<DOC>
[109th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:99908.wais]
FUNDING OPTIONS FOR THE YUCCA MOUNTAIN REPOSITORY PROGRAM
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ENERGY AND AIR QUALITY
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
MARCH 10, 2005
__________
Serial No. 109-37
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
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99-908 WASHINGTON : 2005
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------------------------------
COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida Ranking Member
Vice Chairman HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia BART GORDON, Tennessee
BARBARA CUBIN, Wyoming BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
HEATHER WILSON, New Mexico BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING, ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon HILDA L. SOLIS, California
LEE TERRY, Nebraska CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey JAY INSLEE, Washington
MIKE ROGERS, Michigan TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
Bud Albright, Staff Director
James D. Barnette, Deputy Staff Director and General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Energy and Air Quality
RALPH M. HALL, Texas, Chairman
MICHAEL BILIRAKIS, Florida RICK BOUCHER, Virginia
ED WHITFIELD, Kentucky (Ranking Member)
CHARLIE NORWOOD, Georgia MIKE ROSS, Arkansas
JOHN SHIMKUS, Illinois HENRY A. WAXMAN, California
HEATHER WILSON, New Mexico EDWARD J. MARKEY, Massachusetts
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING, ALBERT R. WYNN, Maryland
Mississippi GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
GEORGE RADANOVICH, California LOIS CAPPS, California
MARY BONO, California MIKE DOYLE, Pennsylvania
GREG WALDEN, Oregon TOM ALLEN, Maine
MIKE ROGERS, Michigan JIM DAVIS, Florida
C.L. ``BUTCH'' OTTER, Idaho HILDA L. SOLIS, California
JOHN SULLIVAN, Oklahoma CHARLES A. GONZALEZ, Texas
TIM MURPHY, Pennsylvania JOHN D. DINGELL, Michigan,
MICHAEL C. BURGESS, Texas (Ex Officio)
JOE BARTON, Texas,
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Berkley, Hon. Shelly, a Representative in Congress from the
State of Nevada............................................ 3
Garrish, Theodore J., Deputy Director, Office of Strategy and
Program Development, Office of Civilian Radioactive Waste
Management................................................. 20
Garvin, Robert M., Commissioner, Wisconsin Public Service, on
Behalf of National Association of Regulatory Utility
Commissioners.............................................. 14
Gibbons, Hon. Jim, a Representative in Congress from the
State of Nevada............................................ 6
Porter, Hon. Jon C., a Representative in Congress from the
State of Nevada............................................ 9
Additional materal submitted for the record:
Bolten, Joshua B., Director, Office of Management and Budget,
letter dated March 24, 2005, requesting responses for the
record..................................................... 32
(iii)
FUNDING OPTIONS FOR THE YUCCA MOUNTAIN REPOSITORY PROGRAM
----------
THURSDAY, MARCH 10, 2005
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Energy and Air Quality,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:56 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Ralph M.
Hall (chairman) presiding.
Members present: Representatives Hall, Shimkus, Walden,
Otter, Burgess, Barton (ex officio), Boucher, and Dingell (ex
officio).
Staff present: Mark Menezes, chief counsel for energy and
the environment; Kurt Bilas, majority counsel; Annie Caputo,
majority counsel; Elizabeth Stack, policy coordinator; Peter
Kielty, legislative clerk; Sue Sheridan, senior minority
counsel; and Bruce Harris, minority professional staff.
Mr. Hall. Okay. We will come to order. Without objection,
the subcommittee will proceed, pursuant to Committee Rule 4E,
which allows members the opportunity to defer their opening
statements for extra questioning time.
The Chair recognizes himself for an opening statement.
First, I would like to thank Ranking Member Rick Boucher,
Chairman Barton, and Ranking Member Dingell of the full
committee for the help in setting up this hearing.
Yucca Mountain may have to be opened before more nuclear
power plants can be built. Considering our country's growing
needs for energy, this isn't a program that many of us feel
that we can stall any longer. But most importantly, it is an
issue of fairness, making sure that our constituents get what
they pay for. Today's hearing is an opportunity for us to look
at the most serious challenge facing Yucca Mountain, the need
for Congress to adequately fund the program.
Over the last 10 years, Yucca Mountain has been under-
funded to the tune of over $1 billion. The worst part of this
situation is that our Nation's electricity consumers are paying
for a service that they aren't receiving. This year alone,
consumers will pay approximately $750 million for a disposal
facility that is at least 12 years behind schedule. Of that
money, only $300 million will actually be spent on the program.
Once again, electricity consumers will get an IOU from the
government for another $350 million that will be added to the
Nuclear Waste Fund balance of $17 billion. Ladies and
gentlemen, that is a lot of IOUs.
Inadequate funding leads to inadequate progress on this
program. These delays are costing taxpayers approximately $1
billion per year. DOE estimates it will spend in the
neighborhood of $500 million each year on storage costs for
waste that should be stored in Yucca Mountain by now. Nuclear
plants will spend an additional $500 million each storing their
spent fuel, a cost for which the government is liable. Each
year that we, the Congress, fail to address this issue costs
taxpayers an additional $1 billion. That is real money, even by
Congress's standards. We need to solve this problem now.
We will begin by hearing the view of our Nevada colleagues,
Congresswoman Berkley and Congressman Porter. I don't see
Congresswoman Berkley; I do see Congressman Gibbons. Are you
going to take Ms. Berkley's place, or will she be here?
Mr. Gibbons. No one can take her place. I am here as an
independent Congressman from the 2nd District in Nevada, sir.
Mr. Hall. I believe you can take anybody's place. We will
begin by hearing the views of these colleagues, and next we
will hear the views of administration, as presented by Ted
Garrish, Acting Director of the Office of Civilian Radioactive
Waste Management at DOE. We will also hear from the Honorable
Robert Garvin, a commissioner with the Wisconsin Public Service
Commission, presenting the views of our Nation's public utility
commissions on behalf of NARUC.
This committee has attempted, several times, to solve the
funding dilemma. I encourage my colleagues to use this hearing
to gain a better understanding of the challenges before us. We
should seek guidance on how we might ultimately solve the
difficult problem, and we need to ensure that our constituents
get what they pay for. We do have a distinguished panel. I
presume Mrs. Berkley will be here in a little bit. In the time
meantime, we have John Porter, who is in his second term for
the 3rd Congressional District. He serves on the House
Education and Work Force Committee, the House Transportation
Infrastructure Committee, and the Government Reform Committee,
where he is a chairman of the Federal Work Force and Agency
Organization Subcommittee. He served on city council and later
as mayor of Boulder City. He has been a State Senator, and now
he is a Congressman. He has been in every sized courthouse
there is; you might outtalk him, but you can't outrun him. He
is a Marine Corp marathon veteran.
We have Congressman Gibbons, his fifth term, representing
Nevada's 2nd Congressional District. Congressman Gibbons serves
on the House Resources Committee, the Armed Services Committee,
and the Committee on Homeland Security. He was a combat pilot,
highly decorated in both the Vietnam and Persian Gulf Wars, a
commercial pilot for Western Airline, an exploration geologist,
a mining- and water-rights attorney, a State legislator, and
probably someday a Governor out there and will help me get
tickets to the fights. It wouldn't surprise me at all if he
didn't do that.
Congresswoman Shelly Berkley is great lady and a longtime
friend of mine. First elected to the U.S. House in 1998, she
represents the 1st Congressional District of Nevada, which
includes Las Vegas. She is a member of the Committees on
Transportation and Infrastructure, International Relations, and
Veterans Affairs. She is a former member of the State
legislature and longtime regent for Nevada's university system.
She is good addition to this Congress and will be very helpful
in this committee hearing.
And we will get underway. Mr. Boucher was called away on an
emergency telephone call, and he will be back in a little bit,
and when he does, whoever is giving your opening statement, we
will let you finish, and then we will hear from him, if he
would like, and then we will pick up and go.
Thank you. The Chair recognizes Ms. Berkley.
STATEMENT OF HON. SHELLY BERKLEY, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEVADA
Ms. Berkley. Thank you very much, Mr. Chairman. It is
always a pleasure to appear before you. And before I get
started, I can assure you I can get you tickets to fights, and
I don't have to be Governor. I would like to thank----
Mr. Hall. I assure you I will take them.
Ms. Berkley. I would like to thank you and Ranking Member
Boucher for allowing me to testify today. I don't think it will
be a surprise to anybody, the testimony that I share with you--
you know I have been an opponent of the Yucca Mountain Project
since its inception and long before I came to the Congress to
represent the 1st Congressional District.
Our Nation is facing $550 billion deficits that have left
vital programs, such as education, healthcare, and veterans'
benefits under-funded. We should be focusing on these important
programs because they help the greatest numbers of our
citizens, not projects such as that Yucca Mountain Repository,
which has already cost billions and has a ballooning price tag,
depending on who you talk to, of anywhere from $58 billion to
$308 billion. Despite multiple lawsuits challenging the site,
unresolved scientific issues, findings establishing that the
storage canisters at Yucca Mountain will corrode--and the
finding was that they will corrode and release radioactive
waste in our groundwater--and enormous terrorist risks that
this plan creates if waste is shipped across the Nation, the
administration continues to push recklessly ahead with this
project. The United States Court of Appeals, the second highest
court in the Nation, ruled that the radiation standard for the
proposed nuclear waste dump is not based on sound science and
will not protect the health and safety of the American people.
The court found that the EPA blatantly disregarded the findings
of the National Academy of Sciences and that radiation levels
will reach their peak in 300,000 years, instead of the 10,000-
year radiation standard that was set by EPA. Rather than
incorporating the findings of the National Academy of Sciences,
when crafting safety guidelines, the Bush Administration
ignored the law and knowingly ordered the EPA to draft a
radiation standard, not based on science, but an arbitrary
period of 10,000 years. The gap between the science and the EPA
standard? A mere 290,000 years.
The proposal to reclassify contributions to the Nuclear
Waste Trust Fund as offsetting collections is shortsighted and
fiscally irresponsible. Not only does this budget gimmick
funnel money into a project plagued with problems, it also
bypasses budgetary rules that have been set forth in order to
maintain the integrity of our appropriations process.
I remind you, although I am sure I do not have to, that we
really seek waivers for funding of critical programs such as
the ones I originally mentioned, for education, and healthcare.
Then why would we be doing this for the Yucca Mountain Project?
Another plan proposes to move the Yucca Mountain Project
off budget. This reckless proposal would dedicate all current
and future proceeds of the Nuclear Waste Fund to the Yucca
Mountain Project. This project is in a downward spiral. Even
members of the nuclear industry are beginning to look for
alternative ways of storing the nuclear waste. Throwing more
money at this trouble-ridden albatross will not fill the gaps
in the science because the science simply isn't there.
It will not change the fact that Yucca Mountain is prone to
regular seismic activity and threatened by volcanic activity.
It will not change the fact that it is impossible to safely
transport 77,000 tons of radioactive waste across the United
States, across 43 States and 360 Congressional Districts for
the next 30 to 40 years. Nuclear waste shipments will pass
within miles of our homes, our places of worship, our schools,
and our neighborhoods.
To guarantee such a massive amount of funding without
proper oversight is an invitation for waste and abuse. With
looming deficits, we must ensure that every dime of taxpayers'
money is spent responsibly.
Instead of walling off funds from the Nuclear Waste
Disposal Program, we should be investing in alternative methods
to safely dispose of high-level radioactive waste, including
dry-cast storage onsite.
We should also be endowing programs for the research and
development of cleaner forms of energy, such as renewables, not
problem-ridden projects like the Yucca Mountain Project that
creates potential risks to all of our communities.
Yucca Mountain is unprecedented in its scope and nature, as
well as the potential harmful consequences on the health and
safety of millions of Americans. A project of this magnitude
must undergo Congressional scrutiny at every stage in order to
ensure the safety of our public.
