Copyright 1999 Federal News Service, Inc.
Federal News Service
FEBRUARY 25, 1999, THURSDAY
SECTION: IN THE NEWS
PREPARED STATEMENT OF
SECRETARY BILL RICHARDSON
U.S. DEPARTMENT OF ENERGY
SENATE ENERGY AND NATURAL RESOURCES COMMITTEE
Thank you, Mr. Chairman, and Members of the
Committee, for the opportunity to appear before you today to present the fiscal
year 2000 budget request for the Department of Energy. In fiscal year 2000, the
Department requests $17.8 billion in investments needed to furnish America with
the scientific and technical foundation that will help our nation cross the
threshold of the 21st Century.
Before I address the details of this year's
budget request, I would like to do two things. First, I would like to briefly
outline what a 21st Century Department of Energy will offer to America, and how
it will answer to America's challenges. And second, I would like to describe a
pair of Departmental actions that I know are of interest to you: our ongoing oil
and gas activities, and our decisions on Nevada's Mountain. I will then turn to
our budget request for fiscal year 2000 and we can get to your questions.
From my time in Congress, through my term as Ambassador to the United
Nations, and into my tenure as Secretary of Energy -- which is now approaching
six months -- I have been keenly aware of just what energy means to our country.
When I announced our budget request on February 1st, I also noted the
Departmental theme that, I believe, addressed the essence of what this agency
can provide to our nation: Science, Security and Energy: Powering the 21st
Since its inception, the Department of Energy has performed a
central role in stewarding not just America's growing energy demands, but also
the world's. And this role has changed to meet the evolving demands of a modem
Today, we utilize our technical and scientific knowledge to meet our
missions of ensuring the United States' energy security, maintaining the safety
and reliability of our nuclear weapons stockpile, safely cleaning up the
environment from the legacy of the Cold War, and developing breakthroughs in
science and technology.
Much of the substance of our national energy profile
is included in our Comprehensive National Energy Strategy. This plan is focused
on hitting a number of critical, national goals, including: - Improving the
efficiency of our energy system, using energy resources more adeptly to boost
overall economic performance while also protecting the environment; - Guarding
against energy disruptions, by shielding our economy from supply interruptions;
- Promoting energy production and use in ways that respect our health and
environmental values; - Growing tomorrow's energy options. With continued
progress in science and technology, we can furnish tomorrow's America with a
full slate of clean, abundant, and affordable energy sources; and finally by -
Joining hands with our global neighbors to illuminate, address, and resolve
international energy dilemmas.
One such dilemma has, over the last year,
played out on the international stage. As you know, the international oil
markets have weathered a stormy year. And even though short-term demand is down,
over time, demand will increase substantially. Examining the larger picture, our
projections show that the world will likely double its energy use by 2030 and
quadruple its use by the end of the 21st century. Oil demand is projected to
grow by about two percent annually over the next 20 years.
National Energy Strategy was designed to address expanding our energy sources. I
have made a very concerted effort in my first six months at the Department - and
will continue to do so - to ensure that America has the most diverse,
economically-responsible energy portfolio of any nation in the world.
must also keep in mind that energy production and use are principal contributors
to local, regional and global environmental problems. Developing and deploying
new, energy efficient technologies represents one of the best ways to address
these problems. Energy efficiency makes good economic sense, and it makes good
environmental sense. Even those who disagree with the specifics of the Kyoto
Protocol do agree on the need to conduct the scientific research necessary to
develop and deploy new, energy efficient technologies.
Mountain Policy Update
In December, the Department
completed the Yucca Mountain Viability Assessment. This
assessment assembled, for the first time, information about all major elements
of the site and proposed repository design. The assessment concluded that there
were no disqualifying conditions, and it identified additional research work
that needs to be accomplished in order to complete a final recommendation for
site approval and for preparation of a license application for submission to the
Nuclear Regulatory Commission (NRC). The assessment also included a preliminary
baseline design, cost and schedule for completion of the proposed repository.
For fiscal year 2000, the Department is requesting $409 million, an increase of
$52 million over the current fiscal year to fund the additional cost of these
efforts. These funds will support continuation of technical evaluation of the
site and refinement of engineering and design for the repository.
current schedule, the Department would also complete 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 NRC would occur in 2002.At the time
I was confirmed last year, I committed to you to take a look at our nuclear
waste policy and to come up and talk to you about issues related to our program
at Yucca Mountain. Since I submitted the viability assessment
to the President and the Congress in December, I have been examining our nuclear
waste policy and consulting with my staff and others in the Administration on
whether changes or additions to that policy are appropriate to address the
Department's obligation under its contracts to take spent fuel from utilities.
