BUDGET

• Manage the Department’s efforts to restructure its contractor work force during

FY 2000.

• Provide enhanced separation benefits to workers separated from former defense

nuclear program activities.

25

• With community assistance, create 1,700 new jobs through expansion of existing

businesses or new business starts within communities affected by the Department of Energy’s work force restructuring.

• Support renegotiation or renewal of 25 collective bargaining agreements throughout the Department of Energy complex and assist field organizations in labor/

management relations and negotiations.

• Stimulate efforts to dispose of unnecessary assets and reuse existing facilities.

U.S. Department of Energy

Office of Energy Efficiency & Renewable Energy

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999

Comparable

Approp.

FY 2000

Request Change

Power Technologies (formerly Utilities) .................................................................. $272.3 $325.2 $+52.9

Industry Technologies ............................................................................................. 165.9 171.0 +5.1

Transportation Technologies ................................................................................... 243.8 305.5 +61.7

Building Technologies, States & Communities ...................................................... 262.2 335.9 +73.7

Federal Programs .................................................................................................... 23.8 31.9 +8.1

Program Management ............................................................................................. 59.7 66.9 +7.2

Subtotal, Energy Efficiency & Renewable Energy .............................................. $1,027.7 $1,236.4 $+208.7

Use of prior year balances ..................................................................................... -64.0 -0.8 +63.2

Total, Energy Efficiency & Renewable Energy ........................................................ $963.7 $1,235.6 $271.9

KEY RESULTS SUPPORTED BY FY 2000 BUDGET

• Power—(formerly Utilities) Improve the performance, reduce the cost, and perform highly-leveraged field verifications of technologies that generate electricity

from renewable energy resources in a highly-competitive, restructured utility

environment. Power Technology programs are expected to replace up to 1.2

Quads of domestic primary energy by clean renewable resources, save consumers $1.4 billion, and reduce annual U.S. carbon emissions by nearly 24 million metric tons by 2010, roughly equivalent to all the energy used for a year

in homes in Texas, our nation’s second largest state.

• Industry: Develop and facilitate the deployment of energy efficient technologies

in partnership with the most energy intensive industries. Investments are expected to save up to 1.5 Quads, $6 billion, and 29 million metric tons carbon

equivalent (MMTCE) annually by 2010, roughly equivalent to all the industrial

energy used for a year in Pennsylvania, the fifth largest state in the nation.

• Transportation: The Partnership for a New Generation of Vehicles (PNGV) will

support development of technologies needed for an 80 mpg family automobile,

and more efficient small trucks and heavy trucks. DOE Transportation programs are expected to save up to 1 million barrels/day of oil, $9.9 billion, and

reduce carbon 25 MMTCE annually by 2010, roughly equivalent to the oil based

fuels used for a year for transportation in Florida, the third largest state in the

nation.

• Buildings: Work with industry, states, and other key partners to develop and implement energy efficient buildings and building technologies and programs leading to savings of up to 2.3 Quads, $16 billion, and 36 MMTCE annually by

2010. This is roughly equivalent to all residential and commercial building energy use in Texas in a year. In addition, the program will weatherize nearly

77,000 low income homes.

• FEMP: Accelerate efforts to deliver federal energy savings through $5 billion

worth of Energy Savings Performance Contracts (ESPCs) with the private sector. Also accelerate utility financing and procurement of energy efficiency products to achieve 30 percent reduction in federal energy efficiency. FEMP programs are expected to save up to 0.1 Quads, $400 million, and 1.2 MMTCE annually by 2010.

26

U.S. Department of Energy

Office of Fossil Energy

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999

Comparable

Approp.

FY 2000

Request Change

Fossil Energy Research and Development

Coal .................................................................................................................... $123.1 $122.4 $-0.7

Petroleum ............................................................................................................ 48.6 50.2 +1.6

Gas ..................................................................................................................... 115.2 105.3 -9.9

Management & Other ......................................................................................... 97.1 97.1 0.0

Subtotal, Fossil Energy R&D ................................................................................... 384.0 375.0 -9.0

Naval Petroleum & Oil Shale Reserves .................................................................. 20.7 21.2 +0.5

Elk Hills School Lands Fund ................................................................................... 36.0 36.0 0.0

Strategic Petroleum Reserve ................................................................................... 160.1 164.0 +3.9

Subtotal, Fossil Energy ........................................................................................... $600.8 $596.2 -$4.6

Use of prior year balances & other ........................................................................ -7.9 -33.2 -25.3

Clean Coal Technology Program ............................................................................. -40.0 -246.0 -206.0

TOTAL, Fossil Energy ............................................................................................... $552.9 $317.0 $-235.9

KEY RESULTS SUPPORTED BY FY 2000 BUDGET

• Coal R&D—Start construction of clean, advanced coal fire power system-part of

the final phase of the Low Emissions Boiler Program (LEBS) to be completed

in 2001. The system will use newly developed high temperature filtration processes for superior environmental performance and provide the foundation for a

new generation of highly efficient supercritical steam power plants. Complete

subscale testing of high temperature air furnace technology for use in highly efficient indirectly-fired combustion power systems and in Vision 21 Power

Plexes. Complete initial lab tests of novel gaseous separation (O2, H, CO2) technologies to provide low cost options for Vision 21 Power Plexes. Identify candidates for low-cost gas purification technologies to support zero emissions goal

of Vision 21 Power Plexes.

• Natural Gas and Oil R&D—Continue scale-up development of ceramic membrane for gas-to-liquids processing; continue implementing President’s Committee of Advisors on Science and Technology (PCAST) recommendation for

methane hydrates recovery program and continue development of advanced

diagnostics and imaging technologies for highly fractured and bypassed gas reservoirs and endangered domestic oil reservoirs. Continue support for National

Lab partnerships with industry and for Petroleum Technology Transfer Council.

Initiate Preferred Petroleum Upstream Management Practices (PUMP).

• Continue restructured advanced gas turbine program for 2001 introduction of

‘‘quantum leap’’ turbine, continue scale-up tests of solid oxide fuel cell, and continue cost-reduction R&D for molten carbonate fuel cell technologies.

• Naval Petroleum and Oil Shale Reserves—Continue to operate NPR3 and to

finalize equity determination activities on NPR1.

• Strategic Petroleum Reserve—Maintain a highly reliable level of operational

readiness. Complete Weeks Island oil skimming and decommissioning. Initiate

long term monitoring of Weeks Island to assure mine stability. Test major SPR

systems in the post-Life Extension program era at all sites. The addition of $5

million to the SPR Petroleum Account assures the capability to sustain drawdown operations until sales receipts are available.

• Clean Coal Technology—Continue prior cost-shared commitment to 20 projects

projected to be active in FY 2000.

27

U.S. Department of Energy

Office of Environmental Management

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999*

Comparable

Approp.

FY 2000

Request Change

Site Closure ............................................................................................................. $1,290.2 $1,265.6 $-24.6

Site/Project Completion ........................................................................................... 1,141.1 1,081.8 -59.3

Post 2006 Completion ............................................................................................ 2,403.9 2,532.5 +128.6

Science and Technology .......................................................................................... 243.2 230.5 -12.7

UE D&D Fund .......................................................................................................... 220.2 240.2 +20.0

Privatization ............................................................................................................ 228.4 253.0 +24.6

Program Direction ................................................................................................... 337.1 349.4 +12.3

Subtotal, Environmental Management ............................................................... 5,864.1 5,953.0 +88.9

Uncosted Offset ...................................................................................................... -32.1 -25.0 +7.1

TOTAL, Environmental Management ....................................................................... $5,832.0 $5,928.0 $+96.0

*Includes FY 1999 Emergency Supplemental funding of $13.8 million to correct year 2000 computer problems.

KEY RESULTS SUPPORTED BY FY 2000 BUDGET

• Accelerate clean up at as many sites as possible by 2006, reducing risks to workers, public health, and the environment.

• Pursue accelerated closure of three major sites: Rocky Flats, Fernald, and Mound.

• Provides for the first full year of operation of the Waste Isolation Pilot Plant

(WIPP) by receiving waste from multiple sites across the country for permanent

disposal. Transuranic waste will be received from New Mexico, Idaho, Colorado,

South Carolina, Washington, Ohio, and Illinois.

• Continue EM’s contracting strategy of privatizing clean up activities at multiple

sites.

• Support aggressive efforts to deploy new, efficient technologies to accelerate clean

up schedules, and produce significant cost savings.

• Vitrify between 100 and 105 canisters of high-level waste at the Savannah River

Site, South Carolina and in West Valley, New York

U.S. Department of Energy

Office of Environment, Safety and Health

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999

Comparable

Approp.

FY 2000

Request Change

Technical Assistance .............................................................................................. $50.4 $50.8 $+0.4

Health Studies ........................................................................................................ 78.5 86.5 +8.0

Oversight ................................................................................................................. 25.0 25.5 +0.5

Subtotal, Environment, Safety and Health ............................................................. $153.9 $162.8 $+8.9

Use of Prior Year Balances .................................................................................... -5.1 -8.7 -3.6

Total, Environment, Safety and Health .................................................................. $148.8 $154.1 +$5.3

KEY RESULTS SUPPORTED BY FY 2000 BUDGET

• Technical Assistance: Technical experts in fields of nuclear safety engineering, occupational safety, radiation protection and other environment, safety and health

disciplines work with DOE line programs to solve critical problems and develop

programs to prevent injuries, illnesses, environmental contamination, and to

comply with all environmental laws and regulations

• Health Studies: Continue research on the effects of radiation on humans; epidemiological studies on occupational diseases; and studies to determine potential

health effects to workers and community residents exposed to hazardous mateVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00030 Fmt 6633 Sfmt 6621 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
28

rials from DOE operations. This year includes funding for the Department of

Health and Human Services to conduct health studies previously funded by the

Office of Environmental Management.

• Oversight: Perform independent oversight to appraise the effectiveness of environment, safety, health, safeguards, and security programs, and follow-up with corrective actions. Administer enforcement programs to assure DOE contractors

adhere to safety rules.

U.S. Department of Energy

Office of Science

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999

Comparable

Approp.

FY 2000

Request Change

Basic Energy Sciences ............................................................................................ $799.5 $888.1 $+88.6

Biological and Environmental Research ................................................................. 436.7 411.2 -25.5

Less One Time Projects ...................................................................................... -46.8 0.0 +46.8

Total BER Base .................................................................................................. 389.9 411.2 +21.3

Fusion Energy Sciences .......................................................................................... 222.6 222.6 0.0

Computational and Technology Research .............................................................. 157.5 198.9 +41.4

High Energy Physics ............................................................................................... 695.5 697.1 +5.5

Nuclear Physics ....................................................................................................... 334.6 342.9 +4.5

Multiprogram Energy Labs & Other ........................................................................ 72.1 74.6 +2.5

Subtotal .............................................................................................................. 2,718.5 2,835.4 +117.2

General Reduction/Use of Prior Year Balances ...................................................... -13.0 0.0 +13.0

Superconducting Super Collider (SSC) Balances ................................................... -7.6 0.0 +7.6

TOTAL, Science ........................................................................................................ $2,697.9 $2,835.4 $+137.8

Technical Information Management ....................................................................... $8.6 $9.1 $+0.8

KEY RESULTS SUPPORTED BY FY 2000 BUDGET

• Begin the ‘‘Scientific Simulation Initiative,’’ a critical element in the President’s

Information Technology for the 21st Century program, in partnership with NSF

and other agencies (NASA, DOD, NOAA, NIH); an integrated initiative in computer simulation and modeling that builds upon, and is integrated with Accelerated Strategic Computing Initiative (ASCI) capabilities.

• Increase Climate Change Technology Initiative research in carbon management

science, in relation to DOE’s technology programs which are directed at the

themes of science for efficient technologies, fundamental science underpinning

advances in all low/no-carbon energy sources and sequestration science.

• Continue construction of the Spallation Neutron Source at Oak Ridge National

Laboratory to regain our position of international leadership in neutron sources

used for physical, chemical, materials, biological, and medical research. This

$1.3 billion facility involves DOE leadership of an interlaboratory effort (ORNL,

LBNL, LANL, BNL, and ANL).

• Maintain scientific user facilities by providing operating time and user support for

over 15,000 scientists in universities, federal agencies, and industry.

• Continued participation in the President’s Next Generation Internet initiative, the

Partnership for New Generation of Vehicles, DOE 2000, genome and global climate change.

• $32 million for carbon management science, including using microbial genomics

to find ways to sequester carbon for potential greeenhouse gas reduction.

U.S. Department of Energy

Office of Fissile Materials Disposition

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999

Comparable

Approp.

FY 2000

Request Change

Future Storage ........................................................................................................ $0.9 $4.3 $+3.4

29

U.S. Department of Energy—Continued

Office of Fissile Materials Disposition

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999

Comparable

Approp.

FY 2000

Request Change

Disposition .............................................................................................................. 86.0 95.0 +9.0

Facility Design ........................................................................................................ 48.0 62.9 +14.9

U.S./Russian Activities ............................................................................................ 24.9 24.9 0.0

Core Technologies ................................................................................................... 2.7 2.3 -0.4

NEPA Compliance .................................................................................................... 1.9 3.3 +1.4

Program Direction ................................................................................................... 4.6 7.3 +2.7

Use of Prior Year Balances .................................................................................... -1.5 0.0 +1.5

TOTAL, Fissile Materials Disposition ....................................................................... $167.5 $200.0 $-32.5

Russian Plutonium Disposition ............................................................................... 200.0 0.0 -200.0

KEY RESULTS SUPPORTED BY FY 2000 BUDGET

• Complete Title I and initiate Title II designs of Pit Disassembly and Conversion

Facility and Mixed Oxide (MOX) Fuel Fabrication Facility

• Initiate Title I design of an Immobilization and Processing Facility

• Begin implementation of U.S./Russian accord for plutonium disposition in Russia

• Continue Phase II testing of integrated prototype for pit disassembly and conversion

• Upgrade surplus pit storage facilities at Pantex

• Continue disposition of surplus highly enriched uranium (HEU)

• Issue a draft environmental impact statement on disposition of U233

U.S. Department of Energy

Office of Civilian Radioactive Waste Management

FY 2000 Congressional Budget Request

[Dollars in Millions]

Program

FY 1999

Comparable

Approp.

FY 2000

Request Change

Yucca Mountain Site Characterization ................................................................... $282.4 $331.7 $+49.3

Waste Acceptance, Storage and Transportation .................................................... 1.9 5.7 +3.8

Accelerator Transmutation of Waste ...................................................................... 4.0 — 4.0

Management Functions ........................................................................................... 69.7 71.6 +1.9

Subtotal .............................................................................................................. 358.0 409.0 +51.0

Less the Use of Previously Appropriated Funds ..................................................... -0.5 -39.0 -38.5

TOTAL, Civilian Radioactive Waste Management ................................................... $357.5 $370.0 $12.5

KEY RESULTS SUPPORTED BY FY 2000 BUDGET

The FY 2000 budget requests $370 million in new budget authority and assumes

that $39 million of the $85 million reserved in the FY 1996 Energy & Water Development Appropriations Act (P. L. 104-46) will be made available by Congress. The

total program funding request of $409 million in FY 2000 supports activities necessary to be completed in time to determine the suitability of the Yucca Mountain

site as a repository, develop the documentation needed for a Secretarial decision on

the Site Recommendation to the President in FY 2001, and conduct other activities

associated with the federal government’s waste acceptance obligations.

Yucca Mountain Site Characterization Project in FY 2000 will:

• Select the natural system reference models to support a decision on whether to

recommend the Site to the President and the License Application.

• Select the reference repository and waste package designs to support a decision

whether to recommend the Site to the President and the License Application.

30

• Complete and issue the final Environmental Impact Statement. • Continue the evaluation of this site for compliance with 10 CFR Part 960, the Department of Energy’s repository siting guidelines. • Initiate development of the documentation to support a Secretarial decision on

Site Recommendation.

Waste Acceptance, Storage, and Transportation activities will focus on:

• Development of processes for the legal and physical transfer of commercial spent

nuclear fuel to the federal government. • Pre-licensing discussions with the Nuclear Regulatory Commission for a non-sitespecific interim storage facility. • Updating a Request for Proposal scheduled for issuance in FY 2001 for acquisition

of waste acceptance and transportation services. • Institutional issues of concern to Program stakeholders regarding transportation.

Regulatory Compliance, Program Control, and Management functions include:

• Nuclear quality assurance, NEPA compliance, and compliance with external regulatory requirements. • System engineering and integration, program planning, independent technical

oversight of critical program elements, validation of repository design concepts

and operating strategies, and licensing records management. • Federal salaries, training, computer applications and information technology.

Mr. BARTON. Thank you, Dr. Moniz.

We’ve been joined by the distinguished chairman of the full committee, the Honorable Tom Bliley. Does he wish to ask questions

first? Mr. Chairman, I’ve given you the honor, if you wish to be the

first questioner.

Mr. BLILEY. Oh, I’ll pass.

Mr. BARTON. Okay.

The Chair will then recognize Mr. Norwood—Mr. Norwood’s on

a tight time schedule and asked if he could go before some of the

other subcommittee members.

Mr. Norwood, for 5 minutes, questions only.

Mr. NORWOOD. Thank you very much, Mr. Chairman, and I do

appreciate it—the tight schedule is difficult today, and I do have

some questions—however, those I have about Tritium and Yucca

Mountain, et cetera, I’d like to submit for the record, and concentrate my efforts just a few minutes on the power marketing administration. In particular, my interest is the southeastern power

marketing administration, which happens to be the best one, I

think—I believe I’m right in saying that out there—at least we

tend to generate more than we spend, that’s always a good sign.

Mr. BARTON. It’s the best one in the Southeast——

Mr. NORWOOD. There’s no question you can say that, Mr. Chairman, you’re right very often.

Has the gentleman—in either or both—has the administration

made an actual policy decision to terminate wholesale power contracts with existing preference customers by, in your budget, having eliminated funding for purchase power and wheeling? Has

there been a decision made, a policy decision?

Mr. MONIZ. The budget reflects, clearly, a policy that the PMAs

would not need to participate in purchasing power or wheeling

services for PMA customers, because the customers can obtain the

services themselves, working directly with suppliers. However,

since announcing that policy, we have learned that a number of

PMA customers believe in an abrupt adoption of this policy——

Mr. NORWOOD. Would you pull that mike just a little closer to

you, please?

31

Mr. MONIZ. Yes. Since that time, we have learned that a number

of PMA customers believe that an abrupt adoption of this past will

create undue hardships. So we stand ready to work with Congress

and PMA customers to develop a workable plan to go forward. The

Department is open to new ideas that provide a permanent solution

for financing this activity.

If I may, Mr. Norwood, let me ask our CFO, Mike Telson, to amplify on this statement.

Mr. NORWOOD. Thank you. Well, did you say to me you’ve

changed your mind and you’re going to change the budget—is that

what you said? And then we’ll talk about it again under more sensible circumstances.

Mr. TELSON. Mr. Norwood, we’re willing to work with you to address any problems that are raised, but if I might take just about

a minute to describe what the problem is. Over a number of years,

we’ve been working with our customers to bring down what we call

purchase power, using alternate financing techniques—that is,

wherever possible where the customers can pay where we get our

power from, we would arrange for that to happen, and so get it off

our budget book.

The problem that we have is that the purchase power/wheeling expenditures that we have to seek—we have about $50 million or

so that are left right now from a peak of much higher a number

of years ago—that money has to be sought as a discretionary appropriation, even though that money comes back to us immediately

in the form of a reimbursement from our customers.

However, that money goes to the Treasury, it doesn’t come to us.

Mr. NORWOOD. In other words, they sell electricity and we put

it back into the Treasury.

Mr. TELSON. Correct.