The Department of Energy has consistently changed
regulations and reduced standards in order to railroad Nevadans
and push the Yucca Mountain Project through. These funding
proposals are just another example of changing the rules to
accelerate a project that lacks sound science.
Funds for Yucca Mountain should have to compete with our
need to expand clean-energy sources. At a time when energy
markets are volatile and the cost of gas is skyrocketing, our
Nation must scrutinize every dollar spent on the Yucca Mountain
Project. We should invest our resources to strengthen and
diversify clean-energy sources, not invest billions in the
nuclear-energy technology, a 20th Century energy solution to a
21st Century world problem that has a deadly byproduct and a
deadly consequence.
Congess should also be using the same vigor to fill the
gaps in funding for education, healthcare, and veterans
programs. Given the overwhelming needs in our Nation and the
limited resources at our disposal, it makes absolutely no sense
to give special treatment to the Yucca Mountain Project at the
expense of millions of Americans.
I urge the members of the subcommittee to reject any
proposal that would skirt the appropriations process, reduce
necessary Congressional oversight, and limit our authority and
power as Congresspeople to oversee a most important project in
this Nation. Thank you very much for your very kind attention.
[The prepared statement of Hon. Shelly Berkley follows:]
Prepared Statement of Hon. Shelley Berkley, a Representative in
Congress from the State of Nevada
I would like to thank Chairman Hall and Ranking Member Boucher for
allowing me to testify today.
Our nation is facing $550 billion deficits that have left vital
programs, such as education, health care, and veterans benefits
underfunded. We should be focusing on these important programs because
they help the greatest number of people. Not projects, such as the
Yucca Mountain repository, which has already cost billions and has a
ballooning pricetag of $58 billion to $308 billion.
Despite multiple lawsuits challenging the site, unresolved
scientific issues, findings establishing that the storage canisters at
Yucca Mountain will corrode and release radioactive waste into our
groundwater, and enormous terrorist risks this plan creates if waste is
shipped across the nation, the Administration continues to push
recklessly ahead with this project.
The U.S. Court of Appeals--the second highest court in the nation,
ruled that the radiation standard for the proposed nuclear waste dump
is not based on sound science and will not protect the health and
safety of the American people.
The Court found that the Environmental Protection Agency blatantly
disregarded the findings of the National Academy of Sciences (NAS) that
radiation levels will reach their peak in 300,000 years, and instead
set a 10,000 year radiation standard. Rather than incorporating the
findings of the NAS when crafting safety guidelines, the Bush
Administration ignored the law and knowingly ordered EPA to draft a
radiation standard based not on science, but an arbitrary period of
10,000 years.
The gap between the science and the EPA standard? A mere 290,000
years!
The proposal to reclassify contributions to the Nuclear Waste Trust
Fund as offsetting collections is shortsighted and fiscally
irresponsible. Not only does this budget gimmick funnel money into a
project plagued with problems, it also bypasses budgetary rules that
have been set forth in order to maintain the integrity of our
appropriations process.
I remind you that we rarely seek waivers for the funding of
critical programs, such as the ones I mentioned before--education and
healthcare, as we are doing for the Yucca Mountain Project.
Another plan proposes to move the Yucca Mountain Project off-
budget. This reckless proposal would dedicate all current and future
proceeds of the Nuclear Waste Fund to the Yucca Mountain Project. This
project is in a downward spiral, and throwing more money at this
problem-ridden albatross will not fill the gaps in the science, because
the science is not there. It will not change the fact that Yucca
Mountain is prone to regular seismic activity and threatened by
volcanic activity.
It will also not change the fact that it is impossible to safely
transport 77,000 tons of radioactive waste across the United States
through 43 states, and perhaps as many as 360 Congressional districts,
for the next 30 to 40 years. Nuclear waste shipments will pass within
miles of our homes, places of worship, schools, and hospitals.
To guarantee such a massive amount of funding without proper
oversight is an invitation for waste and abuse. With looming deficits,
we must ensure that every dime of taxpayer money is spent responsibly.
Instead of walling off funds from the Nuclear Waste Disposal
Program, we should be investing in alternative methods to safely
dispose of high level radioactive waste.
We should also be endowing programs for the research and
development of cleaner forms of energy, such as renewables, not
problem-ridden projects like Yucca Mountain that create potential risks
to our communities.
Yucca Mountain is unprecedented in its scope and nature, as well as
the potential harmful consequences on the health and safety of millions
of Americans. A project of this magnitude must undergo congressional
scrutiny at every stage in order to ensure the safety of our public.
The Department of Energy has consistently changed regulations and
reduced standards in order to railroad Nevadans and push the Yucca
Mountain Project through. These funding proposals are just another
example of changing the rules to accelerate a project that lacks sound
science.
Funds for Yucca Mountain should have to compete with our need to
expand clean energy sources. At a time when energy markets are volatile
and the cost of gas is skyrocketing, our nation must scrutinize every
dollar spent on the Yucca Mountain Project. We should invest our
resources to strengthen and diversify clean energy sources, not invest
billions in nuclear energy technology, a 20th Century energy solution
in a 21st Century world that has a deadly byproduct.
Congress should also be using the same vigor to fill the gaps in
funding for education, health care and veterans programs. Given the
overwhelming needs in our nation and the limited resources at our
disposal, it makes absolutely no sense to give special treatment to the
Yucca Mountain Project at the expense of millions of Americans.
I urge the Members of the Subcommittee to reject any proposal that
would skirt the appropriations process and reduce necessary
congressional oversight.
Mr. Hall. Thank you very much. The Chair recognizes Mr.
Gibbons.
STATEMENT OF HON. JIM GIBBONS, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEVADA
Mr. Gibbons. Thank you very much, Chairman Hall, Mr.
Boucher, members of the committee. Thank you for giving me an
opportunity to also testify on this very important issue.
I can completely understand the emotional draw that it has
for everyone in this country, but this has also been a very
emotional issue for Nevada. It is one of the utmost concerns to
me and to many of the constituents that I have, because Yucca
Mountain is in the 2nd Congressional District of Nevada. I
represent every county in Nevada, including Nye County, which
includes Yucca Mountain, as I said earlier. As you probably
know, I mean strong opposition to Yucca Mountain. It is an
unsafe and unsuitable solution to our nuclear waste problem.
However, today, I would like to focus my testimony, not on the
scientific flaws, but more likely on the flawed fiscal
responsibility that has been associated with this program.
Under no circumstances, Mr. Chairman, should the funding
for Yucca Mountain Project be taken off budget or removed from
the tight fiscal control of Congress. Currently the nuclear-
power industry pays into the Nuclear Waste Trust Fund based on
their kilowatt per hour production. As of November 2004, these
payments have totaled close to $23 billion. Now, these payments
are then designated toward the construction of the Yucca
Mountain Waste Repository; however, these payments are not
directly diverted toward to this ill-advised project, but
instead require strict, yearly Congressional appropriation.
Similar to other government trust funds, the balance of the
trust fund is used for other purposes.
Over the past few years, many of our fellow colleagues have
proposed changing the classification of this trust fund and
essentially allowing all of these moneys to be used for
construction of Yucca Mountain. While many proponents of the
Yucca Mountain Project have applauded this effort, as Members
of Congress and stewards of fiscal responsibility, we should
soundly reject the proposal to take it off budget.
With the current budget deficit growing out of our control,
it is imperative that Congress maintain more control of
government spending, not less. If this proposal is adopted,
Congress will no longer have strict oversight of the current
trust fund balance, totaling close to $17 billion. This is
approximately $17 billion that has already been used for debt
reduction and will now no longer be under the watchful eye of
Congress.
This does not even include the future receipts of the trust
fund, with an estimated $1.6 billion being collected in fiscal
year 2005, alone.
In a time when Republicans are on the Hill demanding
Congressional oversight on spending, I think it is hypocritical
to make more spending not subject to strict, yearly
Congressional oversight. I understand that some will argue that
taking the Yucca Mountain Project off budget is not technically
shifting the funding into a mandatory funding and that the
program will still require yearly Congressional oversight.
However, I challenge the committee to explain how taking the
Yucca Mountain plan off budget does not have the same effect as
a mandatory account.
I challenge you to explain how such a proposal will not
create unnecessary incentives for appropriators to allocate the
entire trust fund. In addition, a recent decision in the
Federal Appeals Courts ordered that the Federal Government
needs to develop a plan to protect the public against radiation
released beyond the 10,000 year standard. As a result of the
Court's decision, the Environmental Protection Agency must now
promulgate a new safety standard that that can show compliance
well beyond the 10,000-year mark, more like 100,000 years.
Now, these are Congressional mandated safety standards
which the Department of Energy cannot realistically meet. It is
the permitting issue, and not funding, that pose a greater
challenge to the future construction of Yucca Mountain. It
would be completely irresponsible for Congress to give the
Department of Energy a check for approximately $17 billion for
this project when it is all but certain that the DOE may never
open it and certainly cannot meet the strict safety standards
that Congress have previously set.
Simply put, taking the Yucca Mountain Project off budget is
bad policy and a poor precedent for Congress to set. If
Congress is willing to give the Department of Energy complete
control of this trust fund without any Congressional oversight,
what message does that send to other constituents throughout
this Nation? Constituents expect us to hold the line on
irresponsible government spending and reign in the growing
budget deficit. Removing billions of dollars from our oversight
is not an appropriate or responsible budgetary decision.
Mr. Chairman, I want to thank you for the time and the
opportunity to testify before your committee today, and I would
ask unanimous consent that a complete, written copy of my
remarks be entered into the record.
[The prepared statement of Hon. Jim Gibbons follows:]
Prepared Statement of Hon. Jim Gibbons, a Representative in Congress
from the State of Nevada
Mr. Chairman, thank you for giving me the opportunity to testify on
this important issue.
This is an issue that has always been of the utmost concern to me
and to many of my constituents. I represent every county in Nevada,
including Nye County which includes the Yucca Mountain waste
repository.
As you all probably know I am in strong opposition to Yucca
Mountain. It is an unsafe and unsuitable solution to our nuclear waste
problem.
However, today, I would like to focus my testimony not on the
scientific flaws with the project but on fiscal responsibility. Under
no circumstances should the funding for the Yucca Mountain Project be
taken off-budget or removed from the tight fiscal control of Congress.
Currently, the nuclear power industry pays into the Nuclear Waste
Trust fund based on their Kilo watt per hour power production. As of
November 2004, these payments have totaled close to 23 billion dollars.
These payments are then designated towards the construction of the
Yucca Mountain waste repository. However, these payments are not
directly diverted to this ill-advised project, but instead require
strict yearly congressional appropriations. Similar to other government
trust funds, the balance of the trust fund is put back into the general
Treasury account and used to pay off our national debt.
Over the past few years, many of our fellow colleagues have
proposed changing the classification of this trust fund and essentially
allowing all these monies to be directly used for construction of Yucca
Mountain. While many proponents of the Yucca Mountain project have
applauded this effort, as Members of Congress and stewards of fiscal
responsibility, we should soundly reject this proposal. With the
current budget deficit growing out of our control, it is imperative
that Congress maintain more control of government spending, not less.
If this proposal is adopted, then Congress will no longer have
strict oversight of the current trust fund balance B totaling close to
17 billion dollars! This is approximately 17 billion dollars that has
already been used for debt reduction, and will now no longer be under
the watchful eye of Congress. This does not even include the future
receipts of the trust fund, with an estimated $1.6 billion being
collected in FY 2005 alone. In a time when Republicans on the hill are
demanding Congressional oversight on spending, it is hypocritical to
then make more spending not subject to strict yearly congressional
oversight.
I understand that some will argue that taking the Yucca Mountain
project off-budget is not technically shifting the funding into a
mandatory program and that the program will still require yearly
congressional oversight. However, I challenge the committee to explain
how taking the Yucca Mountain project off-budget does not have the same
affect as a mandatory account. I challenge you to explain how such a
proposal will not create unnecessary incentives for appropriators to
allocate the entire trust fund?
