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Industrial processes. The multi-sector program will emphasize research in thermal sciences, biocatalysis, and tribology. In addition, funding for evaluation of invention proposals and support for the most promising among them is proposed.

Support will continue for the Low Income Weatherization and Schools and Hospitals grant programs, utilizing funds recovered in settlements of oil pricing and allocation violations during the period of price controls which are not or cannot reasonably be refunded to injured persons. The proposed funding level of $238 million is equal to the amount appropriated for FY 1984.


The renewable energy technologies show substantial potential as energy supply alternatives across virtually all major segments of the energy market. Solar and other renewable energy technologies, including solar thermal, solar buildings, photovoltaics, biofuels, wind, ocean, and geothermal options, promise increased diversification within the Nation's future energy supply infrastructure.

The budget request in this area is substantially larger than the FY 1984 request. The incorporation of previously discussed Departmentwide cost savings measures, coupled with completion of several expensive projects, makes it possible to present a program at levels slightly below the prior year's appropriations.

We are convinced that, at requested funding levels, the renewable energy program will maintain the momentum established to date by the industrial and federal research community. We fully intend to continue development of virtually all major technology options at a reasonable and businesslike pace. The funds requested for this area permit us the flexibility to expand or open up several avenues of technical investigation and improve upon an established technology transfer activity.


The program level proposed for the Department's fossil energy programs in FY 1985 is $273 million. Although this is about 20 percent below the FY 1984 appropriation, it is virtually twice the FY 1984 budget request, and reflects the Department's strong commitment to supporting a mix of technology alternatives. The coal budget of $178 million continues to address generic research, technology base development, and environmental research. An integrated acid rain research effort cutting across virtually all programs is a feature of this budget. Coal cleaning and preparation and improved combustion systems are among the technologies being developed to permit the Nation's vast coal reserves to be used in an environmentally sound manner. Efforts in magnetohydrodynamics will be redirected to a multiyear program consisting of advanced scientific research and an integrated system test. Research and development into a number of promising synthetic fuels technologies continues in the coal liquefaction and gasification programs.

Petroleum research is proposed at a level above the FY 1984 appropriation, with emphasis on enhanced oil recovery. The gas budget continues activities in Western tight gas sands and Eastern gas shales, and proposes advanced research on the energy potential of methane hydrates and deep source gas.


The Department's nuclear energy programs are designed to provide the technological base to support industry's efforts to revitalize the. development of nuclear power as an economic and environmentally acceptable source of baseload electric power.

The Department's budget request in FY 1985 is $618 million. The largest program elements in the budget are Breeder Reactor Systems (5308 million) and Remedial Action ($152 million). The Breeder Reactor Systems budget is well below the FY 1984 appropriation, because the program has been restructured significantly since the failure to appropriate FY 1984 funds for the Clinch River Breeder Reactor (CRBR) led the Department to initiate termination activities. No FY 1985 funding is required for CRBR termination. As now constituted, the breeder program focuses on resolving technology issues that are key to achieving a safe, reliable, and economically competitive breeder for introduction by the private sector early in the next century. Our confidence in the technical merit, safety, and licensability of breeder reactors was recently confirmed by the action of the Nuclear Regulatory Commission in issuing a Memorandum of Findings favorable to the CRBR. This action would have been sufficient to authorize issuing a construction permit had the project continued. The Clinch River Project has produced valuable experience in the areas of design, component testing, and licensing. This information will be retained for use in the restructured base technology program. A priority element of the program will be à substantial increase in international collaborative efforts.

In FY 1984, activities related to the conceptual baseline design of a proposed large High-Temperature Gas-Cooled Reactor (HTGR) will be completed and available for work with NRC. Efforts will also be initiated on design studies utilizing passive cooling systems for decay heat for both a small integrated system and a nodular system. Efforts in FY 1985 will be further refocused to evaluate the potential of small HTGRS for unique domestic and international markets. In addition, the development of the technology base needed for HTGR electric and process heat applications will be supported. These activities and objectives are consistent with the current policy of support for long-leadtime, hightechnology advanced concepts that cannot be fully supported by the private sector.

The Remedial Action program has the objective of treating or stabilizing radioactive wastes and performing decontamination and decommissioning at surplus DOE and certain non-government facilities and sites. Funding for FY 1985 is proposed at a level which is more than 50 percent higher than was provided in the FY 1984 appropriation. The increase is concentrated in three areas: inactive uranium mill tailings sites; surplus facilities (primarily Shippingport, Pennsylvania); and the former reprocessing facility at West Valley, New York. The remedial action program has matured to a point where funding at approximately this request level will be required for a number of years, to achieve the cleanup schedules proposed in authorizing legislation.