Mr. NORWOOD. I understand.

Mr. TELSON. But we have to take $50 million, roughly, from a

very, very tight pot, which you have——

Mr. NORWOOD. I understand.

Mr. TELSON. [continuing] even a worse problem than we do, having to find money within a discretionary pot. So, we have an asymmetry which creates a problem for the Department, creates a problem for the whole budget. Obviously, just the bottom line is that

if we don’t appropriate the money, it’s clear that we can’t get the

receipts from the purchase power. Right?

Mr. NORWOOD. Right.

Mr. TELSON. Obviously. Yet prior OMB and CBO baselines would

have you believe that that was possible. See, that’s the situation

we encountered when we were preparing this budget. So what

we’ve done is we’ve taken the lead to work with OMB to prepare

a proposal that would rectify the situation by basically taking these

receipts out of the base sum, because we’re not going to seek an

appropriation for that.

Mr. NORWOOD. You know, we all appreciate the problem that you

generate the money, it goes to the Federal treasury, and you don’t

get it back appropriately—I’ve fussed about that for a long time.

In fact, all of us who pay taxes into the Federal treasury have the

same problem—we can’t seem to get any of it back. But I understand and appreciate where you’re coming from, but there are nuVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00034 Fmt 6633 Sfmt 6602 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
32

ances here that will lower the amount that’s going into the Federal

treasury if you continue down this line, wherever the money’s

spent, and that’s not good, either.

Mr. TELSON. Right.

Mr. NORWOOD. Let me just ask quickly—because we’re running

out of time—did you check on the law when you made the decision,

because it is my understanding that there is some question as to

whether the Department of Energy would be able to comply with

the Flood Control Act it this amount of appropriations were to

stick.

Mr. BARTON. This will have to be the last question——

Mr. TELSON. Yes. Sir, we will work with you to address these

issues, because, clearly, it is not in our intent to create problems

for you.

Mr. NORWOOD. I didn’t think it is, and this isn’t hard. All we’ve

got to do is put it back like it was and then—so that we can generate more income for the Federal Treasury.

Mr. TELSON. Right. Maybe, perhaps if the CBO could also adjust

their baseline. Maybe this is something to also be looked at.

Mr. NORWOOD. Mr. Chairman, the rest of them I’ll put in writing.

Mr. BARTON. Okay, I thank the gentlemen from Georgia. We’ve

commented that I think Bear Bryant had a hat made out of the

same cloth that your coat is——

Mr. NORWOOD. Actually, he did, yes.

Mr. BARTON. The Chair would recognize the gentlelady from Missouri for 5 minutes for questions.

Ms. MCCARTHY. Thank you, Mr. Chairman.

Dr. Moniz, I appreciate your remarks with regard to energy efficiency, renewable energy, and—if I might read from your testimony—‘‘to maintain U.S. technological expertise and competitive

advantage in global energy technology markets to develop and deploy technologies capable of reducing greenhouse gas emissions.’’

I cannot find, when I look at the budget, where those numbers

are—these are lofty and wonderful words—I happen to believe in

them—I happen to think that addressing technology is a win-win

for this country. I’d rather see us develop it and export it, than buy

it under some foreign country’s name as we did with electronic

technology in the past in other instances.

But I see the words, I don’t see the numbers, and I want to know

what you’re talking about when you talk about ‘‘develop and deploy

technologies capable of reducing greenhouse gas emissions.’’

Could you give me a little more information on that, please?

Mr. MONIZ. Certainly. Thank you for the question.

The portfolio, which will be addressing greenhouse gas emissions,

first of all, is very broad, and I will walk through a few of those

examples. I do want to also emphasize that without exception, the

technologies that we are working on to develop greenhouse gas

emission reduction, are simultaneously addressing multiple goals

in terms of energy security, clean environment at local levels as

well as global levels, et cetera. So these are multipurpose technologies—in particular, of course, efficiency is a technology which

serves essentially all of our energy and economic goals.

33

Ms. MCCARTHY. I’m particularly interested in those technologies

that we can export to developing countries—they are an incredibly

important component if we are going to address greenhouse gas

emissions, we certainly can as a nation, but we need everyone addressing it. And one of the keys to that is to make technologies that

are affordable and usable in these developing countries so they can

participate in the goals we all seek.

Mr. MONIZ. Yes. There is a very good synergy here, in the sense

that, as one develops, for example, renewable technologies, they of

course are very environmentally friendly—they are also a technology, because they are often very modular, they depend upon resources which are available in rural areas and in many foreign

countries. As we develop those technologies, they will be very important as we evolve to distributed power in this country, as we

serve our own rural areas, and provide the basis for what we believe will be an exceptional export market as we serve other countries, for the same reasons.

Ms. MCCARTHY. Are you working with private industry on this—

because there are, you know, entrepreneurs all over America trying

to accomplish this—this sort of next Silicon Valley approach to the

future.

Mr. MONIZ. Yes. The—our energy programs, our energy resource

and technology programs—of course, some of the work, particularly

the basic—the more basic work—is done to a large extent in our

laboratories in some universities. But certainly as we go into the

development phase, the applied research phase, a very large fraction of our work is done in cost-shared partnerships with the private sector.

Ms. MCCARTHY. Is there enough money in the budget for this effort? I think it’s a critical one.

Mr. MONIZ. Well, the—we have to work, of course, within the

overall constraints. We certainly have program pressure that could

use more funding. On the other hand, we do have a fairly robust

increase in the efficiency and renewable areas, for example—the

order of a 20 percent increase in those areas.

Ms. MCCARTHY. Can you get a little more detail to me and anyone else interested on the committee? I know a number of us that,

along with the Chairman, went to Kyoto to participate in the protocol effort there, and came away convinced that this could be an

economic opportunity for this Nation.

I’d like to know a little bit more—and more detail—just what’s

going on, so that I can be of assistance in that regard. I don’t want

to take up the committee’s time this morning, but I would like to

have more information made available to me about these two important points that you make.

Mr. MONIZ. We would be delighted, of course, to provide you

much more detailed briefings at your pleasure. Let me just note

that, again, the principal Departmental response in the context of

Kyoto, is to develop this robust and broad energy R&D portfolio,

developing the new technologies that will provide power, whether

it’s through higher efficiency in fossil, or through developing renewables, or whether it’s developing new modular small nuclear power

plants, which may find use elsewhere and of course, have no emissions.

34

The market for addressing the anticipated very, very large

growth in energy use worldwide is enormous. We are talking trillions of dollars, and we believe that these technologies will also

give our industries a strong competitive edge.

Ms. MCCARTHY. I just remain concerned that when I couldn’t

find electronic components made in America, that I don’t want to

see this happen with our opportunity here, and that’s why I keep

raising these issues.

Mr. MONIZ. And we agree fully.

Ms. MCCARTHY. These lofty words and these big numbers are

great, but I really want to know how we’re doing against our competitors out there in the world who are obviously, I think, a little

ahead of us on the curve, and—Mr. Chairman, I know I’ve gone

over my time, but—I know you are concerned about this issue, as

well.

Mr. MONIZ. Mr. Chairman, if I may add one comment—or am I

out of order?

Mr. BARTON. No, we’ll give you—we’ve got the hearing room until

12, so——

Mr. MONIZ. I would just note that we are very acutely aware of

the concern that you expressed. The good news is that in many

areas—for example, even in nuclear power, where we have not,

ourselves, had a new plant ordered for many years—we have modern designs from American companies which are leading the world.

In advanced turbines, we are out there in front. For the

photovoltaics—we have a huge export market right now for the

photovoltaics.

We could provide a lot more detailed information on this——

Mr. BARTON. I thank the gentlelady from Missouri. We’d recognize the gentleman from Oklahoma, Mr. Largent—he asked to go

out of order—and then we’ll proceed in regular order after that.

Mr. Largent, for 5 minutes.

Mr. LARGENT. Thank you, Mr. Chairman.

Dr. Moniz, how many employees are there at the Department of

Energy? Currently?

Mr. MONIZ. The Federal workforce is—I believe it’s around

15,000. Then there are about 100,000 when you include the contractors who work in our laboratories and production facilities.

Mr. LARGENT. Is that number going up or going down?

Mr. MONIZ. That’s gone down very substantially. Both the Federal and the contractor workforces, in this decade, have gone down

in the order of a quarter to a third, depends if it’s Federal or contractor.

Mr. LARGENT. Next question, I want to ask you about this Emergency Oil Task Force? It’s been commissioned by the Secretary in

December to develop a balanced oil action plan—when is that commission to report?

Mr. MONIZ. Well, in some sense, Mr. Largent, they are reporting

continuously through developing the kinds of initiatives that we’ve

outlined here. This task force was assembled to keep working with

the industry and providing many of the ideas you’ve seen here.

Mr. LARGENT. Okay, then let me ask you this question. The first

idea that you mentioned in your report talks about taking—or putting 28 million barrels of oil into the strategic petroleum reserve,

35

and using the oil—finding that oil from the offshore production.

Why would you choose to use offshore production as opposed to domestic production from independent producers?

Mr. MONIZ. With your permission, may I ask one of the experts

to address that question?

Mr. LARGENT. Sure. You bet. I guess my point, while your expert

comes to the table, is that 80 percent of the production that occurs

domestically is done so through the work and efforts of independent producers. So why wouldn’t we want to be helping the 80

percent as opposed to the 20 percent which is your majors—and

your majors are principally responsible for the offshore productions—not independents—so I’m saying, in this time of crisis, why

are we not looking to help the independent producers who are

doing 80 percent of the work, as opposed to the majors, who are

doing 20 percent of the domestic production?

Mr. BARTON. We need the expert’s name and title at the Department.

Mr. SHAGES. I’m John Shages. I’m the Director of Finance and

Policy for the Strategic Petroleum Reserves Office.

Mr. BARTON. Okay.

Mr. SHAGES. The answer, Congressman, is that logistically, the

oil coming in from offshore is the only oil that can be brought directly to the strategic petroleum reserves. All the pipelines of the

country lead inland from the coast; they do not lead from the inland back to the coast. All the strategic petroleum reserve sites are

on the coast. We will try to make this program available to all the

producers in the Outer Continental Shelf—there are about 140

leases out there and a number of them are with independent companies.

Mr. LARGENT. Isn’t it true that those pipelines used to flow the

other way, though? In other words, when we were actually exporting oil, those pipelines flowed the other way, and now because

we’re importing over 50 percent, maybe over 55 percent of the oil

today, those pipelines have reversed as a result, is that not true?

Mr. SHAGES. Some oil did use to flow to the coast, and it no

longer does.

Mr. LARGENT. Okay. All right, thank you for that, I appreciate

it. Let’s see, the other thing I want to say about this is that there

is an invitation that will be forthcoming from the Oklahoma delegation to try to—an invitation to the Secretary to come to Oklahoma, where we could put on a highly publicized forum on this

issue. I believe it’s not only an interest to oil-patch States like

Oklahoma and Texas, but it really does present national security

issues that I think we need to highlight and underscore at this

time.

One other question I had about that is—and this is, I know this

is a loaded grenade that I’m kind of throwing in here—and I have

mixed emotions about it as well, but—what is the Department of

Energy’s thought—or the administration’s thought—on an oil import fee? Because I don’t see it mentioned anywhere in here, and

yet I’ve heard it brought up in conversations.

Mr. MONIZ. Mr. Largent, well, first of all, I may just note that

I think the Secretary would very much welcome the invitation to

36

Oklahoma. With regard to the oil import fee, I’m afraid I’m not

aware of any such discussion at the moment. Mike? Do you——

Mr. TELSON. No, I’m not, either. You may want to ask the Secretary, but we don’t know.

Mr. LARGENT. Okay. Let me—if I have just a little bit more

time—I want a real quick question. Why do we not consider reprocessing spent nuclear fuel in this country, when everywhere else in

the world, it’s done? We’d reduce the amount of waste by 90 percent, it is environmentally friendly, it’s the right thing to do. Why

do we not do that in this country?

Mr. MONIZ. The policy, of course, goes back about 20 years to our

non-proliferation concerns, in particular the reprocessing that is

being pursued in other countries right now separates out plutonium, which is then—if acquired in the wrong hands—rather directly usable in a nuclear weapon, so we continue to try to maintain a strong non-proliferation regime.

Mr. LARGENT. Mr. Chairman, let me just say in closing—ten seconds—that I am—I want to commend the Department of Energy

and the administration for putting out a plan on electricity restructuring. It’s a very important issue for our country, and I look forward to working with you on coming to a consensus bill in the near

future.

Thank you, Mr. Chairman.

Mr. MONIZ. Thank you.

Mr. BARTON. Thank you, Congressman Largent. We’d recognize

Congressman Wynn for 5 minutes.

Mr. WYNN. Thank you, Mr. Chairman.

I noted in your testimony that you said that the problem would

be working with Congress to advance electricity restructuring. My

colleague just mentioned he was looking forward to working with

you on that role. I’d like you to comment, if you would, about consumer protection issues with respect to restructuring, and specifically on the Department’s position with respect to reliability issues

that may be raised in the course of restructuring.

Mr. MONIZ. First, there will be a number of consumer issues addressed in the plan which is still undergoing final tuning. For example, a very important issue of serving rural customers is one

very important example—as well as other issues involving PMAs.

With regard to reliability, there are discussions, of course, as to

how regulation of transmission would be handled. Second, we are—

of course, reliability—a near-term issue of reliability is Y2K, where

we are working with NERC to try to assure——

Mr. WYNN. Could you repeat that please—I didn’t——

Mr. MONIZ. A near-term reliability issue is our work with

NERC—the North American Electric Reliability Council—to make

sure the Y2K problem does not bite us later on this year. And finally, we are increasing our research program in reliability technologies for the good of the future.

Mr. WYNN. There is a lot of sentiment—and I don’t want to actually get in the debate today—but there’s a lot of sentiment that individual States are well-positioned to address most of the restructuring concerns, but that they may not be as well-positioned to discuss or to address the reliability issues. What’s the Department’s

37

position on this? Is there a Federal role in reliability—addressing

reliability concerns?

Mr. MONIZ. Yes, we believe there is. We believe there are a number of considerations that go beyond the State considerations, involving, for example, regional issues. In that context, we are—we

will be discussing a role for FERC in addressing reliability rules,

basically. So that is under final development, but we are proposing,

certainly, a role for FERC.

Mr. WYNN. When do you believe that you will be in a position

to discuss these with Members of Congress?

Mr. MONIZ. I believe the administration bill is in process. We believe it’s very close. I would anticipate, certainly, in March.

Mr. WYNN. By March——

Mr. BARTON. Would the gentleman yield on that point?

Mr. WYNN. Certainly, Mr. Chairman.

Mr. BARTON. Just to inform the Under Secretary—and you can

inform the Secretary—we’re going to be holding hearings on comprehensive restructuring probably mid-March.

Mr. MONIZ. Mid-March, thank you.

Mr. WYNN. Just a question regarding—you said there was perhaps an issue relative to rural customers—would similar issues be

raised with respect to urban or low-income customers as well?

Mr. MONIZ. I’m not sure. Do you know [speaking to staff]? I will

be honest, I am currently unaware of such discussion, but it’s a

very important point. I will——

Mr. WYNN. What we’ve been hearing is that there may be some

price discrimination with respect to customers in urban areas or

low-income customers. Obviously, restructuring represents an opportunity for tremendous consumer savings, but those savings are

basically for wholesale customers or larger customers and don’t actually trickle down to the residential—both low-income and middleincome customers—that would be problematic, and I would really

appreciate the guidance of the administration and your Department on how we address these issues.

Mr. MONIZ. Yes. One thing I might just add—of course, it is not

specifically targeted at urban customers, but—the 1998 bill proposed a public benefits fund, which includes State grants, which of

course, could be used in targeting particular populations.

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

Mr. BARTON. Thank you, Congressman Wynn. The Chair would

recognize—I think Mr. Whitfield was here before Ms. Wilson—so

we would recognize Mr. Whitfield, 5 minutes, questions only.

Mr. WHITFIELD. Mr. Chairman, thank you very much. During my

opening statement, I mentioned the fact that Secretary Richardson,

back in October, came to Kentucky, and amidst a lot of publicity,

talked about how he was going to have submitted in the Department of Energy’s budget for the year 2000 funds and a legislative

plan to build two conversion plants—one at Portsmouth, Ohio and

one at Paducah—to help deal with this depleted uranium

hexafluoride problem. And yet, I notice in the 2000 budget for the

Department, there’s not anything in there about this plan. I was

wondering if you could address that, Mr. Moniz.

Mr. MONIZ. Yes, I certainly would be happy to. I’m certainly

aware of your and Mr. Strickland’s strong interest in this issue. Let

38

me say first of all that we regret that the plan is not on the table

at the moment, but let me outline what we believe is a schedule

that will allow all of us to work together on this important issue.

First, you referred earlier to the Expression of Interest that we

will be sending out to begin the process, and particularly looking

at getting industrial input in—in terms of the conversion plants

and possible demonstration plants. That EOI will be completed this

week and in the Commerce Business Daily next week. In March,

we will issue a preliminary DUF6 plan, and also complete and

issue the final programmatic EIS.

With the input from the EOI, then we will move to a final plan.

We are targeting that for May—to issue a final DUF-6 plan—and

then to issue a draft RFP for the conversion contract and hold a

bidders’ conference and go through that entire process. We would

hope to issue a final RFP in July, potentially receive conversion

plant proposals in September, move to award early in 2000, and potentially—and I stress, of course, these are all subject to change

after we receive the EOI input—but we would like to target, if at

all possible, completed design for full-scale facilities very early in

2002.

So that is the path that we have laid out, and it will be kicked

off with the EOI and the draft preliminary plan very, very shortly.

Mr. WHITFIELD. Well, that’s very good news. I hope that you all

will be able to maintain that timetable on that aspect of it.

On this Worker and Community Transition Program, there’s

been some discussion recently about the elimination of the Office

of Worker and Community Transition Program—that obviously is

a very important program because, as a result of the privatization,

there already has been job loss in Kentucky and in Ohio, and we

think it’s quite important that we keep this worker and community

transition program in existence. I had heard recently that the administration might propose the elimination of the Office of Worker

and Community Transition. Is that accurate, or is that just a

rumor?

Mr. MONIZ. I am certainly not aware of that—as you know, we’ve

proposed a $30 million budget this——

Mr. WHITFIELD. Right. And I guess that’s down from about $45

million. So you all have no intention of proposing the elimination

of the program?

Mr. MONIZ. That is certainly my understanding. We feel that the

program clearly accomplishes very important goals with regard to

the communities that have served us and that we serve. It has, in

fact, generated, we estimate, about 16,000 jobs over the complex.

We expect to equal that in the years ahead.

Mr. WHITFIELD. Okay. Well, I see my time has run out, but I

have more questions.

Mr. BARTON. No, the Chair is going to let every member here ask

5 minutes, and then the Chair has a number of questions. If the

gentleman from Kentucky wishes to stay, we’ll, once everybody has

at least 5 minutes, we’re going to have kind of an open-ended question session that you can participate in.

The Chair would recognize the gentleman from Ohio, Mr. Strickland, for 5 minutes.

39

Mr. STRICKLAND. Thank you, Mr. Chairman, and I would like

unanimous consent to submit an opening statement and a list of

questions that I probably will not have the chance to ask today.

With your permission, I would——

Mr. BARTON. Without objection—we had already given that blanket consent, but we will certainly give you special unanimous consent.

Mr. STRICKLAND. Thank you, Mr. Chairman—and I want to follow up with my colleague, Mr. Whitfield’s comments. Thank you,

Mr. Under Secretary, for being here to answer our questions. I noted that in the President’s proposed budget there’s $5 million

allocated, and we are concerned—I think Mr. Whitfield and I both

are concerned—that only $5 million has been allocated to implement Public Law 105-204, and I’m just wondering if you could give

us some explanation as to why what appears to be a fairly meager

sum has been included in the President’s request.

