because we think those dollars can go very, very far. the fact is almost all of this has been private sector so far. at the end of the day, i believe this is going to mean that we avoid more intergenerational poverty in communities in the united states, so that those kids especially that do get an internet connection, they're more likely to do their homework and apply for college and working age folks who can apply for a job. you're going to improve their upward mobility through this internet connection. >> i appreciate your leadership there. and i appreciate you coming to my community and highlighting that as an important investment for helping children rise out of poverty. i want to turn your attention to your proposal to support the administrative support fee on the fha lenders again. and i'm pleased to see it has a sunset clause this year. i have a few questions about how it's to be implemented. congress has rejected this proposal. so i'm not necessarily pleased to see it back.

but i do have some questions about how you suggest it would be implemented. first of all, it says it would be charged on a prospective basis. your budget also says mortgages insured under that title under the previous fiscal year. is this prospective or rhett owe active? >> it's prospective from when it's enacted. but the fee will be assessed at one point in the year, at the end of the year. i don't think i've seen the text you're looking at. i believe that's what's been described. it's going to be on transactions going forward. it's not going to be going backward. >> it states the fee would be calculated based on mortgages that were insured under this title during the previous fiscal year. >> that's right. if we started it tomorrow, the fee would be assessed after that one year. and it's talking about going backward to capture everything after it was enacted. >> also under your proposal it says small lenders i think would

get hit with a pretty hefty fee because of the complexity of the formula. will you base the fees on prior years of business? wouldn't it be better to assess the fee on the mortgage at the time it's made? lastly, your request is for $30 million. you also say the fee could be as much as four basis points. fha is projected to be a quarter million dollars over the three-year life of this provision. what are you going to do with this money, is it the right number? which is it? >> we've actual said between 2 and 4 basis points now, as a recognition of this figure that you cited. and so we're also aware of the usda's approach. it's a little bit of a different approach. and we did give thought to that. we actually believe that this -- and one of the reasons we pursued this is because we

thought it might be more manageable to smaller lenders. as for what it would fund, this $30 million would fund investment in our i.t. and ensuring that our risk management is as strong as possible. so, you know, we're confident that this will help us be a stronger organization at fha, that it would directly relate to the ability to work with lenders effectively and help them understand how they stand in comparison to their peers. and this is i think the third year that we're asking for this. but during this time, we very much have reached out to the industry and worked with them in terms of taking suggestions. that's why you see the change, that it's prospective, that it's limited to three years, that it has a sliding scale of what it could be in terms of the basis points. all of that is in response to

feedback that we've gotten. >> thank you, mr. secretary. >> let me ask you about -- first of all, welcome, mr. secretary, good seeing you again. let me ask you about colonias, those are the third world condition places that we have along the border. no water, no sewage. housing is something that's needed. sometimes they don't even have electricity. it's in the united states. we added some language through the help of the chairman and the ranking member, to make sure that the colonias were eligible for the home ownership opportunity program. could you tell us what your plan is for the colonias, number one? then after that, if you could talk about your upward mobility

project also. i think that's the cdgb money administered by hud and hss, and see what your work is, what your vision is on that also. so it's the upward mobility and then colonias. >> okay. thank you, representative. good to see a fellow texan. >> yes, sir. >> we have in this budget, we're making a request that we made last year. we really do believe that this would help serve our colonias better. as you know, there are a couple of thousand of them over four states, new mexico, texas, arizona, and california. current there's a 10% cgdb set-aside in those four states. what we're asking for in the fiscal year 2017 budget is that we take it up to 15% but that it

still be at the discretion of those states. this year it's only given the torsi authorization, let's say the states of new mexico, arizona, california, if they so desire, they can go up to that. >> that's right. right now, three of the states, only california. the rest is not. the rest of them are already maxed out at 10%. this would give them authority to go up to is15%. as you mentioned, these are the neediest communities by far in these states, with conditions that require a tremendous amount of attention in terms of infrastructure, in terms of housing, and so forth. and we believe that this is a modest but important measure that would help improve the quality of life there. as to your other question, this is the second year we're proposing an upward mobility

initiative. so the idea behind this is to give our cgdb grantees and home grantees as much upward flexibility as possible. it would allow up to ten communities, states or localities, to combine four sources of funding. cdbg and home from hud, as well as social service block grants and community service block grants from hhs, as a pilot project going forward, allow them to combine those funds for the allowable uses, and basically be able to get a bigger bang for the buck. on top of that, we're requesting $300 million in mandatory appropriation for investments in communities that would allow that flexibility. so further proactive investments along those lines. and i believe that this is one way that we're trying to fill

this gap that was spoken of in terms of the cbdg, that it would be an excellent way to see what some of these communities can do, when we further give them flexibility and have a good impact. >> all right. thank you very much. >> thank you. mr. young, you're recognized, sir. >> thank you, mr. chairman. welcome, secretary. i want to talk about a but des moines register" op ed that was in the paper last summer. there were a few issues you've probably heard about regarding waste and fraud and abuse. it published a story about a $5 million government loan in return for $40,000 in kickbacks. he was never disciplined about allowed to retire. another hud employee was kept on the payroll for 19 months after

charges of threatening to kill and accessing hud computers to obtain information on his victims. we share the same goal of ensuring that funding for hud is spent on the most vulnerable in our communities, who are in really difficult situations, and as the editorial states, and we'll get you a copy of this, quote, every tax dollar lost to waste, fraud, abuse, and incompetence, is a dollar not spent providing shelter for the poor and those who need it. can you comment on what steps hud is taking to address these types of serious personnel problems, prevent them in the future, and increase accountantibility for taxpayers? in other words, how does this happen and how do we get to keeping our eye on this and making sure this doesn't happen again? >> i appreciate the opportunity to address that. i had not seen that editorial but look forward to taking a look at it. number one, we're second a

culture of accountability at hud. one of the first things that i did within i believe it was the first month that i was there, it may have been the first a couple of weeks, was to send out a joint letter with the inspector general that went out to all employees, encouraging them to collaborate with the inspector general on any types of reviews or investigations that are happening, and make sure that we have a positive working relationship so that we can root out more issues like this. secondly, we have increased our training for employees, including ethics training, so that employees understand the standard that we expect them to hold themselves to and that we will hold them to. third, as i mentioned earlier in my testimony, we are in step with our inspector general on the overwhelming majority of recommendations that he has made and we're taking implementation of those recommendations

seriously. fourth, we're trying to improve our hiring process so that we get the best and brightest from the beginning. i would say these instances you point out are an aberration. the vast majority of hud employees are honest, hard working people. but we also believe that we want to always improve as an organization. one of the things we're trying to do is improve hiring. we recently partnered, for instance, with toyota who came in and worked with our hiring folks to improve the hiring plan process. and we continue to work through the hiring process in general so that we can get the best folks available out there. and we're working with our employees to gauge them and provide an organization that listens to them i think more effectively, so that they feel more engaged, and the good ones are likely to stay on longer because of that. our employee viewpoint survey

scores went up significantly this year. hud was the most improved mid-size agency. we're doing all of those things and others to try and create a hud that is stronger, that is more responsive, and is more likely to avoid some of the individual instances that you pointed out. >> i certainly appreciate that. and i don't mean to infer that -- we only hear the bad things that happen out there on the news. so many positive things are happening as well with your employees. thank you for instituting the ethics training and the personnel programs. finally, i want to comment on the veterans affairs supportive housing. you mentioned that early on in your testimony, about a 36% decline in veterans homelessness. that's great. can you talk about how you come up with that data and track that issue? and then i notice in your budget request, you're really asking only for $7 million for vash,

and that's for tribal justification only. my concern with that is, is that an inference that we don't have a veterans homelessness problem? >> let me answer that part first. that's an important question, of course. it is not. number one, other resources that we're dedicating serve veterans as well. so for instance, when we request, as we are in this budget, additional resources for housing choice vouchers for permanent supportive housing, for rapid rehousing, all of those impact veterans. the lack of a request this year for vash is a recognition that we believe with regard to vash vouchers, that we have the resources we need to address the challenge of veteran homelessness there, as vash vouchers can. we are proud to begin tribal hud vash. we awarded the first receivers allocations in december of 2015.

