<DOC>
[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:58494.wais]
WORKER SAFETY AT DOE NUCLEAR FACILITIES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
of the
COMMITTEE ON COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
JUNE 29, 1999
__________
Serial No. 106-43
__________
Printed for the use of the Committee on Commerce
U.S. GOVERNMENT PRINTING OFFICE
58-494 CC WASHINGTON : 1999
COMMITTEE ON COMMERCE
TOM BLILEY, Virginia, Chairman
W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas RALPH M. HALL, Texas
FRED UPTON, Michigan RICK BOUCHER, Virginia
CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio FRANK PALLONE, Jr., New Jersey
Vice Chairman SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania BART GORDON, Tennessee
CHRISTOPHER COX, California PETER DEUTSCH, Florida
NATHAN DEAL, Georgia BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma ANNA G. ESHOO, California
RICHARD BURR, North Carolina RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California BART STUPAK, Michigan
ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York
GREG GANSKE, Iowa THOMAS C. SAWYER, Ohio
CHARLIE NORWOOD, Georgia ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma GENE GREEN, Texas
RICK LAZIO, New York KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming TED STRICKLAND, Ohio
JAMES E. ROGAN, California DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona LOIS CAPPS, California
CHARLES W. ``CHIP'' PICKERING,
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland
James E. Derderian, Chief of Staff
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Oversight and Investigations
FRED UPTON, Michigan, Chairman
JOE BARTON, Texas RON KLINK, Pennsylvania
CHRISTOPHER COX, California HENRY A. WAXMAN, California
RICHARD BURR, North Carolina BART STUPAK, Michigan
Vice Chairman GENE GREEN, Texas
BRIAN P. BILBRAY, California KAREN McCARTHY, Missouri
ED WHITFIELD, Kentucky TED STRICKLAND, Ohio
GREG GANSKE, Iowa DIANA DeGETTE, Colorado
ROY BLUNT, Missouri JOHN D. DINGELL, Michigan,
ED BRYANT, Tennessee (Ex Officio)
TOM BLILEY, Virginia,
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Card, Robert G., President, Kaiser-Hill Company, L.L.C.,
Rocky Flats Environment Technology Site.................... 82
Hall, Lincoln E., Vice President for Operations, Energy &
Environment Sector, Lockheed Martin Corporation............ 95
Jones, Gary L., Associate Director, Energy, Resources and
Sciences Issues, accompanied by William Swick, Assistant
Director for Energy Issues, General Accounting Office...... 7
Michaels, David M., Assistant Secretary for Environment,
Safety and Health, accompanied by Keith Christopher,
Director, Office of Enforcement and Investigation,
Department of Energy....................................... 13
Miller, Richard D., Policy Analyst, Paper, Allied-Industrial,
Chemical and Energy Workers Union.......................... 55
Sussman, Arthur M., Vice President, Argonne National
Laboratory, University of Chicago.......................... 68
Van Ness, Robert L., Senior Vice President, University of
California................................................. 61
Material submitted for the record by:
Michaels, David M., Assistant Secretary for Environment,
Safety and Health, Department of Energy, responses for the
record..................................................... 108
(iii)
WORKER SAFETY AT DOE NUCLEAR FACILITIES
----------
TUESDAY, JUNE 29, 1999
House of Representatives,
Committee on Commerce,
Subcomittee on Oversight and Investigations,
Washington, DC.
The subcommittee met at 11 a.m., in room 2125, Rayburn
House Office Building, Hon. Fred Upton, (chairman) presiding.
Members present: Upton, Burr, Bilbray, Whitfield, Bryant,
Klink, Stupak, and Strickland.
Staff present: Mark Paoletta, majority counsel; Dwight
Cates, investigator; Edith Holleman, minority counsel; and Penn
Crawford, legislative clerk.
Mr. Upton. Thank you everyone for coming. With the end of
the cold war, the Department of Energy's nuclear weapons
production responsibilities have subsided. The risk of exposure
to radioactivity at DOE nuclear facilities, however, has
increased for thousands of workers now engaged in the clean up
of the nuclear weapons complex.
In addition to DOE's remaining weapons research and
production responsibilities, nuclear activities at DOE
facilities now include decontamination of nuclear reactors,
stabilization and safe storage of spent nuclear fuel, and clean
up of radioactively contaminated soil and groundwater.
Significant occupational risks associated with these
activities are not regulated by the NRC or OSHA. Currently we
rely on DOE to self-regulate nuclear and industrial safety at
its facilities. Accordingly, in the absence of external
regulation it is critical that DOE establishes a credible and
effective worker safety program.
Today's hearing will focus on DOE's efforts to hold its
contractors accountable for protecting workers engaged in
nuclear activities at DOE facilities as required by the Price-
Anderson Amendment Act of 1998. We will also review whether
nonprofit, educational institutions that manage many DOE labs
should continue to be exempt from paying civil penalties for
nuclear safety violations.
In 1957 Congress enacted the Price-Anderson Act which
indemnified private companies engaged in nuclear activities
from financial liabilities associated with any damage or injury
caused by nuclear accidents. Price-Anderson Amendments Act of
1988 reauthorized and expanded this indemnification, but in
light of significant safety problems uncovered at DOE
facilities Congress also required DOE to impose civil penalties
on indemnified DOE contractors that violate nuclear safety
rules.
At the same time Congress exempted several educational
institutions including the University of California, Los
Alamos, and Lawrence Livermore in the University of Chicago at
Argonne Labs from paying these civil penalties due to their
nonprofit status.
Established in 1996, DOE's Office of Enforcement and
Investigations which reports to the Assistant Secretary for
Enforcement, Safety, and Health is responsible for
investigating nuclear safety violations and imposing civil
penalties or other corrective actions when appropriate. DOE
relies on its contractors to identify and report on nuclear
safety violations when they occur.
In determining whether enforcement action is necessary DOE
considers the safety significance of the violation, the
contractor's willingness to take corrective action, the
contractor's ability to pay, and prior history of other
violations.
DOE will frequently decline enforcement action when a
contractor quickly identifies and corrects nuclear safety
problems. To date, DOE's Office of Enforcement has identified
more than a thousand cases of nuclear safety noncompliance and
has issued only 33 notices of violation and assessed $1.8
million in civil penalties.
Of the $1.8 million in fines, nonprofit contractors were
exempted from $605,000 or a third of the assessed fines. Of
that $605,000 in phantom fines assessed on nonprofits, the
University of California is by far the leader with $425,000 or
70 percent.
University of California at Lawrence Livermore was cited
for two of the largest safety violations in 1998 including
severity level-one violations. In one occurrence a Lawrence
Livermore employee received such an enormous internal dose of
radioactivity that even after treatment to remove the
radioactive material his dose still exceeded regulatory limits.
This exposure may have been prevented, but someone had turned
off the radioactivity alarm in the room that the man was
working in.
However, we cannot measure the effectiveness of DOE's
enforcement program or the impact that it has had on worker
safety simply by looking at an individual case of noncompliance
or the total number of violations and assessed penalties.
In a report released today the GAO finds that DOE has not
been aggressive in issuing nuclear safety rules or in holding
its contractors accountable for complying with some nuclear
safety requirements. According to this report DOE's inaction in
converting several nuclear safety requirements to enforceable
rules has limited the overall effectiveness of DOE's
enforcement program.
Furthermore, DOE has not properly classified exactly how
many facilities should be subject to its nuclear safety
requirements. How could DOE have an effective nuclear safety
program if it doesn't know how many facilities to which the
rules apply? These and other issues are significant because DOE
is not externally regulated and it must rely on the strength of
its own oversight to hold contractors accountable.
In addition to these findings DOE also recommends an end to
the civil penalty exemption for nonprofit, educational
institutions. DOE believes that it's unwise to limit any tools
that can be used to ensure safe nuclear practices by its
contractors.
In contrast, the NRC, as well as other Federal regulatory
agencies do not exempt nonprofit organizations from penalties
for safety violations. Instead the NRC reduces the civil
penalty for nonprofit contractors based on their ability to
pay. DOE could similiarly establish such a reduced penalty
system.
Furthermore, the Department's nonprofit contractors now
earn annual performance fees that could be used to pay any
civil penalties. DOE, however, believes that the civil penalty
exemption should be continued and even expanded. DOE believes
that contract mechanisms can be used to ensure nuclear safety
performance, but that GAO reports that DOE has so far been
unsuccessful in applying contractual mechanisms to encourage
nuclear safety.
Congress and nuclear workers should not have to rely on the
Department's enforcement program to ensure a safe work
environment. DOE contractors must work proactively to establish
effective nuclear safety programs in a field which prevent
nuclear safety accidents from ever occurring.
Line management in the field is responsible for the
institutionalization of safe operations, however, if a
contractor is unable to prioritize and implement safety
considerations, then DOE should not be reluctant to apply every
tool possible to make it so.
Today we will hear from DOE, GAO, several nonprofit and
for-profit contractors and a union representative of DOE
workers on how we can improve nuclear safety at DOE facilities.
I yield at this time for an opening statement from the
ranking member, Mr. Klink.
Mr. Klink. Thank you, Mr. Chairman, that was a good
statement. I associate myself with most of it.
Mr. Chairman, I think this is a particularly appropriate
time to be holding this hearing in light of the hearing we held
just last week on the Rudman Report and the House and Senate
consideration of restructuring the Department of Energy. One of
the outcomes, I think, of last week's hearing was the
realization that people such as Senator Rudman who are focused
on the safeguards and the security problems in DOE's weapons
complex have no understanding or plan for carrying out the
environmental, safety, or health responsibilities of DOE. A
theme relevant to today's hearing was the difficulty in
changing the entrenched DOE culture.
In June 1989, shortly after Admiral James Watkins took over
the Department, he stated that. ``For over four decades DOE and
its contractors have accepted that its national security
mission was incompatible with creating a health and safety
environment.'' He said, ``The chickens have finally come home
to roost and the years of inattention to changing standards and
demands regarding the environment, safety, and health are
vividly exposed.''
Admiral Watkins proposed to lead DOE to a new culture.
Priorities would be changed and environment, safety, and health
would receive more weight than weapons production. Indeed, he
said that 51 percent of the contract award fee would be based
on environmental, safe, and health requirements, and all of the
award fee would be at risk for failure in any one of those
three categories.
Well, this never happened. In fact, our DOE witness today--
a decade later--will tell us that DOE just recently revised its
fee policy to allow putting the entire fee at risk because of
poor safety performance. We will hear today about recalcitrant
nonprofit and for-profit contractors.
The Price-Anderson Amendments holding contractors liable
for their nuclear safety violations through the use of civil
penalties were written in this committee and passed by Congress
in 1988. It was to be an interim provision until the nuclear
facilities came under the control of the Nuclear Regulatory
Commission and the Occupational Safety and Health
Administration. Not only has the Department's record in
implementing that law been abominable, we learned recently that
it has abandoned external regulations because of the usual
internal disputes among the programs.
On Price-Anderson enforcement, the Department has moved
with all deliberate speed. You see, we already have noted it
has finalized two of 11 rules that it drafted. Fortunately, the
workers' protection rule was one because the General Accounting
had found in 1990 that radiological protection programs were a
major deficiency at DOE. But it is our understanding that the
program offices objected to the other rules. Just as adequate
security costs money, adequate worker safety protection costs
money.
The program offices and the contractors like to use as much
of their funds as possible for program purposes and don't want
to be interfered with. And, as a result, for 7 years, Mr.
Chairman, the rulemaking has been under discussion and then
suspended.
DOE has lots of excuses such as they were reinventing
Government; working on other solutions to the health and safety
problems. But if every agency or every citizen of this country
took DOE's position that they didn't have to enforce the laws,
then our country would simply not be able to function.
The enforcement program we authorized in 1988 was finally
in place in 1996 and today it has a total of five people
working for it. Obviously it cannot pursue all or even most of
the violations.
The site representation program which was going to put a
DOE employee at every site to monitor health and safety issues
was never staffed up and is now going to be eliminated. DOE
will probably say that it and its contractors have all the
Price-Anderson coordinators at each site. Well, these are
usually people with other responsibilities. And our staffs'
contact with these people did not leave a great impression of
either their knowledge or their ability to effect change.
When Secretary Richardson gave up external regulations, he
did promise, however, that the following steps would be taken
to enhance safety. First, DOE's acquisition regulation would be
revised so that the contractor's entire fee would be at risk
for poor performance of safety measures; second, that oversight
and enforcement programs would be strengthened; third, there
would be a complex wide tracking system to make sure that
actions to correct safety and emergency management defects
would be identified and completed on an expedited basis; and
fourth, a Secretarial Safety Council would be established.
I note, Mr. Chairman, the Secretary did not mention this--
mention issuing the lost Price-Anderson regulations, and that
the proposal to change the acquisition regulations was
published in April 1998, and still is not finalized.
Is the enforcement program strengthened? Not that we can
see.
Dr. Michaels is going to tell us today that he will have
those regulations in place by January of next year. I have to
tell you, Mr. Chairman, I am hopeful that he is right, but yet
I'm very skeptical of that promise or any others that are made
by the Department.
Let me just say one comment about the exemption from civil
penalties for nonprofits. It doesn't appear that it's working.
According to the enforcement staff, the labs have been
extremely difficult to work with. As scientists they believe
that they know better. I know we are going to discuss today
with the University of California the careless behavior
demonstrated by the Lawrence-Livermore National Laboratory.
What's even more distressing was the lab's ability to stop the
issuance of a departmental press release concerning its
violations. There's something seriously wrong at the Department
when contractors have that amount of power.
I also must express bewilderment by the Department's
statement that fines work very well with private contractors,
but don't work well for recalcitrant labs.
I look forward to today's testimony and the response to our
questions.
Mr. Upton. Thank you, Mr. Klink.
Mr. Whitfield, do you have an opening statement?
Mr. Whitfield. Mr. Chairman, I do not have an opening
statement. I'll just file one for the record. Thank you.
Mr. Upton. That's fine. Thank you.
I would note for the record that originally we were
supposed to be in session with votes yesterday. On Friday
afternoon that was changed so the House is not yet in session
and all members of this subcommittee, I'll ask unanimous
consent, will be able to file an opening statement by unanimous
consent if they so desire, and we expect a number of members to
come as their planes arrive as the House is not yet into
session this week.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. Joe Barton, a Representative in Congress
from the State of Texas
I would like to thank Chairman Upton for scheduling this hearing on
the very important subject of worker safety at DOE Nuclear Facilities.
This is a timely subcommittee hearing as it comes a week after the full
Commerce Committee hearing on June 22, 1999, on the Rudman Report and
its analysis of the security problem at DOE facilities. Any legislative
effort to reorganize the Department of Energy will have to come through
the Commerce Committee and is of great interest and concern to the
Members of the Committee.
I commend the witnesses we have here today for testifying on the
issue of worker safety at DOE Nuclear Facilities. For an issue as
important as this to our national security, we need to hear from all
parties involved, and I think we have a good representation here today.
Since my days as a White House Fellow working at DOE, I have
personally witnessed the organizational problems at the department. I
have always been concerned about these problems, as many have, and now
our worst fears apparently have occurred. Espionage by the Chinese on
our nuclear weapons designs has occurred at Los Alamos lab, and there
is additional evidence of national security breaches at the other DOE
labs. There have to be changes made in response to these problems.
