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by day. Our objective for the immediate future is to build this Nation's energy strength, making full use of its vast natural resources and the daring and ingenuity of its citizens. Our approach includes removing technological and institutional barriers to increased use of coal and nuclear power, opening the Outer Continental Shelf to responsible hydrocarbon production, and eliminating the remaining price controls on natural gas. At the same time, we will continue to support advances in conservation as well as possible energy sources of the future such as magnetic fusion.

Some of these initiatives require budgetary resources, but many do not. The President's decontrol of oil in January 1981, required only the stroke of a pen, yet nothing has done more to put this Nation back on the right energy track. Reforming the nuclear licensing process and permitting all gas to sell at market rates would have a negligible budgetary impact, but would have immense, longlasting benefits. Federal funding for appropriate activities can help us to reach our energy goal, but Federal funds are in short supply.

Deficit reduction is perhaps the preeminent domestic economic imperative today, and the Department fully recognizes that fact. For this reason, we are doing all we can to concentrate increasingly scarce resources on those programs and projects that directly fulfill a responsibility of the Federal government and truly require Federal assistance. If we are to achieve our overriding goal of deficit reduction we cannot afford to continue to allocate scarce Federal resources to activities where the rationale for continued Federal involvement is weak, and where State and local organizations or private industry can and should take over responsibilities presently borne by the Federal government. Also, we cannot permit programs or projects to continue with Federal support unless they meet a high priority national need.

These policies are evident in the FY 1987 budget for the Department of Energy. Among the major initiatives are the privatization of the Federal interest in Naval Petroleum Reserves No. 1 and No. 3 and the defederalization of the Power Marketing Administrations. There is no national security reason for the government to continue to run the Naval Petroleum Reserves today, almost seventy five

years after they were established. They have not been true reserves since 1976,

when Congress determined that the Reserves should be produced at their maximum efficient rate and the output sold.

Similarly, the Power Marketing Administrations principally perform electric utility functions which are not fundamentally Federal in nature. We believe non-Federal entities could perform the same services with equal or greater efficiency and be subject to local and regional control, as is true for most of the electric power now sold in the Nation.

Another new initiative in the FY 1987 budget involves cooperative research and development ventures with private industry consortia. Our Fossil Energy organization will conduct a pilot program in FY 1987 and the Conservation and Solar technology areas will investigate similar venture partnerships with industry. The use of cooperative research and development ventures should serve to con

centrate resources on research and development activities that more broadly sup

port industry, promoting more effective technology transfer and providing better leveraging of scarce Federal resources.

Our rigorous attempt to limit Federal support in FY 1987 to only the highest

priority projects and programs whose success will serve the national interest

has implications for FY 1986 as well. This policy has resulted in our withdrawing support from a number of activities deemed to have lower priority, deferring the funds thus saved, and using them to reduce the need for new budget authority for more worthy activities in FY 1987. We have no choice under the current and necessarily strict fiscal regimen but to concentrate scarce resources where they show promise of bringing the greatest benefits.

The budget proposes an indefinite moratorium on further development of the Strategic Petroleum Reserve (SPR) and a cessation of fill later this year when 500 million barrels of crude oil will be in storage. The SPR represents a wholly adequate "insurance policy" given the current energy situation, and, in fact, achieves the level of protection envisioned by Congress when it established the program. The moratorium will be reassessed as economic conditions and the world oil market conditions change.

The Environment, Safety and Health functions have been centralized and expanded, with greatly increased funding for oversight and planning activities under the direction of the new Assistant Secretary. This underscores the Department's commitment to give high priority to public and worker health and safety in our operations. Similarly, the Department will direct increased funding to another area of priority concern, which is upgrading safeguards and security at the Department's facilities.

With this as introduction, let me turn now to the major elements of the

Department's FY 1987 budget.

