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STATEMENT BY

ELIZABETH A. MOLER, DEPUTY SECRETARY

U.S. DEPARTMENT OF ENERGY

SUBCOMMITTEE ON STRATEGIC FORCES

COMMITTEE ON ARMED SERVICES

UNITED STATES SENATE

March 12, 1998

Mr. Chairman and Members of the Subcommittee:

Thank you for the opportunity to appear before you today to discuss the FY 1999 budget request for the Offices of Environmental Management, Nonproliferation and National Security, and Fissile Materials Disposition. My colleagues have provided detailed written statements on their budgets, and they and officials from certain other programs under your jurisdiction are with me today to respond to any questions that you may have.

Our fiscal year 1999 budget request supports our work to ensure enhanced U.S. energy security; a cleaner environment; a safe and reliable nuclear deterrent; a reduced risk of nuclear danger; and continued scientific leadership for the U.S. in the international community.

Our FY 1999 overall Departmental budget request of $18.0 billion reflects a 9 percent increase from the fiscal year 1998 appropriated level. Though it is an increase, when compared to previous years and adjusted for inflation we are nearly 30 percent below the fiscal year 1981 appropriation, and nearly 20 percent below our fiscal year 1993 appropriation.

Of the $1.08 billion increase requested for fiscal year 1999, there are increases in the following core programs:

• $156 million to emphasize research and development in renewable energy and nuclear energy;
• $246 million for investments in basic science programs and facilities; and
• $421 million to fully support stockpile stewardship activities under the Comprehensive Test Ban Treaty and address the threat of nuclear proliferation throughout the world.

Beyond this increase in our core programs, there is also a $317 million increase to continue our environmental cleanup privatization initiative.

We are also continuing to reengineer our operations and streamline our workforce. Since 1995, we have reduced our federal workforce by over 3,000 positions, or 23 percent. Contractor employment has declined 29 percent from an all-time high of 148,000 in 1992 to just over 100,000 this past year.

MANAGEMENT IMPROVEMENTS

Before providing an overview of the budget requests for the three offices mentioned above, I want to provide you with some examples of the progress we have made during the past year to

strengthen the management of the Department. In addition, I want to highlight some areas of increased emphasis in the coming year.

We have made substantial improvements in our environmental privatization program during the past year, including actions to strengthen our procurement, legal, and safety and health reviews of Requests for Proposals and contracts, and steps to improve cost estimating and training of personnel. In addition, we have just selected a new Director of the Office of Contract Reform and Privatization, who brings private sector expertise to bear in the Department's activities in this area.

As a result of last year's appropriations process, the Department was provided with $35 million to provide for independent reviews of the Department's individual construction and privatization projects, as well as an external review of the entire project management process. We recently received phase one of the study, which was done by the National Academy of Sciences. Although the second phase of the study will not be completed until next year, we endorse the Academy's recommendations thus far and are working aggressively to implement them.

We are continuing to move forward on these and other management improvements. We plan additional steps to strengthen the integrated management of the Department's missions. In addition, further actions need to be taken, within the framework of the current downsizing targets, to better match the workforce to the evolving mission. Over the past few years, those employees we expected to become the Department's next generation of technical experts and senior managers have been hit the hardest. Moreover, DOE now has 25 percent of its workforce currently eligible for full or early retirement, a demographic fact which threatens to seriously erode the Department's future technical capabilities and management leadership. I would like to work with the Congress to arrive at a path forward to introduce some certainty and stability into the Department's staffing levels.

I would now like to discuss briefly the three major offices that are the subject of today's hearing.

ENVIRONMENTAL MANAGEMENT

The Environmental Management (EM) program is responsible for managing and cleaning up the environmental legacy of the nation's nuclear weapons and government nuclear energy projects. Beginning with World War II, DOE and its predecessor agencies developed the largest government-owned industry in the United States, responsible for nuclear weapons research, development, testing, and production as well as a variety of other nuclear-related research projects. When most nuclear weapons production operations ceased in the late 1980's, the DOE established the Office of Environmental Management in 1989 to address the environmental legacy of nuclear weapons production and other nuclear-related contaminants. Our responsibilities include facilities and sites in 31 states and one territory which occupy about 2.1 million acres -- an area equal to that of Rhode Island and Delaware combined.

