OPEC’s policies are a threat to the U.S. economy. U.S. House 2000

[ Perhaps when the energy crisis has struck and rationing grows ever tighter, people not be traveling much and have more free time, and interest in the history of energy policy. So here’s a bit of what was said back in 2000.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation, 2015, Springer]

House 106–197. June 27, 2000. OPEC’s policies: a threat to the U.S. economy.  U.S. House of Representatives.

Excerpts from these 85 pages follow.

Benjamin A. Gilman, New York, Chairman.   Today’s hearing is the third in our series on the impact of the price fixing schemes by the Organization of Petroleum Exporting Companies on the American homeowner, on the small businessman, on our commuters, on our aviation industry, on the truck drivers and the policy maker who sits in your seat and must manage this uneasy and very troubled relationship.

We look forward to holding additional meetings of our Committee to explore additional issues related to the energy crisis facing the American people, including a sustainable energy strategy and a review of the profits of the major oil companies that are up some $7 billion over the past year and the OPEC nations whose revenues have doubled over the past 2 years. I would also note that the General Accounting Office released a report over the weekend reviewing areas where existing controls over foreign travel of our nuclear scientists can be and should be strengthened.

The administration’s laissez faire approach has sent a clear signal to OPEC that price fixing is okay by us, that production cutbacks are not so bad after all, and that as long as you keep trying to aim at a reasonable price for crude oil, you can overshoot $30 barrel oil with not so much as a slam on the wrist. Our government has become the victim of the manipulation of the oil market by OPEC.

The legislation I introduced last week, the Foreign Trust Busting Act and the International Energy and Fair Pricing Act of 2000 will ensure that this administration adopts a consistent and a comprehensive policy of opposition to OPEC and to other similar cartels. In the ongoing energy crisis facing our Nation, we can help keep the spotlight where it belongs, on this international energy cartel. With the enactment of this measure, the administration will no longer be able to go back to business as usual in supporting any back room arrangements and cartel-like behavior.

Sam Gejdenson, Connecticut.  The failure to act about our energy independence really starts here in the Congress. If you think of the initiatives of the Republican-led Congress over the last 6 years, I think one of its earliest initiatives was simply to abolish the Energy Department. But it got worse. When we take a look at where we are today as a Nation, this Congress has continuously prohibited the administration from increasing the standards of efficiency on automobiles. This is not simply as bad as living with the status quo, because as Americans moved from cars to trucks, it actually reduced our overall fleet average

For those of you who think this would somehow infringe on our personal freedoms, think about this. When I was a teenager, a Corvette got 9 miles to the gallon. Today that same car, more powerful and faster, gets 27 miles to the gallon, because Congress and the administration after the energy crisis forced the automobile industry by increasing CAFE standards, not as this Congress has done by blocking the administration from increasing CAFE standards.

The Congress ought to pass a new CAFE standard, demanding more efficient standards for trucks and cars.  It’s high time that we started enacting sensible legislation and supporting the Administration’s efforts to reduce our dependence on foreign oil.

Unfortunately, for 6 years, the majority in Congress has failed to make the necessary investments in energy efficiency, renewables, and conservation. Since Fiscal Year 1996, the majority has slashed the President’s proposed investments in energy supply research and development by approximately $2 billion and conservation programs by $1.1 billion.  The majority also consistently blocked any effort to improve the fuel efficiency of our cars and trucks. If we had more efficient vehicles on the road today, high gasoline prices would be less of an issue. Unfortunately, since 1996, Congress has barred the National Highway Traffic Safety Administration (NHTSA) from even studying whether or not fuel efficiency standards for cars and light trucks should be increased. As a result, we have not increased average fuel efficiency standards (Corporate Average Fuel Economy—CAFE, for short) since 1985. This is extremely short-sighted because raising the average fuel economy of our cars and trucks just by one mile per gallon will save about 250 million gallons of gasoline each year— that’s 12.5 million barrels of oil per year.

Kevin Brady, Texas.  The inescapable fact is America is addicted to foreign oil and we are falling deeper into addiction every day. Many have chosen to blame OPEC, the dealers of the oil, for not selling to us at a fair street price, which is ludicrous. America needs to kick its habit, its dependence on foreign oil, and that is one of the questions the Secretary Richardson needs to answer today, why we fail to address the real problem.