Mr. MONIZ. Well, we believe of course, first of all, we want to

husband the resources, that total $400 million roughly, carefully.

We believe in the process that I just laid out in response to the last

question on the timetable. These $5 million will be appropriated for

beginning the work on the conversion plans, going through NEPA

processes, getting design work going.

As I said, we are hopeful—again, contingent on the kind of input

we receive from industry—but we believe we can aim for a 2002

design completion.

Mr. STRICKLAND. So the amount of money, in your judgment,

does not reflect any lack of commitment or intent to follow through

with the intent of the law?

Mr. MONIZ. Quite the contrary, Mr. Strickland—this is a strong

commitment, and we will absolutely do our best to feed input and

hold to the kind of schedule that we discussed.

Mr. STRICKLAND. I would like to ask a question, if I could, about

the Russian HEU deal—both, once again, Mr. Whitfield and I have

had very similar concerns in regard to these issues.

I understand that the Omnibus Budget Act of 1998 included

$325 million to purchase natural uranium stockpiles from Russia

in an attempt to encourage Russia to resume shipments of enriched

uranium and to rescue this HEU deal that is of concern to us.

Could you explain to me precisely what the administration is going

to buy with the $325 million? Will this material be stockpiled? If

so, could you tell us where, and where the resources to pay for the

storage will come from? I don’t know if you have those bits of information right now, but that’s an issue that is of great concern to me.

Mr. MONIZ. I can certainly respond to that.

First of all, as you correctly point out, the HEU agreement with

Russia, which of course is a centerpiece of our non-proliferation objectives, is currently not functioning optimally. The key is, in fact,

to resolve to so-called natural uranium component—and there currently are or soon will be, approximately 11,000 tons of natural

uranium sitting at USEC.

The $325 million to which you referred was appropriated to purchase the 1997 and 1998 uranium—namely, these 11,000 tons at

the then market price—however, contingent upon there being a

contract between Russia and western companies to market all fuVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00042 Fmt 6633 Sfmt 6602 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
40

ture natural uranium consistent, of course, with the ceiling set in

the original legislation.

So, if this all goes forward, then presumably, we would purchase

the 11,000 tons. As indicated in the protocol that the Secretary

signed with Mr. Adamov in Vienna, we would—in the interests of

stabilizing everything—store that uranium for approximately 10

years; details to be worked out, but presumably, somewhere with

USEC.

Mr. WHITFIELD. Mr. Chairman, could I ask one quick follow-up?

Mr. BARTON. Yes, you may. You would ask it anyway, so we’ll

just give you permission. No—you’re very welcome to.

Mr. WHITFIELD. I’m wondering, in your judgment, is it likely that

there will be a requirement for additional expenditures in the future to keep the Russian HEU deal alive?

Mr. MONIZ. No.

Mr. WHITFIELD. Thank you. Thank you, Mr. Chairman.

Mr. BARTON. The Chair would recognize the gentlelady from New

Mexico, Congresswoman Wilson, for 5 minutes.

Mrs. WILSON. Thank you, Mr. Chairman. I have a number of

questions which I’ll submit in writing, but there are several things

that I thought you might answer here today.

Starting out with the issue of non-proliferation and following on

my colleagues’ questions, what percentage of the Russian residual

stockpile will remain after the expenditure of the $525 million appropriated last year?

Mr. MONIZ. First, let me indicate that the $525 million are in

two pieces—the $325 million just referred to in terms of uranium,

and $200 million to start our program of plutonium disposition.

I cannot give you precise numbers in terms of the remaining

stockpile, but let’s just say that in the uranium case, perhaps comparable amounts might be remaining, and in the plutonium case,

somewhat larger amount than the first traunch of 50 tons.

Mrs. WILSON. Do we have any plan for further purchases to complete the purchase of that stockpile? And if not, what is the—what

are our intentions with respect to controlling proliferation of that

material?

Mr. MONIZ. It’s a very good and very difficult question. Our work

with Russia—and, in fact, our own internal work—involves, clearly,

a steady stream of disposing of the material—and I might add

that—for example, the HEU—the 500 tons over 20 years is about

all the system can bear.

With regard to the remaining material, we are working, of

course, with very strong materials protection control programs, so

we are trying to make sure that the material is secure. With regard

to the plutonium, in addition, we will be moving materials into a

new storage facility that the Department of Defense is working to

construct with Russia at Mayak.

So basically, it is physical control, accounting, and a steady program of disposition.

Mrs. WILSON. In your budget, you have $30 million for a nuclear

cities initiative, and $30 million for initiatives for proliferation prevention. Can you please describe to me exactly what we’re purchasing in those cases, or what the programs are?

41

Mr. MONIZ. Yes. Both programs—they’re somewhat different—

but both programs involve a variation on the theme of engaging

Russian scientists and engineers in Russia, as opposed to having

them engaged elsewhere. They involve, in the IPP—Initiative for

Proliferation Prevention—case, they involve research programs—

some of which may lead to commercialization in which American

national laboratory individuals oversee the programs, guarantee

accountability in terms of the work done, and in terms of it not

being employed for weapons work—in contrast to a recent New

York Times article.

In the nuclear cities initiative, the first initiative is focused on

a wide variety of Russians institutes, including those in major cities. The nuclear cities initiative addresses the 10 so-called closed

cities, or secret cities, which are typically in not very convenient

places in terms of infrastructure and transportation. We are working there in the cities to develop unclassified work. Frankly, it’s an

issue of working with them to help right-size their complex, which,

for our own security reasons, we want to see come down in scale

over the next years.

Mrs. WILSON. Has the Department of Energy or the administration considered any alternatives other than direct subsidy of those

cities in keeping those people in place? In particular, have you

worked or considered changing immigration laws to get those scientists, or key scientists and engineers out of Russia?

Mr. MONIZ. Over the last years, since the end of the cold war,

of course, there have been a number of Russian scientists and engineers who have come to this country and worked with us. There

is, however, not an organized plan to bring the scientists from the

nuclear cities to the United States—there are other issues in terms

of impacting our own workforce which could be addressed. What we

are doing—we do not view this as simply aid—we are working with

them to develop specific projects which can also help them develop

something of an economy. This is a challenge, but as an example,

I will note—and I regret I can’t say what the details are at the moment, but probably within a few weeks, for example, you will see,

under the nuclear cities umbrella, an expansion of software work

going on at one of the closed cities, involving American industry.

So that’s the kind of program that we like to see develop.

Mrs. WILSON. Thank you, Mr. Chairman.

Mr. BARTON. Thank you, Congresswoman Wilson. The Chair

would recognize the gentleman from Pennsylvania, Mr. Klink, for

5 minutes.

Mr. KLINK. Mr. Chairman, I thank you. I apologize for my late

arrival, but your old subcommittee is also meeting, and as you

know, I’m the ranking member up there—we’re holding a simultaneous hearing, and Dr. Moniz, let me welcome you, thank you for

being here. It’s good to see you again—I saw you briefly in the hall,

but we were running to our committee.

I really appreciate the Department’s mission to foster a secure

and reliable energy system that is environmentally and economically sustainable. But I am disturbed that there is a year-by-year

cut in the fossil fuels program. I’d like an explanation about that—

specifically, Dr. Moniz, I want to ask about fossil fuel research and

development. The fiscal year 2000 budget request for this is $364

42

million—that’s down $20 million, or about 5.4 percent from fiscal

year 1999. I notice in your testimony that you make up for the decrease; that you’re continuing to develop Vision 21 Powerplex program, which you call the roadmap to the future, and the power

plant of the future—where modular technologies will be integrated

into non-polluting energy-producing facilities such as membranes

for the low-cost separation of oxygen and other gases.

You say you expect Vision 21 power plants to be highly efficient.

In your testimony, you also say that by the year 2030, these plants

could reduce greenhouse gas emissions globally by 370 million tons

of carbon a year—that’s pretty good.

Now, you may know that, currently, I don’t support the Kyoto

protocol because it doesn’t require the same emission standard reductions between developed and developing countries. We have to

get the developing countries to participate meaningfully. But I’m

very proud of the work that we’ve done in Pittsburgh by the Federal; Energy Technology Center—the FETC Center—where they

manage the entire coal and natural gas program for the Department’s Office of Fossil Energy. I know you’re very familiar with

what they to there. FETC is working with private industry, with

universities, and with national laboratories, to develop advanced

energy and environmental technologies. I believe that they deserve

an increase in funding for fossil fuel research and development—

or at least the same level as last year, instead of a steady decrease.

You seem to be correlating Vision 21 with global warming—I’m not

sure that that’s true, but that’s part of my question.

Today, a fossil fuel, coal, is the primary source of fuel for electric

generation. Realistically, you know that we cannot meet the Kyoto

emissions reduction requirements by 2008. It would have a tremendous effect on the transportation industry, the manufacturing industry, building, power-generation sectors of our economy. Don’t

you think it would be most beneficial to increase, or at least maintain, the funding level for fossil fuel research and development

rather than cutting it?

Coal is the backbone of our economy currently. We have to have

a bridge to get from where we are to where we want to be by 2030

or 2050. The good people at FETC, I think, should be given more

funds so they can expand their partnership with industry, with

universities and laboratories, to further develop an advanced energy and environmental technology. I believe this funding cut is to

the detriment of FETC’s partnerships, and I believe the Department is making a mistake in cutting fossil fuel funding. I would

like to hear the rationale you have for cutting fossil fuel research

in your budget, and I will thank you and let you respond.

Mr. MONIZ. Thank you for the questions. Let me make several

comments, if I may. First of all, I will note that I am pleased that

I will be visiting FETC on March 15 and 16, and I’m looking forward to that very much.

Let me first respond to the question about the association of the

Vision 21 with greenhouse gas emission reduction. It is indeed, I

think, a very important contribution to greenhouse gas emission reduction by improving efficiency enormously, but I do want to stress

that, again, the objectives are multiple—increasing efficiency in our

fossil energy use addresses our economic strength, our energy secuVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00045 Fmt 6633 Sfmt 6602 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
43

rity, our environmental issues—be they urban smog particulates or

acid rain, or global warming issues. So, it’s certainly a multipronged approach. With regard to the budget—I would just note

two things. First of all, I want to go back and maybe stress—of

course, we recognize that 85 percent of our energy use in this country is fossil. And when we talk about efficiency programs, be they

in the fossil energy program or in the conservation appropriation,

they are both basically fossil programs. So in some sense, once you

add a major part of the efficiency program with the fossil program,

to understand our total investment in fossil energy R&D.

Second, the small decrease in the funding, I should also note,

that part of that is the end of some major programs. For example,

in the fossil energy case, the low emission boiler program is coming

to an end—so that is ramped off.

In the natural gas arena, for example, there’s a major program

in the efficiency program that involves small turbines—gas fire turbines—that program is going into commercialization, and we’re

coming out of it.

So we believe the program, while not, frankly, as robust as we

would like, does, in fact, maintain the core activities quite well.

Mr. BARTON. The gentleman’s time has expired. Do you have one

more question, Congressman Klink?

Mr. KLINK. No, I will have some follow-up in writing, and if the

Under Secretary would be so kind as to respond, I would——

Mr. BARTON. The Chair would recognize the gentleman from Mississippi, Mr. Pickering, for 5 minutes.

Mr. PICKERING. Thank you, Mr. Chairman. Dr. Moniz, the first

question is concerning the nuclear waste issue. My understanding

is the DOE program staff estimate the nuclear waste program will

need approximately $11.6 billion in funding between fiscal year

2000 and fiscal year 2010, in order to maintain the schedule and

open the repository in the year 2010.

Now, to stay on this schedule, program staff estimates the DOE needs $739 million in fiscal year 2000. Yet, you only ask for $370

million. So my question is, how can you say you’re on track for the

repository in 2010 when you only ask for half the funds needed to

get the job done?

Mr. MONIZ. The request of just over $400 million, we believe, is

the request to keep us on track for the repository in 2010. The request, in particular in the year 2000—in fact, we increased it above

$370 million because of the results of the viability assessment that

identified some issues that needed increased funding in order to

keep us on track for the suitability determination in 2001. So, according to our profile, to reach the $10-plus billion requirements

through 2010, we believe we are on track with that budget request.

Mr. PICKERING. Let me make sure that I understand. Does DOE

staff project that you need 739, or is that incorrect, for this year?

Or—excuse me, for 2000, fiscal year 2000.

Mr. MONIZ. No—perhaps the CFO would like to address that

question——

Mr. TELSON. The staff request is $409 million for this year—$370

plus $39 million of supplementary funds, they were requesting.

739, I believe, includes other work that does not pertain to our program, per se.

44

Mr. BARTON. Would the gentleman from Mississippi yield?

Mr. PICKERING. Gladly, Mr. Chairman.

Mr. BARTON. This is a point that I’m going to get into in my

questions—but to facilitate the gentleman’s questions from Mississippi—if you take $400 million times 11—that’s $4.4 billion—

that’s not $10 to $11 billion. So you must have a funding profile

that in the future goes up much more rapidly than the $370 to

$400 million. Is that correct?

Mr. MONIZ. Yes. In the years, for example, 2006, 2007—our pro- file is up at $1.3 billion—per year.

Mr. BARTON. I yield back——

Mr. PICKERING. Thank you, Mr. Chairman. My other questions

concern the strategic petroleum reserve. I want to commend the

Department for looking at flexible ways to address some of those

issues, but I also want to kind of combine these questions to the

efforts that Mr. Largent—the issue Mr. Largent raised—is there a

way that we can also help our domestic producers, our independent

producers—and you mentioned in your budget, also, ways that you

will try to help them through tax relief and through research and

development.

My first question on strategic petroleum reserve—the current capacity is approximately 700 million—is that correct? 700

million——

Mr. MONIZ. 680 million.

Mr. PICKERING. And that is after the decommission of the site.

And you currently have how much oil in the strategic petroleum reserve?

Mr. MONIZ. 561. 561.

Mr. PICKERING. And you say that you will put 28 million barrels

of offshore production in your budget, and so that leaves approximately 100 million barrels of capacity. Do you believe that the commercial storage potential will fill the rest?

Mr. MONIZ. I think it’s—we’ll have to wait to see what the industrial response is. But again, if I may ask our expert on this what

he thinks—if you’ll permit. John, do you want to——

Mr. SHAGES. We’re of course hopeful, but the amount of capacity

that we’re offering is the capacity of the Big Hill site, which is 70

million barrels of capacity, and so the commercialization effort

wouldn’t fill more than that.

Mr. PICKERING. Now, would you charge a fee or lease arrangement for them to store in your facility?

Mr. SHAGES. Yes, that’s the whole idea of the program—that we

would charge a fee to be paid in-kind so that we would be adding

oil to the strategic petroleum reserve inventory.

Mr. PICKERING. Would it produce a revenue flow to the Department of Energy that could be used for help in other domestic production?

Mr. SHAGES. We would not accept money in payment—we would

be accepting——

Mr. PICKERING. It would be in-kind——

Mr. SHAGES. In-kind.

Mr. PICKERING. Okay. So, in essence, you would provide—not

free storage—but, in essence, you would give the incentive to have

the storage for our nation’s stability and security of supply, and in

45

return we would have an additional capacity in storage in this strategic petroleum reserve.

Mr. MONIZ. Yes, and it would increase in capacity.

Mr. PICKERING. As you know, back in the 1992 Energy Act, there

was a—several issues raised, and subsequently—on the possible

lease of oil versus the purchase of oil. Now, if I remember correctly,

a lease arrangement cost about a quarter—25 percent—of a purchase of oil over a 15 year period of time. Is that correct?

Mr. TELSON. Are you referring, sir, to the leasing of oil from producers, or——

Mr. PICKERING. From producers. Now, in the past, it was always

done under the assumption it would be from a foreign producer,

but I think in today’s environment, we may want to look at domestic producers or domestic supply. A foreign lease has, as you know,

many complications. The question is, can you do more—either

through a lease of the commercial storage—if, for example, we

drew down more of the strategic petroleum reserve, currently,

around 500 million barrels? If you sold it at $10 a barrel, that’s approximately $5 billion. Could you use the $5 billion to then have

targeted tax relief, assistance to the domestic industry to maintain

our infrastructure, and feel it would be the commercial storage

lease at a lower cost to the government? Do you understand my

question?

Mr. TELSON. Yes, sir, I think you are suggesting, if we sold some

oil, what would happen to the proceeds from that?

Mr. PICKERING. That is correct, and could you produce

revenue——

Mr. BARTON. This will have to be the last question of this question period.

Mr. PICKERING. Sure. But the question is, you are saying that

you need offsets to be able to help the domestic industry through

tax relief or through other efforts. If you were to sell the oil but

at the same time replace the commercial storage or lease, so that

we don’t jeopardize our security of supply, but it is a more cost-effective way, and it could provide the offsets to assist our domestic

industry—as the Department considered or contemplated that type

of approach?

Mr. TELSON. Mr. Pickering, we will be glad to sit with you and

discuss these ideas. They are pretty complicated ideas, as you

know, just laying them out. But maybe there is something there

that we should look into.

Mr. PICKERING. Is it possible, if you sold it, you could use the receipts for these other purposes?

Mr. TELSON. Not without a congressional authorization. But we

will be glad to talk about it.

Mr. PICKERING. Thank you.

Mr. MONIZ. I would just add that, of course, selling oil right now

is one of the things we are trying to not to because of the market.

Mr. PICKERING. Right. I realize that, but in business, you know,

bad money after bad money is not a good principle. If you can do

it at 25 percent of the cost, and at the same time use the money

for productive purposes that will give a good investment, then you

have to look at those options.

46

Mr. MONIZ. Yes. It is a tradeoff. Again, we would be happy to

certainly work with you.

Mr. PICKERING. Thank you.

Mr. BARTON. The gentleman from Mississippi used to work for

the Majority Leader, Mr. Lott, and he stretched that one last question to about 5 minutes’ worth of questions.

We are going to recognize the gentlelady from Missouri. She

claims she has one followup question before the chairman starts.

Ms. MCCARTHY. Thank you very much.

Dr. Moniz, I want, first of all, to thank the Secretary for visiting

the Allied Signal plant in my district and for his very wise decision

with regard to their future. We are all very pleased.

I wanted to talk about the overall Federal management technologies Allied Signal budget because in fiscal years 1998 and 1999

we, the Congress, increased the funding earmarked for them. In

1998, we increased the appropriation from the requested amount

by about $20 million, and in fiscal year 1999 the Congress add-on

amounted to $12 million.

Can you tell me how much of this was actually sent to Allied Signal, and if all was not given to the plant, where the remainder was

sent? And Mr. Telson?

Mr. TELSON. I am sorry, Ms. McCarthy, could you repeat the

question? I heard the elements, but I didn’t put it together.

Ms. MCCARTHY. Yes. The Congress put more money into the Federal manufacturing and technologies Allied Signal plants in the

past 2 fiscal years. I don’t need to go over the numbers.

Mr. TELSON. Yes, of course.

Ms. MCCARTHY. But that add-on, I wonder how much of it actually reached those facilities across America, including my own——

Mr. TELSON. Congresswoman, we will be glad to get you the specific answer, the number. We have run into the phenomenon over

the past several years that there are additions to lines, and then

below the line there are general reductions required by the committees. What often happens is that the general reductions, when they

are distributed across, in many cases end up eating up a lot of

those increases. So we will get you a description of that.

Ms. MCCARTHY. That would be very helpful, because that would,

then, address the rumor that about $20 million was sent to the laboratories, and we could put that rumor to rest.

