Review of the President's energy budget for fiscal year 1977

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Material Information

Title:
Review of the President's energy budget for fiscal year 1977 Seminars : before the Task Force on Energy of the Committee on the Budget, United States Senate, March 12 and 15, 1976
Physical Description:
vii, 178 p. : ill. ; 23 cm.
Language:
English
Creator:
United States -- Congress. -- Senate. -- Committee on the Budget. -- Task Force on Energy
Publisher:
U.S. Govt. Print. Off.
Place of Publication:
Washington
Publication Date:

Subjects

Subjects / Keywords:
Energy policy -- United States   ( lcsh )
Budget -- United States   ( lcsh )
Genre:
federal government publication   ( marcgt )
non-fiction   ( marcgt )

Notes

General Note:
At head of title: 94th Congress, 2d session. Committee print.
General Note:
Includes index.

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 026181745
oclc - 58777183
System ID:
AA00025955:00001

Full Text



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REVIEW OF THE PESIDENTS ENERG

BUDGET FOR FISCAL YEAR 197
BEFORE THE,.;iill; ';;;;

TASK FORCE ON ENERGYiiiii Is
OF THE

COMMITTE ON TH BUDGE
UNITEDSTATESSENAT


M"CM 12 AND 159 1976;









APRIL 15, 1976i;i;""" s;iii~i;



Printed or the se of te Commitee on te Budge

U~jL OVZRMENTPRINING FFIC

WASEUNGTON 1976;; "' i;UR~i1;i~il










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COMMITTEE ON THE BUTDGET
EDMUNDS8. MUBEIB, Maine, Chairman
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WARRNG.MAGNUON Wsigon HNRY~i BafMoN, Oklahoma
FRAK E MOS tahd ROBERT DOEr, Kansa
WALTE V ONDAE, Minnesota J. GLNNsr BIA1,1 Jj, M=71&nd
ERNEST .HO G outh Caroa JAME B, New York
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906mars j. iD*NNe, Ir.,Staff Direcator
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W.Taomis 3rbxwar.r, Director of Po#* tin
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14ANXi 3L MOSS, Utah. Ch, d
RAM T9- OIon08 South. Caia') Jr GLENN RALXrv Ja., Maryavlnt
J" 1RLW3Nz, Dalware J .AMES A. XcLUE Idaho
PETE V. DOXENICI, New Mexico
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Hon. EDMI[ND S. MiUSKIE1
Chab-mnan, Committe onte Pudd,,
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DEAR S o u : .%ached isi reodof
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Energy Task Formen co U on Mrt'
dent's EnerGOBudget> for Fiscal year 1977 inpeato '~e4
opment ath Firs -'Concurren- Budge Reouin b4 6, 97
.4, 44 91 1 .11 i
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Toward 1 g thatfd tp anisreiewed the mt-j
budget and considered y pol issues a
cy m ":,
Earlier the Congressional Budget Officews. o danl
studies on anticipated fiscal, 1977 energy issue.Sm'fte dde
were completed in time to' pcoAide'redM"tesharnter-
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mainder will be consideredawheaoutpli~. -it I
iiiiiiiiEnergy is the lifebiiid of .U.S.. econ........ n sii
likely to have greater budgetary impactinteyashadhn
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iiiiiiienergiy. Accordingly, the econonaiid budgetary implctosf
President's proposed eneg- bnudget. eserv aeu onieain
For fiscal 977,the Administration's offbfundigi
energy far exceed then'-budget pr6 .i;K "Adm nistration'splan
is to stimnlfitenmg prdeo and developetasw~wmhi
through Feera e neiytvs private setr trii" a,0Of
budget arraiements -present a smaller cui

ary control, however. Although not involvn infiatices
in spending initially, such off--budget proposl a eur osd
erable Federal expenditures in the future. More information will be
available as the legislative process evolves ancogesnacmit
tees complete examination of the Administr
The need for additional information as abs
further consideration before the Second Co
Apart from the immediate budget considerationsthereareanu
ber of key policy questions related to the Preintsnrgpooal
which are of significant interest to the Bude omtte o x
ample, how much is the Nation going to hv o dt eeo
sufflicient energy supplies ? What are the logrng e
tions of Federal investment in the new energtehogisTowa
extent is Congress' control over the energyporman eea
spending affected by off-budget financling ragmns
(IV)





V

Hisoriall, te Federal role in energy has been to support basic
nonnucearenegy research and technology. In the nuclear area the
Govrnmnt' rle has been much more extensive and included pro-
ducionof uclar technology and material. In view of the growing
foreign energy supplies, a decision should be made
soo coceringthe Federal role and the. size of the effort to develop
new echoloiesand whether to support them as nuclear power has

formation gained from these hearings will contrib-
uteto he ommttee's understanding of the President's energy budget
for iscl 197 ad provide a valuable input for developing the First
Concrren Budet Resolution.

FRA-NK E. Moss. ChairmaL
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CONTENTS
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Let er f t an m ittal ---------------------------------------------------- M



31E NG DAYS
FRID MA CH 12 ----------------------------

STATEMENTS BY COMMITTEE MEMBERS


WITNESSES
le, Director, Congresonal Budget Ofie; accompanied by
DouglsM.Clostle, Assistant Director, Natural Resources and Com-
mere; icoat Timenes, Jr., Deputy Assistant Director for Natural
Resorce an Commerce; W. David Montgomery, associate analyst;
Richad M. owd, principal analyst; Lawrence H. Oppenheimer, prin-
cipa anlys; Reginald Brown, principal analyst; Edward H. Bastat-
ter prncialanalyst; Ronald Hoffman, deputy assistant director for
tue analysis; and William F. ederman, associate analyst-- 2

TIArmar DAYS
M ONDAY, M A CH 15 -------------------------------------------------- 117

STATEMENTS BY COMMITE MEMBERS
Senator M oss--- --- --- --- --- --- --- --- --- --- --- --- --- --- 117
;; ;"



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WITNESSES
t C., Jr., Administrator, U.S. Energy Research and Devel-
opment dmnstration (ERDA), accompanied by Merwyn C. Greer,
Contollr; r. Richard W. Roberts, Assistant Administrator for Nu-
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c;and Dr. Wilam Mcormk, director for commercializa-
tio, EDAman Willam R. Voight. --------------------------------- 12M
Preare satement of Dr. Seamans ------------------------------- 185
7&user, ric ., Deputy Administrator, Federal Energy Administration,
accompnied y William G. Rosenberg, Assistant Administrator, Energy
elopment; and Ernest E. Salisbury, Jr., acting associate
assstat amiidatmtor for financial management, PEA, and Martin D.
Howel, epuy assistant administrator, management and admini tration,
FEAm mie m em ww -- - -- - -- - -- - ------eo e w w o e--= .*------------ ____ 119
Preare sat ement oftMr. Zaswener.... --------------------------- 12A&


OMB Diretor Lynan to Chairman Muskie regarding increased ap-
proriaio for fiscal year 1976 of $8.6 billion for financing uranium
enrihmet plants, and to be considered as contingent liability other
th n u get authority -- -- -- -- -- -- -- -- -- -- -- -- 147
C ptroller General Stats to Chairman Muskie stating his
opnion on Director Lynn's letter, 8upra ----------- 149
asd A--Crmittee members to witnesses, written:
j~e "tr~os to PEA Administrator Zarb and ERTDA Administrator
(jointly) - -- 171
I..--...-...--.-- ---.---.. . .----------- 177
(VII)
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FRMAY., XA 12,1976iii i
U.S. SEATEr,
TASK FORCE oz; EvNmRG
Comxrrrm on Tn BU ,
IWaelington, D.C.
The askforc me at : 4 pn., pursuant to notice, in room 357,
Rus~el SeateOficeBuidin, on. Frank E. Moss (chairman of

Staf meberspreent:Lews J Ashley, task force coordinator, and
ChalesD. c~ulle, pofesioal staff member; and Daniel Twomsey,
ii,;




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SentorMos. e illbein urhearing.
OF~~qIWa SAEYTOF SEATwont MOSS
Iad Committee wil begin its markup
in oderto sbmi th Firt Cncurent. Resolution to the Senkate by the
15t o Aril Bfoe w cn omlete, these acinthe committee
nees t kow ha th buge shul allow for in th nrgy area.


We hve he resients bdge, w hich outlines his energy proposals,
ar next Monday, March 15 Mr. Eric
iL:&unerDepuy Adinisratr Federal Energy Administration,
a r r eJminist Energy Research and
w present the details of the adminis-
e977 at that time.
The nery tak frce as denified certain energy issues related to
the udgt, nd n te 1th.of arch we will have the reports from
othe Seate ommttee pusuat to the Budget Act, which I expect
COSTUDIES
Earlerthe ongessinalBudet Office (CBO) was asked to under-
takestuiesdeaing ithsom ofthe anticipated energy issues such as
Ou~rConinetal hel (OS) eceipts, synthetic fuels, and uranium
o~rihmet. Sme f thse tud efforts have matured, and others
FOCUSOF TDAY'S SESSI01
studes ill videvalta1e input to the CBO annual report
to~e rleaed.gdI bliee the task force can benefit from these
Rili~














prCisonseqentoly, I aked Dr. Rvis tmorpriiae ntiemnrti
afipternon. This emtinart issdesigned to '





we ... .... overview... oitth
energy proposals, indicatethefiscal1 budgetfiguresandrel







osoe ofoltoe ke issusini ordr tgpo poidclraeor oid"
cioncurrndfcltte roleariong mitre abuthefgri n heu
Preideint's budget. Thise shoul proid ante esetv hc
wefiihMnaIepcthtanmbers of unaswre questionswit
.......s a d i i i t k w e

prcss.sATIEC0,TR
NICOIAIMIIN FACES R. E TOR
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TER, ~~ PRINIPA ANLYT ,,0)
prec.ision wes; w hkt is reolly t w









thsvime, tof whthenergyt issues, andtre iietearao netit
wae haven to dawinthroduce ommitte bugeomrkp

cponurtunit resolutin. Withra memis re nrdcinltms r
never htd begn. Aloruicetou meay wattytroy nrdcn h
membersuiy o nd foursf -who aewtyuWeregdtohave them
STA T iiiN IIhaveiOF. RBO A RDES






reASITANT DIECOR energy, RESOURCE resourceR
Nculture traprttinE, JR.,mEPUYASITATDIETOO
GOMRY theIAENAYT RICHARD.e thi groupin of CO



bilonDr. this Yres;nht fiscrall eabotarIam.on o o ehv
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n ever h ad............i.......e.t..ou,.an..........d ..............oat
opporunit, an for ou t hav the ppo nityt6 mt thfii.
The diviion I hve withn CBO dals wit that prt of te budge


billion for this present fiscal year.l









Intretig. y oerthe last 10 eas thesae act6pivite ave -eceivd
kleary, h~dihe ese om figre undersae th sgiicac ofm thetse
"M grains that we dea ith rep-resent Federali





ute hrouh th ret of the buadget.
EEGY 1OUTLA 's AS A PERCENT OF BUDGET
'afernon tv are here to discusse jst oie of thesbpoga
enety mrgy. programs ecie lessthn 1prcn
of th tta Fdealbudget. but a, growings ar'e. Cearly, enry a
bhren, of he most contro versial ad difclt
k bcgoudto Congressional concern, of course, ha
the rtmtcincease over time in our consumption of energy nti
toutr an i te, wAmi ad our increased dopendence primaiyo
Se m derivativesto satisfythat growig
i~tth 'smeItio, e-abewitne ssing a decline in, our own oesi
ivhe~ye, wthrepect to present and projected future demardPrs
-aesrap abou15 p erets of our Nation'serg
su~plis ad w i ort about one-thid& of that petroleum o bu
J&j0&itbforvealenergy u ples

r i which I thoug it iight bhe ppulto
in rde toseta ramework for discussing specific questions thiwl
bebeor te onress this year.
The ~ ~ u ecnij, everyone pow real~izes, is inextricablyenry
nite4 availability Iand _prio lev6ls have an, id
enei~g I b A *11 con-









1146 4) e, pacts, on i fation, employmnent, ajdthoii owt


Theresieafter the embargo in 1974, indicated that itsh d b
thegoa ofthiconitry to achieve indeplendence of foreign neg
suppiesby 184.There is, I think it is fair to say, a generlcn
,a~ppB tatU.S, eliance -o inpot should bq reduced. As yehw
ever thre i nogeneral consensus as' to the specifies on: ()*a
Jo -0fimors,$a-ceptable;. (2) tetime iee
*nd (3 te costs, econonue anc environmpentl asciatdwh
]ENERGY, OUTLO)OK
ink '19 im i to sum~drize our energy outlook in thefolw
,F demand will continue'to growlhug
!beiencedsince World War II. Eily tapped do
oi a gM aill continue to dwindle. E~xtraction fls
Vcciibi goplis will, be- more expen~sivo and more technoloia]

sourc wi lso bmore cost
+iqur teehnlogial dancem and fihancial backngt
beco" co net1iy available. This is true even of the'two atra
tti*,* nelear that: are: closest to bigor arerg
etdiflfl Vit& da. Both gtill face hurdles.. The Uniiietate
'68 ansl 18 6f coaT but sigpnificint oestions remain conc








ing te stsof sntrip mining ztrlanprtai sr e4

clearul cyce-secfially, reproessha andwsedipsl
Pletif foreign oil supplies wil cnti
lstill cost less than most of the pr
COWGRESACTS ON802 rXERG ONX
Gien this outlook, there is no questi
wilmove to an energy economy that is uhls ee~toe
tieon oil and gas and much more :relato tentvsuc.
Thquestion is how quickly andat whate
enionmental?
nthe last years Congress has acted
isses (1) it reorganized executive braincenrypoamratg
theFderal Energy Administration (heEnrgRserc
an Daevlpment Admintistration, (ERDAadteNula eu
I aoryCommission (NR) ; (2 it Aha eatedtmagehepieool
inoder to minimize the efects of risingprcsodmetccnnu
reoery; (3) it has mandated certai cosevtin mesrstn n
cuaged others to moderate the rate of inces noealdmn o
enry; and (4) it has provided steadily nmigbde.spp


ENERGY OUTLAYS INC
Toillustrate thi in, f~a year 1974, toal Fdrlotasfreeg
were $0miltlion. In fiscal year 1975, thos rpe o$.-blin i
fica year 1976, they rose -again by $1 bilint oa tlat h
Prsdent's estimate, of $2.6. billion. In fiscly0 7&P dn'
bdet request would lead t outlays of aprxmtl 3. iloo
a 0pereent increase over last year.
ENERGY ISSUES
Tday we will cov .er several issues thawilcmbeoeyuts
Frst: Energy research and development.Th e'su erae
-or verall level of effort, including ourcmimn t nt-cl
demnstration of new technologies; andthmiofecnlf ha
wespport through the ERDA budget. .iaiwo h
Scond: We will talk about the budgeipl ,Em
Poiy and Conservation Act (EPssd.CA)sge4aerl
tieat which -the President's budget waputgh& m9Ms
cule of significant, big ticket items heep1 ~M ws,;
thvay in Iwhich the development of th nvl1tololiste
ar andled.
Third: Outer Continental Shelf (OCS) eapa-I
-htthese will be an issue for the markupot .frtW
curet resolutionIs.
Furth: Uranium enrichment: The ki< su Iim 3:h
d edfr expansion of our enrichmetcaiy i hsc
ede needatt fo Ot n'1
an h usino wh hudonadbil P t.Sol





5
be privatik~ed or should it remain in Government ownership, and
control?
IFifth: Energy fiancing in general: The President has put orkward
aproposal to establish an Energy Independence Agency (EIA) which
Woul s.igni-ficantly facilitate commercial development of energy sys-
.Six .th: We will discuss very specific proposals dealing with commer-
cializatdon ofl synthetic fuels wlich have been put forward.
TFhiese.. last three issues I have mentioned are of considerable impor-
tance, askd are now presently before the Congress. As proposed by the
Ixesident, they would not result in significant on-budget expeniditures
Hinitially. Alowever, they- would represent dramatic new Federal de-
I',rtures cauryiNgr with them the potential of considerable leverage on
the commercialization of energy technology, and signfcn contingent
liiiiit futu eder budgets.