As you are aware, the Department is in litigation with a number of utilities
related to these contractual issues. I am sensitive to the concerns of the
utilities. Many of them have serious concerns regarding the costs and physical
limitations of continued storage of spent fuel at their reactors.
constructive some of the ideas put forth to date as alternatives to centralized
interim storage such as to have the Department take title to spent fuel onsite
and assume management responsibility until such time as it can be placed in a
permanent repository. I want to continue to examine this idea further and take a
serious look at how such a proposal would be structured and paid for without
imposing undue burdens on either utility ratepayers or the taxpayers. I also
want to analyze further proposals that would ensure that the revenues raised by
the nuclear waste fee remain available to complete the job of safe management
and disposal of nuclear waste.
Finally, as I continue to evaluate these
nuclear waste issues, I am anxious to learn more about the potential for
accelerator transmutation of waste. The Department is spending $4 million in
fiscal year 1999 to develop a roadmap for continued research and development in
this area. This would certainly not replace the need for a repository, but it is
intriguing research that may become important sometime in the future.
Let me emphasize that the Administration is not now endorsing any of
these proposals, and the Administration continues to oppose interim storage at
Yucca Mountain in advance of completion of the scientific and
technical work necessary to make a decision on whether it is a suitable site for
a repository. I am optimistic, however, that we can make progress on addressing
the legitimate concerns of the nuclear utility industry and hope that we can
avoid an unnecessary legislative showdown this year. I look forward to working
with members of this Committee and others in the Congress in this effort.
Oil and Gas Policy Update
As I mentioned in opening, oil and gas markets
have seen some tough times -- and continue to. Therefore, last December, I
appointed an internal Oil Emergency Task Force to assess the effects of low oil
prices on domestic production. I instructed the Task Force to go out into the
Oil Patch to "feel-out" 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 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 have already announced several
initiatives in these strategic areas, and will continue to work on others in the
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.
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. We are working with the
Small Business Administration to assist small, independent, domestic oil
producers to take advantage of SBA's small business assistance programs. We are
signing a Memorandum of Agreement with SBA Administrator Aida Alvarez that will
formalize this collaboration.
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 which
have specific production problems, ranging from reservoir characterization to
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.But as we strive
to preserve the industry's viability, we carry with us the responsibility to
continue progress in exploration and production. We must continue to move
forward to maintain both our energy security and our leadership in technology.
Therefore, the Department of Energy is today releasing a report that
documents the remarkable legacy of technology innovation in oil and gas
exploration and production, and that highlights the environmental benefits -
more efficient recovery of oil and gas, smaller industrial "footprints," cleaner
and safer operations - associated with advanced technology.
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
I am pleased with these initiatives and hope to announce more in the
coming days. I will need this Committee's support to continue the Department's
efforts to help the oil sector.
The Fiscal Year 2000 Budget Request
Department of Energy's fiscal year 2000 operating budget represents an increase
of 4.1 percent -- or $717 million - over FY1999 levels, when you exclude three
With these one-time adjustments, traditional budget
accounting would show our budget to be level, at $17.8 billion. Our budget
reflects my concerted commitment to do more to help America meet the challenges
of the 21st Century.
This is my first full budget request, and it plainly
reflects the priorities I have set for the Department of Energy, as does our
theme: Science, Security and Energy: Powering the 21st Century.
This budget increase will help the Department fulfill
its four missions. These are: - Advancing the frontiers of science and
technology; - Helping to increase the security, diversity and affordability of
America's energy resources through market mechanisms; - Promoting national
security, and keeping our nuclear weapons stockpile safe, secure, and reliable;
and - Cleaning up the environmental legacy of the Cold War, and establishing a
national integrated waste strategy to clean up our sites.
1. Science and
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.
The $2.8 billion budget request for fundamental research in fiscal year
2000, an increase of $138 million, further supports our commitment to science.
I'm pleased to announce our $70 million investment as part of 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." These new simulation capabilities will be powerful tools to do things
like design a new generation of cars, develop new pharmaceuticals, and also help
improve our weather and climate research, reaffirming America's leading role in
We will continue investing in the Spallation Neutron Source.
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.
Our increased budget will
support a number of scientific user facilities that are new or just coming into
operation, including: - the Fermi Lab Main Injector near Chicago; - the
B-Factory at the Department's Stanford Linear Accelerator in California; - the
Relativistic Heavy Ion Collider at our Brookhaven Lab on Long Island; - the
Combustion Research Facility at our Sandia/California Lab; and - the National
Spherical Torus Experiment in Princeton, New Jersey.