Mr. TELSON. We would be glad to get that information for you.

Ms. MCCARTHY. I thank you very much, Mr. Chairman, for your

gracious offer.

Mr. BARTON. The Chair is going to recognize himself for an openended question period, since everybody has had an opportunity to

answer first round. If the members here—well, Mr. Fossella has

not had a chance. Does Mr. Fossella wish to be recognized for 5

minutes?

Mr. FOSSELLA. No, thank you.

Mr. BARTON. Okay. Now all members that are present, if they

wish to participate either in the line of questioning that the Chair

is going or another one, feel free to interrupt, because we know

that they have schedules.

Mr. Secretary, I want to refer you to a draft funding profile that

we just handed out. It was given to us last week at the staff level

47

on the minority and majority side in preparation for this hearing.

The title—it is a draft, and it is ‘‘Cashflow Funding Profile for H.R.

45,’’ which is the high-level nuclear waste interim storage bill that

is pending before this subcommittee. Do you have a copy of that?

Have you ever seen that before? I don’t have knowledge that you

have seen it, but I don’t want to——

Mr. MONIZ. I saw it last night.

Mr. BARTON. You did? Okay, so you have at least had some familiarity with it.

I want to go back to some of the questions that Mr. Pickering

was asking, because it is the majority staff view—and I believe the

minority staff would concur with this—that an analysis of this admittedly entitled ‘‘draft’’ profile indicates that the annual appropriations required for Yucca Mountain are going to be significantly

higher than the historical appropriation levels. If you assume a historical funding profile of $350 million, we don’t believe that the

permanent repository is going to open in 2010.

Now if you look on this chart, at the top, you have got a category

called Yucca Mountain, and it has a funding profile this year of

$308 million, and it goes to the current budget year that you were

testifying before today, $359 million. If you go on out, it does get

up in 2005 and 2006 to $925 million, and then $1.02 billion in

2006; 2007, it is over a billion dollars. So that the aggregate total

from fiscal year 1999 to 2010 is $6.5 billion.

The interim storage proposal, the next line below that, its aggregate number is $4.553 billion. The program management number

is a little over half a billion. The total program number is $11.613

billion—$11.6 billion, and that is an average of over a billion dollars.

Now the appropriation request that we have before us doesn’t appear to match that. Could you elaborate on that or explain to me

how I have misread this document?

Mr. MONIZ. Yes, sir. First of all, I don’t think you have misread

it, from what I can understand. But, of course, this is a draft

cashflow chart for building the repository and doing interim

storage——

Mr. BARTON. Right.

Mr. MONIZ. [continuing] whereas our appropriation is that

matched to doing the repository. So in that profile, then the $409

million in 2000 is what our profile says. So, without interim storage, the profile is roughly $400 million, up or down a bit, through

2002, and 2002 is when the licensing within our construction

starts, and then the profile jumps dramatically after 2002.

The chart that we have here includes interim storage, and then,

of course, it ramps up much more——

Mr. BARTON. I understand that.

Mr. MONIZ. Yes.

Mr. BARTON. But it doesn’t appear to me that, based on your testimony today, that you are on track, based on this, to have the

funding levels that you need to get the repository open.

Mr. MONIZ. Mr. Chairman, I would say we are on track. Without

interim storage, we are on track, but it does raise the issue that,

as you noted correctly, that 5 years down the road we would need

48

to be at an appropriate level, substantially higher than the historical funding.

Mr. BARTON. Okay, well, let me ask this question: Based on

this—again, this is a draft analysis; you didn’t submit this in your

testimony, so I understand that it is not official departmental policy. But in this analysis, you get out to 2006, 2007, et al., and you

are well over $1 billion a year.

Mr. MONIZ. Yes.

Mr. BARTON. Now where is that money going to come from?

Mr. MONIZ. May I just add that is the case with or without interim storage. It is higher with interim storage, but it is $1.3 billion I think in the case without interim storage.

What I would say is the integrated cost to year 2000—to 2010,

excuse me—which in the Yucca Mountain repository only program

is $10.1 billion, can be accommodated in the waste fund. The issue

is getting access to it, getting the annual appropriation to be in this

$1-plus billion annual range. But the waste fund is growing currently in terms of receipts plus interest at roughly a billion a year.

Mr. BARTON. Well, then, my understanding is these funding requests do not take money from the waste fund. Is that correct or

incorrect?

Mr. MONIZ. I think that would be a policy issue to address at

that time. Mike, do you want to?

Mr. TELSON. It does. It would have to, presumably. But that is

the issue we have to address in the years forward.

So, again, we would argue the waste fund has the resources, but

it will require an administration/congressional understanding that

one has access to a billion——

Mr. BARTON. My staff analysis is that there has been about $15

billion put into the waste fund. We have got about $8 billion currently in the fund. Is that the Department’s assessment of the fund

also?

Mr. MONIZ. It is $7 point something, is our current assessment.

What is the number? Our analysis is $7.3.

Mr. BARTON. $7.3 billion?

Mr. MONIZ. Yes, and growing at about $1 billion a year.

Mr. BARTON. Okay. Now let’s go back to Mr. Telson. Is it the Department’s position to take some of the funding for the repository

from the waste fund, which you don’t show that you are going to

do that? But at some point in time do you think you will? ‘‘You’’

being the Department, not you personally.

Mr. TELSON. No, no. We do in 2000. Our request does take

money from the waste fund in 2000, part of it, and in the outyears

it is 370, I think—I am sorry, 307, is that correct? A hundred and

fifty in 2000 from the waste fund itself, but in the future we will

have to tap into it higher than we are now, and that is just the

consequence of the fact that we have been undertapping it over the

last 15 years, and now we will have to go the other way, when we

start the construction. That was the purpose, presumably, for developing the balances.

Mr. BARTON. We are going, in the very near future, to mark up

H.R. 45 in this subcommittee. Is the Department going to offer an

alternative to H.R. 45? Is the Department going to offer amendVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00051 Fmt 6633 Sfmt 6602 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
49

ments to H.R. 45? Or is the Department going to just oppose H.R.

45? Or do you know?

Mr. MONIZ. Well, the administration, as you know, continues to

oppose H.R. 45, and certainly the bill in its current form the President presumably would veto. The Secretary, as he said in his confirmation, is looking forward to discussions with Congress on this

subject.

Mr. BARTON. Okay. Would you inform the Secretary that the

Chair and the ranking minority and the full committee chairman

and the ranking member of the full committee are going to invite

the Secretary for a discussion on that in the very near future?

Mr. MONIZ. Yes.

Mr. BARTON. Because we are planning to move the bill, at least

in the subcommittee, and I can’t give you a time table, but very

quickly. If there is a way—if there is a specific concern that can

be alleviated by a particular amendment or a change in phraseology, or whatever, we would certainly wish to discuss that with either the Secretary himself or whoever he designates to be his

spokesperson.

Mr. MONIZ. If I may add, Mr. Chairman, the Secretary certainly

has stated that he hopes to avoid or help avoid a legislative showdown on this.

Mr. BARTON. We understand. We share his willingness to avoid

a showdown, if that is the term he wants us to use.

Mr. MONIZ. On the other hand, I think the administration does

remain strongly committed to the idea that any kind of early—certainly any kind of a commitment to the kind of interim storage proposal being proposed would undercut our development of the repository.

Mr. BARTON. I have a pending vote on the floor. At some point

in time, I am going to actually have to suspend. What is your time

schedule? Are you willing to wait? I think Mr. Whitfield is going

to come back; Ms. McCarthy probably is going to come back. Are

you willing to—I think even if we take time for a little vote, we

can wrap this up by 12:30.

Mr. MONIZ. Oh, that would be fine, Mr. Chairman.

Mr. BARTON. Okay. Then we are going to recess the hearing until

five until 12. I should be back here at five until 12, and we will

continue the questions.

Mr. MONIZ. Very good.

[Brief recess.]

Mr. BARTON. We certainly appreciate Under Secretary Moniz

being very agreeable to staying. Hopefully, we can wrap this up in

the next 30 minutes or so, if we don’t have any other votes.

Before the recess, Mr. Under Secretary, we were looking at this

draft flowchart, a funding profile which would be required under

H.R. 45. Now I want to read from the written testimony that Mr.

Lake Barrett presented to our subcommittee on H.R. 45 2 weeks

ago.

I quote, ‘‘H.R. 45 would undermine our ability to open the repository as scheduled in 2010 by shifting budget priorities and work effort to an interim storage facility.’’

He went on to state that, again, ‘‘Based on historical appropriations patterns, the proposed bill’s funding provisions do not provide

50

sufficient funding resources to support the simultaneous construction and operation and an interim storage facility and the repository program.’’

Now we will accept the fact that H.R. 45 requires higher funding

levels than have been historically appropriated. That is a valid criticism. But if you look at this funding profile, it appears to me that

the Department’s funding profile, whether you have an interim program or not, does the same thing. It just does it later. Do you all

agree with that?

Mr. MONIZ. I think that is likely to be true.

Mr. BARTON. Likely to be true? Is that as close as I am going to

get you to giving me a straight answer?

Mr. MONIZ. No, I will——

Mr. BARTON. It is true. I mean, the plain fact, Doctor, is that it

is true. Again, I am not here to get into an argument with you over

the high-level waste bill.

Mr. MONIZ. Right.

Mr. BARTON. I mean, the Clinton administration, Secretary Richardson can support it, oppose it. I understand that President Clinton has given Senator Bryan a letter that he still intends to veto

it. That is fine.

We are going to try to do a bipartisan bill that can sustain, that

can overturn a veto. We are not idiots up here. I mean, you know,

we understand the President does what he has the right under the

Constitution. To trump him, we have got to have more than a twothirds vote. I am working to get that in the House, and I know certain Senators are in the Senate.

But it would be nice to at least agree on what the funding profile

is, whether you support an interim storage facility or not. Now I

think we are going to get you the votes, so that next year, if you

are still the Under Secretary and you come before this subcommittee, and I am still the chairman, we are going to talk about

funding interim storage, because it is going to be a law of the land.

But I may be wrong; we may not. But let’s at least talk from the

same page in terms of funding requirements.

Even though it is a draft, and it is not official policy, it does appear reasonable that this is the funding amounts that are going to

be required. Do you agree with that?

Mr. MONIZ. May I, Mr. Chairman, explain what I meant by the

‘‘likely’’ statement?

Mr. BARTON. Yes, you may. You don’t have to ask permission to

explain yourself. This is an open hearing.

Mr. MONIZ. I was trying to be precise within my limited understanding of budgetary issues. What I meant was the following, and

perhaps Mr. Telson can clarify:

Each year there is coming in now an annual funding stream of

$650-or-so million.

Mr. BARTON. Right.

Mr. MONIZ. In the future, I believe there will be an additional

funding stream coming from the defense side to catch up.

Mr. BARTON. We are less sanguine about that actually happening, but we understand that is your proposal. We are a little

skeptical of that, but we——

Mr. MONIZ. And this is all part of where the ‘‘likely’’ was coming.

51

Mr. BARTON. Right.

Mr. MONIZ. If that is the case, and that is raised up to the billion

dollar scale, my understanding is—and, again, I would ask Mr.

Telson to clarify—is that there are a variety of thresholds in terms

of the difficulty of funding these peak years.

Mr. BARTON. We would share that assessment.

Mr. MONIZ. Appropriations is an issue. There is an issue of going

up to the annual income stream. With the defense issue, it was a

major issue.

Mr. BARTON. Right.

Mr. MONIZ. And then there was an issue of, beyond that cap,

having to access the existing fund. So all I was suggesting was that

where the annual income stream is relative to the peak funding

year is a qualitative year. That is all I meant by ‘‘likely.’’

Mr. BARTON. The subcommittee’s assessment is that you are

going to need more dollars sooner than you are requesting. And I

think that Congressman Hall is not here; he is somewhat under

the weather. He is voting on the floor, but he has trouble speaking.

I think I am speaking for the majority and the minority, and so

don’t be surprised if, based on this hearing, we send a letter to the

appropriators asking for more money for this program than the Department is. I don’t think that is a bombshell to this group, but

just be aware of that.

Mr. Telson?

Mr. TELSON. If I may just modify it, Mr. Barton, we will need increases in future years higher than what we have now. But in fiscal year 2000, we are confident that the $409 million will do the

job that we need to do to get the position——

Mr. BARTON. Okay, now you used a phrase that I should know,

but I don’t. What is $409 million?

Mr. TELSON. $409 million is the amount of money we are asking.

Mr. BARTON. Oh, the amount of money.

Mr. TELSON. Yes.

Mr. BARTON. Okay. Well, Mr. Whitfield, I have another line of

questioning on something else, but you have been very patient. Do

you want to ask some of your questions?

Mr. WHITFIELD. Thank you, Mr. Chairman. I just have a couple.

Mr. BARTON. Sure.

Mr. WHITFIELD. I appreciate that.

Mr. BARTON. Mr. Shimkus, we are in kind of an open question

period here.

Mr. WHITFIELD. Dr. Moniz, I wanted to say, again, that I do appreciate your laying out this timetable on these conversion plans.

Actually, it is the first time we have heard about any timetables.

But now I want to ask you—you indicated that you hoped to

have design completed by the year 2002, I believe. I was curious,

why is it necessary for the Department to do the design, and why

wouldn’t you just contract that out with some outside firm to do design, in hopes of speeding up the process?

Mr. MONIZ. The real question is when one can be prepared to

startup construction on the full-scale facilities. That is what we

hope to be able to target for this early 2002.

Mr. WHITFIELD. Okay.

52

Mr. MONIZ. The design is complete and moving toward construction.

Mr. WHITFIELD. Now that I have advocated your letting this out

to private contractors, I want to criticize you for letting out something to private contractors. You know, one of the linchpins of the

privatization was that we do everything to mitigate job loss in a

well-trained workforce that the USEC plans. I notice DOE has entered into an agreement with Bechtel-Jacobs to be the agent for the

Department in future construction projects at these plants. Of

course, they are going to be subcontracting that out, but why would

you not be able to utilize more of these USEC employees, many of

them who do have the skills necessary to do this kind of work?

Why would you not make more of an effort to do that?

Mr. MONIZ. My understanding is that the discussion as to how

that work will be handled remains to be fully resolved. Certainly,

the Department very clearly supports efforts to minimize impact on

the incumbent workforce, and we will working with the contractors

in this direction.

Mike, do you want to add anything to that?

Mr. TELSON. Just that this contract was awarded on April 1,

1998, and, basically, it was part of our effort to be more efficient

in how we handle our environmental management work at all of

our plants throughout the whole system. So it is one of the features

of another program that we are trying to do.

Mr. WHITFIELD. Well, I could proceed on this, Mr. Chairman, but

I look forward to working with you all, because it is a real priority,

not only for the Ohio delegation, but the Kentucky delegation, to

get these conversion plants completed as soon as we can, because

we have a real need for them.

Thank you for your time today.

Mr. BARTON. Dr. Moniz, I want to switch gears on you a little

bit. I am going to hold a hearing, I hope, within the next 2 to 3

weeks on the status of the domestic oil and gas industry with specific focus on the small, independent oil and gas operators. One of

the themes of that is going to be to get the State Department and

the Department of Energy to explain the policy with respect to

Iraq. But just to get the ball rolling, can you explain to me what

the current policy is with respect to oil sales allowed under the

U.N. Protocols by Iraq?

Mr. MONIZ. My understanding, Mr. Chairman, is that there is a

sales sort of price ceiling, that is, an income ceiling of roughly $5

billion a year.

Mr. BARTON. That is my understanding, too.

Mr. MONIZ. $5.2 billion a year.

Mr. BARTON. Let’s assume the number is $5 billion, because that

is good enough for this first round in this hearing. When that number was derived, do you know what the per-barrel price of oil was,

the world markets?

Mr. MONIZ. I would have to guess, but, given the timing, I would

guess it was somewhere in the $17, $18.

Mr. BARTON. Yes, it was over $17; it was between $17 and $20

a barrel.

Now that being the case, what is the world price of oil per barrel

today?

53

Mr. MONIZ. Well, as we know, let’s call it in round numbers $10.

Mr. BARTON. Approximately, for even rounder numbers, let’s say

it is about half.

Mr. MONIZ. Right.

Mr. BARTON. Make it easy. If that is the case, doesn’t it make

sense to lower the cap? Because if you don’t, it doesn’t take a lot

of mathematical genius to realize the Iraqis are going to produce

twice as much oil, and if they do, that is going to further exacerbate the oversupply problem.

I am told—again, I am not the Under Secretary of Energy, and

I don’t have all the resources that you and the Secretary have—

but I am told that one of the principal reasons that we are continuing to have these low, low oil prices is because the Iraqis are

pushing the upper limits, and maybe even exceeding the limits, of

what they can produce. They have the capacity to produce even

more oil than they are, and so it is killing, I mean literally, the

independent oil and gas community in the United States, the small

guys that do these 15-or 10-barrel-per-day wells.

So why shouldn’t we, cooperatively, on a bipartisan basis, take

another look at this Iraqi cap, which was based on a price much

higher than the world oil markets are today?

Mr. MONIZ. I am afraid, Mr. Chairman, I don’t know the exact

numbers in terms of the Iraqi—the volume of sales and how that

impacts the market. Obviously, additional sales don’t help the market.

And I am afraid that the issue of the cap, I will certainly carry

your message back, but in the end that is the State Department

and other people——

Mr. BARTON. Well, we are going to talk to our friends at the

State Department, too.

Mr. MONIZ. Yes.

Mr. BARTON. And we are going to do a hearing focused almost

entirely on this.

Mr. MONIZ. Yes.

Mr. BARTON. You weren’t briefed that you were going to have to

talk about this, so I don’t expect you to know all the details. I am

just asking kind of general theory right now.

Mr. MONIZ. Right. I would add, I believe currently the Iraqi— with current oil prices, let’s say $10 a barrel, I believe the Iraqi capacity to produce tops out at, in financial terms, $3 billion or so,

I think is all they are capable of producing.

Mr. BARTON. We are told that, again, on the old price they could

produce between 1 and 2 million barrels a day, and they are currently producing around 3 million barrels a day and they could go

up to 4 to 4.5 million barrels a day. Now I haven’t confirmed that.

Mr. MONIZ. We would have to look into that and get back to you.

Again, my understanding is that I think they really cannot produce

today more than around 2.5 billion barrels a day.

[The following was received for the record:]

At the time of the hearing, the Energy Information Administration (EIA), an independent agency within the Department that collects and analyzes energy data, was

estimating current Iraqi crude oil production at about 2.5 million barrels per day.

With inflation-adjusted prices near all-time lows at that point, the EIA was estimating that under the current phase of the United Nations’ Oil-for-Food program, Iraq

would generate about $3 billion in the 180-day phase that ends at the end of May.

54

This is far less than the maximum of $5.256 billion allowed under the program. Because Iraq was so far under the maximum allowed, the EIA was assuming that Iraq

was producing at full capacity. The EIA was also not expecting Iraqi oil revenues

to reach the revenue cap through at least 2000.

Since the hearing, however, oil prices have increased significantly. Largely as a

result of an agreement among countries belonging to the Organization of Petroleum

Exporting Countries to cut oil production, oil prices have risen about $5 per barrel

since the hearing. The EIA’s forecast also estimates that Iraqi oil production will

increase from current levels of about 2.5 million barrels per day to 2.7-2.8 million

barrels per day by sometime in 2000. Consequently, the FIA’s most recent shortterm forecast now estimates that Iraqi oil revenues may exceed the current maximum allotted revenues ($5.256 billion) in the 180-day phase that begins in November 1999 and ends in May 2000.