SThe itssue of whether they should be treated on-budget or off-budget
is a..ssue b.fore the Bud&. C. mmittee this spring, and the dollars




involved are sgifan enough to mAke, it a likely crit~ical issue.
Since we need a specific starting point to get into these issues, the
tit I e might lip end -that is with the
secoqnd concurrent resolution. I would like. -to turn to Mr. NicolaW
Timn, my deputy, iiwho w get us into this.
Senator Moss Go, Mr. i





Mr. Trmrww Thank you. We have provided you a notebook con-
Uinin b~eingchart&',lIt also contains brief summaries of those pa-
Yer w*i L we haecompleted, and we will have additional papdixa
t se o. ite staf early -next week
'Turing to page 4 Isee p. 29] in that report, the second concurrent
resolution does not address energy specifically. itther, it sets a target
for the overall innGian nvmnn.ad natural re-
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sourc.-with $18 billion bu.. ority in fiscal 1976.
The Ama -of the subfunction dealtat we havehaem are those
vrM Bili;Sdi from our secreheepin~g and understanin of the way that,
the individual appropriation legislation is taking )lace. using those
..timates. the ul an..ce for the energy function was $3.2illion in
budget authority in fiscal 1976.





Not shown here axe receipts from rents and royalties on the OOS,
which are in subfunction 953, or certain other energy-related activities
whidharo'carried in other functions.
[seep. 01 shows the general content of those expenditures
for 1016:S i dfic 305. 8h general operating programs
listed. ar acivitiet'o the FBA tanmd o ERDA and a numbs of smaller
efforts. heregaid"bry Iaeiivities of the NRC and the Febderal Power
'Commission (FPC) are shown there as well.
8. ti6m 80 percent in budget authority and TO percent in
oaf 8s is devoted to research Iind dev1*e!6pnt.I
OiDage 6 [ws p. 31] we begin the comparison of the mark in the
scnd concurrent resolution with the estimates for fiscal 1977."That
+4 'be the burden of oumr -balamneef our presentation today.
T' e.differF~enes which I will note between the mark for 1976 as
p0re tzited-nth6 second concurrent resolution and in the President's
bud~get &erive from some comparativily modest accounting changes.
e 2i,
i i;iii~iisii;

.. ii~iiiiii;;i, i
ii i N iii;,2isiiiiiiiiiiiiiiiii"" r iiiiiis0iliiiiii

;;; ii;i~s;,; i;;; ii;"iiiiii;

ii ili






m ~~i ........... i
iiiii iiiiiiii~iiiiiiiiii iiiii iiiiiiiiiiiiii i .............
Certin ctiitisr eretansfe oved inofnto85i the Presant tps
Ii iiii;,ii ~Id et i
it ther are severl ther potential
come about as a result of congressional decisions ntevrosplc





i ssues, iii i11ii~iiliiii!
I~tr ,which M~r., Costle J'ast, indicate&e
As a matter -of convenience, we might. nste, 1&o h nx P
[ase p. '32]- an alternative m~tethedl of the -preetto-feeg
budgets, which the administration uses, total.... sm40.iloi
fisal ear1977.This figure remilts-from the inciiao u othe actiities---sch as the electric pow#,~er eaf aciiie.o
the watrrogramswhich ctutobe construed. asben eryeltc
P ge 8 [see p." 33] refers.to Iunctirt.305 forfr
would be an increase in general. opeating'rgan paiarya




a esult of frher reases in aned cap










"ii"iis"iiiiii
;i~ii""E;,~iiiiii~~i ...
I an i iuii iiiiiiiiii hia lities, wiich iiire w eiiiiiiiiiiiii




l..ion iiir b et athorit y.
ENERG T RESAR~GRANI ): EQ
A newcateo a g i ih Present1977iifor
.te Energ -IndePendence, Authopt This refletseC



















i is s 5iiiliiiii
phiiiiiiii of- the *op- erations of gn g -,wlhfi .......
Thiswoul be the net gains or-. ,os~ 'nstipdte Mtb6It
losofa~ ut.$40L'3b on

emith thaas a gem, al.rkgrouied'we w L 0
,to, the, specifie4isues,..he Arat 7f s .
menat, -which, as I Ibave. notod,- --uuts ._pe8.Q
current R. & udwtgtg( is ua dj 16'pto
the new teholg for the fuure.
Senator~a WoXr -w
Dr. Dowio. Sen ator, ii-y'o4wiH,0A to) pe
havel restated the ismM tha iecm up. Wiso h
level pf fund'ng and' subsidiar issue to that, T4*af, IU
,the governmenot su pport larg( .D proje' 4a
mnix, of, tecbodlog* t ththe. 4;4L* buet
Those are two very critical. issues.
Page 11 [see p. 36] showssm of the bpd i n fv
occurred both in the .second concurrent. resolutibic n't~~ix~
budget. for fiscal years 1976 and 1977, and:xs trsntd:n
Presid-ent's budget request.,
R. & D. is the largest, singl 448M i~con
to the generial philosophy that rh 'private. seco14.uah i"n
increasingly larger, role in energy developmI
the early stage. of that. The priority that has b 04
can be see'n by the *increase in funds requested f:k&,bi
about 30 percent, both in budget authority and fiscal year over 19766








iii chi ai teiii to ito iiiiihaiumde.

hi do e On ad! 1 lo2ig hisor. 3 o] we veoinein
the resden's fsca.19hbdget proosal fore R. & D.funtdimngb
Wene toe th higoulii i p ogr
i iiiriiiriiiiiiiiiiiiiiiiiiiiiiiiiii



rili iiiiiiiiii
in the R. & D.k fo area.tecture metoahttoetnd to ginclude.

The...~~ ~ ~ m~leeg rga a a ong history of t velonmxcear
iiiiiliii in coal an"-inclu es now seii .thy rlct effor
Strations ~ ~ ~ uc thtae ohgo-ie aticularly 'ithateaner bierl
mesned tobrn hiheufr f or
coal _s)fejy,. and begnning of work for archtecture. and. engineeing~



proothgramsog.misvey e
Geoterml ad.:slr'ar reatiey new large themosrefetefonrts at
piotllustin aateth slarli gena t














,,P,,iiiiiiiiiiiiii




s~n~ii
14'"'.I.ttem. to mangorta
the~ ~ ~I ay of1redmntr ationproects
at hemoen. A'te om nt t ilusrae the smllpieces.,t









Srf -'iitii iiiiw IatPri ctn










....... iiiiiiii i i
01~ ~ ~ ~~9 Meme hl incude th eaairdectr




-ost part7,trr, is anse in thed
449 at aloor.w'J~i budgerts. w
Thenuckar~~~~ feclisarseparchefot desusigned to closew mmtheslo
in te uaniu cyle, o iproed the-streare a coupclea of comes~nt
tQ Aq rocssingbqt. A, godpr. Othis lacreaqed slgtly support
ofi thereee preogragm.ivr h 6 pr

progran~~~~~~ a i a50-pe'aout'frcligt waterreactrse.t~h
major ~ ~ ~ thut fthcr;.th eavelopmbut3prent' Much,

Bgfm s.o reeder, inctr which i etil
04P-ach iver ri~eder'ea~t ceno bilerdevlpmotrwitho grogrnd-
'bi~~~gsiiato programgxpthose com 198isn ~ eeet


