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DEPARTMENT OF ENERGY
Since 2001, the Administration:
• Strengthened America’s energy security by increasing the amount of oil stored in the
Strategic Petroleum Reserve from 550 million barrels to 700 million barrels;
• Launched international partnerships to accelerate development of clean energy
technologies at home and abroad, including the International Partnership for the
Hydrogen Economy, FutureGen, the Carbon Sequestration Leadership Forum, and
the International Thermonuclear Experimental Reactor fusion energy project;
• Provided grants to States that improved the energy efficiency of 409,000 homes of
low-income families;
• Accelerated cleanup of 20 Department of Energy legacy nuclear waste sites, including
completing the physical cleanup of Rocky Flats, Colorado, more than a year ahead of
schedule; and
• Took major steps to prevent nuclear terrorism by securing weapons in the former
Soviet Union; deploying radiation detection equipment in key overseas ports;
removing or securing high-risk, vulnerable nuclear and radiological materials around
the world; and retraining foreign weapons experts in non-military pursuits.
The President’s Budget:
• Proposes major new investments—as part of the President’s American
Competitiveness Initiative—in the basic research and world-leading facilities that will
enable future breakthroughs in nanotechnology, information technology, and related
fields of science that promise significant economic benefits;
• Advances a new Global Nuclear Energy Partnership to support an expansion of
nuclear power generation, while addressing nuclear waste and proliferation issues;
• Proposes solar and biomass technology initiatives that support energy independence;
and
• Provides national security funding that continues the transformation of the nuclear
weapons complex.

89

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DEPARTMENT OF ENERGY

FOCUSING ON THE NATION’S PRIORITIES
Doubling Research Investment Under the American Competitiveness Initiative
America’s economic strength depends in part on our Nation’s rich tradition of scientific and technological innovation and leadership. Because investment in fundamental research in the physical
sciences provides the foundation for such innovation, the President’s American Competitiveness
Initiative proposes a significant, sustained investment in the areas of the basic research portfolio
of the Department of Energy (DOE) that promise to deliver the scientific breakthroughs that will
transform our future. DOE supports an array of basic research and operates a variety of unique
scientific facilities to support its energy and national security missions. These scientific facilities
host roughly 18,000 researchers each year and broadly benefit users supported by other agencies,
other countries, and the private sector. DOE’s Office of Science provides more than 40 percent
of total Federal funding for basic research in the physical sciences, and it serves as the principal
Federal funding agency for research in high energy physics, nuclear physics, and fusion energy
sciences. It also supports research in areas such as climate change, environmental remediation,
genomics, computer science, and applied mathematics. In the past decade alone, 14 Nobel Prizes in
physics and chemistry have been awarded to scientists supported by the Office of Science.
The 2007 Budget proposes $4.1 billion
for DOE’s Office of Science—a $505 million
increase over 2006 funding. These additional
funds, which represent the first installment of
a 10-year doubling plan under the American
Competitiveness Initiative, will be focused on
the areas of research most likely to sustain
and enhance U.S. economic competitiveness.
The Budget will enable cutting-edge research
across a wide expanse of scientific endeavors,
from understanding the earliest moments of
the universe, to learning how to guide nature’s
Tiny nanoscale rods and wires—such as those shown in this image,
own efficient assembly techniques to make
which as a whole is less than one tenth of the width of a human
cheaper, stronger, and lighter materials for
hair—have a wide variety of potential applications, including the
development of the next generation of solar cells and high-efficiency
applications like hydrogen fuel cells and more
lighting. The new DOE-funded methods for growing these structures
energy-efficient lighting and consumer elecsimply and inexpensively represent a significant step toward commercial
viability.
tronics. The Budget increases research and
facility support for promising energy-relevant
areas such as nanotechnology, including a major new targeted effort in solar-related research and
completion of the last of five nanoscience research centers. In addition to operating DOE’s current
large scientific user facilities near maximum capacity, the Budget funds several new facility projects.
For example, the 2007 Budget provides $80 million to build the world’s most powerful civilian
supercomputer to enable scientific simulations that are otherwise impossible, and $45 million to
begin work on what will be a world-leading $600–800 million x-ray microscope facility with the
capability to study materials, chemicals, and biological matter with unprecedented clarity at the
scale of individual atoms.

