a former chairman and ranking member for his many contributions, his sound advice, experience and that very essential institutional memory. our joint task, this budget cycle, is no different. funding the right ballots of investments for our most critical needs with an eye towards those that protect our nation. and, yes, parade private sector jobs sustainable jobs and opportunities, not jobs which rely on government large es. i hope you'll be able to explain today how the budget request before us does just that. secretary chu, please ensure that the hearing record requested by the subcommittee are delivered in final form to us no later than four weeks from the time you receive them. members who have additional questions for the record will have until the close of business tomorrow to provide them to the subcommittee office. with that, i turn to my ranking member, mr. viscowski for any

comments he may wish to give. >> chairman, thank you very much. i know my entire statement will be entered into the record. first of all, thank you for your kind words and reciprocate the group this morning that i'm blessed in life, obviously for many, many reasons. but one of them is to serve on this subcommittee. because all of us, together, want a strong nation, a good, sound energy policy, as well as the economic development that can fall from an investment in our water infrastructure. and you have done a great job in bringing us together and, again, resolving differences and making sound judgments. i appreciate that very much. dr. chu, i also congratulate you on your wedding anniversary and birthday. had this not been a leap year, you would be just one day before my son's birthday. so i congratulate you for that. i do welcome you to the sub committee for your fourth appearance. i am pleased that president

obama continues to recognize the energy challenges facing this nation. and i appreciate the budget's strong statement that america will not seed the leadership in clean energy. additionally, i certainly believe that we need to be more conscientious about our energy consumption and further advance our conservation efforts. we need a strong, yet balanced approach to energy research and development that effectively nurtures basic sciences leading to significant technological demonstration, deployment and commercialization. these efforts, with a goal in mind towards ensuring production in america of these findings. i cannot emphasize my last point strongly enough. i see very little or no merit to the department fostering technological advances or breakthroughs for product that is will not ultimately be manufactured do messedically. the government can drive the

policies, however, i am, as i have said before, very concerned about making sure the department exercises strong leadership and fundamental management reform. they do need to be forthcoming at the department of energy. if not, it will significantly inhibit the chance of a successful energy policy. i know contract and project management seem tedious and dull. i certainly am tired about bringing it up year after year. administration after administration. and, actually, i believe you are now the 7th secretary of energy i have questioned on the topic. i continue to be appalled at the cost overruns and schedule slips of the department of energy's major construction projects.

the chairman has noticed some areas of concern. particularly the actions on yucca mountain. i speak for myself when i indicate that i share his concerns in that regard. i would also add my very serious reservations about the inclusion of $150 million request for usec, u-s-e-c, within the nonproliferation budget request. i hope to hear from you and others in the department why when coupled with a transfer authority request for fiscal year 2012, the department believes providing usec with $300 million in taxpayer's money is a good investment and not a bail out. mr. secretary, i do look forward to hearing from you today about

the fiscal year 2013 budget request. that will help address energy and national security challenges. none of us will always agree, but, certainly, as a member of the subcommittee in long standing, know that we can work through our differences in a cooperative and bipartisan fashion. and, again, mr. chairman, i appreciate you yielding the time. >> thank you very much. chairman, the full committee has recognized mr. rogers. >> thank you, mr. chairman. and thank you and your ranking members for doing great work over here. you're doing good. mr. secretary, happy birthday, happy anniversary. welcome. this week, the national average price for a gallon of gas is $3.60. it's up 20 cents over last month. 40 cents more than this time last year. the increasingly unstable middle east, a belligerent iran

threatens to hold its exports, shut down of the strait of hormus. our contracts around the world, monopolizing new foreign sources. once again, energy security, key to economic prosperity and national defense, is the focus of public debate. the congress has sent a very strong message that we must have balance in the conventional fuels. coal, natural gas, oil, nuclear. to provide energy today and to renewable energies to power our future. and while the president has repeatedly mentioned his support for a similar all of the above

energy policy seem that this administration is not serious about responsibility and responsibly diversifying our energy portfolio. instead, this budget request coupled with the budgets of interior and the epa, say merely a continuance of this administration's political posturing and diversion of federal dollars. the favorite speck tors at the expense of the others. in particular, coal, so important to my region of southern and eastern kentucky, and our country's most abundant energy resource, has remained squarely in the administration's cross hairs. although your budget tries to hide it, your proposal significantly rolls back investment and carbon capture, carbon storage and the advanced energy systems programs that