What are the steps that must be taken now to make sure this does
not happen again? To begin with, I believe that those at fault in these
security breaches must be held accountable. DOE must be held
accountable as well as the contract personnel working at the labs.
There is mounting evidence that something is seriously wrong in the
management of these labs and in the security operation throughout the
DOE lab organization.
I believe that at the labs where these national security breaches
have occurred there needs to be serious consideration given to the role
of the contractors in contributing to these problems. I support
terminating the University of California's contract because of the
evidence of negligence involved in the managing of the Los Alamos lab.
I also believe that because of all of these problems with the
management of the DOE labs, it is necessary to relocate the functions
of the labs completely out of DOE.
As Chairman of the Subcommittee on Energy and Power, I look forward
to being involved in legislation to address these security problems
which would come though my subcommittee. This is an important issue for
our country and one which we cannot ignore. Again, I thank Chairman
Upton for holding the hearing and I thank the witnesses for taking time
to appear before this committee.
______
Prepared Statement of Hon. Tom Bliley, Chairman, Committee on Commerce
Mr. Chairman, thank you for holding this important hearing. Today
we will review the Department of Energy's implementation of its
enforceable nuclear safety program required by the Price Anderson
Amendments Act of 1988. Congress expects DOE to hold its contractors
accountable for the protection of workers engaged in the important
nuclear research and cleanup activities at DOE sites across the
country. That is why Congress gave DOE civil penalty authority to
oversee and fine contractors that violate nuclear safety rules. In
addition to this civil penalty authority, DOE also can demand
corrective action of its contractors to ensure that nuclear mistakes
are not repeated. Our review of the Department's implementation of
nuclear safety requirements will also include a review of the safety
performance of several of DOE's largest contractors.
Proper planning and contractor control over risky nuclear
activities can prevent nuclear accidents. Workers should expect a safe
work environment. Unfortunately, several nuclear violations have
occurred--and in some cases recurred--at a few DOE sites operated by
contractors that have been slow to learn and understand the importance
of nuclear safety. It is not enough for a contractor to simply pledge
to respond quickly and implement corrective actions after a nuclear
accident has happened. I am particularly concerned about an apparent
pattern of unsafe nuclear work at Los Alamos and Lawrence Livermore
National Labs. For example:
In November 1996, there was a fire and explosion involving
radioactive material at Los Alamos. Two years after this
serious accident, DOE fined the University of California for
refusing to implement radiation protection requirements the
University had agreed to implement.
In November 1996, a Nuclear Facility Appraisal identified
significant and widespread problems with nuclear safety
procedures at Lawrence Livermore. Eight months later, five
workers were exposed to high amounts of radioactivity during
waste processing activities.
In May 1996, a DOE appraisal identified significant problems
with Lawrence Livermore's criticality safety program. One year
later, multiple and recurring criticality safety failures
occurred at Lawrence Livermore, including loss of control of
plutonium at Building 332.
These significant nuclear safety violations seem to demonstrate the
same pattern of organizational disarray, and managerial neglect,
identified by the Rudman report with respect to security violations at
the labs. Even more troubling, DOE seems to be unable to hold the
University of California accountable for these violations or identify
the corrective actions to prevent these violations from recurring. Due
to statutory exemptions, the University of California has not paid any
of the $425,000 in fines the DOE has assessed for these violations.
Furthermore, in spite of these serious safety violations, DOE continues
to rate the University of California's health and safety performance as
``good,'' and has awarded all base performance fees associated with
health and safety activities. In light of these circumstances, I may
seriously consider GAO's recommendation to end the civil penalty
exemption for nonprofit educational institutions.
I want to make it clear that hundreds of nuclear activities are
safely performed at DOE sites every day. Several DOE contractors have
established sound nuclear safety programs that protect workers.
However, in written testimony today, GAO reports that there are many
holes in the Department's nuclear safety program. Mr. Chairman, where
there are gaps in nuclear safety programs, there are nuclear accidents
waiting to happen. I look forward to working with the Subcommittee
today and in the future to identify ways to improve the Department's
nuclear safety program and to hold contractors accountable for poor
safety performance.
Mr. Upton. Our two first witnesses include Ms. Gary Jones,
Associate Director for Energy Issues at GAO. She is accompanied
by Mr. William Swick, Assistant Director for Energy Issues at
GAO. Also testifying is Dr. David Michaels who is Assistant
Secretary for Environment, Safety and Health at the Department
of Energy, and he is accompanied by Mr. Keith Christopher,
Director of the Office of Enforcement and Investigation.
As you may know, this subcommittee has a long tradition of
taking testimony under oath and do you have any objection to
that?
[No response.]
Mr. Upton. Hearing none, we also have--you're allowed to
have to counsel in addition to the folks that are with you now,
and if you don't have any need for that, if you would just
stand and raise your right hand.
Do you swear to tell the whole truth and nothing but the
truth so help you God?
Ms. Jones. I do.
Dr. Michaels. I do.
Mr. Upton. They are now under oath. We'll start with GAO,
Ms. Jones, do you want to go with your testimony. Again, you
have been a frequent visitor here; you know I would like you to
keep your comments or your opening statement limited to 5
minutes and the little egg timer is--I don't know if this is
poached or whatever, but 5 minutes is now yours.
Ms. Jones. And you promised to give that to me at the last
hearing if I----
Mr. Upton. No, I don't know that I made that promise. You
might have made that request.
TESTIMONY OF GARY L. JONES, ASSOCIATE DIRECTOR, ENERGY,
RESOURCES AND SCIENCES ISSUES, ACCOMPANIED BY WILLIAM SWICK,
ASSISTANT DIRECTOR FOR ENERGY ISSUES, GENERAL ACCOUNTING
OFFICE; AND DAVID M. MICHAELS, ASSISTANT SECRETARY FOR
ENVIRONMENT, SAFETY AND HEALTH, ACCOMPANIED BY KEITH
CHRISTOPHER, DIRECTOR, OFFICE OF ENFORCEMENT AND INVESTIGATION,
DEPARTMENT OF ENERGY
Ms. Jones. Thank you, Mr. Chairman.
We are here today to discuss the Department of Energy's
efforts to hold its contractors accountable for nuclear safety
requirements.
Let me take just a minute the define the framework within
which the safety enforcement program operates.
As you mentioned, Mr. Chairman, independent regulators do
not help ensure that DOE operations are safe. Instead, DOE
relies on its own staff to ensure safety.
One mechanism to hold contractors accountable for safety
was provided by legislation passed in 1988 which allows DOE to
impose civil monetary penalties on those contractors not
meeting nuclear safety requirements. However, that law named
seven contractors and research laboratories that along with
their subcontractors and suppliers were exempt from having to
pay penalties.
The legislation also gave the Secretary of Energy the
authority to exempt nonprofit educational institutions under
contract to DOE from paying penalties. Given that backdrop, let
me discuss the results of our work.
DOE determined that to be able to assess civil penalties
existing safety requirements in DOE orders would have to be
reissued as enforceable rules. However, over 10 years after the
Congress authorized DOE to assess civil penalties, DOE has
issued enforceable rules covering only 2 of the 11 safety areas
originally proposed; radiation protection for workers and
quality assurance.
The other nine safety areas not included as rules include
training and certification of employees performing vital
operations and the preparation of safety analysis reports. DOE
did not complete the remaining rules because of work on other
safety issues and internal discussions about how best to ensure
nuclear safety. Not issuing these enforceable rules has limited
the overall effectiveness of the enforcement program because
DOE has fewer options to ensure that contractors are meeting
safety requirements.
In commenting on our report DOE agreed that it should issue
additional rules and outlined the strategy for doing so.
We also found that DOE has been inconsistent in placing
nuclear facilities under the quality assurance rule. Nuclear
facilities are defined as having a nuclear reactor or
activities where a nuclear hazard to employees or the public
potentially exists. Based on this definition, there are a
number of facilities that should have been included under this
rule but were not.
For example, Savannah River categorized its reactors as
nuclear facilities, Hanford did not. Although none of the
reactors are currently operating, radiation exposure remains a
potential problem at both sites.
Incorrectly categorizing facilities could affect the type
of safety oversight being done as well as the enforcement
activity undertaken. DOE agreed that the scope of the quality
assurance rule should be clarified and is taking action to do
so.
DOE concluded that the enforcement program is a valuable
tool for increasing the emphasis on nuclear safety. While DOE
assessed penalties against both for-profit and not-for-profit
contractors, it collected penalties only from the for-profit
contractors.
DOE recommended in March 1999 that the statutory exemption
from paying penalties be continued and expanded to include all
nonprofit contractors, subcontractors, and suppliers. However,
DOE has not made a convincing case for doing so.
First, DOE states that the exemption should be continued
because major universities and other nonprofit contractors
would not be willing to put their assets at risk paying civil
penalties. However, under performance-based contracting for
fiscal year 1999, all but one of the contractors that manage
and operate DOE facilities, including the nonprofit
contractors, can earn a fee. Nonprofit contractors use this fee
for unallowable and administrative costs and to conduct
laboratory-directed research. The fee could also be used to pay
any civil penalties imposed on the contractor.
Second, DOE stated that the contract provisions are a
better mechanism than civil penalties for holding nonprofit
contractors accountable for safe nuclear practices. Although
performance-based contracting can be an effective way to
emphasize safety, DOE has not taken full advantage of this
mechanism. For example, the University of California, DOE's
contractor at Livermore, received 96 percent of the $6.4
million fee available in fiscal year 1998 even though it had
significant nuclear safety deficiencies resulting in
enforcement actions.
Third, DOE states that its current approach is consistent
with the Nuclear Regulatory Commission's treatment of nonprofit
organizations. We don't agree. NRC can and does impose
penalties for violating safety requirements on any organization
that it regulates without regard for the profit-making status
of that organization. However, it usually sets lower penalty
amounts for nonprofit organizations.
In addition, both NRC and other regulatory agencies have
collected penalties for violating nuclear safety requirements
from organizations that DOE exempts from payment.
Mr. Chairman, the GAO report that you have released today
suggests that the Congress consider eliminating the statutory
and administrative exemptions that currently apply to certain
nonprofit contractors. By making that change, all contractors
would be held equally accountable for violating nuclear safety
rules.
Thank you, Mr. Chairman.
[The prepared statement of Gary L. Jones follows:]
Prepared Statement of Gary L. Jones, Associate Director, Energy,
Resources, and Science Issues, Resources, Community, and Economic
Development Division, General Accounting Office
Mr. Chairman and Members of the Subcommittee: We are here today to
discuss the Department of Energy's (DOE) efforts to hold its
contractors accountable for nuclear safety requirements. DOE has a
widespread complex of research and nuclear facilities that contain
large quantities of nuclear materials. Some of the materials are in a
deteriorated condition, not properly packaged for storage, and may pose
a significant risk to workers, the public, and the environment. With
few exceptions, DOE's facilities are not inspected or licensed by
independent regulators to help ensure that operations are safe.
Instead, since 1946, DOE and the agencies that preceded it have relied
on their own staff to ensure the safety of these facilities.
Most of the work at DOE facilities is carried out by organizations
under contract to DOE. Because of the risks and the potential
liabilities inherent with handling nuclear materials, the law
authorizes DOE to indemnify, or agree to pay damages for, those
contractors that could have an accident associated with handling
nuclear materials, and whose actions could cause damage. In 1988, the
Congress enacted legislation permitting DOE to hold its contractors
accountable for meeting its nuclear safety requirements through a
system of civil monetary penalties. DOE determined that to be able to
assess civil penalties, existing safety requirements would have to be
reissued as enforceable rules. The legislation also named seven
contractors at research laboratories, that along with their
subcontractors and suppliers, were exempt from having to pay the
penalties. In addition, the legislation gave the Secretary of Energy
the authority to exempt from paying penalties other nonprofit
educational institutions under contract to DOE.
On the basis of the report we prepared for the Committee and are
releasing today,<SUP>1</SUP> our testimony will address (1) what
enforceable nuclear safety rules DOE has issued; (2) which DOE
facilities and contractors are covered by these rules; (3) how DOE has
enforced the nuclear safety rules; and (4) whether there is a continued
need for exempting certain contractors from paying penalties for
violating nuclear safety rules.
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\1\ Department of Energy: DOE's Nuclear Safety Enforcement Program
Should Be Strengthened (GAO/RCED-99-146, Jun. 10, 1999).
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In summary, we found the following:
<bullet> Since 1988, DOE has issued enforceable rules covering only 2
of 11 safety areas originally proposed--radiation protection
for workers and quality assurance issues that define how work
is planned and carried out. The other nine safety areas not
included in the rules, such as training and certification of
employees performing vital operations, are still covered in DOE
orders, and DOE generally includes compliance with them as part
of its contracts. However, not elevating safety orders to the
status of enforceable rules has limited the overall
effectiveness of the enforcement program because DOE has fewer
options to ensure that contractors are meeting safety
requirements and correcting any deficiencies.
<bullet> Nuclear safety rules are to be enforced at any DOE facility
with the potential to cause radiological harm to the public,
workers, or the environment. Although no problems have been
identified with the application of the radiation protection for
workers rule to the activities of DOE's contractors, DOE field
offices have been inconsistent in the degree to which they have
placed nuclear facilities under the quality assurance rule. Not
properly categorizing DOE facilities as subject to the rules
could potentially affect the type of safety oversight carried
out by contractors, as well as the enforcement activity
undertaken by DOE.
<bullet> DOE began its enforcement program in 1996 and concentrates its
investigations and enforcement actions on those violations of
nuclear safety rules that are the most significant. Between
1996 and 1998, DOE has taken 33 enforcement actions and
assessed more than $1.8 million in penalties. Violations have
included such things as unnecessarily exposing workers to
radioactivity and not following procedures intended to prevent
an uncontrolled nuclear reaction from occurring. DOE has
concluded that the enforcement program is a valuable tool for
increasing the emphasis on nuclear safety.
<bullet> Although DOE recommended in March 1999 that the statutory
exemption from paying penalties be continued and expanded to
include all nonprofit contractors, subcontractors, and
suppliers, the exemption may no longer be needed. DOE cited
three reasons for continuing the exemption--nonprofit
contractors' unwillingness to put their assets at risk if
required to pay civil penalties, effectiveness of existing
contract mechanisms in obtaining compliance, and consistency
with other regulatory agencies' treatment of nonprofit
organizations. However, nonprofit contractors now have
contract-related fees available that could be used to pay
penalties, contract mechanisms have not been effectively used
to address safety-related problems, and, in contrast to DOE,
other regulatory agencies collect penalties and administrative
costs from nonprofit organizations.
Mr. Chairman, our work clearly shows that, although DOE is
ultimately responsible for ensuring nuclear safety at its facilities,
the Department has not been aggressive in issuing nuclear safety rules
or in holding contractors accountable for complying with the quality
assurance rule. The enforcement program is an important complement to
existing contract-related mechanisms for ensuring that contractors have
safe nuclear practices. Therefore, in the report we are releasing
today, we are recommending that the Secretary of Energy take steps to
strengthen DOE's nuclear safety enforcement program, and we are
suggesting that the Congress consider eliminating the statutory and
administrative exemptions--that currently apply to certain nonprofit
contractors--so that those contractors would be required to pay the
civil penalties assessed for violating nuclear safety rules.