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91

Fusion Energy Research
In January 2003, President Bush committed the United States to participate in negotiations
on the largest and most technologically sophisticated energy research project in the world—the
International Thermonuclear Experimental Reactor (ITER). The United States and its six international partners—the European Union, Japan, Russia, China, South Korea, and India—have chosen
a site in France and are progressing rapidly toward completion of a draft agreement, with the
signing of an approved final agreement scheduled for summer 2006. If successful, this cost-shared
experiment will advance progress towards developing fusion’s potential as a commercially viable
and clean source of energy near the middle of this century. The 2007 Budget provides $60 million in
equipment research, design, and fabrication activities for the United States’ in-kind contributions
to this important partnership.

Advancing Nuclear Power Development
Nuclear power offers an emissions-free, safe, and reliable source of energy and is an essential element in the Nation’s energy mix. Recognizing these benefits, the President’s National Energy Policy
emphasized appropriate development of nuclear energy systems. The 2007 Budget continues strong
support for nuclear power in several areas.
The Budget provides $54 million in 2007 for the Nuclear Power 2010 (NP 2010) initiative to make
it feasible to build new nuclear power plants in the United States for the first time in three decades.
Under this initiative, DOE and two private consortia, which include many of the country’s major
nuclear utilities and reactor vendors, have created two public-private partnerships to develop applications and obtain Nuclear Regulatory Commission licenses for new Generation III+ nuclear power
plant designs. In 2005, two project implementation plans were issued for the two construction and
operating licensing demonstration projects. The effort from these two projects will reduce the uncertainty of obtaining design approval, which is a major obstacle to their financial viability. If successful,
this seven-year, $1.1 billion effort, 50 percent of which would be non-Federal funding, could result in
a new nuclear power plant order by 2009, and a new nuclear power plant constructed by the private
sector and in operation by 2014.
The NP 2010 program includes funds to develop regulations for nuclear power plant standby support, a program proposed by the President and authorized by the Energy Policy Act of 2005. Under
the authority, DOE will be able to offer risk insurance that will protect sponsors of the first new
nuclear power plants against the financial impact of certain delays during construction or in gaining approval for operation that are beyond the sponsors’ control. The risk insurance will provide
additional certainty to the builders of new nuclear power plants and help lead to the construction of
a new nuclear power plant by the 2014 timeframe.
The 2007 Budget is also looking ahead to the next generation of nuclear power plants. The Budget
provides $32 million for research and development (R&D) to support Generation IV nuclear energy
systems. Generation IV technology offers the promise of a safe, economic, and proliferation-resistant
source of clean nuclear power and possibly hydrogen.
The Budget reinforces the Administration’s commitment to increasing nuclear power while building a more secure fuel cycle as called for by President Bush in 2004. The Budget provides $250 million
in 2007 for the Global Nuclear Energy Partnership (GNEP), which will:
• enable an expansion of nuclear power in the United States and around the world;
• promote nuclear nonproliferation goals; and
• help resolve nuclear waste disposal issues.

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DEPARTMENT OF ENERGY

FOCUSING ON THE NATION’S PRIORITIES—Continued
GNEP will help meet the growing demand
for electricity in the developing world through
an international framework that will promote
emissions-free, safe nuclear energy and eliminate the need for foreign countries to build enrichment and recycling capabilities. In addition, GNEP will phase-out old recycling technologies that separate plutonium and thus create a proliferation risk.
Advanced recycling technologies can extract
highly radioactive elements of commercial
spent nuclear fuel and use that material as
fuel in fast spectrum reactors to generate
additional electricity. The extracted material,
which includes all transuranic elements
(e.g., plutonium, neptunium, americium,
and curium), would be consumed by fast reactors to reduce significantly the quantity of material
requiring disposal in a repository and to produce power. The plutonium would remain bound with
other highly radioactive isotopes, thereby preserving its proliferation resistance and reducing
security concerns. With the transuranic materials separated and used for fuel, the volume of waste
that would require disposal in a repository would be reduced by 80 percent.
Improving the way spent nuclear fuel is managed in this manner will facilitate the expansion of
civilian nuclear power in the United States and encourage civilian nuclear power in foreign countries
to evolve in a more proliferation-resistant manner. Once these recycling technologies are proven,
the United States and other GNEP countries having the established infrastructure could arrange to
supply nuclear fuel to countries seeking the energy benefits of civilian nuclear power, and the spent
nuclear fuel could be returned to other GNEP countries for eventual disposal in international repositories. In this way, foreign countries could obtain the benefits of nuclear energy without needing
to design, build, and operate uranium enrichment or recycling technologies to process and store the
waste.