would allow our country to more efficiently use the fossil fuels already at our disposal. instead, these funds have been shuffled around to support the president's pet projects, including a proposed $500 million increase for the energy efficiency and renewable energy program, which is already funded at 1.8 billion. further more, as the epa rolls out its regulations and fleshes out a proposed greenhouse gas rule, these fossil r&d funds are vital to developing the new technologies necessary to come ply with the administration's own control standards. essentially, the administration has created a catch 22. demanding that industry invest heavily into new technology in order to meet stricter standards, while cutting off the funding for those investments.

it's a systematic dismissail of coal, the outcome of which will be thousands of lost jobs and more expensive electricity for american citizens while their tax money is thrown at unviable solutions like solyndra's solar panels. combined with underfilling the strategic preserve of last year's sale, in order to create the appearance of savings, i fear your budget reduces our energy security in real terms. obviously, my colleagues and i have serious concerns about the administration's policies. as they relate to our energy security. however, i would like to commend your department for its efforts through nnsa to maintain our strategic arsenal. i would welcome you to expand upon how your request, which includes significant reductions, ensures our nuclear capableties are secure, thoroughly modernized and continue to be a

sufficient deterrent to our enemies. thank you, mr. chairman. >> thank you, mr. chairman. mr. dick's, ranking member of the full committee. >> i also want to welcome secretary chu to the energy and water subcommittee for the opportunity to discuss the fy '13 department of energy budget request. for fy -- i bet you could have thought of better things to do on your birthday and on your anniversary. but we'll be brief. for fy '13, the president's budget request for the energy department is a sensible proposal that carries on our investments and important national programs in defense, science and energy efficiency. this proposal represents a further investment for many programs that are the building blocks for a more efficient and independent energy future. this fy '13 budget request contains a small increase for naval reactors, but healthier increases for other nuclear weapons, activities, such as

modernization as well as nonproliferation programs. while the increase for weapons activities is less than what was outlined in the budget document of a few years ago, the funding seems adequate for fy '13 to maintain our capability. however, i understand the administration is working on a plan to establish our requirements beyond this proposed budget. i applaud the budget request for an important energy program such as efficiency and renewable energy program would be increased by more than 520 million over the fy '12 enacted level. this is important to establish in maintaining our lead in both the manufacturing and deployment of new energy technologies as well as making existing technologies more efficient. the budget request also continues adequate support, adequate spending for the clean-up and the nuclear weapons

site in washington state which is funded through the environmental management program. i want to work with the subcommittee and energy department to make sure that hamford clean-up succeeds at a reasonable cost to the taxpayer. however, i must express my disappointment that this budget continues to reflect the administration's decision to shut down the yucca mountain project. it is my opinion that the decision congress made back in the 1980s to use yucca as our national nuclear waste repository is still the law of the land. again, i want to welcome secretary chu to the committee and we look forward to your statement. thank you. >> thank you, mr. dick's. mr. secretary, thank you for being with us. and we welcome your remarks and your entire statement, of course, will be included in the record.

>> is that beter? >> yes. >> perfect. members of the committee, thank you for the opportunity to discuss department of energy's fy '13 buts request. to promote economic growth and strengthen our security, president obama has called for an all-of-the-above strategy that envelops every source of american energy. the president wants to fuel our economy with domestic energy resources. the department's fy '13 budget request of 2.72 billion is guided by the president's vision, our 2011 strategic plan, our technology review. it supports leadership and clean energy technologies, science and innovation and nuclear security and environmental clean-up. decades ago, the energy department supported energy

department support helped to develop the technologies that have allowed us to tap into america's abundant shale gas resources. today, our investments can help advance technologies that will help unlock the promise of renewable energy. the budget invests approximately $400 million in our programs. it advances offshore wind, carbon captured utilization and stores the smart-grid technologies. and it helps reduce our dependence on foreign oil with biofuels and fuel-efficient vehicle technologies. the budget request invests 770 million in the nuclear energy program to help develop the next generation of nuclear power technologies, including small modular reactors. it also includes funding for the continued nuclear waste r&d, which aligns with the recommendations of a blue ribbon commission on america's nuclear future. as we move to a sustainable energy future, america's fossil