We talk about Africa and Caspian and Latin America, but why aren’t we doing more to significantly increase the responsibility America takes for our energy needs? Is it the conflict between our environmental goals and our energy goals? Is it the unwillingness to stand up to special interests and say we have to have a long-term energy policy that allows us to be more independent? What is it going to take to get a responsible energy policy that all of America is engaged in?

Edward R. Royce, California.  We have heard a defense of the Department of Energy after the disastrous guarding of our nuclear secrets, after we have seen the inability of the Energy Department to formulate an energy strategy. And let me just say this for the record, it is not for the lack of spending. We spent $17.8 billion over in the Department of Energy. Is this really the record we wish to defend? The answer which we have heard here is to raise taxes, to spend money on new subsidies for alternative fuels.

The world is awash in oil reserves, and it is a matter of using our diplomatic clout to increase production out of OPEC, and yet what we have here is a call for more funds into the Department of Energy.

This administration has been able to push up the gas taxes to the point where they are 60 cents a gallon State and local. That is the hit now. I just want to share with you the words, a quote. ‘‘The United States should start by gradually imposing a higher gasoline tax, hiking it by 1 or 2 cents per month, until gasoline costs $2.50 to $3.00 per gallon, comparable to prices in Europe and Japan.’’ That is what Paul and Ann Ehrlich said in their book, and this is what Vice President Gore said. The time for action is due and past due. The Ehrlichs have written the prescription. Now, it was Vice President Gore who was the chief advocate of the energy tax, arguing it was good for the economy, good for the environment, and I would urge you to read George Stephanopoulos’ book ‘‘All Too Human’’ about that. This administration has pursued this goal.

What we would like to do is get some focus on the question of OPEC and getting some leverage on OPEC to break that cartel. I would just like to say as Chairman of the Africa Subcommittee, I have listened to the Nigerians explain that they would like to double their production of oil. I think it would be wise for the administration to get behind that effort. You know, new technology is allowing for deeper offshore drilling. West Africa is one of the top regions for oil prospecting. Frankly, their known reserves dwarf anything in the Caspian Sea. We need to have a focused energy policy on breaking up this OPEC cartel and taking those countries that want to develop more production on their reserves and encouraging them to do so. I hope we end today’s hearing with some commitment that we will focus on the pieces of legislation that the Chairman of this Committee has introduced in order to try to go after that OPEC cartel and break it up.

Bill Richardson, Secretary, Department of Energy.  I continue to believe that markets should set prices, but while we import 22% less oil from OPEC today than we did around our last gas crunch, which was in 1977, it remains clear that actions by major oil producing nations still significantly affect oil supply. That is why this spring I spent a great deal of my time talking with energy ministers and leaders from the oil producing nations, Saudi Arabia, Kuwait, Mexico, Norway and Venezuela, often getting great criticism from one side that I wasn’t tough enough, from the other side that we were too pressure oriented. Each of these nations is well aware of the special economic and energy relationships between their country and the United States, as well as to other importing countries. Each of these nations agrees that stability is our common goal and that volatility in the oil markets is undesirable.

We believe in engaging OPEC. And if you look at the record, for instance, Saudi Arabia has been forthcoming. They have been leaders in increasing production. Kuwait has also, and I think Chairman Gilman effectively made a case with Kuwait earlier and was helpful. So there have been countries, Algeria is another country that has taken some surprising positive positions in increases in production. What we try to do with OPEC is engage them, convince them, make our arguments on economic grounds, not political grounds. It doesn’t pay, I have found, to coerce or threaten, but to be forceful. As you know, a lot of OPEC countries were not happy when I made those visible trips and when I advocated very strongly for our position. This last time we took a more low key approach. But it still involved a number of telephone calls and quiet visits that took place. That is how I think we should deal with OPEC. OPEC is a reality. They are going to be around. As a nation, we need to reduce our reliance on imported oil. I think that is message number one. This is where, together, in a bipartisan fashion, we can deal with renewable energy and those tax credits and the Home Heating Oil Reserve and helping domestic oil and gas production.