Solar and Bio-Fuels Initiatives
The Budget proposes two initiatives to promote energy security for the United States by fundamentally changing the way the Nation powers its cars, homes, and businesses—the Bio-Fuels Initiative
and the Solar America Initiative.
The Bio-Fuels Initiative will help displace future demand for oil by increasing funding to develop
affordable, domestically produced bio-based transportation fuels (ethanol and biodiesel) and other
products largely derived from oil today. The increased investment will support construction of an
industrial-scale “biorefinery” to demonstrate production of fuels, chemicals, heat, and power from
biomass (energy crops and crop residues); much like an oil refinery produces these products from
oil. If successful, industry may begin investing in commercial-scale biorefineries, and consumers
could begin buying more products—including fuel for their cars and trucks—produced in America’s
heartland.
The Solar America Initiative will accelerate the development of solar photovoltaics (PV), an emissions-free solution helping to meet the Nation’s growing demand for electricity. Currently, solar PV

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93

provides a very small amount of the electricity produced in the United States, largely because it is too
expensive. The initiative aims to accelerate research to reduce the cost of PV technologies through
industry-led partnerships. If cost goals are met and other policies to promote deployment remain in
place (tax incentives and State mandates for renewable energy purchases), the initiative could result
in 5–10 gigawatts of PV electrical capacity by 2015, compared with less than one gigawatt today. The
increased capacity would be enough to power roughly one million homes. The increased use of solar
PV also could significantly reduce demand for natural gas in the power sector.

Demonstrating the Future of Coal
The United States has 25 percent of the world’s coal reserves. Coal provides a safe, secure, domestic source of affordable energy, but it comes with a challenge: how to generate power from coal
while dramatically reducing the emission of air pollutants and greenhouse gases. DOE seeks to answer that challenge with its proposal to build FutureGen, a next-generation power plant cost-shared
with industry and international partners. Announced by the President in 2003, FutureGen would
generate electricity and hydrogen from coal with near-zero atmospheric emissions. The 2007 Budget
provides $54 million toward design and construction of the project, while providing an additional
$268 million for R&D on technologies that will be used in FutureGen and similar next generation
coal-fueled power plants, including fuel cells, turbines, coal gasification, carbon sequestration, and
hydrogen separation. The Budget also ensures that unexpended funds available from prior years’
clean coal projects are available for future funding of the FutureGen project. Funding in the 2007
Budget nearly completes the President’s 2000 campaign commitment to provide $2 billion over 10
years for clean coal technology research, four years ahead of schedule.

The SECA Fuel Cell: An Innovative Competition Speeds
Technology Development
The Solid State Energy Conversion Alliance (SECA) is a joint Government-industry partnership to strengthen U.S. energy security by
developing fuel cells for high-efficiency generation of electricity and
hydrogen from coal or natural gas. The SECA program leverages
private-sector ingenuity by providing Government funding to industry
teams developing fuel cells, as long as the teams continue to exceed
a series of stringent technical performance hurdles. This novel incentive structure has generated a high level of competition between the
teams and an impressive array of technical approaches. The SECA
program also develops certain core technologies that can be used
by all the industry teams to avoid duplication of effort. The program
exceeded its 2005 performance targets, and it is on track to meet its
goal for an economically competitive technology by 2010.

A prototype of the first fuel cell to pass the
initial SECA technology hurdle.