In addition, a recent decision in the federal appeals court ordered
that the federal government needs to develop a plan to protect the
public against radiation releases beyond the proposed 10,000 years. As
a result of the court's decision, the Environmental Protection Agency
(EPA) must now promulgate a new safety standard that can show
compliance well beyond 10,000 years.
These are congressional mandated safety standards which the
Department of Energy cannot realistically met. It is this permitting
issue--and not funding--that pose a greater challenge to the future
construction of Yucca Mountain.
It would be completely irresponsible for Congress to give the
Department of Energy a check for approximately 17 billion dollars for
this project, when it is all but certain that the DOE may never open it
and certainly cannot meet the strict safety standards set by Congress.
Simply put, taking the Yucca Mountain project off-budget is bad
policy, and a poor precedent for Congress to set. If Congress is
willing to give the Department of Energy complete control of this trust
fund, without any congressional oversight, what message does that send
to our constituents throughout this nation? Constituents expect us to
hold the line on irresponsible government spending and rein in the
growing budget deficit. Removing billions of dollars from our oversight
is not an appropriate or responsible budgetary decision.
Thank you for your time and the opportunity to testifying before
your committee today.
Mr. Hall. Without objection, and I thank you. And I would
say this, before I recognize Mr. Porter, that while there are
some differences of opinion with some of your testimony, I note
that you have always done it with a professional approach,
fiercely battling for your folks and with class. I appreciate
that. Mr. Porter, you are recognized, sir.
STATEMENT OF HON. JON C. PORTER, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEVADA
Mr. Porter. Thank you, Mr. Chairman and Mr. Boucher for
affording me the opportunity to testify today.
As I am sure you can imagine, the Yucca Mountain issue
remains an intensely personal issue to myself and my fellow
Nevadans. I have been in public office for over 20 years of my
life, and throughout those 20 years, I have fought on behalf of
Southern Nevadans on many issues. In looking back over this
period of time, one issue stands tall above the rest. This is a
push-button issue for Nevadans, and that is Yucca Mountain.
Therefore, Mr. Chairman, I am here today to express my vehement
opposition to this project on behalf of my constituents in
Southern Nevada.
Throughout the fight against Yucca Mountain, one thing
seems to be proven time and time again: Yucca Mountain has yet
to be proven safe as a repository to dump our Nation's high-
level nuclear waste. Since 1987, when Yucca Mountain was named
the only site to be considered further, billions upon billions
of dollars have been spent on this ill-fated project. Study
after study proves that Yucca Mountain is not as solid as
information as we have provided before.
Earthquakes, water percolation, transportation, and
radiological safety standards have plagued the Yucca Mountain
Project, yet we continue this fight year after year.
I wish we knew in 1987 what we know today. Located only 90
miles from Las Vegas, and even closer to the quickly growing
community of Pahrump, Nevada, Yucca Mountain is becoming more
and more of a threat to the health and safety of Southern
Nevadans as well as to millions of Americans with every day
that it is being considered our Nation's nuclear waste
repository.
The Yucca Mountain Project will directly impact 44 States
and many major metropolitan areas, including Chicago, Toledo,
Los Angeles, Dallas, Pittsburgh, and Denver, as the millions of
shipments of high-level nuclear waste would be trucked and
shipped and sent by train through these communities.
Mr. Chairman, I disagree with Yucca Mountain on many
different fronts, but the reason for this hearing today is to
talk about the funding options that are before you. Last year,
funding for Yucca Mountain was cut significantly. This year,
the Energy Department's top nuclear manager publicly
acknowledged that Yucca is falling behind schedule. This is
frustrating for proponents for Yucca Mountain, causing them to
look toward other solutions to put Yucca Mountain back on
track.
One of the options that has been mentioned frequently is
taking some more of the funds generated under the Nuclear Waste
Fund to help pay for Yucca Mountain. Although to some, this
approach may seem like a short-term solution to funding issues
surrounding Yucca Mountain, I have a firm belief that this
would equate to basically giving its proponents a blank check
to complete the construction of this project putting all
Americans at risk, not just Nevadans.
As you know, Mr. Chairman, the transportation and storage
of high-level nuclear waste is not an issue to ignore,
especially in the post-September 11 world. Shipping 77,000
metric tons of dangerous, radioactive nuclear waste by removing
it from reactor sites around the country and putting it on
trucks, trains, barges, and moving it through cities and towns
and waterways across America is a dangerous scheme, and we as a
Congress cannot afford any missteps along the way.
Now is definitely not the time to lessen managerial
oversight of this project. With all of the problems currently
looming over Yucca Mountain, we as Members of Congress cannot
lessen our oversight over a project when we have not seen the
final safety standards.
Mr. Chairman, the American people deserve better. The
American people deserve more from us than wasting our time
throwing billions of dollars in project that has spent too long
already at the public trough. For this reason, on behalf of the
people of Nevada, I insist that this body maintain its
oversight authority over such potentially dangerous projects.
Taking an item off budget is reserved for issues of national
interest, far surpassing the completion of Yucca Mountain. Just
because the project may not be on track does not mean that we,
as Members, should try to force it to move any faster, putting
all Americans at risk. This also sets a dangerous precedent for
all projects across the country that do not meet an arbitrary
master plan. Any budgetary gimmicks like this are dangerous and
cannot be allowed.
Mr. Chairman, last year, I testified before the committee
regarding this same issue, and my message remains the same: We
are all here to represent millions of people from across the
country. These constituents have instilled their faith in each
of us to make pretty tough decisions to protect not only their
interests and their tax dollars, but their health and safety as
well. In attempting to find other ways to fund Yucca Mountain,
whose interests are being served, the health and safety of our
constituents, or is it the balance sheets of the nuclear
utility companies?
Mr. Chairman, I thank you again for this opportunity, and I
ask that you look closely at what decisions can be made that
may impact all of these families, children, schools, churches,
and businesses across the country if we give up that oversight
that we have had as a U.S. Congress. Thank you, Mr. Chairman.
[The prepared statement of Hon. Jon C. Porter follows:]
Prepared Statement of Hon. Jon Porter, a Representative in Congress
from the State of Nevada
Mr. Chairman, thank you for providing me the opportunity to testify
today. As I am sure you can imagine, the Yucca Mountain issue remains
an intensely personal issue to myself and to my fellow Nevadans as
well.
I have been in public office for over twenty years of my life.
Throughout these twenty years, I have fought on behalf of Southern
Nevadans on many issues. In looking back, one issue stands tall above
the rest as THE ``push-button'' issue for Nevadans--Yucca Mountain.
Therefore, Mr. Chairman, I am here today to express my vehement
opposition to this project on behalf of my constituents in Southern
Nevada.
Throughout the fight against Yucca Mountain, one thing seems to be
proven time and time again--Yucca Mountain has yet to be proven a safe
repository to dump our nations' high-level nuclear waste. Since 1987,
when Yucca Mountain was named the only site to be considered further,
billions upon billions of dollars have been spent on this ill-fated
project, only to have study after study prove that Yucca is not the
solid formation it was once thought to be. Earthquakes, water
percolation, transportation and radiological safety standards have
plagued the Yucca Mountain project, yet we continue this fight year
after year. I wish we knew in 1987 what we know now.
Located only 80 miles from Las Vegas, and even closer to the
quickly-growing city of Pahrump, Yucca Mountain is becoming more and
more of a threat to the health and safety of Southern Nevadans, as well
as the millions of Americans, with every day that it is being
considered as our nation's nuclear waste repository. The Yucca Mountain
project will directly impact 44 states and many major metropolitan
areas, including Chicago, Toledo, Los Angeles, Dallas, Pittsburg, and
Denver, as millions of shipments of high-level nuclear waste is
trucked, shipped, and sent by train through these areas.
Mr. Chairman, I disagree with Yucca Mountain on many different
fronts, but the reason for this hearing today is to talk about funding
options. Last year, funding for Yucca Mountain was cut significantly.
This year, the Energy Department's top nuclear manager has publicly
acknowledged that Yucca is falling behind schedule. This has frustrated
proponents of Yucca Mountain, causing them to look toward other
``solutions'' to put Yucca Mountain back on track. One of the options
that has been mentioned frequently is taking some of the funds
generated under the Nuclear Waste Fund to help pay for Yucca Mountain.
Although, to some, this approach may seem like a short-term
solution to the funding issues surrounding Yucca Mountain, I am of the
firm belief that giving its proponents a ``blank check'' to complete
the construction of this project will end up putting all Americans at
risk. As you know, the transportation and storage of high-level nuclear
waste is not an issue to ignore, especially in a post September 11th
world. Shipping 77,000 metric tons of dangerous radioactive nuclear
waste by removing it from reactor sites around the country, and putting
it on trucks, trains and barges, and moving it through cities, towns
and waterways across America is a dangerous scheme and we, as Congress,
cannot afford any missteps along the way.
Now is definitely not the time to lessen managerial oversight over
this project, and with all of the problems currently looming over the
Yucca Mountain, we as Members of Congress, cannot lessen our oversight
over a project that we have not even seen final safety standards on.
The American people deserve more from us than wasting our time throwing
billions of dollars at a project that has spent too long already at the
public trough.
For this reason, I, on behalf of the people of Nevada, insist that
this body maintain its oversight authority over such potentially
dangerous projects. Taking an item off-budget is reserved for issues of
national interest that far surpass the completion of Yucca Mountain.
Just because the project may not be as ``on track'' as it should be
does not mean that we, as Members, should try to force it to move any
faster. This also sets a dangerous precedent for all projects across
the country that do not meet an arbitrary master plan. Any budgetary
gimmicks like this are dangerous and cannot be allowed.
Mr. Chairman, last year I testified before the Subcommittee on
Energy and Water Quality regarding this same issue, and my message
remains the same: We are all here to represent millions of people from
across the country. These constituents have instilled their faith in
each of us to make tough decisions to protect not only their interests
and tax dollars, but their health and safety as well. In attempting to
find other ways to fund Yucca Mountain, whose interests are being
served, the health and safety of our constituents, or the balance
sheets of the nuclear utility companies?
Again, Mr. Chairman, thank you for the opportunity to testify
today. I will continue to join the other members of Nevada's delegation
in representing the overwhelming majority of Nevadans who oppose Yucca
Mountain, and I would be happy to answer any questions the panel may
have.
Mr. Hall. You used exactly your 5 minutes, not even 1
second over.
Mr. Porter. Thank you.
Mr. Hall. Perfect timing and I thank you for it. The Chair
is going to recognize the ranking member, the very venerable,
longtime chairman of this committee, Mr. Dingell, for an
opening statement.
Mr. Dingell. Mr. Chairman, thank you for your courtesy, and
thank you for this hearing on an issue that is very important,
not only in terms of energy policy, but also in terms of
consumer protection and deficit spending.
The need to put Yucca Mountain on a sound financial footing
is an issue which you and Chairman Barton and I have been able
to work together on in the past. I look forward, again, to
doing so in this Congress.
As I have outlined before, I have three major funding
concerns. First, we need to determine whether the Department of
Energy $651 million request for the 2006 fiscal year is
adequate to meet the program's near-term needs. Second, we need
to secure sufficient long-term funding for the project by
insulating the $16 billion balance in the Nuclear Waste Trust
Fund from competing pressures. That translates, Mr. Chairman,
to saying that we would protect it against the grubby hands of
the Appropriations Committee, the Budget Committee, and the
Office of Management and Budget, all of whom will spend this
money for purposes quite different than those for which the
Congress designed the Fund. Finally, we need to protect
taxpayers' future payments to the fund from being siphoned off
by the budgeters and being spent on unrelated programs, and see
that they are spent on that which the Congress has said they
should be spent.
