Good Morning Mr. Chairman and Members of the Committee.   I am pleased to appear before you today to discuss the President’s FY 2005 budget request for the Department of Energy.  At $24.3 billion in gross budget authority, the FY 2005 budget request is the largest in the history of the Department, nearly a 4 percent increase over last year’s submission and 27 percent higher than when we took office.

This FY 2005 budget request builds on a number of successes we have achieved over the past three years.    Secretary Abraham and I are very proud of what we have accomplished in terms of fulfilling the President’s management vision for this Department and also what we have achieved for the national, energy, and economic security of the American people.   We are grateful for the support and guidance the Members of this Committee have provided the Department. 

The Office of Management and Budget recently announced that DOE has made the most progress among cabinet-level agencies in the implementation of the President’s Management Agenda.    OMB issued a scorecard that evaluates agency performance in the areas of human capital, competitive sourcing, financial management, e-government, and budget/performance integration.   OMB recognized the Department as the cabinet-level agency “leading the pack with regard to management improvement.”  One hallmark of that leadership centers on defining the mission of the Department.   From our first days in office we stressed that the overriding umbrella under which the operation of this Department takes place is a mission of national security.

In addition to the progress we have made on management and mission definition, we have made great progress in a number of our program areas.   We have implemented changes that have fundamentally reformed DOE’s Environmental Management program.  Complex-wide, we have taken an approach to accelerated cleanup that says we will not allow the legacy of the work done in the weapons complex to be part of a community’s burden for future generations.  At the beginning of this Administration, the timetable for completing cleanup at all sites was 70 years.   Today, we have implemented reforms to accelerate completion of the cleanup program by 35 years, saving American taxpayers as much as $50 billion and perhaps even more. 

Another area where we have made tremendous progress is ensuring that nuclear power remains part of the Nation’s fuel mix.   Two years ago, the Administration made the decision to move forward with the Yucca Mountain project.  Thanks to the efforts of this Committee, the Yucca Mountain project is authorized and on-schedule to accept waste in 2010.  There is still much work to be done – at the site, at the Nuclear Regulatory Commission, and throughout the country – but at the end of the day America will finally have a long-promised, safe repository for nuclear waste.

The Yucca Mountain project goes hand-in-hand with other steps we have taken to ensure nuclear energy plays an important part in our future energy mix.    Our scientists are pursuing an advanced fuel cycle to significantly improve fuel performance, energy utilization, and proliferation resistance for nuclear reactors.   We are also working internationally to develop the next generation of nuclear technologies to take us to the next level in terms of efficiency, reliability, and security.  

In addition to advanced nuclear research we are pursuing other new technologies to meet future energy and environmental challenges.    These are transformative technologies that will change the way we think about how we use and produce energy.   We are pursuing a path toward a “hydrogen economy” -- with affordable zero emission fuel cell vehicles, abundant production sources, and safe storage and transportation of hydrogen.  We are developing carbon sequestration which, when used in conjunction with advanced power production technologies, promises to ensure that this country’s 250 year coal reserves can be used without concern about environmental impact. 

Knowing of this Committee’s strong interest in the Department’s national security programs, I would like to mention the great progress we have made with Russia on nonproliferation.   We have accelerated the material protection programs and expanded the scope of our work to ensure that dangerous materials don’t fall into the hands of terrorists.  We have increased our cooperation with Russia’s Strategic Rocket Forces by initiating warhead security work at three new sites. 

We have extended our International Nuclear and Radiological Cleanout programs to states that were once part of the Soviet Union and its empire.    Working with them, with Russia, and with the International Atomic Energy Agency, we have been able to secure radiological materials in these countries. 

Moreover, we have begun a MegaPorts program to detect the trafficking of nuclear or radioactive materials in the world’s busiest seaports.  Eventually we hope to have detection equipment in key locations all over the planet.

We have also taken measures to modernize our defense complex.    Three years ago, our complex was in a seriously deteriorated condition.   Many of our buildings and facilities were in such disrepair that our ability to carry out our defense responsibilities appeared jeopardized.   It was clear to us that we needed to make significant investments to restore those facilities to working condition.  And we are doing so, with a very substantial capital investment program under way to make these repairs and improvements. 

While we are rebuilding and modernizing the defense complex, we are also restoring its capabilities.   Some of the capabilities within our weapons complex have either been allowed to deteriorate or simply have been lost.   The ability to manufacture plutonium pits for nuclear weapons is one example.   We produced the first certifiable pit last year, and are on a path forward now to have a new, fully certified pit ready to enter the stockpile by FY 2007.   This will complete the first step for the United States to restore the capability that other nuclear weapons states already have. 

In the same vein we are enhancing our nuclear test readiness.  The weapons in the nuclear stockpile are of various ages and conditions.  Today we are confident they will function as our nuclear deterrent if they are needed.   But as these weapons age in an era in which we have a moratorium on testing, it is up to our laboratories to do the phenomenally complicated job of determining through science and technology whether or not the weapons will work effectively.