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DEPARTMENT OF ENERGY

FOCUSING ON THE NATION’S PRIORITIES—Continued

Responding to Hurricanes Katrina and Rita
In August and September 2005, Hurricanes
Katrina and Rita devastated U.S. energy
supply, processing, and transportation and
distribution infrastructure located in the central
and western Gulf of Mexico and along the Gulf
Coast of Louisiana, Mississippi, and Texas.
The Nation lost 28 percent of its daily crude oil
production, 16 percent of its daily natural gas
production, and 29 percent of its daily refining
capacity, and 2.7 million customers lost
electricity service. DOE responded by lending
and selling over 20 million barrels of crude
oil from the Strategic Petroleum Reserve; by
directing utilities to establish new electrical
connections across service areas to provide
power to major gasoline pipelines serving
Natural gas processing plant in Louisiana flooded by Hurricane Katrina.
the Midwest and East Coast and to restart
Houston’s water pumping infrastructure;
and by assisting State and local governments and the private sector to assess and repair damaged
infrastructure. These actions assured the market that crude oil would continue to be available, allowed
regional refiners to continue operations, helped ensure that adequate fuel supplies were maintained in the
Midwest and East, and helped make power quickly available for essential regional and national needs.

Power Marketing Administrations
The Power Marketing Administrations (PMAs)—Southeastern, Southwestern, Western Area, and
Bonneville—sell electricity generated at 133 multipurpose Federal dams and related facilities operated by the Army Corps of Engineers and the Department of the Interior’s Bureau of Reclamation.
These hydropower facilities represent about four percent of the Nation’s electricity supply (37,000
MW). The PMAs also manage more than 33,000 miles of federally-owned transmission lines.
The Budget provides $229 million for the Southeastern, Southwestern, and Western Area PMAs.
Bonneville Power Administration (BPA) finances its $3.0 billion annual cost of operations and
investments primarily using power revenues and loans from the U.S. Treasury. The amount of BPA
borrowing authority from the Treasury is currently capped by statute at $4.45 billion.
The Energy Policy Act of 2005 directs Federal agencies to remove constraints on the interstate
transmission grid to help ensure that the Nation’s electricity can flow more freely. BPA will continue
to seek non-Federal participation and joint financing and ownership of its transmission system
upgrades and other investments. In December 2005, BPA and DOE dedicated a private-public
financed transmission line: the new 63-mile, $175-million Schultz-Wautoma electric transmission
line in central Washington State. The line forms a key energy link to major cities along the Pacific
Coast and will enhance electricity reliability in the western United States.

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95

BPA markets its secondary electricity production to customers both inside and outside of the Pacific
Northwest, such as California. Historically, BPA receives up to $500 million per year from these secondary market revenues. Due to high energy prices, future secondary revenues could be significantly
higher. Beginning in 2007, and consistent with sound business practice, the Budget provides that
any secondary market revenues in excess of $500 million per year will be used to repay BPA obligations to the U.S. Treasury. This will allow BPA greater financial flexibility to meet its future capital
investments.
In addition, the Budget provides that the interest rate for future debt obligations owed to the Treasury by Southwestern, Southeastern, and Western for power-related investments be set at the rate
governmental corporations borrow from the Treasury, similar to how current law sets the interest
rates for BPA’s borrowing from the Treasury. This new policy will be applied to all power-related
investments whose interest rates are not specified in law.

Leveraging Science to Promote National Security
The mission of DOE’s National Nuclear Security Administration (NNSA) is to:
• maintain and enhance the safety, security, reliability, and effectiveness of the Nation’s nuclear
weapons stockpile;
• prevent the spread of materials, information, and technology of weapons of mass destruction by
eliminating or securing nuclear materials, information, and related infrastructure; and
• provide the Navy with safe and highly capable nuclear propulsion plants for warships.
The science and technology R&D underpinning this work is conducted at the DOE’s national
laboratories, most of which began as centers of invention and production for the Nation’s nuclear
deterrent.

Supporting and Maintaining the U.S. Nuclear Weapons Stockpile
The United States continues a fundamental shift in national security strategy to address the
realities of the 21st Century. The Administration’s Nuclear Posture Review (NPR), completed
in December 2001, presents a national security environment in which threats may evolve more
quickly and be less predictable and more variable than in the past. The NPR recognizes the need
to transition from a threat-based nuclear deterrent with large numbers of deployed and reserve
weapons to a deterrent consisting of a smaller nuclear weapons stockpile with greater reliance on
the capability and responsiveness of the Department of Defense (DOD) and NNSA infrastructure
to respond to threats.
The NNSA infrastructure must be able to meet new requirements in a timely and agile manner
while also becoming more sustainable and affordable. Such actions as consolidating the nuclear
weapons complex and placing an emphasis on practical and streamlined business practices are
critical to this transformation. Efforts are underway, for example, to consolidate the facilities and
infrastructure currently supporting the stockpile stewardship program. This program is the critical,
science-based effort to provide confidence in the safety, reliability, and effectiveness of U.S. nuclear
weapons, but it is supported by a Cold War infrastructure in need of transformation.

