we appreciate your being here, of course. and you're here today to present the administration's fiscal year 2013 budget request for your department. your request totals $27.2 billion, a $1.5 billion increase, a $1.5 billion or 5.7% increase from the fiscal year 2012 enacted level. nearly one third goes into one area, energy efficienty. we need to know why this funding is necessary and a prudent use of taxpayer dollars. fossil energy is substantially cut from last year, how does your budget relate to the real world outside of washington

where energy costs are eating up family budgets? on top of that, the public's faith has been shaken by revelations that many programs under your jurisdiction have wasted taxpayers dollars and created markets for various renewables that cannot be sustained about further infusions of federal support. artificial marks plus the reality of wasted dollars undermine the real economy which exists outside of this city. we know all too well the problems the loan guarantee program has faced so far. so this is the public face. we don't know what will be the next shoe to fall. but we have great reason to be concerned. back home, in people are frankly disgusted that some of these investments have been wasted. they seriously question the proper role in government -- the

proper government role and energy markets in the levels of risks that you and those suborder nant to you have taken over the past two years. the allison report on the loan guarantee program noted that the failure rate of the program to date has been less than some had projected. i respect the expertise and judgment of mr. aliceson. they'll now be painted with the same brush. the loss of public confidence is difficult to calculate. are there lessons you learned from this? energy projects fail in the marketplace, we know that. but if political directors were behind any project selection, than our fears would be justified. i put yucca mountain in the same box. the administration has tried to kill this project wasting billions of dollars to accommodate senator reid, mind you, not on any either in whole or in part.

as a current law of the land is for waste disposal at yucca mountain, we need to hear from you if the administration is proposing any legislative changes to authorize their recommendations. you have to make tough decisions to support the nuclear programs at the nnsa, decisions which this country has been demanding for some time. nuclear security programs are the most vital mission within your portfolio. i have significant concerns about the administration's call as a current law of the land is for waste disposal at yucca mountain, we need to hear from you if the administration is proposing any legislative changes to authorize their recommendations. you have to make tough decisions to support the nuclear programs at the nnsa, decisions which this country has been demanding

for some time. nuclear security programs are the most vital mission within your portfolio. i have significant concerns about the administration's call for reduced military spending, we showed last year that our national security can be sustained and even improved with less money. it will be the administration's task to show your fiscal year 2013 request does not sacrifice our strategic security for bug tear savings. and together the administration and congress supported small development of small modular reactors, another positive development as was the recent ground breaking for two nuclear reactors in georgia. mr. secretary, last year, we wrestled with how to put together a budget for your

department that was fair and balanced. i am proud of our product. i want to thank my ranking member once again as a former chairman and ranking member for his many contributions, his sound advice and experience and that very essential institutional memory. our joint task with this budget is no different. funding our most critical needs with an eye towards those that protect our nation and, yes, create private sector jobs, sustainable jobs and opportunities. not jobs which rely on government. i hope you'll be able to explain today how the budget request before us does just that. please be sure that any records are delivered in final form no later than four weeks from the time you receive them. members will have additional questions for the record will have to -- until the close of business tomorrow to provide

them to the sub kmicommittee office. with that, i turn to my ranking member for my comments he may wish to give. >> thank you. i reciprocate at 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 of 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 congratulate you on your wedding anniversary and birthday. you would have been one day before my son's birthday. i congratulate you for that. and do welcome you to the subcommittee for your fourth appearance.

i am pleased that president obama continues to recognize the energy challenges facing this nation. "appreciate the budget's strong statement that the leadership will not seed in clean energy. i certainly believe 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 insuring production in america of these findings. i see little or no merit for break throughs for products that will not ultimately be manufactured domestically.

