The FY 1988 budget meets our increasing national security requirements. It maintains our commitment to priority programs, such as basic energy science research, environment, safety and health, nuclear safeguards and security, and clean coal technology development. The FY 1988 budget of $13.9 billion, which is a large sum, supports a level of program activity which is essentially unchanged from FY 1987. However, the request for new budget authority is higher in FY 1988, because the funds carried over from prior years are much less than they were in 1987.

The budget reflects recurring policy themes of this Administration: One, confine Federal support to activities which are properly the responsibility of the Federal Government.

Two, improve technology transfer, and obtain meaningful cost sharing with the private sector and with the States.

Three, divest assets which could better be managed by non-Federal entities.

Our budget reflects the Administration's strong support to frontier research and commitment to maintain and strengthen the Nation's scientific leadership and technological competitiveness.

SUPERCONDUCTING SUPER COLLIDER

The most dramatic evidence, of course, of this commitment is President Reagan's recent decision to support construction of the Superconducting Super Collider, the next generation in high energy physics.

This decision ensures that the United States will retain world leadership in high energy physics well into the next century. The site selection process, which you may well wish to ask about, was announced on February 10, at a press conference, and it should lead to a final site selection by, we estimate, January of 1989.

The target completion date for this project is 1996. Other major projects contributing to research efforts include CEBAF, which is the Continuous Electron Beam Accelerator Facility in the nuclear physics program and the Compact Ignition Tokamak in the magnetic fusion energy program. That, of course, is located in Princeton.

The budget request for the General Science appropriation which supports the SSC, CEBAF and other high technology major research facilities is $815 million. This is a 13 percent increase over the FY 1987 funding level.

ENVIRONMENT, SAFETY AND HEALTH

We continue major efforts that we began in 1985 to identify and correct past problems in the environment, safety and health areas, and to prevent current and future violations of safety and environmental standards in our facilities.

Our budget request for environment, safety and health increases 13 percent, to $70 million, with most of the increase applied to continuing the environmental survey that we started last year, as you remember, and technical safety appraisals of the Department's facilities.

The budget also contains a strong commitment to effective safeguards and securities at all of our facilities.

ACID RAIN

Mitigating acid rain is another major effort in our area. An initiative which will receive increased emphasis is our effort to find ways to burn coal more cleanly and more efficiently. In addition to a number of advanced techniques being studied in the fossil energy research and development budget we are proposing to increase our clean coal technology activities by drawing on funds in the clean coal reserve to investigate promising retrofit, repowering and modernization technologies.

STRATEGIC PETROLEUM RESERVE

Last August, the President affirmed his commitment to our Strategic Petroleum Reserve, and we have been filling that at a rate of 75,000 barrels a day in accordance with a law passed last year.

We have recommended in this budget that the mandated level be reduced to 35,000 barrels a day because of budgetary considerations. The language submitted with this budget authorizes this fill rate without jeopardizing the government's ability to continue producing oil at the Naval Petroleum Reserves.

The Department is renewing its efforts to divest activities which are more appropriately managed by non-Federal entities. In particular, we are proposing legislation authorizing the sale of Federal interest in the Naval Petroleum Reserves Number 1 and Number 3, and legislation authorizing a study of divestiture of the Southeastern Power Administration. Also, we will continue planning activities for the sale of the Alaska Power Administration.

NAVAL PETROLEUM RESERVES

For budget purposes, it is assumed that the Naval Petroleum Reserves could be sold in FY 1988 for $3.3 billion, with $2.5 billion received in FY 1988 and $.8 billion in FY 1989. However, the FY 1988 budget does contain a full year's funding for the NPR's.

POWER MARKETING ADMINISTRATIONS

Two power marketing administration assets are assumed to be sold in FY 1989.

Another initiative affecting the Power Marketing Administrations is repayment reform. The objective is to have debt repayment proceed on a proper, businesslike basis. While this initiative will not affect the level of Federal funding in support of the Power Marketing Administrations, it will assure that repayment of the Federal investment in the PMA facilities will occur on a timely, stable and predictable basis. Repayment reform will not increase interest costs or the total Federal investment to be repaid.

At this point, I would like to touch briefly on budgets for selected program areas. The FY 1988 budget request for fossil energy, conservation, research and development, solar and other renewables is consistent with our FY 1987 request to you.

We believe that adequate funds are being directed to the highest priority activities. The private sector can and should provide financial support for projects involving a proprietary product or process development. We are proposing to limit conservation grant funding

to the $134 million derived from escrow funds for petroleum product over-charges.

The States have received almost $3 billion in the last two years in settlement of oil pricing and allocation violations. We see no need for additional funds for that particular activity.

NUCLEAR WASTE DISPOSAL

The budget request for nuclear waste disposal in FY 1988 is $500 million, as proposed to you, which is consistent with the funding levels that were provided in FY 1986 and FY 1987. However, a draft Mission Plan amendment and a detailed budget supporting that mission amendment of $725 million in FY 1988 have been prepared. Following a review by Congress, a budget amendment will be submitted for the $725 million program to carry out the schedule described in the Mission Plan amendment.

We recognize that these are areas of Congressional concern. It is our hope that the amendment to the Mission Plan will provide a suitable vehicle for Congress to provide any direction that it believes is needed for the conduct of this program.

DEFENSE ACTIVITIES

The FY 1988 budget request for the Atomic Energy Defense activities appropriation account is $8.1 billion. In FY 1989, the request is $8.5 billion. A two-year budget was submitted for this account as required by authorization legislation. The growth in the account averages 3 percent for each year over the FY 1987 level plus inflation.