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DEPARTMENT OF ENERGY

FOCUSING ON THE NATION’S PRIORITIES—Continued
The 2007 Budget proposal of $6.4 billion for Weapons
Activities strongly supports the implementation of
the responsive infrastructure and the ongoing program
of work that forms the backbone of the nuclear weapons
deterrent. Key programs funded in this area include
Directed Stockpile Work, Science and Engineering,
Readiness in Technical Base and Facilities, and Security.
• Directed Stockpile Work (DSW) ensures the viability
of the U.S. nuclear weapons stockpile by maintaining and refurbishing warheads to ensure their safety,
reliability, and effectiveness. The 2007 Budget provides a total of $1.4 billion, which will sustain DSW
work while accelerating materials consolidation and
weapons dismantlement.
• A total of $426 million in 2007 supports the Science
and Engineering programs that develop the tools
and capabilities needed to certify the continued
effectiveness of the nuclear stockpile well into the
future. This work will remain critical as the United
States reduces the number of operationally deployed
warheads to between 1,700 and 2,200 over the next
10 years.

A technician services a nuclear weapon component in
support of the NNSA’s mission to maintain the U.S.
nuclear weapons stockpile.

• Readiness in Technical Base and Facilities underpins the stockpile work by providing $1.7 billion
for the operation and maintenance of existing facilities and construction of new facilities that
have continued to decay since the end of the Cold War. The 2007 Budget accelerates construction
projects supporting the development of a responsive infrastructure.
• Security Programs protect the nuclear weapons complex, nuclear weapons and their components, and transportation of material between facilities. The 2007 Budget provides $721
million to ensure the security of NNSA facilities and $210 million for secure transportation
while consolidation efforts are underway.

Preventing Nuclear Terrorism
Preventing weapons of mass destruction from falling into the hands of terrorists is a top national
security priority. The 2007 Budget proposal of $1.7 billion strongly supports the international programs that deny terrorists materials, technology, and expertise needed to develop or acquire nuclear
weapons.
The sprawling nuclear complex of the former Soviet Union remains a focal point of U.S. nonproliferation efforts. At the Bratislava meetings in February 2005, Presidents Bush and Putin agreed
to a number of nuclear security initiatives to accelerate Russian-U.S. cooperative efforts. The Budget proposal of $129 million for these activities supports completing security upgrades at Russian
nuclear warhead storage sites by 2008.

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97

Unsecured nuclear materials throughout the world, and
their attendant technology and expertise, pose a significant
threat to U.S. national security. In the 2007 Budget, the
Administration proposes $107 million, an increase of $10
million over 2006, for expanded and accelerated efforts to
secure and/or remove at-risk nuclear and radioactive material worldwide through the Global Threat Reduction Initiative. Another $84 million, an increase of $60 million over
2006, is requested for the core program within the Second
Line of Defense program, which deploys radiation detection
equipment at key border security crossings overseas.
NNSA implements a number of additional critical
programs that support the overall effort to deny terrorists
nuclear weapons, materials, technology, and expertise. The
2007 Budget provides:
• $269 million for cutting-edge nonproliferation R&D for
improved technologies to detect and monitor nuclear
proliferation and nuclear explosions worldwide;
• $207 million for shutting down three Russian nuclear
reactors still producing 1.2 metric tons of plutonium
per year and replacing them with conventional fossil
fuel power plants; and

Following Libya’s strategic decision in December
2003 to dismantle its nuclear program, NNSA
provided critical technical expertise in support of the
dismantlement effort. The photo shows a Libyan
centrifuge casing.

• $290 million for construction of the U.S. Mixed Oxide
fuel fabrication plant in Savannah River, South Carolina. The facility will dispose of 34 metric
tons of U.S. surplus plutonium.
Cooperating foreign countries continue to participate in these activities through the G-8 Global
Partnership against the Spread of Weapons of Mass Destruction, which was established in 2002.
G-8 countries have committed $20 billion over 10 years to nonproliferation programs in Russia and
other Newly Independent States. The United States intends to provide half of the $20 billion of G-8
funding, including over $1 billion in the 2007 Budget in the combined nonproliferation programs of
NNSA, DOD, and the Department of State.

