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Copyright 1999 Federal News Service, Inc.  
Federal News Service



LENGTH: 2852 words


Mr. Chairman, and Members of the Subcommittee, it's my pleasure to be with you to discuss the Department of Energy's budget request for Fiscal Year 2000.
As you know, this is my first full budget request and my first time appearing before this Subcommittee. I especially appreciate coming back to the Hill to visit with my colleagues.
When I took over the Department of Energy, I knew I was facing a challenge. I won't talk around the issue we have before us: there's a good deal of work to be done. I'm here to discuss what we need to do - and what you think we need to do - and how we propose cooperatively going about it.
I want to improve management -- and I have already put initiatives in place to do so. I've made some tough decisions since I arrived: on tritium production; on assessing the viability of Yucca Mountain as a nuclear waste repository; on our contracting procedures and how we can improve them, to name just a few. And in the coming year, I will make many more.
And I seek your guidance on how we can make these decisions pay the best dividends for America - how we can make the Department of Energy one of America's best cabinet agencies.
Let me give you an example of how we're trying to do that.
Last December, I appointed an internal Oil Emergency Task Force to assess the effects of low oil prices on domestic production. I asked the Task Force to go out into the Oil Patch to "feelout" the industry and gauge the perspective of its decision-makers. I asked them to identify which measures were reasonable ... what steps could be taken quickly ... and what were the most effective ways to stop the premature abandonment of oil and gas wells.
The Task Force then came back and gave me a list of recommendations, designed to:
- enhance America's energy security; - preserve our domestic production capacity; - lower the costs of production; and - improve government decision-making.We've already announced several initiatives in these strategic areas, and will continue to work on others in the days ahead.
To enhance the nation's energy security, we will shortly be putting 28 million barrels of federal royalty oil into the Strategic Petroleum Reserve. In a related move, we are offering un-utilized space in the Reserve for commercial storage, with storage fees to be paid in oil.
No money has been appropriated to fill the Reserve since 1990; the last oil that went in was paid for with receipts from a Desert Storm oil sale.
Now, for the first time in recent memory, we have mechanisms to re- fill the Reserve during peacetime. These "first-of-a-kind" efforts are designed to make the most of today's low prices. By putting oil in the Reserve today, we will receive a higher rate of return tomorrow: increased energy security, more strategic assets, and a great buy for the American taxpayer. Mr. Chairman, I especially appreciate your support for this initiative.
The Administration has altered its requirements for federal lease holders to diminish the threat that near-term low prices hold for long-term production. This change would allow stripper well operators to temporarily suspend production, without losing their leases or having to plug their wells.
To help see small operators through tough times, the Administration is also offering various types of federal royalty relief, and is actively considering additional categories of relief.
To help lower the costs of production, we just committed $18 million dollars 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 - which have specific production problems, ranging from reservoir characterization to environmental compliance.
We launched a large-scale pilot program in six states -- California, Texas, Ohio, Utah, Wyoming and Colorado -- to decrease production costs through the use of new, energy efficient technologies and motor replacements. A similar small-scale pilot in Kansas has shown promising results -- lowering the cost of production by 77 cents per barrel. In today's price environment, 77 cents to a marginal producer could mean the difference between oil production and well abandonment.
Just last Friday, we announced another innovative pilot program in Texas that could be the first step towards paperless regulation. This new on-line permitting system could save the industry millions of dollars in administrative costs and countless hours of labor.
And finally, we are pushing hard for better dialogue between government decision-makers, and improved coordination with other federal agencies. Energy concerns must be represented at the table when key economic and regulatory decisions are being made.
I am pleased with these initiatives and hope to announce more in the coming days. I will need this Subcommittee's support to continue the Department's efforts to help the oil sector.
Now, to the specifics of our budget request.
The Department of Energy is requesting a total of $1.229 billion dollars for FY 2000 from the Interior Subcommittee. This is nearly 2 percent below the FY 1999 appropriation.
a. Transportation
The Department's budget builds on a record of strong accomplishments. Back in 1992, America had trailed Japan in car production for 13 consecutive years. But for the past five years, America's auto builders have led the world in auto and light truck production.
And this turnaround was made possible, in part, by technological breakthroughs by our nation's scientists and engineers, and by programs which this Subcommittee funded, such as the Partnership for a New Generation of Vehicles, or "PNGV," which has the goal of developing an 80 mile-per-gallon automobile.
We made progress this past year, when we shared costs with industry to develop a smarter, smaller, less-expensive electric power system for the "car of the future.

