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S. HRG. 107–31 SPENCER ABRAHAM NOMINATION HEARING BEFORETHE COMMITTEE ON ENERGY AND NATURAL RESOURCES UNITED STATES SENATE ONE HUNDRED SEVENTH CONGRESS FIRST SESSION NOMINEE TO BE SECRETARY OF THE DEPARTMENT OF ENERGY JANUARY 18, 2001 ( Printed for the use of the Committee on Energy and Natural Resources U.S. GOVERNMENT PRINTING OFFICE 72–247 DTP WASHINGTON : 2001 For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 VerDate 11-MAY-2000 13:06 May 10, 2001 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 72-247 SENERGY2 PsN: SENERGY2 COMMITTEE ON ENERGY AND NATURAL RESOURCES JEFF BINGAMAN, New Mexico, Chairman DANIEL K. AKAKA, Hawaii FRANK H. MURKOWSKI, Alaska BYRON L. DORGAN, North Dakota PETE V. DOMENICI, New Mexico BOB GRAHAM, Florida DON NICKLES, Oklahoma RON WYDEN, Oregon LARRY E. CRAIG, Idaho TIM JOHNSON, South Dakota BEN NIGHTHORSE CAMPBELL, Colorado MARY L. LANDRIEU, Louisiana CRAIG THOMAS, Wyoming EVAN BAYH, Indiana GORDON SMITH, Oregon BLANCHE L. LINCOLN, Arkansas JIM BUNNING, Kentucky PETER G. FITZGERALD, Illinois CONRAD BURNS, Montana ROBERT M. SIMON, Staff Director SAM E. FOWLER, Chief Counsel ANDREW D. LUNDQUIST, Republican Staff Director DAVID G. DYE, Republican Chief Counsel JAMES P. BEIRNE, Republican Deputy Chief Counsel (II) VerDate 11-MAY-2000 13:06 May 10, 2001 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 72-247 SENERGY2 PsN: SENERGY2 C O N T E N T S STATEMENTS Page Abraham, Hon. Spencer, Nominee to be Secretary of the Department of En- ergy........................................................................................................................ 9 Akaka, Hon. Daniel K., U.S. Senator from Hawaii .............................................. 2 Bayh, Hon. Evan, U.S. Senator from Indiana ....................................................... 37 Bingaman, Hon. Jeff, U.S. Senator from New Mexico.......................................... 1 Burns, Hon. Conrad, U.S. Senator from Montana ................................................ 41 Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado ............................ 29 Cantwell, Hon. Maria, U.S. Senator from Washington ........................................ 47 Craig, Hon. Larry E., U.S. Senator from Idaho .................................................... 35 Domenici, Hon. Pete V., U.S. Senator from New Mexico ..................................... 23 Dorgan, Hon. Byron L., U.S. Senator from North Dakota ................................... 20 Feinstein, Hon. Dianne, U.S. Senator from California ......................................... 45 Graham, Hon. Bob, U.S. Senator from Florida ..................................................... 26 Johnson, Hon. Tim, U.S. Senator from South Dakota.......................................... 3 Levin, Hon. Carl, U.S. Senator from Michigan ..................................................... 6 Murkowski, Hon. Frank H., U.S. Senator from Alaska ....................................... 4 Nickles, Hon. Don, U.S. Senator from Oklahoma ................................................. 43 Schumer, Hon. Charles E., U.S. Senator from New York .................................... 50 Smith, Hon. Gordon, U.S. Senator from Oregon ................................................... 40 Stabenow, Hon. Debbie, U.S. Senator from Michigan .......................................... 7 Thomas, Hon. Craig, U.S. Senator from Wyoming ............................................... 33 Wyden, Hon. Ron, U.S. Senator from Oregon ....................................................... 31 APPENDIXES APPENDIX I Responses to additional questions .......................................................................... 63 APPENDIX II Additional material submitted for the record........................................................ 79 (III) VerDate 11-MAY-2000 13:06 May 10, 2001 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 72-247 SENERGY2 PsN: SENERGY2 VerDate 11-MAY-2000 13:06 May 10, 2001 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 72-247 SENERGY2 PsN: SENERGY2 SPENCER ABRAHAM NOMINATION THURSDAY, JANUARY 18, 2001 U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. The committee met, pursuant to notice, at 9:06 a.m. in room SD– 106, Dirksen Senate Office Building, Hon. Jeff Bingaman, chairman, presiding. OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW MEXICO Chairman BINGAMAN. The committee will come to order. Under the Rules of the Senate the standing committees continue from one Congress to the next and have the power to act until their succes- sors are appointed. Although the Senate has yet to appoint new members, we expect, subject to the approval of a Democratic Con- ference and the full Senate, that Senators Feinstein and Schumer and Cantwell will be appointed as Democratic members of this committee and, if they are able to attend this morning, we will certainly permit them to ask questions of the nominee and participate. Obviously, we extend the same courtesy to any new Republican members, but I understand that the Republican Conference has not yet decided on who those members