we see a continuing need there. and let me just again thank the committee on both sides of the aisle, because i tell folks in public all the time that this really is an instance where i think things wording out the way that they should on behalf of veterans. the resources have been appropriated. hud and the va have been working with local communities to get these vouchers on the street. and i have to say, the teams that work on this are probably the most active and passionate teams on either -- in either agency, for obvious reasons. >> mr. secretary, on that note, i'm going to have to -- we'll look forward to continue to drive down that number. >> we'll have further conversations. thank you, mr. chairman. >> thank you, mr. young. mr. secretary, the fifo issue is a major time. we kind of talked about this before. it makes it impossible for you

to deliver audible financials. even worse, it's causing hud to violent federal law. can i have a firm commitment from you that this accounting problem will be corrected in time for your 2016 audit? >> i can tell you that we are working with the gao on this issue right now. as well as with the ig. you're right, it is an accounting issue. we don't believe we're violating the ada on it. but i can pledge to you that we will work diligently with the gao and the ig on this to resolve it. >> and again, mr. secretary, you know, i want to work with you. this is a hugely important issue. so, you know, let's just make sure that we focus on that. i'm obviously willing to work with you to be helpful. >> will do. >> to be helpful. you are requesting -- let me go to the administrative fee area. you're requesting $2.1 billion

for administrative fees. a $427 million increase, which is a 26% increase above last year. now, we all understand the importance of supporting public housing authorities so they can efficiently run their programs. but does it really make sense to ask for such a -- i mean, it's huge increase to the administrative account. >> this is an issue that i believe goes to how we can ensure that we have a housing choice voucher program that is more efficient, that is stronger, serves all of those voucher holders better. the fact is that over the last several years we've only dedicated between let's say 70 and 80% of the admin fee that

ought to have been dedicated, appropriated to housing authorities what changed is that we undertook an admin fee study to understand what was the appropriate level that we ought to be investing for the administration of these vouchers. and based on that, we have made this request, to increase the admin fee. this is important for housing authorities because over the years, they've been asked to do more and more with less and less. we believe this is the right level of funding to ensure this is a well-run program. it's a very big program, and an important one, and we wanted to make sure they have the resources to get it right, to avoid problems in the future. >> hud has had a fair amount of success in leasing up units. phas have been able to leaguse

nearly all of the available units in the purchavoucher prog the past two years. i don't want to punish you for your success, but the question -- it begs the question, if you're meeting your leasing milestones, why the need for more administrative overhead? >> i would just say the resources out there for administration are stretched very thin with housing authorities. we've done a dependable job in many instances of trying to stretch those resources as far as possible. he also understand this kind of expense is probably not the first thing that folks think about. but it is tremendously important that we adequately resource these housing authorities so that they can continue to do a good job and get even better in the informatiadministration of program. >> my understanding is you have not yet implemented your new fee structure. wouldn't it make sense to hold the line on spending for this

account until you've actually finalized the new administrative fee formula? >> we believe we do know the best approach based on the administrative fee study. so that gives us confidence that we understand the level of the propose racial, where this ought to be. that's reflected in the request. >> finally, what are some efficiencies that the phas, i don't know why that's hard for me to say, could implement so that they can keep their overhead expenses down? >> you know, there are a number of them, actually, across the board. some of them are addressed in chairman luke meyer's housing opportunity through modernization 3700 legislation. basically they center around different things. for instance, giving flexibility with regard to inspections and income verification, especially for smaller housing authorities, so that they're not as

administratively burdened. they can do things other than have to routinely check on the same information year after year, that oftentimes for many of the residents has stayed the same. if you have, for instance, a senior resident who is on fixed income, and that's demonstrated on record to the housing authority, there's really not a reason that they ought to be verified every single year. that can go to once every two or three years. those are the types of things that we're working, we want to work with housing authorities on in order to reduce their administrative burden. >> thank you very much. mr. secretary, the ranking number. >> mr. bryce, you're recognized, sir. >> thank you, mr. chairman. mr. secretary, before moving on to other questions, i want to briefly return to the initial question about choice neighborhoods, because it was a rather complicated question, and certain aspects of it didn't get answered. you might want to respond for the record on some of this. but i'm eager to get on the

record, one way or another, the answer to the question i asked about the level of demand here, the kind of ratio of meritorious proposals that -- implementation grants we're talking about, the ratio of meritorious proposals to what you're able to fund given your appropriation in recent years. >> yes. so most recently there were 33 implementation applicants for five implementation grants that were awarded. >> what time period does that cover? >> well, the grants that were last awarded a few months ago. so this would cover the last fiscal year's grants, which was i believe fiscal year 2014-2015, just a couple of months ago.

also you asked about planning grants. we awarded seven planning grants. we had 51 applicants for those grants. >> all right. so that's fairly typical of recent cycles, i assume, that ratio. >> it is. these are -- choice neighborhoods is very popular out there. there is a lot more need than we're able to dedicate resources too. and that's one of the reasons that we're requesting a significant increase this year from the $125 million that was appropriated last year to $200 million. >> let me just quickly register a question about this new category of grants that you're proposing, the so-called planning and action grants. that aims at smaller projects. i wonder what kind of projects you're looking at there. i think i'll ask you to do this for the record, because in

asking the question i'm somewhat concerned about proliferating too much small and modestly sized grants in a way that begins to eat away at the limited funding we have for implementation grants. after all, the implementation grants, the larger grants, the more comprehensive projects, are what choice neighborhoods is all about. so i'm going to ask you to elaborate for the record how these smaller grants, especially this new category, what kind of volume you're anticipating there and what the budget impact would be. >> we would be glad to. as you know, this is the first time -- this is a new category and we are excited about them. we'll be glad to elaborate on the record, why that is and how many we anticipate making and so forth. >> yes. and of course the impact on the main item, which is the implementation grants. housing for the disabled and elderly. i raised this in my opening statement. you know, mr. secretary, many states are struggling to comply

with the olmsted decision in terms of housing for the disabled. we need to do a lot more to integrate people with disabilities into their communities. this mismatch is widespread between the housing available, the housing required to meet this goal. there's also a dearth of housing for the elderly, the kind of need that the 202 program has historically addressed. there's a shortage of available unit, ten people waiting often for each unit. yet this budget request seeks no funding for people with disabilities or the elderly, 202, 811. in years past the request has included new resources. i wonder why the request is not more ambitious. and then, just on disabled housing in particular, how can had you had leverage other programs like home, programs, to create units to further homestead to compliance?

or the mainstream voucher program in tennent-based section 8. are there other ways to get at this issue besides the conventional 811 program? >> there are other ways. we are making a significant request of housing choice vouchers. and for instance, in the 12-month period from january 2015 to january 2016, in our hcv program, 22% of new admissions to the hcvp program were nonelderly disabled families with no children. 7% were nonelderly disabled families with children. and another 7% were elderly disabled families with no children. so in total, 36% of hcv admissions were disabled

families. and i point that out just to say that we were serving individuals who are disabled in several different ways. you're right, 811 and 202 have not been funded for new units. we did have a request last year, as you probably remember, for 700 new units of 811. each year as we make our budget requests we do have to make these challenging choices. it is something that is a priority and that we believe that we can make progress on in these different ways. with regard to elderly housing, i think it's the sail there. we're looking forward to utilizing that fiscal year 2014 appropriation to get a better understanding from our research project on 202 housing of the link between housing and health and how we can create savings

and ensure that communities are doing everything they can to provide investment in housing and in support of services up front, and save money for medicare and medicaid later. hud is working with hhs to provide technical assistance to states that are looking for ways to utilize medicaid dollars to provide to elderly and disabled residents. so there are different ways we're approaching this challenge. of course, you know, i don't disagree with you that this is very important and that new units have not been funded. >> thank you, mr. secretary. >> we'll do what we can. >> thank you, sir. mr. joyce. >> thank you, mr. chairman. mr. secretary, back to this ffh example you gave to me prior to our getting cut off, you mentioned that there were some

prior research that went into it. could you give the subcommittee an exact example of where it is you're using the research and data you gleaned from your backgrounds into making -- acting in concert with the community and the outcome of the fahh? >> i'll be glad to follow up with you. i don't have those in front of me. i know we did engage in that. i'm very proud of the team from our policy and research group, as well as fair housing and cpd. because this had come up in the 1990s and it had not gotten past the finish line, it was not successful, from the very beginning they were attentive to local communities in trying to understand how we could make this feasible to them and put them in the driver's seat. we'll be glad to share with you on the record these different instances of plans that were put