Some of these challenges may require legislation; some may
not. The administration's budget suggests that futures payments
to the fund should be ``reclassified'' for purposes of budget
treatment in order to alleviate certain pressures on program
funding.
That doesn't sound very good to me, and I would observe
that it probably means that they are talking about seeing to it
that those funds are dissipated in some curious way which might
satisfy somebody else's intentions other than this committee
and the Congress.
Some believe that the Office of Management and Budget
already has the authority to accomplish this action by
administrative means; however, we have to regret that the good
people at OMB have been too busy to answer the letters I sent
them in May 2004 and January 2005 posing this question. Perhaps
this indicates that Yucca Mountain is not an important matter
in the eyes of those in the administration. I hope that that is
not the case. Clearly, they are not being forthcoming in
dealing with the Congress or vigorous in terms of protecting
the public interest with regard to these funds.
The reclassification approach, however, appears to have
drawbacks. It does not address the need to take the balance of
the Fund off budget as this committee voted to do in two prior
Congresses. It does nothing to secure the adequate annual
appropriations for the Yucca Mountain Project as direct
spending could. It does not ensure that future contributions by
ratepayers are fully dedicated to this project rather than
unrelated budgetary priorities, as adopting a user-fee concept
might, nor does it limit the amount of money flowing
irretrievably into the Waste Fund, as would lowering the bill
fee to collect only the amount needed for the annual spending
could.
Finally, it appears that some reclassification bills have
the subtle effect of masking increased deficit spending. I
recognize, of course, that all of the proposals have
limitations, either practical or political. It will do nothing
for the program or for consumer, however, for the Congress to
aim low, to settle only for gimmicks and gimcracks when we
should be considering broad reform that might actually get the
job done and put the nuclear waste of this country into a safe
and proper repository and see to it that the public moneys are
spent in a proper fashion, in accord with what the Congress
said they should be spent for.
I will close with the hope that these will be reviewed as
constructive suggestions by the administration. I confess I
have small hope of that. Nuclear waste legislation is enacted
only once in a blue moon. Without clear leadership and support
from the executive branch, Congress can do little more than
nibble at the edges of the serious funding that this program
faces.
In my letter of January 14, 2005 to the OMB, I asked for
the administration's positions on various legislative and
administrative options. I know the folks over there are very
busy, but it would be helpful if they would pause long enough
to give us a response on a matter very important to our current
legislative considerations and purposes of this hearing.
Alternatively, perhaps, the testimony of Mr. Garrish of DOE
would be able to enlighten us on this regard. I would suggest
that we should ask him questions since administration officials
have a noticeable allergy and reluctance to appearing here to
discuss these matters with us.
I thank you for holding this hearing. Let us hope we can
get to the bottom of this thing, that we have some cooperation
from the administration. I hope that that will be so. The hopes
are small. Thank you, Mr. Chairman.
Mr. Hall. Mr. Dingell, we thank you.
Are there other gentlemen who would usurp the chairman's
time by making another statement? Or would you like to have
your statement put in the record? Does anybody want to be
recognized for 5 minutes? Okay. Well, I was joking. We will
hear from any of you, if you want to, or if you would like, put
it in the record. Okay, the Chair hears none.
All right. At this time, we are honored to hear from
Ranking Member Boucher, the gentleman from Virginia.
Mr. Boucher. Well, thank you very much, Mr. Chairman. I do
have a brief statement this afternoon.
I very much appreciate your convening this hearing on the
subject of status of funding relating to the Yucca Mountain
Nuclear Waste Repository. The Nuclear Waste Policy Act of 1982
gives the Federal Government the responsibility of providing a
facility for the permanent disposal of nuclear waste. As
stipulated by the Act, nuclear generators of electricity are
responsible for the cost of both permanent disposal and interim
storage at utility reactor sites. The cost of storage and
disposal of nuclear waste are funded by an assessment charged
to customers who received electricity generated by nuclear
power. These fees are collected and then placed in the Nuclear
Waste Fund and are administered by the Department of Energy.
DOE has recently abandoned its most recent 2010 target for
opening the depository at Yucca Mountain and then also missed
the target of December 2004 to file a license application for
the Yucca Mountain facility.
Approximately $6 billion has been spent on the program to
date and more than $16 billion remains in the Nuclear Waste
Fund. However, moneys assigned to the fund have been used for
other purposes in previous years, and the program, now, has to
compete for funding with other unrelated DOE programs. The fund
needs to be altered in order to ensure that ratepayer
contributions are applied for the purpose intended and that the
Yucca Mountain receives the funding that it needs in order to
proceed in a timely manner.
Our witnesses today will comment on the need to alter the
fund in order to ensure that the program moves forward. I,
personally, support appropriate changes to the fund's structure
that would ensure adequate moneys for the program and direct
future collections to the furtherance of the Yucca Mountain
program. Potentially, the interest on the existing fund balance
should also be so protected and directed to program activities.
And perhaps, we should be concerning ourselves with the
principle that is the fund, the more than $16 billion currently
residing in that fund, which we hope would be made available in
a timely way for program use.
And I look forward to hearing from our witnesses their
thoughts on the steps we should be taking to achieve these
goals. Thank you very much, Mr. Chairman.
Mr. Hall. Thank you, Mr. Boucher.
The second panel, please, come forward. We will have Mr.
Theodore J. Garrish, Deputy Director, Office of Strategy and
Program Development, Office of Civilian Radioactive Waste
Management with the Department of Energy. And we have Honorable
Robert M. Garvin, Commissioner, Wisconsin Public Service. He is
testifying on behalf of the National Association of Regulatory
Utility Commissioners. Gentlemen, we recognize you.
At this time, Mr. Garvin, we recognize you for 5 minutes.
You are not relegated to that; you may use less time than that
if you would like, or if you run over, we will be considerate.
Thank you. We recognize you.
STATEMENTS OF ROBERT M. GARVIN, COMMISSIONER, WISCONSIN PUBLIC
SERVICE, ON BEHALF OF NATIONAL ASSOCIATION OF REGULATORY
UTILITY COMMISSIONERS; AND THEODORE J. GARRISH, DEPUTY
DIRECTOR, OFFICE OF STRATEGY AND PROGRAM DEVELOPMENT, OFFICE OF
CIVILIAN RADIOACTIVE WASTE MANAGEMENT
Mr. Garvin. I am new to this. Thank you very much, Mr.
Chairman. My name is Robert Garvin. I am a member of the Public
Service Commission of Wisconsin. I also serve as Chairman of
NARUC's subcommittee on nuclear issues. I am testifying today
on behalf on NARUC. I very much appreciate the opportunity to
appear before you today, and I would ask that my full testimony
be submitted into this record.
I will briefly summarize our views. NARUC's goal for the
Civilian Radioactive Waste Management program is for the
Federal Government to meet its statutory and contractual
obligations to accept commercial spent nuclear fuel now stored
at 72 locations across this country and to safely dispose of
that waste. While we had wanted that process to begin in 1998,
as the law in contract signed with nuclear utilities required,
further delay now seems likely. The ratepayers we represent
have done their part by paying, through their utilities, over
$24 billion in fees and interest over the past 2 decades.
Despite Congressional approval of Yucca Mountain in 2002,
meeting the 2010 latest waste-disposal target date is not
certain because the license-review process for the Yucca
facility has yet to begin.
While certain litigation by the State of Nevada has been
resolved, more litigation seems likely. And the biggest
obstacle may be that funding available for the repository
program may be inadequate to meet the necessary schedule.
While money should not be a hindrance to the repository
program, it has been, as a growing gap between fee revenue and
interest earned and annual appropriations. The repository
budget has been cut for the past decade, while revenue
continues to flow in, leaving a $16 billion in the Nuclear
Waste Fund that is basically inaccessible for its intended
purpose.
We believe a critical aspect of completing the Yucca
project is for Congress to reform the process by which moneys
from the Nuclear Waste Fund are made available for the program.
There are a number of acceptable ways for the current funding
problems to be resolved, so long as, the imbalance between
revenue and annual appropriations is brought to an end, and the
legislative change allows nuclear waste disposal to become a
reality.
The costs of delay are significant to the government and
utility customers. It is estimated by DOE to be $\1/2\ billion
for every year past 2010 for just the government waste. The
cost of commercial waste, for which DOE is also liable, is
surely that much, if not more, and it was mentioned today $500
billion a year. As a State regulator from a State that relies
on nuclear energy as a critical base-load resource, we have
seen firsthand how delays in Yucca are costing consumers.
In the case of WE Energies, we regulators have authorized
the utility to spend approximately $50 million for interim
storage facilities and dry-cast storage at its Point Beach
facilities for the past decade. In addition, if it is
relicensed, there will be even more dollars spent for interim
facilities. In the case of another investor-owned utility,
Wisconsin Public Service Corporation, they have not had to
invest in dry-cast storage to date because the original
facility was sized to host two plants. It may be required to
take measures to enlarge the storage facility, and it has at
the Kiwani Pool, and this is another interim measure, and dry-
cast facilities may be required if they seek relicensure.
Dairyland is a small facility on the banks of the
Mississippi River that has been retired for over 15 years, yet
Dairyland customers continue to incur costs for the storage of
spent nuclear fuel there. In fact, Dairyland is one of the
groups of nuclear operators, or former operators, who are
actively pursing a privately run central storage facility. All
of these real and potential expenditures are in addition to the
$350 million of principle paid through September 2005 that
Wisconsin ratepayers pay into the fund.
In summary, the lack of certainty over waste disposal
places a cloud over future nuclear generation in a very
volatile energy marketplace. The Nation needs to move forward
to assure the availability of safe, permanent disposal of
nuclear waste without further delay. We urge Congress to act on
effective reform of management of the Nuclear Waste Fund. Thank
you for giving me the opportunity to appear before your
committee, Mr. Chairman, and I am available for questions.
[The prepared statement of Hon. Robert Garvin follows:]
Prepared Statement of Robert Garvin, Commissioner, Public Service
Commission of Wisconsin
My name is Robert Garvin. I am a commissioner at the Public Service
Commission of Wisconsin (PSCW). I have served in that capacity for four
years. I also serve as the Chairman of the Subcommittee on Nuclear
Issues and Waste Disposal of the Electricity Committee of the National
Association of Regulatory Utility Commissioners (NARUC). As Chairman of
the NARUC Subcommittee that focuses directly on the issues that are the
subject of today's hearing, I am testifying today on behalf of that
organization. In addition, my testimony reflects the views of the PSCW.
On behalf of NARUC and the PSCW, I very much appreciate the opportunity
to appear before you this morning. The issues that you are addressing
in this oversight hearing are very important to NARUC's membership and
my State, and I am grateful to have this opportunity to present our
point of view concerning the progress of the Yucca Mountain project.
NARUC is a quasi-governmental, non-profit organization founded in
1889. Its membership includes the State public utility commissions
serving all States and territories. NARUC's mission is to serve the
public interest by improving the quality and effectiveness of public
utility regulation. NARUC's members regulate the retail rates and
services of electric, gas, water, and telephone utilities. We are
obligated under the laws of our respective States to ensure the
establishment and maintenance of such utility services as may be
required by the public convenience and necessity and to ensure that
such services are provided under rates and subject to terms and
conditions of service that are just, reasonable, and non-
discriminatory.
NARUC's goals in the nuclear waste area are well known and have
been stated before this and other Congressional committees on a number
of prior occasions. NARUC believes that the federal government needs to
meet its obligation under the Nuclear Waste Policy Act of 1982, as
amended, to accept spent nuclear fuel from utilities and other nuclear
generators in a timely manner. NARUC further believes that the nation's
ratepayers have upheld their end of the bargain struck in the Nuclear
Waste Policy Act by providing, either directly or through income
generated on prior payments, over $24 billion for use in constructing a
nuclear waste repository. Finally, NARUC believes that the Nuclear
Waste Fund should only be employed for its intended purpose and that
the monies in the Nuclear Waste Fund should be utilized, along with
appropriations from the Department of Defense budget, for the sole
purpose of supporting the opening of the Yucca Mountain facility in a
timely fashion. The basic principles underlying NARUC's approach to the
nuclear waste issue provide a solid foundation for future policy
decisions concerning the nuclear waste program.