will be. Is that correct? Senator MURKOWSKI. That is my general understanding, Mr. Chairman. Chairman BINGAMAN. The committee will consider the nomination of Spencer Abraham to be the Secretary of Energy this morning, then we will break for lunch and reconvene at 2:30 this after- noon to consider the nomination of Gale Norton to be the Secretary of the Interior. I have decided to exercise the prerogatives that I have as chairman for another day-and-a-half, Mr. Chairman, to model these hearings after those that we conducted in this room for Donald Rumsfeld instead of those that are being conducted for John Ashcroft. By that I mean that I would intend to give a brief statement myself, call upon Senator Murkowski, the Ranking Re- publican member, to give a statement, then call on the two Sen- ators from Michigan to introduce the witness, and then call on Sen- ator Abraham, the nominee, to make his statement, and then we would go after that to questions by the committee. In the first round of questions we will have 8 minutes per ques- tioner instead of 5, so the people can make statements or ask questions as they see fit. The purpose of this hearing, as I said, is to consider the nomination of our former colleague, Spencer Abraham, as the Secretary of (1) VerDate 11-MAY-2000 13:06 May 10, 2001 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 72-247 SENERGY2 PsN: SENERGY2 2 Energy. Several years ago, Senator Abraham urged that we abolish the Department of Energy. He has since seen the light. He has come to understand the importance of that Department, and the importance of it for our energy security, our national security, our economy, and our scientific and technological prowess. I am sure he is also learning the difficult problems facing the Secretary and how difficult it will be for the Secretary to solve those problems. Like his predecessors, he will be held accountable for energy supply and price fluctuations over which he has very little control. He will be held responsible for the performance of Na- tional Nuclear Security Administration, over which he has no di- rect management authority. He will be called to account for environmental messes that he had no part in making, and he will be held liable for not having opened the nuclear waste repository 3 years ago. Republicans harshly criticized President Clinton’s nominees for this and other posts in the Department of Energy for not being suf- ficiently steeped in the intricacies of the energy area for which they were nominated, and for needing, as it was referred to, on-the-job training. It would be easy for Democrats to respond in kind, now that our roles are reversed. It would be easy but it would not be constructive or fair to this nominee. It is time for both parties to put aside their rancor, to work coop- eratively with the new Secretary to try to solve some of these very serious problems facing the Department. I, for one, have assured this nominee of my support, and I look forward to working with him. At this point let me call upon Senator Murkowski to make any opening statement he would like to make. [The prepared statements of Senators Akaka and Johnson fol- low:] PREPAREDSTATEMENTOFHON. DANIELK. AKAKA, U.S. SENATORFROMHAWAII Mr. Chairman, thank you for promptly scheduling this hearing to confirm our Sec- retary of Energy. The sooner we confirm Senator Abraham as the Secretary of En- ergy, the sooner he can begin work on his new and challenging assignment. I am pleased that President-elect Bush has chosen Spencer Abraham to be the Secretary of Energy. He is aware of the concerns of Americans regarding rising energy costs. As a Senator from Michigan, Spencer Abraham has had firsthand experience with the increases in gasoline prices that occurred last year. I want to tell you that I plan to vote for your confirmation as the Secretary of Energy. I also commend you for accepting the task of running the Department of Energy. It is one of the most challenging jobs in the Federal government. As a member of this Committee and as a member of the Senate Armed Services Committee, I look forward to working with you on all aspects of the operations of the Department. Senator Abraham, as you know our nation has suffered the impact of high energy prices for the last two years. Some areas of the country have suffered more than others. But Hawaii has borne the brunt of having to pay high energy prices during all of the 1990s. For most of the 1990s, the average Honolulu gasoline price, based on a weekly survey, hovered at roughly 25 cents to 50 cents above the national average. One of the major challenges facing our nation is to stabilize energy prices and en- sure that Americans enjoy reasonable and affordable energy prices. We have not had a coherent and comprehensive energy policy for a long time under both Demo- cratic and Republican administrations. Additionally, we have not had a commitment to address our dependence on foreign sources of oil. The absence of an effective policy and a visible commitment to addressing our energy dependence have made us captive to OPEC’s production decisions and led to other problems. The