together in communities. >> thank you. and would you consider, are you familiar with the chicago, dubuque, iowa information you were working on? would you consider from chicago to across the border to dubuque, iowa, to be successful? >> i'm not familiar with that particular example. i would love to learn more about it. to us, the point is that there are a couple of things that we know. number one, we know that these decisions, whether they're land use decisions or other policy decisions, are best made at the local level. and so we want to respect that. secondly, we also know that communities and we share an interest in them making the best use of federal taxpayer dollars. and then third, we do see affh as part of the unfinished business of the fair housing act. i want to be straightforward

with you. there is a component of ensuring that they live up to the obligation of the fair housing act. but we don't want to do it in a heavy-handed way. we want to collaborate with them and let them make the decisions. in those cases where we have flagrant violations of the fair housing act, communities that are just completely unwilling to work on these things, then there will be enforcement. but i see that as a last resort, not as a first way to come through the door. >> sure. >> and so we have -- our folks have given a tremendous amount of thought to how you could put local communities in the driver's seat so they can make smart decisions about what ought to be invested and how in their community. >> i'm really interested in understanding how moving people across state lines is somehow bettering the communities. the other problem we have, obviously, is foreclosures, and vacant properties which we know

are areas that become drug houses, centers for drug activity in neighborhoods. these abandoned properties are a huge problem, obviously, in many communities. do you have a plan to complement the agency' initiatives and refurbish these communities? >> this is a challenge in a lot of communities, especially coming out of the housing crisis, as we have. as you remember, we had nsp funding a few years ago that was very helpful to communities in this regard. of course that is not a stream of revenue anymore, investment. but we encourage communities to use some traditional funding like cdbg, for instance, that has the flexibility so they can address the issues of foreclosed-upon properties. in fha we work in several different ways to help folks avoid foreseeable.

-- foreclosure. we've tried to get those resources into the hands of communities to avoid foreclosures. they're several steps we're taking. in addition to that, let me just say we're very proud of the housing counseling that hud has done, that hud has funded. we're requesting $47 billion, which is what was appropriated last year. part of that is foreclosure counseling, to help avoid foreclosures. we're trying to address this in multiple ways. >> and i appreciate that. we're looking at those houses that, will gone. and for lack of a better term, they're bad bones. they need to be taken down. that's why hhs1'í and the hamp money that we got together. i was wondering if you're working in concert with secretary lu to get that money in communities that need it the

most. >> to the extent that these communities request some sort of technical assistance, our folks of course are in communication with treasury. there are individuals communities that we've been working on together, sure. >> that would be gate. thank you very much. >> thank you, mr. chairman. mr. secretary, let me ask you to look at the hud vash, the federal rental assistance, or the va. in laredo, laredo only receives about 15 of those vouchers. i know that there is a point in time survey that's done. but there's something happening where we still have a lot of veterans still homeless in laredo. i understand the survey and what they use that for. to the point where, you know, even some of the veterans that

have relatives in nova laredo so they can forward being ovafford there. i think it's a shame to go over the river to mexico to get housing. could i ask your folks to work with us a little closely on this particular issue? i would be happy to show you this big story that got written locally, i think it's a two- or three-part series about veterans. and it's just one of those issues. i know there's never enough money, i understand that. but i would ask you all to, if you can assign one of your -- robbie greenblum or one of the folks from san antonio to work with me. i would ask you to just work with us on this, because -- i know the city manager is here in the audience with us. and it's an issue that we've been trying to figure out and we can't seem to get over this

survey point in time. so i would ask you to just work -- i know you're very passionate about this issue and want to work with your office. >> absolutely. we are very proud because of everyone working together that we've seen a 36% reduction in the veteran homelessness over the last few years. at the same time we know that, number one, we can't stop pushing and driving that number down. secondly, we need to reach all communities. so for instance, from the fiscal year 2016 funding that we received, we're creating another category for smaller communities to get hud vash, to more pro actively work to get hud vash into smaller communities. we think that will help fill the gap for smaller communities. i had the opportunity to meet with one of your councilmembers. this was one of the issues they took up. we look forward to following up.

>> thank you, mr. secretary. yes, we do want to follow up. it's an ongoing -- you know, it's just shameful that they have to go to another country to get housing on that. so i look forward to working with you. i also want to extend the invitation again to -- i think we had talked about you going down to laredo. we'll find a time that works and have you go down to laredo. the city of laredo would be willing to host you. i know we the chairman down there and he saw the transportation needs we have, the largest inland port in the united states is in laredo. we would love to host you down there sometime. as you know, you were the senior international a couple of years ago, which is a big celebration where they recognize somebody from the u.s. and somebody from mexico.

the secretary was the senior international. thank you for your work. >> no doubt laredo is frankly a very special place. it really is. a very special place. mr. secretary, let me go to one more area. again, i thank you for being here and for being forthcoming. i want to talk briefly about moving to work. for the fy 2016 bill, we gave authority to establish 100 more moving to work agencies. and our foremost goal, though, is to see what works well, and then expand those areas across hud programs. however, gao and hud's ig have noted repeatedly that hud does not have performance measures in place to gave the effectiveness of mtw agencies.

worse, we have seen some agencies use mtw flexibilities and serving people in need. what is your time frame for those mtws and what criteria for selecting the participants will be used? >> it's a great question. number one, the 39 mtw agencies that we have now have done a number of creative things over the years that i believe demonstrate the value of mtw. you're correct that ensuring that we have better ways to measure the outcomes that have been achieved because of mtw ought to be a priority and it is a priority, because of the new authority that we have, we'll increase the number of mtw agencies by a hundred. that gives us the opportunity in

this new contract the chance to include more performance metrics. and i believe be able to measure the value of mtw in unprecedented ways. as to your question of how we're going to implement this, the legislation requires us to establish an advisory committee. and so we have begun work, going forward, to get an advisory committee together. we expect over the next a couple of months to do that, to make recommendations on what this expansion of mtw should look like. the legislation gave us a number of years to accomplish. this will phase in. we don't anticipate that it will happen all at once. it will be in manageable phases. i can't say right now whether that will be ten or 15 in the first round. the advisory committee will help

us determine that. to your point of being able to measure the outcomes better, i am completely in agreement with you that this new approach ought to include more of that, because right now, frankly, i do think that there's a dearth of that information. >> do you anticipate that this expansion will have an actual cost, the cost in terms of hud's staff time to review, to reflect, to monitor these new agencies, mtw agencies? >> there will be a cost associated with it. in future budget requests, we believe that it would be appropriate to provide the salary and expense increases necessary in our public and indian housing program area, to keep up with the additional monitoring and collaboration with these mtw agencies. right now i can't tell you with

specificity how many people we're having to deal with this issue for affh as we ramp up in the fair housing office. for instance, our affh engagement. i do think there are going to be some costs associated with it. no numbers yet. a >> and again, you touched about the issue of, you know, measuring performance. and, you know, do you -- any idea how you intend to measure performance so that the best practices can be documented and hopefully repeated elsewhere? >> yes, to my mind, and certainly the folks who are working on this in our public and indian housing, the flexibility we're allowing these mtw agencies is meant to have better outcomes in terms of self

sufficiency, for instance, of the residents of public housing. so the kinds of performance metrics or outcomes that i would like to see measured are, compare a non-mtw agency to an mtw agency and tell me what is the average length of time that a public housing resident lives in public housing, how long is a family there in one versus the other, how have you been able to use your flexibility to create suv-sufficiency faster. you know, let's look at the educational achievement of residents in mtw agencies versus non-mtw agencies or income levels in one versus the other. these bottom line outcome assessments that will show us whether -- you know, in a more specific way, i think, whether the flexibility that we've allowed is paying off in the life outcomes of the people that we're serving. to me, that's what's most

important. >> thank you, mr. secretary. i appreciate that. mr. price. >> thank you, mr. chairman. let me move to public housing and in particular the repairing and maintaining our public housing stock. congress bears primary responsibility for that, for chronically underfunding this account. i start out by saying that. however, i'm concerned that hud didn't ask for any increase in the public housing capital fund in the fiscal '17 request. i wonder why that's so, what it indicates. i wonder if you could discuss the rationale behind that decision to provide essentially flat funding when it's clear we're falling farther and farther and farther behind. and then secondly, i wonder if

