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to that final conference approval on that farm bill inquiring about the plans. They seemed very interested at that time. I am certain that they will be right now.
I would just like to have one other question answered which I would like to submit for the record for your later response. It deals with the departmental plans, or lack thereof, in research in the complex car. bohydrates. I would appreciate it if you could send that for the record later.
Secretary HERRINGTON. Yes, we would be pleased to.
Senator MATTINGLY. I think it would be worthy of your pursuit, which I am certain you are for, instead of us spending money out of the Treasury there is the possibility of using surplus commodities, which have already been paid for, to swap for oil which can then go into SPR.
Thank you, Mr. Chairman.
Senator ABDNOR. Mr. Chairman, I don't have any questions at this time. I plan to submit some questions in writing, though.
ATOMIC ENERGY DEFENSE ACTIVITIES Chairman HATFIELD. Mr. Secretary, your budget request proposes an increase for atomic energy defense programs of about $1 billion-a 14percent increase from $7.2 billion in fiscal year 1986 to $8.2 billion in fiscal year 1987.
What level of inflation was assumed for this account in your budget, and what percentage of real growth over the Gramm-Rudman adjustment appropriation for fiscal year 1986?
Secretary HERRINGTON. The assumption for inflation on that budget is 4.5 percent. The real growth is computed at 3 percent.
Chairman HATFIELD. Can the Department effectively absorb another large increase, doubling the program in 1 year? You may wish to provide the committee with a detailed breakdown of the request showing the 1985, 1986, along with your 1987 level. We would be very happy to have you do that for the record.
But in general, do you think you can absorb that kind of rather dramatic increase?
Secretary HERRINGTON. Mr. Chairman, I think the increase is driven by two primary factors: We have had a real careful look at both these programs. One is the administration's strong position in support of SDI and the milestones that we at the Department of Energy are required to meet at our national laboratories.
The other is the task of providing sufficient materials and weapons under the President's Nuclear Weapons Stockpile Memorandum that we are tasked to do. In both those cases we are the managers of these projects, and I believe we can meet the goals and milestones that we are required to.
NUCLEAR ENERGY RESEARCH Chairman HATFIELD. Mr. Secretary, would you turn to page 13 of your statement, please?
On page 13, you indicate that the budget proposes a fundamental shift in funding of nuclear energy R&D activities. As I read it, your 1987 budget request proposes some large shifts, particularly in the advanced reactor research, away from civilian reactor research into military research. Now, my question is, can you tell the committee to what extent this change is toward military applications or elaborate on that, and is this a short-term or a long-term shift as far as the future is concerned?
Secretary HERRINGTON. I think the reason behind the shift is something that I ought to point out first. In our estimation, having less money to devote to new programs has forced us to pick winners and losers among the various programs that we are operating in the civilian sector. Some have done well; some have done not as well.
The next point is shifting into the military area allows joint funding with the military. In other words, we are able to leverage our money a little more effectively by going into projects with the Army or with the Air Force for small reactors with primarily military-type applications.
It seems a prudent thing to do, in that we will be able to keep the programs going, and the reactors that we are working on don't have strictly military applications. I think there can be civilian uses for some of the spinoffs.
Finally, whether it is a long-term policy or a short-term, I don't feel I can answer today sufficiently based on where we are.
Obviously, if the deficit were not as it is, we perhaps would not make that shift as we have. But we don't know the total impact of Gramm: Rudman at this point.
MILITARY VERSUS CIVILIAN RESEARCH Chairman HATFIELD. Mr. Secretary, I wonder if we could get the benefit of your further reflection on this point, because actually, it can communicate, at least to some, an appearance that the Department of Energy is becoming more like an arm or a division of the military, for in this budget we see some rather significant civilian functions that are being cut, and we see some military applications being increased.
I think that it is well to take stock of this shift, both from the standpoint of a philosophical commitment, but also as to whether this is a temporary situation or if this means an establishment of a foundation for a long-term objective that would continue this kind of trend.
I really feel very strongly that before we launch into 1987, we ought to have some reflection or some responses to this perception that at least we see, and the budgetary implications of it today and 3 years from now.
We have other questions that we will submit in writing, but I wonder if you would address that particular perception in terms of the general philosophy and commitment of the Department?
und submit that e hot direct prog. There is some
SHIFT OF NUCLEAR ACTIVITIES TO DEFENSE Secretary HERRINGTON. Yes, sir, I would be happy to.
I also have read numerous things on the shift of the Energy budget into the defense area, and in putting together this budget, I looked at it very carefully with that in mind.
Some things have occurred to me that I think are relevant; that perhaps this committee has been through many times, but they might need to be said again. If you take all defense activities, as we have them set out in the budget, I would submit that there are many activities under the category of defense activities that are not direct program defense activities. There are some environmental cleanup activities. There is some upgrading of facilities that have been neglected for many years, and other types of indirect activities, such as this, that are put in the defense category.
If you put all those together against an appropriated fund of $12.1 billion, you would come up with a figure of about 67 percent in the defense category of our total budget. But that, too, is misleading, because this Department, as is well known, does the uranium enrichment business, which is substantial. We are, today, operating Power Marketing Administrations around the country on a no-profit, no-gain type basis.
