ENERGY AND WATER DEVELOPMENT WEDNESDAY, APRIL 14, 1982 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, D.C. The committee met at 2:05 p.m. in room 1318, Everett McKinley Dirksen Senate Office Building, Hon. Mark O. Hatfield (chairman) presiding. Present: Senators Hatfield, Abdnor, Mattingly, Stennis, and Burdick. DEPARTMENT OF ENERGY OPENING REMARKS Chairman HATFIELD. The hearing will come to order. Today, we begin our examination of the fiscal year 1983 budget for the Department of Energy programs within the jurisdiction of the Energy and Water Development Subcommittee. On behalf of the Appropriations Committee, I want to extend a very special welcome to the Secretary of Energy, Dr. James B. Edwards. Mr. Secretary, we look forward to your testimony, which will give us an overview of the proposed energy budget, which will then be followed by a panel of distinguished Energy Department officials led by Assistant Secretary Heffelfinger, who will briefly report to the subcommittee on departmental administration and other support activities. Mr. Secretary, again we are very pleased to have you here today and your full testimony will be placed in the record. SECRETARY EDWARDS' FUTURE PLANS Senator STENNIS. Mr. Chairman, may I add a personal word? I read in the paper with interest that Dr. Edwards is going to be president of the school of medicine located in his home city, Charleston, S.C., and I know he will be outstanding there. I certainly wish him well. I hate to see him leave town. I want to maintain his Department here and have him run it a while. Anyway, he is going to do great work down there and I congratulate him. Secretary EDWARDS. I am not going to leave town tomorrow, by the way. Chairman HATFIELD. Mr. Secretary, that was the first question I had on my list. [Laughter.] Now that the issue has been raised, may I proceed to question you a little bit on that issue before you get to your testimony. Secretary EDWARDS. Senator, I will try to respond to any questions you have. Chairman HATFIELD. Have you incorporated some remarks on that subject in your official testimony? [Laughter.] Secretary EDWARDS. Senator, I had not planned to talk to that point at all, but I will be glad to respond. Chairman HATFIELD. I think we can revolve this committee into a career discussion session for a moment. [Laughter.] Are recent news reports accurate that indicate you have been offered an appointment? I assume you have discussed this with President Reagan? Secretary EDWARDS. Mr. Chairman Chairman HATFIELD. Do you have a deadline to meet by the board of trustees? Secretary EDWARDS. No; we are very fortunate. The board of trustees has, in fact, made the offer to me to become president of the Medical University of South Carolina at Charleston, my home town, and that may be one of the reasons I have had a smile on my face recently. But they, fortunately, have given me no deadlines to meet so I can respond to that at any time I think it is appropriate. I have talked to the President on two occasions about the possibility of my leaving. I hope we can fulfill some remaining obligations and then leave at an appropriate time. We have not decided when that time will be, Senator. Chairman HATFIELD. The President has not given you a deadline to totally dismantle the Department before you leave? [Laughter.] Secretary EDWARDS. Senator, we would like very much to complete this merger, as we refer to it now, into the Department of Commerce before I leave town, so maybe you can help me hurry that along so I can get on my way. Chairman HATFIELD. I want to commend you and congratulate you, whatever your future may be. I am the holder of an honorary degree from the University of South Carolina. I feel it would be a great career opportunity for you, if that is your desire and your wish to go in that direction. Secretary EDWARDS. I also have an honorary degree from South Carolina, so you and I are alumni. Chairman HATFIELD. Please proceed with your testimony. STATEMENT OF HONORABLE JAMES B. EDWARDS, SECRETARY STATEMENT HIGHLIGHTED Secretary EDWARDS. Mr. Chairman, members of the committee, I appreciate the opportunity to discuss with you the fiscal year 1983 budget for Federal energy programs. I have submitted a statement for the record and would like to make a few comments. This budget is structured to carry out this administration's policy of relying on the free market for solutions to energy problems. The free market has served us well in the past and will work well in the future when it is allowed. Our fiscal year 1983 budget request follows the pattern begun in last year's request, to redirect our efforts in favor of the more appropriate Federal role of longer term, high-risk technology research and development with a potentially high payoff. This redirection in spending and the removal of over 200 sections of petroleum price and allocation regulations, along with retaining, without change, only 74 of the 155 other existing and proposed regulations we inherited in January 1981, are the keys of our policy of placing more reliance on the private sector and the market. This policy is working well. Since the decontrol last year, drilling and seismic work has reached all-time peaks and oil imports are at the lowest since 1975. FEDERAL ENERGY ROLE The fiscal year 1983 budget request supports the five basic responsibilities in energy which are unique to the Federal Government: One, is establishing sound policies which give individuals and business incentive to produce and use energy efficiently and allow an integrated energy market to function. Two, protecting against energy supply disruptions, primarily through maintenance of the Strategic Petroleum Reserve. Three, providing support to long-term, high-risk, potentially highpayoff research. Four, supporting production and testing of nuclear weapons. And last, performing other tasks, such as operation of naval petroleum and oil shale reserves and marketing Federal power and utility regulation as required by law. ENERGY PROGRAMS REORGANIZATION As was stated in the national energy policy plan, energy is no longer viewed as an isolated entity, but an integral part of the overall economy. Consequently, a separate Energy Department is no longer necessary. The five basic energy responsibilities can be carried out more efficiently and effectively in other Cabinet-level departments with related