We have been focussing our priorities on high risk problems such as stabilizing and ensuring the security of plutonium and stabilizing tanks containing high level radioactive waste. We have also addressed cleanup and stabilization requirements to meet our legal obligations under compliance agreements with state and federal agencies. Despite the pressure to address these high risk problems and comply with legal requirements, we also know that successful cleanup requires investing in developing and deploying more effective technologies. Without successful investments in technology, the cost and technical challenges would make long-term success impossible. Finally, we have found that getting the job done requires cooperation with regulators and other stakeholders. We have supported effective public participation through continued relationships with States and Site-Specific and National Advisory Boards, as well as funding for Tribal Nations potentially affected by our activities.

Given the fiscal constraints and the unfortunate reality that our nuclear waste legacy is a very long- term problem, the present investment now in science and technology is one of our best hopes to ensure real reductions of risk to the environment and to improve worker and public safety for our future. We are confident that this is the right course, and that with your support we can make the land and facilities available for community use or conservation, as well as develop new environmental technologies that will improve tomorrow's environment and economy.

The total FY 1999 Environmental Management budget request is $6.l billion, including $517 million for privatization authorization. This budget will fund cleanup from coast-to-coast, in twenty-four states across the Nation, with ten states accounting for about 85 percent of the total request. This request reflects a substantial investment for privatizing certain large cleanup projects. We are committed to accelerating our efforts to clean up our sites so that they can be returned to their communities for economic development or open space.

We have restructured the EM budget for FY 1999. It now includes three accounts: the Site Closure Fund, the Site/Project Completion Account, and the Post-2006 Completion Account -- which will help us to focus on our cleanup targets. Our goal is to complete cleanup at as many sites and projects by 2006 as we can. We are accelerating cleanup, maintaining compliance and reducing risk at the same time. We have set forth our cleanup and closure strategies in a recent draft strategy document called Accelerating Cleanup: Paths to Closure. This report, for the first time, provides a project-by-project estimate of the technical scope, cost and schedule required to clean up the 53 remaining cleanup sites.

By 2006, our goal is to clean up 43 of these sites, leaving cleanup at 10 sites in 8 states to be completed. Realizing this goal will require a sustained national commitment as well as a number of other requirements, including:

• sufficient funding,
• use of world class technologies,
• improved efficiency,
• national integration of operations,
• resolving future land use issues with communities and regulators, and
• resolving other site-specific issues.

The budget has been organized into projects with measurable endpoints, in order to improve accountability. The EM budget reflects specific commitments to accelerate cleanup, treat an unprecedented amount of waste, deploy new technologies, and make progress on resolving the nuclear waste logjam. We have also set very ambitious goals for closing several sites by 2006, including the Rocky Flats site in Colorado. We plan, in addition, to close the Mound and Fernald sites in Ohio by 2005, and the Weldon Springs, Missouri, site by 2002. In FY 1999, we will continue to work closely with our communities as we develop our plans for cleanup, risk reduction, environmental and health monitoring and smaller site closures.

The Accelerating Cleanup: Paths to Closure draft report, for planning purposes, assumes a funding level of $5.75 billion annually. This year's funding request obviously falls short of that amount. The outyear budget profile resulting from last year's balanced budget agreement also falls short of that amount. We are doing our very best to prioritize our work at individual sites in a way that makes sense. We will need your support to do that, as well as the support of our regulators and stakeholders. We will also need to work with our contractors and employees to be more efficient and cost effective as we approach this enormous task. By working with both OMB and the Congress, we hope over both the near and long-term that more stable funding will be made available so that we will be able to reach our goals.

I want to stress to the Committee that this Department has extremely complex technical challenges in the environmental cleanup area, and our costs must be controlled if we are to adhere to the President's balanced budget agreement with the Congress. Our environmental compliance obligations are immense and new problems arise every day, and we know that we must increase our efforts to define our priorities and ensure the best use of available funds. This budget request reflects those efforts.