We believe we can do that.   But if some day in the future it were determined that we had uncertainty, it would take us a minimum of three years to conduct a test to determine whether or not the stockpile was reliable.  That is too long.   We are in the process of reducing that timeframe by half so that this Department can protect America’s national security by being able to conduct such a test in a timely fashion.

Beyond the things we have done within the complex, we have aggressively pursued international cooperation in order to advance our initiatives.   In a variety of areas, especially those that relate to climate change, we have been able to create partnerships with other countries to develop the Department’s cutting-edge science and technology.

Last November, the International Partnership for the Hydrogen Economy brought together 15 countries and the European Union to work together on fuel cells and other energy technologies for the future.   The Carbon Sequestration Leadership Forum in June brought together 13 countries to begin working on ways to sequester greenhouse gas emissions from fossil fuels. 

And we have expanded international partnerships on the energy production side as well.    We have developed much stronger relationships with countries like Russia and others in the Caspian region, in Africa, and in South America that have the potential to be major suppliers of gas and oil for the 21^st century.  As important as it is to have a diverse mix of fuel, it is equally important to have a diverse set of sources from which we acquire that fuel.  Toward that goal, in December we hosted a conference on liquefied natural gas, or LNG, bringing together all of the world’s major gas-producing countries to discuss increasing U.S. access to gas imports.   It was an extremely successful conference, one that will help produce the fuels we need in the 21^st Century. 

And, finally, we have made a lot of progress on safety and shoring up the security of this complex.    Much of our Department’s work is of a highly skilled nature and deals with dangerous materials.   Many of our facilities are located near populated communities.   Given these facts, it is clear that safety has to be of paramount concern for everyone at DOE.   We have done a good job of driving that message home, and it is best reflected in the improved safety record in our laboratories. 

The same goes for security.    Our Departmental mission is national security. We cannot be said to be fulfilling that mission with any confidence unless we can guarantee security at our facilities.   We are attempting to do that.   We have increased the security budget by about 35 percent since FY 2002.   We have made significant managerial changes in the security leadership at our facilities. We have revised and are implementing the Design Basis Threat, which is the post-September 11^th analysis of potential threats against which we must protect DOE sites and materials across the country.   And we have a high-level review of security procedures being conducted by some of the Nation’s top military and civilian experts. 

The FY 2005 budget proposal we are submitting to Congress seeks to continue and build on these successes.   It includes unprecedented funding increases to hasten the cleanup of the Cold War environmental legacy, to construct a permanent nuclear waste repository at Yucca Mountain, to deliver on essential nuclear-related defense requirements, to provide for energy security by exploring the promise of hydrogen and fusion, and to promote basic science research to ensure America’s technological preeminence well into the future. 

ENERGY

Turning to the energy budget, in FY2005 the Department is requesting $2.7 billion for energy resource programs.   An important element of all our energy programs is making current forms of energy use more secure, more efficient, and more environmentally benign.   At the same time, we are preparing long-term energy solutions that will eventually make questions of supply and environmental effects obsolete.  The Administration’s energy portfolio takes a long-term focus through investments in hydrogen use and production, electricity reliability, and advanced coal and nuclear energy power technologies.   Investments in these pivotal areas honor a commitment to strengthen the Nation’s energy security for the near-term and for generations to come.

In FY 2005, the Department’s Office of Energy Efficiency and Renewable Energy is at the forefront of implementing the President’s Hydrogen Fuel Initiative.   Hydrogen holds tremendous promise to help meet our Nation’s future energy challenges.  The Department is requesting $227 million for hydrogen activities.   That figure includes $173 million in the Energy Efficiency and Renewable Energy program, $9 million in the Nuclear Energy program, $16 million in the Fossil Energy program, and $29 million in the Science program.

The budget includes an investment of $544 million for R&D to improve energy efficiency and reliability in buildings, transportation, and industry, and $375 million for R&D to reduce the cost of renewable energy technologies such as wind, solar, geothermal, and biomass, as well as to promote deployment of renewable technologies.    The Energy Efficiency and Renewable Energy budget also includes $291 million to fulfill the President’s commitment to increase funding for the Weatherization Assistance Program by $1.4 billion over ten years.   The FY 2005 request represents a $64 million (or 28 percent) increase over FY 2004 funding, and would weatherize 119,000 homes in calendar year 2005. 

This budget invests $447 million for the President’s Coal Research Initiative to dramatically improve the efficiency and environmental protections being developed for coal burning power production.    Of that figure, $287 million will go to the President’s Clean Coal Power Initiative, including the ambitious FutureGen program.   The Department launched FutureGen in FY 2004.   This cost-shared, $1 billion project will create the world’s first near zero-emissions fossil fuel plant.   When operational, FutureGen will be the cleanest fossil fuel-fired power plant in the world.