Steve Chabot, Ohio.  I agree with [others] about the ingratitude of both Kuwaitis and Saudi Arabia in the fact that we sent our men and women in harm’s way over there. This is a real slap in the face to the United States that they have cooperated in this collusion, in this unholy alliance of countries withholding oil from the market and driving up these gas prices to the extent that they have been, particularly in the Midwest, where we live.

Consumers in my district are getting gouged, or perhaps I should say gored, at the gas pumps. Working families are being priced off the highways. Small businesses are feeling the squeeze. Frankly, your administration is rapidly losing credibility. In February, when our constituents felt the first major spike in gas prices, you said, ‘‘It is obvious that the Federal Government was not prepared. We were caught napping. We got complacent.’’ Now it is late June and those taxpayers are still waiting for relief.

Many of my constituents have asked me if there isn’t something the Clinton administration can do when it engages in dialogue with the price fixing oil cartels. After all, it hasn’t been so long ago that American servicemen and women laid their lives on the line for some of those oil producing nations that are now threatening our economy with cutbacks and production and higher prices.

I have to ask the same question: What goes on at those meetings? I note that you traveled to Saudi Arabia in February 1999, oil was then selling for $12 a barrel. In March you went to the OPEC meeting in Vienna, the price jumped to $14.68 per barrel. In July, you hosted the Western Hemisphere Energy Ministers Conference, and the cost of a barrel of oil soared to $20. In August a trip to Nigeria, $21 a barrel. By December 1999, when you hosted the African Energy Ministers Conference, the price went to $26 a barrel. After you traveled to Saudi Arabia, Kuwait, Mexico, Norway and Venezuela in February of this year, the price of oil rose to nearly $30 a barrel. Apparently whatever our government was doing during those meetings wasn’t working very well. Do you think it is perhaps time for the Clinton administration to take a different approach? Do you think perhaps we can send a strong message to the price fixing oil cartels that we take a dim view of this criminal behavior and that our President will finally respond to this crisis by exercising the power he has as chief executive? Can we tell them to look elsewhere for assistance, perhaps in the area of arms sales? Mr. Secretary, the working people of my district in Cincinnati and all over the Midwest and in fact all over the country are growing angrier by the day. They want their government, the government they pay for, to lend them a hand. The time for complacency is over.

I believe our policy of engagement with OPEC is working. Now, let me just tell you a little bit about OPEC, and you know this very well. There are some countries there in OPEC that we don’t have strong relations with, Iraq, Iran, Libya. There are other countries that we have strong relations with, Saudi Arabia, Kuwait, Venezuela, Nigeria and Indonesia. OPEC operates by consensus, and I engage them, every minister, intensively. I did not travel this last time, but telephone incessantly, making our case, saying ‘‘keep an open mind,’’ and we think the results were positive.

Christopher H. Smith, New Jersey.  Having read Vice President Gore’s book, Earth in the Balance and The Population Explosion by Paul Ehrlich. It is a book of pseudoscience, extreme exaggeration, a book filled with worst case scenarios. As a matter of fact, I went back and looked at some of the things with The Population Bomb. They haven’t happened. Yet that was used to drive policy for years and yet those worst case scenarios were nothing but worst case scenarios that didn’t even come close to happening. Hyperbole like that is very dangerous when it has such an impact on policy. Now, in looking at The Population Explosion, there is a quote, and again I read the book, so I am very well acquainted with it, but one quote from it, ‘‘The United States can start by gradually imposing a higher gasoline tax, hiking it by 1 or 2 cents per month, until gasoline costs $2.50 to $3.00 per gallon, comparable to prices in Europe and Japan.’’ That is on page 219 to 220. As we all know, the Vice President wrote the promo for that and said, ‘‘The time for action is due and passed due. The Ehrlichs have written the prescription.’’ if that is not an endorsement of higher gasoline prices, I don’t know what is.  

The Vice President has clearly made it clear that he would like to see higher prices as a way of mitigating consumption as an environmental issue.

Bill Richardson, Secretary, Department of Energy.  I know that the Vice President cares about how we can make automobiles and trucks more fuel efficient, and still ensure that Americans have a free choice in buying them. I just heard today that SUVs, their sale has been dramatically increasing in the last 2 weeks, more than ever, the most-sold automobile.

