SUMMARY OF NUCLEAR ENERGY BUDGET

Mr. VAUGHAN, Mr. Chairman, I am pleased to have this opportunity to summarize the Department's nuclear energy supply research and development programs and our uranium enrichment programs.

The Department places high priority on ensuring that nuclear energy continues to contribute to a strong, stable, and secure national energy base to meet both civilian and military requirements. Our reactor development programs to help preserve the nuclear option and our execution. of a reliable, competitive, and businesslike uranium enrichment enterprise are an integral part of that commitment.

The funding levels for our various program elements are tabulated in my prepared statement and I will not repeat them. While the overall fiscal year 1987 budget request for our nuclear energy supply research and development programs increases slightly from our fiscal year 1986 estimate, there have been some shifts in relative funding levels for individual programs. Within an essentially level budget, our funding request for nuclear energy R&D has decreased by about $45 million, while funding for remedial action and waste technology has increased by some $64 million compared to last year.

BUDGET FORMULATION CRITERIA

There are several key factors that influenced the formulation of our programs and our budget request.

First, the Department is fully committed to support the bipartisan effort to control and reduce the Federal deficit. In this necessary environment of fiscal constraint, we are constantly faced with difficult choices among deserving programs. Therefore, although it may appear to some that worthwhile R&D elements have been eliminated or significantly reduced, we believe that each of our programs is focused to make optimum use of limited resources.

Second, space and defense nuclear energy needs are increasing as previously planned. All of these activities are an essential part of a top national priority.

Third, our Civilian Reactor Research and Development Program is more sharply focused. Last year, we testified to our conviction that the institutional and technical impediments to the near-term deployment of light water reactors must be overcome before there would be a good chance to realize the potential of advanced reactors. Our Light Water Reactor R&D Program is focused on essential safety and reliability research and development which can help facilitate efforts by U.S. industry to usher in a new, advanced generation of nuclear powerplants. Certainly, the anticipated timing for the commercial introduction of innovative reactor technologies, beyond light water reactors, has been stretched out. We have made good progress in our high temperature gas-cooled and liquid metal reactor design work in the past 2 to 3 years. Our focus will now be upon key features affecting the economic, passive safety, and technical issues of these concepts to preserve their potential for the future.

Fourth, although the remedial actions and waste technology budget request does increase significantly compared to last year, the increase is less than previously forecasted. The program objectives can be achieved at the requested funding level by extending the authorization period for the Department's Uranium Mill Tailings Remedial Action Program from March 1990 until the end of fiscal year 1993.

URANIUM ENRICHMENT

Finally, the uranium enrichment budget request reflects several strategic decisions made by the Department during the past year, including placing the Oak Ridge gaseous diffusion plant into a standby condition, termination of the gas centrifuge enrichment plant project, and selection of the atomic vapor isotope separation process as the advanced uranium enrichment technology for the United States for the next century.

Against this background, let me turn to a few of the key issues and highlights of our nuclear energy R&D programs.

NUCLEAR ENERGY RESEARCH AND DEVELOPMENT

The Department has provided R&D support for both the defense and civilian nuclear energy areas for decades. Both will continue to be served by our proposed program, which is integrated and coordinated so as to minimize overall cost. The priority for the defense nuclear energy programs for military applications has not changed; those programs related to SDI have expanded and moved ahead as previously planned, while overall funding stringencies have tightened.

Therefore, in the face of the urgent need to reduce Government outlays, we have adjusted the pace of our Civilian Reactor Development Program, one which will still keep us ahead of market needs for the types of reactors involved. The agenda in our draft strategic plan for civilian reactor development, which is currently being reviewed by the Energy Research Advisory Board, remains valid. We plan to make adjustments in the scope and pace of those tasks to reflect national priorities, funding constraints and comments received from the review panel and others.

LIGHT WATER REACTOR RESEARCH

Turning for a moment to our light water reactor effort, the technical support for demonstrated removal of the remaining technical, licensing, and institutional impediments to the next generation of these plants as well as for innovative advanced reactors, remain a key objective of our R&D programs.

Work on advanced light water reactors includes R&D needed to bring forward a new generation of midsized reactors. With today's pattern of lower load growth rates, plants with smaller than 1,000 megawatt electric ratings and lower total capital cost may be required to meet utility needs. Both the market and the regulatory processes are too uncertain to justify the sufficient private sector financial investment on their own to carry the design concepts to a State at which their potential can be adequately assessed. In fiscal years 1986 and 1987, DOE,

through competitive contracting and in cooperation with EPRI, will be providing selected technology support for these advanced designs through cost-shared programs.

In response to a request that your subcommittee made last year, Mr. Chairman, we have provided, just prior to this hearing, a detailed report on these activities.

ADVANCED REACTOR CONCEPTS

With respect to our more advanced civilian reactor research and development in the current fiscal year, work will continue on the development of liquid metal reactor and high temperature gas-cooled designs and their supporting R&D activities. Fiscal year 1987 will see a further focusing of our effort on key economic and safety aspects of these designs to ensure assessment of the technical points effecting licensing.

These programs for 1987 and beyond will build on the significant progress made in the past few years. Passive safety features are being incorporated into these advanced reactor designs to reduce significantly the likelihood and consequences of plant failures. The potential exists to accomplish a number of things in terms of the response of these plants to severe accidents, to achieve much longer core life programs, to achieve and use state-of-the-art technology in communication, controls, and operations. In addition, we are continuing our advanced metal fuels work to establish the technical feasibility to improve safety margins, fuel cycle costs, and on-site reprocessing.