Mr. Chairman, now I would like to discuss our findings in greater
detail.
DOE Issued Fewer Nuclear Safety Rules Than Initially Planned
DOE's progress in its efforts to re-issue existing nuclear safety
requirements as enforceable rules has fallen far short of its original
goal of converting all requirements into rules. Although DOE issued
proposed rules covering a broad range of safety issues, only two areas
of safety requirements have been addressed with completed rules. DOE
largely suspended work on the nine remaining proposed rules because of
work on other safety issues and internal discussions about how best to
ensure nuclear safety.
DOE issued several proposed safety rules beginning in December
1991.<SUP>2</SUP> These proposed rules included existing DOE orders on
such matters as protecting workers from exposure to radiation, issuing
safety analysis reports, reporting defective items and services, and
reporting safety-related problems. In March 1993, DOE issued one more
proposed rule dealing with the protection of the public and the
environment from radiation. After a public comment and review process,
DOE issued two of the rules as final--the rule on radiation protection
of occupational workers in December 1993 and the rule on quality
assurance requirements in April 1994. The remaining rules have not been
finalized.
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\2\ These proposed rules also included a procedural rule setting up
the process that DOE would use to investigate potential violations of
nuclear safety rules, issue notices of violation to the contractor, and
assess penalties based on the severity level of the violation. After
receiving comments and making revisions, DOE issued this procedural
rule as a final rule in August 1993.
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DOE received extensive comments from contractors and other
interested parties on the remaining nine safety requirements proposed
as rules. DOE's plan was to issue these remaining rules as final after
it completed the analysis of the comments received. However, DOE has
issued none of the remaining rules as final. DOE officials said two
major factors contributed to the delay--work on other safety issues and
discussions within DOE on how best to proceed with safety regulation.
Although the Secretary concluded in a recent report to the Congress
that the enforceable rules have been beneficial in improving
contractors' safety performance,<SUP>3</SUP> the system of enforceable
nuclear safety rules originally envisioned by DOE has not been fully
realized. DOE's inaction in converting the many other aspects of
nuclear safety into final published rules has limited the overall
effectiveness of the enforcement program. Although DOE officials have
said that there is a renewed effort within DOE to address the need for
additional enforceable rules, there is still no definite schedule for
finalizing the remaining proposed rules.
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\3\ Department of Energy Report to Congress on the Price-Anderson
Act (Mar. 1999).
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In our report, we recommended that the Secretary of Energy
expeditiously complete the process of issuing enforceable rules
covering important nuclear safety requirements. In commenting on a
draft of our report, DOE agreed that it needed to complete this process
and outlined its strategy for doing so.
Clarification Needed About Facilities to Which the Rules Apply
Penalties for violating enforceable nuclear safety rules apply to
any contractor, subcontractor, or supplier that has been indemnified
from liability for possible damages caused by working with nuclear
materials. However, the two rules issued to date--occupational
radiation protection and quality assurance--have somewhat different
criteria for determining which facilities should be subject to them,
with the occupational radiation protection rule having broader
coverage. Under the occupational radiation protection rule, DOE
facilities are subject to its provisions if the activities conducted
there have the potential to result in the occupational exposure of an
individual to radiation or radioactive material. The quality assurance
rule adds a second test--a facility must be defined as ``nuclear.'' To
be a nuclear facility, a facility must have either a nuclear reactor or
activities or operations that involve radioactive and/or fissionable
materials in such a form and quantity that a nuclear hazard potentially
exists to employees or the public.
Although there are no apparent problems with the application of the
occupational radiation protection rule, the number of facilities DOE
field offices decided were subject to the quality assurance rule may be
somewhat understated. According to the 1998 annual report of DOE's
Office of Enforcement and Investigation,<SUP>4</SUP> the office has
identified a number of facilities that should have been included but
were not. Our review of DOE's approach to identifying nuclear
facilities confirmed that there are problems in this area. The nuclear
reactors at DOE's Savannah River site in South Carolina and Hanford
site in Washington State are an example. Both sites have reactors that
produced nuclear weapons material between the 1940s and 1980s. Although
none of the reactors are currently operating, radiation exposure
remains a potential problem, because, for example, all have reactor
blocks or vessels in place that contain residual radioactive material.
Nevertheless, Savannah River categorized its reactors as nuclear
facilities, while Hanford did not.
---------------------------------------------------------------------------
\4\ 1998 Annual Report, Price-Anderson Nuclear Safety Enforcement
Program (Jan. 1999).
---------------------------------------------------------------------------
DOE does not know how widespread this problem of identifying
nuclear facilities is so its significance is difficult to determine.
However, incorrectly categorizing facilities could potentially affect
the type of safety oversight being done by contractors and DOE field
offices, as well as the enforcement activity undertaken by the Office
of Enforcement and Investigation.
In our report we recommended that the Secretary of Energy ensure
that field locations are properly following DOE's guidance in
determining which facilities must comply with the nuclear safety rule
on quality assurance. In commenting on a draft of our report, DOE
agreed that the scope of the quality assurance rule should be clarified
and described the steps it has taken and will take to do so.
DOE's Enforcement of Nuclear Safety Rules Has Resulted in Penalties
Against Contractors
DOE established the enforcement program in 1996, which relies
primarily on a system of self-reporting and corrective actions by its
contractors, and concentrates its enforcement actions on those
violations of nuclear safety rules that are the most significant, and
to situations where the contractor has not promptly identified,
reported, and corrected the problem. DOE's enforcement process includes
(1) identifying, evaluating, and investigating potential violations of
the nuclear safety rules, (2) determining the severity level of the
violation,<SUP>5</SUP> (3) calculating the civil penalty,<SUP>6</SUP>
and (4) notifying the contractors and public of the results of the
enforcement action. As our report states, between 1996 and 1998, DOE
took 33 enforcement actions with assessed penalties totaling $1.8
million, with the highest penalty assessed--$165,000--in November 1998.
There have been only two severity level I violations--one against EG&G
Inc., at DOE's Mound, Ohio, site for deficiencies in its radiation
dosage monitoring program, and the other against the University of
California at Lawrence Livermore National Laboratory in California for
exposing workers to unnecessary levels of radiation. So far in 1999,
DOE has taken four enforcement actions with penalties totaling
$357,500. These included a preliminary notice of violation in May 1999
with an assessed penalty of $330,000, the largest to date in the
program, against Fluor Daniel Hanford, Inc., for repeated violations of
the quality assurance rule at its spent nuclear fuels
project.<SUP>7</SUP>
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\5\ The severity levels are: level I, the most significant, are
those violations that involve actual or high potential for an adverse
impact on the safety of the public or workers at DOE facilities; level
II are those violations that show a significant lack of attention or
carelessness towards the responsibilities of DOE contractors for the
protection of the public or worker safety and that could, if left
uncorrected, lead to an adverse impact on public or worker safety;
level III are violations that are less serious but of more than minor
concern and, if left uncorrected, could lead to a more serious
condition.
\6\ DOE calculates the civil penalty based on the severity level of
the violation, with severity level I penalties set at 100 percent of
the base civil penalty (currently $110,000 per violation per day). DOE
may also consider other factors, including how promptly the contractor
reported a potential violation and initiated corrective action and
whether a pattern of repeated violations exists.
\7\ The May 1999 preliminary notice of violation also included
DOE's first use of a compliance order in the program, which requires
the contractor to complete specific corrective action steps within
designated time periods.
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In its March 1999 report to the Congress on the Price-Anderson
Act,<SUP>8</SUP> DOE stated that its authority to impose civil
penalties has proven to be a valuable tool for increasing the emphasis
on nuclear safety and enhancing the accountability of its contractors.
On the basis of our analysis, we agree that DOE's enforcement program
appears to be a good mechanism for increasing both contractor awareness
of and accountability for nuclear safety requirements and complements
existing contract mechanisms. We believe the advantages of the
enforcement program include its independence from the program and field
office structure, the objectivity of its enforcement process, its
emphasis on verifying that corrective action has been taken, and the
visibility of its results.
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\8\ In the Price-Anderson Amendments Act of 1988, the Congress
required DOE and the Nuclear Regulatory Commission to report by August
1, 1998, on the need for continuing or modifying the provisions of the
act.
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Continuing to Exempt Nonprofit Contractors from Paying Civil Penalties
May Not be Warranted
Of the $1.8 million in civil penalties assessed by DOE from 1996
through 1998, certain nonprofit contractors exempted by statute or
under administrative rule did not pay about $605,000, or 33 percent, of
the total penalties assessed. One part of DOE's March 1999 report on
the Price-Anderson Act reassessed the merits of the enforcement program
and the need to continue exempting nonprofit educational institutions
from civil penalties. Although DOE concluded that the authority to
impose civil penalties has proven to be a valuable tool for increasing
the emphasis on nuclear safety and for enhancing contractors'
responsibility and accountability, DOE also concluded that the
exemption from having to pay the penalties for nonprofit contractors
should be continued. Our analysis of DOE's reasons raises several
questions about the merits of continuing the exemption:
<bullet> DOE states that the exemption should be continued because
major universities and other nonprofit contractors would be
unwilling to put their assets at risk for contract-related
expenses such as civil penalties. However, under performance-
based contracting,<SUP>9</SUP> for fiscal year 1999, all but
one of the contractors, including the nonprofits, that manage
and operate DOE facilities have the opportunity to earn a
fee.<SUP>10</SUP> This fee, which is in addition to reimbursed
costs, is used by the nonprofit contractors to cover certain
non-reimbursable contract costs, and to conduct laboratory-
directed research activities. The fee could also be used to pay
any civil penalties imposed on the contractor. In addition, in
setting the amount of a civil penalty, the Secretary has the
authority to consider factors such as the contractor's ability
to pay and the effect of the penalty on the contractor's
ability to continue to do business. The Secretary could limit
the amount of the civil penalty assessed to no more than the
amount of the available fee.
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\9\ Performance-based contracting, part of DOE's contract reform
efforts, links contractors' incentive fees to the satisfactory
accomplishment of specific tasks and uses objective measures and
criteria to measure contractor performance.
\10\ Stanford University has a no-fee contract to operate the
Stanford Linear Accelerator Center in California. According to DOE, the
contractor wants no fee because a fee would be inconsistent with its
role as a university research organization.
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<bullet> DOE states that contract provisions are a better mechanism
than civil penalties for holding nonprofit contractors
accountable for safe nuclear practices. Although performance-
based contracting can be an effective way to emphasize nuclear
safety, DOE has not taken full advantage of this mechanism. For
example, at the Lawrence Livermore National Laboratory in
California, DOE's main contractor--the University of
California--received 96 percent of its $6.4 million available
fee in fiscal year 1998, even though it had significant nuclear
safety deficiencies resulting in enforcement
actions.<SUP>11</SUP> For fiscal year 1999, it will receive
about $1.1 billion to operate the facility and up to $6.4
million in fees for meeting or exceeding performance goals,
including compliance with health and safety requirements. If
the contractor does not perform satisfactorily in the safety
and health area, the most this fee could be reduced is
$252,000, according to the agreement with DOE, or only about
four percent of the fee.
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\11\ The University of California was assessed $313,125 in civil
penalties in 1998 for severity level I and II violations of nuclear
safety rules at the Lawrence Livermore National Laboratory in
California. The University of California is statutorily exempt from
paying the penalties assessed.
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<bullet> DOE states that its current approach is consistent with the
Nuclear Regulatory Commission's treatment of nonprofit
organizations because DOE issues notices of violation to these
nonprofit organizations without collecting penalties but can
apply financial incentives or disincentives through the
contract. However, DOE's approach generally is not consistent
with that of the Commission or other regulatory agencies. The
Commission can and does impose penalties on any organization it
regulates for violating safety requirements without regard to
the profit-making status of the organization. In doing so, the
Commission sets lower penalty amounts for nonprofit
organizations than for the for-profit organizations. Although
this option is also available to the Secretary, DOE does not
currently take this approach. In addition, both the Commission
and other regulatory agencies have assessed and collected
penalties or additional administrative costs for violating
nuclear safety requirements from organizations that DOE exempts
from payment. For example, between 1989 and 1993, the
California State Department of Toxic Substances Control
assessed and collected $88,000 in ``administrative costs'' from
the University of California for violating state environmental
laws at two DOE national laboratories--Lawrence Livermore and
Lawrence Berkeley.
<bullet> In our report, we recommended that the Secretary of Energy
eliminate the administrative exemption from paying civil
penalties for violations of nuclear safety rules that DOE
granted to nonprofit educational institutions. In commenting on
a draft of our report, DOE said that the issue of exemption
from civil penalties is ultimately one for the Congress to
decide and that, if the Congress should eliminate the
exemption, the Department would assess penalties against the
nonprofit organizations in a manner similar to that used by the
Nuclear Regulatory Commission.
Thank you, Mr. Chairman and members of the Subcommittee. That
concludes my testimony, and I will be happy to respond to any questions
you may have.
Contact and Acknowledgment
For future contacts regarding this testimony, please contact (Ms.)
Gary L. Jones at (202) 512-3841. Individuals making key contributions
to this testimony included William R. Swick and Carole J. Blackwell.
Mr. Upton. Thank you.
Dr. Michaels.
TESTIMONY OF DAVID M. MICHAELS
Mr. Michaels. Mr. Chairman and members of the subcommittee,
I am pleased to be here today to discuss worker safety at the
Department of Energy's nuclear facilities and in particular the
findings of the GAO in its draft report on the DOE nuclear
safety enforcement program.
Let me say at the outset, we very much appreciate this
committee's continued strong interest in worker health and
safety at DOE. We all know that, with good reason, concerns
with security have been very much on everyone's mind in the
past several months. But it is vital to remember there are very
real worker safety and environmental hazards at all DOE
facilities.
This committee certainly has a strong record in these
issues and has been at the forefront of much of the progress we
have seen over the past decade. I encourage you to maintain
this interest in worker safety and environmental health as we
address important issues over the next few months.
I will submit my entire statement for the record and will
summarize my remarks today.
Joining me today is Mr. Keith Christopher, Director of the
Office of Enforcement and Investigations who oversees the
Department's Price-Anderson enforcement program. Mr.
Christopher came to the Department from the Nuclear Regulatory
Commission with a strong background in nuclear safety and
regulatory issues, and he has been instrumental in developing
this program at DOE. I'm sure his insights and experiences will
be helpful to the committee.
Mr. Chairman, the Department endorses the GAO's overall
conclusion that DOE's nuclear safety enforcement program has
been effective and should be strengthened further. Following a
brief summary of the program, I will address the GAO's specific
recommendations in detail.
The Price-Anderson Amendments Act of 1988 continued
indemnification of DOE contractors and increased the amount
available in the case of any single nuclear accident to more
than $9 billion. At the same time Congress recognized the need
for enhanced accountability for nuclear safety and authorized
DOE to issue civil penalties against contractors who failed to
comply with DOE nuclear safety rules or orders.
In establishing the program the Department adopted a policy
of promulgating formal rules in accordance with the
Administrative Procedures Act. This process meant substantial
review within the Department, consultation with the Defense
Nuclear Facilities Safety Board, and full opportunities for
comment by members of the public including DOE contractors. To
date we have final rules on quality assurance requirements and
on occupational radiation protection.