only way to reverse our energy problem is to have a multifaceted energy strategy and remain committed to that strategy. This will send a clear message to VerDate 11-MAY-2000 13:06 May 10, 2001 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 72-247 SENERGY2 PsN: SENERGY2 3 OPEC and their partners about America’s resolve. If we are to have a comprehensive energy policy that strengthens our economy and serves the real needs of Ameri- cans, then we need to dismantle our dependence on foreign oil as soon as possible. The way to improve our energy outlook is to adopt energy conservation, encourage energy efficiency, and support renewable and alternative energy programs. Above all, we must develop energy resources that diversify our energy mix and strengthen our energy security. This is only one aspect of the problems faced by the Depart- ment. It faces other problems as well. The problems facing the Department are var- ied, complicated, and challenging. The Department has a large and diverse bureauc- racy. The process of reinventing and reorganizing the Department is far from over. Electric utility industry restructuring poses its own challenges. Nuclear waste is a monumental problem. The weapons program has its own challenges. Environmental management at the Department’s facilities is a complicated and an expensive under- taking. The Department’s science and technology programs need direction in the post Cold War era. The Department has facilities in 35 states, requiring it to work very closely with state and local agencies. The responsibilities of the Department extend even to remote islands in the far reaches of the Pacific Ocean. Our national security and economic health depend to great extent on what the Department does. In a nut- shell, a series of problems await our new Secretary. To address these and other issues, a strong hand is needed at the helm. The De- partment needs an effective leader who can promote policy and build a consensus. The President’s nominee to be the Secretary of Energy is such a man. Senator Abra- ham’s record and his experience have prepared him well for this challenge. I have every confidence that he will provide leadership in developing and implementing a comprehensive energy policy. I am also confident that he will address other problems faced by the Department in a cooperative and bipartisan manner. Senator Abraham, I look forward to working with you. PREPAREDSTATEMENTOFHON. TIMJOHNSON, U.S. SENATORFROMSOUTHDAKOTA Mr. Chairman, the Secretary of Energy is a critical and vital Cabinet position. We are at a crossroads in our energy policy. Gas and oil prices are going up, shortages are becoming more prevalent and our electricity system is becoming more con- strained. Meanwhile, demand is growing more than ever and our economy is affected by the volatility that is occurring. At this juncture, it is important for the Secretary of Energy to be a steward of the direction the nation’s energy policy. It is clear that we must take a measured, balanced approach. Favoring one side too heavily in this debate could have ramifica- tions that will take us years to change. It is also important that we work together to find solutions and stop assessing blame. In particular, we need to work together to find a long-term national energy strategy that can lower our dependence on foreign oil and get us away from the in- stability with which we are constantly faced. There is much debate about how to do this and far too much time has been spent in this committee faulting people rath- er than coming up with solutions. I am hopeful that we can be more productive. As we all know, the rising cost per barrel of crude oil has driven up the prices of gasoline, propane, diesel and heating oil with seemingly little relief in sight. These increases have become a significant obstacle for farmers and ranchers, fami- lies, local governments, and frankly, anyone who has any level of dependence of fuel for heating, transportation, or other needs. Moreover, natural gas prices are also going up because of low supplies and lack of production. In a state like mine where nearly half of the residents rely on natural gas for heat, this could have serious con- sequences. Its clear that consumers are going to experience disruptive price fluctuations as long as we rely on foreign oil imports for the majority of our fuel supply. Obviously, no magic bullet exists for either the short or long-term fuel supply and price situa- tion. But while it is only one part of a potential solution to our nation’s energy situa- tion, I am committed to elevating the role that alternative fuels, such as ethanol and biodiesel, play in our nation’s energy strategy. The use of renewable alternative fuels benefits energy security, the environment, and our overall economy. And of course, the production and use of renewable alternative fuels derived from agricultural products directly helps our agricultural economy. I have supported ef- forts in the past for greater use of alternative fuels. I authored legislation that was enacted two years ago that includes the use of biodiesel that federal fleet operators can