" Working together, we've already shrunk this system from the size of a large suitcase to smaller than a shoe box. Now, we're working to cut the $10,000 dollar cost to less than $500 dollars.
For FY 2000, we are requesting $143 million dollars to focus on key component technologies, including:
- fuel cells; - advanced direct-injection engines; - exhaust control; - advanced batteries; and - electronic power controllers.
Our Clean Cities request of a little over $10 million dollars will advance infrastructure development to deploy alternative fuels to over 65 communities.
b. Industries
And the Department is working with nine industries that account for 75 percent of the energy used in manufacturing, working to "re-make" them as Industries of the Future, including:
- forest products; - steel; - aluminum; - metal-casting; - chemicals; - petroleum refining; - agriculture; - mining;.and - glass.
These industries also account for most of the emissions and waste produced by U.S. manufacturing, so we're developing new efficiency methods. We're developing innovative technologies to help these industries boost efficiency and competitiveness, with less pollution. To realize these efforts, our budget requests $171 million dollars for the Industries of the Future program.
c. Buildings America's homes and offices, too, represent significant opportunities for boosting efficiency and cutting environmental risks. Heating and lighting our homes and workplaces account for over one-third of U.S. carbon dioxide emissions. We need to do better -- and our new buildings need new energy-saving technologies to help us do so.
The Department is therefore requesting about $145 million dollars to bring our R&D resources to bear on this challenge. These funds will enable us to provide the next generation of environment-friendly technologies required by the construction industry.
I ask for your support of the Department's request for the appliance standards program. The appliance standards rulemakings now underway will result in billions of dollars of savings for consumers, and represent my highest priority in the Department's Office of Buildings.
We're also requesting $154 million dollars for the Weatherization Assistance Program, where we're weatherizing nearly 80,000 low-income houses for warmer winters, cooler summers, and lower utility bills. And we've requested $37 million for State Energy Programs.
And our 'EnergySmart Schools' project is supplying schools with the information they need to cut energy costs and save money. (I was in Atlanta and Hollywood, Florida a few weeks ago, and I saw children not only benefitting from this great project, but also getting excited about science and math as they learned about how energy works.)
d. Federal Energy Management Program
Buildings like this one offer considerable opportunities for efficiency and saving of taxpayer dollars. The Federal Government spends $8 billion dollars each year on energy. That's too much. Therefore, we are requesting about $32 million dollars to help accelerate the Federal Energy Management Program, which helps federal agencies identify, finance, and implement energy efficiency improvements for their facilities.
(We have a big announcement coming up on new energy savings performance contracts in the Mid-Atlantic and the Northeast states. The total value of the contracts in $1.5 billion dollars and will save over $1 billion a year on energy costs and emissions of 1.5 million metric tons of carbon will be avoided.) We can find big savings if we re-commit to this program.
e. Management
And in response to your request, Mr. Chairman, the Department of Energy is working with the National Academy of Public Administration (NAPA) to undertake an independent review of our financial management and procurement practices.
This review will address concerns expressed by you and other Members of the Subcommittee -including the extent of carryover balances, cost- sharing, and competition in our acquisition and financial assistance processes.
We are working with NAPA to develop an appropriate statement of work, and are now completing the steps required to award a contract. NAPA has proposed completing review by the end of August, and will document its findings, including any recommendations for reforms to EERE's business practices. We look forward to working with NAPA and expect its contributions will benefit the overall management of our program.
Our FY 2000 request for Fossil Energy Research and Development is $364 million dollars, a slight reduction from the $384 million appropriated for FY 1999. In this portion of the budget, we continue to address three primary challenges:
- Developing new technologies that can provide the nation with cleaner air at lower costs; - Research into affordable options for greenhouse gas control; and - Ways to enhance our energy security.
a. Coal
Our request for advanced coal technologies is $122 million dollars, about the same as was appropriated in FY 1999. At the core of this program is our research on the "Vision 21" energy concept - our goal of a virtually pollution-free power plant in the post-2010 time frame. This is an energy facility that could be twice as efficient as today's power plants, reduce greenhouse gases by more than 40 percent, and co- produce fuels and chemicals in addition to electricity.
In our coal program, we also include exploratory research on carbon sequestration. This is an extremely important research priority, and we have increased our budget request from $5 million dollars in FY 1999 to $9 million in FY 2000. If we can develop low-cost ways to capture and permanently dispose of carbon dioxide, we could make future climate change policies much easier to implement, both in the U.S. and abroad.
b. Natural Gas
Our natural gas budget request is $105 million dollars. I should point out that there is another $114 million of gas-related R&D conducted by other offices in the Department (the Offices of Energy Efficiency and Science). A significant portion of this budget is to assure that we have affordable gas supplies in the future. This is particularly important given projections that gas demand could increase by a third in the next decade, perhaps more if gas is used to meet climate change strategies.
Our gas R&D budget also includes funding for two high-priority power generation technologies:advanced gas turbines and fuel cells. We are within a year of running the first tests of a revolutionary new gas turbine that will far surpass any other utility turbine in the world - both in efficiency and environmental performance. Our FY 2000 budget continues to fund the final phase of this effort.