energy resources will continue to play an important role in our energy mix. the budget request includes $12 million as part of a larger r&d initiative by the departments of energy, interior and epa to understand and minimize the potential environmental health and safety impacts of natural gas development through hydraulic fraking. the budget also promoted energy efficiency by saving energy and sponsors r&d and processes to help u.s. manufacturers cut costs. to maximize our energy technology efforts, in areas including batteries, biofuels, electrogrid technologies, recording research and development across our applied research programs. to encourage the manufacturing and employment of clean-energy technologies. the president has called for extending proven tax incentives, including the production tax credit, the 16 l 3 program and the advanced energy manufacturing tax credit.

as industry, congress and the american people make critical energy decisions, it's also important that we adequately fund the energy information administration. competing in all the new energy -- competing in the new energy requires american ingenuity. the budget includes $5 billion for the office of science despite bayic rezerjt. these funds for progress and material science, basic energy science and advanced computing and more. the budget request continues to support research centers which aim to solve specific problems to unlock new clean development. it also supports the five existing energy hubs and proposes a new hub in electricity assistance. through the hubs, we're bringing together our nation's top scientists and engineers to achieve game-changing results. additionally, the budget request includes 350 million for rpe to

support research projects that could fundamentally transform the ways we use and produce energy. rpe invests in high risk, high reward research projects that, if successful, could create the foundation for entirely new industries. in addition to strengthening our economy, the budget request strengthens our security by providing $11.5 billion to the national nuclear security administration. as the united states begins the star treaty, the science, technology and engineering capableties within a security enterprise will become more important to sustaining the u.s. nuclear deterrent. that is why the budget request includes weapons activities and $1.1 billion for the reactor program. initially, it's nsa's work to pro vent nuclear terrorism, which is one of president obama's top priorities. includes 2.5 billion to include arms control activities.

finally, the budget request includes $5.7 billion to continue progress and clean up the nation's cold war nuclear sites. the budget request makes strategic investments to promote our prosperity and security. at the same time, we recognize our country's fiscal challenges and are cutting back where we can. we're also committed to performing our work efficiently and effectively. countries around the world recognize the energy opportunity and are moving aggressively to lead. this is a race we can win, but we must act with fierce urgency. thank you and now, please, to answer your questions. >> thank you, mr. secretary. since i understand do we have votes and the 4:00 time frame, we'll try to stick to the five-minute rule, and that's for the members to be aware of. mr. secretary, our committee has long-supported -- and this has been very bipartisan -- the department's efforts to keep the world's best science and engineering work force here at

home and to keep our position as the world's top innovator. we also need to think one step further by making sure we don't just invent the newest technologies, but that we then manufacture them in the united states. after all, devoting federal funding to support a research team of 10 people at home just so a company can support a thousand manufacturing jobs overseas, truly misses the mark. mr. secretary, beyond the advanced manufacturing program your budget proposes, how are you working? and this is very much in line with the ranking members' comments, to ensure that federally funded research and development conducted at american universities our laboratories and companies, that leads to manufacturing and jobs here in these united states. >> well, mr. chairman, first, i couldn't agree with you more. i think that if we invest in

research in american universities or national labs or in companies that we would like to see not only that research lead research leads to discoveries but that research leads to manufacturing in the united states. because that is where we will see our future prosperity. the department of energy is working in other ways. first, when there are issues having to do with ip generated by the department of energy, we are looking at what means we have to say if you support our star company or research, what are the means we have at our disposal to make sure it doesn't go to the highest bidder, and just wh just what are those means? >> i'll tell you one example. we supported some research by a company that was based in america on manufacturing of improving the manufactureability to drive the cost down.

given what was happening in china, they weren't going to get out of this business and we were taking steps to make sure the i.p. generated by american taxpayers would have control, that, again, it doesn't migrate. >> so it did migrate? what's the reference to china? we know that china is aggressive in this area, but if we made, and you gave this example yourself, if we made this substantial investment, what did we do to protect that property? >> what we do is we look at the legal means we have of making sure -- i've been told by my people, for example, when i learned about this that if this intellectual property is then sold somewhere else, the united states will look at what means we have. >> s ergy has been in business for quite a long time.