the government can drive the policies, however, i am, as i have said before, very concerned about making sure that 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'm certainly tired of bringing it up year after year, administration after administration. i believe you're the seventh 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. in 2009, this subcommittee had a hearing on the department's continued appearance on gao's

high risk list, a position it held since 1990. given the challenges in the last year on major construction projects, i fear that not much has changed. i do hope you can provide assurances to day that you are taking significant, strong actions to get the department off the list. president chairman has noticed some areas of concern, particularly the department's decision and actions on yucca mountain. i speak for myself when i indicate that i shared his concerns in that regard. i would also add my very serious reservations about the inclusion of $150 million request for usec within the nonproliferation budget request i hope to hear from you and others in the department why when couples with a transfer authority request for fiscal year 2012 the department believes providing you with 300 million dollars in taxpayer money is a good investment and

not a bailout. 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 this subcommittee 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 of the full committee is recognized. mr. rogers? >> thank you, mr. chairman. thank you and your ranking member 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, belligerent iran threatens to shut down the strait and limit exports. china's rapidly growing economy is driving up oil prices through increases demand. while a state owned enterprises are securing commodity 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 said a very strong message that we must have balance in the expansion of conventional fuels. coal, natural gas, oil, nuclear to provide energy today with investment and to renewable energy to power our future.

and while the president has repeatedly mentioned his support for a similar all of the above energy policy, this budget proposal and the recent denial of the keystone xl pipeline seemed to insinuate that this administration is not serious about responsibility and responsibly diverse fig our energy portfolio. instead, this budget request for doe coupled with the budgets of interior and the epa seem merely a continuance of this administration's political posturing. and diversion of scarce federal dollars to favored sectors 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 captured, 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. as the epa rolls out the regulations and flushes out a proposed green house gas rule, these fog sit r&d funds are vital to developing the new tech nomgs necessary nolgs are necessary to comply 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 dismissal 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 reserve after last year's sale and 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 a strategic arsenal. i would welcome you to expand upon how your request which includes significant reductions ensures our nuclear capabilities are secure, thoroughly modernized an continue to be a sufficient deterrent to our enemies. thank you, mr. chairman. >> thank you, mr. chairman. mr. dicks, 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. and 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 and 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 nuclear weapons activities such as modernization as well as nonproliferation programs. while the increase for weapon activities is less than what was outlined in the budget document of a few years ago, the funding seems adequate to maintain our capability. however, i understand the administration's working on a plan to establish a requirement beyond this proposed budget. i applaud the budget request for the healthy increase and important domestic programs such as energy efficiency. the energy efficiency and

renewable energy program would be increased by more than $520 million over the fy-12 enacted level. this initiative funded under this program are important to establish and 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 cleanup in the hanford 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 hanford cleanup 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 repos torre is still the law of the land. again, want to welcome secretary

chu to the committee. we look forward to your statement. thank you. >> thank you, mr. dicks. mr. secretary, thank you for being with us. we welcome your remarks and your entire statement will be included in the record. >> is that better? >> yes. >> perfect. thank you. chairman and ranking member and members of the committee, thank you for the opportunity to discuss department of energy's fy-13 budget request. to promote economic growth and strengthen our security, president obama called for an all of the above strategy that develops every source of american energy. the president wants to fuel our economy with domestic energy resources while increasing our ability to compete in the clean energy race. the department's fy-13 budget request of $27.2 billion is guide by the president's vision, our 2011 strategic plan and our technology review. it supports leadership in clean

energy technologies, science and innovation and nuclear security and environmental cleanup. decades ago the energy department supported energy department support helped to develop the technology that's allowed to tap into america's abundant shale gas resources. today, our investments can help advance technology that's will unlock the promise of renewable energy and energy efficiency. the budget request invests $4 billion in our energy programs. it advances progress in areas from solar to off shore wind to carbon capture utilization and storage to smart grid technologies. it helps reduce our dependence on imported oil by developing next generation biofuels, advance batteries and fuel efficient technologies. it requests $770 million in the