The process of attempting to open a geologic repository for the
storage of high-level radioactive waste, including spent nuclear fuel,
has been a protracted one. As you know, the Nuclear Waste Policy Act
contemplated that the proposed repository would begin to accept waste
in 1998. Instead, over six years later, the Department of Energy (DOE)
is still engaged in the process of attempting to license, construct,
and open the proposed repository. In the meantime, the customers of the
nation's nuclear facilities continue to pay the required one mill per
kilowatt hour fee that is intended to finance the proposed repository
while, at the same time, continuing to bear the cost of on-site waste
storage as well. The nation's debt to these customers is long past due.
Moreover, the Administration indicated in its FY 2003 budget request
that it will cost $500 million annually to manage government high-level
radioactive waste at Department of Energy sites in the event that waste
acceptance at the proposed Yucca Mountain facility is delayed past the
previously scheduled 2010 opening date.
Finally, the federal courts have decided that the Department of
Energy has breached its statutory and contractual obligation to take
spent nuclear fuel by the date specified in the Nuclear Waste Policy
Act, thereby subjecting the nation's taxpayers to significant damage
liabilities that have yet to be quantified and that will continue to
increase with the passage of time. In evaluating the potential impact
of these liabilities on the federal budget, it is important to remember
that the United States Court of Appeals for the Eleventh Circuit has
determined that monies from the Nuclear Waste Fund may not be used to
pay any damages ultimately awarded to the nuclear industry for breach
of the Department of Energy's obligation to take nuclear waste
beginning in 1998.
While there is no agreed-upon estimate of the government's
liability for the added storage costs for commercial spent fuel that
will result from further delay in waste acceptance at Yucca Mountain.
Nonetheless, we can safely assume that the cost of delay relating to
commercial spent nuclear fuel is several times the cost of delay
identified for government material since there is nine times more
commercial waste than governmental waste. These factors make it even
more imperative to prevent further delay in opening the Yucca Mountain
facility.
The decision by the President and Congress to proceed with the
development of the Yucca Mountain facility in 2002 was gratifying to
NARUC and its members. The recommendation of the Yucca Mountain site by
Secretary Abraham, the President's decision to concur in the
Secretary's recommendation, and the Congress' decision to override
Governor Guinn's veto brought much needed attention to the nuclear
waste disposal issue. Despite this attention to these issues, the
passage of the Congressional resolution reaffirming the federal
government's commitment to the development of the Yucca Mountain
facility does not end the need for Congressional supervision of and
commitment to this program.
In other words, the adoption of the 2002 Congressional resolution
should certainly not lead to complacency on the part of any branch of
the federal government. The timely opening of the Yucca Mountain
facility is not, as this committee well knows, a fait accompli.
Although there is some current uncertainty over the date for the
submission of the repository license application, given the necessity
for Environmental Protection Agency to revise its radiation protection
rule for the repository to comply with a court decision announced last
summer, the Department of Energy has expressed its intention to submit
the license application by the end of this year. Frankly, from NARUC's
perspective, the biggest obstacle to the beginning of waste acceptance
at the proposed repository in accordance with the Department of
Energy's current schedule is the risk of inadequate funding during the
next few years.
As a result, NARUC believes that it is vitally important for
Congress to take certain specific steps on an expedited basis to ensure
that the Yucca Mountain facility opens without additional delay. Most
importantly, Congress should make adequate funds available for the
licensing, construction, and operation of the proposed facility. Unless
adequate money is appropriated for the Yucca Mountain project, the
proposed facility will not open in accordance with any schedule that is
ultimately adopted. This will result in increased costs to the federal
government, the nuclear industry, and the customers of the nation's
nuclear generators. Therefore, I repeat, the most important issue for
Congress to address in connection with the nuclear waste program at
this time is ensuring that adequate monies are appropriated for the
Yucca Mountain project.
The history of funding for the Yucca Mountain program is and has
been a source of concern to NARUC and its members. Over the past
decade, fee revenue has continued to flow into the Nuclear Waste Fund
at an ever-increasing level, a pattern that reflects improving nuclear
industry productivity. Earnings on the balance in the Nuclear Waste
Fund have grown to the point where they have exceeded fee revenue in
most years. In the face of this increase in the amount of available
resources, annual appropriations have consistently been reduced from
the amount requested by the present and past Administrations throughout
the last decade.
Although over $24 billion dollars has been collected for the
Nuclear Waste Fund from ratepayers to date, only about $7 billion has
been expended from the fund to support the repository program. This
reduces the likelihood that important milestones associated with the
repository program will be met, the most important of which is the date
upon which nuclear waste begins moving to the repository for storage.
Furthermore, spent nuclear fuel continues to accumulate in 72 locations
that were never intended to be indefinite storage facilities. Despite
the Nuclear Regulatory Commission's and the nuclear industry's
confidence that the present practice of storing spent fuel at reactor
sites is safe, NARUC agrees with former Secretary Abraham that
permanent storage of nuclear waste at the Yucca Mountain repository
would be more secure than on-site storage. NARUC also agrees with
former Secretary Abraham that the prospect of further delay in opening
the Yucca Mountain facility raises a serious homeland security issue.
The history of the budget process relating to the Civilian
Radioactive Waste Management program suggests that there is a risk that
past funding problems will continue in the future. The budget struggles
for this program over the past several years have resulted in hundreds
of millions of dollars in cumulative budget reductions. Further, each
year that the program operates under a continuing resolution the DOE
program managers are hesitant to make spending plans and commitments in
the beginning of those years. Last year, because the Administration
assumed that budget reclassification legislation would be enacted in
the same year it was proposed, it requested ``zero'' appropriations
from the Nuclear Waste Fund for FY 2006, resulting in the House
Appropriations Committee proposing only $131 million from the Defense
Nuclear Waste Fund as the total appropriation for that year. Except for
the Senate's failure to mark up the Energy and Water Appropriation bill
and the enactment of a continuing resolution funding the nuclear waste
program at the $577 million amount approved for the previous year, the
repository program might have faced fiscal calamity.
These funding difficulties need not persist. There is an obvious
solution to the funding problem. The government can sustain the
required level of spending for the repository program by using the very
funding mechanism contemplated in the Nuclear Waste Policy Act. The $16
billion balance in the Nuclear Waste Fund, which continues to grow
every year, provides more than enough money to permit the Department of
Energy to maintain the current schedule, assuming that these monies are
actually made available for use in the program. The real problem lies
in developing an approach to funding the Yucca Mountain program that
ensures that the monies paid in to the Nuclear Waste Fund by the
nation's electric ratepayers are actually devoted to the purposes for
which that fund was created. The best way to achieve that result is for
Congress to reform the process by which monies from the Nuclear Waste
Fund are appropriated for repository program activities.
As we understand it, the existing budget rules applicable to the
Yucca Mountain program make no distinction between monies appropriated
from the Nuclear Waste Fund and other general funds available to the
Department of Energy as a whole. As a result, any increase in the
amount appropriated for the program from the Nuclear Waste Fund
currently must be offset by decreases in expenditures for other
Department of Energy programs despite the fact that the nuclear waste
program is the only Department of Energy program that can be lawfully
appropriately paid for from the Nuclear Waste Fund. Although the
existence of such a limitation might constitute sound budgetary policy
in the event that all Department of Energy programs were supported
through general appropriations, such a limitation seems overly
restrictive given the Nuclear Waste Fund's status as a special fund
containing monies contributed by a specific group of Americans for use
in a particular way. As a result, NARUC believes that the key to timely
completion of the Yucca Mountain project is for Congress to reform the
process by which the monies from the Nuclear Waste Fund are made
available for use in connection with the repository program.
The manner in which the mechanics of the appropriations process
operate is, of course, a matter committed to the sound judgment of
Congress and not to an association of State regulators. There are
probably a number of acceptable ways for the current problem to be
resolved, ranging from modification of the existing budget rules to
making the needed reforms to the Nuclear Waste Fund. At this point, we
are willing to support a range of alternative methods for reforming the
appropriations process as long as the imbalance between the amount of
revenue entering the Nuclear Waste Fund and the amount of monies
actually expended from the fund in support of the repository program
ends.
Any reform, however structured, should ensure that future annual
appropriations are limited by the needs of the program rather than the
amount appropriated in the past, particularly given that past
appropriations were barely adequate for the study period and are
totally inadequate for the licensing, construction, and waste
transportation phases that lie ahead. There is no question about the
appropriateness of measures to assure that monies from the Nuclear
Waste Fund are spent wisely. Those measures, however, should not thwart
the entire purpose of the Yucca Mountain program. Assuming that
Congress believes that it should cap expenditures from the Nuclear
Waste Fund for budget oversight reasons, such expenditures should only
be capped at the sum of fee revenues and earnings on the balance of the
fund received in a particular year.
As we understand it, expected program needs, even in peak years,
should not exceed the total that would be available under the
application of such a formula. The Department of Energy projects that
$1.5 billion will be added to the Nuclear Waste Fund each year during
the remainder of this decade and that the Department of Defense budget
will provide additional appropriations each year toward the repository
program. For these reasons, there is no question that the amount of
money flowing into the Nuclear Waste Fund, coupled with adequate
support from the Department of Defense budget, will suffice to pay for
needed work on the Yucca Mountain program over the next several years
as we near initial repository operations.
Any reform proposal should also provide that increased expenditures
from the Nuclear Waste Fund for support of the repository program would
not necessarily result in the reduction of other Department of Energy
expenditures. That is because the funds used to support those other
programs come from a different source that is not directly tied to the
programs in question. A failure to reform the process by which monies
from the Nuclear Waste Fund are appropriated for use in the repository
program will condemn the Yucca Mountain program to additional years of
fiscal uncertainty and undermine the progress made by the 2002 decision
to approve the Administration's recommendation that the program go
forward.
NARUC was encouraged by the action taken by this subcommittee and
the Energy and Commerce Committee in developing and approving H.R. 3981
during the last Congress. Unfortunately, that bill was not taken to the
floor nor acted upon in the Senate. Nonetheless, the idea of reform was
advanced and we are encouraged that the effort could be renewed this
year. We were gratified by Chairman Barton's announcement last month
that he intended to introduce similar legislation again this year. At
its Winter Committee Meetings held nearly a month ago, NARUC adopted a
resolution, a copy of which is attached to this testimony. This
resolution urges enactment of legislation that has the effect of
reforming the budgetary process in order to ensure the timely
availability of sufficient funds to enable initial waste acceptance at
the repository in 2010 or whatever revised date DOE is currently
considers appropriate for initial waste acceptance.
The larger question of future access to the so-called ``balance''
in the Nuclear Waste Fund is certainly important, but it is not as time
sensitive as fixing the annual appropriations process. We also suspect
that tapping into that $16 billion balance will pose some difficulty
for Congress because that money has already been used for other
purposes so that the existing $16 billion fund balance is an ``I.O.U.''
that a future Congress will have to honor with dollars that can
actually be spent. We hope that our suspicions are unfounded and would
welcome an explanation that alleviates our concern.
We are equally uneasy about the ``investment returns'' that are
credited to the Fund. The investment return for FY 2004 totaled $1.3
billion, almost double the $732 million in fees collected from
utilities during the same period. It is frustrating to see abundant
resources reported as reserved for the nuclear waste program, while
also seeing annual appropriations that are consistently less than the
amount requested in the Budget because of the absence of sufficient
funds for the year. While NARUC would like nothing more than to be
assured that the Nuclear Waste Fund can be managed exactly as the
Nuclear Waste Policy Act envisioned, it is our sense that coupling such
a revision in the relevant appropriations rules with legislation
similar to H.R. 3981, which has a near-term horizon through 2010, could
put enactment of the more immediate reform at risk by trying to do too
much at once, even though we would be delighted if it could be done. In
other words, NARUC's highest priority is a practical near-term solution
to the most pressing problem faced by the nuclear waste program.