you've been the secretary for a couple years. this isn't new news here. we have the excellence represented by a lot of incredible talent at all our national laboratories, and they've been coming up with some pretty ingenius ideas. what's to prevent that in genuity to be sucked out of our labs and find us confronting some challenges based on the cheap labor and manufacturing base in places like india or china? >> well, mr. chairman, what has happened in the last 10, 15 years is a growing realization that we can't take the industrial side of what we do for granted. but also an appreciation of how important it is that we remain

technology leader, and especially high tech manufacturing that rests on the intellectual property that we generate here in the united states. >> you headed up one of those laboratories. >> correct. >> and god bless you for doing that, and the investment we made in the variety of innovators and people under your, you know, area of responsibility, what was to take -- what prevented them from -- that information from migrating abroad? what steps can we legally take if, indeed, it's possible in a global economy with the internet? >> when we support the development of an idea, we can, in principle, look at steps, and we're doing this increasingly. when we have the idea, first we're greasing the interaction between the private sector in the united states and what comes

out of the universities' national laboratories. in addition to that, if you're supporting research, we are in discussions. if you support this research with the u.s. taxpayers' money, how do you begin to say, all right, we don't want to see this again, as i said, go to the highest bidder. these are complex things we're looking at -- >> we shouldn't be looking at it. how are you acting on it? are the horses already out of the barn here? have we come up with a lot of ingenius ideas and innovations and patents and we're -- you know, they're being marketed by our global competitors? >> well, the u.s. government doesn't have complete control over certain things, and so when a company, let's say a star company, hits up an intellectual property and develops it, depending on what -- >> we just don't want them

setting up shop in beijing, especially if we, the taxpayers, have made these types of investments. >> no, it's a set of reasons to encourage american companies to set up manufacturing in the united states. those set of reasons include provisions on whether they can use research supported by the department of energy, but they also, quite frankly, include issues having to do with the climate in the fiscal policies and tax policies. >> we know the climate here, and it's not inuring to our benefit at the moment. let me yield to our ranking member who threw his opening statement to ensure very much my concern here. he can speak from an industrial base that has been stripped of a lot of it. mr. fizklovky.

>> i would associate myself with the chairman and i'm very concerned. i had my american provision for the stimulus bill in 2009 but it applied only to infrastructure investment. and when credits were used for energy programs, much of those facilities and products were important. i'm told we lost one of our production facilities and possibilities for solar. i produce more steel. i don't, my workers do, and my district in any state in the country, and any time i see a 215-ton windmill imported and we don't make it here, i get furious. and i appreciate the last time we had a discussion, you initiated the discussion, and i appreciate that there is a focus now at the department about making sure the intellectual fire power that you have is going to be used with a goal of making sure good products remain

in manufacture. i do appreciate that. the question i have on manufacturing, just to follow up, though, is there is a proposal for a manufacturing demonstration facility within the 2013 budget. again, on first blush, i think it's a great idea. they have reached the energy innovative hubs, the energy research centers, industrial centers, regional application centers, manufacturing energy centers, and the obvious question is do we need that? do we have too many centers? are we dissipating our efforts? >> i don't think we're dissipating our efforts. you named a lot of centers, so let me start with the bioenergy centers. >> i'm just saying, why do we need the manufacturing

demonstration? let me focus on that. >> three minutes left here. >> right. those centers typically are centers in which you work for the american companies and they're almost like incubator companies. i toured one, it was a carbon composite. it was done in conjunction with oak ridge where you have a company and you test new manufacturing methods. so these companies say, well, we don't really know if this is going to work or not, so your habitat solely helps them develop new manufacturing medicine to enable them to produce carbon composite materials that the whole world thinks will be material to the future, but in order to use them, they are american products. these are american companies that use this facility and say, look, we can use this experiment. maybe the companies can't afford some of the stuff, and here's a facility. we'll help you get started.

i think those are examples of the manufacturing facilities, and ours are applicable to help keep manufacturing in the united states. >> two last questions. the second one deals with the issue of management and wood note, that in the 2011 report by the gahoe, they did indicate that the department has made progress relative to the watch list. but also suggested that the doe needs to commit. you still have ussa as well as environment environmental issues. there is a financial report that talked about serious management issues that hamper the work in an nasa laboratory.