you could reflect on the impetus that lies behind moving to work, for example, which you've just been discussing, or the rental assistance demonstration program, the r.a.d. program, or for that matter choice neighborhoods and other demonstrations programs. to what extent are these programs drawing on discontent or the shortfall of adequate funding for the public housing capital fund? are we seeing here ways of compensating for that? clearly we have a problem with that essential capital fund appropriation. so i guess i'm asking you very broadly what are the strategies for dealing with it and to what extent are they or are they not reflected in the budget before

us. >> you're right, representative price, that over the years, the funding has not been there to keep up with the public housing capital needs. and we do have over a $25 billion backlog in public housing capital needs. so what you've seen is that we've had to become creative and the rental assistance demonstration project, r.a.d., represents one way we've done that, with the private sector analysis that we got about a year and a half ago showed that of the first 57 deals of r.a.d., for every one dollar, federal dollar that was invested there, there were 19 non-federal dollars that it leveraged. so r.a.d. has been successful in leveraging private dollars and some philanthropic dollars, i believe. with regard to the capital

housing needs that we have, you're correct that this request this year i believe is a $35 million reduction from what was enacted last year. and in part that's because we do see more activity on the r.a.d. side. we've converted 30,000 units. we already have the applications for 185,000. we have a waiting list of 11,000 units now. we're asking congress to remove the cap because we believe that the demand is there and that there are a lot of units that can be renovated. if we would lift that cap, we can do some of this work successfully. but we're also requesting some flexibility so that public housing authorities can use 30% of their operating and capital money interchangeably, so that if there are some dire capital

needs that they feel have to be addressed now, that they do have some flexibility to do that. this is of course the kind of flexibility that exists for mtw agencies. and in the past we've made a broader request for flexibility. but we feel that the 30% flexibility request makes dvb.w, and that it could be used to for some of these needs. >> thank you. that's helpful. i just observe, though, that the answer you gave regarding the public housing capital fund, just like the answer you gave earlier on section 202 rental housing for the elderly, and on section 811 housing for the disabled, all of that just underscores the limitations we're operating under. and this is even with a budget agreement. this is getting off of this and he train statisequestration lev

adequately in terms of the needs we're addressing. i hope for a good allocation this year as we write the bills. i of course hope and expect that we will have our usually collaborative process across party lines. but i just am stunned by the magnitude of this task, and just how much we're having to devote of this budget to simply staying in place. so we have a lot of work to do. we of course look forward to you as a full partner in this effort. >> thank you, mr. price. further questions? mr. secretary, this has been very helpful. let me once again thank you and also your staff for your participating and your participation today and for answering our questions. the committee staff will be in contact with your budget office

regarding questions for the record. and we'll have a number of questions to submit, and i would imagine i'll have some and i imagine that other members will have questions as well. if you would please work with omb to return the information for the record to the subcommittee within 30 days from friday, we would then be able to publish the transcripts of today's hearing and make informed decisions when crafting the fiscal year 2017 bill. and again, we look forward to working with you. we appreciated you being totally accessible. and the subcommittee looks forward to working with you as we put this bill together for this year. tomorrow we will see the administrator of the federal aviation administration. i look forward to that. mr. price, any final comments? with that, mr. secretary, again, our secretary, our gratitude and with that, we will

now close this hearing. thank you. >> thank you so much.

[ background chatter ] [ background chatter ]

[ background chatter ]

>> march is women's history month and we're honoring it with a special discussion with richard norton smith and susan

swane, to discuss their book first ladies. focusing on the unique partnerships and ambitions of the first ladies. that's saturday at 7:00 p.m. eastern on c-span. >> this weekend the c-span city's tour hosted by our time warner cable partners, takes you to anaheim, california. on book tv. >> the idea actually came from my editor at oc weekly at the time, i wasn't offended by the idea of asking mexicans, i didn't want to do it at first, because i didn't think anyone would care. in journalism, you want stories people care about. i thought the idea, who's going to want to read an advice column about mexicans. just seemed silly. but we needed to fill a space

and he said it's only going to be one time, a satirical column, people went nuts for it. some people loved it, some people hated it, but more importantly, people were caring. and where it was supposed to be a joke, i said, ask me, i'm the mexican. people called me and started sending me questions like crazy immediately. >> and on american history tv -- >> john froling and his partner go up to san francisco, which is where a lot of the german immigrants are located and are actually able to -- i find it very shocking, but are able to convince 50 people of whom nobody was a farmer, and only one person had any background in wine-making, to give up their businesses and come to anaheim. so their first action after they form what's known as the los

angeles vineyard society was to hire george hanson to be their superintendent. and his job was to bring the irrigation here, lay out the town site, and plant actually hundreds of thousands of grapevines before the families would actually even come down here. >> watch the c-span cities tour, saturday at noon eastern on c-span 2's book tv. sunday afternoon at 2:00 on c-span3. the c-span cities tour, working with our capable affiliates and visiting cities across the country. earlier today, energy secretary moniz was on capitol hill. to brief lawmakers on his 2017 budget request that calls for $32.5 billion. this is just over two hours and 15 minutes.

>> dwrge, this committee will

come to order. this is the second of our three budget hearings before our committee. our final hearing on budget will examine the forest service budget scheduled for next tuesday. secretary, it's good to have you before the committee. i want to again thank you for traveling to alaska and to oscarville with myself and ranking member and four other members of the committee. it was a great field hearing, but we really appreciate that you took the time to see the need, the opportunity, and also the progress that we're making on energy innovation in rural alaska. the buzz is still going around the tundra there about the visit that was had. and the interest that was given to the region. so, we appreciate what you have done there. we also appreciate the effort that you make to work with us, looking forward to your testimony today. no surprise to you, but i have

been critical of much of the president's overall budget request, including his proposed $10.25 barrel tax for oil that would hurt families, businesses and our broader economy. the president's budget features tax hikes, increases and other policies that)v will only maker primary energy industries, oil, natural gas and coal, less productive. despite totaling $4.1 trillion, the president's budget also cuts the base funding for the low-income home energy assistance program, which helps thousands of alaskan families stay warm in the cold months. these are a few of my general criticisms of the president's budget request. the reason we have hearings like this is so we can take a closer look, see if there are things we might be able to work together on within specific areas. to your credit, secretary moniz, the budget for the department of energy has plenty that i think fits into that category.

so i thank you for that. but i also think that it is a tribute to your leadership and to your efforts to improve your department's performance in a cooperative as well as a bipartisan manner. as you know, sometimes we don't always agree but you have always given me the courtesy of an outreach and conversation, and i appreciate that. as i mentioned, this is not the budget for the department of energy that i would write. it only partially adheres to the balanced energy policy that most of us agree on with significant increases for efficiency and -- vehicle and renewable technologies, but a cut proposed for fossil r & d, and the work that we should be doing to help methane hydrates. i have some questions about spending that the budget proposes. but here's the good news. even in the instances where, again, we may initially disagree, i know that you're going to work with us to find some common ground. when it comes to the importance of innovation in america's future, particularly america's

energy future, i know you and i are on the same page even if our numbers don't necessarily align. i think the ultimate goal is there. thank you. appreciate the opportunity to work with you and we look forward to your presentation. with that, senator campo? >> thank you, madame chair. thank you to the secretary for being here at today's hearing. i am very pleased to see that this year's 2017 budget request continues to push for investments necessary for building the future of our economy through science and clean energy. the budget requests greater funding and 10% increase for doe in fiscal year 2017 is

appreciated. total budget request is $2.9 billion more than enacted in 2016. successful investments that doe under your leadership. we thank you for that. in particular investments in science and energy have grown 15% over the last five years, acknowledging the crucial role that innovation plays in enhancing our energy security, mitigating and adapting to climate change, boosting manufacturing competitiveness and creating jobs. this budget takes a big step forward in fulfilling the u.s. pledge to double federal clean energy research and development over investment over the next five years as part of mission innovation. in november 2015, president obama and other global leaders announced the creation emission innovation. this initiative is made up of 20 countries that have committed to doubling the research and development funding over five years in an effort to spur clean energy innovation. budget request details of the proposal would increase federal investment from $6.4 billion in fiscal year 2016 to $12 billion