We have increased our funding slightly for the Oil Technology Program. Within our $50 million dollar request, we will continue to fund several high-priority initiatives that I announced in the last couple of weeks:
- First, our plan to return to the Nation's most endangered oil reservoirs with cost-shared projects to keep these fields from being abandoned. And - Second, work with independent producers to solve specific oil field problems by applying new technologies.
In the Clean Coal Technology budget, we are requesting that $246 million dollars of prior budget authority be deferred until FY 2001 and later. This program continues to produce results. For example, fully one half of all coal-fired power plants in America are today equipped with low-polluting combustors that resulted from our Clean Coal and R&D programs. Within the next year or so, that figure will be 75 percent.
Of the 40 projects in the program, only two will not be fully funded by FY 2000. Those two are still in the pre-construction phases and have sufficient funds to carry them through FY 2000. Because of this, we can defer the funding without impacting the pace of the program.
Global climate change poses major environmental challenges for the entire world. We are going to continue the dialogue on the Kyoto Protocol to help improve the framework it provides. At the same time, we will continue research and development and push for the accelerated use of energy efficient and clean energy technologies - all components of the President's Climate Change Technology Initiative, or "CTTI."
Even without the Kyoto Protocol, we believe these investments are wise national policy boosting national security, improving air quality, and strengthening our national economic competitiveness while protecting American jobs. Our budget is looking to increase support for CCTI programs by about 13 percent. Included among this broad and balanced energy R&D portfolio are:
- clean, advanced fossil energy technologies; - carbon sequestration; and - energy efficiency applications in the building, industry, and transportation sectors.
These programs are part of the Administration's larger "Climate Change Budget," which includes activities at four other agencies and $3.6 billion dollars in tax incentives over five years for energy-efficient homes, fuel-efficient cars, and renewable energy.
Now, back to our work at home - specifically, within the Department, and among our management. Today, the Energy Department is functioning smarter and leaner. Working with Congress, we've reduced our Federal employee workforce by 25 percent in less than four years - beating our goal by almost two years.
We've also reduced our contractor employment by 29 percent since its peak in 1992. But this streamlining has left gaps in Departmental skill areas.
a. Workforce 21
To resolve this, in December I announced a targeted effort to bring specialized skills into the Department as part of a "Workforce 21" initiative. These efforts will bolster the strength of our skills and our comprehensive expertise, Department-wide. And we're going to improve diversity, making sure women and minorities are better represented within the Department. I ask for your support in this undertaking, Mr. Chairman.
b. Management Study
And we are taking a comprehensive look at the structure of the Department, looking for ways to improve efficiency, strengthen management, ensure accountability, and improve reporting requirements. And we are looking at the relationship between our field offices and headquarters, to enhance communications and capability.
In summation, I would like to state for the record that the Department of Energy's proposed budget for FY 2000 will provide our scientists and engineers with the tools, facilities and talented personnel necessary to help lead this nation into the new millennium. The technological breakthroughs which lie ahead will provide improvements to the quality of life of all Americans. With this Subcommittee's continued support, the Department of Energy will produce the science, security and energy to power this nation in the 21st Century.

LOAD-DATE: February 26, 1999

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