Powering the Nuclear Navy
The Naval Reactors Program is responsible for the environmentally sound and militarily effective execution of all nuclear propulsion work for the Navy, beginning with technology development,
through reactor operations, and, ultimately, to reactor plant disposal.
The 2007 Budget of $795 million for Naval Reactors supports the continued safe and effective operation of 104 reactor plants and development of the Transformation Technology Core for VIRGINIA
class submarines and the CVN 21 aircraft carrier reactor design. This program, in collaboration with
the DOE Office of Nuclear Energy, Science and Technology, also funds testing efforts at the Advanced
Test Reactor at the Idaho National Laboratory.

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DEPARTMENT OF ENERGY

FOCUSING ON THE NATION’S PRIORITIES—Continued
Yucca Mountain Project
The Yucca Mountain Project is critical
to national and homeland security and for
the future of the Nation’s electric energy
supply, as well as for nuclear nonproliferation
and protecting our environment. High-level
radioactive wastes have accumulated for 50
years and are currently stored in temporary
facilities at some 122 sites in 39 States. In
1982, the Congress passed the Nuclear Waste
Policy Act that adopted geologic disposal as the
Nation’s long-term strategy for safe isolation
of radioactive wastes. The Act confirmed
the Federal Government’s responsibility
for disposing of spent nuclear fuel (SNF)
and high-level radioactive waste resulting
from the Nation’s commercial reactors and
Yucca Mountain, Nevada.
atomic energy defense activities. In 1987,
the Congress focused efforts to develop a nuclear waste repository on Federal land at Yucca
Mountain, Nevada. In February 2002, the Secretary of Energy recommended Yucca Mountain for
a repository. After listening to representatives of the State of Nevada and consulting with science
and environmental advisers, the President notified the Congress that Yucca Mountain is qualified
for a construction permit application to the Nuclear Regulatory Commission (NRC). In July 2002,
the Congress approved the President’s recommendation.
The 2007 Budget provides $544.5 million to maintain steady progress toward opening the repository. This funding includes:
• preparing a license application to the NRC based on a safer and simpler approach to handling
SNF and operating the repository, otherwise known as the canister approach;
• improving decaying site infrastructure at Yucca Mountain to ensure worker, regulator, and
visitor safety, and operational efficiency;
• planning the facilities needed for receipt of SNF and High Level Waste for emplacement in the
repository; and
• developing transportation infrastructure necessary to move the waste safely and securely from
where it is today to the repository for disposal.
The project will benefit from the steps taken under GNEP, as waste will be recycled and transmuted
prior to disposal in Yucca Mountain. These efforts will reduce the volume, long-term radiotoxicity,
and thermal heat load of nuclear waste, consequently delaying the need for additional geologic repositories.
In addition, the Administration intends to submit to the Congress a legislative proposal to address
regulatory, funding, and other issues to allow DOE to move forward with this critical project.

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RESTRAINING SPENDING AND MANAGING FOR RESULTS
Terminating the University Nuclear Energy Program
The University Nuclear Energy Program was designed to address declining enrollment levels
among U.S. nuclear engineering programs. Since the late 1990s, enrollment levels in nuclear
education programs have tripled. In fact, enrollment levels for 2005 have reached upwards of 1,500
students, the program’s target level for the year 2015. In addition, the number of universities
offering nuclear-related programs also has increased. These trends reflect renewed interest in
nuclear power. Students will continue to be drawn into this course of study, and universities, along
with nuclear industry societies and utilities, will continue to invest in university research reactors,
students, and faculty members. Consequently, Federal assistance is no longer necessary, and the
2007 Budget proposes termination of the University Nuclear Energy Program. The termination is
also supported by the fact that the program was unable to demonstrate results from its activities
when reviewed using the Program Assessment Rating Tool (PART), supporting the decision to spend
taxpayer dollars on other priorities.