in fiscal year 2021. it makes the administration's commitment clear, providing $7.7 billion for fiscal year '17 and funding of clean energy r & d across 12 agencies is roughly 20% above fiscal year 2016. but what is also key to this effort and success is partnerships with the private sector. at the same time the administration announced mission innovation, private sector initiative of innovation was also announced and the breakthrough energy coalition led by bill gates is made up of 29 investors from ten countries that have committed to significant increases in the amounts of capital in what will be focused on early stage innovation, clean energy technologies. these partnerships will help entrepreneurs translate investments in fundamental science, applied research and development ranging from everything in smart buildings to energy storage, to grid modernization, to the new kinds of products and services that

help boost america's competitiveness. along these lines i want to mention proposal including the doe budget to establish clean innovation partnerships around the country. it's a new proposal, secretary moniz, and we have discussed this, you and i, along with our colleagues about the potential advantages of this. the goal of these partnerships is to accelerate the pace of clean energy innovation and address clean energy challenges, specifically to energy resource, customer needs, innovation capabilities and regions around the country. just to be clear, this isn't about new physical infrastructure. this is about partnerships. this is about regional initiatives that help us move faster. i would like to say it's almost as if it is distributed innovation. we have expertise in universities and research centers across the nation. i know for us in the pacific northwest, the fact that the faa built a center of excellence on composite manufacturing, took

advantage of the industry that was there in aerospace, the research that was done at the university of washington and the research capabilities of the federal government allowed us to move faster in something that was game changing aerospace manufacturing to building lighter and more fuel-efficient planes. that's the kind of innovation we would like to see in other key sectors. i just want to say a few words about the doe science budget as the office was sciences is the single largest sponsor of basic research and the physical sciences supporting over 24,000 investigators at over 300 u.s. academic and doe laboratories, it also plays an important, sometimes under-appreciated role in climate science as it relates to developing expertise, computing capabilities and data necessary to understand the carbon cycle and the fiscal year budget request of $5.67 billion, which is 325 above the 2016

level. this investment, i believe, allows doe to do the basic research in physical science, operate cutting edge user abilities while advancing technology and innovation. this funding supports the energy frontier centers, the bioenergy research centers and advanced computing research. i also am pleased to see the request for energy efficiency renewable increase by 40%. building efficiency for fiscal year 2017, having a bump is particularly important. because they're really emphasizing new technologies, patrol technologies and everything that will make the building's system itself smarter. why is this so important? we spent $400 billion each year to power our homes and commercial buildings in the united states. that is more than 40% of our nation's total energy bill and it basically comprises 40% of

the nation's carbon pollution. so getting smarter about the intelligence of the physical structures that are consuming energy is a very good investment for our nation. leveraging the new smart buildings technology could help us cut energy use in buildings by another 20% while the global markets for these technologies is extremely lucrative opportunity for the united states, somewhere between $7 and $17 billion. so the united states being a leader here could help pay off significantly. there is an area of the budget i am concerned about. and the president's proposal on the hanford budget. i was relieved to see that the proposed budget will allow for continued progress on the construction of waste treatment immobilization plant and continue the stewardship of the tank farms. but my colleagues continue to have this focus of what is a national priority.

the hanford clean-up project is still one of the largest clean-up projects in the entire world. i know a lot of my colleagues are familiar with the budget as it relates to clean-up projects around the country, and we've had some success in areas, but nothing compares to the task at hand at hanford. it is estimated to cost us, the u.s. government, another $107 billion to finish this clean-up. so this is a massive task and undertaking, so proper funding also enables that we will continue to make sure that worker safety is a top priority. these people are doing an incredible job, doing the clean-up, which is a monumental task, but also doing it in a safe and secure manner. i know secretary muniz, you know the complex challenges of

cleaning up at hanford and how much is left yet to tackle. i'm concerned about the implications of the current budget on the clean-up effort. the department of energy richland office has done an incredible job of decontaminating and demolishing and removing waste. and basically remediating the river corridor. so, to date, 324 of the 332 buildings have been decontaminated and demolished and 115 million tons of hazardous waste has been moved away from the colombia river. i invite any of my colleagues to visit both the history of our nation as well as the clean-up effort. we welcome them. 574 of the 580 waste sites along the river have been remediated and all the regulatory milestones have been completed on time and ahead of schedule. but i'm afraid that the rich land office has been somewhat of a victim of its own success.

especially judging from the $190 million proposed cut to fy 2017. the tricities community and i visit this as a significant risk to the public. the funding shortfall endangers the progress made and also risks ground water contamination. the completion of 618 waste site remediation of building 324, which is highly contaminated, and only a few, just a few yards away from the columbia river. these projects are important. and technically demanding. so the notion that we're dealing with ground water remediation, so close to the columbia river, for the focus of the tricities, we want to do more, and not worry about cutback from success. technically challenging clean-up

work. we know how important it is for to us continue to move forward. so i look forward to having that discussion with you during the q & a and just want to also say that i'm concerned with the proposed $130 million overall cut to some of the non-proliferation programs. your work on the iran nuclear agreement was a great milestone, but it's clear the department of energy will continue to play a leading roll in the safeguard technologies that support global materiel strategy and certain support the grid modernization increase and thank you for the focus on energy storage. so thank you, madam chair, and i look forward to hearing the secretary's comments. >> thank you, madam chair. >> i'm going to offer apologies on behalf of committee members. i know there's a lot going on

this morning. started our hearing a little bit earlier to try to accommodate it, but if you see people popping in and out it's not because of lack of interest in the department of energy. it's just a lot of conflicting priorities. thank you for being here and if you would please proceed. >> well, thank you, chairman mikulski and ranking member cantwell and members of the committee. actually, it's good to see many of you from our trip a few weeks ago in alaska which was really excellent and i found extremely educational. so, thank you for that field hearing. turning to the budget, as was already said, the budget request for fy-'17 is for $32.5 billion in discretionary and mandatory funding. an increase of 10%. from the fy-'16 appropriation. first i do want to emphasize that the request for the annual appropriations is $30.2 billion which is a 2% increase over fy-'16 appropriations and, in

fact, 2% also applies to the national security programs and to the domestic programs at the department. this 2% increase is supplemented by a request totaling 2.3 billion in new mandatory spending authority. that mandatory spending proposal includes $750 million for three different r&d activities which i'd be happy to discuss, of course, and $674 million for uranium enrichment d & d, the latter from the usec fund. the $1.6 billion -- i do want to emphasize that $1.6 billion usec fund is an existing not new mandatory spending account and our proposal is in keeping of the spirit of the still current authorization that revenues from the beneficiaries of past uranium enrichment services, rather than taxpayers at large, be used to pay the cost of d & d

of the now shuttered facilities. and indeed in 2000 congress recognized the applicability of the usec fund to support portsmouth and paducah d & d. and the usec fund is only one of three funds totaling nearly $5 billion that exists that are applicable to this cleanup problem of uranium enrichment d & d and finally i do want at least in passing to acknowledge which is very important that underpinning all of our priorities is stewardship of the department as a science and technology powerhouse for the country with an unparalleled network of 17 national laboratories. and i can assure you, and there have been recent reports, that we are working very hard. we have been for several years, to strengthen the strategic relationship between the department and our national laboratory network. i also just want to mention that we continue with the strong emphasis on cross-cutting r&d initiatives.

these have been extremely successful in our view and our major focus -- the biggest increases in this budget in the crosscut is for grid modernization and for the energy/water nexus and, of course, we also continue a very important crosscut in terms of advanced computation particularly the movement to exit scale computing in the next decade to do everything from nuclear weapons to energy technologies to cancer solutions. the supporting budget details for each of these is provided in an extensive statement for the record which i request to be inserted into the record, and i will just turn in the remaining time to some comments on mission innovation and why it merits your support. senator cantwell already gave quite a bit of detail about mission innovation in which 20 countries, including, of course, the united states, seeks to double our energy r&d over a five-year period.