SDI funding increases from $349 million in FY 1987, which includes $32 million of prior year funds, to $481 million in FY 1988.

URANIUM ENRICHMENT

The major emphasis in the Uranium Enrichment Program in FY 1988 is to reduce costs of its operation at the gaseous diffusion plants so that we can become competitive in the world market. And I would like an opportunity to discuss that a little bit with the Committee.

Mr. Chairman, I appreciate your courtesy in letting me make these brief remarks. Of course, these programs are extremely important to us, and having a chance to lay out our game plan for you is something that we appreciate.

Mr. BEVILL. Very good, Mr. Secretary. To begin with, I do want to thank you for having Sherry Peske work with the Committee during our appropriation process. She is already making a very significant contribution. And also, I wish to express my appreciation for the work Harry Peebles has done in making the arrangements for it.

NUCLEAR WASTE

Mr. Secretary, the Nuclear Waste Program has been drastically changed by the Department in the last two years. It has been suggested that many of those changes may not be consistent with the intent and purpose of the Nuclear Waste Policy Act of 1982.

Are you of the opinion that you are in full compliance with the requirements of that Act?

Mr. HERRINGTON. So far we are, Mr. Chairman. Let me say two things: Number one, we need a nuclear waste repository. I do not think anyone on this Committee or on our staff would disagree with that.

Number two, nobody wants it.

You have to work within those limitations. Last May, we suggested that we did not need to do site-specific work on the second repository, and that is very important. At this time, number one, we do not really know today if there is going to be enough waste for that second repository. I could go into more detail, but it involves the fact that we may not have the 70,000 metric tons at the time we thought we were going to when this Act was passed. Therefore, you probably, in good conscience, could put off the decision on the second repository, to start looking for it, until about 1996. This would get us the advantage of a savings of between $700 and $900 million in the work that we would do now that we might not have to do in the future.

And of course, new technologies could develop in the next 10 years as we go into the first repository. That has been a very controversial decision, obviously, divided on geographical lines, and everyone is concerned about us following that law to the letter.

What I have done is written up our plans in a Mission Plan amendment and submitted it back to Congress, and we have asked Congress to give us input on that Mission Plan. And I honestly expect that they will.

Mr. BEVILL. If you wish to expand further on that, you may do that in the record.

Mr. HERRINGTON. Thank you.

Mr. BEVILL. And that is true of all of these questions we are asking.

Mr. HERRINGTON. Thank you.

Mr. BEVILL. That program is very difficult with some very difficult decisions. As a matter of fact, you remind me when you say nobody wants it, that is the understatement of the year.

URANIUM ENRICHMENT

Mr. BEVILL. Two years ago, you, as Secretary, cancelled the Centrifuge Enrichment Program in favor of the Advanced Laser Isotope Separation, AVLIS, research program.

The Fiscal Year 1988 budget includes no funding request for the AVLIS Program, effectively cancelling it. Why have you done this? We all felt so proud that we were able to work out the difficult selection between the two programs and then suddenly here we are with no program. No money requested for it.

Mr. HERRINGTON. If I could explain. First of all, it is not my intent, nor the Department's intent to cancel AVLIS. What I have done is request no money this year for this reason: There is a serious question in my mind, looking at this program, and I think in some of yours, whether we should be in the Uranium Enrichment business with the unresolved problems we are facing today-the TVA demand charge, the miners' suit, the South African import

situation. It goes on and on. And the worst, Mr. Chairman, is the repayment of the unrecovered government investment issue. It does not matter who you talk to, OMB, the Energy Department, Congress. There are many different opinions on what this program owes the Federal Government, anywhere from $300,000 on up to $8 billion.

We simply have to deal with those problems, or we are not going to be in this business. And this is the year to deal with it. I think we are at a turning point.

We should not put any more money in AVLIS or any other program if we are not going to be competitive, if we are not going to set up the private corporations, if we are not going to move in this

area.

That is my reason. It is not an intent to cancel AVLIS.

TVA DEMAND CHARGE

Mr. BEVILL. All right. Under Secretary Salgado has written a letter to the Chairman of the TVA stating his belief that the DOE is not obligated to pay the TVA electrical demand charges under the DOE-TVA contract. What is the status of this, and would you expand on the DOE position?

Mr. HERRINGTON. We have been having a series of meetings with TVA and with the Chairman, as recently as last week and this week, in an effort to resolve the demand charges that have far exceeded the contract that was in full force and effect.

I have to tell you, with reluctance, that we feel we have been treated unfairly by TVA, that the increases have been arbitrary, not taking into consideration the data base that we have put into that particular area. We have an almost unlimited supply of money going into that program from the Department of Energy. Today, the cost of a SWU for enriched uranium is increased by $55 just because of the TVA demand charge, which this year will approach $550 million for electricity that we do not use.

We need to sit down with them and be realistic on both sides, and we are making a great effort to do that. And I am hopeful we will get some resolution.

Mr. BEVILL. Of course, you are aware that there are two sides to the issue. This came up yesterday when the TVA Board of Directors was testifying, and, as you know, they expanded their nuclear program in anticipation of furnishing power to Oak Ridge. So this is the other side of the coin.

Mr. HERRINGTON. Yes, sir.

Mr. BEVILL. So I am hopeful that the two agencies can work something out which would be equitable to both.

Please describe the site selection process for the Superconducting Super Collider.

SUPERCONDUCTING SUPER COLLIDER

Mr. HERRINGTON. The announcement of the Superconducting Super Collider last month is being followed by formulation of the site selection process. By April, we should have guidelines issued. We hope to have proposals in by the end of August, a referral to the National Academy of Science by September 1st, a preferred site