Tile~ ~~~~~l nulanoretfdrc R .hsing rome sligethitory inab-9s










we can see thtomePresidn has pmgassede thouhevrigpeen
~~~0pretof ERDA agnc requests for porm n them varyng io
ages maon di0cateant inrclinsvation ofth roinsraminfroemxo

Aosbe-ht the oet bit appar ethat thatendaenc itsntowr ula

suke a ntomnnulear program or in their judgment artohrlm
pedimenii ts to the efficient spending of that money, su
opportunities that exist or the ability to mnanage suchalreices
i noik
Thon e dfences between -the agency proposals, hwvr n h
President's pasthog of those requests may wellsugtamns
that could be ptnilyadded to the budget by Conres
If you will. turnb. r a moment to page1 [ s6
see that I have *included on-budget additions potentiaf ewe O
billion and $1.1 billion. That represents a differenceofhlabiin
dollarsi in nonulearlk programs dbetween what the aec euse
and what the President pasdthrough, and an addtoa$60ml
lion in the nuclear pr~ogram that the agency requestdadhePsi
dent cut out.
So it is possible in Conrs this year, if there is anatmtoale
in mny way the mix of techn1og~niestat are being spotdb h
present energy research and development programteecudb
additions of thissize.
Are there any questionsg Senator 1
Senator Moss. The percenaghe of nonnuclear IL & D a aedw
then1
Dr. Ikw D. The paeretage ofnonnuclear IL&R hAn dow
slightly, that is tme
Mr. Geffff. Total dollars, however, have gone up.
Senator Moss. Y I me that, but ercetage ithaow
Mr. Cosnz. Thank you.
Dr. Dowa. We will turn to Reginald Br-own.
Mr. Biow.Good afternoon, Senator.
Senator Moss. Good afternoon.
ENERGY PO1UGY AND CON AVATIN S
Mr. Bantow. If youi turn to page 13 [seep. 3.w aeHte h
major issues concerng the Energy Policy asnd VorActand
some of the programs affected by it.
On pagre 14 [see p. 39). we have summarized the !uptltpao
EPCA. in conjunction with the budget impact Of i
not passed yet, but which is in conference.
Page 15 [see p. 401 details the program afecte ad Iwud
to highlight three of these programs: storage, incwies frwl n
receipts.
STRATEGIC BTORAGE
TIe major budget issue in the act comes unde.
question where we ihlight strategic storage. TheCogesi
iiiiiiiiii@,,,i '"














i;;;;iiiiiiii iiiiiiiii;iiiii[l
"k;; ;"'il;;;;i;;;;;;;;;;;;;








gram~~~~ whc iIadae y the act sometime later this month, and we
figure ~ ~ My thtprvlo htpa a result in as much as $300 million
7n llion in 1977.

COST OFTRATEGIC OIL RESERVES
Thettalcostforful implementation of storage, that is, the full-
blwnpc as high as $6. billion over a 6- to 7-year



The ky qustio conronting the Congress in the immnediate future,
then is ow uch udgt authority to provide for the early storage
i i ....... iiir


t in storage. The cost of storage will largely
be det~riinedby t e ot of fuels we are putting in the facilities.
the EPCA n conjuntion with H.R4. 49, allows the President
...o ue podctin fomthe naval petroleum reserves for storage, but
it'oest rquie hm t do so. Short of using industry-owned fuel,
whih i alo emitedby EPCA, the production from the petroleum
The ost xpenivesource of fuel, of course, is imported oil.
Wheter e ed u paing $200 million or $1 billion depends on the

INCEMTlVES FOR COALa
In aditon t strag, the other item listed, "incentives for coal,"
has udge autorit of 750 million for loan guarantees for incentives
-for &tidevlomen. he onyreal question here is whether that will
be teatd.on orof-bdget. O-budget treatment would distinguish
A. ro th Pesien'sEnergy Independenc Authority.
irx











MMMoES PROM NAVALET, O Ie RESERVE
14w thequetionof eceiptsa: T1he President's 1977 budget estimates
rfWoleum from the naval reserve at $10 a
barrel. Thatiyiedsi$i00iiiilion


We aveadjste thse receipts..downward, as you see. The differ-
ene e omicpae il b argser in downsra years ,between the
.$1, etimte nd he$7.6per barrel which we use.
llii










Thoseraynot be sto fully fud a storage
stopge pogrME high cost oil could not
_ii..-..-










ecipts of oil sd at $ per barrel
if-thee ae n qustins, Senator, I wo~uld like to pass back to Dr
Dowd,~~ ~ wh il icusuanium enrichment.
Senator Moss. All right.
Ext.r








TRAWTTUX ENRTCUMAENT
Dr. DwD. f yo wil turn to page 16 [see p. 41] the key issue
befoe Cogres on urnium enrichment this year is, "Should the
Fedeal overmen cotinue to own and manage all U.S. enrichment
as t des owor houd future additions to capacity be the prime
11








e rivate sector!"
n age17 seep. 21we have included the present budget frame-
. wok fr urniu enicment. At the moment, the United States owns
sifto~eate thee nrihment plants, and it services all U.S. nuclear
poweplats adabut wo-thirds of all foreign powerplants.
68-943---76-
iiiiiii"iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii








to. use all of thatcapacty oth ex
We have done an..lysisohis as
remarks and a summary of that analsy per ntebc fyu
notebook [see p. 82].
L Iet. me briefly discuss whatth aio sus novdpeeae
One of the questions is: How me
Thi's depends on many factors, iclu



iiand the pereage of foreign mar



]!i
TUnited States akesas I said, about twotid.o h frinmre.i
is planned in the future that this s d
pends, therefore, on the growth of :
SDepending on the growth, and onthpecnaeofrig rk,
one can project the need for from 2 olinihnntcpct aii
ties by the end of the century, all lag hl~ftesm ieaec
.of the 3 in the United States right now
Now, that is a big spread, and itdensagodbtnth.rwh




iui!
.that is....g to.occr in nuclear powe







iiiiiiiiiiii



.iiliiiii iiii
UIRANIUM ENRICHMENT-DJL7 IO E
Competing for the process to be usdi hs nihetfclte
are two different technoloie, a diehiqew
Staes has -used for somei 30 years' adt
thprocess used inthe next enrichn
or, b C soveriment, and a -cent...fuge te..................
piro uctig enrichment ca~pacity at subtllal oe e-irca ot
Each plant, iising the preset enrihetecnlg uwh fl
output from aprxmt' two larg.ncerpwrlns hra
a centrifuge plat dneed- o a











;I
'Cpital 'cots seeo be the sam:
Y tto-be resolved ike *Issueisa -o anenne-n eyfstrtt
covonh e lenntadiet.
been put, on a, codmme~rcial scale by inutyrb he oenet
We looked at the~se in' terms of thremjrotnsWeinid d
the options of all new c apacity privat,-l e aact oeiet
iind a mixed option with the next uraiumercmn lnf en
diffusion' built by the Governmen't, anthceriueblby'ive
inddstry.-
COST OF URANIUM -ENRCMNPAI.
The budget impacts of that are in tebc fieoeooBify
if Government built the capacity,- onecudepc ohv nrana
Government expenditure, getting up 9$ ifo pr n h
1980s.
However., very shortly after thattervnusfo
-ment facilities would overtake. costsan bytearlotevus
could exceed cost by some $3 billion ayerSiDtcudrvd eens
to the United States. That is in constan Ga
If it were all private, if everyne aaVadionttws
.built were private, then the;re wouldb okdt ulybthi
would be some tax expenditures duettainsmn, ed,












taxe frmpoits. ie)Aihm oxldde yipc
n-~'18 thehtax ependiture would be riigbdeedy on both
R ouiiiiii ier e r id it1feki

order eXlionfori abouwyealr1s. By the. early...s th nle
... iiii i i ii

reacabot$00 million.a-ea e a










a i iiiiiiii



li
~ii
H '.it-lear -,:umied Assuranc withi the privcte seto bulding thes
more4 risky entorifue andite Govrncment bctuidiesg Ithermature doifo

fusinpantthnites epass on that a budgeary illmpac
whih allti betwee th oathe Iitwo Inse tbihat case teqbudgent mary
imoe -t appvroved. Twulds te rirsin bsudet outevars aboutil
$750: M milonqy tearlnt hae 190s faing veyn ucky and rf-tdevenuestn,
overtak1 epnodea itur abot ath lrate 1980st aotd thenrsigto alve


ofabut00milo authori theeaftr. o aasmo

TheNucea one wsuan o te Ater istevhceb. wihtePei
privtizeeprichment actvites.en bildthe ext
den woul iike tto in psca esr to dos
fiav- 6. dietbi u e c.Ifit porasses $400 billion ofcinbudgent imact

and I ill no dea withit aretin grea length_ xep tomy note thatirt
present the cu fing'shatocnsiersn tha ot yethis partiua itemeu would
rl~qr cleinitlyn obunil autorter 19ul'ntb 'oit

ftrENES. Fh-6ay Rhat thinS8Rtation. cncer s n b oad meeto
Ulrilml ad thss.
PqnrfO,4cMEpf waodth otherno. entr
will.cia t0 gai pasage8oftebo[se the there. woul be ds
.hree programs, e syat iunl foimecialzto yerogr9m
J ydr ind86ependencetathoi'e-ity ind la pror1 oftxeie o
siiisAlofthem Wbl i 'euraisen fon abourt milonm a inbuglet auesi
I tn he
I riiturn ec





!wtftiits
d ,ilr""0srrrrrr
Oxmomrmr; O""" :Nlihooi, SeAior.





Oil 11nto pge'1-'ofthe ook ee' 43]1 wil bedis
P-.i




















iiii
The Phresien' policys indrhis treegr aper obopaevr

iiiii iliancein topri ate. ini. a
objec tiv..n particula.r it a hear to.i

to high er pric es of enegy the wilb eesrysm etag
chnes inorh p~atterngas in wincohl wepoue nfeeeryag
invester ov ear the netdcd e w oualodibeneddtexadomsi
enrgy prodcurrent operto alte th technlogeihwihepo-c
energy. negy
iiii iiiiiiiiiiiiiiiiii

















A c ertain oun t wh c ern has be n ab
o the w gos e s eceor tho pr












$600 bitwion. oTheren miht bedfincutives i bann iacno
thisvamuto investment, inldn nilnneso akola
depressed marobets I





Inl somem coases, dficulthies appear tobeasctdwihherk
and theeylre scale of sy theti nuews tecnolg whc ihtbn
voled In other cases, it apptears thtenryurceeihrol

Teethre proposedsprogrems tesekind ofqusios

Iyowol, turn to page 19 [see p. 44]. Itsn~eicl com
mecalizto per 1 ogradiaistes the isseofwehrteGvnmt

sale andurbndiatue. niiae nt
TheUnitdSae a in the Dashtit oInrelie heviyontl.W
whil notutiizin othr, ore 4dnt ourcs ofenegy. ech
nooisfr rdcn gsfo oafreamlh-e xse:o

a ubro eradnwtcnlgisaei h fig fo~vr







lae riat nvsten

rIrSMFO IACNGEEG DVWXN




The probles I mentined as obsules to 6anein anery diyelop


Alniil theproosd pogamsentilmnal nital utays o
in fscalyea 197 toadmiliser te prgra.Thbe:VnO eta
proramexendtues ntcipte inthefisti-yai.'OaLth-otor







tee wee alld o, rice suppots were needed sometime after190
Oil- comitmet co ld hve been made to large expenditures.
These re qui e ucrtaignm buchlike the outlays in regard t h
uraiumenrchmntprogram. They are likely to be muchsmle
thanthecommtmets that the government actuall u ndertaksi
bdget, to get to the specifies has, or p
l976, a budget authrity of 00 millio
............................... iiiiii
ii ii'i "ii ,,,, .... iii........... ,,






sed frl nii ees should be cret t.

TH RESDENT'S SYNT THEM FUL RPOSALS
Nl, a'systeatic program for synthetic fust
proose, b th Prsident, and if we see the budget request a h
begi=-ng of t at rgram, this $500 moillion would also, be js
benothing shown for fisc year 1977, becau
t transfr the synthetic fuels programt
Enery Inepenenc Authority. I will discuss that particuarl ro

One easo whytheprogram was included in the fiscal year17
budet ndputon hebudget came out in hearings in October bfr
theHoue Cmmiteeon Science and Technology. The Presidentcn
sides ths prgramto be suficiently' important thiat even if an Eeg
IndeendaceAutoriy were not created,- he would wanit thi po
gram t begoingon

Theproram whch as oulneda in the fall could have invle
up t $26 blli n i otsanding loan guarantees. Th~at wouldbeth
maximum amou t otstadid at aniy one time, and perhaps upto$
billin in rice suport paymk.ents could be conceivable. Thatlee
of aymntscoud e reuired if the OPEC ca~rtel fell apar n

On age 20[se p.45]we see what the administration propoeda
#e: unt of udgt authority they felt was sufficient tokee h

An lternaivewasproposed in a bill introduced in FebruaryHR
1.212. Tisbll ould provide $2 billion in loan guarantees n
r~qureshatfun's ust be appropriated before the guarantees ol
b isue. Tis ropsal could result in the addition of up to $2 ilo
FINANCING EIA
It as~eenproosd that the synthetic fuels commercializationpo
gram6'trnsfetedto an independent corporation designed t ir
lare saleaidto riate, energy development. That proposed Eeg
Indeendece Athoity would have $100 billion in assets tobepo
vidd b te Teasryand private money -markets.
n pae 2 47]: the. potential additions off b~ude
jj,,ionin bd~g t a ority, would. represent the $75 billion in borw
eY ]PT the EIA plus $8 billion: cont
I MI: I'' rior he T reau's conributio would pot appari
th e...........
'H
















iiiiiiiiiii i ir a~o
........ .............. ..................................................................... ..............
i iiiiiiiiiiiiiiiiiii~ iiiiiiiiiiiiiiiiiiiiiiiiiiii~ iiiiiiiiiiiiiiiiiiiiiiii~iii ii~ iiiiiiiiiiiiiii~ i~ ii~~iiiii~ ~iii iiiiiiiiii~iiiiiiii~~ii~~ii~iii~ i~iii~iiiiiii~ i~iiiiiiiiiiiiiiiiiiiiiiiiiiiiii~~iii~iii~~iiii iiiiiiiiiiiiiiliiii













iiiiiiiiiii ii
!iiis! ........ ii iiiiii; i;ii;


,iiiiilii;' iiiiissiiiii;;i Ii
;14









the, bugtq bu t ~eriatrelfat ito wolthen g .is h:pblcdb
croeilinhgpldbeeigbe









W hatcould let pEA to t is .........
eind methods adieraion for prjctsletonaeeaieti h
bill.i










.wenraly, te, ETA ouldt tofe pariespotadlngurte,
Thgler criteria whch it isintended o use fal tw igroups. A project







moust pas ongboth ofteseciei eoei cudb udd n
cite is itb to be finnce 'i th

Werily roetasonableou rs-ht is, mlio thwojctcudnflbro
......A











money the geneq civtye by p&-.......
wouldyn be -very budgch eaciyer is
thn was budgetally chargd redtwrh borwesouncrl~e
outlay in tha year. ,

One isu mx,,ight be whethe;~ir P~it is
deligible. Italo should offbder agraoal rset frpyett h
he. Thise provisionmplaces somt e bu imetatoso h pcldsta
teEAwould be ieallowe unotollupport
The oterii critheriairelater tof thetehia tueoprjcsTe





TAX RELIEF FOR El



Independence ~ 8~;;~siii Auho ity couldb
proecs wh inachn wolthliileosrcinon d moteegyociiieusd





;iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii iiii,;ri ni,;;i r~ n~r



theoil a ingalls ictor. t ri or anycommercialization-p



i!~


iiiii iiiii
p roudibl em s. eie It o a p pear s tha t m os t a ctivities........................
would ber elgbe Phrdojlecntsv toolret'b iaAby.thpive
c nrhatentv ould be elgile

Thr r arey fohe lgbe rics rjet novn
reuaor rintttinlinoaios Ir 'mpe trnry ak







ii



I~ii; oiliiiiii ,
VO~l v M i al bilt for e taStae regulator y commisxu*sionos te-
iiiiilv t . & .i
Os unertak actions, to' 'remedy any, finanialA difficulties that
P.. Whn, thse prposals. were made electric', tilitti in 1974 viere,- *i
a poitin ofsevre financial distress. There were constructiont cut-
ch ;'ay hve 'been due, either to financial diffcilteite 'r to a
dii66vrk,6ifdeand was not growing as fastas was thought. But
"'tc ertinly suffbring from low stock priceds and havinig
nliil. isib
XOW hm~g see to have improved a bit. The FEA in its recent re-
pot,1-ational ener ... outlook indicate that it was rela-....

out the general. shpe of th letric utility indis-
trybuf hai pecfic. utilities might be in serious ndeed of assistance.
This is atie, for looking at page 24 [see p. 49]. whichi ndicates
thtsof about $800 mnillion in -iscl year 1977 is antici-
pated...............incentives were provided.





f 4
Oge, u ofestimating that figure is that currently mlany elee-
iri~uli Iies haeunused tax credits from the existing investmnent tax
credi. Thse, tiltes might have difficulty in utilizing the further tax
relief whichao is rovded

-O~ fialj)64tii the- bill, is that- foie of these tax cuts would be
ai.6*tA o~a, eearic uitility uthless-itis rqgulatory -commission~ mande
g~hi'chages n te nature of regulations, syiecifically -inithding con-
strqcton orkin rogress in the rate base. That could have the effect
6f r'is~grelc~cby u"tility revenues, in addition to the txbenf its

'Osr CONTINENTAL SHELF PEVENUF8
willnowurnthe fliot- over to Mr. Larry Oppefnheiner, who will
discus tl OCSrevnues.
-Mr.OPIVTiuxa. Mr. Chairmn I will be brief. As you know, the
OC recipts~dffr 'row. the other issues we'talkind about, in that they
W




giO ho 0, P01eyisre. They are simply'a maidtter of pr-ojecting receilpts.
Theqtetioft s hat the estimates of the OCS receipts ought to be
forths ad or henext fiscal ea.
Nowon age 6 [ee p. 51TI have detailed a brief history of what
w~w~rojeted or eceipts in fscal 1976. The President's budget pre-
