think we were going to have such early problems with that statute as you are having, but it does bring to mind the waste isolation pilot project in New Mexico. I think you are aware of that facility, are you not, Mr. Secretary?

Secretary HERRINGTON. Yes, sir, I am.

Senator DOMENICI. Let me tell you how the WIPP project finally got sufficient support in the State of New Mexico to proceed. After a lawsuit, much farther along in the proceedings than you are now, a settlement, overseen by the U.S. district court, was entered into between the Department of Energy and the State of New Mexico that prescribes the kind of things that the State and the Federal Government are responsible for.

I would like to remind you that we have set up various processes to work through consultation and concurrence. We are very proud that they are working. I wish the States involved in the first high-level waste disposal project would look at these processes, because they have been a very significant way to have input into the protection of health and safety.

For the WIPP project, there is a requirement that certain roads that are going to carry the waste to the WIPP site be upgraded and paid for by the Federal Government.

In addition to other stipulations and agreements on the waste isolation pilot project, Mr. Secretary, there was a part of the stipulated agreement that said that the roadways that go into the waste isolation pilot project, that are going to have to carry the trucks with the waste material, are insufficient. It said that the Federal Government would provide resources to upgrade those roads.

We have had, now, in my recollection, four Federal budgets since the stipulated agreement was entered into. The last budget submitted by you does not fulfill that mandate. We have had to fund the WIPP roads with the assistance of the Appropriations Committee. I really believe that we are going to have to do it this way this year, because funding for the WIPP roads is again not in the President's budget.

I do urge that you and others who are involved with the WIPP project take a look at this and see if you can at least assist us by telling the chairman and ranking member that there is a commitment on the part of the Government to fund the WIPP roads. They have voted in the money without the administration requesting the road improvements, but with tight budgets, it gets more and more difficult. I understand that.

But clearly, I don't think the State of New Mexico ought to be left to totally implement what the Federal Government concurred with and agreed to in a stipulated agreement overseen by the U.S. district court.

Might I ask whether you would look into this matter? If I am stating the facts right, could you at least state to the committee what you think the Department's responsibility is?

Secretary HERRINGTON. Yes, sir. It is still our position, sir, that we do have a commitment on that. We have every intention of complying with the law on that particular point.

CHANGE OF CONTRACTOR AT LOS ALAMOS

Senator DOMENICI. I appreciate that.

With reference to one other item of interest to New Mexico. At the scientific lab in Los Alamos, you have put out to bid a new operation and maintenance contract for the lab. The new contractor is going to be Pan Am in lieu of a longstanding contractor called the Zia Corp. I understand that the time had come for a new contract, and I have no argument with letting it.

I would only ask that you be aware of the fact that this is a very major transition for some 1,800 workers, and while it is not directly under you, Mr. Secretary, I hope you understand that it is absolutely imperative that that be done properly. The ultimate goal is efficiency and productivity, and I have no argument with that. The new contractor apparently agrees to do it for less money over the foreseeable contract period, and I can't argue with that.

I just hope that they also understand that when you have had a contractor with employees for over 30 years, that it is a very, very difficult transition. I hope they will be considerate as they proceed through the final negotiations and the transition to a brand new employer for many people who have been working there for 15 to 30 years.

Secretary HERRINGTON. I think we can try to be as sensitive as possible to that, working with our contractor at the University of California, and monitor this as best we can. Every effort will be made. Senator DOMENICI. Thank you, Mr. Secretary.

Thank you, Mr. Chairman.

Chairman HATFIELD. Thank you.

The Senator from Wisconsin.

CLEAN COAL TECHNOLOGY PROGRAM

Senator KASTEN. Mr. Chairman, thank you very much.

Mr. Secretary, I have had an active interest in the Clean Coal Technology Program and, as you know, I sponsored an amendment, along with the Senator from West Virginia, Mr. Byrd, setting up this $400 million program outlining the timeframe for selecting clean coal projects under the program.

There are a number of different clean coal projects that are part of this overall program. I have one of particular interest-Wisconsin Electric is one of the many groups that are interested. They have been working on a pressurized fluidized bed project to burn coal without polluting the environment. They are already planning to spend $600 million of their own money to move on with this project and to accomplish that goal.

So that is good news. They are moving along, and I am pleased.

I am also pleased to hear that the program opportunity notice is out and that the Clean Coal Technology Program is moving on along schedule here. In general, it appears that we are moving in the right direction. As I said, they are going forward with their private sector development, also.

But there are a couple of specific concerns that I just wanted to raise with you.

First of all, the program opportunity notice states that: "The Department of Energy intends to recover any profit resulting from the clean coal project sites." This program, at least in the beginning, was set up to further research into efficient, clean, coal power systems. It wasn't intended to raise revenues, as I understood it.