Terminating Federal Support for Oil and Gas R&D
During consideration of the energy bill in 2005, the President stated that “energy companies do
not need taxpayers’-funded incentives to explore for oil and gas.” The 2007 Budget proposes to terminate DOE’s Oil and Gas R&D programs, as in the 2006 Budget, because these R&D activities are
more appropriate for the private sector to perform and the programs have not demonstrated results,
as identified in the PART review. The programs focus on incremental and evolutionary technology
advances that oil and gas companies have the incentive to conduct, which is not in accord with the
Administration’s R&D Investment Criteria. The 2007 Budget also recommends repealing provisions
in the Energy Policy Act of 2005 for a new mandatory $50 million per year (2007–2017) oil and gas
R&D program funded with Federal revenues from oil and gas leases, which would be similar to the
discretionary programs proposed for termination. Industry has the incentives and resources to do
such R&D on its own.

Refocusing the Clean Coal Power Initiative
The Clean Coal Power Initiative (CCPI) has had difficulty implementing demonstration projects
that achieve the best results for the American taxpayer. As identified in the PART review, CCPI
projects have a history of significant delays, which has slowed the use of funds and created a backlog
of over $500 million in unused balances. Furthermore, some CCPI projects do not directly support
the program’s purpose. The 2007 Budget restricts the addition of new funds to CCPI, while DOE
works to improve the use of existing funds.

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DEPARTMENT OF ENERGY

RESTRAINING SPENDING AND MANAGING FOR RESULTS—Continued
Regaining Momentum in Cleaning Up Legacy Sites
The Environmental Management (EM) program is responsible for cleaning up the 114 sites involved with nuclear research and weapons production, which resulted in vast amounts of radioactive
contamination and hazardous waste. The EM program performs various cleanup activities, such
as soil and water remediation, to comply with environmental laws and settlement agreements that
are legally enforceable. The 2002 PART rated this program Ineffective, and in February 2002, the
Administration proposed an initiative to provide additional resources to sites agreeing to implement
revised, risk-informed cleanup strategies to accelerate completion from 2070 to 2035 and reduce program costs. The EM program developed revised cleanup plans at 19 of 39 sites in 2002 that remained
to be cleaned up. The peak year of funding for this initiative was 2005. The 2007 Budget proposes
$5.8 billion for the EM program. The funding reduction from 2006 primarily reflects the accelerated
completion of the Rocky Flats site in Colorado. The 2003 PART rating for the EM program improved
from Ineffective to Adequate.
In 2002, DOE began implementing recommendations from its program review and revised cleanup
strategies. Despite the promise of these cleanup and management reforms, performance has been
mixed and the long-term results are very uncertain. DOE has identified significant project management, regulatory, and legal challenges, which it is working aggressively to address. For example:
• The Hanford Waste Treatment Plant in
Washington State was supposed to be
completed in 2011 at a cost of $5.8 billion.
DOE’s contractor estimated in April 2005
that the project will be delayed by four
years and cost an additional $3 billion.
DOE is working to validate cost and
schedule estimates of the overrun by
summer 2006.
• The Bulk Vitrification System at Hanford
is a demonstration project for an alternative treatment technology for low-activity
tank waste. If the technology proves sucConstruction of the Hanford Waste Treatment Plant in Washington State.
cessful, a full-scale, follow-on plant would
treat about 50 percent of the low-activity
tank waste, with the remainder vitrified in the Waste Treatment Plant. Because its costs have
increased from $46 million to $159 million, DOE has suspended the project until it can determine how to get costs under control.
• At the Savannah River site, the cost of the Salt Waste Processing Facility, which will treat
radioactive tank waste, has increased from $440 million to $680 million, and the completion
schedule has slipped from 2009 to 2011.
• DOE has agreed to seek a permit modification for the Waste Isolation Pilot Plant (WIPP)—a
defense transuranic waste disposal facility in New Mexico—before disposing of radioactive tank
waste classified as transuranic waste. New Mexico opposes disposal of tank waste at WIPP.
• Voters in Washington passed Initiative 297, which purports to prohibit DOE from bringing any
more waste to the Hanford site until all the waste there is cleaned up. Litigation is ongoing
regarding the constitutionality of the initiative.

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EM Contracting Reforms Pay Off
Performance-based incentive contracts to accelerate closure of the Rocky Flats, Colorado, site and the
Mound and Fernald sites in Ohio are starting to pay off. Rocky Flats closed in 2005 to become a wildlife
refuge. The Ohio sites are scheduled to close in 2006 at significant savings from original estimates.
These savings and early closure are a direct result of performance objectives, incentives, and balanced
risk integrated into the EM contracts, which held both DOE and its contractors accountable for results.
Understanding the work to be accomplished before a contract is written is critical. These lessons learned
should be transferred to other EM cleanup efforts.