nuclear energy program to help develop the next generation of nuclear powered technologies including small modular of energy, interior and epa to understand and minimize the potential environmental health and safety impacts of natural gas development through hydraulic frac. the budget also promotes energy efficiency to help americans save money by saving energy. and it sponsors r&d and industrial materials and processes to help u.s. manufacturers cut costs. to maximize our energy technology efforts in areas including batteries, biofuels, electric grid technologies, coordinating research and development and applied research programs. to encourage the manufacturing and deployment of clean energy technologies, the president called for extending proven tax incentives including the production tax credit, the 1603 program, and the advance 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 economy requires us to harness our resources. including american ingenuity. the budget includes $5 billion for the office of science to support basic research that can lead to new discoveries and help solve energy challenges. these funds support progress and material science, basic energy science and advanced computing and more. the budget request continues to support energy frontier research centers which aim to solve specific scientific problems to unlock new clean energy development. it also supports the five existing energy innovation 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 to support research projects that can

fundamentally transform the way 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 they begin the nuclear arms reduction required by the new s.t.a.r.t. treaty, the science, technology and engineering capabilities within the nuclear security enterprise will be more important to sustaining the u.s. nuclear deterrent. that is why the budget request includes $7.6 billion for weapons activities. it also includes $1.1 billion for the naval reactors program. additionally, it supports nnsa's work to prevent nuclear terrorism which is one of president obama's top priorities. includes $2.5 billion to implement key nuclear security, nonproliferation and arms control activities. finally, the budget request

includes $5.7 billion to continue progress in cleaning 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 recognize ing recognizi aggressively to lead. this is a race we can win but we must act with fierce urgency. thank you and now i'll be pleased to answer your questions. >> thank you, mr. chairman. as i understand, we have votes in 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 workforce 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 ten people at home just so a company can support 1,000 manufacturing jobs overseas truly misses the mark. mr. secretary, beyond the advanced manufacturing program your budget proposes, how are you working -- this is very much in line with the ranking member's comments -- to ensure that federally funded research and development conducted at american universities, our laboratories and companies then 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 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 a number of ways. first, when there are issues having to do with ip generated by the department of energy, we're looking at what means we have to say if you support a start-up company or research that you can -- what are the means we have at our disposal to make sure that it doesn't go to the highest bidder? >> what are those means? >> i'll tell you one example. we supported some research done by a company, bp solar which is based in america, manufacturing of improving the manufacturability of silicon to drive the cost down. it was fully a successful

program. but bp solar decided that, given what was happening in china, that they were going to get out of this business. and we were taking steps to make sure that that ip generated by american taxpayers would be -- would have controls that, again, it doesn't migrate. >> so it did migrate? and what -- >> no. >> what's the reference to china? we know 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? intellectual property? >> what we did is look at the legal means we have of making sure. so i've been told by my people, for example, when i learned about this that -- if this intellectual property is, quote, then sold somewhere else, the united states will look at what means we have. but -- >> respectfully, the department of energy has been in business

for quite a long time. you've been the secretary for a couple of years. this isn't new news here. we have excellence represented by a lot of incredible, talented, all our national laboratories. and they've been coming up with some pretty ingenious ideas. what's to prevent those -- that ingenuity and innovation to be sucked out of some of our labs and find ourselves confronting challenges based on the cheap labor and manufacturing base in places like india or china? >> well, mr. chairman, what's 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. 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? >> so -- and god bless you for doing that. and the investments we made in the variety of innovators and people under your, you know, area of responsibility, what was to take -- you know, what prevented them from that information from migrating abroad? >> well, first -- >> what steps do we legally take if indeed it's possible and a global economy? >> well -- when we support the development of an idea, we can, in principle, look at steps, and we're doing this increasingly. when we look at -- we have the ideas first. we are greasing the interaction between the private sector in the united states and what comes

out of universities and national laboratories. in addition to that, you know, if you're supporting research, we're in discussions. if you support the research with the u.s. taxpayer money, how do you begin to say, all right. we don't want to see this then go -- again as i say go, to the highest bidder. these are complex things that we're looking at. >> well, we shouldn't be looking at them. how about -- how are you acting on it? are the horses already out the barn here? i mean, have we come up with a lot of ingenious ideas and innovations and patents and, 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 start-up company picks up an intellectual property and develops it,