Could you clarify the Government's position on the recovery of the Department's investment, if that is what you are getting at, in clean coal technology, and what do you mean in terms of recovery of the Government's revenues?

Secretary HERRINGTON. I think there was some misunderstanding when that first came out, not because of anybody's fault. The wording was not quite as clear as it could have been. We have clarified it.

What we have in mind is exactly what you say as far as promotion of clean coal. There is a possibility that some of these systems will become profitable and, in that case, we would like to see the Federal Government, out of profits and after a period of operation, work out some sort of repayment schedule for the amount of money the taxpayers donated to that project. It in no way would be used in negotiating this contract, that type of term, to discourage companies or to hinder the projects that are ongoing.

Senator KASTEN. Therefore, this is one more step in your evaluation? You are going to try to figure out how much revenue you could then take out of a project once it became successful? It is complicated. Secretary HERRINGTON. Sure.

Senator KASTEN. Because we are not only dealing with a "for-profit" company, but we are also dealing with a regulated industry in the case of Wisconsin, and we get involved with questions and decisions made by the utility ratesetters in the overall process. I wonder; I don't quite understand when you say you are going to work it out and negotiate it with the companies if and when the technology becomes profitable.

Secretary HERRINGTON. I don't think this repayment or recoupment of taxpayer dollars is a condition of picking the winners and losers in the request for proposal.

That certainly is outside the intent. What we are looking for there is the most promising technology and the best investment of clean coal money that we are going to be putting out. That is the sole criterion.

The next step is down the line. If one of these companies becomes very successful and has the ability, then we would like to talk to them about recoupment of the investment that the taxpayers have given them, and I think that is fair.

I think it is legitimate to ask a company that benefits substantially from a Federal grant of clean coal money that if they are successful and profitable that they be in a position to talk to us about repayment of that money.

Senator KASTEN. I don't disagree with the overall concept. I am just suggesting that it might not be the easiest thing to work out, especially

when we are in the position that we don't know whether we have companies that can make this work, although I think we are close in the one that I know a little bit about, and if and when it makes money, and if it does, those dollars are going to be reflected in rates which are going to be passed on to consumers before you are going to be able to negotiate profits coming back to the Federal Government.

CLEAN COAL PROPOSAL SELECTION

Secretary HERRINGTON. My answer is that we would not negotiate any kind of repayment or recoupment and the terms thereof until after the proposal selection. During the contract negotiations, I think that is a legitimate item of discussion.

Senator KASTEN. But for the present time, right now, we are looking at this program in terms of furthering research into efficient, clean, coal power systems, and that is the primary criterion, and that is where we are as of this minute.

Secretary HERRINGTON. Yes, sir; that is the primary criterion.

Senator KASTEN. In the program opportunity notice, it also states that clean coal projects funds would be dispensed from 1986 to 1988. If negotiations between your Department and particular project sites were not complete before October 1 of this year, October 1, 1986, does that mean that the 1986 funding effect would be lost?

Secretary HERRINGTON. We intend to carry forward on this. In fact, we don't expect to be in actual contract negotiations until August, I would say. Some of those could take that long.

Senator KASTEN. If you lapped over, we wouldn't lose the 1986 money, it would be carried over into 1987?

Secretary HERRINGTON. Yes, sir.

Senator KASTEN. Or we would be able to get the project going?
Secretary HERRINGTON. That is our intent.

Senator KASTEN. The program opportunity notice says the Federal Government will match dollar-for-dollar the three phases of the project the engineering phase, the construction phase, and the testing phase. In some large projects, such as the one that I am familiar with in Fort Washington, WI, the pressurized fluidized bed project that I talked about, construction won't be completed until 1989, and testing won't start until 1990.

If a project with the same kind of schedule were selected, would the Department make the matching money available between 1988, and it is the same basic concept we were touching on before?

Secretary HERRINGTON. Yes. The answer is "Yes."

Senator KASTEN. Mr. Secretary, thank you. I also want to join my colleagues here in commending you on the job that you are doing in the Department of Energy and as part of the President's Cabinet.

Secretary HERRINGTON. Thank you, sir.

Senator KASTEN. I thank you very much for the work you are doing. Thank you, Mr. Chairman.

Chairman HATFIELD. Thank you, Senator.

Mr. Secretary, I know you probably have a very busy schedule. If you wish to be excused, you may.

Secretary HERRINGTON. Thank you, sir, I appreciate it.

Chairman HATFIELD. Thank you for your time today and your cooperation. We look forward to working with you on all these matters. Secretary HERRINGTON. Thank you.

57-567 0-86-2