The nuclear waste program is of immense national importance. Having
overcome the political hurdle inherent in the vote on the joint
resolution in 2002 to move forward with the Yucca Mountain process, the
Congress should focus on ensuring that the means to complete the
process of licensing, constructing, and operating the repository are
made available to the Department of Energy. Nuclear energy is an
inevitable component of both our country's energy present and its
energy future. Congress recognized that fact when it enacted the
Nuclear Waste Policy Act two decades ago. Congress reaffirmed that
determination when it voted to proceed with the repository program in
2002. The nation needs to move forward to assure the availability of a
safe, permanent nuclear waste disposal site for future generations
without further delay.
The nation's electric ratepayers have been paying for a nuclear
waste repository for over twenty years. It is past time for the
ratepayers to get what they have paid for. The best way for Congress to
assure that this result occurs is to reform the process of funding the
repository program so that monies from the Nuclear Waste Fund are more
readily available for use connection with the Yucca Mountain facility.
We urge this committee and other relevant committees to make reforming
the use of the Nuclear Waste Fund a priority in this Congress, to
identify a way to provide stable financing for the program using the
ample revenue stream that is available for the purpose, and to enact
any legislation necessary to implement that decision.
Thank you for this opportunity to testify. I look forward to your
questions.
______
Resolution Supporting Reform of the Nuclear Waste Fund
WHEREAS, In 1982 the Nuclear Waste Policy Act established policy
that the Federal government is responsible for safe, permanent disposal
of all high-level radioactive waste, including spent nuclear fuel from
commercial power reactors; and
WHEREAS, Since 1983 ratepayers in States using nuclear-generated
electricity have paid over $23 billion in fees and interest, via their
electric utility bills, to the Nuclear Waste Fund (NWF) in the U.S.
Treasury in what was to have been a self-financed waste disposal
program; and
WHEREAS, Congress historically has only appropriated a small
fraction of the amount of revenue going into the NWF to develop the
waste repository--resulting in a balance in the Fund, now over $16
billion, which must be available to meet future disposal program needs;
and
WHEREAS, the Department of Energy, as recently as 2004, estimated
annual appropriations will need to average $1.3 billion from 2005-2010
to enable construction, waste package procurement and transportation to
meet the goal of initial waste acceptance in 2010--12 years past the
date set in 1982; and
WHEREAS, Previous attempts to address the gap between NWF revenue
and annual appropriations have been either embroiled in nuclear waste
politics or faced other insurmountable obstacles; and
WHEREAS, the National Commission on Energy Policy, in its 2004
report Ending the Energy Stalemate in its policy recommendations for
nuclear energy, says the ``Administration and Congress should act
immediately to reform the budget treatment of the Nuclear Waste Fund;''
now therefore be it
RESOLVED, That the Board of Directors of the National Association
of Regulatory Utility Commissioners (NARUC), convened at its February
2005 Winter Meetings in Washington, D.C., urges that the Department of
Energy again propose legislation to reclassify fees paid by utilities
to the Nuclear Waste Fund as discretionary offsetting collections equal
to the annual appropriations from the Fund or by other means that
achieves the result of having appropriations match Fund revenue, and be
it further
RESOLVED, That NARUC urges the 109th Congress enact legislation
this year that would enable total fee payments into the Nuclear Waste
Fund to be fully available as annual appropriations to finance the
civilian radioactive waste management program funding needs each year,
with any shortfall made up from the Defense budget, or the existing
balance in the Fund.
------
Sponsored by the Committee on Electricity
Adopted by the NARUC Board of Directors February 16, 2005
Mr. Shimkus [presiding]. Great. Thank you.
Now, we would like to recognize Mr. Theodore J. Garrish,
Deputy Director, Office of Strategy and Program Development,
Office of Civilian Radioactive Waste Management, Department of
Energy. Welcome, sir. Your full statement is in the record, and
you have 5 minutes to summarize.
STATEMENT OF THEODORE J. GARRISH
Mr. Garrish. Mr. Chairman, member of the subcommittee, I
appreciate the opportunity to testify today on the need for a
stable and efficient long-term funding for the program, to
implement our Nation's radioactive waste management policy. I
appreciate especially the subcommittee's recognition of
importance of this problem in program and the tremendous
support you have provided for us in the past.
As you know, the mission of the program is to safely
dispose of spend nuclear fuel and high-level radioactive waste
resulting from the Nation's commercial nuclear energy industry
and atomic defense activities, and it is vital to our national
interest. Some people believe that the department's ability to
fulfill its mission is in question, and they would suggest that
the program is unable to move forward. I would like to take
this opportunity, if I could, to tell the subcommittee that the
program is well situated and has never been in a better
position to do its job. Today, we are in excellent shape for
the future and are moving ahead step by step toward development
of a repository at Yucca Mountain.
Let me tell you why I am optimistic about the program.
First, we have an approved site for the repository. The Court
of Appeals affirmed the actions taken by the administration to
select Yucca Mountain, and we do have site for the first time.
Second, we have a draft of the entire license application,
nearly 5,000 pages, which is being refined and will be ready to
submit to the NRC by the end of this year. Third, the
transportation program in Nevada and throughout the country is
moving forward in earnest. The EIS is well underway, and the
date for completion is in site. And finally, the administration
continues its strong support of this program as we move
forward.
We are making progress on this vital mission, but let me
say that the current challenge is not so much technical as it
is financial. There is sufficient money in the Nuclear Waste
Fund, but the question is whether or not we will have access to
the fund when we need it. The essence of this problem is
simple. We had a deal between ratepayers and the Department of
Energy--they paid the fee for us to take the waste. And the
concept was that this was supposed to be self-financing. The
ratepayers have paid $22 billion thus far, and there is $16
billion in the fund; but access to the fund is limited because
of the budget process. We must compete for funds against other
DOE programs, even if the money is in the fund. The conclusion
is that we will never get the job done at the historical
appropriation levels.
Thus, the subject today is how to overcome this dilemma.
You ask a number of questions in your letter of invitation. You
ask about the funding profile, the administration's
recommendation, the challenges facing the program, and the
potential liabilities. Let me cover each of those for you.
First is the 10-year funding profile. The 10-year funding
profile is attached to my testimony, and as you can see, the
estimate in 2004 was between $9 and $10.5 billion to have the
repository operating. As you are aware, the Department is
reevaluating the program's out-year schedule due to the court
decision regarding EPA and the lack of funding legislation.
However, I am providing these two 10-year funding profiles that
are illustrative of preliminary planning estimates. These
profiles are based on a number of assumptions and must be
viewed as tools for discussion rather than as project
timetables.
One scenario has a 2012 start date. The other assumes a
2015 start date. Both profiles depict several years, during
construction, where funding requirements will exceed $1.5
billion. These higher dollars funding levels are 2 or 3 times
the annual funding the program has historically received. Over
the last 10 years, appropriations have ranged between $315
million and $577 million. This contrast between historic
funding levels and the substantially higher levels that would
be needed for construction brings home the point that something
must be done to ensure that we will receive appropriations
above historic levels. The provisions for funding and fee
collection in the Nuclear Waste Policy Act were intended to
ensure that adequate funds were available when needed. This
approach worked until 1991, when the budgetary laws were
changed to the current situation, where receipts are included
on the mandatory side of the budget and appropriations are on
the discretionary side. As a result, instead of having full
access to the Fund, the Nuclear Waste Office must compete
against other DOE priorities to receive adequate funds. That is
a critical issue which must be solved. Originally, the Nuclear
Waste Fund was conceived to be self-financing and the funds
available. Both the Congress and the administration have been
aware of this problem for a number of years and have expressed
the need for funding reform to solve the problem.
Your second question was the administration's
recommendation for a solution. We believe that a solution that
would satisfy this problem is one that would support
reclassification of fees paid by ratepayers and deposited by
utilities into the Nuclear Waste Fund, making them
discretionary fees, and allowing them to be used as offsetting
collections. This allows their use to offset the increased
appropriations needed. This approach has been recommended
several times in the past, and we believe it is a viable
solution.
I appreciate your recognition of this problem. In past
sessions, you have been very supportive in solving the issue in
similar ways, and Congressman Shimkus has a bill to that effect
in the last Congress.
The third question you asked is what are the consequences
if we don't act? And I think this is really the important
question that I would like to emphasize. You asked for me to
describe the challenges that funding shortfalls would impose on
the repository program in coming years. My answer is as
follows: without full access to the Nuclear Waste Fund, either
through appropriations or reclassification, I believe the
program can complete the license process and continue as it has
in the past, but we will not have sufficient funds to construct
the repository, nor will we be able to construct the Nevada
railroad, nor acquire the equipment to transport the materials
to the facility in a timely fashion. Nuclear waste will remain
at sites near communities and water supplies around the
country, and we will not have finished the job of cleaning up
the cold war legacy. Therefore, we have reached a crossroad. We
have made substantial investment in a repository, to date, and
we have positive results, and now we must finish the job.
While the fee income continues to flow into the Nuclear
Waste Fund, there is a continuing expectation and obligation
that we will use this money to finish the job and dispose of
waste in manner directed by the Congress in the Nuclear Waste
Policy Act.
Your last question, you ask what are the liabilities if we
fail to act? I believe that a number of witnesses have already
testified, and you have seen the numbers, that the estimate is
between--$2 and $3 billion total liabilities through 2010, and
the rate now for liability will be approximately $500 million
per year for the utility lawsuits. About 60 are pending
currently.
Before I conclude my remarks, I would just like to address
one other issue. Many people have been concerned in the past
over the corpus of the Nuclear Waste Fund and whether that
corpus will be available when it is needed. I know there is
significant concern over this issue; however, I believe that
the Nuclear Waste Fund is adequately protected by the
provisions of the Nuclear Waste Policy Act and the cases
related thereto. Section 302(D) of the Act states that
expenditures from the Fund can only be used as stated in the
Act. A 2002 court case, Alabama Power v. DOE, affirmed that the
Nuclear Waste Fund can only be used for these purposes. In my
judgment, both the law and the Alabama Case provide protection
for the fund's future use, and the corpus can only be used for
the purposes enumerated in the Act.
I conclude with one important thought: the utility
ratepayers have paid the government for disposal services
agreed upon in their contracts with the government. There is a
balance of $16 billion in the U.S. Treasury of ratepayer fees
paid with interest and $750 million per year coming into the
fund. Failure to provide a stable mechanism for access to these
funds is inconsistent with the intent of the Act and 20 years
of public policy on this issue. The estimates of billions of
dollars that taxpayers will pay in damages should compel a
solution. The administration is prepared to work with the
Congress on coming up with an appropriate way to deal with this
problem, and I thank you for your interest in this vital
program and look forward to your questions. Thank you.
[The prepared statement of Theodore J. Garrish follows:]
Prepared Statement of Theodore J. Garrish, Deputy Director, Office of
Civilian Radioactive Waste Management, U.S. Department of Energy
Mr. Chairman and members of the Committee, I am Ted Garrish, Deputy
Director of the Department of Energy's (DOE) Office of Civilian
Radioactive Waste Management (OCRWM). I appreciate the opportunity to
testify about the need for stable and sufficient long term funding for
the Department of Energy's program to implement our Nation's
radioactive waste management policy, as established by the Nuclear
Waste Policy Act of 1982, as amended.