In 1993 the Department published its procedures and policy
and notified DOE contractors about the upcoming regulatory
program. By October 1995 the Department had completed the
process of recruiting staff, building and organization and
providing training to the complex.
On April 3, 1996, the Office of Enforcement and
Investigation issued its first enforcement action, and on July
16 that year we issued its first civil penalty.
The Enforcement Office is currently staffed by a director,
Mr. Christopher, who reports directly to my office. There are
four enforcement officers at headquarters and a legal counsel.
The headquarters office is supported by a network of
approximately 30 Price-Anderson coordinators who work in
various field offices. These coordinators report to the
Department's field office managers and have significant
interaction with the headquarters enforcement staff.
The Enforcement program was structured to closely resemble
the regulatory process of the NRC. At the same time, DOE
recognized that it needed an approach that reflected the
complex and decentralized nature of DOE and its unique
relationship with our contractors.
Early on it was determined that the goal of the office
would be to encourage behavior that would enhance nuclear
safety across the complex; not to accumulate stacks of
penalties to individual contractors that once paid would have
no effect. It was also recognized that staff resources were and
would continue to be limited.
The Enforcement program was therefore structured to
leverage its resources in two ways. First, we created strong
incentives for contractors to act on their own initiative to
identify problems, to report potential noncompliances, and
initiate timely and effective corrective actions.
On the other hand, any effort by the contractor to hide or
avoid reporting serious problems is the basis for escalated
penalties.
The staff is also leveraged through the use of Price-
Anderson coordinators. Overall the coordinators have played a
critical role in our success. We feel that it is very important
that DOE field offices are active in the program. The
Enforcement program needs to be a Department of Energy wide
program, not a program of the Office of Environment Safety and
Health.
Frankly, we found this to be working better at some sites
than others depending on the commitment of the individual field
office management. And we will be taking some steps to address
gaps where they exist. But we do not believe that we should
have a large central headquarters-directed staff that primarily
relies on numerous inspections to drive safety and issue civil
penalties as a matter of course.
In adopting the 1988 amendments to the Price-Anderson Act,
Congress elected to exempt seven specifically named, not-for-
profit institutions from payment of civil penalties. The
Department believes the reasons for this action in 1988 remain
valid today and recently recommended to Congress the exclusion
be extended to all not-for-profit contractors.
In making this recommendation the Department reviewed the
effectiveness of the current program on both for-profit and
not-for-profit contractors. We also looked at the most likely
impacts on the Department of subjecting not-for-profit
institutions to civil penalties. In the end the Department's
recommendation reflected the concern that universities who
manage our laboratories would be unwilling to risk their
educational endowments for civil penalties that potentially
could be very substantial.
It's important to keep in mind that even though not-for-
profits are exempt from civil penalties, they are not exempt
from enforcement of the Department's nuclear safety rules. It's
the Department's position that all of its contractors, for
profit or not, who are subject to the rules are required to
comply with them.
In the case of a potential violation by an exempted
laboratory, the full enforcement process is carried out. Civil
penalties are calculated just as with for-profit contractors.
In a public announcement that includes a national press release
the contractor is told that, were it not for the statutory
exemption, the full amount of the fine would have to be paid.
And just as with our for-profit contractors corrective actions
are required and monitored.
It has been our experience that this process has been
effective in assuring appropriate contractor response.
The Department also believes that current safety-related
contractual provisions can be effective tools in holding not-
for-profit contractors accountable for safety. These contract
provisions have been substantially strengthened over the past
decade. They include reduction or elimination of fee, stop work
orders, and ultimately contract termination as was the case at
Brookhaven National Laboratory.
The Department also recently revised its policy to allow
DOE to put the contractor's entire performance-based fee at
risk where warranted by poor safety performance. In addition,
Secretary Richardson has asked the recently-established Safety
Council to report back by the end of September on further
recommendations of contract mechanisms available to DOE to
reinforce the priority he assigns to safety performance. Among
the options the Safety Council is considering for not-for-
profit contractors are: reducing performance fee by the amount
of any remitted penalty assessed through the enforcement
process; taking safety performance into consideration in
providing program funding to a DOE facility; and assuring the
removal of personnel responsible for major safety deficiencies.
The GAO recommends the Department act expeditiously to
issue the remaining enforceable rules covering nuclear safety
requirements. We agree it is now time to move forward and
complete the rulemaking. I have directed my staff to work
toward the goal of issuing the final rulemaking and we'll
address all remaining issues by October 1.
In its third recommendation the GAO points out that some
DOE contractors have misinterpreted requirements about exactly
which facilities and activities are subject to enforcement
action under the Department's quality assurance rule.
It has been the Department's clear and consistent view that
the scope includes all reactor and non-reactor nuclear
facilities. We are now confident that this issue has been made
clear to the contractor community and appreciate GAO's interest
in this matter.
That completes my statement, Mr. Chairman. We will be
pleased to answer the subcommittee's questions.
[The prepared statement of David Michaels follows:]
Prepared Statement of David Michaels, Assistant Secretary, Environment
Safety and Health, Department of Energy
Mr. Chairman, I am pleased to be here today to discuss the
Department of Energy's enforcement of nuclear safety and our views of
the General Accounting Office (GAO) draft report entitled DOE's Nuclear
Safety Enforcement Program Should Be Strengthened.
The Department endorses the overall conclusion of the GAO that
DOE's nuclear safety enforcement program has been effective in
protecting worker safety at DOE and that it should be strengthened
further. The program has proven itself to be an extremely valuable tool
for enhancing nuclear safety and contractor accountability throughout
the Department. The Department also agrees with the two specific GAO
recommendations that the Department should complete action on all
proposed nuclear safety rules, and that there should be better clarity
and agreement in the Department about which facilities must comply with
Price-Anderson rules. We have already taken actions to address each of
these areas.
The Department does take exception with the GAO recommendation to
Congress that, when the Congress considers the Price-Anderson Act
reauthorization in two years, it should discontinue the current
statutory exemption from civil penalties for not-for-profit entities
contractors. In the recent report to Congress on the Price-Anderson Act
reauthorization, the Department expressed its view that the current
statutory exemption for not-for profit contractors should continue, and
should be expanded to include all not-for-profit contractors.
This past March, Secretary Richardson announced a series of steps
to strengthen the Department's safety performance and increase
accountability for safety. These actions included an increased emphasis
on accountability and enforcement of nuclear safety through the
enforcement program. We now have enough experience with the program to
know where we are already effective and where we need to improve. We
are also, at Secretary Richardson's request, exploring ways to link the
enforcement program and other activities in the Office of Environment,
Safety and Health to evaluations of contractor safety and health
performance pursuant to both contracts and determinations of award and
performance fees, as I will discuss later in my testimony.
Following a brief overview of the evolution of the DOE enforcement
program, I will address each of the GAO recommendations in more detail.
DOE Enforcement Program
Congress passed the Price-Anderson Amendments Act in 1988. This Act
continued indemnification of DOE contractors and increased the
indemnification available in the case of a nuclear accident to more
than $9 billion. At the same time, Congress authorized DOE to issue
civil penalties against those contractors who violate DOE nuclear
safety rules or orders. DOE pursues enforcement actions through the
issuance of Notices of Violations and, where appropriate, civil
monetary penalties of up to $110,000 per day for continuing and
significant violations. At the time, DOE's nuclear safety requirements
were established by DOE Orders, negotiated with its operating
contractors, and enforced by DOE Field Offices through the contract
evaluation process. In conjunction with establishing the Price-Anderson
civil penalty enforcement program, the Department adopted a policy of
promulgating formal rules in accordance with the Administrative
Procedures Act. This process included substantial review within the
Department, consultation with the Defense Nuclear Facilities Safety
Board (DNFSB), and full opportunities for comment by members of the
public including DOE contractors. To date, we have promulgated final
rules on Quality Assurance Requirements (10 CFR 830.120) and on
Occupational Radiation Protection (10 CFR 835). We have found that,
over the past several years, these two rules have allowed for a wide
scope for enforcement activities.
In 1993 the Department published its enforcement procedural rules
and policy to notify and educate contractors about the upcoming
regulatory program. By October 1995, the Department had completed the
process of recruiting staff, building an organizational infrastructure,
and providing the training and formal guidance to the DOE complex
needed to implement the enforcement program. On April 3, 1996, the
Office of Enforcement and Investigation (Enforcement Office) issued its
first enforcement action and on July 16, 1996 issued the first civil
penalty.
The Enforcement Office is currently staffed by a Director who
reports directly to the Assistant Secretary for Environment Safety and
Health, four enforcement officers, and a legal counsel. The
headquarters office in turn is supported by a network of ``Price-
Anderson coordinators'' who work in the various field offices. Though
not a part of the enforcement staff per se, these coordinators serve a
critical role in the program. They report to the Department's field
office managers, who are ultimately responsible for overseeing the work
and safety performance of the contractors, and have significant
interaction with the headquarters enforcement staff.
The enforcement program was structured to closely resemble the
regulatory process of the Nuclear Regulatory Commission. In structuring
the enforcement program, however, DOE recognized that an approach was
required that reflected the complex and decentralized nature of DOE and
its unique relationship with its contractors. Early on, it was
determined that the goal of the office would be to encourage behavior
that would enhance nuclear safety across the complex, not to accumulate
a stack of penalties to individual contractors that, once paid, would
have no effect. It was also recognized that staff resources were and
would continue to be limited.
The enforcement office was therefore structured to leverage its
staff resources in two ways. First, the program creates strong
incentives for contractors to act on their own initiative to identify
problems, report potential non-compliances, and initiate timely and
effective corrective actions. Where we find that contractors have taken
effective and timely action to identify problems, report them, and fix
them, we generally do not take formal Enforcement Action. On the other
hand, any effort on the contractor to hide or avoid reporting serious
problems is the basis for escalated penalties. Penalties can also be
partially or fully mitigated if the contractor demonstrates that it has
aggressively moved to identify and effectively correct problems.
The staff is also leveraged through the use of Price-Anderson
coordinators in the field, as I mentioned before. Overall, these
personnel have played a critical role in the program's success. The
field office coordinators provide a bridge between the headquarters
enforcement office--an independent office within the Office of
Environment, Safety and Health--with the field offices, who are part of
line management. We have felt that it is important to actively involve
the field offices in the program because the enforcement program needs
to be a Department of Energy-wide program, not a program of the Office
of Environment, Safety and Health.
Frankly, we've found this arrangement to be working better at some
sites than in others, depending on the commitment of the individual
field office management, and we will be taking some steps to address
gaps. But we do not believe that we should have a large, central,
Headquarters-directed staff that primarily relies on numerous
inspections to drive safety and issues civil penalties as a matter of
course. That kind of approach would not serve to improve safety at the
Department, and it would not provide the right incentives for
contractors to be primarily responsible for their own safety programs.
The current enforcement and investigation process is clear and
straightforward. DOE's process and regulatory authority for enforcement
actions is embodied in a regulation (10 CFR Part 820), and supplemented
by the Enforcement Policy (Appendix A to 10 CFR Part 820) and various
guidance documents. The Office of Enforcement, in consultation with
field and program office management, decides which potential reported
or unreported noncompliances are significant enough to warrant
enforcement action. The first step is generally an investigation. The
investigation includes document review and on-site visits to gather
facts and circumstances, conduct confidential interviews, and
understand contractor actions already taken. The potential for
mitigation of civil penalties in enforcement actions provides an
incentive for contractors to improve safety performance.
If necessary, an informal enforcement conference is held with
senior contractor management and DOE field and program office
management to review the circumstances of the noncompliance, mitigating
factors, and the timeliness and adequacy of corrective actions. The
primary consideration in determining whether to move ahead with an
enforcement action is the actual or potential safety significance of a
violation, coupled with a determination of how aggressively the
contractor identified, reported and corrected the problem. DOE also
classifies the violation as either Severity Level I (the most
significant, with actual or potential significant consequences to
workers or the public), Severity Level II, or Severity Level III
(greater than minor significance and important to avoid a more
significant condition). The results of the investigation are documented
in an Investigation Summary report.
Based on the facts and significance of the noncompliance, DOE can
take any of the following enforcement actions:
<bullet> Enforcement letter, indicating that, based on the proper
actions having been taken by the contractor, the investigation
is being closed without further action.
<bullet> Notice of Violation with no civil penalty.
<bullet> Notice of Violation with civil penalty.
<bullet> Referral to the Department of Justice for criminal
prosecution.
In response to a Notice of Violation, contractors are required to
complete and document specific actions taken and planned to prevent
recurrence of similar events. Field Office personnel verify that
corrective actions are effective and complete before the case is
closed, and failure to complete effective corrective actions is the
basis for further enforcement action. Contractors have a wide variety
of administrative and judicial procedures available to them to respond
to a Notice of Violation. Information on the enforcement proceeding is
available to the public once DOE issues the Preliminary Notice of
Violation; prior to that point, material is confidential and considered
pre-decisional. It is the Department's policy to issue a press releases
with each issuance of a civil penalty.
Exclusion of Not-for Profit Laboratories From Civil Penalties.
In adopting the 1988 amendments to the Price-Anderson Act, Congress
elected to exempt seven specifically-named DOE not-for-profit
institutions from payment of civil penalties. The Department believes
that the reasons given for this action in 1988 remain valid today, and
recently recommended to Congress that the exclusion be extended to all
not-for-profit contractors. At the same time, the Department recommends
that Congress eliminate the current provision that allows for-profit
subcontractors of these institutions to avoid penalties.
In making this recommendation, the Department reviewed the
effectiveness of the current program on both for-profit and not-for-
profit contractors. It also looked at the most likely impacts on the
Department of subjecting not-for-profit institutions to civil
penalties. The views and experiences of each of the program offices
were considered, and different views were expressed in the course of
lengthy analysis and deliberation.
The Department's recommendation reflected the concern that
universities and other not-for-profit institutions who manage our
laboratories are unwilling to put their educational endowments at risk
for potential civil penalties that could be very substantial. Another
concern that was expressed is that if these contractors were subject to
penalties, DOE would have to increase the fees it pays to its nonprofit
contractors to compensate for the additional risk. Thus, making not-
for-profit contractors subject to civil penalties could have the
undesirable consequence of diverting funds away from DOE research with
no apparent concomitant increase in safety.
In judging this recommendation, it is important to keep in mind
that even though not-for-profits are exempt from civil penalties, they
are not exempt from enforcement of the Department's nuclear safety
rules. It is the Department's position that all of its contractors who
are subject to the rules--for-profit or not--are required to comply
with them.
In the case of a potential violation by one of the exempted
laboratories, the full investigation and enforcement process as
described above is carried out. That means the potential violations are
investigated, an enforcement conference is held, a determination is
made, and civil penalties are calculated just as with for-profit
contractors. In a public announcement, the contractor is told that were
it not for the statutory exemption, the full amount of the fine would
have to be paid. And just as with for-profit contractors, corrective
actions are required and monitored. It has been our experience that
this process has been generally effective in ensuring appropriate
contractor response.