So the $12.1 billion in appropriated funds, to me, is distorted, because if you took the gross magnitude of DOE activities, you are speaking in the range of $19 billion. Put the defense programs against that figure, and you are talking in the range of 43 percent.
Is this long range or short range? I think everybody in this room hopes it is short range. It depends on a lot of things. What type of progress can we make on SDI, which I think is going very well. What kind of progress can we make at the arms negotiations talks? How much longer does the Energy Department have to produce the type of weapons that we are putting out at this point?
I think there are a lot of variables. I think our policy is that it would be better to be a short-term activity. I think right now with the development of SDI and the requirement to meet our goals of the stockpile memorandum, we have to say that in the foreseeable future, this trend would stay the same.
Chairman HATFIELD. Mr. Secretary, I think you would agree, though, that taking, say, the nuclear waste costs, you would have to certainly pro rate a major portion of that to the defense-related activity that produced the waste in the first place. You can't ascribe all that cost to a nondefense or civilian part of your program, could you?
Secretary HERRINGTON. No, I think you are 100-percent correct, but the perception that 67 percent of the Department of Energy makes weapons is out there. People write about it and talk about it. And I think that is misleading. There are activities that are not weapons activities. Just as in the Defense Department, for instance, there is a huge portion of their budget involved in DOD schools. Perhaps that should be over in the Education Department.
firmation hearing, and as you know, my interes a $686 million
You can't call all activities by one particular name. There has to be some delineation.
POWER MARKETING ADMINISTRATIONS Chairman HATFIELD. Mr. Secretary, I notice on page 18 of your testimony a section devoted to what you entitle “Power Marketing Administrations,” in which you refer to a two-initiative program, twopronged initiative of the administration to defederalize and modification of repayment practices.
Having a slight interest in this particular proposal, I assume that a position that has been taken, I believe, by the Department relating to repayment schedules remains the same; namely, that any change in that particular repayment schedule would be initiated only after enactment of legislation to change existing policy.
Is that correct?
Secretary HERRINGTON. Yes, sir. I made that commitment in my confirmation hearing, and we intend to stick by that.
Chairman HATFIELD. As you know, my interest in the Bonneville situation is that the ratepayers have made, this year, a $686 million payment, $237 million of that on principal, and it looks as though they will be making a similar payment this year, which will make it pretty much current with the obligations under the present repayment schedule.
The second part of that initiative relates to defederalization of the PMA's. I note the language on page 18 of your statement says that I am reading now from your testimony in the middle paragraph:
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.
Could you elaborate on that phraseology as it might relate to an alternative or an option of legislation being enacted before defederalization could or should occur?
Secretary HERRINGTON. I don't look at it as an option. I would think it is part of the process.
What I mean by that proposal is that the sale of an asset the size of Bonneville Power would probably dwarf most of the financial transactions that many of us are used to. It is complicated, and it is difficult, and it is something that cannot be done overnight.
What I am saying is, before taking on such a project, you would need to have major input from groups involved. One example would be that there needs to be a very good look at who your buyer would be, and then you have to look at what price. The budget number that we have used is simply a plug number, but a great deal of sensitivity would need to go into that process.
BONNEVILLE POWER ADMINISTRATION Chairman HATFIELD. Let me go back and rephrase my question. Let's separate Bonneville out from the other PMA's, because it is distinctive, as you well know, in both the enabling legislation, the generic legislation, and the current status of that facility.
Will the administration initiate sale of Bonneville assets only after enactment of legislation?
Secretary HERRINGTON. Yes.
Chairman HATFIELD. You foresee the requirement or the icecessity of having specific legislation in place in order to sell assets of one kind or another currently a part of the Bonneville Power Administration?
Secretary HERRINGTON. Yes, sir, I do.
Chairman HATFIELD. I have separated my question deliberately, and now take the other PMA's as distinctive to Bonneville, because they are different.
Do you foresee the necessity of having in place legislativa authority or authority established by legislation before you would sell or put up for sale assets relating to the other PMA's?
Secretary HERRINGTON. Yes.
Chairman HATFIELD. You would? In other words, legislative foundation would have to be established to dispose or sell any assets from any of the PMA's in your view?
Secretary HERRINGTON. That is the administration's position, yes.
Chairman HATFIELD. That is the administration's position. I am so grateful to find these areas where we can agree. (Laughter.]
Especially on an issue like this one.
You are the finest Secretary of Energy we have had, I think, for a very long time; taking that position fully qualifies you to be Secretary of Energy for as long as you want. (Laughter.]
Secretary HERRINGTON. Thank you, Mr. Chairman.
I understand I have submitted a very lengthy list of questions in the authorizing committee that the Secretary has been asked to answer. I have an interest in a number of those. I think you are qualified to be Secretary for quite a long time, even before you answered the chairman's question. I do appreciate all you are doing in the Departnent, and I commend you for it.
WASTE ISOLATION Pilot PLANT I would like to ask a couple of questions that have concerned me and that are parochial. I note that the gentleman in the Department who is presently trying to find a permanent underground site in this country for the disposal of high-level nuclear wastes is here with you. I didn't