SPACE AND DEFENSE POWER SYSTEMS

As I think most of you know, the space and defense power systems segment of our program is structured to respond to requirements identified by NASA and the Department of Defense, including the SDI organization. These are all cost-shared programs, which will provide the design, development, and supporting technology to build compact, high-performance reactors for space and terrestrial applications and dynamic isotope power systems for space application.

Our SP-100 Space Reactor Program is moving into the 5-year ground engineering test phase based on a reference mission that has been established by SDI. The Multimegawatt Space Nuclear Power Program concentrates on the evaluation of potential higher space power concepts and the development and testing of enabling technology leading to the selection of a reference concept by 1991.

The small nuclear power source demonstration project will demonstrate in fiscal 1987, performance of a reactor subsystem that will be an alternative to conventional power systems for applications such as the North Warning System, which is an upgrade of the DEW line across northern Canada. Last, our Multimegawatt Terrestrial Nuclear Power Program will design a passively safe, 10-megawatt electric hardened nuclear powerplant to meet needs which have been identified by the Air Force, as well as SDI. The request for proposals for this latter project will be issued in the next few weeks.

In our Advanced Nuclear Systems Program, we will continue our responsibilities to develop, demonstrate, and deliver radioisotope power sources for both military and civilian space and terrestrial missions. The RTG's, as they are called, for Galileo and Ulysses passed all their tests and are ready for launch. As you know, the launch has been deferred to the summer of 1987. Additionally, NASA is planning to continue to use these on their future missions and we are continuing to work with DOD and NASA to pursue the technology of advanced RTG's that offer promise of higher power density and greater size adaptability as mission requirements evolve.

With respect to the continued operation of our liquid metals reactor test facilities, I would simply note that the operation of these facilities continue to make significant contributions to the United States and international liquid metals operating experience as well as providing testing capabilities required for the development of nuclear energy sources that will be needed for space and military application.

Some of the achievements in the past year from the tests in these facilities, which are important programmatic activities, are tabulated in my written statement. The Department is also evaluating whether alternate cost-sharing methods among other DOE programs should be applied to these facilities' costs.

REMEDIAL ACTION

Let me turn, now to our remedial action and waste technology programs. My written statement contains detailed information on each of the projects underway in this program. Emphasis in all of the remedial action programs will concentrate on cleanup activities at highest priority sites and the continued protection of the public and the environment at all sites.

Of particular interest to this subcommittee is the uranium mill tailings remedial action project, which is responsible for conducting remedial action at 24 former uranium ore processing sites and several thousand contaminated vicinity properties. Our proposed 32-year extension of this project takes into consideration the actual project experience gained in performing remedial action at several processing sites and many vicinity properties. Project plans have been revised to reflect this experience and more level funding and workloading among the projects. Within these plans, work will continue first at the high priority sites with minimal planned extension in previous schedules for these sites.

I note, Senator Hatfield, that you are interested in the Lakeview, OR, project, and work is planned to be underway there in fiscal year 1986 as previously planned, and I know Senator Domenici, you are interested in the Shiprock project, which you and I had the opportunity to dedicate. That work is proceeding well and on schedule.

Let me conclude with a summary of our uranium enrichment activities.

Our fiscal year 1987 budget request for this program is approximately $1.05 billion in budget authority, which will be fully offset by $1.29 billion in projected revenues. In addition, the Department proposes to return $235 million to the Treasury as a part of the repayment of prior Government investment in the uranium enrichment enterprise.

Our primary objective is to retain a competitive, financially healthy uranium enrichment supply capability in the United States for the long term.

Important progress has been made in achieving the seven major goals established for this uranium enrichment enterprise, as articulated in the June 1985 strategy document and as outlined in my written statement.

ADVANCED ENRICHMENT TECHNOLOGY

We, in the past few years, have become more cost competitive, improved the operation of the existing gaseous diffusion plants, and are continuing the development of AVLIS which we believe is the world's most advanced enrichment technology for the future. Of most significance, in this program, through several creative marketing initiatives, we have been able to increase our share of the free world enrichment market from 46 percent in 1985 to 53 percent in 1990.

Within the United States, the corresponding numbers get us to more than 80 percent of the domestic market in that same timeframe.

There is, however, much more to be done, and the next 2 years will be very critical for the enrichment enterprise.

One key action recently initiated by DOE is the proposed modification of the uranium enrichment services criteria. We noticed a proposed rulemaking in the Federal Register at the end of January 1986. The proposed criteria modification addresses: First, the items that were questioned in the miners' lawsuit; other aspects of the enterprise, including flexibility for future competitive actions; and last, a reiteration of the Department's position opposing restrictions on the enrichment of foreign natural uranium. We hope to complete this rulemaking process by the end of summer.

A new initiative which is now under review is an effort to transfer future development and ultimate deployment of the AVLIS technology to the private sector. This is part of a general evaluation of areas in which the private sector can beneficially be involved in the enterprise. As a minimum, we hope that the private sector will be interested in deploying the AVLIS technology. I would emphasize that this is an area in which we have initiated an evaluation and are going to form late careful plans before we proceed in any manner which would be detrimental to the enterprise.

INTRODUCTION OF ASSOCIATES

This completes my statement, Mr. Chairman. I have several of my colleagues with me Mr. Longenecker, Dr. Wilcox, and Mr. Voight. We would be pleased to respond to your questions at this time.

Chairman HATFIELD. Thank you very much, Mr. Vaughan.