dkt~ $9bilio'. B November, however, Concurrent Resolution 2 pro-
dlciadonly ".5'11lion, because the conferees knew the, schedule of
leae ale hd bendelayed
fte te itntsalJe iv Caifornia, the CBO predicted tha t recelptst
4adullytota betweeni $2..2 billion nd $2.8 billion in fiscal 1916.
I .a 'p, ha On pa e21 [Mee p. 59].
Fo hO Xtsal year, the PresidP ent's budge niia es rcipts
onO projection'anticipates receipts of somewhat
(yickly explam: 'he reasonis for the u .ncertainties and
whih, s ou qan see, amount to severa ilo
do"iI i
// i//

iNN;,,,II;




@""~"
~lll;sl~ i1l ii: '"";"".;"" '" """"
!""" ""i;;;l;;;;;Ri "










Frthe Atherei haveben Qdielay inp the an ate ce&A e
thanwse exeed, a+ndtba ther havebenitipualain anetrcin
plcdonseqandthtly have beipaen leapsed. t ea
Secothnd reepshe al e h haovn e betedn getlyoeesiaed Inth
pas, wr. thatTreceipts eequalsthos eofill comparab



mgitud. insws Neahv Gulfofexico. H owe ver, hesalstieraei
wht e call, frntie wso areas, in Caiorna off thde cato lo
in thoe areas dont ba the onitraditional relatonsiswchte
hae ine the bGolf of oe sico
Conseuentl weatcpae eeit et er s 1mnioet









be loess than half theamotuntsa prdce hin thearsdetsbugt
Now Msar.sl ofmne wll sumup atindo thap~ae hthe isue
Mr Genervtio Act, Whave taslke tof aboadvaiey o niitvedn
picer tagsand wayso -financing on imortoff budge.W ano rsm
to4 antiipae whto therg comm it dtees woudery medt ou u
a.Iwould like tosugt therand scoe of om of the posbe ntatvs

I ewol pointh out the pe-otkenta poblems thatroul rs nfa
197 ase eatresult offlhealiztopo h efcsulte.nry o
aendConsrvatons Act and~e posily ofsome satynthti full4a
Frfiscal 19he, h1 think the hilportath Cbude uhriyOp
would bendue tod energ R.& ndthe Energy Poicradonera
Mor. prsTESentatis orba I ee wol vier toose ouMrsnato tti
pofint. Ioud ikhe to thank gthe stf of the Budge Comte n


hav beenetremi elsy hepurime.ihen n
sthget, and ca they ha ehd ter budelp poft essBO We an alty
to. Coet It hadeon'ths imprtateeryae.ti very difficult.
thnge tor do, aos yupinte out givn your bsriefing
Y ou pessentaiony toda heemasben veryh goodManypitraebe
cariid app nd the budget figurst we are goingohvet:delwt

Ifsnthetic ofues uranium enrichmmen t aill deIaehndef
suchupriorites .Thtiprbbyaodex

je to esentiall thet de'sitermritation of theBor.f- etm a
wol peri h ude loti h.manro n ;~t
program..
Intecaeo raimeribe4 iwlldpxd nw'i.lto
ho o cr.Ta i rbbyago xanlli.te"~

wee o eid ta OB' ntrpeatono t6 Bdgt c W r







neos ad oul elct thnto score.the uranium enrichment progrm
; ii;R ;iiiii~i i;;'


thee s'$8 ilio threinnew BA, although there is a low proa
line, Senator is how the ngress ft
wiiitstode~l iththse higs. In somelhing as large as the ELA w
woul be ~mihinga vry large federally guaranteed effort wt
liflrilver lttl wy t cntrol, it. from year to year on budget
ut- kiter the relationsip of priiti
iiiii =iiiiiiiii==iliiii==iiiiiiiii iiiiiiiiiiiiiiiiiiii ii
Mr. CosTx. is e tiey possible.


Senator! Moss. The Alyeska Co. providing the pipeline ine nAl
is aprivtecorpratin. hy will some large projects fail to in
............. at all sure that there would-be any di
mit-Nih a Aaskn nturl:gas pieine. Such pipelines do- haea
hisory f -eig. innce. he orgial oil ptipeline was finance
The reaswhee I hinkfinncin miht e difficult are those whc
entillageexenitre o the deeopetof: new technolois
That-4one-o th uiiain ie olbt the synthetic fues po
g~amandto e uamu enichment, program. However iin the qa
nium~wpcbment caehtetelology tobe used in the private seto
the same technology that was used-
Governmnt sucessfuly in te past







fiedtha wihou cetai kids of guarantees they feel that the fian
Oil& ~ ~ ~ ~~ m 0maynty ol e niln to -invest large ansu to buy bods
That oes eave he a teraie of equity financing which- large cm
Looklig thbughtha $10 billionmI mentioned, it is difficult to d
up tore.thn ay,$50bilion! outside the electric utilities indusr
tha, oul ptetiay ae nuain ag difficltis One can or
thrug th eii ha isinthe FEA's 1976: National Energy Outoo
to::tty tomork that out.:u,, ,, r










FACTR 1 STATEGIC FE!ROIEUM RESERVE
Senaor Mss.You entoned establishent of the strategic Pero
le~ rswv, s prtof heEnergy Volicy and Conservation Actan
ifi of the source of the oil as a factor i

puwoud, gintothat in a little more detail. It is of:on
slilrabl~eocem hethr te price: of the oil to be stored is $7oi
t 19.the situation fn











Wearing a background paper for thes
on tht whili11 addes those questions. I think we hv
Rond I
18









iiiiii! iiiiiii! ........................................................ ...................
...................... !
i// ii/,,








Mr. o F il from th aval petrole
prodution othat runs from -$14 ~o $2 a barrt A t Os
tat is used. to alculate the. budget addition, 0HA S'4`s,
lik 50 cents abarrel, so some care should be execsd:hr.
That oil can be either transported to the s6)a aiii r
cange -for oil already near those facilities.
Another source would be buying the oil offtedmsi
crrent market prices, and that is $1.60, or, rate,-74
Another source would be royalty oil, which i iiem'uniy
something like 80 million barrels ayear, and curnlygigfooe
ting around $7 a barrel. It wouldn'~t besufiin ofl h hl
ang program. One ou p as those,- you darlet-ihmptdol
Sto 112 or $14 a barrel of oil.
The final source, of course, is that the, EPC dosalw-rth
etablishment of an industrial reserve, which FAcretyclu
ltes, based on what is allowed there, could am-onto:smhigIM
10 million barrels, wich wouldn't bes enoughfo.tewlepgrm
They don't really know whether that would befailebsdo
impact of those rglations .on the firms andsofrh
So, those are the kinds, of options.,-
Asd o-this day9 it is Thy u~nderstan ding that hsagnyUfitral
decided which way it is poing to go on obtainingtefes
One would hope they would take. the, least-cs prah i ban
inthose fueel. *
Senator Moss. Dan ?
BUmer'm Or A"o souon-ore o
Mr. Twommr. Is there a significant, difference m feta h.bde
fro the source of oil I
If you -ar~e talking about the 1Nav~al reserve 4ih-h~mran
i=Aii"i




















woaif gain'the revenues from, or the roalty `i :te1Gvr
mt woulda~ -sei l nearthearket








th Federal budget Gdin thkequeonmic imspacofretgthrsrvI
M'r. BROWNf. I amIInot sure about thal
Mr. TIMxENES. 'There are a couple of ways oftiknabu aM
Frst: You are going to store oil that is, in some sne necs fyu
neds, although we don't have any that -is excewt u ed tti
pint. That means you are distorting the maretfygcntid
sme sucthtyou didn't have before.
Hills, then, this is oil that was tot thore befole.t
If we start taking over royalty oil insteadofltig 0
market and -taki'ng money for it, then thd tiharkt*F *f
np'that oil somewvhere, else, pregumably by inering h
That is point 1. Point 2, with respect to the ugt
ioi-if it is worth $7.66 and the Governmen,6
ifor that Drice, be it-Elk Hills ai 'a roitapalt'ia
xox













tat isrelly the cost, althoug th a; `bey
i iiii ii withinithiibiiiiti


















h tiiii iiiiiiii d ii
you iscoreit within the budget.
.......... i iii i i i i iiiiiiiiiiiii



m iiiii ii iisir i


iiiiii
i iiiii iiiiii iiii ........ Niiiiiiii"iiiiiii iiiiiiiiiiiiaiii ~ iii ii~iiiH HH .....


ri











It is dilliicult's, Ior as tomk: pI


retr.the jmaot i4. the ]Feeral buget.esetilyh
e- is anticipation of the exp watxilii

e0si4 -themst4he- toruse program01
Mr.sTeentmm Yes.

I orage, ofZa core ens tondll the4osBugt
Comitte ast'wek dthat theadqmii~rtio .b enioinst
bildt;suppleentil'f abodVW.- miliondnfiscal 976 An











Are~~ ths-f bud 't~edoahe -be suplnia inbt
glas A lie mounti6 pA a






eaivnlee ootly. Oe n

f~r~uwpl, to-estrthe budgetn utheority estiates ehaim
wmoh,:ere.ongdeing outlcay.ti o heye o inatioi fteoiia
in dvnc on cual lpin nt o1
-more)expensive th e nstorage. proram.







no costIofTstorage of coursdepend ponible os 'o ilrt-as
depend$on tr. Zausn~terstorague farciwitie hin~sl areaaric
la~lyOI t~ rte ant.. hih tbspecif gfaiiies can be much avalale

to povid fora prgivnmelo hut looed Oine knwsaht, fo xape
istimates loebudgt au ity d esti






than the orresponinng iuas They pare goin toh haenogeefi

amoun)fbdgt ofmnyiadnc oon acually lain Ar t out sopht hy a


in'. Ted jidgmet. mha hot Goges ept hvn seh

Mr. osT~m. nc imath tat istai muhlargesb spveciisn o-te
M~nd-,rttc"e Tag oift ith wudb-possible tmoact on soetaul
0 19 41.1% -say, "Sure,
fo *i,11 vtv6 uhvciegtodom h qrthn















11 teQDt,.harsrto bdgt.im s .re e al-






iiiiiiiiiiiiiiii ........................
numbers, because it isthatll of prede
here.
At a minimum, there should be full fundnfoth eryPlc





liR
and Conservation Act. Thiwold romneftatUst $0 ilo nbde
authority, and perhaps $1 billion. Also, if a decision is made notto









iii









iiiiiiiiiixi
pass the.Nuclear Fuel Assurance Act, anotherh$2
have to be added for new Federal capacity.
At the' high end of the range, those we knowfreti qb o
on budget, such as $1 billioh for '.MA u o-I iinmr o
energy R. & D. and additions to urianim'dicb'nn raaiy ol
budget authority requested by th r&et
If you add in 2 billion for on-budge treatment
all in t his year, that could go, up to $4,5 bilio 13 Itwul eru
double what th.e President s reqested.
















.;;,,iiiiiiiHii
billion in uranium' enrichment gwaranteeo
It is, not clear that to make that kindofAdtnreest:ay















iiiiiiiiiiiiiiiii ilililili!!i....iii.iii!!i i.i.i.ii.iii .......... .......................
k d '"=== ...........................
id realistic -policy optio i y. ou.................
those ,things an would not incur all thoe cssa hrhdgisIvlo
the ran'ge wepeit
On th '6ffbugt impacts, of course,: yo 6J tr ih hep
quaiters ofiai:iilioni dolla of iloan guamiaiiiees fortiiiiiiiiiiiii
of the Enryloiyand -Cons0rvvatiqs Actadg pto$0-if
for the fegIdlnec Authority.



Senator Moss. I asked a question earlieraot h prespo
ndameclear as agnainst the nucear _R.1 D. 6xedtp*pB
1977. You said that the dollar amounts had gn pbta eepa
the nonnuelear-lL -D. w'ere addaeei4L,,
Does this indicate a conscious rdbeion, byte I~aie hf
toward.mom miclearl ... .......
One of the reasons.ERDA vras establihdwatlrtop" u
efforts more equitabily aerossthe R, & D. brd o m ws-
sliding back I
Mr. Cosrm. It is hard to say, Senator, beasofaltepgrm
they have, the ones that are most mature, tht*heos Kc av
had the most time and effort invested in teps4a h ula
program&.
nuclear field is probably better than it is inteo a
area.
As I think Dr. Dowdl indcatedta, t~he A ddntkVfnmh
Peiden what........... itrqetdfrnihtsztmfa




either.
Few agenies in this town evrer get wrhitmyr etB%ltc
suggest that there are, areas where the: ag~en "i od
to proceed this year and which OMB hat de:ZAt &lmiteit
pursue.









In ruh, Ithink there is a ful1 raige ol opinion. I think you could
Rud promets at all ends of the -spectrum on how ready we ar t
proceed Wlth certain solar experiments, geothermal expe
wheter w arepushing the fusion development at th fastes a m
posibl ca, or example. The judgments are hardler to make Mau'se
theyare ess ature tealmnlogies;,there, h asbeen less time and money
spen on hemto bring them along to the level of maturity which the
I i RI[A- is W Iinkhg to become -ERDA. The largest piece they in-
heritd, wi teAEC, ania they have had to scramble over the, last 2
y r illof thephrase that ill Ruckelshaus'used to de-





Scrbethe frst2 ears of the EnviromeAtalpyt.rotec'tion Agency's ekist-
onc.;1&6 EDA EPA bean withg 4 eied inheritajnce ofpogas
some mre maure than others. Ruckelshaus likened'trying to Organize
thatgenq torying to peptrm. an appendledtonky, while .running the
SolI tinkwe need to take a closer loo at the budget justificaitions-
tha" w Mo- re receiving, and CB Q.will be in a position, I think, to
assstte: onressin, its, evaluation.
liOMARMUQO OF OFF- AND QN-BUDGH'T FINANCIN6 ,
Seatr T What are the, pros and, cons of off-budge n h
iwng! .Is .there. aydifference in. the two on the capital
Ewould like to ask Ed RasAe, who is her'fr oiiiuri








staf o ddes thgat qeto .M. Rastatter ca~me to CBO from OMB,
wher, aongmany hias' he wa specficbdally concerned with ques-
tio~ofoffobnge agmeaqisand financing.
Senatr Mos. Very good. Ed.?.

Mr ,RAft atRlI te rwes to sath atie audWrly basicweW on'
qu4 wgiltep hat is iell the ol difference bte.abde n
aiandthaiti is b, ei
I~,iiiii;;;;,,, i;;,iiiii _,,i,,,,,,,

























offbuge es*M tabihda gn=g.iaAa
em bbt w d I
W t of-bth te gencm income unifined budgets e on







doeinth cas becomofff- e bns inon oftopatirs all,



th Grggrotha types borroefine them thaptl wmarkettst, is i.doneit
ther wee iitial establishedasion-bde agnciesf widgth and TVAf--on'
>th ye" blso bonce ro thehta Trebui y inve this casni te
'Ibudghetand. boural Telephned asanko-offbudget.

is undatllAe stnd th ifrential Teagcts tof ths typs' of


onte.catpitAl markets themselves.: There may: b6 igone at. all.
elh
ii











ilil iiiii ,,iiiiiiiiiiii~iiiii~i ll i
iiiiiiii siii ii i isiiiiiiiiiiiiiiiiiii ,







It is simply clas difrently, ithr
Sot is vlt tsay what e
There i at much substantive difi

Seao Mos id you have a fdllowupqeto 1

IMPACT ON CAPWAL WRE
Mr. Twomwr. Is it your understandingta h matoteai
iiiii iiiiiiiiiiiiii




market of a $5 billion or $10 billi.

budget or under a, Federal guarantee, teefc sesnilytesm
on the capital market, wth, possibly a mnritrs ae ifrnil
MKr. RAesTAh I have not addressd-teqeto f ongaate
t.Ihave discussed whether -the agnydig-th pn -sqo
ugtor off buidget
Wat you now axe asking isaeecndaypr~fta n_.hti
whether a program is really financed yla urneso.drc
loans.


In the past loan guara-ntees were typclyntcune;nwee
Now, however, with the creation o
late in 1973, most new substantial loan urne
financed through the Federal FinancigBnwihe~o ih
say, a back door to the1U.S. Treasury.
So, there islieall no ifrnei h aia akt hte
program is financed thoghla guarate rdietlis
SSenator Moss. Thank you.
FJxrUN oN ACCOUtNTIN Rt~~
Your figures on subfunction 305' for eeg ifr`6hAoe:o
the President in his fiscal 1977 budget..
Would you clarify the naminisatiuto' ubr r/hnzbr
rei
Mr. Tmntwqs. Mr. Chairman, I think hyaentTlt
areattempts toiifurther definthe amounting. .
tions, an to a ssist understading
correctly-
For example, the change of; the laser uinpormrm v
tional security account to the energy. accon s rn~
a great deal of sense.
The laser fusion technology .was firtdvlpdi.:tinfda
security directorate of AEC, ardended p'nter organizational rmasons.
It is, of course, useful for weapons i bu i i iiin
being considered as a fusion technologiiiiiiiiiiii
ergy technology.
ii .. i~ i ,, ....... ,



We have some other: changes there. 1-vs hr syhn.eA
in that directionI
Mr. HEDE=VAr. One other aspect ofth ueoa M itlt i
the past, the program dir.etion was allocated. ..................
curity, general science, and energy fun
decided to classify all of the general prormdrcinefr ssb
function 305. This shift results in an addto o prxmtl:$(






inillil;R.i; i ERD is subfuncti n 305 activity., That 's the other major






Mr. Timm~m. I haven't looked at 050, 1 am afr -idi.
Mr, tivi. There, is a nuclari, component in 050: Nationaldefn
Mi-.Mmi~k. Two pieces: wouldl have come out of that.
.luiiirid an analysis of thatI





x.Tox-.- ould you, for the record, ptovie 6~ nlsi ft
. ast~hw heallocation~s of costs may have changed between the fisca
year197 buget when first presented and the current verson of th


[Th foloing waa subsequently supplied for the record:

ERDA~~~ BUGT HNGSDE TOIN TERA FUNTIO SH IlFTS FROM NATIONAL SECURITY (053) TO ENERGY(35
[ in millions of dollarsl








a ~ ~ ~ ~ ~ ~ ~~Fsa year'da~l~aaex taee nwu
Dth 4tbiiE res1'11i"s. eter"""";~ radue t.eathatt e











retrds, ~ ~ ~ ~ ~ 97 budgveuesewstobid kest 1976
brogh he id o lte 980 Bauthorid ty outas
outl------t ------------------- so 7.8e e p b ta hihd r i

Laserro theren --7 ------ ------------------------ilities 0
rate ind I thaink tht d -s 12











other ~> manyri planetr ------------------------------------ 69l re ur 0sp l
turnat tat tme. he fgureof $ bilion n ne reven