i want to emphasize those countries represent over 80%, approximately 85%, of global public energy r&d, so this is a big leveraging opportunity in terms of raising the level of global energy r&d. we believe mission innovation is long overdue. in 2010 the american energy innovation council composed of ceos of some of our major companies from multiple sectors recommended that the government triple investment in clean energy r&d. they made three key points. one, the innovation is the essence of america's strength. two, public investment is critical to generating the discoveries and inventions that form the basis of disruptive energy technologies and, third, the costs of our d & d, are tiny when compared to the benefits. the pledge to seek to double the level of government investment is ambitious but needed. as you know, bill gates a leader of the aeic has recently met

with a number of members and making public statements reiterating the importance of increasing budget-sponsored -- increasing government-sponsored energy r & d. the objective of mission innovation is to greatly expand the suite of investable opportunities in clean energy technology and certainly with the growth we are already seeing in the -- in global clean energy technology markets and in the united states as well, and the expectation that that will accelerate in the wake of the commitment by essentially every country in the world to meet -- to meet their nationally determined contributions means this is indeed an enormous opportunity for american innovation and american -- and the american economy. the scope i want to emphasize the scope of mission innovation does span the innovation cycle from the earliest stages of invention through initial demonstration, with a focus, a weighting, towards the earlier stages of r&d.

it also spans all clean energy supply-and-demand technologies and the infrastructure that enables those technologies to contribute. as already stated, mission innovation is complemented by the breakthrough energy coalition spearheaded, again, by bill gates. i just want to emphasize here another leveraging opportunity. billions of dollars of global private capital coming to the table with exceptional risk tolerance, exceptional patience for return on their investment, and a willingness for the leading technologies to go end to end all the way to deployment. so, we think this is a tremendous opportunity for our country. i just want to make a couple of words, if i may, on clean energy innovation -- on regional clean energy innovation partnerships. again, in our field hearing in alaska we certainly saw how different parts of the country have very, very different regional needs. these i want to emphasize would

be not-for-profit consortia to -- competitively selected to manage a regional clean energy r & d portfolio, and they would not bee performers, they would e managers of this portfolio, addressing regional needs through presumably, mainly at least through regional institutions. this approach tracks recommendations from the national research council's rising to the challenge, which noted that, quote, until very recently u.s. federal agencies have done little to support state and regional innovation cluster initiatives. and they recommended and, again, quote, that regional innovation cluster initiatives by state and local organizations should be assessed and where appropriate provided with greater funding and expanded geographically. so, i think these initiatives, both this initiative, is very much in line with what has been a long-standing desire expressed by the private sector and the research community.

the mission innovation budget we should emphasize does also, of course, support increased investments in successful ongoing innovation programs, many involving national labs, but such as rpe, energy frontier research centers in the science office, advanced manufacturing centers, bioenergy centers, advanced transportation, advanced nuclear reactor technologies, advanced carbon capture technologies to name a few. with that, madam chair, i would conclude my summary. thank the subcommittee for its interest and support in our programs and look forward to our discussion. >> thank you, mr. secretary, and i appreciate you highlighting some of the things that we've been working on several years ago when we introduced the energy 2020 and brought up for discussion at that point the energy/water nexus and the priority. and so it's good to see the department taking that and running with it as you have

mentioned, also highlighting that the public/private partnerships that mr. gates is leading up, the opportunity that many of us on this committee have had to sit down with him as well as you for further discussion. so, we appreciate that. i want to go a little more parochial and do my first round of questions focused on alaska-specific initiatives, and, again, thank you for coming to bethel. thank you for your commitment to try to make a difference out in places where there is no -- is no energy grid so to speak. you mentioned at our field hearing that you recognize that the d.o.e. office of indian energy was understaffed and that you were intending to add new staff members to the alaska office. can you give me any update when we might expect to see additional staff put in place there? >> yes. well, we have the job

description posted for the first of those -- first of those positions, and i'm certainly looking to get at least two positions filled in the next, say, half year. but we'd like to get people there as soon as we can. and we have to go through a process obviously of advertising and competing. we'd also hope and, frankly, you could help, make sure that we have an excellent applicant pool from alaska itself. because local knowledge can only -- could only help be most effective. >> well, we want to work with you on that because we, too, thinks that needs to be a priority. there are those who lived and worked and raised their families in the region and know some of the challenges but also how we can overcome it. >> and may i add? >> the evident innovation that's been displayed already in the state. >> absolutely. absolutely. thank you for recognizing that. i want to ask more specific to the issue of microgrids themselves, and you heard from

our alaskan expert gwen haldman there at the university of alaska center for energy and power. recognizing that we have these islanded systems, then, in alaska, what are your views on the department possibly changing the definition of microgrids to recognize that these systems in rural alaska that are independent and not part of anybody else's grid are also a form of microgrid? because we've come up with some definitional challenges here. >> i will look in to whether there is a precise definitional issue in the department, but i can assure you, we are and will looking at both grid-connected microgrids and complete off-grid microgrids. in fact, we are funding the alaska microgrid partnership with three remote communities there. we have also have our national

labs working on a design support tool for microgrids that will be, you know, work with the alaska -- of course, we all know and fairbanks in particular, there's a very strong energy research center. so, we are working on isolated microgrids. indeed the -- as you use the word island, and, in fact, two years ago we produced a document on island energy systems that we are -- that is drawn from experience in hawaii. it's being applied in the caribbean and many of the same physical features in effect occur in alaska. >> well, let's work on that one, because if there is something we need to correct, we'd like to do that with you. >> okay. >> as we were saying hello here before the committee began, we discussed very briefly the d.o.e. award that went to the

village of egiagit and what they are doing within their river system to generate marine hydrokinetic energy. it's really quite exciting, and i appreciate the department stepping up and helping to facilitate that. the office of water and power, though, appears to be emphasizing wave power research and demonstration projects over current projects, over tidal power technologies. is that somehow purposeful? when you look at the budget, that's one of the conclusions that you're left to draw. and we think that given what we have with the kuska qualm and the youk an, you saw the kuska quam river when you were there, and it's frozen solid there.

being able to harness our rivers as well as 13,000 miles of coastline is something we're very interested in. but am i incorrect somehow in my observation that the emphasis seems to be on wave power research? >> well, we do have programs across all of the hydrokinetic and wave power. i will look more closely at that in terms of the balance of tidal to be honest. >> look at the funding because that's what got our attention. >> but may i just add, the alaska project with the turbine and i will not attempt to pronounce the name of the village, but i think it's been a tremendous success. it was already pulled out and reoptimized which gave a tremendously better performance. in its second year it significantly cut diesel fuel use there and now with this new grant it will be taking advantage of that designing something which could be placed in a number of -- of course, a number of other locations as well. >> it is really exciting. thank you for recognizing that. >> yeah. >> senator cantwell had to go

off to another committee, so let's turn to senator henrik. >> thank you, very much, madam chair. secretary moniz, i'm very pleased to see your continued focus on getting w.h.i.p. reopened and i want to thank you for the focus that d.o.e. has put on safety throughout that entire process. i just want to ask you, are you on schedule and are there any budget or schedule issues that should concern me at this point? >> senator, we believe we are on schedule for safely restarting operations late -- >> december? >> -- later this year, exactly, yes. and the budget request for fy-'17 is on track for our program, right. >> fantastic. >> we will, as you know, down the road need more capital funding for the full ventilation system for full-scale operations at the beginning of the next decade. >> we look forward to working with you on that. switching to los alamos real

quick, i was hoping you could talk a little bit about why we don't have a current consent order in place with the state to be able to guide budgeting and spending issues as well as just what priority updating that consent order has with the department of energy. >> no, it's very important. and that is under very active negotiation with the state, and we are hoping that in the reasonably near future that will be completed at least -- at least for comment and that we will then be in a position to adjust appropriately our long-range cleanup plan. >> great. as you know, i've for a long time been a champion of efforts to improve tech transfer from our labs as an engine of domestic economic development. i'm really pleased with the small business voucher initiative from your office of

technology transitions, and also the recent technology commercialization fund. however, i understand that there may be some issues with the cost-sharing requirement? and i wanted to see if you could talk a little bit about what those issues are and what we can do to help solve some of that. >> well, first, may i say -- and i appreciate your interest and that of a few other members in terms of the tech transfer business, and i would just say that there was quite a few initiatives, including establishing the ott, the fund. we've also established within that office an energy investment center. we just hired an excellent person in january to head that. so, i think -- i think it's certainly been elevated in the -- in the visibility. >> and we appreciate that very much. i think a lot of people are excited about those efforts. >> good. with regard to the fund, yeah, i think our interpretation is that we need kind of 50/50 cost