Important elements of the Department's nuclear waste activities have been designed to support the goals of the Nuclear Waste Policy Act of 1982, which was signed into law on January 7, 1983. The Act created the Nuclear Waste Fund, which provides for commercial radioactive waste disposal services and for the study of monitored retrievable storage (MRS). The Fund is financed by fees collected from civilian nuclear utilities. The Department is given authority to expend Fund resources through annual appropriation acts. The appropriation request for FY 1985 is $327.7 million, slightly higher than the FY 1984 level. Revenues are estimated to be $377.8 million, assuming that beginning in FY 1985 the fee will be adjusted in accordance with the Administration's economic assumptions. The Department is permitted to incur obligations up to the appropriated amount even if there is a shortfall in the revenues paid into the Fund, through authority to borrow from the Treasury.

The Department has identified nine potentially acceptable sites in six states for the first repository. These nine will be narrowed to three in in a phased process by January, 1985, and a final site will be recommended to Congress in 1990. Also, literature studies are being conducted in crystalline rock in Seventeen states as potential candidates for the second repository.

Systems analyses and concept evaluations for an MRS program have been completed. Development of facility design concepts will be initiated in FY 1984, leading to a proposal to Congress in FY 1985 on the need for and feasibility of an MRS.

Another element of the Nuclear Waste Policy Act is the civilian waste research and development program. The FY 1985 request of $27.6 million is more than double the previous year's level, and provides funding for cooperative demonstrations to encourage efficient at-reactor storage; alternative disposal concepts, such as subseabed disposal; and generic research and development studies in support of civilian waste management activities.

Both the Waste Fund activities and the research and development elements of the program are managed by the Office of Civilian Radioactive Waste Management, which was established by the Nuclear Waste Policy Act.


This program is responsible for generic long range energy related research which has applications to all of the Department's technology development programs. The budget for FY 1985 is $420 million, a significant increase over the $337 million appropriated in FY 1984. FY 1985 funds will support use of important facilities: the National Synchrotron Light Source, the Intense Pulsed Neutron Source, the 1.5 MEY high voltage electron microscope, the Atomic Resolution Microscope, and the Stanford Synchrotron Radiation Laboratory. Also, first steps will be taken to expand energy research computing activities to meet immediate needs for supercomputer access by the Department's energy research staff.


The Department's General Science programs support basic research into the fundamental constituents of matter. This research contributes to advances in all scientific disciplines and broadens and deepens the technology base. The budget request is $746 million, a 16 percent increase over the FY 1984 appropriation. The research is conducted in two programs, High Energy Physics and Nuclear Physics. These programs make use of a number of large, advanced accelerators and other research facilities which in many cases are unique in the world. In FY 1985 preliminary research will be undertaken for the design of the next generation particle accelerator, designated the Superconducting Super Collider, in the High Energy Physics program, and in Nuclear Physics construction will be initiated on the continuous Electron Beam Accelerator Facility.


The FY 1985 budget for the Strategic Petroleum Reserve is $2,337 million, which includes $1,890 million for oil acquisition and transportation off budget and $447 million on budget, primarily for facilities development. The request will permit an average annual fill rate of 145,000 barrels per day in FY 1985, with 26.5 million barrels on order for delivery in FY 1986. At the end of FY 1985, there will be 482 million barrels of oil in storage, which is approximately 64 percent of the 750 million barrel reserve planned by 1991. In view of the Nation's improved energy situation and much reduced reliance on insecure foreign sources of oil supply, the Department's budget and plans for development of the Reserve will provide an increasing measure of protection from energy emergencies, including supply interruptions. Within the Facilities Development program, funds are provided for full scale development of the new storage site at Big Hill, Texas.


Defense Activities accounts for about 52 percent of our budget request for FY 1985. The request of $7,806 million meets the requirements of the Defense Department for weapons production & testing, together with research and developMent on new and improved weapons, production of special nuclear materials, and Naval reactor development. Within the Weapons Activities area production activities will involve nine weapons, and preproduction efforts will be conducted on several additional systems.

Increased funding is requested for the Verification and Control Technology program, which aids in nuclear weapons treaty verification, arms control, intelligence, and nuclear export control. Major activities in FY 1985 include continued satellite sensor development.

A major program element is the Defense Waste and Byproducts Management program, which has a budget of $753 million in FY 1985. In FY 1985, efforts wili . continue to provide for the safe handling and interim storage of all defense radioactive wastes as they are produced, including upgrading waste handling, storage, and waste disposal operations by transferring high level waste from old single shell tanks at Savannah River and Hanford into new double shell tanks. Construction of the Defense Waste Processing Facility at Savannah River and the Waste Isolation Pilot Plant in New Mexico will continue.