Mr. BARTON. Of course, if you are a stripper well producer in

east Texas, in Congressman Hall’s district, and you have got a well

that is producing 8 barrels a day, the price, because of delivery

charges, that they are offering is $6 to $7 a barrel. It doesn’t help

you a lot that the Iraqis may only have another half-a-million-barrels-a-day capacity. You are going out of business. And once you

plug all those wells—and, as you well know, your own testimony,

at least this little booklet shows we get about 20 percent of our oil

from these small producers. Once they are gone, they are gone.

Once you plug one of those wells, you don’t reopen it next year,

when the price goes back to $15, $16 a barrel.

Mr. Shimkus, I think you might have had a question or two on

this line?

Mr. SHIMKUS. I do. Thank you, Mr. Chairman.

I got a chance to visit DOE in my last term, and so I see some

familiar faces, and I appreciate that relationship that that visit developed.

Energy security is a big issue in your office. So I, too, have concern over the low prices in oil. It is a big local constituent concern,

because still in southern Illinois we have marginal wells, maybe 2

gallons a day, that—2 barrels, excuse me. Marginal, marginal

wells.

They are being plugged up, too. From the debate of energy security, which those of you who followed just by first two terms, and

being a former Army officer, is a big concern of mine. So I, too, encourage the chairman to, and look forward to the hearing on these

low oil prices because it will have an impact, as we continue to

close up the marginal wells in our country. I think that needs to

be discussed.

Is there dumping; i.e., the dumping—lower prices—of oil or refined gas on our markets? Do you know of any instances of that?

Mr. MONIZ. I personally do not know, Mr. Chairman, but if I may

ask one of the experts here, they can respond. We have no knowledge of that.

Mr. BARTON. I used to know a little bit about the oil and gas

business, but under the classic definition of dumping, they have got

to sell in our market below their cost of production in their market,

and the Saudis could make money at $5 a barrel. So, under classic

definition, there is not dumping. There is obviously a surplus of oil

on the market, but I don’t believe anybody is bringing any kind of

an antidumping case, because literally they can produce it and ship

it to us and make money at very low prices.

Mr. SHIMKUS. Do we import refined gasoline?

55

Mr. MONIZ. Yes.

Mr. SHIMKUS. I mean, I have been told that in the district. So,

as we do that, even if we import oil, our refineries are closing

down, or are threatened to close down, because if we are importing

the gasoline, we are no longer even refining the oil. Again, that is

another national security issue.

Mr. BARTON. That will be another hearing.

Mr. SHIMKUS. Another hearing, good. I like hearings.

So that is going to be a concern that I want to focus on. Again,

I guess for that purpose, as we said in the Army, it is a warning

order that this is of great concern to my district and the issue of

national security.

Mr. Chairman, I have two other areas that I want to move into

real quick.

Mr. BARTON. You are our last questioner, Congressman Shimkus.

So, as soon as you are through, I am going to release the witness.

Mr. SHIMKUS. Okay. Following up on energy security, the biodiesel legislation that passed and was signed into law, I would like

to know—of course, the Department has to promulgate the rule.

What is the status on the rule for biodiesel?

Mr. MONIZ. The Department plans to issue an interim rule that

will take effect in the March-April timeframe.

Mr. SHIMKUS. Be careful when you use dates. I mean, we are

rabid on dates on this committee. So March-April?

Mr. MONIZ. March-April. Can I spell it April?

Mr. BARTON. Of this year, 1999?

Mr. SHIMKUS. Thank you, Mr. Chairman.

Mr. MONIZ. Of course, then there will be a comment period on

that rule.

Mr. SHIMKUS. Now that biodiesel is an approved fuel under

EPACT, is it safe to assume that DOE will now begin collecting

data on biodiesel fuel use?

Mr. MONIZ. I actually thought we had, but perhaps I am mistaken. No? I am sorry——

Mr. SHIMKUS. Well, the issue is you do it for all the other fuels,

and I think it would be helpful if you looked into doing it for the

biodiesel.

Mr. MONIZ. Okay. I think this year we are planning to invest

roughly $50 million in biofuels development in general, and certainly it is a direction that we want to emphasize. So we take your

suggestion.

Mr. SHIMKUS. And the last thing that I want to address—and I

was on the floor because part of the committee process was the 911

emergency bill. So I apologize for not being here earlier.

I want to address the interim storage site and, actually, the lawsuits filed by the utility companies, and the judgments ruled by the

courts. Where is the budget amount of payment for these liabilities,

and where are they as a line item?

Mr. MONIZ. Actually, probably the CFO wants to address that.

Mr. SHIMKUS. He probably doesn’t want to, but——

Mr. MONIZ. I would just note that internal estimates are of potential damages in the half billion to billion range. We understand

there are higher estimates by others. How any judgments would be

56

covered is an issue that we are discussing with the Department of

Justice.

Mike, do you want to add to that?

Mr. BARTON. That is a question that the Chair was going to ask

in writing. So we look forward to hearing your answer to this.

Mr. TELSON. I think you would be better off with it in writing,

but payments with a judgment fund are made under a permanent

appropriation, but they do come out of the judgment fund. They are

made out of the permanent appropriation.

Mr. BARTON. We have a judgment fund?

Mr. TELSON. The United States has a judgment fund to pay for

defaults and——

Mr. BARTON. Well, is the Department preparing a submission of

liability to submit to the judgment fund?

Mr. TELSON. Mr. Chairman, I would like to have our General

Counsel—they have been handling this whole issue. So I would like

to have them be able to comment on that.

Mr. BARTON. Well, this was a subject at our hearing on H.R. 45,

and at that time the senior Department of Energy official was very

ambivalent about where the money was coming from. There was

some discussion about it coming from the waste depository, the

waste fund itself——

Mr. TELSON. No, it has not been determined. That is why we——

Mr. BARTON. Former Chairman Dingell had a number of questions on this also. So we are going to seriously look forward to

hearing—we want to get that lined out, where that money is going

to come from.

Mr. MONIZ. We will respond in writing, Mr. Chairman.

[The following was received for the record:]

The Department has not included any line item in the budget for these liabilities.

Although the Court of Federal Claims has ruled in favor of three utilities, the court

has not yet decided what damages should be awarded to these utilities. It has not

yet been determined whether the damage awards should be paid from the Nuclear

Waste Fund or from the Judgment Fund. The Office of Legal Counsel at the Justice

Department is currently analyzing that question.

Mr. MONIZ. Again, I would just add that there certainly are discussions going on with the Department of Justice in terms of how

would approach this issue.

Mr. BARTON. Right. We understand.

Mr. SHIMKUS. A better solution would be to get onboard and

move the interim storage site, and not incur these liabilities.

I yield back my time.

Mr. BARTON. I thank the gentleman.

We are going to have a number of written questions. I have got

10 pages of written questions that I am not going to belabor.

I want to thank you, Mr. Under Secretary here, for being gracious and willing to stay while we had to go vote.

Please, again, encourage Secretary Richardson to accept the invitation to meet with myself and Mr. Hall, Mr. Bliley, and Mr. Dingell on H.R. 45, because we want to at least give the Secretary the

opportunity to have a dialog, if he so wishes, before we begin our

open markup process.

This hearing is adjourned.

[Whereupon, at 12:20 p.m., the subcommittee was adjourned.]

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[Questions, in addition to those below, were sent to the

Department of Energy, responses were not received at time

of publication.]

[Additional material submitted for the record follows:]

DEPARTMENT OF ENERGY RESPONSES TO QUESTIONS FOR THE RECORD

QUESTIONS FROM CHAIRMAN BARTON

Nuclear Waste Disposal

Question 1: The Department’s proposal for Yucca Mountain requires annual appropriations that are significantly higher than historical appropriation levels. Assuming historical funding levels of $350 million, when will the permanent repository

be ready to begin accepting spent fuel?

Answer 1: The funding levels in the President’s fiscal year 2000 budget request

are sufficient to support a site suitability determination in 2001 and, if the site is

determined to be suitable, submittal of a license application in 2002. It is difficult

to determine the extent to which the opening of a permanent repository would be

deferred, based on a flat funding profile. As the Department has stated before the

subcommittee, the constraints imposed by the Federal budget process have the potential to limit the availability of funding for the nuclear waste program in the outyears, particularly during repository construction. The Department has not fully

analyzed the impacts of outyear funding at historical levels, but as a rough measure

of the outyear impacts of such a funding profile, the Department estimates that approximately $10 billion is required from FY 2000 through 2010 to develop the waste

management system described in the Viability Assessment report and the Total System Life Cycle Cost analysis. The Department desires to work with Congress to address this issue. In exploring any funding alternatives, the Department is committed to meeting two important objectives: not imposing undue burdens on either

utility ratepayers or taxpayers, and ensuring that the revenues raised by the nuclear waste fee remain available to complete the job.

Question 2: In order to make the 2010 schedule for the permanent repository,

what specific changes have been assumed from the historical appropriation trends,

existing fee caps, and the budget rules? What is DOE’s basis for making such assumptions?

Answer 2: Both the Department and the Congress have been aware for some time

that the overall constraints of the federal budget process limit the availability of

funding for the nuclear waste program in the out years. The recently released ‘‘Viability Assessment of a Repository at Yucca Mountain’’ provides the Department’s

current estimate of costs to construct and operate a repository. Funding at historical

appropriation levels will not be adequate to pay Program costs during repository

construction. Future budget requests for the Program have yet to be established and

will be determined through the annual Executive and Congressional budget process.

The Department would like to work with the Congress to ensure that the repository

program is adequately funded. Two important objectives need to be considered: (1)

the Federal Government does not impose an undue burden on either ratepayers or

the taxpayers, and (2) the revenues raised by the nuclear waste fee remain available

to complete the job of the safe management and disposal of nuclear waste.

Question 3: The DOE budget submission does not take into account the potential

fiscal impacts of damage claims against DOE for its failure to accept spent fuel. Has

the Department, in coordination with the Department of Justice, determined how

these claims will be paid?

Answer 3: The Department of Justice, Office of Legal Counsel, is investigating

how claims emanating from DOE’s delay in accepting spent fuel should be paid, but

has not yet issued an opinion identifying the proper method and source for paying

such claims.

Question 4: It appears that DOE is proposing in the budget to use $39 million

of the $85 million in Defense Nuclear Waste Disposal funds previously set aside by

Congress for the purpose of interim storage. Does this request indicate the Department is pursuing some version of interim storage, or is the Department proposing

to use those funds for a purpose other than that which Congress intended?

Answer 4: The Administration opposes pursuing any options that would jeopardize the existing geologic disposal policy by forcing resources to be redirected to

interim storage development, rather than completion, by 2001, of the site characterization work needed to make a decision on the suitability of the Yucca Mountain

site. The Viability Assessment, which was submitted to the Congress and to the

President in December 1998, revealed no technical showstoppers. But, it did identify

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additional scientific and technical work that is needed before a decision can be made

whether to recommend Yucca Mountain as a site for a repository. The $39 million

of prior year budget authority will be used to reduce the uncertainties in our understanding of Yucca Mountain. Specifically, we will continue to study the presence and

movement of water through the repository block, the effect of water on the waste

package, and the effect of heat from the waste packages on the hydrologic and geologic behavior of the site.

Question 5: What is the present balance in the Nuclear Waste Fund?

Answer 5: The present balance in the Nuclear Waste Fund as of February 28,

1999, is $7.7 billion. The data is derived from a report entitled ‘‘Nuclear Waste Fund

Summary of Cash Balances,’’ prepared by the Department’s Office of Chief Financial

Officer on a monthly basis.

Question 6: Does the Department plan to use the balance accumulated in the Nuclear Waste Fund for the permanent repository program?

Answer 6: The Nuclear Waste Policy Act established the Nuclear Waste Fund in

order to ‘‘ensure that the costs of carrying out activities relating to the disposal of

such waste and spent fuel will be borne by the persons responsible for generating

such waste and spent fuel’’ [§ 111(b)(4)]. As required in section 302(d), Nuclear

Waste Fund revenues can be used ‘‘only for purposes of radioactive waste disposal

activities.’’ Both the Department and the Congress have been aware for some time

that the overall constraints of the Federal budget process limit the availability of

funding for the nuclear waste program in the out years. The Department would like

to work with the Congress to ensure that the repository program is adequately funded. It is important that funding alternatives not impose undue burdens on either

utility ratepayers or the taxpayers, and that revenues raised by the nuclear waste

fee remain available to complete the Department’s waste management activities.

Energy Security

Question 7: I am pleased that the Department has established an Emergency Oil

Task Force and is taking steps to assist our domestic oil industry. What specific actions is DOE taking to assist small independent operators, and how much funding

is dedicated to this purpose in FY2000?

Answer 7: Specific actions taken to assist small independent operators and the

corresponding funding in FY2000 include:

Assistance to Independents: focus on technology production problems identified by

small operators by conducting cost-shared research with independents on marginal

wells at risk of abandonment ($0.5 million).

Reservoir Class Demonstration Program Revisit: designed to encourage producers

to use new techniques for prolonging the production life of mature oil fields, now

under pressure for premature abandonment due to low oil prices. The program will

revisit the nearly completed three reservoir classes to address new technology applications in different regions of the country ($6.6 million).

Preferred Petroleum Upstream Management Program (PUMP): start an on-line

permitting project to enable States and independents reduce permitting costs and

speed response time and to conduct limited technology transfer of best reservoir

management practices for production and environmental compliance ($0.5 million).

Streamline State/Tribal/Federal Regulations: enhance cooperative efforts with

states, tribes and Federal agencies to streamline environmental regulations and regulatory processes without compromising environmental protection. Generate independent quality scientific data to help implement national policy in streamlining

and improving existing regulations and laws ($1.6 million).

Technology Outreach: support regional workshops through the Petroleum Technology Transfer Council (PTTC), provide complete packages of applicable results

from Reservoir Class Demonstration and other projects, assist operators in extending reservoir life, improve efficiency and coverage in electronic and hard-copy dissemination of publications and software, and expand schedule of exhibits at professional meetings ($2.9 million).

Approximately one-third of the FY2000 Oil Technology budget applies directly to

small independent operators, with the remainder also applicable to other segments

of the petroleum industry, including exploration, production and oil services.

Strategic Petroleum Reserve

Question 8: I understand that DOE has decided to add 28 million barrels of oil

into the Strategic Petroleum Reserve. Are there plans to store additional quantities

of ‘‘Federal Royalty Oil’’ in the Reserve?

Answer 8: To date, the Administration has only decided to transfer 28 million barrels of royalty oil to the Department of Energy. We are conducting an interagency

study on the appropriate size of the Strategic Petroleum Reserve that we anticipate

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completing this summer. If we reach the conclusion that the Reserve inventory

should be greater than 590 million barrels we would then address the issue of how

to best obtain the oil.

Energy Security

Question 9: The budget request includes $50 million for research and development

on oil production technologies. Please explain in more detail what activities will be

conducted with these funds?

Answer 9: The Oil Technology Program conducts a broad range of research and

field demonstration activities designed to enhance the efficiency and environmental

quality of domestic oil operations. These R&D activities are conducted in partnership with universities, State and local governments, industry and other organizations. Private sector participation is emphasized through industry cost-sharing with

individual companies and consortia to ensure relevance and to facilitate the transfer

of technology to the private sector while leveraging Federal R&D investment.

These activities are carried out under three major areas: exploration and production, reservoir life extension and management, and effective environmental management. Following is a more detailed description of activities in each area:

Exploration and production research consists of exploration and advanced drilling,

completion, and stimulation systems, advanced diagnostics and imaging systems,

the Multi National Lab/Industry Partnership, reservoir efficiency processes, and

planning and analysis efforts.

• Exploration work aims to stimulate activity in currently underdrilled areas and

in untested formations within older producing areas • Advanced drilling, completion, and stimulation work focuses on developing tools

and techniques to drill, complete and stimulate oil wells that can achieve and

maintain higher production rates. • Advanced diagnostics and imaging systems work focuses on the development of

technologies and methodologies that improve success rates and cost efficiencies

for the development of existing fields and the discovery of new fields. • Multi Lab/Industry Partnership activities represent an industry driven program

utilizing a wide range of tools developed for the defense programs and adapted

to oil and gas use to improve seismic, production, drilling, and environmental

technology. • Reservoir efficiency processes include research to develop and demonstrate tools

and methodologies that permit oil operators to recover hydrocarbons in mature

reservoirs that are not producible by current technology. It also supports university research in extraction technologies with an objective on the development

of scientific breakthroughs.

Reservoir life extension and management work focuses on coordinating oil technology activities in research, development, and demonstration of advanced technologies to improve recovery of hydrocarbons from mature oil reservoirs. Activities

in this area include revisiting major reservoir groups to address key production

problems, and increasing production from marginal wells. In FY 2000, activities will

be initiated in the reservoir life extension and management area for a preferred Petroleum Upstream Management Practices (PUMP) Program. PUMP is designed to

provide a short-term supplement to mid- and long-term R&D and will focus on data

management and effective environmental compliance. PUMP will use known technology transfer mechanisms, regional approaches, and integrated solutions to technology, regulatory, and data constraints.

Effective environmental protection research activities focus on technologies and

practices that reduce the threat to the environment and decrease the cost of effective environmental protection and compliance involved in exploration, production,

and oil processing. In FY 2000, the program will focus on detection and control of

air emissions from gas and oil equipment and facilities, treatment of produced water

to meet environmental standards, remediation of soils contaminated with hydrocarbons or produced water, treatment and disposal of wastes containing naturally

occurring radioactive materials, underground injection of produced water, and other

approaches to manage oil and gas field wastes. Activities also include identification

of pollutants present in petroleum and development of technologies to prevent their

formation and to reduce emissions from petroleum fuels. Also, the program will implement, together with states and industry, on-line expert systems for environmental permitting and reporting that can save both producers and state regulators

time and money. Through these activities with state governments and industry, the

gas and oil environmental program can contribute toward decreasing cumulative industry compliance costs, between now and 2010, by as much as $16 billion, increase

gas production by 90 billion cubic feet per year, and retain production of up to

140,000 barrels per day of oil that would otherwise be abandoned.

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Question 10: The funding for coal and natural gas is down from Fiscal Year 1999.

Yet Dr. Moniz’s statement notes the ‘‘pressing environmental challenges of smog

and particulate emissions, acid rain and global warming’’. In light of those challenges, why is the Department reducing its efforts on these fossil fuels?

Answer 10: The current reduction in FY 2000 reflects completion of the Low Emis- sion Boiler Systems project in the Coal program ($12 million) and the use of prior

year funds to finance a portion of FY 2000 requirements. In most areas this does

not lead to a lower level of effort compared to that for FY 1999.

Fossil Energy’s proposed research program has been developed to achieve the twin

goals of a cleaner environment and a growing economy. The research proposed in

the FE program can substantially reduce the burden of environmental costs by billions of dollars annually, while sustaining environmental progress. This means that

the Nation can continue to benefit from fossil fuels at the same time that we continue to improve the environment, grow the economy and enhance our energy security.

Question 11: According to the Energy Information Administration, coal is the

source of roughly half of the electricity generated in this country. If we start to lose

a significant portion of our coal plants for air quality reasons, how will we replace

that lost generating capacity?

Answer 11: To put the scenario posed in your question in context, we note that

substantial reduction in emissions from coal-fired power plants have been achieved

over the past two decades without leading to significant shutdowns of coal-fired capacity. EIA analyses suggest that further emissions-reductions required over the

coming years by the acid rain provisions in the 1990 Clean Air Act amendment can

also be achieved without endangering the economic viability of significant amounts

of coal-fired capacity.

Taking the scenario posed in your question as given, three variables that would

be crucial in understanding whether lost coal capacity could be replaced in a manner acceptable to U.S. electricity consumers would be:

(1) Growth in demand for electricity;

(2) The pace of replacement: how much coal would have to be replaced each year?

and

(3) The cost of alternative technologies and fuels.