I remember going to Saudi Arabia when prices were $10 a barrel and there was great concern in Saudi Arabia, there was great concern in America’s oil patch, in New Mexico and Texas, and in California and Arizona and many other States, Louisiana, because our domestic oil and gas industry was hurting. Our policy has been to say that $10 is too low, $30 is too high. It is now over $30, $31, I think, and we are saying it is too high. Now, given that, what has been our policy with OPEC? Our policy with OPEC has been to forcefully engage it. When they had the production cuts, we expressed strong concerns. We are against artificially set prices. We think the market should dictate.

We think Nigeria has enormous potential for more oil and gas production, and we are working with them to bring more technology, to bring more American investment. We have got substantial investment there. They have had some infrastructure problems, as you know, because of some of the political issues that have been affected there. There was a lot of corruption; instead of revenues coming in from energy production for other capacities, they went elsewhere. What we want to do is develop—we have a 3-pronged strategy: Develop oil and gas resources in three key regions; in Africa, in Latin America, and in the Caspian. We think that we bring our leadership in that area, especially in Nigeria, where there is a pro-market, pro-democracy government, that is doing the best it can to get the economy back and bring some true democracy, and is having some good effects, we are very bullish about Nigeria. The problem still is their infrastructure, their pipelines. We also support a West Africa gas pipeline. We have been very involved in spurring the production of that with both, some energy companies and some of the governments there in Chad and Nigeria and other nations that are key to that. So we think that Africa is a real untapped resource, not just for itself, but for our country.

Gregory W. Meeks, New York.  Let me just say maybe something that might not be as popular to say, but I think we just need to be mindful and always believe in counting our blessings. Though we are going through a crisis here in America right now with reference to oil and gas prices, still, as I was walking over here with my intern, she mentioned to me, you know, aren’t we still getting gas and oil cheaper than anyplace else in the world, and that is probably true, and we should count our blessings for that. But it does not mean that we should be easy and take it easy, and there is enough blame to go around with reference to the crisis we are currently in. Clearly… there is blame on the consumer’s part. We have not been smart consumers. There is blame on the administration, there is blame on Congress. And we can sit here until we are blue in the face, blaming one another and pointing fingers at one another.,

Donald M. Payne, New Jersey.  I think what we need to do is stop being so dependent. I think what we need to do is stop buying all of those sports vehicles, as you mentioned.  We need to talk about ways to reduce the consumption of these gas guzzlers that have been reintroduced into our country, and I believe that what we need to do is to start looking at ourselves to see how we can come about.

I was shocked at Congressman Delahunt as he read off the 8 or 9 companies, oil companies, and the profits, starting at 600% now, they were making profits all along. I mean, that is on top of what was going on. That is egregious. I mean, here we are all bashing OPEC, and we should, but no one, especially from the other side, no one is talking about what is happening with these oil companies, and the mergers, which is happening in banking, which is happening in transportation, which is happening in the airlines. We are going right back to the standard oils of the turn of the century, with the robber barons and the big mega companies that are there, and they are so large that they are almost too big for the government to even have an impact on.

It is really being naively optimistic to think that we can do something to make OPEC change. I mean, people say we need to bust up OPEC. I just would like to know how do you bust OPEC up? We should bust up the diamond cartel. As a matter of fact, they take diamonds of civil wars and bandits and dictators and continue to sell them. We ought to look at busting that up too. It is great to say that, but how do you go about breaking up a group that comes together. I think that we need to have alternative sources, we need to stop being dependent. As long as we go to bigger cars and more gas guzzlers and more disregard for the regard that we had 10 or 15 years ago when we went to smaller cars and people were more fuel efficient. But we have gotten back to the way we were in our habits of consumption that just going on and on and on, until we have alternative energy sources

When we reduce our dependence on OPEC, they will simply reduce the prices. That will weaken the cartel. That is the only way I think we are going to have a real impact

Dana Rohrabacher, California.  We do have some fundamental questions about administration policy. What we see from the Clinton-Gore administration has not had a responsible energy policy, and perhaps this is due to the fact that it is being unduly influenced by looney environmental ideas that have been espoused by the Vice President for decades. The Vice President has been the number one advocate of higher gas prices in order to achieve his environmental goals for decades. Now, are you or are you not here telling us that the Vice President has or has not abandoned his commitment to dramatically raising the price of gasoline in America?