Safeguards and security at the Department's weapons facilities are receiving special attention. A supplemental appropriations request of $158 million is being proposed in FY 1984 for this purpose, as well as to fund environmental protection improvements and unanticipated state tax liabilities.


Ten years ago the United States had a monopoly on the production of enriched uranium. Today, our share of the global enrichment market has dropped significantly due to a worldwide excess of enriched uranium, increasing foreign competition, and the emergence of a secondary market for enriched uranium. DOE's market practices have not kept pace with the changing circumstances. As a result, enrichment revenues are beginning to erode, thus limiting the funds available for investment in more modern enrichment capacity.

Over the past year we have analyzed the situation carefully, considered alternative options, and developed a strategy that we believe will significantly improve our market position. Our most pressing needs are to stabilize our market share, to provide for an orderly drawdown of excess inventories of enriched uranium, and to stem the tide of customers who are going elsewhere for their enriched uranium. Consequently, our first step is to offer a new contract with terms sufficiently attractive to interest potential customers and to keep our present customers satisfied. This step was taken on January 18th, with the issuance of a new Utility Services (US) enrichment contract. This new contract offers several competitive features including a lower price with a long-term price ceiling, the ability to purchase a portion of uranium requirements from foreign suppliers or the secondary market, and ordering and delivery provisions that are substantially more flexible than those of current contracts.

The second element of our strategy is to plan and conduct the activities in all areas of the uranium enrichment enterprise in an efficient and cost-effective Ranner. With regard to existing production capacity, we have initiated intense discussions with TVA to obtain relief from the demand charges for unused power. Additionally, we are introducing more effective cost control measures into our gaseous diffusion operations. As market data are obtained from customer response to the new contract, we will adjust our outlays in proportion to our revenues.

The market response to our new contract will also be critical in determining future investments in replacement capacity and in research and development. An important element of our long-range strategy is to replace the gaseous diffusion operations with technologies that are more energy-efficient and, ultimately, more cost-effective. As you know, we are currently building a Gas Centrifuge Enrichment Plant (6CEP) at Portsmouth, Ohio. Our current plan is to proceed in FY 1985 with construction of GCEP Buildings 1 and 2 and procurement of Set III centrifuges. No funds are committed to any buildings beyond Buildings 1 and 2 at this time.

Beyond GCEP, we are developing advanced gas centrifuge (Set V) and Atomic Vapor Laser Isotope Separation (AVLIS) technologies. In the near term, we plan to continue research and development on both. In FY 1985, we plan to select one of these advanced technologies for further development. Revenues in FY 1985 are estimated to be $1.7 billion. Our request for budget authority is equal to the estimated revenues. Budget authority will be divided among diffusion operations, $1,171 million, Centrifuge, including GCEP, $422 million, and advanced technology, $78 million.

Mr. Chairman, the budget we are proposing is a prudent, balanced approach to meeting our responsibilities in the Department's several mission areas within the context of today's economic realities and tomorrow's anticipated needs. I welcome your questions.

SUMMARY OF 1985 BUDGET Secretary HODEL. If I may just briefly summarize it, we have attempted to set forth in this budget strong support for the Department's responsibilities in three main mission areas. We have the energy portion, we have the general science portion, and we have the national defense portion of our budget. We have been working within the framework of the national energy policy plan we submitted to Congress in October. In that proposal we set forth a goal of an adequate supply of energy at reasonable costs for this country.

We have two main strategies within that goal. One is to minimize the Federal control and involvement in the energy markets, recognizing our responsibilities for health and safety and the environment. Second, not in terms of priorities but as a second primary strategy, we seek to promote a balanced and mixed energy system. By balanced and mixed we mean a total array of resources. We wish to avoid the pitfalls that have caused trouble for many of my predecessors, of being labeled as proconventional such as oil or gas or natural gas or coal or nuclear and anti everything else or prorenewables and conservation and anticonventional.

We think it is imperative as a nation that we maintain a balanced approach, and I hope that our budget has moved in the direction of increased balance.

I must recognize, Mr. Chairman, that there is no way within the budget constraints that we all face that I can satisfy all of the claimants for the various kinds of activities they think should be done. Each proponent of a particular category of resource would like to see all of the money in our budget funneled into the projects they feel are most imperative in their areas. We obviously can't do that. We believe that we have shifted our emphasis toward the more scientific and technical research aspects of these programs.

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