If electricity demand growth is high, and your hypothesized constraints on coal

use are binding, then substantial natural gas capacity additions would be expected,

along with associated increases in natural gas use and pipeline infrastructure requirements. These infrastructure and fuel use increases might be stretched to replace substantial amounts of coal capacity, without substantial price increases.

Finally, research and development into new technologies for electricity generation

can also provide direct benefits in holding down the cost to America’s electricity consumers should the scenario posited in your question come to pass.

Question 12: Can you explain the deferral of Clean Coal Technology funding for

FY2000? Is the decision to defer these projects largely a Department decision, or is

it coming from your industry partners?.

Answer 12: The proposed deferral resulted from schedule delays in the Clean Energy Demonstration Project—an Integrated Gasification Combined Cycle (IGCC)

planned for Illinois and the Clean Power From Integrated Coal/Ore Reduction

(CPICOR) project—a combined steel making and power generation project planned

for Utah. These two projects have over $300 million in future funding requirements;

however, the next funding requirements are not until fiscal year 2001.

Both of the extensions were made at the request of the industrial participant. For

the Clean Energy project, the delay was necessary due to resiting of the project and

the inclusion of the host utility as an equity partner in the project. The CPICOR

delay resulted from a change in the technology vendor. Both projects are expected

to begin construction activities in 2001.

DOE Asset Sales

Question 15. Have DOE contractors fulfilled their legal obligations to identify and

dispose of surplus assets? Provide a legal opinion on the duty of DOE contractors

to identify and dispose of surplus assets under their control. Provide a list of DOE

contractors, indicating the value of DOE assets under the control of each contractor,

whether each contractor has disposed of surplus assets over the past five years, and

the value of any surplus assets disposed of by each contractor over the past five

years.

Answer 15: Yes. DOE management and operating contracts contain a paragraph

within the property clause 48 Code of Federal Regulations CFR 970.5204-21 Department of Energy Acquisition Regulation (DEAR) which requires, among other things,

that the contractor disposition personal property as directed by the contracting offiVerDate 20-MAR-2000 09:04 Mar 28, 2000 Jkt 060484 PO 00000 Frm 00063 Fmt 6633 Sfmt 6621 E:\HEARINGS\55148.TXT pfrm07 PsN: 55148
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cer. Both the 41 Federal Property Management Regulations, Chapter 101-43.101,

‘‘Agency utilization reviews,’’ and the Department of Energy Property Management

Regulations (DOEPMR) 41 CFR 109-43. 101, ‘‘Agency utilization reviews,’’ require

that contractors be responsible for continuously surveying property under their control to assure maximum use, and to promptly identify property that is excess to

their needs and make it available for use elsewhere. Attachment I provides a list

of DOE contractors by Operations or Field Office, demonstrates that each contractor

has identified and disposed of surplus personal property over the past 5 years, and

shows the value of surplus personal property assets disposed of by each contractor

over the past five years. Attachment 2 provides a list of DOE contractors and indicates the value of personal property assets under the control of each contractor.

Total Value Of Any Surplus Assets Disposed By Each DOE Contractor

Field Office Acquistion Cost

FY 1994-MAY 1999

Albuquerque Operations Office

Allied Signal ................................................................................................................................................. $152,002,000

Los Alamos National Lab ............................................................................................................................. $216,452,747

Mason & Hanger .......................................................................................................................................... $79,939,731

Sandia National Laboratory ......................................................................................................................... $236,494,785

Westinghouse (WIPP) ................................................................................................................................... $8,482,192

Subtotal ................................................................................................................................................... $693,371,455

Chicago Operations Office

Ames Laboratory .......................................................................................................................................... $955,490

Argonne National Laboratory ....................................................................................................................... $48,696,734

Brookhaven National Laboratory .................................................................................................................. $21,489,712

FERMI National Accelerator Lab .................................................................................................................. $38,128,729

Princeton Plasma Physics Lab .................................................................................................................... $1,871,805

Subtotal ................................................................................................................................................... $111,142,470

Idaho Operations Office

Idaho National Engr & Env Lab .................................................................................................................. $114,403,219

Nevada Operations Office

Nevada Test Site .......................................................................................................................................... $21,362,800

Oak Ridge Operations Office

Bechtel Jacobs (ETTP) .................................................................................................................................. $25,662,120

Lockheed Martin Energy Sys ........................................................................................................................ $5,419,470

Lockheed Martin Energy Res ....................................................................................................................... $9,876,300

Thomas Jefferson National Accel ................................................................................................................. $3,646,572

Oak Ridge Associated Univ ......................................................................................................................... $1,388,418

Subtotal ................................................................................................................................................... $45,992,880

Oakland Operations Office

Lawrence Berkeley National Lab .................................................................................................................. $12,300,000

Lawrence Livermore National Lab ............................................................................................................... $150,000,000

Stanford Linear Accelerator Center ............................................................................................................. $11,900,000

Subtotal ................................................................................................................................................... $174,200,000

Richland Operations Office

Hanford Site-Fluor Daniel Hanford .............................................................................................................. $154,930,246

Savannah River Operations Office

Savannah River Site Westinghouse ............................................................................................................. $151,879,000

Golden Field Office

National Renewable Energy Lab .................................................................................................................. $5,879,946

Ohio Field Office

Fernald Environmental Mgmt Proj ............................................................................................................... $23,213,251

Mound Site ................................................................................................................................................... $78,535,450

Ashtabula ..................................................................................................................................................... $157,243

West Valley Project Westinghouse ............................................................................................................... $3,747,739

Subtotal ................................................................................................................................................... $105,653,683

Rocky Flats Field Office

Kaiser Hill LLC ............................................................................................................................................. $114,849,460

Federal Energy Technology Center

FETC-DOE ..................................................................................................................................................... $25,783,537

Amax Research & Development ................................................................................................................... $1,915,200

Bartlesville Research Facility ...................................................................................................................... $762,078

Subtotal ................................................................................................................................................... $28,460,815

Strategic Petroleum Reserve Project Office

Strategic Petroleum Reserve ........................................................................................................................ $4,175,958

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Total Value Of Any Surplus Assets Disposed By Each DOE Contractor—Continued

Field Office Acquistion Cost

FY 1994-MAY 1999

Pittsburgh Naval Reactors

Bettis Atomic Power Laboratory ................................................................................................................... $11,754,174

Schenectady Naval Reactors

Knolls Atomic Power Laboratory .................................................................................................................. $14,656,545

GRAND TOTAL .......................................................................................................................................... $1,752,712,651

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Question 16: Has DOE fulfilled its legal obligations to identify and dispose of surplus assets? Provide a legal opinion on the duty of Federal agencies to identify and

dispose of surplus assets.

Answer 16: Yes. The Federal Property and Administrative Services Act of 1949,

as amended, implemented in Title 41 CFR 101-43.101, ‘‘Agency utilization reviews,’’

Federal Property Management Regulations, requires that every agency continuously

survey property under its control to assure maximum use and to promptly make

personal property that is excess to its needs available for transfer. All personal

property that is excess to an agency is then screened by the General Services Administration (GSA) for use by other Federal agencies. DOE excess personal property

is screened for reutilization within DOE as described in the DOE Property Management Regulations, 41 CFR Chapter 109-43.304-1.50, ‘‘DOE reutilization screening.’’

After such a screening, remaining excess personal property is reported to GSA.

The Federal Property and Administrative Services Act of 1949, implemented in

41 CFR Subpart 101-47.2, as amended, ‘‘Utilization of Excess Real Property,’’ and

Subpart 101-47.8, ‘‘Identification of Unneeded Federal Real Property,’’ Federal Property Management Regulations, requires that the Department annually survey its

real property (land and facilities) to identify property that is underutilized or not

being put to optimum use, and directs agencies to follow certain procedures with

respect to any such property.

Question 19: How much surplus property has DOE donated to nonprofit organizations over the past five years?

Answer 19: DOE has donated over $258,000,000 in surplus property over the past

five years.

PEIS Lawsuit Settlement Agreement

Question 20: The Department recently entered into a settlement agreement with

the NRDC that requires the Department to establish a $6.25 million fund to provide

grants to environmental groups monitoring DOE cleanup efforts. Where will these

funds come from, and what is the Department’s authority to make such grants? If

DOE allows a third party to administer this grant program, as is specified in the

settlement agreement, who in the Department remains accountable for how these

funds are spent? How does the Department prevent the kind of abuses we discovered in the Nevada Project Office, where federal funds were used for lobbying rather

than for objective analysis?

Answer 20: The initial funding ($1.25 million) for the Citizen Monitoring and

Technical Assessment Fired (Fund) is provided from the Department’s Defense Environmental Restoration and Waste Management account. The Department provided

the initial $1.25 million for the Fund to RESOLVE, Inc. (RESOLVE), which was

chosen as the Administering Organization of the Fund. After reviewing RESOLVE’s

financial management documentation pursuant to the settlement agreement, DOE

transferred the initial $1.25 Million to RESOLVE in March 1999. The balance of the

required funding ($5 million) is included in the Department’s FY 2000 budget request now before Congress. In addition to the Department’s usual authorities including the Atomic Energy Act and the DOE Organization Act, for payment of funds

to public and private groups, Federal appropriations guidelines also provide that a

court ordered settlement confers authority to fund projects such as those to be selected by RESOLVE.

The Department is firmly committed to ensuring strict adherence to the requirements of the settlement agreement, which limits use of the Fund to technical and

scientific studies, and prohibits use of the Fund for litigation, lobbying, or fundraising. There are several means of Fund oversight. First, RESOLVE must provide

an annual report to the Department outlining how the Fund is spent, consistent

with OMB Circulars for the expenditure of public funds. Second, in the event that

DOE requires an audit, it would be conducted pursuant to the normal procedures

associated with the federal government grant-making process. Third, the Department has prohibited the use of funds for litigation, lobbying, and fundraising activities in the settlement agreement, as it Specifically states that funds may not be

used for such activities. As Administering organization of the Fund, RESOLVE is

responsible for determining that the Fund is used consistent with the intent of the

settlement agreement. However, the Department will oversee RESOLVE’s administration of the Fund. A DOE contracting officer (yet to be selected) will be responsible

for determining that appropriated funds are used consistent with the intent of the

settlement agreement. No money has yet been granted from the Fund by RESOLVE,

but initial receipt of applications is expected by July.

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External Regulation

Question 21: For several years now, this Committee has been advocating external

regulation of DOE facilities and operations by the NRC and OSHA. In testimony

before this subcommittee last May, then-deputy Secretary Moler agreed with us on

the benefits of external regulation at DOE facilities and promised to work with NRC

and OSHA to establish the scope, timing, and resource needs to implement external

regulation. She also promised us that this interagency process would be in place by

July 1998 and would be reflected in the FY2000 budget planning process. However,

Secretary Richardson stated in a February 19, 1999, letter that DOE will complete

the ongoing pilot projects and then put this concept on the shelf—not conducting

any more pilots and not submitting any implementing legislation to Congress.

Please explain the Department’s apparent reversal on external regulation?

Answer: As noted in the Secretary’s letter to Congress of February 19, 1999, a

number of significant, unresolved issues were identified in the three regulatory pilots completed by DOE and NRC. A number of regulatory and cost uncertainties

would need to be addressed before proceeding to submit any legislative proposal for

transition to external regulation. As indicated in the Secretary’s most recent letter

of March 31, 1999, accompanying ‘‘working drafts’’ of two of the three pilot reports

(for Lawrence Berkeley National Laboratory and the Receiving Basin for Offsite

Fuel at Savannah River), the Department remains concerned about the ‘‘extent to

which existing regulatory flexibility or exemptions would be available to effectively

address the DOE’s unique nuclear facilities and operations, and what potential impacts such uncertainties carry with them.’’ The letter also noted that this issue—

the degree of flexibility or exemptions that the NRC can actually afford in defining

how the existing regulatory framework is applied to specific DOE facilities through

a licensing process—‘‘cannot easily be answered by the reviews contained in the enclosed pilot reports.’’ In this letter, the Secretary concludes that ‘‘these potential impacts cannot be overstated and must be fully addressed before any regulatory transition is pursued.’’

Hanford Spent Nuclear Fuel Project

Question 25: Dr. Moniz testified before the Subcommittee on Oversight and Investigations last year regarding the Hanford Spent Nuclear Fuel (SNF) project, which,

at that time was $600 million over budget and four years behind schedule. What

progress has been on the Hanford SNF project since our hearing last year?

Answer: The Hanford Spent Nuclear Fuel Project has achieved significant

progress since the establishment of the high confidence level schedule in the Fall

of 1998. The current Project life cycle cost, based upon this schedule, is $1,720M

which includes a deactivation cost of $133.5M. The proposed budget of $1.375B for

the SNF Project reported in last year’s testimony, reflected the known changes

added to the current baseline at the time of the Congressional hearing. Subsequently, a re-estimate of the entire SNF Project was completed and validated to

support the Tri-Party Agreement schedule commitments. This re-estimate resulted

in the $1.586B baseline approved in December 1998. When added to the deactivation costs, the total life cycle cost is $1.720B. The validation of the SNF Baseline

was accomplished over a three month period by a joint team consisting of Department employees, Contractors from FDH and DESH, and the EPA. The detailed

Basis of Estimate and backup for each SNF subproject’s proposed baseline was

verified and validated as appropriate for the known workscope. Contingency requirements and identified risks were also evaluated during the review. Project expenditures from fiscal year 1995 to February of fiscal year 1999 have been $593M. Institution of a disciplined baseline change control process has resulted in improved controls on the use of funds. Expenditures are being tracked against the risks identified

in the contingency analysis. As a result, the project is performing within its cost

goals. Several technical issues have caused decreased schedule performance to date.

However, the Department expects to recover the slippages in the project by the summer of 1999.

The status of significant activities are:

— The fuel characterization effort has been successfully completed and the final report was issued in March 1999. The cask/transportation sub-project has also

been successfully completed.

— The K-West Basin Integrated Water Treatment System and the Fuel Retrieval

System installation activities are on schedule for completion this fiscal year. Installation of the K-West Basin Cask Load Out System has been put on hold

temporarily due to a potential technical problem, and plausible mitigative solutions are currently being evaluated.

— The Canister Storage Building construction is on schedule. Additionally, the acceptance testing for the Multi-Canister Overpack Handling Machine is also on

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schedule. The Cold Vacuum Drying process equipment skid procurement has

been awarded. However, the delivery schedules are very tight.

— Additional contractor operations staff are being hired and trained pro-actively to

support various start-up activities. Major contractor performance improvements

have been noted as continued attention is being focused in ensuring that seasoned personnel are in place to best serve the project needs.

The SNF project is on track to meet the Departmental commitment to start fuel

removal from the basins by November 30, 2000.

Question 26: The contractors on the project—Fluor Daniel and Duke Energy—

made a commitment to the Committee and to the DOE to complete this project on

time and under budget or risk all of their profit. What is the status of this commitment?

Answer: Fluor Daniel Hanford, Inc., (FDH) and DE&S Hanford, Inc., (DESH)

have both committed to complete the Spent Nuclear Fuel (SNF) Project on time and

within budget. The U.S. Department of Energy, Richland Operations Office (RL) has

modified the FDH prime contract (modification No. 062) that places Performance

Agreement fee earned by FDH in fiscal year 1999 and 2000, at risk upon the successful start of fuel removal from the K Basins by November 30, 2000. FDH has

also modified the DESH subcontract to flow this requirement down. Therefore, both

organizations have put their respective portions of earned SNF Project Performance

Agreement fee at risk on fuel movement.

In fiscal year 1998, the performance fee opportunity that was available on the SNF Project was $7.2M. In fiscal year 1998, FDH and DESH earned no fee. In addition to not earning fee, both FDH and DESH were penalized $351K through penalty

clauses that were invoked in the performance agreements.

Question 27: It is the Committee’s understanding that the subcontractor on this

project, Duke Energy, is now trying to get out of the contract. What is the status

of this situation?

Answer: On February 4, 1999, Dr. Ernest Moniz (Under Secretary) and James

Owendoff (Acting Assistant Secretary for Environmental Management) met with

James Stein (President and Chief Operating Officer of Fluor Daniel) and Richard

Priory (President and Chief Executive Officer of Duke Energy) to discuss the contractors’ approach for managing this project. Fluor Daniel and Duke stated at this

meeting that they remain fully committed to the success of this project.

As a follow up to this meeting, Mr. Stein and Mr. Priory provided additional details of their plan. In brief, the contractors proposed a change to the contractual relationship of Fluor Daniel as prime contractor and Duke as major subcontractor for

the spent fuel project, to a relationship where Fluor Daniel will be directly responsible for project execution and Duke Energy would provide technical support

through a staff augmentation type subcontract. This change was subsequently

made.

Consistent with commitments made by senior management from both Fluor and

Duke to DOE/HQ and DOE/RL, the DESH transition has been completed without

any cost or schedule impacts to the SNF Project. Specifically, the transition included:

* The transition of the DESH Subcontract is not a termination.

* The DESH contract will remain a cost reimbursement, performance fee based subcontract.

* Effective August 1, 1999, DESH transitioned from the major subcontractor for

SNF to a staff support subcontractor to FDH. FDH is now responsible for execution of the SNF project and DESH provides human resources to fill work scope

tasked by FDH. The existing subcontract between DESH and FDH has been

modified accordingly to accommodate this transition. Notwithstanding any

changes made in the subcontract, for the staff augmentation scope, the continuing rights and obligations of DESH as the performing entity prior to August

1, 1999 remains unchanged.

* Consistent with commitments made to Congress, DOE/HQ, and the DOE/RL all

fee earned by DESH on the SNF Project will be contingent on the movement

of fuel in November 2000. As in the past, the fee DESH earns will come out

of FDH earned fee and will not be billed as a separate direct cost back to the

DOE/RL. Also, consistent with commitments made, DESH’s subcontract has

been extended through September 30, 2001.

* Currently, DESH supports the SNF Project and the TWRS Project with approximately 200 DESH employees. These employees have been transferred over to

FDH (∼180) for the SNF work scope and LMH (∼20) for the TWRS work scope.

The only change in this employee transition is that the employees have changed

the name tags on their badge (i.e., DESH to FDH or LMH). There were no layoffs, involuntary reductions in force, or relocation of DESH staff. Therefore,

71

there were no costs associated with severance pay, pension costs, retirement, relocation, cost of money, and travel.

* DESH also supports the SNF Project with approximately 30 DE & Services, Inc.,

staff (Home Office Personnel). These are staff that are on full time assignment

to the SNF Project. There will be no change with these staff. They are still

being utilized through the existing subcontract relationship between DESH and

FDH at no increased cost to the SNF project.

* Currently, DESH is also supporting the SNF Project with approximately 30 DE&

Services, Inc., temporary staff who are here on short term assignments. These

resources will continue to be utilized as necessary and will also be accessed

through the existing subcontract relationship between DESH and FDH at no increased cost to the SNF project.

DOE has made it clear that, regardless of the contractual relationship, DOE expects Fluor Daniel to hold Duke and itself to the commitments made to the Committee on this project, and to assure that the necessary technical experts are made

available to achieve a successful outcome.

QUESTIONS FROM THE HONORABLE TOM COBURN

Strategic Petroleum Reserve

Question 1: Dr. Moniz, I realize the Department has instituted a 28 million barrel

Strategic Petroleum Reserve increase from the market in lieu of payments, but what

is the real effect this will have on the oil market? Will this move help to bolster

falling prices and is it believed to help the independent oil producer?

Answer 1: The reasons that the Administration is acquiring royalty oil for the

Strategic Petroleum Reserve now are that we want to enhance energy security by

replacing the oil that was sold from the Reserve in fiscal years 1996-97, and that

we want to be prudent by doing it while prices are low.