Nuclear energy remains a critical component of the Nation’s energy portfolio and a significant part of America’s energy future.    The budget request for the Department’s nuclear energy programs in FY 2005 is $410 million, a $5 million increase above the FY 2004 level.  These programs work to address essential requirements to develop advanced nuclear power technologies for deployment.  The FY 2005 nuclear energy budget request also reflects the establishment of the Idaho National Laboratory.  This new laboratory will serve as the Nation’s primary center for strategic nuclear energy research, development, demonstration, and education.   It will lead the Department’s investigation of a new type of nuclear power plant that is proliferation-resistant and melt-down proof – the next generation nuclear power plant.   It is our objective that the Idaho National Laboratory becomes the world’s premier nuclear energy technology center within a decade.

The widespread blackout of August 2003, affecting 50 million people across eight states and one Canadian province, was a strong reminder that our Nation’s electricity grid has vulnerabilities and weaknesses which need to be addressed.    Energy reliability is imperative.   To this end, DOE requests $91 million, a $10 million or 12.5 percent increase above the FY 2004 level, to modernize and expand our national electricity transmission grid.  Included within this request is $5.5 million for the new Gridworks program and $5 million for the Gridwise program.  These initiatives will improve electricity reliability by bringing innovation in information technology and transmission hardware into operational electric systems.  The budget request for Other Defense Activities includes $10.6 million for Energy Security and Assurance activities to complement the efforts undertaken by the Office of Electric Transmission and Distribution and the activities of the Department of Homeland Security.

SCIENCE

Every one of the programs and activities requested in this budget depends heavily upon advanced research and development.    The work we do could not be possible were it not for the scientific and engineering capability available in the Department’s national laboratories and at universities across the Nation.  Our $3.4 billion request for science-related programs and activities supports work in areas like nanoscience, fusion, advanced scientific computing, and microbial genomes that hold enormous promise for scientific discoveries over the next decade.   Combined with the significant science expenditures included in the nonproliferation and weapons budgets, this amount makes the Department of Energy the largest federal supporter of the physical sciences, and will help enable us to maintain America’s position as the world leader in scientific research and development. 

Nanoscience – the study of particles at the atomic and molecular level – has nearly unlimited potential.    From the life sciences, to building materials that repair themselves, to giving us the tools to boost the potential of solar power, this new science will be a powerful force for solving a host of challenges.  For FY 2005, the Department requests $211 million, an increase of approximately $8 million over FY 2004, to continue revolutionary nanoscience research. 

The Department’s budget also continues the pursuit of scientific understanding of matter and energy.    The FY 2005 budget includes $80.5 million for construction and $33.1 million for operation of the Spallation Neutron Source; and $50 million for design and procurement activities for the Linac Coherent Light Source, which will truly give us a new window on nature.   Both facilities are expected to significantly advance the understanding of materials that will benefit applied R&D across a wide range of disciplines. 

Another important investment this budget continues is the pursuit of fusion energy power.    When the President announced that the U.S. would join in the International Thermonuclear Experimental Reactor (ITER) project, he noted that “the results of ITER will advance the effort to produce clean, safe, renewable, and commercially available fusion energy by the middle of this century.”  In order to support the President’s commitment, funding for ITER-related activities is up $30 million from last year. 

The FY 2005 budget includes $204 million for Advanced Scientific Computing Research to further U.S. leadership in high performance supercomputing, networking and software development.    The request includes $38 million for the Next Generation Computer Architecture to acquire additional advanced computing capability for existing users, and for longer-term research and development on new architectures for scientific computers. 

The request for our Genomes to Life program is $67.5 million, an increase of $4 million over last year.    This program will attempt to use genetic techniques to harness microbes to consume pollution, create hydrogen, and absorb carbon dioxide. 

New in FY 2005 is the addition of targeted basic research activities within the President’s Hydrogen Fuel Initiative, a $29 million program within Basic Energy Sciences to advance the fundamental understanding of the properties of hydrogen and fuel cells.    This work will complement the applied investigation underway elsewhere in the Department on hydrogen production, storage, and infrastructure development. 

ENVIRONMENT

All of our scientific research is designed in part to meet our Nation’s environmental challenges.    In that regard, DOE’s work on hydrogen, clean-coal technology, or next generation nuclear technology comes as readily to mind as our renewable energy research.  This commitment to the environment includes taking action to address the environmental legacy of our past work, particularly building the nuclear weapons complex that helped win the Cold War.   That means cleaning up the contamination caused by the production of nuclear weapons.   It also means doing right by former weapons employees who may have become ill as a result of their work at nuclear facilities.  And we must act to ensure our Nation is equipped to safely handle future high-level nuclear waste generated by the use of conventional nuclear power as well as the continued production of nuclear weapons. 

