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and design for a possible second repository. Twelve potentially acceptable second repository sites were proposed in January.

The Department also has two other program areas in which radioactive wastes are treated, stored, or prepared for ultimate disposal. The Defense Waste Management program provides for the interim storage of radioactive wastes generated throughout the Doe' complex during the production of special nuclear materials used in the defense production facilities. A highlight of this

program in FY 1987 is the continued construction of the Defense Waste Processing Facility at the Savannah River Plant, and the Waste Isolation Pilot Plant at Carlsbad, New Mexico. The Remedial Action program objective is to treat or stabilize radioactive waste and clean up contaminated DOE and certain nongovernment facilities and sites. The budget in FY 1987 is $294 million, an increase of 28 percent over FY 1986. This increase will maintain the schedule for cleaning up high priority sites throughout the country.


The Department intends to continue filling the Strategic Petroleum Reserve (SPR) in FY 1986 until the inventory reaches a level of 500 million barrels, in compliance with current law. No additional oil purchases are planned for FY 1987. Given the current world energy environment, the SPR inventory is more than adequate for use in the event of a supply disruption. In light of this decision, continued creation of storage capacity is unnecessary at this time. Therefore, we are planning to curtail certain development activities during FY 1986 to reduce near-term federal spending for facilities which are not presently required. Funding for these activities is being deferred and proposed for use in FY 1987 for standby operations and maintenance. As a result, no new appropriations are requested. This moratorium on development and suspension of

fill of the SPR will be reassessed as economic and oil market conditions change.


The budget request for uranium enrichment is $1.3 billion, down slightly from
FY 1986, and is offset by revenues of the same amount. During the last year, we

have taken strong actions to revitalize this country's uranium enrichment business. We have streamlined the program, reduced costs, and reduced prices to customers, thus demonstrating our ability to compete in the world market. Through several creative marketing initiatives, the U.S. share of the free world enrichment market increased from 46 percent in 1985 to an estimated 53 percent in 1990. This will result in additional revenues of over $500 million during 1987 - 1990. We are confident that we can get our prices into the world competitive range using the existing gaseous diffusion capacity.

To ensure more efficient commercial deployment of advanced enrichment tech

nology, the Department intends to transfer the development and ultimate

deployment of the Advanced Vapor Laser Isotope Separation (AVLIS) process to the private sector.

In FY 1987, we are also proposing to begin repayment of the unrecovered Federal investment in the uranium enrichment program. The total Federal investment to be repaid is $3.5 billion. In FY 1987, $235 million in revenue collections will be returned to the Treasury.


A major initiative will be undertaken to privatize the Naval Petroleum Reserves in FY 1987. Legislation authorizing the sale of the federal interest in Reserves No. 1 (Elk Hills) and No. 3 (Teapot Dome) will be submitted this fiscal year with the intent of conducting the sale as promptly as possible, probably in FY 1987. The government's role, which has changed from maintaining the Reserves for national security reasons to producing them at their maximum efficient rates and selling their output competitively, is better fulfilled by private industry. In the interim, the Department will continue to develop, operate and produce the Reserves until the sales are completed. The amount requested for FY 1987 will fund the Naval Petroleum and Oil Shale Reserves for the entire year. Once the sales take place, a rescission of any remaining budget authority will be proposed.


There are two major initiatives affecting the Power Marketing Administrations in FY 1987: defederalization and modification of repayment practices.

We will pursue defederalization through an open and competitive process.


goal will be to seek a fair return to the Federal taxpayers from the defederalization of these assets, while recognizing the benefits currently enjoyed by existing customers, and recognizing and providing appropriate protections for the personnel benefits of Federal employees. Before implementation of this proposal, the views of concerned groups and individuals, including appropriate Congressional Committees, State and local officials, current customers, the financial community, and public power and private sector energy interests will be considered.

Funds are included in the budget for operating the power marketing administrations in 1987, but we will actively seek to defederalize these utility systems. We expect that all five PMAs will be transferred from federal control by 1991. In the interim, the Department is proposing to modify the PMA capital investment repayment process legislatively to protect the interest of the taxpayers. These modifications require repayment of the unpaid balance of the original federal investment at a level not less than would be required under a fixed, straightline amortization schedule for each power investment financed by appropriations and placed in service. The impact of this proposal is relatively modest.

Mr. Chairman, I believe that the budget I have summarized meets the Department's

responsibilities in its several mission areas in a manner which recognizes today's fiscal responsibilities and tomorrow's anticipated needs.