The direct price effect of transferring 28 million barrels of royalty oil over the

course of a year is expected to be negligible.

Question 2: By my calculation the 28 million new barrels accepted into the Reserve will give us a total of 589 million barrels of oil in reserve. What is the future

plan of DOE in regards to the Strategic Petroleum Reserve? Would it not be wise

to try and fill the Reserve with oil at this time to a level of 680 million barrels based

on a two pronged effect: (1) It take more oil off the market and would help shore

up prices, and (2) we make a wise business decision to get the oil at historically

low prices.

Answer 2: The Administration is conducting a study of the appropriate size level

of the Strategic Petroleum Reserve that we expect to complete this summer. Our

policy on adding more oil to the Reserve will be determined after its completion.

However, it is not our policy to try to influence oil prices, and the Energy Policy

and Conservation Act specifically directs the Department to acquire oil in a manner

to minimize the impact upon supply levels and market forces. It is both good policy

and our intent to act in a business like fashion and acquire oil only at favorable

prices.

Fossil Energy R&D

Question 3: I noticed a request that actually decreases the Fossil Fuel R&D ac- count by about $20 million dollars from 1999. What are the specific reasons that

the request is lower and would it not be wise to actually increase the R&D account

given the struggles domestic producers are having and the fact that projections indicate a heavy dependence on foreign oil? Is this an indication of how the administration feels about the fossil fuels industry?

Answer 3: Although there are several small increases and decreases in the Fossil

Energy Congressional Request, the two major reasons for the overall decrease are

completion of the Low Emission Boiler Systems project ($12 million), and the use

of prior year funds to finance a portion of FY 2000 needs ($11 million.)

The overall Fossil Energy R&D budget request reflects a balancing of budget priorities by the Administration, given restrictive budget caps.

Oil Dependence

Question 4: I am very alarmed by the statistics that indicate imported oil will rise

to over 16 million imported barrels a day by the year 2020 accounting for 66% of

oil consumption in the United States. While these are bleak projections the amount

requested for Energy Resources programs only is increased $6 million dollars. It is

my understanding that the Energy Department’s security strategy relies on this

money to help develop technology to increase energy efficiency and reduce energy

demand. The projections indicate this plan is a failure. Is the meager request for

an increase a sign that the DOE believes the energy security plan is a failure? If

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so, why have we not looked at a more vigorous avenue to fight foreign oil dependence?

(Note: The 66 percent dependence on imported oil is for 2010 according to the Annual Energy Outlook 1999 by EIA. Their estimate for 2020 is 71 percent reliance

on imported oil. In addition, EIA projects that imports will be almost 11 million barrels per day in 2010, and almost 12 million barrels per day in 2020)

Answer 4: Two-thirds of the oil used by the U.S. is for the transportation sector.

The Department is requesting $305.5 million for transportation technologies to develop technologies that will reduce our dependence on oil. If the current programs

of the Office of Transportation Technologies (OTT) are successful, it is estimated

that demand will be reduced by 1.8 million barrels per day off the projected 2020

oil use for the U.S. But, every barrel of oil reduced in transportation does not translate into a barrel of reduced oil imports. Therefore, reducing the projected 71 percent dependence on imported oil for 2020 will require even greater attention to efficiency improvements, substitutions, and enhanced domestic production.

That is why the budget request also includes $50.2 million for research and development on oil production technologies. Fossil Energy’s Oil Technology Program conducts a broad range of research and field demonstration activities designed to enhance the efficiency and environmental quality of domestic oil operations. These

R&D activities are conducted in partnership with universities, State and local governments, industry and other organizations. Private sector participation is emphasized through industry cost-sharing with companies and consortia to ensure relevance and to facilitate the transfer of technology to the private sector while

leveraging Federal R&D investment.

Climate Change

Question 5: While Fossil Fuel R&D decreases by $20 million, which helps producers find new ways to produce oil more cheaply, the Climate Change Technology

Initiative (CCTI) is increased $22 million. How can we be sure this increase, and

for that matter, the rest of this funding, is not being used to promote an unratified

Kyoto treaty? What are some assurances that you can give me for the record that

this money will not be used to foster implementation of this treaty while it has not

been ratified?

Answer 5: Fossil Energy has two related programs contained in the CCTI: advanced clean, efficient, fuel flexible, power generation technologies (Vision 21) and

carbon sequestration research. Neither is directly related to the Kyoto Protocol, and

none of the funding is used to implement the Protocol. Both of these programs are

targeted to produce a suite of practical technologies for deployment in the 2015 time

frame, with significant expansion in scope and reduction in cost for sequestration

in the following decade. These technologies will provide cost-effective tools for reducing carbon emissions generally, without respect to the specific targets in the Kyoto

Protocol. The Kyoto agreement focuses on binding national commitments, and R&D

programs such as these are not part of it.

QUESTIONS FROM REPRESENTATIVE RALPH N. HALL

Emergency Oil Task Force

Question 1: Mr. Secretary, in November you formed a DOE emergency task force

to address the price crisis being faced by America’s independent oil and natural gas

producers. Nearly 50,000 U.S. oil and gas industry jobs have been lost since November 1997 and almost 200,000 wells have been permanently shut-in.

I’m aware of the initiatives DOE has announced to help including refilling the 28

million barrels of oil sold from the SPR by initiating a royalty-in-kind program and

providing technical aid and efficient energy programs to domestic producers. I also

understand you may announce a DOE/SBA effort to publicize a program offering

loan guarantees for domestic producers and their capital providers.

I congratulate you on these efforts but I’m afraid that much more is necessary.

One can argue that America’s oil producers are facing the same crisis as America’s

farmers and steel manufacturers. However, President Clinton and Vice President

Gore haven’t uttered a word about the serious economic and national security

threats posed by this price downturn. Why haven’t we seen the White House, the

Treasury Department and other agencies take a stronger and more visible position

in support of far-reaching initiatives to help this struggling industry? When will the

rest of the Administration begin publicly discussing ways to avert the loss of significant amounts of America’s onshore lower 48 states domestic oil production and the

attendant risk to future natural gas development industry?

73

Answer 1: We agree with you that the latest round of low oil prices presents a

severe problem to domestic petroleum production. This is a vital industry that is integral to the energy and economic security of our country.

With respect to your question about White House involvement, Secretary Richardson chaired a meeting at the White House to address these issues on March 16,

1999. John Podesta, the President’s chief of staff, Gene Sperling, chairman of the

National Economic Council, Bob Rubin, Secretary of Treasury, and Secretary Richardson met with representatives of the petroleum industry to hear their concerns

and discuss possible actions. One of the first tangible accomplishments from that

meeting was the establishment of a special energy working group within the National Economic Council. This group has brought in high level representatives from

all agencies within the Administration to address important energy issues. We expect this group to make a real contribution in terms of creating a forum where important issues affecting the petroleum industry and other energy industries, can be

discussed with all important government officials.

Question 2: Again, referring to your task force. Do the members of the task force

have other recommendations that will go further and provide substantial relief for

the industry? Has DOE been working with the Treasury Department on tax relief

measures? If so, please elaborate.

Answer 2: Yes, they do. The work of the task force is an ongoing process where

new ideas or initiatives to aid the industry are being considered. For example, since

releasing its first report DOE has begun working with the U.S. Department of Agriculture to determine if their loan guarantee program for businesses in rural areas

could be expanded to include oil and natural gas businesses.

With respect to tax relief, DOE and the Treasury Department has been closely

following the tax proposals currently in Congress. The two agencies have discussed

the pros and cons of these proposals, and are anticipating serious consideration of

them in Congress. DOE has offered to work with Congress in its efforts to develop

the most cost-effective and efficient proposals possible.

Question 3: The Clinton Administration has consistently touted its global climate

change agenda—an agenda which most in Congress do not support. One of the key

elements of that agenda is a substantial increase in domestic natural gas production. Has anyone in the Administration recognized the implications of the current

oil price crisis on this natural gas agenda?

Answer 3: Yes, we are concerned with the potential impact of low oil prices on

future domestic production of natural gas. The Energy Information Administration

(EIA), in its Annual Energy Outlook for 1999, presented findings from sensitivity

analyses it did on the effects of low oil prices that indicate that low prices may not

significantly impair domestic gas production in the future.

FOR 2020

Oil prices NG prices NG

production

EIA Base Case .............................................................................................................. $22.73/bbl $2.68/mcf 27.4 TCF

EIA Low Oil Price Case ................................................................................................. $14.57/bbl $2.62/mcf 26.9 TCF

As can be seen from this data for the year 2020, EIA forecasts that domestic gas

production will be basically unchanged whether oil prices are $22.73/bbl. (all in constant 1997 dollars) or $14.57/bbl.

Having said this, we are still concerned with this important issue. We expect the

National Petroleum Council, which is currently conducting a study of future gas

supplies in the U.S., to give us their assessment of the implications of low oil prices.

The results of that study should be conveyed to DOE in the Fall of 1999.

Question 4: Some of your predecessors viewed DOE’s Fossil Energy programs, particularly the oil and gas program, as a source of additional funds for other programs. I am pleased to see that you have made a slight increase in Fossil Energy’s

oil research and development program. Can we count on DOE to continue fully

funding this program? Will you fight to maintain this program when congressional

appropriators attempt to rob this program to fund more popular programs such as

Energy Efficiency?

Answer 4: I fully support the Fossil Energy FY 2000 budget request. I believe that

the oil and gas program budget level is appropriate and balanced in light of current

budget constraints. I also support the FY 2000 budget request for Energy Efficiency

and believe that it is appropriate and balanced, too. I will support maintenance of

both programs.

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QUESTIONS FROM REPRESENTATIVE NORWOOD

Purchase Power and Wheeling

Question 1: Has the Administration made a policy decision to terminate wholesale

power contracts with existing preference customers by eliminating funding for purchase power and wheeling?

Answer 1: No. The Administration has made no policy decision to terminate existing wholesale power contracts. On the contrary, the Administration expects and intends that the PMAs will continue to perform critical purchase power and wheeling

activities as necessary to fulfill their contractual commitments. The sole purpose of

the Administration’s proposal to eliminate appropriations for purchase power and

wheeling is to correct an anomaly in the appropriations process. This anomaly unfairly weakens and jeopardizes the PP&W function—a situation which the Administration’s proposal would correct. The Administration recognizes that the financing

methods used to firm Federal power and wheel it to users must take into account

the individual situations found at each PMA power system. The Administration is

open to other ideas that provide a permanent solution for financing this activity

without relying on scarce appropriations.

Question 2: What happens to the contracts for transmission service if funds are

not provided in the budgets for the PMA’s?

Answer 2: It is the Administration’s intention that funding will be available, without appropriations, for the continuation of contracts for firming energy and transmission services. Currently, more than half of the PMA purchase power and wheeling activity is funded without appropriations, through existing off-budget, alternative financing methods, including net-billing, bill crediting and reimbursable authorities. Off-budget financing of the remaining portion of the programs is anticipated from customers. We understand that the Administration’s proposal has generated some concern among current suppliers and customers. Adequate funding of

firming energy and wheeling services is vital to the ability of the PMA’s to meet

contractual firm power delivery requirements. In the event we are unable to achieve

sufficient alternative financing given the time constraints, we plan to work with the

Congress prior to the start of FY 2000 to develop other solutions.

Question 3: If the PMAs do not have funds for purchase power, can they continue

to sell firm source power? And if they cannot sell this power, will they be able to

still generate the same amount of revenues?

Answer 3: Purchase power is vital to a PMA’s ability to market the variable hydro

generation as a firm energy resource. Without purchase power funding, the ability

to market firm source power would be greatly reduced, possibly to zero for some

projects. Non-firm sales on the other hand would be greatly increased, raising concern over the ability of the PMAs to secure adequate revenue under such a scenario,

as the burgeoning non-firm products, representing a much higher percentage of

sales, would be sold at spot-market prices, which are generally less than firm power

prices. There have been times when surplus hydroelectric energy had no monetary

value in northern California due to market saturation during high flow periods.

However, the Administration’s proposal does not intend to eliminate the purchase

power function of the PMAs; rather, it is an attempt to move the funding responsibility for these vital functions from the uncertain appropriations process to those

that benefit and pay for the services—the PMA power customers.

Question 4: Did you check on the law when you made this decision? Because it

is my understanding that there is some question as to whether the Department of

Energy will be able to comply with the Flood Control Act.

Answer 4: The Flood Control Act requires that the PMAs transmit and dispose

of the power from Flood Control projects on a widespread basis consistent with

sound business principles. As a matter of policy, the PMAs market their power consistent with this mandate, and the Administration’s FY 2000 Purchase Power and

Wheeling financing proposal intends to continue this policy. We do not believe that

the FY 2000 proposal violates any provisions of the Flood Control Act, since the proposal is only shifting the responsibility of financing purchase power and wheeling

from appropriations to customers.

Question 5: If the General Counsel’s office had advised your budget personnel that

eliminating the funding for purchase power and wheeling violated statutes governing the authority of the PMAs, would DOE still pursue this proposed change in

funding?

Answer 5: No.

Question 6: Why has the administration made the apparent policy decision to

raise electric rates for retail electric customers of municipal utilities and rural electric cooperatives that currently buy power from the federal government?

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Answer 6: The Administration’s proposal shifts the responsibility for funding the

purchase power and wheeling program from the U.S. Treasury to those that benefit

from the services—the PMA customers. The proposal does not eliminate the ability

of the PMAs to perform these functions. If successful, we do not anticipate rate impacts to existing PMA customers. If funding arrangements cannot be accomplished,

we plan to work with the Congress to provide other solutions.

QUESTIONS FROM REPRESENTATIVE WILSON

Waste Isolation Pilot Plant (WIPP)

Question 1: What is the current status of opening WIPP? When do you anticipate

moving the first shipments of waste? What are the remaining barriers to opening

WIPP and how can the Congress assist in removing these barriers?

Answer 1: The Waste Isolation Pilot Plant (WIPP) is open. The first shipment of

waste from the Los Alamos National Laboratory arrived at WIPP on March 26,

1999. As of June 2, 1999, there have been nine shipments of non-mixed waste to

WIPP from Los Alamos and one shipment of non-mixed from the Idaho National Engineering & Environmental Laboratory. Over the next several months, DOE plans

to send additional shipments to WIPP from Los Alamos, Idaho, and Rocky Flats.

The Department’s Resource Conservation and Recovery Act permit application for

mixed waste for WIPP is pending before the New Mexico Environment Department

(NMED). NMED’s permit hearing concluded March 26, 1999. Based on the schedule

announced at the close of the hearing, it appears that NMED will issue a final permit in November 1999.

DOE Budget Request for 2000

Question 2: What are the DOE estimates of annual liability costs for failure to

accept spent fuel by January 31, 1998? How do you plan to accommodate, avoid or

budget for these costs?

Answer 2: It is not possible, at this time, to estimate the ‘‘annual liability costs’’

for the delay in accepting spent nuclear fuel. The United States Court of Federal

Claims has found in the cases brought by utilities with no operating reactors that

the Department’s delay constitutes a breach of contract. However, the amount of

damages has not yet been determined.

We understand that the Department of Justice’s Office of Legal Counsel is conducting an analysis to determine how to properly treat these costs. The Department

cannot plan for accommodating and budgeting for these costs until the Office of

Legal Counsel has completed its review.

Question 3. What is the status of the dispute with the contractor for PIT-9? Does

DOE plan to litigate this matter, settle it, or arbitrate it in some way? If no decision

has been made about this particular course of action, what is the timeline for a decision on what course of action?

Answer 3. The dispute arising from the decision by the Department’s management

and operating contractor at INEEL, Lockheed Martin Idaho Technologies Company,

Inc. (LMITCO), to terminate for default its subcontract with Lockheed Martin Advanced Environmental Systems, Inc. (LMAES) (the Pit 9 Subcontract). The Department was not a party to the Pit 9 Subcontract. Accordingly, the dispute is a private

one between two subsidiaries of the Lockheed Martin Corporation. The Department’s interest is secondary and, essentially, that of an entity responsible for the

facility at which the subcontracted work was to be performed and for which the Department has reimbursed LMITCO for the $54 million paid by LMITCO to LMAES

during the course of LMAES’s ultimately failed performance—funds that LMAES

and the Lockheed Martin Corporation are now obliged to return to LMITCO.

The dispute has given rise to two lawsuits. First, LMAES and Lockheed Martin

Corporation have commenced an action in the United States Court of Federal

Claims against the United States (but not specifically against the Department). Second, LMITCO commenced an action against LMAES and the Lockheed Martin Corporation in the United States District Court for the District of Idaho, to which the

Department is not a party.

In the Court of Federal Claims action, LMAES and the Lockheed Martin Corporation has challenged the default termination, contending that the termination was

effected by the Department and not by LMITCO. The United States has filed a motion to dismiss the Court of Federal Claims action because (i) there exists no privity

of contract between the United States and LMAES or the Lockheed Martin Corporation upon which to base a direct contract action against the United States, and (ii)

no action undertaken by the United States Government has effected a cognizable

taking of property of LMAES or the Lockheed Martin Corporation in violation of the

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Fifth Amendment to the United States Constitution. That motion is pending before

the Court.

The Idaho district court litigation is a private law suit between LMITCO, LMAES,

the Lockheed Martin Corporation, and EG&G, Idaho, Inc. (LMITCO’s predecessor

as the INEEL management and operating contractor). LMITCO seeks to recover the

$54 million paid by LMITCO to LMAES pursuant to the failed Pit 9 Subcontract

effort which LMAES and the Lockheed Martin Corporation promised to return to

LMITCO if LMAES failed to perform. LMAES and Lockheed Martin Corporation

have subsequently challenged in the Idaho Court LMITCO’s prior default termination of the Pit 9 Subcontract. The Department is not a party to that litigation.

We understand that there have been discussions between LMITCO and LMAES and

the Lockheed Martin Corporation. In addition, LMITCO has been exploring with the

Department various mechanisms that might be available and appropriate to address

issues raised by the Pit 9 subcontract dispute. Such an undertaking has been impeded, however, by the efforts of LMAES and the Lockheed Martin Corporation to

have the Idaho litigation stayed (that is, consideration of its merits delayed) while

they pursue their Washington, D.C. Court of Federal Claims action.

Question 4: Has DOE considered transmutation of spent nuclear fuel rather than

long-term storage? If so, what were the conclusions of that assessment?

Answer 4: The Department of Energy commissioned the National Academy of

Sciences in 1991 to conduct a study that evaluated transmutation of spent nuclear

fuel. The Academy’s report, published in 1996, stated that the current policy to dispose of spent nuclear fuel in a geologic repository should continue, and a oncethrough fuel cycle for commercial spent nuclear fuel should be maintained. The report found that accelerator-based transmutation may become available some decades in the future. But, even then, geologic disposal will be necessary to dispose of

separation waste and activation isotopes.

QUESTIONS FROM CONGRESSMAN MARKEY

External Regulation

Question 1: A February 19, 1999 letter from Secretary Richardson to the Subcommittee Chairman regarding external regulation of DOE facilities states that in

pilot projects ‘‘many of the potential benefits that we expected to see from external

regulation have not been demonstrated and appear to be outweighed by associated

costs and difficulties.’’ What benefits were expected, and why have they not been

seen? What are the costs and difficulties that were found?