DOE is prepared for these responsibilities though our Environmental Management program and the work at Yucca Mountain.   Our FY 2005 budget requests $8.6 billion to meet our various environmental-related objectives.  Within that, we are seeking over $7.4 billion for the Environmental Management program, a $426 million increase when compared to this fiscal year.   This is the most funding ever requested for this program.   This budget reflects the peak year of DOE’s investment strategy for accelerated cleanup.   The budget also includes a $350 million proposal to reserve funds pending the satisfactory outcome of uncertainties associated with a recent court ruling dealing with our authority to classify certain lower-activity waste from reprocessing (Waste Incidental to Reprocessing) under the Atomic Energy Act. 

To better focus Environmental Management funds on actual cleanup activities, the FY 2005 budget includes several program shifts from environmental management to other programs within the Department.   The Department’s accelerated cleanup strategy has led to the creation of two new organizations outside of Environmental Management - the Office of Legacy Management and the Office of Future Liabilities.   Transferring responsibilities to these new offices enables the Environmental Management program to complete its current cleanup scope, and allows other Departmental programs to focus on their primary missions.  

The budget includes $66 million for the Office of Legacy Management to manage post-environmental-cleanup activities.    This organization demonstrates the Department’s long-term commitment to manage requirements relevant to closure sites beyond the completion of remediation. 

The budget also includes $8 million for the Office of Future Liabilities to address various cleanup activities at sites with continuing missions.    The FY 2005 budget provides funds to pay for and manage environmental liabilities for sites not currently assigned within the Department. 

The FY 2005 budget includes $43 million within the Environment, Safety and Health program to accelerate the processing of claims for former workers who may have become ill as a result of their work at U.S. weapons facilities.    This is a matter of doing what’s right and taking care of those whose labors helped secure our safety.   With this budget request, we are making good on implementing a three-year program to completely eliminate the backlog of applications by the end of 2006.  

One of the most significant and long-standing commitments addressed in this budget is funding to establish a permanent nuclear waste repository at Yucca Mountain.    In order to remain on schedule to begin operation in 2010, the FY 2005 budget requests $880 million for Yucca Mountain repository activities, $303 million above the FY 2004 enacted level.   This is key to ensuring the future use of nuclear power in this Nation.   It is also key to helping us complete the cleanup of our weapons facilities and to consolidate high-level nuclear waste in one safe, secure location.  This request enables us to finalize the license application for construction of the permanent repository, as well as other activities associated with construction and with developing a transportation system to Yucca.   We plan to submit a license application to the Nuclear Regulatory Commission by December 2004.

The Yucca Mountain project is moving toward a second phase, one which will require a significant financial commitment to accomplish.   The FY 2005 budget request includes a legislative proposal to reclassify currently mandatory receipts to the Nuclear Waste Fund as discretionary, to offset the amount appropriated for geologic repository activities.  In FY 2005, the Department proposes that $749 million in fees collected from utilities for the purposes of the Nuclear Waste Fund be used to offset FY 2005 non-defense appropriations in support of design and other Yucca Mountain activities.  This proposal will help ensure that the Department will have the financial resources needed to accomplish an undertaking of this scope. 

Throughout the entire budget request is funding for one of our highest priorities, safeguarding and securing DOE’s sites and facilities.   The FY 2005 budget includes $1.38 billion for all DOE safeguards and security programs to address additional requirements identified as a result of the revised Design Basis Threat. 

Within the total amount requested for safeguards and security activities, approximately $707 million will support activities to safeguard nuclear weapons facilities.    About $265 million will support activities that protect the Cold War nuclear waste material being cleaned up at our environmental cleanup sites. 

In addition, we are committing approximately $73 million to support the continued safeguards and security activities at our scientific laboratories and facilities.    We are requesting $255 million to support the development of DOE-wide security policies as well as to provide physical security for DOE Headquarters.   The FY 2005 budget request also includes $58 million to support safeguards and security activities at the new Idaho National Laboratory for nuclear energy R&D.  Moreover, $25 million will fund the Department’s cyber security activities administered by the Department’s Chief Information Officer, while an additional $109 million within the amounts mentioned above will fund DOE-wide cyber security measures.

CONCLUSION

The Department’s FY 2005 request reflects the accomplishments of the last three years, the successes and the many changes.   This request charts a focused course of investment for the Nation’s future -- one guided by a cohesive mission and targeted performance metrics.  Making all of this work are the extremely talented men and women of the Department of Energy which include the world’s top engineers and scientists.   It is a privilege to work alongside them on a common mission.   It is an honor to serve a President who has provided this vision of what this Department can – and will – accomplish in FY 2005 and beyond. 

Thank you.   This concludes my formal statement.  I would be pleased to answer any questions you may have at this time.