The Department also believes that current safety-related
contractual provisions are an effective mechanism for holding not-for-
profit contractors accountable for safety. These contract provisions,
as well as DOE's application of contract mechanisms for its for-profit
and not-for-profit contractors, have been substantially strengthened
over the past decade. They include fee reduction or elimination, stop
work orders, and, ultimately, contract termination as was the case at
Brookhaven National Laboratory. All DOE contracts also now include
provisions on integrated safety management and clearly identify the
environment, health and safety requirements applicable to activities
under the contract. The Department also recently revised its fee policy
to allow DOE to put the contractor's entire performance-based fee at
risk where warranted by poor safety performance or failure to implement
integrated Safety Management systems.
In addition, Secretary Richardson has asked the recently-
established Safety Council to report back by the end of September on
further recommendations of contract mechanisms available to DOE to
reinforce the priority he assigns to safety performance. Among the
options the Safety Council is considering for not-for-profit
contractors are: reducing performance fee by the amount of any remitted
penalty assessed through the enforcement process; taking safety
performance into consideration in providing program funding to a DOE
facility; and ensuring the removal of personnel responsible for major
safety deficiencies.
Additional Nuclear Safety Rules
The GAO recommends that the Department act expeditiously to issue
the remaining enforceable rules covering nuclear safety requirements. I
agree with the GAO recommendation that it is now time to move forward
and complete the nuclear safety rulemaking. I have directed my staff to
work toward the goal of issuing a final rulemaking that will address
all the remaining issues by October 1. A major consideration is to
ensure that DOE contractors (1) implement the requirements included in
a contract pursuant to the ISM process in a manner that ensures
adequate protection of workers, members of the public, and the
environment and (2) evaluate the work and associated hazards
sufficiently to define the safety basis and then perform work within
that safety basis.
Let me emphasize that we do not believe that nuclear safety has
suffered because these rules have lagged behind. All the requirements
in the un-issued rules are contained in the Department's directives,
which are to be enforced through all the contracts.
Need to Clarify Applicability of Rules
The GAO accurately pointed out that some DOE contractors have
misinterpreted requirements about exactly which facilities and
activities are subject to enforcement action under the Department's QA
provisions in 10 CFR 830.120. The Department's clear and consistent
view is that the scope of the provisions includes all reactor and
nonreactor nuclear facilities. This was clear in the preamble to the QA
rule issued in 1994 which was reiterated in the General Counsel
interpretation, Ruling 1995-1, issued in 1996. We also expressed this
position to the contractor community in the 1998 Annual Report for the
Office of Enforcement. After the GAO finding, the Office of Enforcement
developed and will soon issue a formal Enforcement Guidance Supplement
to all field sites to further clarify the scope of Part 830. Finally,
as noted previously, the nuclear safety final rule will reiterate the
broad scope of the QA rules and other nuclear safety rules. The
rulemaking effort mentioned above will provide additional clarity
regarding the regulatory scope of all Part 830 provisions, including
QA.
That completes my testimony, Mr. Chairman. I would be pleased to
answer the Subcommittee's questions.
Mr. Upton. Thank you. Thank you, Dr. Michaels, and a I
apologize to Mr. Christopher, it's ``doctor''; correct? It is
not--oh, Dr. Michaels, oh, I'm sorry.
Dr. Michaels, I don't know whether you've seen the letter
which I'm going to put into the record and we'll address to
Chairman Bliley from an individual by the name of David Lappa.
Mr. Michaels. No, sir.
Mr. Upton. It just was faxed to us in the last couple of
days. But Secretary Richardson advocated a zero tolerance
policy for reprisals taken against whistle-blowers who raise
safety concerns. And according to this record--this letter
which I'm going to enter into the record, and maybe we can walk
that down.
Mr. David Lappa was an employee at Lawrence Livermore Lab.
He was apparently retaliated against for raising safety
concerns at the plutonium facility at Lawrence Livermore, and
in a letter sent in 1998, last year, exactly a year ago, excuse
me, a letter from OSHA to the director at Lawrence Livermore
confirmed that retaliation was taken into account by University
of California against Mr. Lappa for raising the safety concerns
that he indicates in this letter.
As you know DOE fined the University of California for
safety violations at the plutonium facility; however, according
to Mr. Lappa safety problems at the facility are more serious
than were expected. I'm just curious to know about the
University of California's documented retaliation against Mr.
Lappa to see if they are consistent with the Secretary's zero
tolerance policy and what might we see in the future for
similar cases?
[The letters follow:]
David A. Lappa
Livermore, CA 94550
June 27, 1999
Hon. Tom Bliley, Chairman
House Committee on Commerce
2409 Rayburn House Office Building
Washington, DC 20515
FAX: 202-226-2447
Dear Congressman Bliley, Your staff recently contacted me about my
experiences relevant to upcoming hearings on DOE's Price-Anderson
compliance. They subsequently asked me to write you to describe those
experiences. I believe your interest in this subject is important and
timely, and I am hereby responding to your staff's request.
Since obtaining my MS in nuclear engineering from the University of
Michigan in 1979, I have been employed full-time at Lawrence Livermore
National laboratory (LLNL). Like Los Alamos National Laboratory (LANL),
LLNL has always been operated by the University of California (UC)
under contract to the federal government.
In the summer of 1997, I served on a committee investigating
criticality safety infractions in LLNL's Plutonium Facility. Because
the committee's report failed to include important evidence about a
serious, potential root cause of the infractions, I declined to approve
the report. In return, I was reprised by UC management.
Initially, I made internal complaints; first to my department
supervisor and subsequently to LLNL's Staff Relations manager. Lacking
an adequate response, and having no recourse for further appeal within
UC, in 1997 December I filed a complaint with DOE under 10 CFR 708.
(You may want to examine that regulation's implementation by DOE. In
practice, it affords little protection to contract employees. Note
especially that complaints are now investigated by DOE-OIG.)
For the first two months, I engaged in what DOE termed ``informal
resolution'' discussions. By 1998 mid-February, informal resolution had
collapsed, and I had lost confidence in DOE-OIG's willingness and
ability to investigate my complaint. I believed DOE-OIG would not soon
investigate my complaint, nor that it would have adequate resources for
a serious investigation. I therefore filed a complaint under 42 USC
5851 with the US Department of Labor, effectively terminating my 10 CFR
708 complaint.
The DOL immediately began a serious investigation into my
allegations. By 1998 May, the DOL investigator had determined there was
merit in my complaint. On 1998 June 29, DOL issued a finding of
reprisal against UC, which UC did not appeal.
Unfortunately, UC spokesmen were quoted in the press as saying UC
``had done nothing wrong to Mr. Lappa'', and that UC did not appeal the
DOL decision in order to ``save taxpayer dollars.'' Moreover, on my
first day at work following the DOL decision, my department head
advised me that, ``It doesn't matter who's right or wrong.'' Worst of
all, the reprisals did not end.
Consequently, in 1998 September, I filed suit in California
superior court under California Government Code 8547.10 and other
statutes. That civil suit is in the discovery phase, in which we are
continuing to gather evidence of UC wrongdoing. In the course of that
discovery, we may uncover additional, significant evidence about UC's
willingness and ability to comply with Price-Anderson.
In assessing DOE's compliance under Price-Anderson, I hope your
committee carefully will examine UC's record of compliance. The
overwhelming majority of employees at LLNL are UC employees, subject to
UC policy and management. LLNL's activities covered under Price-
Anderson are greatly affected by UC management's attitude toward
compliance.
By virtue of its non-profit status, UC is not subject to paying the
fines levied against it under Price-Anderson. Moreover, when I asked
DOE management if they intended to act on the DOL finding of UC's
reprisal against me, I was told DOE does not want to ``micromanage''
LLNL.
I wish you success in your examination of DOE's Price-Anderson
compliance, and I again ask you to examine thoroughly UC's compliance
under that law. I regret that my civil suit complicates my
communications with your staff. UC policy strictly prohibits certain
types of communication with Congress, and my attorneys therefore have
instructed me to proceed cautiously in that regard.
Respectfully,
David A. Lappa
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Mr. Michaels. Thank you for sharing this with me. I've
heard of this case, I had not seen this letter. But obviously
this is of great concern to us and I'm certainly concerned
about the safety, alleged safety violations that are continuing
at the Livermore Laboratory and also greatly concerned about
the possibility that there are reprisals around whistle-
blowing, around safety at the facility. And certainly we'll
pursue that.
My understanding of the Secretary's policy is, he will
permit no reprisals or any negative activity against whistle-
blowers on safety issues or other issues. And this certainly
would be--a reprisal against him would obviously be
inconsistent with the Secretary's and DOE's policy.
Mr. Burr. Mr. Chairman, could I ask you to yield?
Mr. Upton. Sure.
Mr. Burr. I just want a clarification. Dr. Michaels, you
said you heard of the case?
Mr. Michaels. Yes.
Mr. Burr. Did you hear of the case, or did you know of the
action?
Mr. Michaels. I'm not sure, could you----
Mr. Burr. Could you describe for us how you heard about
this case? Was it in passing when you had a meal with somebody,
or was it official notification?
Mr. Michaels. No, there was no official notification.
Mr. Burr. Was there a conversation with the University of
California where they spelled this out?
Mr. Michaels. No, in discussing with Mr. Christopher the
various activities at Livermore, I heard about it.
Mr. Burr. Did you ever follow up to see whether there was
any credibility to what you heard?
Mr. Michaels. No, sir.
Mr. Burr. I thank the chairman for letting me clarify that.
Mr. Upton. Dr. Michaels, there seems to be some resistance
from the contractor community, including several contractors on
the second panel today, to your plans to promulgate additional
enforceable nuclear safety rules. And there have been claims
that it would cost millions of dollars for contractors to
comply with the new rules without adding a lot of new safety.
Do you believe more nuclear safety rules will improve safety
performance by the contractors?
Mr. Michaels. Yes, sir. Though I believe that our current
nuclear safety rules cover virtually everything that we need to
cover. What we found is that the quality assurance rule has
been very effective because it's a broad rule that applies to
virtually everything we need to get to in addition to the
radiation protection.
The additional rules that we think need to be promulgated
are not the entire list of nine that were in the original list
referred to, but the safety authorization basis rules we think
need to be put into what is called ``rule space''. They are
currently in our orders. And we think having them in rules will
be important. We would like to have the opportunity to use them
if we need them. I'm not sure that they would actually have a
direct impact, and I don't think there's a hazard out there
which we will address as a result of having that rule, but we
think having that rule will be one more implement that we can
use to protect people.
Mr. Upton. And just to follow up with your testimony you
thought that the remaining nine would be done and out the door
by October 1?
Mr. Michaels. No, sir. What we plan to do is issue rules
that cover the areas that we think are not covered by our
current rules. We don't need to issue all nine. We've looked
very carefully at the effect of our two rules currently. And we
think the quality assurance rule actually covers many of the
areas that are listed in the original nine that weren't
covered. We think there are three, the unanswered--there are
three of them in here--unreviewed safety questions, safety
analysis reports and technical safety requirements--that
require some rulemaking. The others are really covered in our
current rules.
The original list is essentially a duplication of our--a
mimicking of some of the NRC rules. What we found, and this,
again, was before I came here, but the complexity of the DOE
mission and primarily the DOE mission around decommissioning
and decontamination rather than building new facilities doesn't
require this set of rules. And we think we can do just as well
with new rules on those three areas as well as clarifying this
question of facilities versus activities which is another area
that GAO brought up.
Mr. Upton. Thank you. Mr. Klink.
Mr. Klink. Thank you, Mr. Chairman.
First, I would offer for the record a memorandum to the
Department Secretary from Mary Anne Sullivan dated September
25, 1998, and would ask that it be passed out to the members
and to the witnesses.
[The memorandum follows:]
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Mr. Klink. I would like to say that one of the issues here
is whether or not the nonprofit education institutions should
be exempted from civil penalties. Dr. Michaels, your office
recommended that they be subject to civil penalties, I believe;
is that correct?
Mr. Michaels. That's correct.
Mr. Klink. And you lost that argument?
Mr. Michaels. My office, but I wasn't present at the time.
Mr. Klink. Oh, our office made it, you weren't there at the
time?
Mr. Michaels. Right.
Mr. Klink. But your office made that?
Mr. Michaels. It predates me. There was a--well, I wouldn't
say that we lost the argument, there was a decision made, a
number of different offices within DOE registered their
opinions and the Secretary made a decision. We didn't concur--
--
Mr. Klink. You made an argument and it didn't stand up?
Mr. Michaels. Yes, sir.
Mr. Klink. Mr. Christopher said that he believes that he
gets a better response from the private contractors than from
the nonprofits. In fact, he told us that in 1996 Los Alamos and
Lawrence Livermore labs were in total denial. Your Price-
Anderson report to Congress says that civil fines work very
well. Can you explain to me why fines inspire better behavior
for profit contractors than for nonprofits?
Mr. Michaels. I think the theory the Department uses in
this case is looking how the contract and the relationship with
not-for-profits would work if we put in civil penalties that
were collectible. Given these are educational institutions
which have endowments on the line, it was felt that the
contract--the negotiation of the contracts--would be such that
the additional fees we would be required to pay them to cover
their liability would be far greater than the amount we would
collect in the fines. It would have relatively little
additional impact on safety because we believe safety is
quite--is protected very well with our current practice with
the nonprofits which is to go through the whole process, issue
the phantom fine, have the press release go out and essentially
raise the issue to the public and the university. And
universities obviously are very concerned about public
appearance.
Mr. Klink. Ms. Jones, does that argument hold water to you?
Ms. Jones. No, sir, I don't believe so. Just the last point
that Dr. Michaels was making that the not-for-profits are
really concerned about that publicity. I would also think the
for-profits would also be concerned about the publicity, so why
fine them?
The other issue is that for the nonprofits, maybe back in
1988 when they weren't getting a fee you could say that the
endowments of the university were at risk. But today there are
only two non-profit contractors that manage and operate DOE
facilities that have a fee less than $1 million, and those
annual fees go up to $8 million. Those fees are used for lab-
directed research and to pay administrative costs. GAO sees no
reason why these same fees could not be used to pay fines and
penalties.
Mr. Klink. Well, Dr. Michaels, the universities have
already said that they're afraid that their entire endowment
will be put at risk, and you, I think, mentioned this in your
opening statement. Is there any way we could work something out
where they would be liable only for the amount of their fee?
Mr. Michaels. Absolutely. And, in fact, what we are now
considering through the Safety Council is actually exactly
that, to have the--and we could do this administratively
without changing legislation. We could subtract the amount of
the fine up to the level of the fee. And I mentioned that in my
testimony, that is one of the things we are considering.
Mr. Klink. I want to make sure that we're talking about the
same thing. We're not talking performance management, we're
talking actually fines. You're talking about a--we're talking
about actually fining them.
Mr. Michaels. Well, we give the contractor, the not-for-
profit contractors, what you could call a ``fee'' essentially
that they can use and Ms. Jones talked about this in her
testimony, for various activities, they can't pocket the money,
they can use it for research. We could actually subtract the
amount of the fine or any other amount from that fee.
Mr. Klink. But the for-profits, if I'm not mistaken, and
then I'll ask Ms. Jones to step in here, they also get a
reduction in their fee, but they also can be fined in addition
to that. And I think that's--I'm talking about, can't we work
out the same thing with the nonprofits that they would be
fined. But, again, you're not risking the entire endowment, but
you're risking at least the amount up to the total of the fee
and fines?