Answer: The December 1996 ‘‘Report of the DOE Working Group on External Regulation, Chapter 5,’’ summarized the expected benefits of external regulation. Key

expected benefits included allowing DOE to focus on its primary missions and ensuring the establishment of a single set of standards and requirements appropriate

to DOE’s nuclear activities. The pilots conducted to date have highlighted the difficulties in establishing a single set of standards and requirements for DOE’s nuclear activities—and the need to provide for regulatory flexibility and exemptions

through any licensing process. These benefits have not been fully realized and, in

our judgment, are outweighed by the potential cost impacts associated with the regulatory uncertainties that have been identified in the pilot program to date. Copies

of two of the three pilot reports (Draft Report on the Pilot Project on External Regulation of DOE Facilities at Lawrence Berkeley National Laboratory and Draft Report on the Pilot Project on External Regulation of DOE Facilities at the Receiving

Basin for Offsite Fuels, Savannah River Site) were delivered to DOE’s committees

of record on March 31, 1999, These draft reports contain details of both implementation issues and costs. Analyses of the results from these pilots is continuing. The

report on the Radiochemical Engineering Development Center was issued and delivered to Congress on July 2, 1999.

Question 2: The letter notes difficulties upgrading facilities to meet NRC standards. NRC standards are intended to ensure the safety of workers and local communities. Is the Department reluctant to provide its workers and surrounding communities the same level of safety afforded those at private plants?

Answer: Definitely not. As noted in the draft reports, the issues are regulatory

in nature. The safety assurances provided by existing DOE and NRC standards utilized by the Department provide at least an equivalent safety to that of the commercial industry. For those facilities where the pilots were performed, NRC confirmed

this.

Question 3: The issues listed in the letter refer only to NRC regulation. Has

OSHA oversight been easier to implement?

Answer: DOE continues to work with OSHA as well as with the NRC. With regard to the issues in the February 19, 1999, letter, most of the uncertainties and

77

issues being addressed were reflective of NRC requirements. However, some apply

equally well to OSHA oversight. In terms of requirements, the Department already

implements OSHA’s regulations pursuant to a memorandum of understanding between the two agencies. The Department is pursuing several initiatives with OSHA

to define the appropriate oversight of occupational safety at privatized facilities and

on-Atomic Energy Act sites (e.g., fossil energy and energy efficiency facilities), as

well as cooperative agreements to enhance occupational safety and health in DOE

operations.

Renewables and Conservation

Question 1: According to your Department’s excellent information source, the EIA,

the amount of electricity generated from wind in the United States decreased from

11 million kilowatthours in 1995 to 6 million kilowatthours in 1997, and photovoltaics similarly decreased from 4 to 3 million kilowatt hours. Why has production

from these emerging renewable energy sources decreased? To what extent are federal policies, state policies and competition in the electric industry responsible for

what I hope is a temporary setback for these clean energy sources?

Answer: The most recent figures for the amount of wind and solar electricity generated in the United States can be found Table A17 of EIA’s Annual Energy Outlook

1999, page 134. The figures for 1995 are in the same table in the same publication

for 1998, page 122. The relevant portions of these tables are reproduced below:

Table A17. AEO 1998 and 1999 Renewable Energy Generation

(in billion kilowatt hours)

1995 1997 2000

forecast

2020

forecast

Solar Thermal ................................................................................................................. 0.82 0.90 0.95 1.44

Solar Photovoltaic .......................................................................................................... 0.00 0.00 0.09 1.56

Wind ............................................................................................................................... 3.17 3.41 6.11 8.44

These tables show that wind generation increased almost 10 percent from 1995

to 1997. Although photovoltaic electricity is not yet generating in quantities large

enough to be measured in billions of kWh, it continues its rapid growth. Energy Information Administration reports an increase of almost 50% in the number of kilowatts of photovoltaic cells and modules shipped by U.S. manufacturers from 1995

to 1997 (Renewable Energy Annual 1998.)

Question 2: Could you highlight a few recent accomplishments of the DOE renewable energy and energy efficiency programs?

Answer 2: The following list provides a brief summary of accomplishments of the

renewable energy and efficiency programs.

• Office of Building Technology State and Community Programs: Consumer

savings totaling more than $33 billion since 1978. A recent example is the Department’s Energy Star program. In 1998, more than 50 manufacturing partners signed on to the Energy Star program to produce and label Energy Star

windows, doors, and skylights. Currently, more than 2,000 retail store partners

(including such giant national chains as Home Depot, Circuit City, and Montgomery Ward), 33 utilities, and nine major appliance manufacturers nationwide

stock and promote Energy Star products. • Office of Industrial Technologies: Over 100 energy saving technologies in the market, saving $2.1 billion since 1985. The Bethlehem Steel Corporation recently joined with the Department’s Office of Industrial Technologies to showcase energy saving technologies for the steel sector. To remain competitive in

the global marketplace, U.S. steel producers much reduce production costs while

improving the quality of their products. A critical component of lowering overall

production costs is reducing energy consumption during production. Bethlehem

Steel’s Bums Harbor, Indiana, steel mill will install six advanced steel making

technologies and processes, that if implemented throughout the steel industry,

could provide net energy savings by 2005 of over 93 million Btu per year, the

equivalent of $198 million.

• Office of Transportation Technologies: Over 50 models of cars and trucks,

using fuel efficiency technologies and alternative fuels are saving 2 billion gallons of conventional fuel a year, consumer savings since 1978 near $10 billion,

oil savings near 20 billion gallons. The Department’s Clean Cities Partnership

Program is a voluntary, locally based, government/industry partnership to expand the use of alternative fuel vehicles (AFVs) and by building a local AFV

refueling infrastructure. Over the past four years, 67 communities have joined

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the Clean Cities effort, enabling deployment of more than 200,000 AFVs in both

public and private fleets. The vehicles will reduce gasoline and diesel fuel use

by an estimated 210 million gallons per year and emissions by an estimated

54,000 metric tons through 2005.

• Federal Energy Management Program: The Program has reduced annual

Federal energy costs more than $800 million from projected 1985 levels. Additional taxpayer savings directly from EERE federal programs is nearly $1.5 billion. Award of five delivery orders under the Western Region Super ESPC will

provide private sector investments of over $7 million for projects at Coast

Guard, FAA, GSA, Forest Service, and VA facilities. The projects Will result in

$14.4 million in savings to the government over the term of the delivery orders.

• Office of Power Technologies: Renewable energy costs are down 80% since

1980. Over $5 billion in U.S. produced renewable sales this decade. World’s

Largest Wind Power Facility. In 1998, Enron Wind Corporation began operation

of the world’s largest wind power facility, a project of 143 wind turbines. spread

across 15 miles of farmlands near Lake Benton, Minnesota, for a total generating capacity of 107 MW. Enron has publicly credited their research partnerships with the Department as essential to the development of the technology

making this wind plant possible. Enron’s turbine manufacturing subsidiary,

Zond Energy Systems Inc. of Tehachapi, California, partnered with the Department under its wind turbine research and field verification programs for the development of the Z-550, Zond’s first commercial wind turbine. The advanced design tools, technical assistance, testing capabilities, and utility operating experience made possible by the Department’s Wind Program were critical to the successful development of Zond’s Z-750 turbine used in the Minnesota project.

Enron Wind Corp. has several hundred additional megawatts of wind power

now under development.

Nuclear Energy Research

Question 1: Dr. Moniz, if you believe in free markets, as I do, then government

subsidies should be reserved for emerging industries that need initial support or for

clear national interests.

a. Would you consider nuclear power an emerging industry or a mature industry?

b. I see that the DOE budget includes $5 million for a new program to extend

the life of existing nuclear reactors, presumably beyond their 40 year licenses. After

40 years, why can’t the industry fund its own research?

Answer: a. The nuclear power industry is a mature industry and we do not subsidize it.

b. Industry is investing over $80 million annually to conduct short-term nuclear

power plant research and development. This work focuses on issues such as plant

relicensing. The Nuclear Energy Plant Optimization (NEPO) program is focused on

longer-term, higher-risk research and development aimed at improving the state of

nuclear power technology in order to realize important strategic benefits for the Nation—such as the reduction of greenhouse gas emissions. Despite the fact that this

program represents a longer-term technology investment than is generally funded

by industry, the Electric Power Research Institute has committed to funding 50 percent of the research cost. We believe that achieving strategic benefits such as reducing air emissions is an important role for government and our proposed $5 million

program represents a very modest investment for the future.

Question 2: The budget also increases funding for new reactor concepts to $25 million.

c. Given that no new reactor has been order and built for 25 years, what are the

chances that any of these reactor will ever get built?

d. If you were CEO of an electric utility in a competitive industry, would you risk

bankrupting your company to try to build a new nuclear plant?

Answer: a. The purpose of the Nuclear Energy Research Initiative (NERI) program is to maintain nuclear energy as a viable option for the future by addressing

obstacles to long-term deployment of nuclear energy through improving plant economics, providing for proliferation resistant technologies, and addressing issues associated with waste.

b. Nuclear power plants are among the most efficient sources of baseload electricity available today, with operating costs averaging 1.9 cents per kilowatt-hour.

True, the construction cost of past plants has been a major factor in the fact that

no new plants have been built for many years, however we believe advances in technology—such as are pursued in the NERI program—can lead to plants that are cost

competitive to build and operate.

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QUESTIONS FROM REPRESENTATIVE SHIMKUS

Biodiesel

Question 1: Last year, the Congress passed legislation (P.L. 105-388) to reauthorize the Energy Policy and Conservation Act. Included in this bill was language directing the Department of Energy to issue a rule on the use of biodiesel in the alternative fuel vehicle program under Energy Policy Act. The deadline for rule issuance

was January 1, 1999. What is the status of this rule? When does the Department

expect to issue a rule, as directed by the Congress?

Answer: The Energy Conservation Reauthorization Act of 1998 amended the Energy Policy Act of 1992 (EPACT) to create a Biodiesel Fuel Use Credit. The Biodiesel

Fuel Use Credit will allow for the allocation of an alternative fuel vehicle (AFV) acquisition credit for a specified amount of biodiesel fuel use by a fleet or covered person currently required to purchase a certain percentage of AFVs under EPACT’s titles III and V.

Although the Energy Conservation Reauthorization Act was signed into law on

November 13, 1998, it called for a rule to be issued by January 1, 1999. DOE regrets

that the rule was not issued by the statutory date. The Department has issued an

interim rule, which took effect on May 19, 1999. Although the interim rule would

take effect fight away, DOE would also establish a comment period during which

interested parties could comment on the interim rule. Those comments would be

taken into consideration by the Department before issuing a final rule. We would

expect to issue a final rule by fall 1999.

We are enthusiastic about realizing the benefits offered by increased use of fuels

from renewable sources, and are expecting that this legislation is resulting in expanded sales of biodiesel fuel.

Question 2: As you know, the Department collects data for other fuels such as natural gas. Does the Department of Energy plan on collecting biodiesel fuel use data?

Additionally, does the Department plan on holding training sessions, in cooperation

with the biodiesel industry, for fleet managers who are interested in using biodiesel

in their fleets? When will these meetings begin?

Answer: The Department does plan on collecting annual biodiesel fuel purchase

data from those fleets choosing to utilize the biodiesel fuel use credit to meet, in

part, their alternative fueled vehicle purchase requirements under the Energy Policy

Act of 1992. We plan to revise the annual reporting form, DOE/OTT/101, Annual

Alternative Fueled Vehicle Acquisition Report for State Government and Alternative

Fuel Provider Fleets, so that State and alternative fuel providers can report their

biodiesel purchases and claim credits. The Department also plans to amend the Federal Energy Management Program reporting form to allow Federal fleets to report

their biodiesel purchases and claim credits.

The Department does not, at this time, plan to hold training sessions for fleet

managers who are interested in using biodiesel in their fleets. We are hopeful that

the issuance of the Interim Final Rule, be published in the Federal Register on or

about May 19, 1999, will provide sufficient guidance to fleet managers regarding the

biodiesel fuel use credit. However, if the biodiesel industry believes that some other

form of guidance, be it training sessions, guidance documents or some other media,

is necessary, the Department stands ready to work with industry to see that fleet

managers have the information necessary to make informed decisions regarding the

biodiesel fuel use credit.

QUESTIONS FROM CONGRESSMAN STRICKLAND

Worker and Community Transition Office

Question 4A. Your testimony indicates that the funding request for the Worker

and Community Transition Office is $30 million. Frankly, I am concerned that this

funding may be inadequate and I say this because I am well-aware of imminent layoffs at the gaseous diffusion plants this year. And, beyond July 2000, as I explained

in my opening statement, there remains no restriction on the number of additional

reductions in the workforces at the two sites. With that said, it is important for me

to point out that the Department has a proposal from the Southern Ohio Diversification Initiative, the Community Reuse Organization in Piketon, Ohio, requesting just

under $6 million for development of industry ready sites and parks. With that understanding, are you confident that $30 million will meet the needs of all of the

DOE sites throughout the complex? If not, will the Department support a reprogramming necessary to meet the needs of sites like Portsmouth and Paducah?

Answer 4A. As you know, a formal agreement was signed between the Department of Treasury and United States Enrichment Corporation (USEC) limiting work

force reductions at the Portsmouth, Ohio and Paducah, Kentucky gaseous diffusion

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plants through July 2000. A parallel agreement between the Department of Energy

and USEC established a $20 million fund to cover separation benefits to be provided

to separated workers. In addition, funds from this account not required for worker

benefits can be used to provide community assistance at these sites. We estimate

that approximately $4-6 million will be available from this fund for community assistance purposes. Additional funding may be made provided from Worker and Community Transition appropriations based on established criteria and available funds.

In the event there are major work force reductions at Portsmouth and Paducah

after July 2000 and that available funds would not allow for consideration of appropriate worker separation assistance, the Department would consider whether a reprogramming request was necessary.

P.L. 105-204

Question 1: P.L. 105-204 specifically calls for the Administration to submit with

the President’s FY 2000 budget request a plan and proposed legislation for implementing a depleted uranium hexafluoride program that includes the construction of

conversion facilities at both the Portsmouth, Ohio and Paducah, Kentucky sites.

Could you please explain why the Budget Request was presented on February 1,

1999 and it failed to include a plan or proposed legislation for implementing P.L.

105-204 when the law was signed by the President in July, 1998?

Answer: The Initial and Final Plan for the Conversion of Depleted Uranium

Hexafuoride was submitted to Congress on March 12, 1999 and July 6, 1999, respectively. In the case of the initial plan, the Department used the extra time to analyze

a wide range of possible activities and work with the Congressional delegations to

ensure the plan met the intent of Congress. The final plan, also reviewed by the

Congressional delegations, reflects the Department’s review of the Expressions of Interest from the private sector and provides a more detailed, final schedule for the

depleted uranium hexafluoride conversion project. This schedule provides for the

construction of conversion plants two years earlier than anticipated by P.L. 105-204.

With respect to legislation, Public Law 105-204 required the Secretary of Energy

to prepare proposed legislation for consideration by Congress. Other than funding

legislation, the Department does not believe that additional legislation is necessary

at this time. The Department will continue to consider whether additional legislation is advisable in light of future developments in the program.

Question 3: You state in your written testimony that ‘‘the Department expected

to publish a formal solicitation for expressions of interest in construction of these

plants within the next week.’’ Could you possibly give me a target date when the

Department will issue the expression of interest?

Answer: The Department issued the solicitation for Expressions of Interest for

construction and operation of conversion plants on March 4, 1999. Expressions of

Interest were received from the private sector on April 5, 1999. A summary of the

Expressions of Interest were provided to Congress on May 13, 1999. The Draft Request for Proposal was published July 30, 1999, for comment.

Question 5: I would also hope that before a final plan makes its Way to the Hill,

interested Members of Congress, such as myself and Mr. Whitfield will have the opportunity to review the plan and the legislation. Could you assure us that, in fact,

we win have the opportunity to provide the Department with our input on the plan?

Answer: Yes. The Final Plan includes input from the affected Congressional delegations.

Question 6: As you may also know, I sent the Secretary a letter, dated December

4, 1998 which outline some of my suggestions for developing a comprehensive plan

to construct and operate depleted uranium hexafluoride conversion facilities at

Portsmouth and Paducah. Could you please tell me when I may expect a response

to my recommendations included in that letter?

Answer: The Department has addressed the recommendations contained in Representative Strickland’s letter of December 4, 1998, as well as his letter of May 24,

1999, in the Final Plan for Conversion of Depleted Uranium Hexafluoride (July 6,

1999) and in the draft Request for Proposal. The Congressman’s suggestions were

very helpful to the Department in completing our final plan and issuing a draft Request for Proposal.

Question 7: More specifically, the December 4, 1998 letter includes a recommended approach for transferring the funds under P.L. 105-204.

c. Has the Department made preliminary decisions regarding the transfer of the

P.L. 105-204 funds?

d. If so, could you please share them with us. (The letter urged the Department

to secure a nondiscretionary funding source by identifying an offset. OMB could help

identify the offset and this would avoid an annual appropriations battle to ensure

funding.)

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Answer: The Department is committed to working to find opportunities this year

to secure acceptable funding sources for the depleted uranium hexafluoride conversion project. We expect to work closely with the Ohio and Kentucky delegations on

this important issue.

Question 9: One other issue raised in the December 4, 1998 letter is the issue of

creating a process for public comment on the draft plan under P.L. 105-204. Will

there be a formal process for interested parties to comment on the Plan?

Answer: The Final Plan for Conversion of Depleted Uranium Hexafluoride (July

6, 1999) included review and incorporates the comments of interested parties on the

plan, including the affected Congressional delegations. There will be additional opportunities to provide input on the project as the Department proceeds with implementation of the milestones contained in the plan. For example, formal public review is underway at present on the initial draft Request for Proposal.

Question 10: I am also aware that the Budget Request includes $5 million to initiate a program to recycle depleted uranium hexafluoride. Could you please explain

to us the Department’s justification for recommending only $5 million from the larger P.L. 105-204 funds for the upcoming fiscal year?

Answer: The Department’s fiscal year 2000 budget request includes $5 million to

begin the process of constructing depleted uranium hexafluoride conversion plants.

These funds are included in the Uranium Program Budget and are requested for

activities related to site-specific National Environmental Policy Act activities and for

procurement activities. The Department has also committed to use USEC MOA

funding for this purpose. The Department is committed to working closely with the

Ohio and Kentucky Congressional delegations to find opportunities this year to secure additional funding for the depleted uranium hexafluoride project.

Memoranda of Agreement—$66 Million

Question 15: On another topic, I mentioned in my opening statement two Memoranda of Agreement established between the Department and USEC making available $66 million for the maintenance and disposition of the depleted uranium

hexafluoride stored at the Portsmouth and Paducah sites. I am aware of several proposals presented by the Department for the best way to spend these funds. I am

troubled that the emphasis was not placed on job creation. These Agreements stem

largely from concerns raised about worker displacement as a result of USEC privatization. Could you assure me that the $66 million will be spent on activities directly

related to immediate job creation efforts at Portsmouth and Paducah?

Answer: Of the $66 million in funding the Department received from the United

States Enrichment Corporation (USEC), $38.7 million of those funds are earmarked

for management of approximately 11,200 cylinders that have or will be received

from USEC over the next several years. Another $3.3 million is earmarked for conversion plant procurement activities and for accelerating activities conducted pursuant to the National Environmental Policy Act. We are preserving the remaining $24

million for use as initial funding for the DUF6 conversion project, or, if it is not

needed for that activity, to fund near-term projects at the gaseous diffusion plant

sites. All of these activities should. help to increase the number of new jobs created

at the Paducah and Portsmouth Sites and mitigate the impact of workers displaced

by USEC privatization.

Question 18: One last question on the $66 million. The Community Reuse Organization in southern Ohio has expressed a strong interest in working with the Department to most effectively use these additional funds. Will the Department consult

with the Community Reuse Organizations as decisions are made about the allocation of the $66 million?

Answer: We have met with community groups in Ohio and Kentucky and will continue to meet with these groups to discuss the best approach to implement overall

projects including their suggestions regarding best use of funds.