use to meet the EPACT. In my view, this is the type of approach we should be using to change the demand for fuel—complimented with increased supply, it VerDate 11-MAY-2000 13:06 May 10, 2001 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6621 72-247 SENERGY2 PsN: SENERGY2 4 could go along way to way towards meeting our increasing energy needs. While only increasing production and use of domestically produced renewable fuels will not take care of our energy security problems, it must be one component of our long- term national energy strategy. I am interested to learn how the nominee will address these and other energy matters. Our well-being and economy is probably more dependent that we would prefer on energy needs but it is a reality that we must address. And we must address it in a cooperative way so that we can meet the needs of the American people. I look forward to the nominee’s testimony. STATEMENT OF HON. FRANK H. MURKOWSKI, U.S. SENATOR FROM ALASKA Senator MURKOWSKI. Thank you very much, Mr. Chairman, and let me join you in welcoming your new members to the committee, and I certainly commend President-elect George W. Bush for nomi- nating Senator Spence Abraham to serve as Secretary of Energy. I must admit, Mr. Chairman, this is a little detraction from my ego to have to hold my breath for a day-and-a-half, but nevertheless it is good character-building to be readjusted, but the good news is, it is temporary. But in any event, you and I have got a close working relationship, and I think it is fair to say the bipartisan nature of this committee has been evidenced by the number of bills that we have gotten out in working with the professional staff in a manner that I think is traditional with the Committee on Energy and Natural Resources. Let me remind the nominee that this is not necessarily a glamor- ous position. As Senator Bingaman indicated, your challenges are many, and in many cases they are unique. I think it is fair to say that we all agree that we have an energy crisis that is upon us. We can point fingers, but that does not do the job. I do not know if you have looked at your gas bill, but I looked at mine yesterday and it roughly doubled, and Nancy and I have been gone most of the month, but nevertheless, outside of an ap- peal to the gas company, which we would lose on, I think it is a reality that natural gas is up about four times what it was a year ago, and 56 million or 50 percent of the homes in this country depend on natural gas. 98 percent of our new electric generation is going to be fired from gas, so the demand is going to be there. We have seen crude oil prices bouncing around up to $37. We noted that OPEC has cut production. Obviously they have dis- cipline within their system, and intend to keep oil prices relatively high. We have become increasingly dependent on foreign oil imports. Some of us remember the gas lines around the block in 1973 and 1974. Others a bit younger do not know what we are talking about, but at that time we were 37 percent dependent on imported oil. Today we are 56 percent dependent. The Department of Energy has indicated that in about 2004 we will be somewhere around 62 percent. The question is, how much is enough? When do you adjust for the national security interests of the country when we have that kind of dependence? Supply is not keeping pace with demand. We have seen the Cali- fornia price spikes, power shortages. They finally had the black- outs. The consumers now are affected. Their bills have been affected yet, but I think some of us think that California may really VerDate 11-MAY-2000 13:06 May 10, 2001 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6602 72-247 SENERGY2 PsN: SENERGY2 5 have forgotten where energy comes from. Somebody has to produce it, and it has to come from some resource. The problems faced by consumers in California are not the only energy problems American consumers face. As we look at the new administration coming in, I think it is fair to say that from the les- sons of the last administration we need a coordinated effort by the Secretary of Energy involving the head of the Environmental Pro- tection Agency, the Department of the Interior, to work for solutions and try and generate a balance and the legitimate concern over the environment has to be modified to some extent by the reality that the energy has to come from some source, and what we have going for us is better and newer technology, and we can make a smaller footprint. We brought an oilfield into Alaska about 15 years ago. It came in as Endicott, the tenth largest producing field in the country. The footprint was 56 acres. Now, 15 years later, we have technology that could reduce that in the ANWR area to roughly 2,000 acres out of million acres. Now, that is the kind of consideration that we have to understand and appreciate and recognize the tradeoff and the balance. As you look at your new applications, the nuclear issue, where 20 percent of our energy comes from, it is efficient, clean, but nevertheless the waste problem is a reality that members of this committee and members of Congress are going to have to