Bill Richardson:  Congressman, the Vice President does not favor higher gasoline prices for consumers. Let me just state that.

Mr. ROHRABACHER. He has always advocated that. That is not even debatable.

Bill Richardson: That is not the case. He wants to see tax credits for families to purchase fuel efficient cars.

Mr. ROHRABACHER: No, he has advocated in his writing, he has advocated in speeches, that Americans, that we are at fault because we want to use our cars too much, because the price of gas is too low. Does that mean the administration has backed off of its commitment to higher gas prices through the Kyoto agreement? Has the administration backed off from that?

Secretary RICHARDSON. Congressman, we have never been for that. Let me just tell you what the Vice President wants to do. You mentioned automobiles. It is through him that the big 3 and the Department of Energy and other agencies are trying to make SUVs more fuel efficient, 40 miles per gallon, 80 miles per gallon. That is his objective.  

Brad Sherman, California.  We are being told that oil prices would be lower if we just got rid of all environmental concerns, drilled everywhere, eliminated any attempt to reduce air pollution, and nothing could be further from the truth. I want to thank the administration and the Secretary for standing firm on environmental concerns.

We should, instead, focus on the fact that we went to war in the Gulf, we could have experienced thousands of casualties, and we had an opportunity to turn to Saudi Arabia and to turn to Kuwait and say in return for your continued existence as countries, we insist that you leave OPEC and produce oil at a reasonable economic rate. Instead, we returned Kuwait to its Sultan or its Emir, and, let’s face it, Saudi Arabia would not be an independent state today had we not acted. Without asking for a single concession for the American consumer or motorist, and in doing so, we not only failed to overthrow Saddam Hussein, we failed to break OPEC.

Those who blame the environmentalists should recognize that if it wasn’t for environmentalist concerns, we would be getting 12 miles a gallon in our cars and 8 miles a gallon or 6 miles a gallon in our trucks and SUVs, and think that we need to go further if we want to break OPEC toward fuel efficiency standards and toward fuel efficiency research. We are told that America is addicted to foreign oil, so the solution is huge subsidies for big producers of oil domestically. Yet we, as motorists, pay the same price, whether we are buying oil from Saudi Arabia or from Texas, domestically produced oil sells for no less. So when OPEC forces the price of oil up, the producers in Texas do just as well as those in Kuwait, and yet we are told we are supposed to give more subsidies, more tax breaks, to those who are already getting huge prices for their oil. The key is not foreign oil versus domestic oil, it is just total world supply of oil.

Howard Metzenbaum, Chairman of the Consumer Federation of America, former Senator of Ohio

I think that history will record that probably the failure to have some sense of appreciation from Saudi Arabia and Kuwait is probably one of the most ungracious, ignominious acts of any nation, one to the other. We were there when they needed us, we were there with our men, women, who went there to save those countries. The Kuwaiti leadership left the country while our men and women were there saving them from being overtaken by the Iraqis, and in appreciation, what comes about? The highest price oils, restricting the production of oil. They ought to be ashamed of themselves.

I believe what is happening now is a serious threat, not to our Nation’s security, but to the lives, the economic welfare, of literally millions of Americans. The price of gasoline may not matter much to those who have the wherewithal, but the price of gasoline is a very serious threat to working people who have to use their automobiles to get to work, to mothers who have to leave their children at a baby clinic, at a child clinic, so that their child may be safe while the mother is working, and it is a challenge for many who are living on a very meager existence to try to be able to get along with the extra costs brought about by reason of increased gasoline prices. It is just unfair, it is unreasonable, it is illogical for us not to be releasing oil from the Strategic Petroleum Reserve.

BENJAMIN A. GILMAN, NEW YORKToday’s hearing is the third in our series on the impact of the price-fixing-schemes of the Organization of Petroleum Exporting Countries on the American homeowner, the small businessman, the commuter, the truck driver, the consumer—and the policymaker who sits in your seat and must manage this uneasy and very troubled relationship. Our policy is hard to discern—and harder still to explain to the average American who has seen gasoline prices rise some 60 cents over the past year and a half to record levels in the northeast and Midwest. Oil prices today are higher than at any time since the Iraqi invasion of Kuwait. Continued high prices for gasoline and other fuels are now beginning to stunt our own economic growth and curtail global growth prospects as well. In addition, they are stoking the flames of inflation inducing bankers to raise rates and curtail lending.