The mission of the Program--to safely dispose of spent nuclear fuel
and high-level radioactive waste resulting from the Nation's commercial
nuclear power and atomic energy defense activities--is vital to our
national interest. The success of the program is necessary to protect
public health and safety and the environment, to maintain our energy
options and national security, to allow the cleanup of former weapons
production sites, to continue operation of our nuclear powered naval
vessels, and to advance our international non-proliferation goals. The
implementation of the Nation's radioactive waste management policy will
consolidate spent nuclear fuel and high-level waste from 125 sites in
39 states at a single secure, remote location in an arid desert, far
from cities, schools and water supplies.
The Administration and Congress recognized these important national
benefits and supported the Department's geologic repository program
when the Congress voted to pass the joint resolution approving the
Yucca Mountain site for a repository and the President signed that
resolution into law in 2002. With the site approval, the program's
focus shifted from scientific study to the design, licensing and
construction of a repository. As you are aware, to accomplish these
objectives substantial funding is necessary.
I am here today to discuss your concerns regarding the long-term
financial viability of the program. Specifically you requested I
discuss 1) the funding profile for the repository program for the next
ten years; 2) the need for reforming the Nuclear Waste Fund to ensure
proper availability of funds to support the project; 3) the challenges
facing the repository program due to funding shortfalls; and 4) the
potential liability facing the federal government due to pending
lawsuits.
the funding profile \1\ for the next ten years
---------------------------------------------------------------------------
\1\ These ``Total Program'' funding profiles are for illustrative
purposes assuming a 2012 or 2015 date for the start of repository
operations and are based on several critical assumptions, such as,
Total Program funding, the EPA radiation protection standard is in-
place by December 2005, and the start of construction of various non-
nuclear items, such as the Nevada rail line before receipt of NRC
construction authorization. Many of these policy decisions have not yet
been made and as such these profiles do not represent any decisions
regarding Administration policy.
---------------------------------------------------------------------------
The Department's 2004 estimate for the total amount of funds that
are needed for the program from Fiscal Year 2005 through the opening of
the repository was between $9 and $10.5 billion. As you are aware, the
Department is re-evaluating the program's out-year schedule due to the
Court's decision regarding the EPA standard and the lack of funding
legislation. As you requested, I am providing ten-year funding profiles
that are only preliminary planning estimates, subject to revision.
These estimates do not represent final policy decisions that have yet
to be made by the Administration. It should be noted that, if stable
and adequate funding is not provided each year, the program's schedule
and costs will be significantly impacted. Attached to this testimony
are charts of the program's preliminary estimated ten-year funding
profiles for both 2012 and 2015 assumed start dates for repository
operations.
RECOMMENDATION FOR REFORMING THE NUCLEAR WASTE FUND TO ENSURE FUNDS
To meet the demand for increased funding the Administration has
recommended alternative funding proposals for the Program in the last
three Presidential Budgets and supports legislation to enact a proposal
to reclassify receipts to the Nuclear Waste Fund as discretionary
offsetting collections. The Administration remains committed to
pursuing an alternative funding mechanism for the repository program
and I hope further discussions on the issues raised today can result in
progress on this important and necessary measure.
The Nuclear Waste Funding Problem
Since 1983, a quarterly fee has been and continues to be paid by
utilities who produce nuclear electricity to fund the development of a
repository for disposal of their spent nuclear fuel. According to
Section 302(d) of the Nuclear Waste Policy Act, the money is to be
collected for one purpose and one purpose only--performance of
``nuclear wastedisposal activities'' through the development and
operation of a repository. In actuality, much of the fees collected to
date sit unused in the Nuclear Waste Fund. The current procedure used
to score Nuclear Waste Fund revenues does not encourage the
appropriation of the full amount of the fees received annually because
the receipts do not directly offset the appropriation for the
repository program.
The Department has entered into legally binding contractual
agreements mandated by Congress in the Nuclear Waste Policy Act with
the nuclear utilities to accept their spent nuclear fuel on a specific
schedule. The Department is legislatively required to begin accepting
the spent fuel for disposal beginning by January 31, 1998, and these
contracts with the utilities reflect that schedule in exchange for
utilities' payment of the fee. The fact that fees are a quid pro quo
payment in advance for a contractually required service to be performed
by the federal government--a legal obligation affirmed by the federal
courts--sets it apart from most other federal user charges and taxes
and justifies special consideration in the budget process.
The fees are deposited into the Nuclear Waste Fund and intended to
be used to pay the full cost of developing and operating the facilities
needed to meet the federal government's commitment to conduct nuclear
waste disposal activities mandated by the Nuclear Waste Policy Act. The
Nuclear Waste Fund was established to ensure that the Department of
Energy's commercial spent fuel disposal program would have the funds it
needed, as it needed them, to get the job done, and also to ensure that
the federal taxpayer did not pay for this waste disposal program.
The utilities and their ratepayers have been keeping their part of
the bargain since 1983. Unfortunately, the federal appropriations
process is increasingly constraining the ability of the federal
government to do its share. Because the fee revenues are classified as
mandatory receipts under budget control legislation, they are treated
just like general tax revenues and deposited into the federal treasury,
resulting in no incentive for the Congress to use the full amount of
annual receipts. As far as the millions of utility ratepayers are
concerned, the fee appears to be just one more federal tax rather than
a payment to ensure the delivery of a contracted service.
Over the last ten years, ratepayers of nuclear utilities have
averaged annual payments into the Fund of about $636 million, while
annual appropriations from the Fund have averaged $198 million. The
total unspent balance in the Fund with interest is over $16 billion.
Until recently, the repository program's requirements were
substantially below the annual fee revenues. However, that situation is
changing. Beginning in FY 2007, program requirements are projected to
equal or exceed projected income from the fee. To ensure that the waste
fee revenues are fully available for their contractually required
purpose, a new approach is necessary.
Administration Position
The program needs stable and sufficient long term funding to
implement our Nation's radioactive waste management policy. The
Administration believes that the fees currently paid by utilities to
finance the repository should be treated as offsetting collections
against the appropriation from the Nuclear Waste Fund. The amount
credited as offsetting collections should not exceed the amount
appropriated for the repository.
This approach would allow Nuclear Waste Fund revenues received from
utility contract holders in a given year, up to the amount appropriated
for that year's nuclear waste disposal activities, to be reclassified
from mandatory receipts to discretionary collections and available to
directly offset appropriations from the Nuclear Waste Fund. The amount
credited as offsetting collections would be subject to appropriations
made in an Appropriation Act. Appropriations up to the amount of
receipts could be provided without reducing the funding available for
other federal programs.This approach outlined in the 2005 Budget to
allow fee revenues to be reclassified from mandatory receipts to
discretionary collections is not new or unique. In fact, the trend in
the federal budget has been to offset against outlays in many areas.
Many other federal activities that generate user charges are treated
this way already. A few examples are the Nuclear Regulatory Commission,
and the Department of Energy's major power marketing activities. This
change would simply be a technical correction that would bring the
funding of the radioactive waste program into line with other practices
in the federal budgeting process. It is particularly appropriate that
revenues from the Nuclear Waste Fund be made available as needed
because, as stated previously, it is one of the few cases in which the
federal government is, by law, contractually obligated to performthe
service for which the fee is being paid.
Reclassification of the fees does not reduce Congressional control
of the program's budget in any way. The Administration will still need
to request and the Congress will still have to appropriate the funds,
as required by the Nuclear Waste Policy Act.
Questions have been raised as to whether the Office of Management
and Budget has authority to reclassify the fees through administrative
action. It is my understanding that, if the Administration were to
unilaterally reclassify the fees through administrative action, it
would be a departure from past practice but does not appear to be
prohibited by law. Nonetheless, if the Administration were to
reclassify the fees unilaterally, it is my understanding that the
Budget Committees and the Congressional Budget Office would have to
make the same change. Absent the Budget Committees' concurrence with
such an administrative action, the administrative fee reclassification
would not be reflected in congressional scoring of appropriations
actions.
I believe a new approach would help assure stable and sufficient
funding so the program to can build and operate a repository for the
Nation.
CHALLENGES FACING THE REPOSITORY PROGRAM DUE TO FUNDING SHORTFALLS
Without a change to the funding mechanism, program funding
shortfalls are likely. Such shortfalls, in turn, will cause significant
delays in repository construction and eventual operations, will limit
progress, and will threaten the very existence of the repository.
Everyone loses if this funding problem is not solved. Since 1995
both the Administration and Congress have been aware of the constraints
the budget process imposes on the Nuclear Waste Fund. Both Branches
have expressed the need for funding reform.
If a change is not made, the government will be forced to spend
billions of additional dollars in added liability costs without solving
the waste problem, since the repository will be extremely difficult to
open in any near-term timeframe. Nuclear waste will remain at sites
near communities and water supplies throughout the country, and we will
not have finished the job of cleaning up the Cold War legacy at defense
sites.
POTENTIAL LIABILITY DUE TO PENDING LAWSUITS
The government's need for a funding change for the repository
program, unlike many other Federal programs, is driven by the highly
unusual contractual arrangement required by the Nuclear Waste Policy
Act. Whenever the Federal government, pursuant to an explicit statutory
requirement, makes a legally binding contractual commitment to perform
a well-defined service in exchange for payments that cover the costs of
that service, it should treat those payments in a way that ensures that
they are used for the statutorily-specified contracted purpose.
The Federal government is contractually obligated to perform the
service for which Nuclear Waste Fund fees are paid. About 60 lawsuits
are pending in the U.S. Court of Federal Claims for damages for failure
of the government in 1998 to meet that obligation. The Court of Appeals
has already established liability in some of the cases. The passage of
legislation to help assure adequate funding for the waste program would
send a strong signal to the ratepayers and utilities that the Federal
government is indeed serious about meeting its obligations.
The Department has estimated that the damages due commercial
utilities for the Department's delay in accepting waste in 1998 could
be approximately $2-$3 billion, if the Department began operations in
2010. Without funding legislation and a decision on the EPA standard,
each year of delay after 2010 could cost the government an additional
$500 million in damages.
Some argue that because of federal budget constraints, now is not
the time to increase appropriations for the waste program, much less to
make changes in the budgetary treatment of the waste fee. If past
decisions are any guide, federal courts are not likely to accept
funding limitations as an excuse for failure to meet contractual
obligations.
STATUS OF THE PROGRAM
Now, let me focus on current program activities. Recently, there
have been comments that the Program has serious problems. On the
contrary, the Program is well situated for the future. We are moving
ahead deliberately, step-by-step, toward development of a geologic
repository at Yucca Mountain. Here are some of the reasons why this
Program is poised for success:
We have an approved site for the geologic repository. Congress
approved the Yucca Mountain site in Nye County, Nevada for
development as a repository in 2002. Lawsuits have affirmed the
constitutionality of the process; therefore, we have a location
for the development of a repository site.
We have a draft of the entire license application in the process of
refinement. We are making improvements to the analysis and
presentation of information, with the objective of completing
preparation of a high quality license application by the end of
this calendar year.
Transportation activities have begun in earnest. We issued Records of
Decision for both transportation mode and the rail line
corridor through Nevada. We are currently preparing an
Environmental Impact Statement for the specific rail alignment
within that corridor. Institutional activities to include the
States as partners have also begun.
We are requesting the full funding amount necessary to complete those
tasks we can reasonably accomplish in FY 2006. The Department
will continue to request annual funding appropriate to meet
project requirements.
The Administration continues its strong support of the Program as we
move forward with its implementation.
This program does, however, face challenges involving parties
outside the Department that I would like to note.
First, the U.S. Court of Appeals for the District of Columbia
Circuit vacated the Environmental Protection Agency's Yucca Mountain
radiation protection standard with regard to its 10,000 year regulatory
compliance period. EPA is currently working to revise its Yucca
Mountain radiation standard to conform to the court's direction. We
remain optimistic that EPA's work in promulgating the standard will be
contemporaneous with our work on the license application and that both
will be ready by the latter part of the year.
The second challenge is being addressed today--the need for
sufficient and stable longterm funding for the Program. Currently,
there is no incentive in the budget scoring process for Congress to
appropriate the full Administration request and to use all of the
Nuclear Waste Fund fee receipts to construct the Yucca Mountain
repository.