Budget Overview

The FY 1987 budget for the Department of Energy is $12.1 billion, which is $400

million below last year's request and about one percent above the FY 1986

funding levels as reduced by the President's Sequester Order pursuant to the

deficit reduction legislation. Outlays are anticipated to be approximately $12.5 billion. Within the $12.1 billion request the Department has sought to

maintain the priorities and budget strategies which have characterized the

Department's budgets since the advent of this Administration. These include a concentration on longer-term résearch and development leading to a balanced and mixed energy resource base, and a withdrawal from continued efforts in more mature technologies, where responsibility for further development should rest with the technology's private sector sponsors.

As mentioned above, legislation is being proposed to permit the transfer of Federal control over the Naval Petroleum Reserves No. 1 and No. 3 and the Power Marketing Administrations. However, pending Congressional approval of these proposals, full funding for these organizations in FY 1987 is included in the budget. Other legislative initiatives associated with this budget would modify the Federal investment repayment practices of the Power Marketing Administrations, without changing interest rates on past investments.

The Department's budget is presented in six categories. Each categor; groups activities which share common characteristics. The FY 1987 budget for Research and Development is about 7 percent below the FY 1986 level when amounts of new

budget authority are compared. However, the level of actual program activity is higher, as FY 1987 will benefit from large sums of unobligated budget authority carried over from FY 1986 and made available for program use. . Most of these unobligated balances will result from savings due to cost reductions in the Uranium Enrichment program, primarily the termination of the Gas Centrifuge

Enrichment Plant.

Comparing funding levels within the Research and Development category at the level of actual program activity, increases in high energy and nuclear physics, environmental activities, supporting research, weapons research and development, and Naval reactors more than offset reductions to fossil, conservation, solar, nuclear energy and magnetic fusion programs.

Defense Production and Support, $4.8 billion, increases by $498 million from FY 1986, due to increased requirements from the Department of Defense for weapons systems, and for special nuclear materials for use in weapon systems and by the nuclear Navy.

The budget request for Waste Activities, $1.8 billion, is 30 percent greater in

FY 1987 than FY 1986, with increases in all major program elements; the Nuclear

Waste Fund, Remedial Action and Waste Technology, and Defense Waste Management.

The budget request for Business Enterprises is $691 million. Funding require

ments for Business Enterprises are about 20 percent lower than in FY 1986. In addition to the uranium enrichment enterprise and the Strategic Petroleum Reserve, this category includes the Naval Petroleum Reserves and the Power Marketing Administrations, which the Administration will actively seek to transfer to non-Federal control. However, the budget includes full funding for these activities through FY 1987 to assure continuity of operations.

The Grants and Other Energy Functions category has a budget request well below

the FY 1986 level, due primarily to the withdrawal of direct appropriations for State energy conservation grant programs. These programs will be able to rely on large sums made available to the States in restitution for petroleum pricing and allocation violations.

Departmental Management, which includes management and support functions in

Washington and the field, is almost unchanged from FY 1986.

I would now like to discuss the budgets for selected program areas.

GENERAL SCIENCE

The budget request for the General Science appropriation in FY 1987 is $773 million, an increase of almost 18 percent over last year. The General Science account includes the High Energy Physics and Nuclear Physics programs, which are a major part of the National effort to identify the basic constituents of matter and the basic forces in nature.

A major feature of the High Energy Physics program in FY 1987 will be the first research operation of two major colliding beam facilities--the Tevatron protonantiproton facility at Fermilab and the Stanford Linear Collider, an electronpositron collider, at the Stanford Linear Accelerator Center.

The highest priority for new construction in basic nuclear research is the

Continuous Electron Beam Accelerator Facility at Newport News, Virginia. Construction will be initiated in FY 1987 for this unique, world-class facility.

The FY 1987 program also provides funding for research and development on superconducting magnets and systems related to the next generation particle collider. The results of prior research and development in this area will provide the technical information for Departmental review of a Superconducting Super Collider-type facility.

ENVIRONMENT

I have continued to stress the importance of environmental concerns at the Department, and the FY 1987 budget request reflects this theme. The funds requested for environmental compliance activities throughout each of the Department's program areas as well as for the Environment, Safety and Health program area have increased this year. The Department's programs are formulated in a manner that balances research and development and production requirements with the need to protect the environment. Funding for the Environment, Safety

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