when such resources are deemed necessary by the corporation. This use would be subject to terms and conditions promulgated by the Secretary to protect the environment and other resource values of the lands involved. The Administration fully recognizes the need for a comprehensive national energy policy. We have continually sought to assure that the growth of this Nation is not hampered by insufficient or prohibitively expensive energy supplies. In 1971, President Nixon sent the first message ever submitted by a President to the Congress on energy policies. A number of specific steps were recommended at that time to meet the increasing demands for energy in America. Those steps included expanded research and development to obtain more clean energy, increased availability of energy resources located on Federal lands, increased efforts in development of nuclear power, and creation of the Department of Natural Resources to plan and manage our energy program. This commitment has resulted in a 50% increase in our energy research and development efforts since 1971. In his Energy Message of April 18, 1973, the President reasserted his commitment to increase our energy knowledge by building upon our accomplishments and to develop a more comprehensive and integrated national energy policy. To carry out this policy he suggested the implementation of a broad based program. A cornerstone in this effort is the determination to increase domestic energy production in a manner consistent with our economic, environmental and security interests. This policy recognizes that for the short term future, our research and development program must provide improved technologies to extract and utilize our existing fuel resources. The Federal budget for the fiscal year 1974 provides for an increase in energy research and development funding of 20% over the 1973 level. In addition, the 1974 budget provides for a new $25 million central energy fund administered by this Department to provide additional money for non-nuclear research and development. The central fund is designed to give the needed flexibility for rapid exploration of new, especially promising, energy technologies with near term payoffs. The Administration's energy program provides that $771 million be applied to the energy research and development program in 1974. We consider this to be the most effective rate at which our financial resources can be expended without waste. It is an amount that has been arrived at after careful studies of the various technologies that appear to be the most promising in improving energy supply. In addition, the central energy fund will provide the flexibility we require to quickly shift support to those research programs that appear to be most promising. This will avoid a loss of momentum in critical research and enable us to utilize this country's capabilities in the most efficient manner. We support the objectives of H.R. 6602 which recognize the need to develop our domestic fossil fuel resources and to centralize responsbility for overview, direction, and coordination of energy research and development. We believe, however, that H.R. 6602 does not represent an effective, efficient or productive alternative to the Administration's proposed energy research and development program. The funding authorized by H.R. 6602 for the Management Project and for the development corporations represents in 1974 an increase of over 107% from that provided in the Administration's budget, raising the total to $1.63 billion. H.R. 6602 also represents nearly a 700% increase in non-nuclear energy development. We believe these increases in funding are beyond the levels of efficient utilization, especially over the next few years. The selection of the five specific energy sources for development at a fixed rate of funding and for a fixed number of years seems too rigid a research program. It does not appear to offer the degree of flexibility needed for operating an effective and efficient research program in which future rate of funding and time required would be dependent on progress, possible "breakthroughs", and evolving technological and economic developments. The proposed legislation could have the effect of concentrating research efforts on the five energy sources identified in the bill without adequately exploring the full range of other promising energy sources and alternative technological processes. Furthermore, we do not feel that the proposed development corporations are necessary to ensure government-industry cooperation in bringing new technologies to a state where they are commercially practical. In the present or planned government organization of energy research and development we are encouraging close government cooperation in developing commercially viable technology. For example, industry is currently contributing $240 million out of $700 million for the commercial demonstration of the LMFBR. The American Gas Association is contributing $10 million per year to a $30 million per year cooperative effort to develop coal gas technology. In addition, the government is actively exploring the possibility of cooperative projects in other areas. The President's energy research and development program represents a reasonable strategy of research on nuclear fission and fusion, fossil fuels, including coal, oil, oil shale, and gas, geothermal power, and solar energy, with careful consideration for the protection of our environment. There is heavy emphasis on research on converting coal to clean-burning liquid and gaseous fuels. We have three pilot plants for coal conversion processes now operating, and six others in various stages of planning and construction. We are studying processes for converting coal to liquids, gases, and directly to electric power, with a special emphasis on elminating pollutants and increasing efficiency through advanced power cycles and magnetohydrodynamics development. We are conducting research on coal mining and seeking ways to extract coal with less injury to the environment and to human health and safety. We have an extensive program of research designed to improve our ability to extract oil and gas and to increase recovery. The Department has an ongoing program of research on extraction of oil from shale and development of geothermal energy. These research programs are closely tied to our oil shale and geothermal leasing programs. We believe that within the Administration there is an existing organization which will in the short term perform the same functions proposed to be performed by the Management Project created by H.R. 6602. For long term solutions, the President is proposing legislation to establish a Department of Energy and Natural Resources building on legislation submitted in 1971 with additional emphasis on energy programs. By Executive Order No. 11712 dated April 18, 1973, a National Energy Office has been established in the Executive Office of the President. Functions of the Director of this office include recommending policies and guidelines on energy matters and to coordinate all energy related programs within the Executive Branch. He is also responsible for the development of comprehensive plans and programs to ensure availability of adequate and dependable supplies of energy. The Department of the Interior has also been reorganized to strengthen activities relating to energy and minerals. The new Assistant Secretary for Energy and Minerals has expanded responsibilities which incorporate all departmental energy activities. The Department is developing a full capacity for gathering and analysis of energy data. The Office of Energy Conservation has been created to seek means of reducing energy demands. The