On January 18, 1985, John S. Herrington was nominated by President Ronald Reagan to be the fifth Secretary of Energy. Mr. Herrington was confirmed by the United States Senate on February 6, 1985, and sworn into office on February 7, 1985.

Prior to joining the Department of Energy, Mr. Herrington served in the White House as Assistant to the President of the United States. Before assuming that post, he served as Special Assistant to the Chief of Staff, the White House, from February to May 1983. Mr. Herrington also served as Assistant Secretary of the Navy from October 1981 to February 1983. He was a member of the Reserve Forces Policy Board, the Military Manpower Task Force working Group, the Department of Navy Review and Oversight Council, and Chairman of the Defense Department Per Diem Committee. For his service in the Department of Defense, Mr. Herrington was awarded the Distinguished Service Medal, the Department's highest civilian award. Mr. Herrington also served as Deputy Assistant to the President and Director of Presidential Personnel after he moved to Washington in January 1981.

Mr. Herrington was born in Los Angeles, California, May 31, 1939. He graduated from University High School, Los Angeles, California, in 1957. He is a graduate of Stanford University where he received his A.B. degree in economics in 1961. Mr. Herrington received his LL.B. and J.D. degrees at the University of California, Hastings College of Law, San Francisco, California, in 1964. Mr. Herrington has been a practicing attorney in California since 1965 specializing in corporation, real estate, taxation, and business law. He also expanded his interests into real estate development, ranching, restoration of historic buildings, and other investment undertakings. Mr. Herrington has also served as a Deputy District Attorney in Ventura County, California, and a First Lieutenant in the United States Marine Corps Reserves.

Mr. Herrington is married to Lois Haight Herrington, Assistant Attorney General of the United States. They have two daughters, Lisa Marie (age 19) attending the University of California at Los Angeles, and Victoria Jean (age 18) attending the University of Southern California. The Herringtons reside in McLean, Virginia.

June 1985

STATEMENT OF SENATOR MATTINGLY Chairman HATFIELD. Does the Senator from Georgia have questions he wishes to ask?

Senator MATTINGLY. Mr. Chairman, I have a statement I would like to have entered in the record.

Chairman HATFIELD. The statement will be included in the record. [The statement follows:)

STATEMENT OF SENATOR MACK MATTINGLY Mr. Secretary, I want to commend the Department of Energy for its involvement, through the biological energy research (BER) subprogram, in supporting complex car bohydrate research activities. As I have expressed in the past, I believe that research in this area is of critical importance to this Nation and its future.

As the Secretary is aware, last October the University of Georgia established a complex carbohydrate research center which has attracted Dr. Peter Albersheim and his team of distinguished scientists to the university. Major financial support of the team's research has been provided through competitive grants within the biological energy research program for years.

In October and December, I requested that the Department of Energy give serious consideration to providing Federal support to the University of Georgia's complex carbohydrate research center as part of its fiscal year 1987 budget request. I note that the departmental budget request acknowledges the importance of complex carbohydrate research. Specifically, the request states that the funding levels suggested by the Department will allow for enhanced support for ongoing projects in complex carbohydrate research. In addition, it states that an effort will be made to “respond to a few of the numerous very high quality research opportunities presently available in these areas."

The University of Georgia clearly represents one of these “very high quality research opportunities," perhaps the highest. Will specific consideration be given to substantial, ongoing support for the University of Georgia's complex carbohydrate research center? What portion of BER Program funds are set aside for these "research opportunities?" When and how will specific allocations be made?

1985 FARM BILL AMENDMENT Senator MATTINGLY. Mr. Secretary, I know you are aware of the amendment which I had offered, which was adopted in both the 1985 farm bill and the concurrent resolution, making surplus Commodity Credit stocks available for exchange in acquiring petroleum products, including crude oil for storage in the SPRO.

My question today is directed to your plans to utilize this feature and what sort of timetable we might expect.

Secretary HERRINGTON. Yes, sir, we are aware of that amendment, and we have not yet begun activity on it, with the exception of a review. I am pleased to say that there is interest and there are inquiries as to how we might implement it.

I think it has promise. It is something that we will want to pursue.

Senator MATTINGLY. You know that some of the foreign suppliers of petroleum products are really interested in exploring a possibility, such as swaps. I assume you are aware that some of those countries are?

Secretary HERRINGTON. Yes, sir, we are.

Senator MATTINGLY. I might point out, a representative-I think it was PEMEX, the Mexican oil company—had called my office just prior

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