responsibilities. In the proposed reorganization plan, these responsibilities will be divided principally between the Department of Interior and the Department of Commerce. The Departments of Justice and Agriculture will also assume some functions and the Federal Energy Regulatory Commission will become a separate independent regulatory agency. A new agency, the Energy Research and Technology Administration will be established within the Department of Commerce to manage energy research and development, uranium enrichment, general science, and defense activities. Other energy functions, such as energy information collection and analysis, emergency preparedness, international energy activities, conservation grant management, and national energy policy formulation will also be assigned to Commerce, but they will not be part of ERTA. The Department of the Interior will manage the Naval Petroleum and Oil Shale Reserves and the five Power Marketing Administrations. FISCAL YEAR 1983 BUDGET The fiscal year 1983 budget request for Federal energy programs is $12.1 billion in budget authority, including $2.1 billion in off-budget oil acquisition funds for the Strategic Petroleum Reserve. The President has recently transmitted a budget amendment increasing the original request by $311 million to provide sufficient funds to support the requirements of the recently signed nuclear weapons stockpile memorandum. Funding is reduced in energy research and development, the strategic petroleum reserve, and program administration. Other major activities have increased funding requirements, including atomic energy defense activities, general science, and the Power Marketing Administrations. R. & D. activities represent 27 percent of the fiscal year 1983 budget and show a 14-percent reduction from fiscal year 1982. This reduction is a continuation of the redirection of fossil, conservation, solar, and renewable resource programs. Magnetic fusion is a good example of long-term research effort with potentially high payoff. The fiscal year 1983 budget request of $444.1 million will provide for continuation of our scientifically oriented fusion program with limited engineering effort. NUCLEAR FISSION PROGRAM The nuclear fission program provides the research base for the continued development of nuclear power as an economic and environmentally acceptable source of electric power. The fiscal year 1983 budget request is $1,016,000,000. In mid-fiscal-year 1982, in support of the President's economic recovery program, we will begin to streamline certain aspects of the liquid metal fast breeder reactor program. This is necessary so that the resources, facilities, and technical expertise can be used in the most cost-effective manner. The breeder base program will continue to support technology development on fuels, materials, and structures. The principal plant project included in the liquid metal fast breeder reactor program is the Clinch River breeder reactor. In fiscal year 1983, it is anticipated that site preparation activities will move forward, as well as the required licensing support, design work, and equipment procurement and fabrication activities. Emphasis is also placed on closing the nuclear fuel cycle, principally by continuing research on commercial reprocessing of spent fuel and on nuclear waste disposal. The administration is committed to the development of commercially financed, high-level waste repositories. To finance repository activities, we support creation of a nuclear waste disposal fund. Fees will be paid into the fund by utilities which use nuclear power to generate electricity. In fiscal year 1983, borrowing authority of $185 million is requested to provide program continuity early in the year until fees are collected from the utilities later in the year. Approval of this borrowing authority by the Congress is of vital importance for a smooth transition to utility financing of the nuclear waste geological repository program. Enabling legislation for collecting fees for the nuclear waste disposal fund from the utilities is also vitally needed. I urge you, Mr. Chairman, and the committee, to take action in an expeditious manner on this issue. The purpose of the basic energy science program is to provide knowledge that is relevant to energy production, conversion, exploration, and use. In fiscal year 1983, the budget request of $283 million will enable the program to maintain most of the ongoing core research program and will permit some growth in biological energy research, advanced energy projects, engineering, mathematics, and geosciences. The fossil energy budget funds will be applied to more generic research efforts and technology-based development related to production of coal, oil shale, natural gas, and petroleum. CONSERVATION PROGRAMS The fiscal year 1983 request of $17.5 million for conservation programs will support research and development in the multisector energy conversion and utilization technology program. State and local assistance programs, including grants for weatherization, schools, and hospitals, are proposed to be terminated together with support for appropriate technology and energy-related inventions. Funds for weatherization are available through the low-income home energy assistance program administered by the Department of Health and Human Services and through the community development block grant program administered by the Department of Housing and Urban Development. SOLAR AND OTHER RENEWABLES The fiscal year 1983 funding request for solar and other renewable energy programs totals $83 million. The administration's policies for solar energy continue the redirection begun last year to place greater emphasis on the private sector in the development and commercialization of solar technologies. No new fiscal year 1983 budget authority is being requested for active heating and cooling, passive heating and cooling, ocean thermal energy systems, hydropower, and solar information programs. Basic research will continue in photovoltaics, solar thermal, biomass, and wind energy program areas and we will complete our commitment for research and development. The programs included in the general science appropriation support basic research to expand our knowledge of the fundamental structure and behavior of matter. The budget request for fiscal year 1983 is $601 million, up from $543 million in fiscal year 1982. |