How has the Administration reacted to this growing threat to our pocketbook and our prosperity? Remarkably passive in the face of OPEC’s continued assault on our free market system and antitrust norms, this Administration is still firing blanks when it should be making an all-out attack on the production allocation system which has kept oil at $30 a barrel for much of the year. The producers are in clover with multi-billion dollar profits while consumers are in hock to a cartel that is turning our economy’s soft landing into an abrupt free fall with no rip cords left to pull. I am still waiting for the answers I raised at our first hearing: What has the Administration done to systematically review our policies toward OPEC and its member states? Why has the Administration failed to weigh in strongly enough with OPEC last year to prevent a continuation of production cutbacks? And how can we begin to take effective action against its continued production cutbacks and price fixing behavior?

The Administration’s laissez-faire approach has sent the clear signal to OPEC that price-fixing is fine by us, that production cutbacks are not so bad after all, and that as long as you keep trying to aim at a reasonable price for crude oil, you can overshoot your mark with $30 a barrel oil with not so much as a slap on the wrist. Uncle Sam is being played for ‘‘Uncle Sucker.’’ The legislation I introduced last week, ‘‘The Foreign Trust Busting Act’ ’and the ‘‘International Energy Fair Pricing Act of 2000’’ will ensure that this Administration adopts a consistent and comprehensive policy of opposition to OPEC and other similar cartels. In the ongoing energy crisis facing this nation, it keeps the spotlight where it belongs—on this international energy cartel. With the enactment of this measure, the Administration will no longer be able to go back to business as usual in supporting back room arrangements and cartel-like behavior. The first measure would allow lawsuits to be brought against foreign energy cartels. The second would specifically direct the President to make a systematic review of its bilateral and multilateral policies and those of all international organizations and international financial institutions to ensure that they are not directly or indirectly promoting the oil price-fixing activities policies and programs of OPEC. (53) It would require the Administration to launch a policy review of the extent to which international organizations recognize and or support OPEC and to take this relationship into account in assessing the importance of our relationship to these organizations. It would set up a similar review of the programs and policies of the Agency for International Development to ensure that this agency has not indirectly or inadvertently supported OPEC programs and policies. Finally, it would examine the relationship between OPEC and multilateral development banks and the International Monetary Fund and mandates that the U.S. representatives to these institutions use their voice and vote to oppose any lending or financial support any country that provides support for OPEC activities and programs.

Paul Gillmor, Ohio. Another factor in the high gas prices has been the fact that the United States has placed many areas ‘‘off limits’’ to domestic petroleum exploration and production. While there may be some valid reasons for doing so, the fact is this has made the United States more dependent on foreign energy and much more vulnerable to the international cartel.

Robert Menendez, New Jersey.     The past five years, Republicans in Congress have funded only 12% of the Administration’s requests for new investments in renewable sources of energy and energy efficiency initiatives—this measly and irresponsible level of funding has been nearly $2 billion short of Clinton Administration requests.

I don’t think, Mr. Chairman, it is appropriate to claim here today that the Administration has no energy policy.

Republicans not only have failed to build up the Strategic Petroleum Reserve when fuel was cheap, but before we faced this crisis, they proposed getting rid of the Energy Department and selling off the reserve—policies that would have been extremely detrimental if carried out as proposed.