sharing there. but certainly more flexibility is -- i mean, would always frankly be welcome. i mean, we as you know in various of our programs there are some cases sometimes in which 20% cost sharing is called for versus 50%, so that's certainly something we'd be happy to work with you on that. >> i look forward to that. and if there are specifically authorization issues -- >> yes. >> -- language issues that we can work with you, we're happy to do that. obviously d.o.e.'s battery storage hub is now in its fourth year. and i -- you know, if you look at the storage market broadly in this country, i think i saw a headline this morning that said it grew something, like, 243% last year. obviously starting from a very small place, but growing incredibly quickly. this is going to be a critical link in the evolution of the grid from sort of the centralized grid that my dad knew as a lineman to the

distributed structure that we see more and more around the country. are there advanced battery chemistries beyond the lithium ion chemistry that we're all familiar with that are under development that might meet future cost and energy goals? what are you seeing within that program that's exciting -- that's exciting to you? >> well, i think the -- first of all the jcs are a hub i think has been doing very, very well. and as you say, actually they -- in their first five-year period will end at the end of 2017, so we will soon be getting into the kind of reviews to talk about potential extension. the hub is working both on grid scale and on transportation batteries. on the transportation side, the principal activity is on lithium sulfur, and they've made some excellent progress. by the way, and the goals are

basically five times the energy density at one-fifth the cost. and by the way, as you said, i want to emphasize that this is one of the areas -- and there are others. i love driverless vehicles as an interesting thing. but the point is, in these cases, including storage, they're coming at us much faster than people thought, and i think it's not always recognized. so, on the grid side, the main activity is on some of the flow batteries, where you use liquids instead of solid electrodes. another chemistry being looked at is magnesium, and the idea -- sorry for the technical word, but it's theire valence opportunity, which can greatly increase the energy density. so, it's a variety of issues that jcs are -- i do want to emphasize that in addition to that hub, of course, i think -- i'm not sure. i think we have about $225 million in various programs addressing energy storage. it's a game changer, and the

costs have come down, let's say, for vehicle batteries by 70% in the last six or seven years. again, i think people are not internalizing all of this. and you're seeing more and more storage introduced on the grid, for example. you're seeing novel uses of, let's say, used vehicle batteries coming in for voltage support in grids. so, a lot is happening. and when that penetrates to the consumer end, i think we will see another -- another big shift. >> thank you, secretary. >> thank you. senator brasso? >> thank you, madam chairman. mr. secretary, good to see you again. i just noticed on friday "the wall street journal" had a front page story and it was entitled "europe energy escape valve, u.s. gas." so the escape valve for europe is u.s. gas. the gulf coast exports are expected to loosen russia's grip on the market, is the subheadline. we talked about this. the article discusses the first

shipment of liquefied natural gas from the continental united states that took place last wednesday. it explains that exports of u.s. liquefied natural gas will give countries like lithuania, poland, bulgaria, greater political independence from russia. it's more than just about gas, it's about freedom. the article goes on to cite that deutsche bank estimates the u.s. could catch up with russia as europe's biggest gas supplier within a decade. with each nation controlling about a fifth of the market. it's not going to be easy. russia controls about a third of europe's market right now, and it may wage a price war, i read, to maintain its share of the market. iran is also interested in exporting lng to europe. senator cantwell mentioned your role in the negotiations with iran in january. "the wall street journal" also ran a story front page of the business section, "iran seeks ways to ship out gas as

sanctions ease." so, that article explains that iran may be able to export lng to europe within two years. i'm concerned that europe may develop a dependency on iranian gas as it tries to reduce its imports from russian gas. that's why i believe it's critical that we continue to make u.s. liquefied natural gas available on the world market. so, the question is, will you commit to acting promptly on lng export applications for the remainder of this administration? >> yes, we have and we will. if i may add a comment -- >> please? >> -- because i completely share your interest and the importance of natural gas diverse supply for europe. first of all, i would question that two years. i think not very likely, to be honest. but i want to emphasize that in addition to u.s. lng, southern

corridor, bringing caspian gas is well under way. we have supported that, and frankly, directly been helping some of the conversations there. but also we're very encouraged at the prospects of eastern mediterranean gas, cyprus, israel, et cetera and there's an interesting question of turkey, egypt going on. as an aside, i'll be in israel beginning of april and be able to discuss the gas development there as well. >> the two-year idea came because the sanctions against iran had stopped the construction of their lng facilities. they have huge resources of natural gas and the thought was in terms of the just renewing the construction that they could actually within two years get things going. but along the line that you've been talking about in terms of other sources, i'd like to turn to the nordstream 2 pipeline which is one of those potential sources. this project would run from russia under the baltic sea directly to germany and the nordstream 2 would follow the

original path way and significantly boost russia's gas exports to germany. so, russia playing an additional role. ten european countries mostly from eastern europe are asking the european union to block this project. they believe it would undermine sanctions on russia, increase russia's political leverage over eastern europe. it's estimated this pipeline would cost ukraine about $2 billion annually in natural gas transit fees that they would lose. last week richard morningstar former u.s. ambassador to the european union said it's a bad idea, the nordstream 2, if you -- and went on to say, if you want to kill europe's lng strategy, go ahead and kill nordstream 2. to date germany's chance lore angela merkel has kind of defended the project. we discussed this issue last october in the committee.

since then i heard very little from top-ranking administration officials. does the administration have a plan to stop this project? and if so, what is it? >> well, clearly, this is in the end is a european decision. i would note that the european commission has certainly emphasized the diversity of supply, and this project would do nothing to increase diversity of supply. it may even, as you said, may even strengthen -- >> add more dependence on russia? >> correct. it certainly is a geopolitical tool as well in terms of eastern europe and ukraine, so we remain active in discussions. but clearly, it's a european decision. and there is considerable public disagreements within europe. >> okay. well, let me be clear. i think president obama should do everything he can to kill this nordstream 2, i just wonder if the president has discussed this with chancellor merkel. >> well, i'm not free to discuss what those conversations are. >> thank you, madam chairman.

>> thank you. >> thank you, madam chair. mr. secretary, i'm pleased to see that the administration has increased funding for our shared priorities of energy efficiency, renewable energy, storage and research. i want to turn to something that you and i have discussed in the past, the tribal indian energy loan guarantee program. this program was authorized by the energy policy act of 2005 to help tribes overcome challenges in securing financing for energy projects. but it has never received federal funding. this program would allow d.o.e. to guarantee loans issued to an indian tribe for energy development, developing these energy resources would bring high-quality jobs to indian country, which indian country desperately needs.

that's why i support this program. as do many members of this committee on both sides of the aisle. and i was -- last year you had put in your budget about $11 million for that, which would have leveraged about $90 million in projects. i was very disappointed to see that the program's not included in this the president's budget request. i am going to do everything to make sure that congress appropriates funding in this bill, because it has a lot of allies. secretary moniz, i know that this is an issue that you care about. we've talked about it in this committee. would you also press senate appropriators to fund this program? >> as you say, i am certainly very, very supportive of the indian energy program. i think it's important.

and i would note that the -- a piece of the current energy bill in the senate i think is a step forward by providing for the tribes and alaska native corporations access to the section 17 -- title 17 loan program. so, i think that's a good start. i would note that it would be even more powerful if it also included at least modest access to the credit subsidy part of the energy efficiency and renewable title 17 loan program. >> 17.03 program? >> 17.03 program. >> i was going to ask you about that, but thank you. let me move on to the transformer reserve. in 2013 we saw a gunman attack a substation in northern california and severely damage