Regarding the Waste Isolation Pilot Plant (WIPP), we are pleased to report to you that the Department is on track to open it 30 days after receiving the expected certification from the Environmental Protection Agency this spring. We also hope to receive the necessary permits from the State of New Mexico in a timely fashion. This will be a crucial step forward in providing for the permanent disposal of the Department's long-lived radioactive waste. The opening of WIPP will be key to making further cleanup progress at other sites.

This reflects something I would like to emphasize to this Committee: despite the enormous challenge and some disappointing setbacks, we have made enormous progress on our cleanup efforts. Let me summarize a few of our accomplishments--both the results on the ground in cleaning up facilities, and the variety of management reforms that we have undertaken to improve the efficiency and effectiveness of the program:

• In FY 1997, we completed cleanup at 411 waste release sites, four percent more than our target of 395 sites. At another 76 release sites, we completed technical evaluations with regulators that determined that no further action was warranted. In addition, we completed assessments to prepare for cleanup at 411 release sites -- 16 percent more than required by regulatory requirements. By the end of FY 1999, we expect to have completed cleanup or "no further action" determinations at nearly half (47 percent) of the approximately 9,300 contaminated release sites for which the EM program is responsible.



• In the past year, we transferred one surplus nuclear weapons facility in Florida to local communities for constructive reuse and committed in a Memorandum of Understanding to transfer another in Ohio.



• After recently opening two large high level waste treatment facilities in South Carolina and New York, we have been making steady progress in preparing waste for disposal in a geologic repository. We expect to have treated approximately 85 percent of all the high level waste (HLW) at the New York site later this year. In South Carolina, we have closed two underground high level waste tanks after removing most of the waste contents and then filling the tanks with a cement grout mixture. The HLW was blended with molten glass, and sealed in stainless steel canisters, ready for disposal. During FY 1997, we treated a total of 564,860 gallons of high level waste and produced 291 canisters at these two facilities.



• Our investments in science and technology are also paying off. Since its inception, the Science and Technology program has sponsored over 700 new technologies, and over 200 new technologies are currently available for use - - many of which allow us to perform tasks that were previously impossible. We demonstrated more that 50 new technologies during FY 1997, and deployed 40 new technologies for cleanup in the field.



• At the Hanford site in Washington, we completed the deactivation of a large plutonium facility 15 months ahead of schedule and $75 million under budget. By deactivating this high risk facility (removing sensitive weapons materials and shutting down unnecessary systems), we reduced the annual surveillance and maintenance costs from $34 million to only $1 million.

Our management improvements have also resulted in greater efficiency:

• Perhaps the most important management reform is the establishment of a goal to clean up as many of our 53 contaminated sites as possible by 2006, in a safe and cost-effective manner. By working towards this goal, we can not only reduce the hazards presently facing our workforce and the public, but also reduce the long-term financial burden on the taxpayer. For every year that a site remains open because cleanup has not been completed, we are paying a "mortgage" in terms of necessary overhead for activities such as site security, facility operations, personnel, safety and other costs. By completing cleanup sooner, particularly at sites where no other missions continue, we can substantially reduce these overhead costs. The FY 1999 budget request reflects a fundamental restructuring to emphasize our site closure and project completion goals.



• By the end of FY 1997, our uncosted balances were lower than the targeted benchmark for the second year in a row, after several years of excessive uncosted balances.



• The headquarters support costs for EM have been reduced by 85 percent during the last few years from $130 million (two percent of total EM budget) to $28 million (less than one-half percent).



• The number of headquarters employees has been reduced by approximately 40 percent since 1995.

We are proud of our accomplishments, but also realize that completing the daunting task of stabilizing these facilities will require accelerated cleanup and greater efficiency if we are to succeed within projected budget targets. We are confident that we can meet this challenge by continuing our results-oriented focus, and by continuing to make management and efficiency improvements.