overnment, however.









Senatorer Moss W-aonepotent benefitsmght ahicru ifrim theurning
uranill ..ent ove -to pisththerivate induseryI
fialrjpatbern of the, alternativesovera sufficient length of time, ther




0 ver Sig yl, sart*
and unni thou hthemid o lte 180s Revnue woud eeiitall
0"ft e Ude ZZ, 4d, h~rei& a crsso-er ointat wich ievnue
.. 1212
woumbe xce -in,,otlas. Ten urter dwn he d thre oul

be sffiientcumlatve' eveuesto: ompetel amrtie th cot o
the 4~htia- IFrom thenon ot, t theextetthatthe aciltieswoul




onntntle-to opete. I hinktha ftts fom 194, ubfntia ne


reveueswoul acrue th-, Gv~rment Gbiousy,,-wha hapen
tifte -i~, i~::9*~wh~. Spculaivebbease aong therthins, w

d~m~r~nw,,,hcr may nieler pwerpint ...i rquie a uppy o




en~eM laani at hut ime Thefigue o $3 illin i netreveues












would ~ea goa toou forein soucsfr eo h apialrg, andnthemeo


the on )ropll tpro e know ahbonut esthe diffusion pant rp4b
Uranium Enricmeont Assciatesrt they popose-.Ato thae -d0pirco
th1fnin iom e from foeign sources.Bbdetady
Thatould edue domes rtic fundiong sbym$i2 billion.
On te oter handtetoalfunding.hin that proposarl isenota h
fundin ofte. enrichmgen plant, btal als -thefnd*a frthe. owr
'-




plant thatare necessaryetafel. t n htrie h oal.Ao
order of5 on.tdir ooio









tionin apialrequre. Tha4thr woul &(be aadvatae buOtisnta
enomosl bisift.- u owmchareg

Mr.~~ somumeN possieceipts ishan 6the e whchmen tatw
have mae aTful prosecid li thel bonuss the acrneagadtesi
page ~ sS asw ofo niscaiyearnt fom theioter As tote diffrnc e
tweene i umes ewbz ther $6 billion ehvese n h M bde nd yorcurn
evnu pe sale.




figur, Intriorlasin ben prvetty goodilariashing bth roatis an
the lases hatwreestdaesalin withrtisear comstie ealytou4 inth
fisal earsoithtsipepagen isno heetablys photenia prb=,a'jW

las yeIpadcr.r wcea sa
Thtlae As with arecage. thswa ssnill h a e
Isn't the differene. betwceein OMI thiestimate and your Iurtii canti









mat prttymuc cnfeined toas pdifencein o1f opnind ony thgcrae
Mr.l companies becNo; there is' al gdimt








ther etiate ad esimates areghoing muc cnnuerfto whae "a ii
of utue sle.aTiheeys w bouldlkto thell inrtheceulartl m ine than

The~~HER -bgdfeec And numberis between thei $cbilonpanies*, 2-t

enesmo senseitiver evttan hs tbe so,
,S : w e a r e d e l i g i t h a n e x r e e y n t r t i n o m i ~ b i n d t h .
rangs I hae do't how ll hoseuncirfiiftisi'my #~en-sal 4
betieaslreasIpeito wcea ml
Xr. osu' -s yu. ecal, hiswasessntillytha 4mer ntewit
the Cliforia sle. I cam in, thik-I& e. se. if1: cn tz*1 th





don'
Mr O PE~ m mm nditvaie b tw enth c mp pd, s;th
knowthe'nswes eiher







Mr.M NWQbH4Lm The, things we used to. deal with like slippage and
so forth are minor elements.

CONSERVATION PROGRAM
Mr. ASHI Y. Referring to conservation, you gave a figure which
indicated an increased effort in-conservatfish R. & D in the ERDbA
budget. Apart from that, what does the. conservation program look
like 1 Is there a dollar figure identified under conservation 1
Mr. Cneis. Some of that is very difficult to put a dollar cost on
becaue it does. not directly. involve the Federal budget; for example,
therumadatimy fue! eoneomy standard for the A~uto industr y. There is
taktiwnyeap e the record now from the auto companies as to what itmill
costtiredetthose staindardsiand if you recall, there were adjustments
rdadei the timetables for compliance before that bill cleared. That is
a pzrt-o the, conservation. effort called for by the bill. Many other
conservation measures were asked of industry inthat bill in an eseen-
iiiii"""""":


tior-Advisor mwmer only,,














Sdirect I A, however, to research and to fund demon-
Aateicas on, how energy can be conserved-or more efficientlX used. A
t..........tial weakness, however, is that -there is not clear..rovision made







imumgn transfer oftlhe kowledgemgained from that research
t6t6 markor rather,,, to ensure tat the marketplace will

mom o. e. sme ractical alternatives that can be demon-
sbtedy BRDA and hopefully markets will pick them up based on
the dal edowtA data that will come out of the ERDA doemonstrations.
ERDA is r'easoneably7 optimistic abqut wha~t can be done.
In other areas, you lave thing's ranging from one extreme, the rules
ii iiiii iii ii ";i ii" l iiii






















that the FedoralGovernmnent applies -to heueof its own facilities in
terms of conserving energy.
That is hard -to get a fixon.
NELW CONSERVATION TECHNOLOGIES
iSpecifally in the budget, probably the most hel ful thing to look












at is what ERDA is going to be spending to deefpnew conserva-
tin technologies, and I think one of the areas that Cogesshould
have particular interest in, is what ERDA plans -to do to transfer
!iiiiiili,
















ose to commercial application.i









M. DowD. May I respond briefly I
Inthe briefing book section for energy R. & D. [see p. 65] we have
amsral pages and we have done a program-by-programn description
including conservation, research and development, and I just note it
here that becmuse the conservation research, and development is at the
moment made up of so many relatively small pieces that a reduction
of the budget really is a reduction of the level of effort.
it is not as if as of the moment you are putting off one or two major
items. You arm putting off a whole lot of things, most of which are
relivly small demonstrations designed to convince the building in i
S ,",iiiiiiiiiii



_.i








iiiiiiiii iiiiiiiiiiiiiiiiiiiii iii iii iiiiiPii~ iiii~~~; iiiiii iiiiiiiiiiiiiiiiii ~Uiiiiiiiii'iiiiiiiii~ii X tiii@ iiii

i;i ;;;;;;iiiiii iii "' ;;;s ; ; "' i i'iiii iiiii



; ii~i lliiiiiii ;; iiii"ii i
iii iiiiiiiii
........ iiiiiiiiii,
li 1iiiii sl "i



dur rpol h av od ihbidngcdsta hs e


was ak snebeau an lca ursdctos reveyheitntt






i or reduce the lighting standards.i
; i,;;;; iis;; i~i~i;;;;;;;l;;;; ~iii i~~iiiii i~~ @



All would have a... effect on conservation. They.w on't do it ..
someone shows the way, and a good bit of the money is designed for
that kind of p&oect.
If you reduce the money, you reduce the scope of the project. You
ii~illllll sllll ii~iiiiiiiiiiiiiiiHH=iO =i ;; i ii ;;;;;;; ;;;,,
Ili liiiil iii;; il~i """';'""".:,,,,,, i
iiiiiiiiiiiiiiiiiliii,, ,,,,ii iiiii i;;s;; ,: ;;
.;iii iiiiiiiii iiiii=-ii


nt reduce any ngle big item.


Mr. CosTLE Significant to the markup on the first concarrent-zesol-
tion there are several Members of Congress who are Vlna to
iiiiiiiii
introduce a bill wthich would set, up a loan guarantee program spe-
ciiclenly in the conservation area-that is, loan guarantees to en-
VILA%


courage businesses to make investments 'in enerry-saving .techniqW....
We don't know much about the specifies of thaf bill, but we arelotd4
it will be coming up this year, and that should probably show up in
the reports that you expect to receive shortly.
I think the level of effort there was something on the level of $6W
million. Again, that raises a question about: do you score that BA,
and -if so, do you do it all at once, or spread it out, and are less
guarantees on or of the budget I,
There isno formulal answer for this, but I think it involves a poliC
judgment ofthe Congress as to how this ought to be treated.
Senator Moss. Let me thank you for this fine presentation toda
This seminar hits clarified a number of points and will be =t
us in deeopn the first concurrent budget resolution. 'Alo*sm
very aprcaieo the CBO effort represented here today.
Mr. Csi.Thank you, Senator.
Senator Mom. Thank you very much.
[ ereupn, at 3:15 p.m., the com ittee reesd to
subject to the call of the Chair.]
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Alice M. Rivlin Director
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Douglas M. Costle Assistant Director for
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V~atral Resources and
Nicolai Tienes, Jr. Deputy Assistant Director




for Natural Resources

Reginald Brown
Richard Dowd

David Montgomery
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Mary Ann Massey
Kendrick Wentzel

Allan Ruchman

Ronal-d Hoffman Deputy Assistant Director
for Tax Expenditure Analysis

Ray Scheppach Chief of-Natiaral and Physical
Resources, Cost Analysis
Section
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RSR AND DEiEL

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Outlays Comparison~i", ri~

Programs 1976 1977 1977 as 1977 FY 76;';O~s
% total PY 76l~s~~
Direct Energy Technologies:;;II;; ili
A. FosslEnerg 333 6 442 165% +109 + 32.7
B. Solar Energy 86 26 116 4.3% + 30 + 34.9%:~;il:,lr, ;;;;iiii;
C. GeohermalEnerg 32 9 6 1.7 + 14 43.8
D. Cnsevaton &D 6 14 91 .4% + 3 + 2.5
Subtotal(507) (13) (695
E. Fusion Power 224 65 304 11.4% + 80 + 35.7%1
F. NUC Fuel Cycle 59 18 147 5.5% + 88 +149.2%
G. Fissio Reactor 22 160 68 25.6% +12 + 31.0
19. Uranium nrichment 8 22 108 4.0% + 19 + 21.3
(R&I? related only)
Subtotal MYO (265)(1,243);~o
1, Other ,J,,,,,,,genqies 247 264 9.9% + 17 + 6.9% ; si;;ri ,,,,l
Tof-akj Direct 1,648 2,20
Supprtin Tecnoloies: 407 09 45 177% +68 +16.7
Grand Total Energy R&D: 2,0'5 2,677 100% +662' + 30.3%i

Operating plus plant and capi.-al equipment
Not estimated.:: ",,~liii~ ~ o~r::sa~

















VI ""; ;"
















FUNDS PROGRAM FUNDS PROGRAM FUNDS PROGRAM EUTO
EMPHASIS EMPHASIS EMPHASIS OBED
$ M Percent $ M Percent M Percent Pecn
A. osil negy794 20.7 699 20.4 477 20.7 6
B. olr negy367 9.6 276 8.0 160 6.9 5
C. eoheral102 2.7 90 2.6 50 2.2 5
D. oneraton262 6.8 243 72 120 5.2 4
Diec Nn-ucer 1,525 39.8 1,308 38.2 807 35.0 6
E. usonPoer685 17.9 624 18.2 392 17.0 6
F. ue Cyle336 Z.8 -306 9.8 179 7.8 5
G. rision1,063 27.7 941 27.5 790 34.2 8
H. nrchmnt223 5.8 214 6.3 ..140 6.0 6
Dirct uclar2,307 60.2 2,115 61.8 1,501 65.0 7
Sutoal RDA 3,832 100 3,423 100 2,308 100

I. OherAgenies291

SupotngTchoogies 851 697 515
Total R&D3,114

Sourc: Se Chater V1.
..... ............... ..iiiiiiiiii .i.....iiii... .... ... .. .. ........ .. ...............







V1. THE FISCAL YEAR 1977 BUDGET, BY PROGRAM;;;;;





Thi chpte cosiss f a series of summaries, one
....................................... iiiiiiiiiiiiiiiiiii nii~~iiiiiii i 88i

.........""";~; ii"' iiiiiiiiiiiiiiiiiiiiiiiiiilliiii
r;;;,;;;iliiiiiiiiiliiiii;i =iiiiiiiii
L iiiiiiiiiiiiioiiioiiii iiii~ ,,;iii

fo e oftemjr oents of the energy research
and Oprogram.iThe format of each is identical,
con~stng f () gaph ofbudget authority and out-lay
ing budget authority aid out-iii
s 1975, 197iiiiii6, and the transi-
tionquater an FY157 buget requests fromn:the program
divi~~~~ionb toEDfo RAt MB, and from the President
tiiiiiiiiiinative descriptions program
con enatives and issues for FY 1977,iiiiiiiiiiiiiiii
and(5)futre rogam mplcations and trends.

.Thefiv-yer bdge prjection charts were developed
usin th mehodlog decried at the beginning of Chapter
IV.. Furlvel ar shwnin increasing order: (1) the OMB
iiiiii iiiiiiii

tk f t Psident's budget, of ommitments
7 equests (2) an increment to
pro d ,modstrel gowh 3% per ya) for mature programs
and lazex-ncrmen tofuly fund developing progams,
(3)in ddtio* fll fudig those progrm for which
iiiiiiiPresident's budget,
finaly,(4)a bdgewhch ould do all of the above and
fuly fnd ll hos intitives suggested for subs equen
year intheproramimpemetation portion of the ERDA plan.
it EJ mpotat t noe tatno commitments to the full
fundng-ev* hav~ben mde r are being'suggested for
FY 177;the reresnt otetial FY 1978 and later decisions.









biviion nd RDA eet are contained in UT.S. Energy
Reseirh ad eveopmnt dmnistration, "FY 1977 Budget Histor
Tabes, COPrin Diisin equests with Requests Submitted to
theOffce f ~angemnt ndBudget and to the Concrest."
.oii;iiii ;;~







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A.. Fossa, ENassY Davatontan
rossmL ENERGY DEVELOPMETl
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S1000 asoe Program Irerement
-we'O twgran Comml txabt
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YEARS0s; t75-190

FOSSIL ENERGY DEVELOPMENT
4W LAYS-PER .ATING PLUS PLAN AM CAPITAL--
L 2200
sod ii i iiiisii;s~iii s







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N** Fulll Fuding
s 180(0) ***- B Program completion
--we sseProgram increment
-- we Progreat Commitmtent

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YEARSILM7 FO 1996










SFY 1977 Request

1975 1976 -TO Div. ERIDA TPres.
..Astual.._.Esti!2ate Estimate Recuest, Rqecuest Budget

budgpt Authority. 335 398 105 794 699 477-
outloys 138 333 64 755 660 442


(1) Program Content and Trends. Most of t-he fundina for fossil
energy (somne 85 0:4S4'f aecoal progam.,o WhoD 9 objecti-Ves are:
to. develop an envir66imnt~ally acceptable te'chaology for con-
verting coal to liduia n-l cas ous fu.els, to im-pro-e e.t~hods
for the direct combustion of coal, and, for the longer term,
to advance more efficienc Dower- conversion systems. I Other
significant fossil energy programs include enhanced 'recovery of
]petroleum and natural cas, and in situ technology (in,-place
retortin 'g and production of oil and gas without earth-moving.,
operations) for oil1 shdle and coal. Fundina has been
provided in recent. years for construction and operatioh
of a number of, 'pilot Plants, costing tens of millions
.each, to lnvestigate a variety of technoloaie's. Overall,
then fossil enercty program is the third largest ene-rav R&D
-1programi. Growth.ibs the foilenergyv budaet has been
steady and the President's budget requests an increastt
f or PY 1977 of 19.8 percent in budget aut~hority and 32.7
percent in outlays.-
t2)--AIEntiat :ves,.a d Issues. Zer,. FY 19," The majo-e thrust
ino he:-FY 1977- fe "-il energy"_-uiget is f undinq fo S-re demon-
kaLtation Plan~t:s VoQe. designqO to Conver~t .iah-mrf ulur coal to a
I adoiler udl,,,6e ,to conver~t coal to a "high-BTU" gas
eoq mity adfficient "to justilt shipmen't by pi:p line, and
0Ine to convert coal to a "low-BTU" -17el.,gas for electric
utilities and longer industrial users.-

(3) Future Proqran Implications and Dgcis.g RAsNto
MP v4B4mhtip #gr .beoinning
s ir pi rte-sealeetic dil'and pressur-
ized fluid bed gasifiers ins the lat-e 1970s and peaking with
the nara-coumercial M51D deon.-stration plant scheduled for the
Mi-1980s. Total pfogran budgeteauthority could peak
around FY 1984, and outlaV4; Shortly thereafter. A#- 4ts
pake S4.9 percent of fossil encr-y program. budget aiithor-
a4y would be earmarked for construtie on and ope'ration of
large test f aci li ties uipilots, 4nt demonsrtratidn pifntsi.












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YEARSA M TO ISM;;














Bugt uhority 42 115 34 6 7 6
Outlys1i 86 26 5 1 1


(1) Prooram Content and Trends.. The ad
program cntains divesesubprogramstodeterm
oproposed solar teechnekagitts, and to ta h1setal
uniited energy of tsve sun. Thes suprgrm incude1
uig solar thermal energy adirectly for th etn h oln
ofbildinas, (.2) con.-:ersion of solar enrgyit lcrct
thogh photovoltaic and solar thermal elcrcsses 3
I wndpower systems, (4) use of the thernilcainsi h
oceas, and (5)conversion of organic mat
pln matter into usdefl clean fuels.

(2 nitiatives .and issues for FY 1977. Teslreea
prga:- is re.latively new but grawinc7 rapilacutn
fo oly 5.1 percent of all energy R&D bude uhrt n
4. prcent of outlays in the President'sF197bde
reus. Overall, this program ranks asentinmprac
lsapercentage of total energy R&D fundig Hoerp -
grmgrowtk.is. beginning to accelerate,haignclse
b-3.1 percent, in bu daet a,'a *.ority and349preti
i ulys over the FY 19*76 level. There are syt, e
b45-tike items in-the sola:_ program. Acrigvdbt

,teAv ilability of appropriate researho
Skbiliiy to age a aid eprogram.
Difrences in oerception oi: these issuesmybrelcd
interatio of funding recuested in t-he Peietsbu
tothat originally ecommended by the red
(4 ercent) the lo-.est4 ofany. aqjorprorm.Nvet


(3 Fture Program inplicati--ons and Decisos ulfnig
fo he solar energy develo -:ent would moet-epormu a
!fithla.-cest (tas a percent-agene oftta ude utoit1o
energy R&% in 1981, and th-ird by 1984. Tens ai got
wil occu between 1981 and 1985 whenentucini ceue