All of these are part
of what President Clinton has called "using science to serve society." Let me
give you three more examples: - Boron Neutron Capture Therapy, for experimental
cancer treatment; - New research into the therapeutic activity of
radiopharmaceuticals; and - The Science Education Initiative, which will bring
the Department's extensive resources into our nation's schools, benefitting
children from Kindergarten through 12th grade.
2. Energy Resources
our Energy Resources budget we're requesting $2.3 billion. This is an increase
of $213 million over the FY1999 level, and includes a 20 percent increase, or
$208 million, to fund energy efficiency and renewable energy programs.
priority is the Partnership for a New Generation of Vehicles, to develop an 80
mile-per gallon automobile. One example of PNGV progress was seen this past
year, when the Energy Department and private industry shared costs in developing
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
cost to less than $500.And we will continue to pursue our ambitious goals of: -
striving to cut energy use in new homes by 50 percent by 2010; - reducing the
energy bills of America's more energy intensive industries; and - cutting
federal energy use by 30 percent from 1985 levels by 2005.
We will also
pursue other initiatives including: - weatherizing nearly 80,000 low-income
homes, to save money on utility bills and keep people warm in the winter and
cool in the summer; and - our 'EnergySmart Schools' project, which gives schools
the information they need to cut energy costs and save money.
working to bring competition to America's electricity industry. Our proposal
will save American consumers and businesses $20 billion each year - and let
consumers choose renewable energy sources while at the same time promoting the
use of renewable energy sources.
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, and will offer states and
unregulated municipal and cooperative utilities the flexibility they need to
"opt out" if they find that competition wouldn't benefit their consumers.
We've been looking to fine-tune the legislation the Administration sent to
Capitol Hill last year. We're going to: - make the bill more consumer friendly;
and - address issues which were not contained in the original proposal (for
example, the role of federal utilities in a competitive environment).
To-date, about 20 states have enacted legislation or promoted 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.
But Federal action is necessary. We believe that it is important to act sooner
rather than later to complement what is going on at the state level -- and we're
ready to work with you to get the job done.
We are increasing - to $25
million - nuclear energy research and development. This investment will help
ensure the viability of this energy option and will secure our leadership role
in promoting the safe use of nuclear technologies.
We have also proposed
over $160 million to operate America's energy security insurance policy - - the
Strategic Petroleum Reserve - without selling oil.
We are funding research
and development on fossil energy - including technology to boost oil and natural
gas production and lower discovery costs. And we will continue to pursue R&D
that will help us find and develop new natural gas resources.Because global
climate change is a major environmental challenge, we will continue our
activities in developing technologies that will reduce greenhouse gas emissions.
We are going to continue the dialogue on the Kyoto Protocol to help improve the
framework it provides, while undertaking more ambitious tactics to address
3. National Security,
We are requesting $6.2 billion, an
increase of $244 million, for the Department' s national security missions.
$4.5 billion of that will go to our stockpile stewardship program. This
effort uses lab experimentation, high speed computer simulation, and decades of
Department specialists' expertise to ensure the safety, security, and
reliability of America's nuclear deterrent -- without nuclear testing. And
stockpile stewardship is working: in December, Secretary of Defense Cohen and I
signed the third annual certification to the President that the nation's
stockpile is safe, secure, and reliable, and that nuclear testing is not
required at this time.
This budget will also support: - construction of Our
National Ignition Facility, keeping us on track and on budget; - the Accelerated
Strategic Computing Initiative -- which will furnish the world's fastest
supercomputers, backed by our experimental facilities, to simulate nuclear
detonations; and - work on tritium production.
And should the need arise for
a return to nuclear testing of our stockpile, the Department continues to
maintain the Nevada Test Site in a state of readiness, performing an active set
of science-based stewardship activities, ensuring it remains a vibrant facility.
We will also push for ratification of the Comprehensive Test Ban Treaty this
year, to help constrain the development of more advanced nuclear weapons, and
limit the spread of nuclear weapons to new states.
One of the nightmares of
the post-Cold War world is the possibility that weapons-usable nuclear material
from the former-Soviet Union will fall into the hands of terrorists, criminals,
or rogue nations. President Clinton has recognized that the possible
proliferation of nuclear, biological, and chemical weapons is one of the major
threats we face as we enter the next millennium, and that we must confront this
The Energy Department has an important role in the
President's Expanded Threat Reduction Initiative, and our budget reflects this
priority, with an increase of $100 million over earlier plans. We will continue
our work in: - Materials Protection, Control and Accounting; - The Second Line
of Defense; - Plutonium Disposition; and - The Nuclear Cities Initiative.We are
doing important work on materials protection, control and accounting upgrades in
55 nuclear sites in Russia and the newly independent states, to ensure that
weapons-grade nuclear materials are protected from theft. We are also helping to
improve working conditions at these sites, by providing winter gear and heaters
for guards' use - guards that are critical links in global safety but who are,
in some cases, not being paid their salaries.