Ms. Jones. You're correct, and the Secretary of Energy does
have the flexibility to base the amount of fines on the
contractor's ability to pay. So that would give him wide
latitude in terms of the amounts of fines that were assessed
against nonprofit contractors.
Mr. Klink. Just one final thing if you will bear with me,
Mr. Chairman, I'll pass out to the members and the witnesses,
we have an e-mail communication here from the University of
California and it lists all of the fines that it has paid to
various State and Federal agencies that do not exempt
universities when they violate the law. Without objection, I
would like to put that is in the record, Mr. Chairman.
Mr. Upton. So done.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] T8494.009
Mr. Klink. It lists a total of $941,489 in fines from 1992
to date. And I would like to note that all but $60,000 of these
fines were assessed against Los Alamos National Laboratory. The
university was not shut down because of this liability in
fines; why should they be exempt from Price-Anderson fines when
they are liable for these other fines? And I would like to hear
from Dr. Michaels and Ms. Jones.
Mr. Michaels. I think they speak for themselves. That they
are----
Mr. Klink. You agree that they should not be exempted.
Mr. Michaels. I think the Department has taken the position
that they should be exempted.
Mr. Klink. If they are not exempted in these other fines,
why should they be exempted in DOE fines? Should there be a
different rule for DOE versus any other kind of fines?
Mr. Michaels. Well, I think the Department and the
Secretary have essentially weighed these issues and we think we
can be as effective exempting them from the fines, but also
going through the regular process and using the contractual
mechanism.
Mr. Klink. Mr. Christopher, do you think they're as
effective? I mean, just your opinion and I'm not--you are under
oath, I just want to know--do you think it's--just to remind
you, I want to know if you think it's as effective.
Mr. Christopher. I think the sometimes virulent reaction
I've gotten from the contractors, the not-for-profits to the
press releases suggests that not having to pay the fines does
not make it as less noticed as you would think, but I think the
payment of fines would have some degree of effect particularly
with the--when you come to the equities, there are very
hazardous facilities at the University of California and others
as there are at the for-profits.
Mr. Klink. I was going to say, if it weren't true, I think
maybe what we would try to do, we would eliminate traffic
tickets and we would just publish everybody's name that speeds
an runs a stop sign. To heck with fines, if the publicity is
bad enough.
You make a very good point the fines are obviously
detrimental to the operation and probably would seem to me,
just as much to the nonprofits as the for-profits, and Ms.
Jones, I ask you--my time is up, I ask if you have any
comments?
Ms. Jones. I agree with the point that you're making, Mr.
Klink. Our report makes the same point--others have been fining
these nonprofits, they've been paying the fines, we think it's
an equity issue, and certainly the nonprofits should be paying
the fines just like the for-profits.
Mr. Klink. Thank you, Mr. Chairman.
Mr. Upton. Mr. Whitfield.
Mr. Whitfield. Thank you, Mr. Chairman.
Dr. Michaels, in your answer to the chairman and Mr. Burr's
brief discussion about Mr. Lappa and the alleged reprisal
against him, I had the opinion that you were really not aware
of that or it was not an issue that you had followed up on. In
reading the letter from Mr. Lappa and then also reading the
decision by the Department of Labor that in their opinion
reprisal action had been taken against him and he was demoted,
they required that certain actions be taken to compensate him
like $15,000 for compensatory damages, $16,000 for attorney
fees, expungement of all negative references, so forth and so
forth. Would you, in keeping with the Secretary's policy of not
reprising against any individual that brought up a safety
issue, report back to the committee the action that DOE has
taken in relationship to the University of California on this
specific case?
Mr. Michaels. I would be very pleased to.
[The following was received for the record:]
In March 1999, Secretary Richardson issued a policy statement on
``Safety Accountability and Performance.'' In this directive, he said
that ``there must be open communication between management and
employees and a zero tolerance policy for reprisals against those who
raise safety concerns. Free and open expression of employee concerns is
essential to safe and efficient accomplishment of the Department's
missions.''
The Secretary relies on DOE line and program management to enforce
this policy. Our office has worked with DOE field offices and
contractors on an ongoing basis for more than ten years to develop the
tools to prevent retaliation of any type. We have generally been
successful. When there are cases where retaliation has been determined
to have occurred, Secretary Richardson counts on his line managers to
take appropriate actions. DOE's contract with the University of
California prohibits the University from retaliating against employees
for whistleblowing. The University's final evaluation plan will be
reviewed to determine whether the fee can be reduced in response to a
finding of employee retaliation, or whether some other action will be
required under the contract.
Separately, through the enforcement process, DOE has the
discretionary authority to issue a Notice of Violation, when
appropriate, to a not for-profit contractor who is determined to have
retaliated against a contractor employee for raising a nuclear safety
concern.
In the case of Mr. Lappa, the Department of Labor issued an opinion
that Mr. Lappa was subject to reprisal. DOE is awaiting information
from the Department of Labor to determine whether there is a sufficient
basis upon which to issue a Notice of Violation under DOE's nuclear
safety enforcement program.
Mr. Whitfield. Thank you. Now, you're familiar with the
uranium enrichment plants at Paducah, Kentucky and Portsmouth,
Ohio. They've been privatized and now are operated by a private
company called USEC. But does the nuclear safety program of DOE
apply to the uranium enrichment plants?
Mr. Michaels. Only to the--what we call the ``legacy''
parts of the plant, not the actual uranium enrichment part. The
NRC is the regulatory agency for those. There are some areas,
though, around the facilities which DOE maintains its
responsibilities for. Essentially in the waste areas.
Mr. Whitfield. Okay.
Mr. Michaels. It's a limited--quite a limited part of those
facilities and involving far fewer workers than the USEC
facilities.
Mr. Whitfield. So it's included as one of the 34 sites in
the 13 States that are in your response bill----
Mr. Michaels. Yes, sir.
Mr. Whitfield. What relief would be available to a worker
who suffered an illness from exposure to some material in the
area that you're responsible for? Actually, what are they able
to do?
Mr. Michaels. Well, if an illness has already occurred,
that would be a very unfortunate outcome because that's already
beyond the enforcement issues, that's already someone is sick.
The current relief would be the State Workers' Compensation
System in either Kentucky or Ohio.
Mr. Whitfield. Right. Okay.
Mr. Michaels. The Secretary, as you may know, is working on
a proposal to develop additional mechanisms for relief for our
contractor employees at places like Paducah and Portsmouth. In
those cases where the State Workers' compensation system are
not adequate because the nature of the diseases are--you know,
they're often based on exposure to esoteric chemicals or to
radiation, state programs often don't deal with those programs
very well. And if at some point you would like additional
information on that we would be happy to provide it.
Mr. Whitfield. Now, it's my understanding that Bechtel
Jacobs is the contractor for environmental issues of that
plant, are you----
Mr. Michaels. Which plant are we speaking of? Of Paducah?
Mr. Whitfield. Paducah.
Mr. Michaels. Are they?
Mr. Whitfield. I'm not sure. Okay.
Mr. Michaels. Yes, but for the environmental--for the
legacy component of it, not for the use of----
Mr. Whitfield. For the legacy component, okay. But are you
aware if they've been fined for any non-compliance with safety
issues at all?
Mr. Michaels. No, sir, they have not.
Mr. Whitfield. Okay. All right. Mr. Chairman, I'll yield
back the balance of my time.
Mr. Upton. Thank you. Mr. Burr.
Mr. Burr. Thank you, Mr. Chairman.
Dr. Michaels, let me ask you, you've heard about
retaliation; did you follow up on it at all?
Mr. Michaels. No, I recently heard that in the overall
briefing on Lawrence Livermore and the situation there.
Mr. Burr. Were you aware that it was against DOE policy for
the DOE or any contractor to retaliate against whistle-blowers?
Mr. Michaels. I certainly--yes, I'm aware of that.
Mr. Burr. Given that you heard it, do you wish now you had
followed up on it?
Mr. Michaels. Well, no, I--I said, you know, in discussing
with Mr. Christopher recently around this particular Livermore
and he raised it and said, this is, you know, one of the issues
coming up. I said, ``Well, let's make sure we deal with this.''
Mr. Burr. Mr. Christopher, do you know of anybody at the
Department of Energy that's looked into this retaliation rumor?
Mr. Christopher. I can add a little bit more--more to that.
When the DOL finding--when we learned of the DOL finding, and
I'm not sure exactly how we learned of it through the process,
my staff has on several occasions requested the DOL report of
investigation so that we could review the facts of the case and
make some kind of recommendations to Dr. Michaels. We have not
received that yet, and I haven't pursued it since my last
request to the Department of Labor in lieu of other issues.
Now, I can explain to you what our options are, once a
finding--a retaliatory finding has been made by the Department
under Section 708 of the Atomic Act, which is what we would
first have to do. I could then issue a notice of violation to
the contractor--in this case the University of California--for
the act of retaliation itself and could then issue an
appropriate phantom find in this case for the act of
retaliation similar to the way we conducted the program in the
Nuclear Regulatory Commission once the finding and the
appellate process through the Department of Labor has concluded
to their investigatory and appeal process that retaliation did
occur.
Mr. Burr. And I didn't have a chance to read Mr. Lappa's
letter, but let me go down to the fifth paragraph, first page.
It says, ``For 2 months, I engaged in what DOE termed `informal
resolution' discussions. By 1998, mid-February, informal
resolution had collapsed, and I had lost confidence in DOE-
OIG's willingness and ability to investigate my complaint.''
Let me ask you Mr.--is it Christiansen?
Mr. Christopher. Christopher.
Mr. Burr. [continuing] Christopher. This was not a rumor at
DOE.
Mr. Christopher. Union
Mr. Burr. Mr. Lappa actually filed a formal complaint.
Mr. Christopher. Correct. Correct.
Mr. Burr. Now, there is, or there was, or there was a
request for it to be investigated. Is it currently being
investigated by the Department of Energy?
Mr. Christopher. No. To my knowledge it is not. Although
the entity that there is an Office of Employee concerns that
actively is responsible for the investigation of----
Mr. Burr. Now, this is a policy that the Secretary has
referred to frequently with some of the issues that surround
DOE labs that there is a zero tolerance for retaliation. This
complaint was made, as I read it, 1997 in December. How long do
you think that a complaint of this nature should take for a
resolution?
Mr. Michaels. Again, I'm going to have to say, I don't
really know because the--we don't do the--have the
responsibility for the investigatory process. And there is a
process within the Office of Inspector General.
Mr. Burr. Is there a policy within EH as it relates to your
responsibility over contractors that there not be retaliation?
Is there anywhere in the contract that it says that a
contractor cannot retaliate on a whistle-blower?
Mr. Michaels. I don't know the answer to that.
Mr. Burr. Let me ask you about the contract, if I could,
specifically Los Alamos. As I read the contract, correct me if
I'm wrong, that contract calls for University of California to
receive a $7 million performance fee of which a program
performance fee of $4.9 million shall be at risk in accordance
with paragraph [b] below. Paragraph [b] below reads, fee at
risk, ``if the contractor's performance in any administrative
operational function area fails to achieve a good rating the
contractor's performance--program performance fee shall be
reduced by $245,000 for each administrative and operational
function area in which a good rating is not achieved.''
Let me ask you how many times since 1997 and for the
beginning of this current contract have in fact the University
of California lost 245 for--245,000 for a rating that did not
reach good?
Mr. Michaels. I don't know. We would have to ask the
contract administrators.
Mr. Burr. Again, in clause 5.4, special assessment
sections, it says that ``the DOE shall conduct special
assessments of the laboratories. The purpose of the reviews is
to determine whether the overall level of performance achieved
is satisfactory with regard to the performance objectives in
Appendix F and whether substantial progress has been made in
meeting the requirements of this clause.'' Can you give me any
indication as to the performance of the University of
California as it relates to the Los Alamos contract?
Mr. Michaels. I can't give you specifics. It's only very
recently that in discussions with the Secretary that this issue
has come up in terms of contract--our involvement, the Agency's
direct involvement in contracts and he's in discussions around
this particular issue. He has said, I want----
Mr. Burr. You shared with us your personal belief, I
believe.
Mr. Michaels. Excuse me?
Mr. Burr. You shared with us that it was now EH's position
that nonprofits should be exempt.
Mr. Michaels. It's the Department's position.
Mr. Burr. I'm asking you about EH. EH had a recommendation
that they should not be exempt, you said, ``I wasn't there
then''; what is your position on it? Should they or shouldn't
they be exempt?
Mr. Michaels. I have no personal position on this.
Mr. Burr. You as the head of EH, what is your position?
Mr. Michaels. If the same discussion arose again, the
positions would be unchanged. EH would hold the position that
contractors should not be exempt.
Mr. Burr. So the argument that--or the position that I
heard stated by you and by the Department of Energy is that we
would put at risk the endowments of these institutions. Let me
ask you if the structure of this contract puts at risk the
endowment of these nonprofits?
Mr. Michaels. Oh, I don't know----
Mr. Burr. Performance-based fees?
Mr. Michaels. The piece of the contract you read doesn't,
but I certainly can't comment on the whole contract.
Mr. Burr. Clearly if they didn't receive a good rating or
above, they lost money. They were fined. I mean, in the
technical terms they lost part of their performance fee. Does
that put their endowment at risk?
Mr. Michaels. That piece of it doesn't, no.
Mr. Burr. If it did, do you think they would sign the
contract?
Mr. Michaels. I suspect not.
Mr. Burr. What do you see that's different in this
performance-based incentive that they go through and the fine
that they might be subjected to if we did not reauthorize the
Price-Anderson Act?
Mr. Michaels. The fines that they could be subjected to are
theoretically quite a bit larger than the amount of money
you're speaking about.
Mr. Burr. Consistent with the charts that I've seen
relative to what you have fined them.
Mr. Michaels. Well, the amounts we have fined them----
Mr. Burr. They have $4.9 million at stake on an annual
basis.
Mr. Michaels. In their fee, correct.
Mr. Burr. Two-thirds of their contract amount is in
jeopardy if your rating is below good.
Mr. Michaels. If the environmental health rating and
safety, correct.
Mr. Burr. Let me ask you, what was there--since the
contract calls for an annual DOE review, one of the areas is
safeguards and safety, what was their rating in the last
review?
Mr. Michaels. Oh, I couldn't tell you that. I would be
happy to get back to you with that. But we don't conduct that
review.
Mr. Burr. But would that review affect in any way, shape,
or form your decision relative to the extension of the Price-
Anderson Act?
Mr. Michaels. I'm not following your question.
Mr. Burr. I mean, is it something that you looked at as you
determined EH's position on whether Price-Anderson should be
reauthorized--extended? To see what the performance, what the
rating was that they currently had to see whether there was a
profit?
Mr. Michaels. I would think----
Mr. Burr. And isn't an annual rating going to be an
indication as to what you're going to see next year, and----
Mr. Michaels. Sure.
Mr. Burr. [continuing] the year after, and the year after?
Mr. Michaels. It's one of the piece we take into account,
yes.
Mr. Burr. So what was their rating?
Mr. Michaels. I don't know. This decision--I can't
personally tell you, these decisions were all made before I
arrived.
Mr. Burr. You're in an enviable position of denial.
The chairman has been lenient so let me take this
opportunity to yield back.
Mr. Upton. Thank you. Mr. Bilbray?
Mr. Bilbray. Mr. Chairman, I'll just try to be real short.