tobgn for larceiti p'ftldt and deAbsxtiwkP t tesin
suh ehnologies as .. 'ocantenzersatue power generation bargesslcnary
an age area siliccn shneets for conversotoecrity
Sreceivers, distributed collectorsa
andmtine bio.-ass coriversion units. Sinc h!eplt n
destration units will be costly, a najor decision have,
tbemade prior to 1981 as to which of t-s rgaslod,
the greatest promise of cor.-%ercial and economic success.
...............;;~i l : s; ;ir ;l;O~:ii;~,~lii s~
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............................ ii;,,ii i iii;iiiiis,;;ilsiii
............................................................... = HH ,Nii 0iiiiiiiiiiiii ~ ~iii

................... ii """| 'iiiii 'Hi "ii
Budget Authrit 2831 1,2 10290 50
Oecoe roles 21 32n 9b 78 -7 o4

.. ...............ds. The geothermal energyiipro-
3oitoan uanthe enrogra rsn
gra~~mn is desiahic todeige pent.xl Doetak
steam, hot tyrcade esoures





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amor~ peak.-""" Thip seqqn"";" Aeak will
f"""mds available during the initial technology. ;l'il;;i :;;;










(2)Iniiatve an Isuesfproes md 1977 As inote casvne o
solarenerg, theba ck is.e ic heopp al s oevel ffnigr,
fairlyeohqma newarc Droogram.
*Ofthi avilailiy o sutable proster opportniktie land the
Future ~ ~ A Proegrm s71-ain and Deiios grA fuellpy
an~, oss bl, arg rozgrm eak, 'Thi secnd loakwiller
j~e pr~cet upo intr~m pocres mad in he moe adance
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a p to:-i pla-zntsenvisaged









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.D., COMBERVATION R&%Alasm AND DEvEIx PME2NT






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75i 197 Request


ontiv 21 5 14 199 lei


(1)ProramConentand Trends. The conservation researc
anddevlomen pr~gan has two major subprograms. Th is
encompasesiedto irve electric energy s
and eveop fasile'nerqy-sto .rage systems, while the secn
andlarerdeas pimarily win end-use conservation andteh
nolgie t irpr 'e onversion efficiency. Within these aes
indutryconervtio,and buildings conservation have receie
the rectestempasi over the FY 1976 request. On the oter
handc rsion efficicy fundingis down over
las yer. verllconservation research and development
rank ninh inteFY 1977 energy R&D budget out of ten majo
his program has expanded robustly over
Its 1436 leel.Budet authority is up 60.0 percent and out
laysare p 625 pecent.

(2)IniiatvesandTassues for 1977. A recent study condce
ORces that conservation and end-use d
mange-"*t easre ae '-a-t least as effective a
incrase suply ptins. The rajaor issu in p the conservato
progam s towha leel ihould the base program of experimnt
and felddmonst atins be expanded. Administrators famlia
whi R"- counity feel that $600 million
Pet-oar-it:notunr a shble for R&D communities to absorb
lativotelky, at ises'how fast and whether -such a


(3) Future ProgramIZColications and Decisions. The conserva-
tio UDproramhasthe potential for sizeable future inceae
In level ofE Poraefort. In general, conservation projet
are ot prtiulary cpital-intensive in the traditionalsee
--dvidinqfoiardfra experiments to pilots to near-comnerca
demostrtionRlats.Thus, the rapid programt growth anticpae
for he'180s sholda~ull program funding path be followd
willtak thefor ofmany diverse,, small-scale experiments
that separately will be small budget items, liut in tota wll,
,, ,, ,, i::,,




















Ml~si of nera Usace on Long Island from 19-75 to 195
i Te 2port~ntie to.-educe Peak Electrical Derand~ra"Mf Ener
-onservation, Solar Ene-cy, Wind ErUr
andToles, Dubin, Fred, Departent fEnvi
Cufolk, New York.
......... ... .... ... ..... ... ....... .. ..... .... .. ... .. . . ...


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FUSION POWRe RESEARCH A
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"is-- o iPirogra commimp
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YEARSgIs975 TO 198
;;;;;iiiii FUirOM POWER RESEARCH AND ()EVIELOPPi tNi.
TLAYS--OPERATNG PLUS PLAN AND CAPI;ek


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STY 1977 Reguqst
197S 197A TO Div. ERDA Pres.
...... AetW&1. Estimate .Estimate Reguest,. Request Budget

buge t Authority 183 '"250 so 695 624 392
oatt ye 151 224 65 542 475 304


03') Program Content- and-Trends, While it- has a long history,
the fusion power R&D program is still very far from achieving
technical maturity, becauseof the intractable problemqs in physics
and advanced enginearina. 14 sucncessful, the poamculd
lead to demonstration of the scientific feasibility of fusion
pover, and to developmren-t, ultimately, of a reliable, ecobnomic,
eavironmentallv safe,.'&and of electric power for the longer term. Subprogram emphasis
In devbloping along two paths. The first relies upon three.
approaches to the magnetic fusion process. Major procurement.-.
obligations are pla.shed for FY. 1977 in support of. the. Tokamak
fusion test reacitor4 ActuS1 heavy' donatruction for this facility
will begin early -in -FY, 978. 7%he second =at~h encomtpasses con
tinued vork on the emraring laser fusion process (wihich was
formefty shown in the budget for defeanse-related) activities)
Exlperimental facilities, parti'cularly for -1-.e magnetic techni-
quoes are extremely expensive. Overall, the fusion power
tprogram currently ranks fourth in total program funding, and
4he President has requested a 56.8 percent increase rate in blad-
g"t authrity and 35.7 pecntI inres inutlays for FY 1977.
of Intatie an&- isue fo 17.aomne initiatives
stigns are raised i beF197 is powe research
-Vdvelopment program.. Thi budget is esentially an ex-
temsion of previous progrbam nteptions ineclgling ,the acceler*
.atest support being given to the Tokamak facility..

(3 Futur Prga -Imt i 'ns adDirop. Qf all the
major enqvgy X65 prograpso te future p ram-shape is the
<&"te*4d ffiaul to predicty-An large part beause of th vWery
basic nature of the technical problern. If the pattern of
IAdealopenet conjectured in the Nationil Plan eventuates, con-
straction'of an experimental power reactor might begin aiound
IMPA, with a major increase Aa.landing at that tin,.

....... .. .... .. ..... ... .... ...

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19o5 197 197. -Ehe Pieo h nres. e
ActualEstim le Et'inciereauest awaene~ss Budgth
budgetle Auhoit 36rasn co69 2133i36h7


(1)Prora~ coten an 'Rcet Tends.aehent fuelcyce rpesac
actviie, dvelo-mnt ffcouercill viiaer le technologies. h
for eprcesingspet ractr:eederd recycling ofPrecovere
uraiumandpltonum.an_ esinofra tem. inastaporag concpt
for adiactve wste. 7e lrgest incease tchnolothese. ra
overFY 976-udat leelsoccrsoin the wastzesc waste a rna
Inen suprorambothin n rasolter and ) areatie sense.lop-
thouh te fel ccleprcrmrank sixt fisovrlin program, n
budgt sie, t isthe ast st goingarogram eire the Preident'
fons and Decisions. If fulll












or 19.4percnt n bugtauthoity an~dc 149.2 peren tin otlys
(2) .1mtiaivesandIsses iora PlY n 17.The size ofuthear ceae
requestea ~ ~ ~ f6ths adzg.-rf eet ainthorain aw arenessofte
impotanc of he otalI. ba cyleand inregas ing c ern wit
.1~ ~ ~ im7o aiat asteas.. Iaamnpat.ctr qi
the 1918it e Anosm fwther-isu
is ~ ~ ~ ~ ~ ~~e reaivemhaiioAs:pot-fdffrn t echnologie s. Th

reactrs, x- the I uel cy.- r pec programs inldssup f
reseach onreproessin taiore_ to tese tchnolgies
ii -ppp;rt fox reproceg
cln .a ri _xng wastes from a rr,
Crlhishlsterfnleiature gas-cooled r eacter (HTGR), whose develop- ;;;;;;;Rl; I
4Wnt" ciii-tes -little support from the fission program, andi;;~r~iilu
Vbose, sole U.S :ranufacturerhas indicated adesire to with
draw from the market.I""iiiiiiiEii,,"iii" iiii"",iO
ruture Porcram Irmlications and Decisions. If full""",1""lR,, ,ii
program funding is-rrrarr.Lei dut in Acebrdancr with the tiire-sr,;i~t~i

moving from sixth to third in bu.Aget authority as a percentsi~illl
of total energ R&D.' -.1his substantial procram increase 'in"
attributable to larce construction projects in the threes;,s ;;~to~iiii
metal fast breeder eactor fuel cvcle cnstruction pro;ect
alone could require total federal investment of at least
f~o,35 billion between 197 and 1986. At issue for th











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YEARS sil?5 TO 1906
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....... ....ii..iiiiii ii i iiiiii iiiiiii iiii ii







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~p18blinadoutlays 53 5215 00 73 28

the issin poerractr develourvn program is the res~th
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n ainie a1ith t dmis of the
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moltn slt beedr r acto ine thes 1977Preidet's andt three
-bredereactrtesremadin. T arae the w
However,, ful funding of







A"V4Jy-f=*4i24A thes lih wtrbe derreactor whic *asen
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level. Coside postcon trovesyhast
ft t g fowr with theaheB
racorevlation of currn b nin c






wate rectos cnti.n Lsinaon ateptwe etor leep roradeor
techolog bas, an t6 assis iundustr ineg achevn buette
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10)Futre roramInoicthen andB Decision. Mostrof dithoe a
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in 161. uchof te erly ncrase ill omeabou a' a rsul
lot boad-ased uppot forthe MFBRprogrm. Sveraladdiiona
:major pojects wll be codidatesfor consruction eginnin
In 1978 At isue forthe log term but aso forFY 197
Is i~he umbe of lterativ fision reedr an conerto
techologes wich an b invstigted t inreasng sales
Zdth reltiv empasisaccrdedfisson nd nn-nulea
rams,,


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00 fogrm Coten andTreds, Current nuclear power plants
arefueed y fipioabl!varantq-,of uraniuma. To be useful,
nuatui yaniT mst e-enriched" to a higher
........ ... . .irrssiiiii li iiiiN= i H iiiiiiiiii iiiiiiiiiiii








cofle ERDA currently
owns andmanagesall:t:: U.S. erichment facilitiesiiii
i iiiiiiliiiiii=i iiiiiiisoiiiisriiiiiiiiiiiii








whos funingappers i th General Operating Progrgms
portionoftheEneyntion, not the R&D por
Manum nrihmet ativtie funded in the energy R&D pro-
gramincude eveopmet (aseous diffusion and advanced
isoopega cetriug enicmeint pfgocess and advanced
techoloiessearaiontecnoalogy (pri:.arily the evaluation
of aterntiv lasr-inuce U-235 separation techniques).
Vhe resden's udgt fr F 1977 -,4quests a 60.9 percent
yover Y 1976, princip.allyas a





resut o th fist has fuding request for the centritage

(2)iniiatve an Isuesfo 1977. Emaphasis has been
Nii~















Rais m ndkear npd participation in-gas centri-
fuge ~ ~ ~ ~ a tehooy cossetlt he Adminitration's effort.
to rivtiz urniu enichent as articulated inethe recently
proposed Nuclear Fuel Assurance Act.
-Pu: ur~.Prox~m mplcaions and Decisions. Future full
:.:7fu~;F#Prdramitna~i 4i11-b relatiVely nodest, with only-
onemajr plotplat pannd for about 1981.
tip'.iiiiiii
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Fora flle dicusionof that subject, see a companio
COOstaf daftanaysi. "raium Enrichment: Alternativei
k fr metig te Ntioas eed and their Implications forth
.i.....i.... ........ ............






.. ........ ....

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OGT AUrHORITY-OPERATIN0 PLUS PLANT AN MPSA

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iiiiiiiiiiiii;~ ii;.;' iii;ii= == i ; ii, ri si i ; il;;s' ;";;il', iiiiiiiiiii iiiiiiiiiiiiiiiiii ii;;;Ii ;
















oand ecent rends. Other federal aienc i
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of heoternie ajor Drogran -reas. ThI-e Nuclear Redulatorv
Csr--mission conducts research on nuclear reactor safetv, .envdzron
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TO 4= ". of-i es of ten bepartment of te Interior conducts
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Othe potion oiInteriore,and numerous other agencies play a
iiiiiiiiiii;iil iiii iiiii 1 1iiiii li














o r e iiixtrmely small budgetary implications.i
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..... Initiiivesiand Isues- for 1977. his progriimIiis
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typf e bv!nainss as usual. It exhibits the slowest
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PY 1977 budget.







(3) Pr mications and Decisions. No items









plane fo I-hee roaaras approach the ragnitude of the
largr fssi .Ap, ncler denpo~nstration plants. Basic
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item atconideably smaller scales, and the relative
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76


JF. SUPPeaRMNG Tzcins sOEass

(ENVIRONMtENTAL RESEARCHs AND SAFETY, BASIC ENNF**G
SCIENCES. AND NTTCLTEA R MATERIALS S19P l ATTIFT:
SAFEGUARS )




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1975 1976 TO Div. ERDA Prs
Actual Estimate Estimate Request RequestBud

Budget Authority:
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Env. Res.& Saf. 183 215 481 370, 260
BakiceBnergy Sci. 191 211 54 3361 227
Nuclear Matlis.
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Outlays:..
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sav. Res' & Saf IS 204 54 384 336 24
Basic Energy Si. 165 188 52 300 i 27


Nuclear Matl's
Seq,: & Saf gd 7 X5 4 34 29 2
Thtal Supportin 331 407 110 718 636 47


-1 Program Content and Recent Trends. The supporting tehol-
ii~u l! ii!!i;! ii;;;; i~iii;;; iiii !!i~ii ii!;i; "iu~iiiilii~, iii'.'!!l iiiiiii~ii "'' "i! ,i,,i ,,,,,ii~i:i~li: iiiiiiii !!'!iiiiiiiiiiiiii rl~!ii !,i iiiiiiiiiiiiiiiiiii,,i!iiiiiiiiiii!!!











#ad program is an amalgam of (1) environmental researchn an d
safety, which includes biomedical and environmental researh
eparational safety, environrmnta-X control technology, andre
actor safety facilities, (2) hasic'energy sciences, encompassing
nuclear sciencematerials sciences, and rpolecular, mathe
cal,.an~d g e-sciences, and (3) nuclear materials securityan
.. ... isafeguards. 1








4n both the nuclear. materials security and safeguards proga
(for continuing improvements in safeguards procedures and

gram. On the other hand, the nuclear science subprogram
fas cuto especially in th'e area o*f-low energy nuclear
science.
Futur Program LERImplcaions ~and Decisions. The only
bi ticket items scheduled at full Program funding are thre
relatively small items (an intense pulsed neutron source,
&4a avapced synchonous radiation source, and a very high
UK'nxnetitron source).
!;i iiii! mi
|;;i;i;



;iiiil:1; ;; 8 i"l;l''l'"' '";;"" ";:'l;:::i; ;"";;;';;;; ;~ 2 lAii~s~i~ ~ ~;;s ""'"""!""'

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;; """""";"!

@iii! ;;; 'iiiiiii:ii;iw ~ iii~ ";i~iii'i~i i iiiiii ~ ~ i i~liiii "n1111;;11:i

















Strteac Storage, Introdution dandvBanckground



,,~pto in the flow of imported pete:sss





Straegicr Sof eragem conist lof perlmaknfnntul
suc asth inthe Nal Petroleum Res









The pnrimay purpose of anstrvateico erlu rsrei

to protet tes U.eat. fom th diavnaeu imato nar
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii iiiii;
lii;, iiiiiiiii iiiiiiiiiilii i;i; iiii ii













a ag net....y of petroleu ca.. asiiiihgvrmett
ipartciat dirclinptoemmktsfrr ....... stabilizing.
.;;lsiiisi~iliiiiiiiiiiii;;; iiii - I, ;i;;"; R ii;;liijlitiii ....;ii

...........oi~ioiiiiiiiiiitiii;i ";;;;;;;;;;;;a, isi;iiiiiiii






purposes. mli barrels. Currel
ii iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii

iiiiii










aThel Enery PoicyadCosraion Actel (Dcfbr 1975)


ili iindiii creat of a petrole
minmu level of n barrels dar ofo
to just under 500 million barrels. Current imports tota




















appoxiately fis? million barrel ofubmittingd

The an Actcae itplekest th.S. proliictonsovo saa 3
to one billion barrels of petroleum products, but not 13ss thans;;












.. .. . ... . ..









Even t;;hough EPCA mandates the establishment of a reserve""
ii iiiiibas, n e o i u
w l haiii b riesolve di y the Congress incident to'iiiiiiii

apprvalfor he ederal Energy-Administration's plaofipe
..mentatio Some likely issues are addressed here: How big