NONPROLIFERATION AND NATIONAL SECURITY

One of the greatest challenges we face in this post-Cold War era is ensuring that unsecured nuclear materials do not fall into the wrong hands. The Department's budget addresses the threat of nuclear proliferation, and works to halt the spread of weapons of mass destruction (WMD). A total of $676 million is included for Nonproliferation and National Security programs, an increase of $19 million. Our request includes $257 million for Arms Control activities to continue to address nuclear materials security issues. We will accelerate our ongoing initiatives to secure at-risk facilities in the former Soviet Union.

Attacking the problem of proliferation of weapons of mass destruction requires attention at many levels. It is a multi-faceted problem, no part of which may be ignored. Particularly, the department runs a comprehensive program to address all the facets of the problem: (1) preventing the spread of WMD materials, technology, and expertise; (2) detecting the proliferation of WMD worldwide; (3) reversing the proliferation of nuclear weapons capabilities; and (4) responding to emergencies. We draw upon 50 years of science and technology expertise resident throughout the DOE National Laboratory Complex to help us achieve these goals.

I am proud to report today that we have been and will continue to work at a rapid pace to confront this critical national security issue.

• Our program of cooperation between DOE laboratories and nuclear facilities in Russia and the Newly Independent States to improve the protection, control, and accounting of weapons-useable nuclear materials is yielding dramatic results. Today, I am happy to say that we are working with Russian authorities to upgrade security at every known nuclear material storage site in the former Soviet Union (FSU). We expect to have completed upgrades at 27 FSU sites by the end of the year. Overall, we are looking at improved security for over a thousand tons of weapons-usable materials.

It is clear from the extensive support for our efforts by the Russian government that there is a serious dedication to the improvement of nuclear materials safeguards and security in Russia. This new, developing safeguards culture is important evidence of the success of the Department of Energy's cooperative program of Materials Protection, Control and Accounting (MPC&A) improvement. We are just now beginning major efforts at the uranium and plutonium cities, the Russian weapons laboratories, and other sensitive facilities. Completion of these sites will require a sustained, multi-year effort, outlined in much more detail in our recently published MPC&A Program Strategic Plan.

• Similar to the MPC&A program, the Initiatives for Proliferation Prevention program seeks to draw scientists, engineers, and technicians from the former Soviet Union's nuclear, chemical, and biological weapons programs into long-term commercial ventures, thereby working to reduce the potential for "brain drain" to proliferant states or organizations. This program serves to fulfill a larger goal of the U.S. Government's policy to downsize the former Soviet nuclear cities.

Together with our international activities, we are equally responsible for ensuring a comprehensive safeguards and security program for DOE's domestic sites. At several sites, based on comprehensive reviews, security systems are being upgraded and protective forces are being increased. We recently completed an interactive television seminar with the FBI on WMD planning. The session, which originated from our Central Training Academy in Albuquerque, New Mexico, was the first-ever cooperative effort among DOE security managers, FBI special agents, and State and local law enforcement officials on WMD counter terrorism planning and responsibilities. I have also directed Sandia National Laboratories to lead a Special Security Review Team to address and resolve other key issues which have been raised as a result of our recent site-specific safeguards and security plan reviews.

To further support an objective, broad review of major safeguards and security issues, we are poised to convene the Department of Energy Security Management Board. First suggested by Senator Warner, the Board was included in last year's National Defense Authorization Act. Besides senior managers from our Department, it will include members selected by the Secretary of Defense, the Federal Bureau of Investigation, and the Central Intelligence Agency. We will have our first meeting next month.

FISSILE MATERIALS DISPOSITION

The Department of Energy's Office of Fissile Materials Disposition is responsible for implementing the Administration's approach to irreversibly dispose of the Nation's post-Cold War stockpiles of surplus plutonium and highly enriched uranium and for providing technical support for Administration efforts to attain reciprocal actions for the disposition of surplus Russian plutonium. These important nonproliferation efforts are aimed directly at reducing the threat that nuclear weapons materials could fall into the hands of terrorists or rogue nations. The FY 1999 budget request for this office is $169 million, a $65 million increase.