I just wanted to make sure that we did not make assumptions
based on a single model without looking at other aspects. And I
guess I'd like to drop this between the Doctor and Ms. Jones,
and I know you guys are sort of dominating the field here. But
the issue of fining nonprofits, making an assumption that they
would be more accountable; Ms. Jones, would you say they would
be more accountable if their endowments were susceptible to
fining?
Ms. Jones. I think DOE has reached the conclusion that the
fines and penalties in their enforcement program have certainly
enhanced safety for the for-profits. I think that same fine and
penalty would help enhance safety at the not-for-profits as
well, but we are not suggesting that the endowments be placed
at risk.
Mr. Bilbray. Now, in certain other fields such as
enforcement of hazardous substances and other stuff from the
State fining they've gone in there, has there been any
indication though under those fines that the nonprofits have
become, let's say, more sensitive or more efficient in
addressing those problems because they were fined by the State
agencies?
Ms. Jones. I'm not sure we have the direct evidence that
would show that, Mr. Bilbray. I think that inherent value of a
fine or penalty is in a sense to hurt somebody's pocketbook.
Mr. Bilbray. Okay. And, Doctor, you can jump in on this,
but here's the thing I want to get to, and I'll say this as
somebody who spent 20 years in local and State Government
agencies, the for-profit does not have the inherent large
bureaucracy and I want to make sure we separate small, not-for-
profit organizations that are very cost effective and very
responsive as opposed to larger nonprofit agencies especially
educational institutions that are very insulated bureaucracies.
Now, when someone in the for-profit gets a fine, you know
there's going to be heads rolling. I think that's a pretty--
pretty, you know, hard fact. But in a large bureaucracy, when
you have civil service protection, when you have tenure, I just
got to ask you very fairly, can we really say that we're going
to compare apples to apples and oranges to oranges? Do we think
we'll ever get the efficiencies and the responsiveness and the
sensitivity out of these large bureaucracies with their built
in insensitivities; cant fire somebody, can't demote them, and
whatever to the level.
Will you admit that we're not going to--basically we do
have limits to the ability to make those large, not-for-profit
organizations as responsive as a for-profit organization? And
Doctor, jump in, either one.
Mr. Michaels. We certainly think so. That's why we think
actually in terms of the not-for-profits, the whole mechanism
of safety enforcement including essentially, you know, what we
hope is some public humiliation will have at least some major
impact, but we know we have to be ever vigilant because we know
that in fact the dynamics of organisms that are not-for-profit
are different than for-profits. And it's a hard challenge and
one we always have to deal with. And certainly that's one of
the issues, I think it's come up not just in safety, but in
security.
Mr. Bilbray. Ms. Jones.
Ms. Jones. Yes, I think there are two issues here. One is
that fining for-profits, is going to hurt their profit, it's
going to hurt the money that they want to make. But if we're
going to be fining, for example, the University of California,
where it's going to hurt them is that they won't be able to do
as much lab-directed research. The second issue is that we're
talking about accountability here, Mr. Bilbray, and I'm not
sure that it's fair to say that because they have a larger
bureaucracy that they shouldn't be held equally as accountable
as a private for-profit company.
Mr. Bilbray. Okay. Well, when we get into these issues and
we talking about these organizations or groups, the fact is
accountability to really be effective in an you management team
is for the accountability to finally trickle down to the
individuals who have actually made the decisions within those
organizations.
I'm just saying that working with traditional bureaucracies
with all the civil service protection, all the tenure
protection, especially when you get into the larger educational
institutions. The ability to hold any one individual
accountable is quite different than what we have in the private
sector. You know, there's so many firewalls built to stop
abuses in the public sector that it's created basically
fireproof situations where it's really hard to finally get into
the individual who is responsible. That's why we have lateral
transfers, people being moved from one department to the other,
basically because you can't do what you can do with the private
sector. And I just want us to just accept the nature of the
creature that for-profits have a sensitivity that it's going to
be really tough for us to make the major institutions address.
Thank you, Mr. Chairman.
Mr. Upton. Mr. Stupak?
Mr. Stupak. Well, thank you, Mr. Chairman, and I apologize
for being late. My plane was over an hour late getting in. But
I do have some questions, if I may of Mr. Christopher, if I
will.
Is it your practice to issue press releases when you have
assessed a fine against a contractor?
Mr. Christopher. The process that's been--yes; the process
that's been established is that once we complete the
deliberative investigatory process, make a determination,
prepare the necessary documentation that working with the
communication staff that they then prepare a press release boil
the issue down to more understandable, less technical terms and
then a press release is issued as for cases that involve civil
penalties.
We don't now issue civil penalties for what we call the
``routine notice of violation'' without a civil penalty.
Mr. Stupak. And for nonprofits?
Mr. Christopher. We treat them the same.
Mr. Stupak. Treat them the same?
Mr. Christopher. Yes.
Mr. Stupak. And is that--I guess you would call it bad
publicity, is that about the only club you have on the
nonprofits?
Mr. Christopher. Well, it's clearly the reason that we
developed the concept of the phantom fine is in the absence of
the ability to do something, it seemed to be the best to treat
them the same as the for-profits and go through the entire
process including the press release because it would appear to
be at least somewhat effective in raising the sensitivity to
the issues.
Mr. Stupak. Sure. So you call that the phantom fine?
Mr. Christopher. Yes.
Mr. Stupak. In the non-profits, they realize that you're
going to issue a press release including the phantom fine in
that press release?
Mr. Christopher. Yes, as the process has evolved over the
last 2 years, it's become apparent that that's how we do
business; yes.
Mr. Stupak. What happened to the press release that your
office drafted for the second Livermore fine?
Mr. Christopher. I'll tell you what I know. The action was
issued as a normal--the enforcement action itself was issued as
a normal course of business, and in the process I just
described, a press release was prepared and the communications
folks, I did validate it's technical accuracy, and from there
it is forwarded to the front office through the public affairs
and congressional affairs, and from there I don't know what
happened to it.
Mr. Stupak. So somewhere between public affairs and
congressional affairs it never was put out publicly?
Mr. Christopher. It was not issued publicly; that's
correct.
Mr. Stupak. Mr. Chairman, I would like to place in the
record a set of e-mails concerning the press release. Jeff
Garberson from Livermore's public affairs office complains that
he can't understand, ``how DOE management can claim to want to
form and promote a cohesive organization, some kind of happy
family in which contractors rush eagerly to Washington to be
part of the ``good news'' machine, with this practice of no
notice, `gotcha' publicity.''
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Mr. Stupak. Now, Mr. Garberson seems to think that DOE
cannot say anything about his lab. What do you think? The labs
don't want fines, you have the phantom fine; they don't want
the publicity. So how are we going to change their behavior?
Where is the accountability of these labs?
Mr. Christopher. Well, I think in terms of--from my
perspective as a regulator in the isolate filed of Price-
Anderson, you know, our function is to try to raise the
sensitivity of, you know, of accountability to assign
responsibility to the University in an appropriate public way
so that there is some public--one you want the public to know
that there is some reasonably credible resolution to an issue
to bring an issue to closure. I think it's very, very
important, and in cases where we've operated properly at many
sites, that press release which has demonstrated to the public
that something of a serious nature happened at one of their
sites which it inevitably will because of the difficulty--the
inherent difficulty with our sites that if the Department can
illustrate that it demonstrates that it had its act together,
that it's had an appropriate measured response being my case
from an enforcement perspective requiring certain things to be
done and specific accountabilities if that fails to be done,
then I think--and we've communicated that through the press
release, I think our experience has shown that the public has
said that's what we expect DOE to do, to take care of business.
So----
Mr. Stupak. But if you're going to bring this to closure,
if we take the second Livermore fine and if it got up to, as
far as you know, public affairs, we understand, or we've been
told that the Acting Secretary has sort of put an end to that
one, how do you bring that one to closure then?
Mr. Christopher. From a regulator's standpoint I'd stay in
regulatory space and I ensure that the commitments that they've
made to correct the situation are adhered to and if they're
not, then pursue them--pursue them again. That's about as far
as I can go----
Mr. Stupak. That's as far as----
Mr. Christopher. [continuing] Yes, sir.
Mr. Stupak. Mr. Chairman, I've got one more question, if I
may?
Mr. Upton. Go ahead.
Mr. Stupak. Dr. Michaels, this did not happen on your
watch, did it? And can you explain it or are you going to allow
this to happen again?
Mr. Michaels. No, sir. In fact, when I heard about this
after I took office in the initial Price-Anderson notice of
violation that came out of Mr. Christopher's office, you know,
I inquired about this history and it was made very clear to me
that that would never happen again, or at least not on my
watch. In fact, I'm quite impressed that the Secretary is--you
know, to the contrary, is eager to get these out and to play a
role to make sure that the maximum impact can be had.
It also is worth noting, though, that the mechanism for
getting the press release and the information about notice of
violations out is not merely sending a press release. The
information goes on our web site automatically, and, in fact,
the second Livermore notice of violations actually did get out
to the media and was widely disseminated because it was up on
our web site and the reports at this point know to look for it.
So even though there was some problem in getting it out, it
actually did get out quite widely and I was, you know,
certainly pleased that that did happen. But it would--I would
like to be able to tell you that that's never going to happen
on my watch. Obviously I can't guarantee it, but----
Mr. Stupak. Thank you. Thank you, Mr. Chairman.
Mr. Upton. Mr. Bryant.
Mr. Bryant. Thank you, Mr. Chairman and I thank you for
holding this hearing. Likewise, I had the airplane flying in
too. I don't think we were on the same plane, but I apologize
to the panel. I would like to ask Ms. Jones a question and I'm
sure you've answered this already in my absence. But I would
ask you the GAO apparently now is recommending something
different than perhaps it recommended earlier this year, March
maybe of 1999 regarding this issue. Would you again sort of
boil it down for me as to why that change has occurred with GAO
in its review of this issue?
Ms. Jones. I think the basic reason for that change, Mr.
Bryant would be because things have changed since 1988
particularly in terms of the argument that DOE and it's non-
profit contractors have been making that their assets would be
at risk, university assets, for example, would be at risk if,
in fact, they had to pay the monetary fines.
Our position is that almost all of these nonprofit
contractors, all but one, in fact, are getting fees and that
the monetary penalties could be paid from those fees. So that's
one of the basic reasons why we believe that the Congress
should consider changing the law.
Mr. Bryant. Mr. Chairman, I will yield back my time.
Mr. Upton. Thank you. There may be some members with
additional questions. I guess I just want to follow up on Mr.
Whitfield's question. Would you then say that you believe that
the assets need to be somewhat at risk beyond otherwise the
penalties that might be there?
Ms. Jones. I'm sorry, Mr. Upton, I'm not sure I understand
the thrust of the question.
Mr. Upton. The contract mechanisms that are there, the
fines, the phantom fines, do you think we need to go beyond
that and actually have some of the assets at risk?
Ms. Jones. Oh, no, sir, I didn't mean to imply that. No, I
believe that back in 1988 when these exemptions were granted,
the nonprofits were not getting fees. Maybe a small
administrative fee, but they were not getting the kind of fees
that they get now. As I said earlier, there's only two
contractors that are getting below $1 million in available
fees. So what I was saying is that any penalty or fine could
come from those fees and therefore the assets, the actual
assets of the nonprofit universities would not have to be at
risk. It would just be the fee that would be at risk.
Mr. Upton. Okay. Got it.
Mr. Stupak, do you have additional questions?
Mr. Stupak. No.
Mr. Upton. Mr. Whitfield?
Mr. Whitfield. No, thank you.
Mr. Upton. Mr. Burr?
Mr. Burr. Yes, sir. Thank you, Mr. Chairman.
Let me ask you, Dr. Michaels, you said, I believe, that
other departments had the ability to comment on the decision
that DOE had relative to Price-Anderson Act extension through
other offices.
Mr. Michaels. Yes.
Mr. Burr. Tell me which offices those were?
Mr. Michaels. I assume, now, again, I wasn't here for this,
but I assume that all of the program offices would have some
role if you ask for comment; defense programs, the Offices of
Science, perhaps environmental management.
Mr. Burr. Let me ask Mr. Christopher, were you here?
Mr. Christopher. Yes, I was.
Mr. Burr. Okay. Were there any other departments that
expressed the same concern that E&H did at the time?
Mr. Christopher. My recollection is that I'm gone off in my
memory now. There were several field office elements--field
office organizations that expressed, and I don't remember which
ones to be frank, support for the original EH proposal. My
recollection is also that most of the major program offices
were in opposition to that proposal.
Mr. Burr. Were in opposition to?
Mr. Christopher. To the proposal to eliminate the exemption
of civil penalties.
Mr. Burr. So E&H for sure and others expressed----
Mr. Christopher. It is my recollection that several, at
least two field offices communicated their belief that the
civil penalty exemption for laboratories should be removed. The
majority or the remainder opposed----
Mr. Burr. How do you think that your contractors are going
to respond to your stated belief that maybe we ought the take
these fines out of the fees? This is something new; right?
Mr. Christopher. It is, yes.
Mr. Burr. Are they going to be supportive of that?
Mr. Christopher. I wouldn't doubt it.
Mr. Burr. As a matter of fact, in Mr.--I believe in Mr.
Stupak's e-mail copy----
Mr. Stupak. It's not on my e-mail.
Mr. Burr. The one that he submitted, I thank you, I think
from Jeff Garberson, public affairs office, I would take at the
University of California, he said that Washington strongly
criticizes Lawrence Livermore for safety violations in our
plutonium operations and levying a $157,000 fine which can't
actually be collected because of the terms of our contract.
Mr. Christopher. Well, actually it's not--it's true, it's
not the terms of the contract, it's the statutory exemption the
contract----
Mr. Burr. Don't the terms of the contract allow you to
penalize them for performance less than exceptional?
Mr. Christopher. I don't--in terms of the--when it comes to
the contract performance measures, as a regulator I don't fee--
--
Mr. Burr. Let me go to Ms. Jones.
Mr. Christopher. [continuing] so I can't answer your
question.
Ms. Jones. Mr. Burr, yes it does.
Mr. Burr. Do we have a huge disconnect between different
arms of the Department of Energy where regulators, and I don't
say this to be critical, regulators have no clue as to what's
in the contract for the contractor that they're trying the
manage for safety and for security.
Ms. Jones. Yes. I would also say that we support
performance-based contracting that. We think it's a good
mechanism for safety.
Mr. Burr. Could you define your understanding of
performance fees?
Ms. Jones. Performance fees are something where you would
say to the contractor, you need to operate the his facility
within the safety rules promulgated by the Department of
Energy. And then there's a judgment on the Department of
Energy's side of how well they did in terms of meeting that
goal.
Mr. Burr. Under the criteria that you would use to evaluate
if somebody had a plutonium explosion. Now, I'm not going to
profess to know the magnitude of something like that. I believe
you might. Would that receive, in that given year, a good,
satisfactory, excellent, what type of rating?
Ms. Jones. The problem, Mr. Burr, is that unfortunately
that's one event. And the way DOE determines if it's good,
excellent, fair, or poor----
Mr. Burr. It's under a point system----
Ms. Jones. [continuing] in terms of safety,----
Mr. Burr. [continuing] it's a point system, isn't it?
Ms. Jones. [continuing] is lots of different events. So
they might take away a little bit of money for that one thing,
but they could give them an overall good or excellent rating.