~~~;;; ;;;;iI jiiiiiiiii i"."i HH HH HHH N H 'i;;siiiiiil, "'iiii
shold heresrv be? How should it be filled? Whtcnios

iiii regardig the use of the rese
is ~ ~ ~ J thtrga iey to cost, including financial arneet


TheS,e f aStategic Reserve:
esired for a reserve depends upon
i.





vulnrablityandthe relative cost to the economyofa
interupion-uxaposed to the cost of storage itsel.Ipr
vule'rabiitydeends on the level of imports, the lklho
aninerrptin, and the length of time an interrpins
liklyt lat'.In addition, emergency conservationmaue
ar aiicing in the short run dependency on





The EPCA calculates a stipulated level of storage capacity
baedupnmprtlevels of crude oil,only, in 1975.Act

impots n 175 ncluded a significant quantity of eia
petrleim prducs, which if included would alter thebs
qqlqlaton ignficantly. Anticipated imports in 18 r
likey tobe mch reater than those experienced in 1.5
!iiiiii ii~~i" ;Ii i~ii i~ii i l' iilli ii !u i!!! iiiiiii; l~iiimm~uiii; i 'ii.i ii'iil ii'ii. H"'iiii !!!. i~iii

il;i li,.l l """"'"""' "";" iii i: rN;; ;;; ;i;;i ; o.. ;;;;.;~ii; 'l'ii 'iii; .ii sii
;;; ;;;;;;I;;; ;;;,,;;

;;;ri, ;;;;

I, ir,;,;,l,, i;,;i; I "I i";





= iiiiiiiiiii
iiiiiiiiiiiiii iili
i;i:iiiiiiiiiiii iii~ i iiiiiii ii.iiil;"iiiiiiiiiiiii i .........
;ii iiiiiiiiiiisiiiiiiiiiiiiiiiiii:'iiiiiiiiiiiiiiiiiiiiiiiiiiii
Te stipulated amount of a ora~p -(thre1 aot RSM 4 he
high m aerage le e oil in 1975) 420 49


million.arrels in sorage mandated b E w provi.
at ii les4i days of proeitiiiiiiiiiiiion f anoter interr

comparable to the organization of Petroleum Exporting cauntrilt

(OPEC) ebargo df 73-74.

-Emergenc conshervation measures might redue-se hor ru
consumption by ass much as 1.7"mi11ion barrels/day. Howeer

these measures cannot be construed as long-term solutions to

the problems associated with an interruption. They alsp ...
.ii """""""iii;;ii iiiiiiiii~iiiiiiiii~iisiiiiii iiiiiiiiiiii iii iiii iiiiiii iiiiiiii iii iiiiN iiiiiiiiNii ii == ii=i = = =














economic costs associate with the disruption of normal activity
when they are i po ed.iiiiiiiiiiiiiiiii.iiiiii







.-The value of a national strategic petroleum reserve'smigt
iiibe viewed in terms iofi the potential -losses in GiosaNa al ..









Product (GNP th1at would result from an interruption. Iatitiaesa
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii iiiiiiiiiii




















of the economic losses associated with monthly embargoed:rang#
as hih as $186 billio fr a one y r irruption n95








Method of FTill

The two prismaryprchbles regarding filing the stera"_

facilities with fuel, relate to determining the source :of the
iifuel and the rate at which the reserve will be built up.:
.Sources of fill are Federal Royalty Oil, imported oil do.estic











oil, or oil from Natural Petroleum Reserves.' The lea'st ekpan-
iiii iiiiiiiiiiiiiiiiiiiiiiiii@iiii ;ii ............
~~;lll i;; i;;ii iiiiii ii"'ii .i!ii !;,;,,;; ""l""ii;iiii s
il;;;;R; I;;";; ;; ii iiiiiiiiii.iii iiii iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii;:' ;; I; ;' iiii~ii~ iii;i ...........
ii rit ii;;;;;;;;;;; i iiiii
iiiiii .;,;iiil:;l;,;;;;
iiiiiiiiiiiuii

ii iiiiiii,, ,, ,,ilii i,,,,,,,, ,,i,, ,,,,,,,,, =,,,, ............ ........ .. .. .
ll ii; 1sl;i ;; i ~ ili isii iiiiiiiiiiiii~ii iiiiiii~i iiiiiiiiiiii iiii~ iiiii~ '
iii,] ii ii ii .................... ... .....== = = == ii== i= i= =
= == ii i
~ ;iii ii ii;
iiiiiiiiiiiiii iiiiiiiiiiiii~o ;iio s;;i;iiii
iiiiiiiii;' i -;' ii

",iiiiiiiiiii ( sliiiiiiii i iiii iiiiiiii ll illi;iii ...........................i .. ... iii
.............. ii ,,,,,ii!!,,,,,i ,,,i i







81


sive source of fuell in out.-of-pocket costs, is that located in

-the NPas, specifially NPR #1 at Elk Hills.. The rate of fill

Will largely be determined by the maximum efficient rate of
i.oductio.fir ifieidiiiiiiiiiiiiiisi asiiiiiiiieiiiiiimiiii





already o:en inkte.a1o

Drawdown:of the Researvge:. e?

e Decisionsaon the coditions une whic th resrv

should bb thypti4d-can ave an impact on cost, equity, and
illllll i ii; ~ i i Iii;" l iiii iiisi iii o iiiiiiiii iiiiiiiiiiiiiiiii iiiiiiiiii i!iiiiiliii i~iiiiiiiiiiiiii; i iii ii ii iiiii








uccess withiiiiiiiiiiiii ihtheiiiiiigram meeii its ibeiitiiii off-iiiii









setting an interruption of imports which may fulctuate in

.magnitude and be uncertain in duration.

.Castsz

-The cost of a strategic petrolrum reserve will be very

sensitive to the source of petroleum. A mid-range estimate

for a 500 million barrel program, consisting of two incre-

etsof 150 million and 350 million barrels, is on the order

.of $2.4 billion in 75 dollars over the seven year period.

This estimate assumes that all of the first stage oil and 90%

Yof the second stage oil comes from NPRs. If, on the otherhand

a.1 of the oil came from imports, costs in current dollars

could reach $6.8 billion over seven years.



-Current plans implicit in the President's. FY '77 budget
i""""""'"""""
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lii sr ii; ;;;;;; N;,;;;Ii;,iiiiiilitiii;i
:ii N iN ;NiiliNiiic~ii~






iiiiiiiiiiiiiiiiiiiiiiiiiiii








'; "';"';;;;;;;':;;~ ~ ~ ~ ~ ~! ;;:;i,,,,= """"i;=,.iiiiliiliiiiiliiiiiii.liiliiiiiliii ;i~iiii0iiiii liii",; """. """"""""""

iiiiiiiiiiiiiriiiiiiii~liiiiiiiiiii, iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii'i; ii; i l
iiiss;;iiiiiiiiiiiii ;jNl;;ii;:,,i;; ~ i
; i:;;:;; "" ii "
s~sssl~a nN :I;; @;;;




















;iiiiiiiiii iiiii ii ii; ii; i i; i i i i
~RiIMANIUM ENRICHMENT










should own ahnd managerhead ntextgnrtino rnimerchk'



iiiiisibility ii the piate setri



The Current-Situation

The current generation ofnulapoepatsi

fueled by a fissionable variant ofurnim.Ur

natural state does not contain enough of itsfissionable

component to sustain the chain reacinrqiedt oe

nuclear reactor. Naturally-occurrn

Hbe "enriched" to a higher concentao ffs nii

before it can sustain the controlldncerrato:hc

produces electricity. Technology to accomplishthisenrich-

ment has existed for more than 30 er;i a is eeoe

by the U.S. Government during Worl a It rdc h

even higher fissionable concentratosrqie frnula

weapons. Since the war, the govermnhaaloue te

technology to supply enriched nucla ult leti tlte



iv







83


fbr conmmereal power generation. The government-has continued

toUownn the technology, which is classified because ofitsya
pcations for national security. Enrichmet facilities re





Iarg'e complex and expensive to construct;-they ar als exs'pen
isive to operate.
ThreeU.S. urani enrichmtfilities iiilst todayiiiiiiiii






all-'whed'and managed bytheEnergy Research and Development

Administration'(ERDA) but berated by private industry under

Contract. These facilities, at maximum production, can annually

.eo v Lce the equivalent of about 172 power plants with& a ner-

Naing capacity of 1000 megawatts (MW) each the typical size

for a anulear power plant. The United States cur-rently has

the equivalent of 37 1000-MW nuclear powerplants oearat-ional

In addition,, because the United States has: 95 percent of the

pxesent.free world enrichmentl cpacity, it also rrdvides enrich-

ment services to the equivalent of 31 1000iMW foreign nucelar

power plants. By 1985,, ERDA estimates that there will be the

equivaltatIof approximately 185 domestic nuclear plants and the

equivalent of approximately 385 foreign nuclear power plants.



Theve fiue are based on ERDA's mid-range projections
ofA 8 wstic.and foreign nuclear generating capacity antici-
pated to be on-line by 1985. For domestic projections, see
U.S, Energy Research and 'DaevelpmenL: Administrationi, "Totalo
Ebergy, Electric Energy, and Nuclear Power Projections, United
States," FebiquALry, 197-5,,.and ERDA s testimony before the JointU
Comm~ittee on Atomic Energy in June, 1975. For foreign
projections, see ERDA's "Draft Environmental Statement,
Expansion of U.S. Uranium Enrichment Cap~acity" (ERDA-1543),
June, 1975.



v
liii illiii" ii, iiii iiiiiiiii

===ii === "= iiiiii "iiiiiii iii~i i i iii i. ... i iiiii iiiiii ==iiiiii.. iiiiiiiiiiiiiiiiiiiiiii iiiiiiiiiiiii iiiii iii iiiiiii iiii i iiiiii i iiiiiii i i i iiii iiiiiiiiiiiiiii
iiii~; i
iiiiiiii~ ~ ~ ~ ~ ~ ~ ~ ~~'''" iiiiiiiiii ii iiiiiiiiiiiiiii iii iiiiiiii i ii iiiiiiiii iii iiiiiiiiil;si~i ;i : ;;ii ;; ;ii rrrrr~rrrrr iiiiii iiiiiiiiii ', iiiiiiil i """;i;ii
88Nrilliiiii""iii.~. .




ii"lllii; il~i
ii" ii
C.;o,,,. ;N.as:....;z;;;;;;l~i~:;~ll:;;" "l~ :; lllr sn
iiiii i""""" iii; i";':,:,,,,':iiii """"" i""'"'








: i ii~ ii ;iiiii;:so ii


I;;;;;;i;liliii~;;iiiiiiiii~ii~iiiiiiiii
r,,i,;; iiiiiii;; o~ I ii; "" '"
; ""
.l ""'; iii;"l:iii
n;;iiii '""""''| i,i;;:::ii~~~










,,.Currently planned additions .,t exstng .gowernumat-*weal
enrichment facilities will increase Us,S capacit by 63peampea_
iiii ;ilii@
iiiiiiiiiii i;i






by. 1983.. ERDA indicates that. this entire cpeaciat has already..
been. committed to both dometic and fqreg*ign- estomers.. ap.-M405,1
ERDA estimates that total enrichment capacity will have to

increase yet another 15 percent -- or enough cumultative capacity.

to service the equivalent of over 3800:1000-MW power* pl6Atw.-.-t..

to meet projected United States demand and to maintajua 35,-.'

percent share. of the proected forteign-market.: Thegg bal aavrw.Gg
foreign demeand will? be made up by plannead foreitppenant uuraman
eni chmeniiiiit iiiiit aciities.
Bea e RA'ii eniiiiiieiiint aiiity i presenty iateri'












thean te demand for services, .ERDA hase been stockpiling enricbbd

fueklfor futuer sale; .if existinig and planned .ovearnmexi.*e&
paity aditon were r at fiipacity (iiiicii isii niiiitiii iiiiiiii.iiiiiiii














thee.gase because* as 4 fic nt lelectribity is not always -
available),. the. resulting. stockpile coald.,:by 1,985, proi ide

between one and two. years' supply of :the 'total-demand :whiLch

the United States. expects to mehet. at.that tim. .