face up to. Hydro consists of about 8 percent of our electric generation. We have problems, of course, trying to balance the needs of the areas with the fish resources, but we are going to have to make decisions, and the decisions are going to have to be made on sound science. We simply cannot put off the decision-making process. Wind, solar, biomass, there is tremendous potential there. We spent $6 to $7 billion in the last 5 years mostly in subsidies, grants. It has been worthwhile, but it still contributes less than 4 percent of our energy source. Now, these are a few of the problems you will face as Secretary of Energy in the coming years, and I might add, I have not added the issues you will face with regard to environmental cleanup, the weapons complex. You have got to go out to Hanford. Believe me, it is a tough set of facts, and it is challenging to the science as well, the laboratories down in New Mexico and the contribution they make, but I have great confidence in your ability to meet the challenges placed before you as Secretary of Energy and I welcome both you and your family and feel that you have the qualifications, because in the time that you have been in the Senator representing your State of Michigan you have demonstrated a keen understanding of energy and environmental issues, from technological ad- vances in automobile technology to the needs of Michigan consumers for natural gas and heating oil in the winter. Your vocal support for the funding for the T&GV at the Depart- ment of Energy’s Office of Science demonstrate your commitment to the mission of the Department of Energy to break through re- search to yield the next generation of energy technologies and the public-private partnership needed to get these technologies to the market. VerDate 11-MAY-2000 13:06 May 10, 2001 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 72-247 SENERGY2 PsN: SENERGY2 6 You have also been one of the Senate’s foremost authorities on high tech issues and the Department of Energy’s high tech re- search will benefit from your leadership. I encourage you to try and bring the environmental community to recognize that with true technology we can make advancements and we can make footprints smaller, and the opportunity before you, particularly in the Depart- ment of Energy, with the capabilities in the laboratories and var- ious other aspects, puts you in the forefront of that effort, so we have high expectations that you will be able to come forward with some answers and, indeed, a recognition of the necessity of trying to balance where energy comes from. So, Senator Abraham, you are clearly an outstanding nominee. I fully support your nomination with the chairman. I look forward to hearing about your vision for the Department of Energy, and I look forward to working with you as you help to solve our Nation’s energy crisis and provide a secure, affordable, and clean energy future. Mr. Chairman, I just have one more comment. I commend you on being able to do something I have never been able to do, and that is limit the opening statements of you and I. Chairman BINGAMAN. With that, we will go ahead and hear from our two colleagues from Michigan. First, Senator Levin. We are glad to have you here before the committee. STATEMENT OF HON. CARL LEVIN, U.S. SENATOR FROM MICHIGAN Senator LEVIN. Senator Bingaman, first let me congratulate you on the way this committee has thrived under your chairmanship. To be able to do what Senator Murkowski just did indicates a tremendous initiative, leadership on your part. You know, it is one of the wonders of the political world that within a few months after Senator Abraham lost an election to Senator Stabenow, an election in which I supported Senator Stabenow, that today we are here, Senator Stabenow and I, to introduce to this committee Senator Abraham to recommend his confirmation by the U.S. Senate. This is really American democracy at its ironic best. One of the most demanding jobs in this Government is that of the Secretary of Energy, for the reasons which Senators Bingaman and Murkowski have just enumerated. Energy is the key to our security, to our economy, and to our comfort. The importance of it is highlighted by some of the recent problems that we have had, from high gas prices around the country to shortages in California of electricity, to the demands for heating, fuel, fuel oil, to the way in which OPEC manipulates the world market in oil. This is a tremendously demanding and tasking job to which Sen- ator Abraham has been nominated. It needs someone who is ex- traordinarily hard-working, and someone who is a quick learner. Senator Abraham is both. He is known for being both a quick study and somebody who is extremely hard-working. I just want to spend a moment on one issue which has not yet been touched upon. Sen- ator Abraham brings a special expertise with his knowledge of alternative fuel vehicles and the importance to those vehicles to our energy security and our energy future. The auto industry in this VerDate 11-MAY-2000 13:06 May 10, 2001 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 72-247 SENERGY2 PsN: SENERGY2