As many of you know, the
proliferation challenge in Russia and the Newly Independent States will not end
once all nuclear materials have been secured.
This budget advances our
cooperation with Russia in disposing of Russian military plutonium and supports
design of the facilities needed to dispose of excess plutonium in the U.S.
Threats to our nation's security -- chemical, biological, nuclear, and cyber
terrorism -- have become more technologically advanced.
The Department of
Energy has a leading role in creating the tools to defuse these threats. We've
boosted our funding in all these areas -- particularly in chemical and
biological weapons detection, where we are creating the most effective,
hand-held devices that America's law enforcement community has seen, for use in
detecting radiation or chemical materials.
Our laboratories - the world's
preeminent national defense technology centers -- have long been of great
interest to foreign intelligence sources. Therefore, we have created an entirely
new office of counterintelligence, doubled its budget, and have already put a
number of counterintelligence fixes in place to ensure the security of our labs
and our most sensitive information.
4. Environmental Quality / Environmental
Our request proposes an increase of $114 million for
environmental quality programs, of which nearly $100 million is for our
Environmental Management Program, bringing it to $5.7 billion. The Department is
taking an aggressive approach to address the immediate and long-term
environmental and health risks of the Department's former weapons production
complex, and resolve the issues surrounding spent nuclear fuel storage.
FY 2000 request will enable the Department to address the highest human health,
safety, and environmental risks within the Department of Energy complex. It will
also enable the Department to continue its real progress toward answering some
of the most critical questions in the area of long-term nuclear waste disposal.
For our Environmental Management program we are requesting a total of $5.7
billion. This amount would enable each cleanup site under the aegis of the
Department of Energy to meet its safety and legal requirements, support our
goals for accelerated cleanup and site closure, and maintain other critical
environmental projects and priorities. It is nearly $100 million higher than in
FY 1999.In FY 2000, $228 million is requested to continue the Department's
Privatization Initiative, begun in FY 1997 in pursuit of alternative financing
mechanisms for several of the Department's large scale environmental cleanup
design and construction activities. Under the privatization approach, many of
the technical and performance risks are shifted to the private contractor,
creating greater incentives to complete projects on time and within budget. This
contracting approach also will bring private sector efficiencies, and new
technology to the Department's cleanup program.
As was mentioned earlier,
the Department achieved significant progress this past year in its Civilian
Radioactive Waste Management program, completing the Yucca
Mountain Viability Assessment. In December, I submitted the viability
assessment to President Clinton and the Congress. The assessment recommended
further study - and we are proposing the funding required to do exactly that.
For FY 2000, DOE is requesting $409 million ($370.0 million in new budget
authority). These funds will support: continued data synthesis and analysis;
model validation; and refinement of engineering and designs necessary for major
upcoming decision documents: the Final Environmental Impact Statement and Record
of Decision in 2000; the Site Recommendation to the President in 2001, should
the Suitability Assessment determination prove suitable; and the License
Application to the Nuclear Regulatory Commission in 2002.
We need to do
more, and this budget reflects our commitment. In the next few months, I plan to
meet with the governors of a number of states to discuss their long-term
priorities for the cleanup program.
And for programs within the Office of
Environment, Safety, and Health, DOE is requesting $163 million, including $13.5
million for its commitment to the Radiation Effects Research Foundation. We also
propose $20 million for other Health Studies programs, including epidemiological
studies and occupational medicine. From our headquarters to the Department of
Energy labs, clean-up sims, and field offices spread across the U.S., we are
going to boost safety performance and protect our workers from harm.
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 ambitious 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.
To resolve this, in December I announced a targeted effort to bring
specialized skills into the Department as part of a "Workforce 21" initiative.
We are also putting employment initiatives in place to ensure the Department has
the essential expertise to carry out its missions in the future. 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. We are
seeing results from our Research and Development Council, which has been working
to ensure that we fully synchronize and integrate our work across the
Department, focus on what our key objective is, and ensure that our laboratories
are aligned directly with that work. This "roadmapping" technique helps us
guarantee the elimination of duplication in our work - and will help save
And we are looking at the relationship between our field
offices and headquarters, to enhance communications and capability.
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 Committee's continued support, the
Department of Energy will produce the science, security and energy to power this
nation in the 21 st Century.
February 27, 1999