The extent and timing of the need for increases in enrich-
.iii~iiiiii,,,

















i H,' ,~~~ ~~~~~~ .. .. ..... .. ............ ...... ....
ment capacity beyond that ciurrently planned at existing govern-

















ment-owned facilities will depend strongly on the extesit bit

future role of nuclear power in the United States and on the

U.S. share of growth in foreign demand for 4nrihdM& uranium.
~isi~ iHi.v iii .iii ii iiii iii ii /iii s i ii
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii iiiiii;;;iiiiix iiiiiiiiii
ii ; :siiiii I ipii ;;;Pu;; iiiiiii iiiiiiii iiiiii iiii~iiiiiiiiiiiiiiii ;ili: ...................iiiiiii~iiiii iiii iiiiiiiil;;iiliiiiiiii~~iiiliii~iiii~ ~ i iii

; i iiiiii
iiiiiiii""l iii ;lx

ii.ll~ iiii == ;"" i"..."iiiiiiii iiiiiiiiiiiiiiiiiii iiii iiiiiiiiiiiiiiiiiiiiiiiiiiiiii'iiii i




;;iii"i iiiiiiiiiiiiliiiiiii luiil


.,;;,;; u; ,il;nionii; riiiii;iin siipiiii
....= ................................... @ ....................





iiiiiiiiiiiii iii;;; ..........................................i~~i~~;
iiiiiii~i. i Iiiii i;ii~;II ;;;
iiiiiiiiiii ii~~~~ ii ,. "=i.= ;;~~;; :; rl;~~;;;: ll"ii ;:i~x:ii ii;i;i
iiiiiiii"ii iiiiiiiiiiiiiiiii
iiiicii iiii iiiiii ;;;;ii











en n na teion an analrysis of variety of-estimathes ofanti-

Sfuture nuclear gapa ity appearslikely







Uxat,-,furtar adiio -oS enrichent capacit beyon thos

nov~~~~~ capsis:D4 wil e eeedinte. the-18 s.ak Becaue -o ln


lead.,tipeble tonmn--n perhaps fumesic cuotomerseadtol

plans maltwe~uderomenimnt the nearurture aif-hy n ob
ready U.S. needee t id.llhe-am ofbnew capacity using existing










or~coatmpl4Ltt estimatesoul range from 180 peren te:



or pw ptiistitaly oneastsesta utheur treneeds:df ncla

power.~ ~~ B ceeai .the gaseu dif addiions pros th tcpl

and ~~ y maigiIaalbeto futureatoresti relitoleprsadb
itgmighte-scalo'qsib3, to moderate operatihe timieg be]the next

genepttI on of, Pinr:3',Ch;net facilities brought on-line. While
the exact PF*I:)er of new U.S. facilities that will beneedediiiiil, .;r;
is.V; ';qf 'rt'"ip, cprrent,,;'.estimates range from two to;, ,,, ,,,ten.
rg, are tw-.Princi'l enrichmnt tephnoogies tha




wj~th..-.:.30..Lyears f l rge-scaleioperatin experience behindlit.

J;;;;;;~ti~i~ii









The centrifue prcssa is a sewer technology wlhih is awrti-

cOat@ed to hav several madvantaessym over then diffusionm metodet
including salgler vablshe commercald oegretina levels (*ne-.:I:.,
thida the size of an aeconomically feasible, diff usoassanItP#
iiiiiiiiiiiliiiiii







lower electrictyr requirementsj.a nd potentially lower miobt
of Construction an oaperation Because of its promise, the
centrifuge .process is generall considred to be the enrich-

ment tecahnology of the fautare. 'Neverheless,, beause the
centrifuge has not yet be,,, n comm .ercly prov, the older








diffusion process is expected to be the methogrused for the.
next U.S. enrichmen facilty constructed.


Issue-an Option
Tere are -bfou asi optn for the ownership of
,iiiiiiil~iii~ i iiii; illl;Uiiiiiii :iiii@ .......................................











.. eniiiiiiii hmnt apacity ( sh of ne capac.ity.












could be transferredto the piate industrial sector;
(2) The feeral government coul contine to bwn ahda a- d
iiithroug .ihiDA iii nrichmn lites including ia Ai'acit-i














(3) Th fedral goveirnment could bul and own the 'next major
inczeme n of cavacity (fusineg diffusion technoldel anA I tutib
inciriiiiit involvii'ywetrifuge tehnoalogy coul. be b..ui.t
















-and towhed by private-industry; and (4) Ownership of at1L new

cappacity--and existing. capacity if aesred--could he transferred
to a separate government corporation that would be created

expressly for this purpose.
iiiiviiii
'"""" ii;siiiiiii ..........l ~
.;iii,;;;; i iiiii;; R _:
~iiiiiiiiiiiiiiii~ l
iiiiiiiinii;;~ii~ sii iiiii;
''""""..... i i i i i ... .. i i .............................. iii

iiiiiiiiii "ii =iii =i . i . iiii ii= == i iiii== [ iiiiii T "= .i " = iii ... i == "
.........""" : """" i . ................


iiiiiiiiti;i"',i,,;;I;;;



~11 iii
;;II ~ ~ ;; ;~;IIIni, ; ;;:iiiii ;;~ i:ii::is;I;;,i, ii
ii~iiii ii .........""""ii' .ll.." .""




iiiiiiiiiiiiiiiiiiiiiiiiiiiii ii;;;iii
@ @ ;;,,s I iii;;; ;'RI;:@ @ I;"
@ @'I""";""""""







87
iii iiiiiiilr?; iiii;i iiii i

ardless of the ption selected, the iapita r i
ifori iniistruction i ll be bascaly t eiiiiisiimii Besidi es costii iiiiiiiiiii

however, -tdure are a numb~er f ther criteria against whic

echh of the optionspan hsbe masured. These include: effec-
tiveness in advancing the development of new enrichment tech-
l"..gy, cost to c.nser....senvironmental impact, .ffects on




U.S. capital marketsand balance of payments an ipact on

the federal-budet.bi

The Case for Private Ownership

Several arguments underlie the case for private owner-

ship. The first is that the proper role of the federal

government in.providing energy technologies is support of
.research and development, leaving commercial applications to
;i"i !iir" iiiiiiii,,;
;ii~ii~i .s ..-; .. "'I . ;; ;;"il.




















the private sector; the second (and corollary) argument is

that there will be sufficient firms participating in the private

sector to ensure competitiveness, which -- it is argued --

would result in potentially more appropriate market prices for
~endhefuel,.improved technological advancii inesed
fo tcapital invemient and tde, and loiiiiiiiiiir direct federa














outlays'. Pricing policie woud beset by cmpgeting producers.

at. leve-s, reflecting.their cost an fair market values. In

order to maximize prdtits, industry would seek the most efficient

proiduction me~thods, an .would pursue new and improved technodogies.
Private firms might find it easier to solicit foreign capital



ix
.,,,, i i iiii,,:

ili; ,,I~;~~~l ;;lir ": ;,n~,iiii;u~ill n~n,;




| ::il; ;i;;i iii;,iiiis:;
iiiiiiiiill~IX~~ir~lii~~.iiiii iiiiiii ,,,,oo~o",,,,li;;i i~lip:O l i ,s
;; ir;;,,,;; i,; s r sl




i.... iiiii===ii iiiii iiii iiiiii i i = = I I I I I i i E I I i iiiiiiiiii Iiiiiiiiiiiiiiii iiiiiiiiiiiiiiiiii I i I I i E I iiii i i Iiiii I Iiiiiiii I ; I l i i iiiiii l l l
i= =iilii I~i==iiIII ii~iii ii i;; ,o; ; Iiiiiiiiiliiiiiiiiiiiiiiiiiiiii iiiiiiiiiiiiiii i .iiiiiiiiii
rs~uiiiiiiiiii s ;Eiiion siiiiiiiisii l~iiiiiii ii iiiiiiiiiiiiiiiii ii;iiiiii; iiiiiiiiiii iiiiiiiiiiiiiiiiiiiiiiiiiiiii iiiiiiiiiiiiiiiiiii i;,,;

@ ~ ,lli;iiis;










investment, thus relieving stresses onA domestc-Asta 4 dmarkets.

In addition, the incentive of increased prof~ths fin=, freign...-

sales might make private industry more likelytan the gammon

ment to sell eii r hed fuel a.....ad, thereby i.......... the:....

balance of payments. ... -..-:- ...
Finally, to iheextent tha t privat'e secto.ian

capaity t oiiiiiiiiiid oterwiiiiiise be buil b th guerimi ii
iiiiiiiiiii ========== Niiii iiiii N N




federal outlays could be reduced. The goernmmament woudolect
revenues in the form of agreed-upon royalty payments in return

for having turned over its technology to industry. In addition.,

corporate profits would be taxed in the normal fashion. Off-

setting these revenues, however, would be increased tax expen-

ditures (dume primarily tto tax write-offs under the investment

tax credit) and the loss of revenues from direct federal sale

of enriched uranium. The potential range of these impacts

is described below.


The Case for Government OwneashiR

The case forgovernmentownership --whether thtouq

ERDA or a government corporation "- is based-*on the fedleoi

arguments. Because of unfcertainties regardingenutre marleet

for enriched uranium, and the high initial capital neeed-O:,t.A

unlikely that private firms would 'enter the iandutry in,

sufficient numbers to assure competi-tiveness.l.. hisvankes 't

unlikel~y that many of the benefits attributable. to pri'vtate.
isector ownership could be achieved.


















x
iiiiiii iiiiiii; i




iiiiiiiiiii,;










iiiiiiiiiiiiiiiiiiiiiiiiiiiiii ~*i~i






iiiiiiiiiiiiiii i iiii



i ;iiiiL;'ili~
















heir conumers i th i juged desirable. By diectly con-
-lties, the governmentwould be better
let inmzptnial adverse environmental impacts.ii



-choloy eveopmntcould be accelerated by an aggressive

..eerl pogam orreearch-and development. Finally, budgetary

act woldin he ong-term, be f averable wit govern-
.outlays would exceedrevenues in the






arlyyeas, tis itution would be reversed when sales revenues

x~ee coss ofcontrution and operation.
-IIII, h addi .apaity can be ade











a-dmbhaiot f hearguments litdabove,,particularly

i fth goermen i lmit.ed to provdng only the nex larg
nrichment.,acility... ecause thisfacility islikely to b
i;iiis' i;;;irii~

























mate ffusion technology, it is posible

,tht een nde th spr of competition privat4 enterp- Ii se _
"'I beunbleto cheve significant technical or'cost'

Ance. Alo# aditons to existing capacity owned by the

rnmet wuldcos les than construction of a mne st-and
shadditions cold expand faciliti-
.................. .... .





















xi
iiiiii iiiii iiiiiiii iii
m == iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii

iiii ii~iiiii "'!" ii~iiiii~iiiiiii~iii lii''iiiiiiiiiiiiiiiiii iii" 'iiiiiiiiiiiiiii ii ''~"i/iiiiiiiiiliii




i ii iiiiii ~ iiiiii
l~n1 :~li ~ iiiiii
Ir";ili". """""'""""""I:s;iiiiiis:ili i i~ ii~ii~ii.. ;;;. 11 ;,,,~i; ~~




















lead in piac on the

diffusionl techooy and owerhi o that it it*cn~e:,,.
i i .... niiiiii"" """"""""""";"""""""

"':;iiiiiiiii;;-;;;;;; ..... =i;;iii
i;;;iiiiiiiiiiiiiiiiiiiiiiiiii ui










cinsidered separately froml sn
iiiiiiiiiiiii i; i iiiiiiiiiiiiiiiiiiiiiiiiiiNH HH



1 81l 11,, ,,,iiiiiiiii ii iiiiiii ii ii ii
.iiiiiiiiiiiiiii ,iiiiiiiii
iiiiiiiillllllllllll;



ii ii!,
ThelCased fo a Go .eiiiiiiiorpii
The aecase f eor cratin a sprtegvrmetcrprto
toconi and opeate futureriment













tothe caseimae aof rvete fo ontnedgvrmnowesi

thoug ae government corporatio coldosutinmiialo



tiont coulde set a usof that itwudb ntrl ef
financing orsothte onl itsonulmic-rose-akp..


iareetGOrprevlaigthe Administrations pro Poposa

pOsatobtanfr reposiilt for5 prviin futue40n
.iiiii,,iii; :: ,x i i
.A.









Comptroler Genral ofthe Unied'Staes,,, R"ort t



October 31, 1975t pp. 36-40.ir

xii




or-0VI










federal budgets in terms of expendiures and revenues.

While the FY '77 budget outlays would not be significantly

affected by any of these options, future outlays could change

sizably. The figures which follow illustrate the pattern

of revenues and tax expenditures associated with the options.
The revenues sh ownare net revenues; that is, certain govern-

ment costs eassociated with'each of-the options have ben

deducted from total revenues 'hich would be received. Tax

expenditurest however, have not been deducted fro the net
revenues. All do.11ray mounts are in 1976 doll1ars. These

totals reflect the expenditures and revenues associated with

constructing six e-enricent facilities' depending on

futtir4 dehAnds for increased enrichment aaiy sfwa

two or as maviy tas'ten facilities coul actually be ned.


The pattern for the .first three options is similar in some

respects. .If the effects of tax expenditures are taken into
account as well as net revenues, there would be an increasing

bur(ken on the budgpt throughout the early 1980s under all

three options. By the mid anid late 1980s, the burden could

begin'to decrease to a point at which expenditures and net
revenues would be e~qual. Beyond that time, -net revenues

would in each case increasingly exceed expenditures so that

the laitter are recouped.





xiii








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i ..................









4000
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0PB I08O4 8 8 S -9
iiiiiiiiiiii iiiiiiiii ;iiiiiiiiii ........ ........................................





A 5 An .Figure;i A, if rivaba ;indaatiy were ite iii

iiiiiiii iiiii i p iiiii beyond hat ped i
iiil~i ::iiiiiiii;j;;ii~ i '"" I ';; ,,,pp,,,,iiiiiiiiiiiiiiiiii iiiiiiiiii iiiii; i i ;,iii iii ;,;;i ;i iiiiiiiiii' "iiil iii







rifacilities are successful so that no federal financial guarantee



500-iv reeusfo diinlsae fsriesbt
cop at rdnar buinss axe.|; These reeue oudb
"' i iiiiiiiiiiH iiill
~ ~ii ii ii iiiiiiiiiiiiiiii iiiiiiiiiiiiiii iii








"" iil;i:"i,~ ~



....... ii;; ,;;
iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii
iiiiiiii ii iii;=, iiiiiiiiiii,,;;;;i;iiii,; ,
iiiiliiii- =======
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iii

iiiiiii z iii
:i'"""" '~ ""' '"D -500-""
;;;;; i0
iiili~iii ;;~ ,;L -1000 --;,,,;ii
'""'""". ..L .
R 1500-
;.S -2000--;
-2500
.iii; ,,-3000
?B o 2 4 6 a 9 9 9
WARiwISP TO 199
As shown inigure A, if rivate. indstry were t
al nw apctybeon ta crrntyplnndo fdra otly
wouldnot e reqiredfror ewiadi-tins,,eithein
j~uila117 7 or;
beod hsasueo orsta rvaeercmn
faiiie r scesfls ta'o eealfnnca uaate
1' '"are invoked by industry. The federal government would not:i;;;;;
receive revenues from additional sales of services, bu 1'!!'i
would reci ve ryalties or use o its tecnologiesand woul





Under this ption, the"crossover"date when nnu~alline
reene bgn o xee nna epedtue wud-e198
Thedae f ecupen wencuultie etreenesexee


;C Isl"";lli;; '"" x iv