Department has also strengthened its capacity for overseeing and coordinating a broader range of energy research and development. The programs and steps outlined in the President's Energy Messages of 1971 and 1973 as well as ongoing research programs appear to eliminate the basis for enactment of H.R. 6602. While we concur in general with the objectives of H.R. 6602, it appears the programs proposed by this legislation would overlap and duplicate energy research and management programs already underway and result in the uneconomical expenditure of Federal funds. The Office of Management and Budget has advised that there is no objection to the presentation of this report from the standpoint of the Administration's program. Sincerely yours, ROGERS C. B. MORTON, Mr. UDALL. Go ahead, sir. Secretary MORTON. We would like, also, to include for the record a set of statistics on Federal energy R. & D. funding. Mr. UDALL. Without objection, so ordered. FEDERAL ENERGY R. & D. FUNDING [Agency codes: AEC-Atomic Energy Commission; DOI-BOM-Department of the Interior, Bureau of Mines; DOI-GSDepartment of the Interior, Geological Survey; DOI-OCR-Department of the Interior, Office of Coal Research; NSFNational Science Foundation; TVA-Tennessee Valley Authority; EPA-Environmental Protection Agency] Secretary MORTON. Mr. Chairman, I am pleased to be able to appear before this committee today to discuss with you the President's energy message, and the administration's efforts to deal with the Nation's energy situation The President's first energy message of June 1971, took a number of steps designed to improve our energy situation in the 1980's and 1990's. In addition, he announced major new initiatives in his energy message of April 18, 1973, designed to take effect today and in the near future. Now and for the immediate future, we are committed to an energy system greatly dependent on fossil fuels and to a transportation system based largely upon petroleum. With this in mind: The President has modified the oil import program to make world supplies of crude oil and products more readily available to the United States. He has ordered accelerated leasing of the Outer Continental Shelf to provide additional resources to the American economy within a very few years. He has called for prompt resolution of the problems surrounding the Alaska pipeline to make the known resources of Arctic oil and gas available to the domestic economy as rapidly as possible. He has proposed legislation to deregulate the price of new natural gas to increase supplies of this preferred fuel over the short term. He has proposed legislation to permit licensing deep-water ports so that very large tankers can deliver oil economically to our shores. He has ordered research directed at near term targets, and proposed measures which would make more coal available now. He has called for conservation measures which will help this summer, as well as over the longer term. I mention these facts to place the subject before us today in perspective. We are here talking about longer term solutions to our energy problem, solutions to which we can take a more rational, noncrisis approach. President Nixon stated the case very well in his energy message of April 18: If we are to be certain that the forward thrust of our economy will not be hampered by insufficient energy supplies or by energy supplies that are prohibitively expensive, then we must not continue to be dependent on conventional forms of energy. We must instead make every useful effort through research and development to provide both alternative sources of energy and new technologies for producing and utilizing this energy. The administration is vitally concerned with the role of research and development in supplementing our energy supply from our domestic resources. In June 1971, the President sent to the Congress the first Presidential message devoted exclusively to energy matters. It contained a number of initiatives in energy research matters. It contained a number of initiatives in energy research and development. His message of April 18, 1973, contains further initiatives. Consider what we have done, and what we are doing, in energy, R. & D. Overall, the President's budget request for energy research and development in fiscal year 1974 totals over three-quarters of a billion dollars, a 20-percent increase over last year and more than double the levels of expenditure in fiscal year 1970. The President's energy R. & D. program represents a reasonable mix of research on nuclear fission and fusion, fossil fuels-including coal, oil, oil shale, and gas-geothermal power, solar energy, and research on ways to best protect our environment while providing ample energy supplies. As part of this program, we are requesting $120 million for coal research in fiscal year 1974-a 27-percent increase over last year and almost four times the amount spent in 1970. There is heavy emphasis on research on converting coal to clean-burning liquid and gaseous fuels. We have three pilot plants for conversion processes operating, and six others in various stages of construction and planning. We are studying processes for converting coal to liquids, gases, and directly to electric power, with special emphasis on eliminating pollutants and increasing efficiencies through advanced power cycles. And we are conducting research on coal mining to seek ways of extracting coal in a manner less injurious to the environment and to human health and safety. We have an extensive program of research designed to enhance our ability to extract oil and gas, to increase recovery, and reduce the amount left in the ground. The Department has an ongoing program of research on extraction of oil from shale, budgeted at $2 million in fiscal year 1974. This research is closely tied to our oil shale leasing program. We are ever alert to the potential of new energy forms. The Department will spent over $4 million on research on geothermal energy in fiscal year 1974, compared with only $200,000 in 1970. The President's budget calls for establishing a central energy research and development fund of $25 million. With the flexibility given us by the structure of this fund, we will be able to respond quickly to technological innovation, and rapidly exploit technological opportunities as they occur. To help identify research needs, opportunities, and priorities, we have established the new Offices of Research and Development, Energy Data and Analysis, and Energy Conservation. Mr. Chairman, these substantial initiatives are part of a balanced and vigorous administration program of energy research and development. I ask your permission to offer for the record a detailed breakdown of Federal expenditures for energy R. & D. since 1970. Mr. UDALL. We will welcome those figures. Secretary MORTON. H.R. 6602, the Jackson bill, National Energy Research and Development Policy Act of 1973. Now, Mr. Chairman, let me turn to H.R. 6602, the proposed National Energy Research and Development Policy Act of 1973. From the outset, I must say that we agree wholeheartedly with the objectives of the proposed bill-to stimulate development of our domestic resources toward a goal of domestic energy self-sufficiency while keeping conservation, environmental, and efficiency concerns well in mind. H.R. 6602 rightly addresses itself to three critical areas. First, it recognizes the need to accelerate development of our fossil fuels. Second, it recognizes the need for centralizing responsibility and institutional capability for overview, direction, and coordination of energy research and development. Third, it recognizes the need to insure Government-industry cooperation to demonstrate and com |