Copyright 1999 Federal News Service, Inc.
Federal News Service
FEBRUARY 24, 1999, WEDNESDAY
SECTION: IN THE NEWS
HEADLINE: PREPARED TESTIMONY OF
SECRETARY BILL RICHARDSON
U.S. DEPARTMENT OF ENERGY
HOUSE COMMITTEE ON APPROPRIATIONS
SUBCOMMITTEE ON THE
DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES
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
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.
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
HOW THE DEPARTMENT OF ENERGY IS WORKING FOR AMERICA TODAY
Let me give you an example of how we're trying to do that.
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:
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
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.
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
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.
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.
THE FISCAL YEAR
2000 BUDGET REQUEST
Now, to the specifics of our budget request.
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
1) ENERGY EFFICIENCY
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
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
Our Clean Cities request of a little over $10 million dollars
will advance infrastructure development to deploy alternative fuels to over 65
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:
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
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.)
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.
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.
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.
2) FOSSIL ENERGY RESEARCH AND DEVELOPMENT
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.
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.
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
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.
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
3) CLEAN COAL TECHNOLOGY
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.
4) GLOBAL CLIMATE CHANGE
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
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.
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.
February 26, 1999