17 transformers. fortunately, this incident did not cause major outages. however, this attack made it clear that our grid is vulnerable to massive disruptions from physical attacks and even cyberattacks or extreme weather. mr. secretary, what is the current capacity for utilities in terms of having a reserve of transformers that could be used in emergency to respond to a coordinated attack on our grid? >> well, some of the -- of the large ious have taken some steps in this direction. but if you look across the country as a whole, i would say we are still quite vulnerable. we are now doing a significant study of this, and we will report that back to the congress. and depending upon its outcomes, of course, we may talk about it

some federal role in establishing a more complete coverage. we might also talk about that and, frankly, we have talked about it as potentially a north american strategy particularly with our very strong integration with the canadian grid. >> i do know that we have a study, but i filed an amendment to the energy bill to authorize d.o.e. to create a reserve, to create a strategic transformer reserve. this authorization was included in the energy bill that passed out of the house. it was my understanding that the edison electric institute and some others have expressed some concerns that a federal reserve would be duplicative and could interfere with the industry's current voluntary sharing programs. do you think that the industry's voluntary sharing program goes far enough? >> well, i think that's a part of the study that will come out. but as i said, i mentioned the independent -- the investor-owned utilities, which ei represents, but we do have many other structures for electricity delivery in this

country. and i don't want to prejudge the outcome of the study, but i think that that diversity of utility structures will probably end up suggesting the need for some reserve, yeah. >> when will the study be completed? >> it's due in december, but we had started it actually earlier than the congressional directive to do it within one year, so we may be able to get it there earlier. >> thank you very much, mr. secretary. thank you, madam chair. thank you, senator franken. senator danes, you are up next. >> used to be in the supply chain business. this is called just in time right here. secretary moniz, good to see you again. i very much enjoyed our time in alaska. enjoyed talking about gravitational waves, the 27th

dimension, and getting insights into your amazing mind in terms of nuclear physics. >> and your insights into social media. >> it was a great snapchat trip. on that visit one of the aspects that we focused on was the energy challenges certainly facing alaska native villages and the office of indian energy. this office was created by congress in 2005 and has the statutory authority to facilitate energy development in indian country. i recognize your budget asks for nearly $23 million above the enacted $60 million for fy-'16 and i'll be submitting some questions for the record on this account. your budget proposes $600 million in fy-'17 including $240 million of which is available from repurposing funding from clean coal projects. $32 million below the enacted level. at the same time the budget proposes $2.9 billion in energy efficiency, renewable energy

which is $829 million above fy-'16. the global demand for coal will increase in the coming years. you look at the pie charts of coal consumption, the u.s. consumes about 10% of the world's coal. the rest of the world consumes the other 90%. so, as we think about global stewardship, environmental stewardship, i believe the united states should be leaders in clean coal technologies. and i'm concerned your budget proposal does not reflect that sentiment. i spent five years working in mainland china for procter & gamble and saw firsthand the challenges they face environmentally over there. and i'm just concerned that if we don't continue to lead and invest in clean technology, clean fossil fuel technology, we may abdicate that leadership perhaps to china or to india or somewhere else or perhaps nobody takes those reins and leads with

it. so, i think taking away money from one of the few larger-scale clean coal technology programs and repurposing it for other projects is troubling. and this is at a time when the administration to the epa power plan is threatening to take away affordable power from the grid such as the case of the coal strip plant in my home state of montana. so, the question is, why are we undercutting projects that are applying clean coal and carbon capture technologies at a commercial scale? >> well, let me make a few points, senator daines. first of all, i might note, i think just today there was an article that china announced that its coal production -- its coal use went down by 3% in one year. they probably have peaked in terms of use. and they're closing another 1,000 coal mines in china, so that's an interesting development. >> just on that point, other data suggests that china is

building a new coal-fired plant every ten days for the next ten years. and as we look at the global forecast between now and 2040 for coal consumption -- and, of course, these are all forecasts and you take them based on assumptions. but the global coal use looks to increase by most respectable forecasts between 10% and 15% from where we are at today in 2040. so, the trend line globally is still going up for coal. >> no, i agree. but china as by far the largest coal user, it is significant, i think, that they have come down several percent in one year and may have peaked. i'm not saying they have, but they may have been peaked. as far as building, they're doing a lot of shutting older, inefficient plants, replacing them with more modern plants, of course, addressing their very, very serious pollution problems. in terms of our domestic program, first of all, i do want to emphasize that there are many

aspects of support for coal going forward that are not simply in the fossil energy budget. i'm not going to go through all of them, but includes in particular -- i do want to emphasize -- that probably $5 billion both production tax credits and investment tax credits proposed for carbon capture and sequestration. so, that's a pretty big we hope incentive towards deploying new projects. with regard to the fossil energy support, we -- we did not undercut any projects. we have -- we have three project -- three large projects that are either already operating, one for three years, a carbon capture projects, and some that are coming on in 2016. we'll have three. we did do the repurposing of projects that even though we

gave extensions of time could not meet the criteria, could not meet any financial close, so those -- those funds being repurposed to actually develop new -- what we hope will be very competitive technologies. for example, going to things like ten megawatt pilot projects for new technologies like chemical looping and oxycombustion which could be important for the future. another point is that apart from those explicitly carbon capture projects, r&d and/or tax incentive, the -- we also have going on things that are -- you know, they're not called coal. but they are very directly relevant to, for example, higher efficiency coal plants. one is we have a substantial increase for our pilot program on supercritical carbon dioxide cycles which would give much

higher efficiency for any thermal plant, and it's led by fossil because of coal basically, and secondly, things like in the office of science, and in fact, we propose a new cross-cut initiative in this budget for advanced materials in extreme environments. that would include going to the very high temperatures and pressures for going to ultra, ultra super critical cold lands. so, there's quite a bit in there. >> thanks for the insights. i'm out of time. the projections coal use globally will be higher in the next 20, 30 years than it is today by most forecasts and i hope the united states could continue to lead in clean coal technology. i think as leaders here we will be the best guardians overall of global stewardship, and i'd like to see the continued investments here certainly in clean coal technology. >> and i think that this portfolio of investments is one that i think will accomplish the goal.

>> thanks, secretary moniz. >> senator cantwell? >> thank you, madam chair. and, mr. secretary, thank you, again, for working so diligently on this budget proposal. as you can imagine -- well, i have many questions. but i have four specific -- i have four questions and they're all related to hanford as you can imagine. greatly important subject for our entire nation, but particularly important in the state of washington as we are integrally involved in making sure that the tri-party agreement and other things are lived up to. so, i have a question about the buildings i mentioned the 324 and the 61810 and the fact that the budget decrease -- i think i said practically to every energy secretary that i have had the opportunity of working with since i've been in the senate, i firmly believe the energy secretary should be for life or until hanford is cleaned up. because as i mentioned -- >> that would extend beyond life. >> i hope not. i think the issue is, is that,

you know, with such a large budget need, i think from time to time people come in with ideas and notions of how to they think cut corners, save dollars, and i have seen so many different proposals that have gone by the wayside where people try to implement something. it doesn't work. and then come back a few years later and fold on that only to cost us billions. so, one of the things i wanted to, on this river corridor project, these -- they are making good progress, but why not continue to make progress given that this radioactive plume is so close in proximity to the river and that we want to make sure that there is, you know, important, you know, hanford-wide service account which ensures proper maintenance of the infrastructure and to make sure that we continue to move ahead. so, that's one question. second, i want to understand what we're going to do in the next year on additional public

meetings for focusing on defense waste cleanup. that's an initiative that, you know, separating the commercial and defense waste and moving forward on that proposal is something that i think is very important for us to continue to do. and i know that there were cuts to the community support budget. this is something that's very important to the people in the -- in the tri-cities. last year there was a decision made to decouple defense waste and commercial waste. and then there was a process of holding meetings to define what consent agreements mean, and i've noticed that this proposed budget cuts the community and regulatory support. so, this is important to places like benton and franklin and grant counties so they can focus on having, you know, comments in this process. and lastly, i also see that the historic -- you know, the hanford national historic park

budget does not reflect a contribution from the department of energy, and i'm concerned about that and want to make sure that doi and d.o.e. are going to work together to move forward on that. but my main question is, will you take a second look at this cleanup priority for the river corridor in looking at that budget cut and looking at that how challenged we are on the -- the site itself and its proximity and look what we can do to remedy that cut. >> well, thank you. and i think i have the four questions. well, first of all, of course, we are -- be very happy to sit down and kind of work through what the constraints and the opportunities are and the budget. obviously, we are working with an overall constrained budget in which we try to optimize for the highest priorities.

and frankly, the area across the country, which -- but includes hanford for sure, that is the -- in many ways we consider to be the highest risk is tank waste, you know, addressing that, and so we certainly have a very high priority at three sites for tank waste. now, on the river corridor specifically or the fy-'17 budget for richland, first of all, i very much appreciate your acknowledgement that there's been a lot of progress along the corridor.