We have begun to implement a hybrid strategy for plutonium disposition strategy that calls for pursuing both immobilization and burning mixed oxide (MOX) fuel in existing, domestic commercial reactors. A number of very important activities are being conducted this year to enable surplus weapons plutonium disposition to proceed to the construction phase in the FY 2001 - FY 2002 time frame. Following years of research and technical reviews, we recently decided to focus future work in the immobilization area on the use of ceramics as opposed to glass. This will allow us to concentrate our efforts on one form and brings immobilization, as a means for disposing of surplus weapons plutonium, one major step closer to realization.

With regard to the MOX/reactor approach, DOE is continuing with a program of research and development to support Departmental decisions on plutonium disposition. Shortly, we expect to issue a Request for Proposals to solicit business proposals from industry to provide MOX fuel and irradiation services. Private sector participation is necessary because the Department does not own the reactors needed to irradiate the MOX fuel and there is no MOX fuel fabrication plant in the United States. Following a review of the proposals, the Department expects to award a contract in late Fiscal Year 1998.

With regard to efforts to attain reciprocal actions for the disposition of surplus Russian plutonium, the two governments recently completed an initial round of negotiations on a bilateral agreement on scientific and technical cooperation in plutonium management and disposition and reached agreement on nearly all counts. We expect this agreement to be signed in the coming months.

Later this summer DOE plans to begin testing and demonstrating an integrated prototype system for disassembling nuclear weapons pits and converting the resulting plutonium metal to a form suitable for either disposition approach as well as for international inspection. This demonstration will take place at the Los Alamos National Laboratory and will help us establish key design requirements for a full-scale Pit Disassembly and Conversion Facility.

The increase in FY 1999 for fissile materials disposition will allow the Department to begin the design of key U.S. plutonium disposition facilities for disassembling and converting nuclear weapons pits to unclassified forms and for fabricating MOX fuel and to expand joint technical work with Russia by designing a pilot-scale plutonium conversion system in Russia. DOE is also completing the analyses necessary to select the sites where surplus plutonium disposition will take place and we expect to announce shortly the Department's preferred alternatives for siting the Pit Disassembly and Conversion Facility and the MOX Fuel Fabrication Facility. The Savannah River Site, which has an operational high level waste vitrification facility has already been identified as the Preferred Alternative for immobilization. Following completion of an Environmental Impact Statement, final site selection would appear in a Record of Decision scheduled for release in late 1998.

FY 1999 efforts on the immobilization approach are aimed at resolving technological issues, developing and demonstrating production-scale processes and equipment, and conducting the necessary verification testing of the preferred can-in-canister approach in order to be confident that it can be successfully implemented in a timely and cost-effective manner. For the MOX/reactor approach, we plan to complete fuel qualification design, initiate licensing efforts and process development for MOX fuel fabrication, continue irradiation tests of the MOX fuel as well as to begin the design of a MOX Fuel Fabrication Facility with a capability to process 3.5 metric tons of surplus plutonium oxide per-year

The next two to three years will be a crucial period in the U.S.-Russian relationship concerning the storage and disposition of surplus weapons plutonium. Work with Russia on small-scale tests and demonstrations of disposition technologies is moving forward and negotiations with Russia have begun on a framework of agreements for plutonium disposition. We recognize, however, that the United States cannot proceed independently to dispose of our surplus plutonium without significant progress from Russia. As a result, the Administration will not construct new facilities for disposing of surplus U.S. plutonium unless there is significant progress with Russia on plans for plutonium disposition.

Beginning the design of key U.S. disposition facilities, developing a pilot-scale system in Russia to demilitarize weapons plutonium, and implementing a framework of agreements on plutonium disposition are significant steps in this important nonproliferation program. I believe that these efforts will send a clear signal to the world community regarding our nonproliferation goals and will further encourage the Russian Government to take significant reciprocal actions to initiate plutonium disposition. It is an investment in our future well worth making.

This concludes my statement, Mr. Chairman. I would be pleased to answer any questions that you and your colleagues might have.