Cynthia A. McKinney, Georgia.  I want to bring something that I feel is very, very important to your attention that I am sure you are not aware of. It has to deal with the situation of African-American workers at Savannah River site. I just want to list some of the things that are alleged to have taken place there. There is a work area where African Americans primarily work. That area is referred to as ‘‘Coonsville.’’ Nooses have been placed on African Americans’ work stations, and electricians brought a noose to the site and demonstrated the historical value of a noose. The ‘‘N’’ word is reportedly regularly used by both management and staff. African Americans at the Savannah River site have 1.7 to 1.8 times the exposure to radiation than their white counterparts. African American employees feel that management places African Americans in the work site to get the radiation. Twenty percent of the total workforce at Savannah River site is African American, yet 40% of the staff in the areas of exposure to radiation are African American. Two percent of the upper management at Westinghouse are African Americans. There has never been an African American vice president at Savannah River site. A machine named ‘‘the manipulator’’ is referred to as the slave master. Finally, I would just like to say I had the president of Westinghouse, Savannah River site, in my congressional office, Mr. Buggy, and while there, Mr. Buggy actually used the ‘‘N’’ word in my presence, in my office. That is the kind of leadership that exists at Savannah River site Westinghouse under contract by DOE. Now, I also have a letter from Maryanne Sullivan, general counsel, dated May 15, 2000, from the Department of Energy, where she says that litigation expenses are considered to be costs of doing business. My question to you, Mr. Secretary, is why should the U.S. taxpayers foot the bill for litigation expenses against poor employees who have already been victimized by that kind of management and that kind of an environment? And why should that be condoned by the Department of Energy?

Secretary RICHARDSON. Congresswoman, I will get back to you on these issues. Let me just say that after that 60 Minutes report came out, and I think you are aware of that, I sent a team down there to look at some of those allegations. I also sent my ombudsman, somebody who I appointed in the Department to find problems of racial profiling, we have had some problems with Asian Americans in the suspect case at Los Alamos, and I wanted to send a message that we don’t tolerate racial profiling. I will have somebody come see you, or I will come to see you myself, to look into some of these issues that you have raised with me.

Edward J. Curran, Director of Counter-Intelligence, Department of Energy

I am a current FBI employee with the assignment to review of the counterintelligence program within DOE, prepare a 90-day study with recommendations, and improve the counterintelligence program.

What we found is the counterintelligence program at the Department of Energy was almost nonexistent. It didn’t even meet minimal standards. We said that and we said we have a lot of things to do here. The 48 recommendations were very controversial within the Department and the laboratories. There is a great deal of resistance to any of those recommendations. We broke them down into tier tier 1, 2 and 3. Tier 1 were recommendations that we need to do right now to fix the problem at DOE. One of those recommendations was to enhance our pre-brief and debriefing programs of our scientists who are traveling overseas, and we acknowledged 2 years ago they are targets of foreign intelligence service, just like anybody else in the government, DOD or other government agencies, including private industry. The results of this GAO study we worked very closely with them in the past 8 months while they were preparing this. We gave them complete access to our database that we put the information on our pre-briefings. These were pre-briefings that the Secretary has approved in November. Despite the resistance, he approved all 48 of these recommendations.

We agree totally that all our scientists are at risk, no matter where they are outside the United States, whether it be because of economic espionage, proprietary information. What we have to first address, though, are those countries from the sensitive countries that have a track record, have been identified as activities by those intelligence services that threaten immediately our national security. Our scientists get pre-briefs often, personal briefings, before they go overseas. We gather this type of information. We know what countries do what to us, and it is a defensive mechanism that whether we do this or not, that targeting is going to take place overseas. We feel that to have a structured program to prepare these people to go over is of tremendous interest to counterintelligence. If I could just read from the GAO study one paragraph, which was unfortunately leaked to the news media last week, and I think some elements in the news media believed that anything that is leaked is critical to the Department of Energy. I think you need to read it thoroughly, though, to see this is not a critical report. Page 3 of the GAO study, it says, DOE and its laboratories have instituted several national security controls over official foreign travel by laboratory employees. They include threat assessment and analysis provided by DOE’s office of counterintelligence, security and counterintelligence awareness training, and a review and approval process for foreign travel requests, face-to-face or written pre-travel briefings, classification review of publications and presentations, and face-to-face or written post-travel debriefings and trip reports prepared by the traveler.

What we try to do is if you do these pre-briefings early, we can come up with determinations whether a particular employee is being targeted or singled out, whether because of the science he happens to be working on, or whether he may show some vulnerabilities. Once we determine that, if we consider an employee to be in harm’s way or be unusually targeted, we will take him out of that country.  Every scientist within DOE that travels to a foreign country is required to have a pre-brief with a counterintelligence officer. Every employee going overseas is required by the Secretary to have at least an annual briefing on awareness training and counterintelligence security issues.


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