DOE is committed to regaining the momentum of accelerated cleanup. To develop a high-performance organization, the EM program plans to:
• develop credible project baselines with realistic schedules and costs;
• identify and effectively manage risk;
• select the most appropriate contracts for the work and uncertainties involved;
• communicate frequently with regulators, communities, and stakeholders;
• improve skills for acquisition, project management, and technical staff; and
• share feedback with other sites on lessons learned as soon as possible.

DOE Contract Management and Administration
Since 1990, the Government Accountability Office (GAO) has found that inadequate DOE contract
management practices pose a “high risk” to the effectiveness and efficiency of its program missions.
Prior to 2000, OMB worked with DOE to develop the Rocky Flats closure contract as a pilot for
contract reform implementation. Its success should serve as an incentive to expand those contract
concepts and approaches to other large environmental cleanup programs.
In 2005, DOE worked with OMB and GAO to identify goals with short- and long-term strategies
for improving DOE’s performance in managing its contracts and capital projects. DOE has identified metrics and established baselines and targets for demonstrating progress over the next several
years. DOE also developed a series of quarterly action plans to strengthen contract performance,
administration, and project management. The Administration will establish a path to success and
improve DOE’s overall performance in contract and project management.

102

DEPARTMENT OF ENERGY

RESTRAINING SPENDING AND MANAGING FOR RESULTS—Continued
Update on the President’s Management Agenda
The table below provides an update on DOE’s implementation of the President’s Management
Agenda as of December 31, 2005.

Human Capital

Competitive
Sourcing

Financial
Performance

E-Government

Budget and
Performance
Integration

Status
Progress
Arrows indicate change in status rating since the prior evaluation as of September 30, 2005. Double arrows
indicate that the status rating was downgraded from green to red.
DOE has identified mission-critical occupations, e.g., project, contract, and information technology management
and scientific and technical occupations, for which it needs increased levels of human capital skills, competence,
and/or knowledge, and it continues to make investments to reduce or eliminate deficiencies in these areas. In
2005, DOE cancelled a large competitive sourcing study because of concerns over its ability to provide adequate
contract management and oversight, and it is now reviewing its plan for future public-private competitions.
DOE did not receive a clean audit opinion in 2005 because of problems associated with implementing a new
financial accounting system and the start-up of a new finance and accounting services organization. DOE will
work in 2006 to improve accounting system performance, data quality, and training, as well as operations and
controls. DOE has secured 99 percent of its operational information technology systems. DOE is developing
consistent approaches to defining, measuring, and achieving efficiencies for its applied R&D programs, which
are needed to allow comparisons across similar programs. DOE also is increasing the use of PART measures in
its performance plans.

Initiative

Status

Progress

Real Property Asset Management
DOE has inventoried its real property, developed an asset management plan, and is collecting performance
data on its inventory. DOE is working to develop a rolling implementation strategy to realize the goals outlined
in its asset management plan.

THE BUDGET FOR FISCAL YEAR 2007

103

Department of Energy
(In millions of dollars)
Estimate

2005
Actual
Spending
Discretionary Budget Authority:
National Defense:
National Nuclear Security Administration................................................
Other Defense Activities ................................................................................
Energy Resources................................................................................................
Science and Technology ....................................................................................
Environmental Management ............................................................................
Nuclear Waste Disposal .....................................................................................
Corporate Management .....................................................................................
Total, Discretionary budget authority .................................................................

2006

2007

9,205
485
2,816
3,636
7,280
572
263
24,257

9,105
429
3,092
3,597
6,590
494
231
23,538

9,316
552
2,949
4,102
5,827
544
268
23,558

...............

84

—

—

Total, Discretionary outlays ...................................................................................

24,307

24,248

24,417

Mandatory Outlays:
Existing law ........................................................................................................
Legislative proposal ........................................................................................
Total, Mandatory outlays ........................................................................................

1,686
—
1,686

1,423
—
1,423

1,808
30
1,778

Total, Outlays ..............................................................................................................

22,621

22,825

22,639

Memorandum: Budget authority from enacted supplementals


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102