Despite these challenges, the Program is fundamentally on sound
footing and we are poised to make significant progress in the coming
year.
Consistent with Departmental and Program objectives, the Yucca
Mountain Project's main focus in FY 2005 is on improving and completing
the license application. The required elements of design, performance
assessment, safety analyses, and technical data in the license
application must be sufficient for the NRC to conduct an independent
review and reach a decision to issue a construction authorization. The
application must demonstrate that the repository can be constructed and
operated and that the health and safety of the public will be
protected.
CONCLUSION
We are committed to the goal of beginning to receive and transport
spent nuclear fuel and high-level waste to an NRC-licensed repository.
Toward that end, our objective is to complete a high-quality license
application and have it ready to submit to the NRC in December of this
year.
The Administration believes that the fees currently paid to the
government by utilities to finance the repository should be treated as
offsetting collections against the appropriation from the Nuclear Waste
Fund. We will continue to work within the Administration and with our
Congressional counterparts to provide the funding needed to meet Yucca
Mountain's programmatic requirements.
I appreciate the efforts of the Committee to explore ways to
properly align the Nuclear Waste fees with the expenditures for Yucca
Mountain. We appreciate your holding this hearing to address the
Program's need for stable and sufficient long-term funding.
This concludes my prepared statement. I will be pleased to respond
to any questions the Committee may have.
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Mr. Shimkus. Thank you for your testimony. And as a former
high school teacher, we have got some young high school
students back there, and it is probably an interesting--
probably a little boring. But when I taught high school, in the
civics books was the discussion of Yucca Mountain, which would
have been 20 years ago. And for the students out there, the
basic premise is this: we have agreed to take high-level
nuclear waste and put it at Yucca Mountain, underneath a
mountain in the desert. And the question we are debating now is
how do we pay for current construction of the facility. And it
deals with budgets and all of these other issues, and we tried
to address that last year--we did get derailed last year on the
process, hence the legislation and movement, and hence this
hearing.
You did, at the end, Mr. Garrish, at the end of your
statement, talk about the litigation aspects a little bit, so
my questions kind of follows along with some of your comments
there. In 2004, the government reached a settlement agreement
with Exelon Corporation for $80 million in fiscal year 2005 and
a total of $300 million to cover damages to date, resulting
from the government's failure to meet the contractual deadline
of January 1998 for initial fuel acceptance included in the
Nuclear Waste Policy Act. Over 50 additional lawsuits from
utilities to cover such damages are pending in the court. DOE
estimates that these damages could cost approximately $500
million per year. The industry estimates that the costs are
closer to $1 billion per year. These costs will grow with
further delays in the program. Is the cost of the Exelon
settlement included in the budget? And if it is, where is it
located?
Mr. Garrish. No, Mr. Chairman. The cost for the Exelon
settlement is paid for out of the Judgment Fund. Now, that is
included, ultimately, in the budget, but it is not included in
the same fashion that you are suggesting.
Mr. Shimkus. Correct. Thank you. Are the potential
additional costs associated with other suits incorporated in
the administration's budget projections?
Mr. Garrish. There are no projections for future
liabilities in government projections. In other words, the
judgment fund does not contain those projections for reasons
related to litigation strategy.
Mr. Shimkus. So we need to resolve this issue so that these
litigations do not continue in the future?
Mr. Garrish. I think that is an important point. When you
are paying $500 million-plus for your utility litigation and
there are increased costs in the same range related to the
defense waste, and DOE must store those wastes or make other
provisions you are looking at $1 billion a year in costs for
failure to complete the job. It would seem to me that a good
bargain at this stage would be to finish the job and do it
right, eliminate the damages, and move forward.
Mr. Shimkus. And I can't speak for the industries, but they
may be less intent on pursuing their lawsuits if we are showing
good-faith efforts in moving forward and developing the
repository and receipt of the promised high-level nuclear
waste.
Mr. Garrish. Well, I have to say I think their lawyers are
very aggressively pursuing these cases, so that may be true,
but I am not sure that that is evident in the courts.
Mr. Shimkus. The OMB budget estimates show that the
interests earned on the Nuclear Waste Fund in fiscal year 2004
was $1.3 billion. How is that income scored in the budget?
Mr. Garrish. I am not sure it is that high, but I believe
that it is at least $750 million.
How is it scored? It is scored like a mandatory receipt, so
it goes immediately into the fund. In other words, that
treatment is exactly the same as the treatment for the fee.
Mr. Shimkus. For the fee? For it is going--it is added to
the fund----
Mr. Garrish. That is correct.
Mr. Shimkus. [continuing] whether it is $700 or $1.3
billion.
Mr. Garrish. Yes.
Mr. Shimkus. If we would move on--if my numbers are correct
or your numbers are correct, and if we moved on addressing the
interested earned as being directed to the Yucca Mountain, that
would obviously give us a stream of funds that would be well
received if not--we would probably, in some instances, as your
testimony stated, need in excess, if it is $700 million. And if
it is $1.3, it is probably in some of the worst-case scenarios
for dollars it needs in a year to move to recede.
Mr. Garrish. Well, I don't believe that we have addressed
the interest question. Thus far we have only addressed the fee
part of the Waste Fund. That would be a matter that we would
have to continue to examine.
Mr. Shimkus. Well, what actions would be required from us
or you to address those earnings on the interest earned?
Mr. Garrish. Well, I think that the earnings have the same
problem as the fee; in other words, it goes into the fund. We
still have to figure out a way in the budget process to either
classify them differently or to figure out some way to get the
appropriations out of the fund.
Mr. Shimkus. Great. Thank you. That is all the questions I
have. I now turn to my colleague Mr. Boucher from Virginia.
Mr. Boucher. Thank you very much, Mr. Chairman. Mr.
Garrish, Mr. Garvin, thank you for your comments here today.
Mr. Garrish, I understand that the Department of Energy
missed its original target of December 2004 to file for a Yucca
Mountain license with the NRC. Why did you miss the target and
when do you intend to apply now?
Mr. Garrish. Okay. There were two reasons for that, and the
principal reason was that on July 9 the Court of Appeals
vacated the EPA's radiation standard and directed the EPA to
have it remanded and to resubmit it back through the process.
As a result, there was no standard in place for us to judge the
license application by.
Now, we are in the process of completing our license
application. The EPA is in the process of the completing of its
promulgation of the standard, and they have indicated that they
will have something published in draft form sometime, either
late Spring or early Summer. The Department is anticipating
that we will proceed with the development of our license
application to have it ready to submit by the end of this year,
and we are assuming that our work will be contemporaneous with
EPA, although that is an issue that they will have to determine
when it is appropriate to finally publish. But the principal
reason why we did not file a license application was the remand
of that standard. There was a second reason that is related to
the licensing support network, which is a discovery issue. We
have to provide to the NRC a complete set of all of the
documentation that we will rely on, all of the documentation
that does not support our case, and all of the scientific
materials have to be put into an electronic form and made
available to the public. A board of the commission determined
that there were some archival records which we had not included
in that collection, which required us--to be made available at
the same time with the certification. As a result, we cannot
file our license application until 6 months after this
licensing support network is certified. So as a result of
having our certification overturned, we have to complete the
certification process; and once that is done, then we have to
wait an additional 6 months before we are able to actually do
our filing. We anticipate that it will be completed by this
Summer and we will have our licensing-support network in place
and certified.
Mr. Boucher. And so you anticipate, now, filing the end of
this year, so you are essentially losing a year on the process?
Mr. Garrish. Well, we are intending to file. We will have
our work completed.
Mr. Boucher. All right.
Mr. Garrish. And in other words, I think the concept is we
want to wait for the Environmental Protection Agency to
complete its work. We are hopeful that they will be able to do
that.
Mr. Boucher. Okay.
Mr. Garrish. We will have our part of this done.
Mr. Boucher. Okay. Thank you.
As I perceive your testimony, you are recommending that we
address the budget problems we are having with accessing the
fund by administrative means, by having the Office of
Management and Budget reclassify these fees, administratively.
However, that is only an effective remedy assuming the
concurrence of the Congressional Budget Office and assuming the
concurrence of the budget committees in the House and in the
Senate, and that is part of where we are having our current
difficulties. So how effective do you think this remedy you are
recommending is going to be at the end of the day? Do you have
any reason to suggest to us that will be more effective than
the status quo?
Mr. Garrish. Now, Mr. Boucher, maybe I gave the wrong
impression. I don't believe that we are suggesting that we
would administratively reclassify. I am suggesting that a
reclassification needs to be undertaken, and the one way that
that can be accomplished is through legislation.
Mr. Boucher. Are you recommending the legislation? I
perceived you were suggesting that OMB accomplish this
reclassification, administratively. Am I incorrect in that
understanding?
Mr. Garrish. Yes, sir.
Mr. Boucher. Okay. So you are recommending legislation for
that?
Mr. Garrish. I believe in order to be fully effective--if
this is done administratively, there are number of bodies that
have to concur, or else the----
Mr. Boucher. Understood. And so you are actually
recommending that we accomplish this reclassification,
legislatively?
Mr. Garrish. Yes, sir.
Mr. Boucher. That gives me a great deal of more confidence.
Do you have an outline of the legislation that you would
recommend to us?
Mr. Garrish. Well, I believe what we supported last year
and what was introduced and what Mr. Shimkus supported, I
believe that we----
Mr. Boucher. That would be the same thing?
Mr. Garrish. The same basic ideas. We would support the
same sorts of concepts. We would like to talk those through
with you to see if we can get some agreement, and we could move
something along.
Mr. Boucher. That is very helpful. Thank you very much.
Thank you, Mr. Chairman.
Mr. Shimkus. Thank you. I would like to address additional
questions to Mr. Garvin, if I may.
In this debate--of course, Illinois being a high nuclear
state, we don't have a Federal onsite location for high-level
nuclear waste, which means they are located onsite. With DOE's
schedule for Yucca Mountain slipping yet again, what reactions
do you anticipate from public utility commissioners around the
country?
Mr. Garvin. Well, right now, if you are a regulator, it is
a tough time to be in our seats because of the rising energy
costs. And by not addressing this issue, ultimately, it is
going to cause greater pressure on customer's bills, which is
what our concern is.
We have three active units in Wisconsin. One is inactive,
like I mentioned in my testimony. But it is a major deal. These
are large, rate-based facilities that have significant capital
costs, and by coming up with these type of interim, dry-cast
storage, that is just another, additional, added cost to
service on top of the current dilemma, which is customers
paying into this fund, but not getting any return out of it. So
it exacerbates it.
Mr. Shimkus. Do you know of any commissions that are
considering withholding Nuclear Waste Fund payments and placing
it into an escrow account?
Mr. Garvin. Well, we discussed that at our winter meeting
last month, here in Washington, with two lawyers who gave us
sort of the pros and cons of that, of how aggressive you want
to be. I think the legal answer is, first, State commissions
are not parties to those contracts. And I think there is a
little reluctance--and I want to speak for the industry on some
of the operators to actually do that because they could be
deemed in breach of their license. There is that right. And
there is all of the other litigation consequences that go with
there. So there is discussion. It seems like the simple thing
to do from a practical purpose, but legally, people are a
little gun-shy to do that.
Mr. Shimkus. And finally, have any commissions considered
denying recovery by utilities of costs associated with
additional onsite storage of spent fuel as a result of DOE's
delay?
Mr. Garvin. Not that I am aware of. We have, just through
regular construction authorization, authorized the construction
of those facilities. And then once a State commission
authorizes those type of activities, it is generally deemed as
a prudent expenditure and will be included in the rates.
Mr. Shimkus. Great. Thank you. Mr. Boucher, do you have any
additional questions? Seeing no other members, I will call this
hearing adjourned. Thank you very much.
[Whereupon, at 3:57 p.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows:]
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