Mr. Burr. So under the contract method that we're currently
in, a contractor could have a serious violation but because of
the points methods that they use, they might never be penalized
based upon the performance fee?
Ms. Jones. That's correct. Our report points out that we
don't think DOE has had a really good track record of using
these contract mechanisms to penalize the contractor whether
you're talking about safety, security, or other things. I think
we used the example of Lawrence Livermore last year. They got
96 percent of the fee that they were able to get, and yet they
had a number of very significant safety problems.
Mr. Burr. Let me ask you, either Dr. Michaels or Mr.
Christopher, now, that's a site profile for Lawrence Livermore,
this is one for Los Alamos. I would take for granted that an
annual site profile is done on all facilities; is that an
accurate----
Mr. Michaels. I don't know if they're done. That document
was done by the Office of Oversight, is that----
Mr. Burr. The office of Oversight and Environmental Safety
in Health.
Mr. Michaels. Well, we tried to visit one. We try to visit
each site, it's a little more than every year at this point,
unfortunately, so I don't know that we produce a new one every
year on an annual basis.
Mr. Burr. But that's under your area; isn't it?
Mr. Michaels. Yes, sir.
Mr. Burr. And tell me what the latest site profile of
Lawrence Livermore suggested?
Mr. Michaels. I couldn't tell you that off-hand. If you
have it in front of me, perhaps you could share that with me.
Mr. Burr. I would be happy to.
Mr. Michaels. Yes.
Mr. Burr. Have you ever seen it?
Mr. Michaels. No, I have seen it, but, you know, we have
quite a few sites and I'm not up-to-date on all of them.
Mr. Burr. It's not very complimentary. And it's your area.
Mr. Michaels. No, I'm not surprised. We tend to--when we go
out to some of these sites, some of them we think we are doing
well, we know that Livermore is not doing that well.
Mr. Burr. And yet what I hear you saying today is we want
to continue what we're doing because it's working. And what I
hear over here is no matter how much they continue to do what
they're currently doing, it ain't going to work.
Mr. Michaels. No, you don't hear that from me. What you
hear from me is the Department has made a decision which
actually, and you asked my personal opinion, I think a good
argument could be made on the other side that fines will not
necessarily improve that performance. I think we have to think
about ways to improve the performance, but if the issues is
merely on fines, I frankly think that's not going to have a
major impact. If we collected $200,000 from the University of
California last year, I'm not sure we would have that much
better of a safety performance, sir.
Mr. Burr. You and I found something to agree on. I'm less
concerned with the question of Price-Anderson which I
understand is your expertise. And I'm more concerned with how
we get the safety of these facilities to where our friends on
the other side of the table can look at it and say, my gosh,
it's working.
Mr. Michaels. No, I agree with you, and we are trying to
look at the contract to say, are there are things we can do,
are there other mechanisms we can use? And frankly, that's a
great concern of mine that I would, you know, look for
assistance from----
Mr. Burr. Let me in conclusion suggest to you that I think
the Department of Energy has a great deal of work to do, if for
no more understanding what's going on with their contractors. I
don't think that there's a good understanding of, one, what the
relationship is. I think that was expressed in one of the
documents entered for the record. I think that the belief that
there is this fear under the current system or potentially
under some modification of the Price-Anderson Act, that fear
doesn't exist, Dr. Michaels. I think that it's time you sit
down and figure out with the recommendations of GAO what gives
it teeth, what assures the safety, and clearly these are
institutions that are going to be under assault from the
standpoint of security as well, and I expect to be as tough if
not tougher on that side than I am on the safeguard side.
With that, Mr. Chairman, I yield back.
Mr. Whitfield. Mr. Chairman, I would like to ask one
additional question.
Mr. Upton. Go ahead then.
Mr. Whitfield. The Price-Anderson Act was adopted in 1988,
so in those 11 years the Department of Energy has evidently
promulgated only 2 of 11 rules. Do you have a date in the
future that you are expecting to complete the other nine rules?
Mr. Michaels. Yes, sir. Well, we don't expect the complete
the other nine rules because what we've determined is that
original projection of 11 rules is not what we need. What we--
as you know, we promulgated two rules, radiation protection and
quality assurance. The quality assurance rule is a very broad
rule. Essentially what it says is, contractors will be held
accountable for the procedures that they state that they will
follow. And they state that they will follow good procedures
because they have to in every area. And when we go and we
simply say, did you follow this procedure, and virtually
everything we need to do is covered by that rule. There are
some areas which we think are not covered by that rule, 3 of
the 9, and we hope to get them out by the end of this year and
my staff is working hard on that.
Mr. Whitfield. So basically you're saying you think you
need 5 rules rather than 11?
Mr. Michaels. Yes, or you could count them. We could put
one rule out that will cover those three. It's an arbitrary
distinction.
Mr. Whitfield. Okay.
Mr. Michaels. But the distinction really is arbitrary We
think we can have a complete set of rules by the end of the
year.
Mr. Whitfield. And that's the plan by the end of the year?
Mr. Michaels. That's the plan, absolutely, sir.
Mr. Whitfield. I yield back the balance of my time.
Mr. Upton. Mr. Bilbray, do you have any additional
questions?
Mr. Bilbray. No, I don't.
Mr. Upton. Mr. Whitfield?
Mr. Whitfield. No.
Mr. Upton. Okay. Thank you very much for coming out.
This panel is excused.
The second panel will consist of Mr. Richard Miller from
PACE; Mr. Robert Van Ness, Assistant Vice President, University
of California; Mr. Arthur Sussman, Vice President of Argonne
National Labs in Chicago; Mr. Robert Card, President of Kaiser-
Hill; and Mr. Lincoln Hall, Vice President for Operations,
Energy and Environment Sector, Lockheed Martin.
Gentlemen, welcome. As you saw with our first panel, we
have a long-standing tradition of taking testimony under oath.
Do any of you have objection to that?
[No response.]
Mr. Upton. If not, can you get ready, do any of you need
counsel? With that, if you would stand and raise your right
hand. Do you swear to tell the truth, the whole truth, and
nothing but the truth so help you God?
Mr. Miller. I do.
Mr. Van Ness. I do.
Mr. Sussman. I do.
Mr. Card. I do.
Mr. Hall. I do.
Mr. Upton. Thank you, you're now under oath, and as you
know, some of you based on experience would try to limit your
opening remarks to 5 minutes.
We'll start with Mr. Miller. Thank you for coming.
TESTIMONY OF RICHARD D. MILLER, POLICY ANALYST, PAPER, ALLIED-
INDUSTRIAL, CHEMICAL AND ENERGY WORKERS UNION; ROBERT L. VAN
NESS, SENIOR VICE PRESIDENT, UNIVERSITY OF CALIFORNIA; ARTHUR
M. SUSSMAN, VICE PRESIDENT, ARGONNE NATIONAL LABORATORY,
UNIVERSITY OF CHICAGO; ROBERT G. CARD, PRESIDENT, KAISER-HILL
COMPANY, L.L.C., ROCKY FLATS ENVIRONMENT TECHNOLOGY SITE; AND
LINCOLN E. HALL, VICE PRESIDENT FOR OPERATIONS, ENERGY &
ENVIRONMENT SECTOR, LOCKHEED MARTIN CORPORATION
Mr. Miller. Thank you, Mr. Chairman.
I would like to thank the committee for inviting us to
testify today. My name is Richard Miller, I'm a policy analyst
for the Paper, Allied Industrial Chemical and Energy Workers
Union. We represent workers at 11 DOE sites within the nuclear
complex. These include Hanford, the Idaho National Engineering
Labs, Grand Junction, the waste isolation pilot project,
Oakridge, Portsmouth, Mound, Brookhaven, Argonne East and West,
and the Paducah Gas Use Diffusion plant. And I'm pleased to see
Mr. Whitfield is here today. He's been a very vigilant ally in
overseeing activities at that facility.
The Price-Anderson civil enforcement authority is
established in a context for DOE indemnified contractors up to
$9.43 billion per nuclear incident. Thus it should be seen that
not only do nuclear workers, but tax payers have a distinct
interest in assuring complete and unflinching compliance by its
contractors with nuclear safety rules.
Second, today's hearing we believe should be viewed in
another context, and that is that over the past several years
DOE has permitted its site representative program to virtually
wither on the vine from staff reductions and reductions in
diminished responsibilities.
We also understand that DOE is planning to abolish this
formerly valuable site oversight program and so we're losing a
measure of accountability.
Second, the Secretary of Energy announced earlier this year
that the Department no longer intends to pursue external safety
regulation. Thereby reversing the path it had been following
for the past 4 years. Thus, despite the rhetoric about
increasing accountability for safety the Department has
proposed no alternatives to save discussions about adjusting
contractor award fees for safety performance.
These are blunt and largely unworkable policy devices which
come into effect only after failure which are in competition
with other incentive fees to expedite completion of work
activities and are viewed quite skeptically by the workers who
are ostensibly the beneficiaries of these policy devices. In
light of this vacuum, we believe this hearing is timely and
quite welcomed.
As noted earlier DOE has promulgated only 2 of the 11
nuclear safety rules in 11 years. We think this is wholly
inadequate. Second, we believe that there's a reason that has
not been adequately explored in the earlier testimony about why
the rules have not gone out the door. The reason is, is that
within the Department there are forcing mechanisms whether they
be the senior field management counsel that's been established,
or other devices where anybody who wants to block a rule can
say, I object. And at that point the Assistant Secretary of
Energy for Environment, Safety, and Health is deprived of the
tools he or she needs to do their job.
In fact, the Assistant Secretary has to seek permission
from the regulated entities in order to regulate them. And that
is the root cause of the problem. The pattern of bureaucratic
undermining of accountability for safety we note is strikingly
similar to the undermining of security controls identified by
Senator Rudman and the special panel of the President's Foreign
Intelligence Advisory Board. That panel found that, and I
quote, ``The DOE and weapons laboratories have a deeply rooted
culture of low regard for, and at times, hostility to security
issues which has continually frustrated the efforts of its
internal and external critics, notably the GAO and the House
Energy and Commerce Committee. Thus, even when there's been
leadership within DOE that supported contractor accountability
measures for safety the bureaucracy has advantages which the
FAIB also noted. And these are namely time and proven skills
and artful dodging and passive intransigence. These advantages
have given the bureaucracy the upper hand to ward our efforts
to get these rules out the door over the past 11 years.
And we heard today how the DOE is discussing an October
1999 deadline to make a decision on rules and issue them by
January 2000. We would like to encourage this committee to pass
legislation to take DOE up on its January 2000 commitment and
legislate that as a hammer date, and further to provide the
public with the right to sue the Department if they don't live
up to that hammer date.
Given the obstacles that have to be overcome and the
endless delaying tactics, we think it's time for Congress to
solve the problem for the Energy Department.
Second, DOE as noted earlier relies on five people to cover
34 nuclear sites in 13 states. Let me point out, that's over
2,000 nuclear facilities and you've got five people to cover
it. We believe DOE has staff resources from the former site
oversight representative program that it could move. It could
move 14 to 17 people into enforcement right away because
they're not doing anything. They've got the staff slots and you
don't have to appropriate another nickel. We would urge you to
push the Department of Energy to take that internal reform.
We agree that nonprofits should be fully fined and
penalized up to the limit of 3 years retroactive of their award
fees and finally we believe that the DOE should provide workers
and the public with access to it's noncompliance tracking
system. This is the computer system where the self reports by
the contractor go to the Energy Department. Apparently workers
have no idea if violations are even reported to the DOE
voluntarily. We think that the workers have a right to know.
We thank you for holding this hearing.
[The prepared statement of Richard D. Miller follows:]
Prepared Statement of Richard D. Miller, Policy Analyst, Paper, Allied-
Industrial, Chemical and Energy Workers Union
As part of the 1988 Price Anderson Act Amendments (``PAAA''),
Congress authorized the Department of Energy (``DOE'') to impose civil
penalties against contractors to deter nuclear releases and injuries.
Eleven years later, DOE has promulgated only 2 of 11 nuclear safety
rules, and manages its enforcement program of 34 nuclear production,
research and environmental cleanup sites in 13 states with an
enforcement staff of only 5 people.
Over the past several years, DOE has permitted its safety and
health ``Site Representative'' oversight program to wither on the vine
through staff reductions and diminished responsibilities. During this
fiscal year, we understand that DOE is planning to abolish this
formerly valuable safety accountability program. Also this year, the
Secretary of Energy indicated that the DOE no longer intends to pursue
external health and safety regulation, thereby reversing the path it
had been following after receiving recommendations in favor of external
regulation from both the Advisory Committee on External Regulation
(December 1995) and the National Academy of Public Administration
(January 1997). The Department has proposed no alternatives to assure
contractor accountability for worker safety. Given this vacuum, the
Subcommittee's investigation into the effectiveness of DOE's nuclear
safety program is timely.
In the absence of external regulation from NRC and OSHA, and DOE's
increasing emphasis on privatization and fixed price contracting, my
testimony will raise these points:
<bullet> The DOE's Price Anderson Act Amendments (``PAAA'') enforcement
program, to which DOE nuclear workers turn for assuring
contractor compliance with radiation protection rules, is NOT
sufficiently robust at present to protect worker health and
safety.
<bullet> Non-profit contractors should be subjected to the payment of
penalties in the same manner as for-profit contractors, up to
the limit of their earned fees.
<bullet> DOE's promulgation of nuclear safety rules has been stifled by
bureaucratic foot dragging and lack of leadership, all to the
detriment of worker safety.
<bullet> Congress should pass legislation to compel DOE to vigorously
implement Price Anderson, by setting milestones for its
rulemaking and permitting citizen suits.
<bullet> To strengthen the enforcement program, the Secretary should
immediately transfer the DOE-EH Site Representative Program
staff slots over to Office of Enforcement.
The Paper, Allied-Industrial, Chemical and Energy Workers
International Union represents 320,000 workers in the manufacture of
pulp, paper, chemicals, pharmaceuticals, gasoline, and motorcycles, as
well as many of those engaged in the production and cleanup activities
at 11 DOE nuclear sites. These DOE sites include Hanford, INEEL,
Argonne West, Argonne East, Grand Junction, WIPP, Oak Ridge K-25,
Paducah, Portsmouth, Mound and Brookhaven Labs. PACE was formed from
the merger of the Oil, Chemical & Atomic Workers Union (``OCAW'') and
the United Paperworkers International Union in January 1999.
1) is the doe's price anderson act amendments (``paaa'') enforcement
scheme sufficiently robust to protect worker health and safety?
A. Why nuclear workers value the PAAA program as the primary means to
force contractors to implement radiation protection rules in
the DOE complex: the Mound facility as a case study.
DOE has taken enforcement actions at many of the sites where PACE
represents workers, including 2 at the Mound facility in Miamisburg,
Ohio. The Mound facility provides a case study on why a viable PAAA
Enforcement program is so essential.
Between 1991 and 1994 DOE's former contractor at the Mound
facility, EG&G, allowed bioassay samples for workers, who were
performing decontamination work involving actinium-227, to sit on a
shelf for three years unanalyzed. Workers were also directed to perform
work without knowing what isotopes they were likely to encounter or if
protections were adequate. Without timely bioassay, workers could
exceed the annual radiation exposure limits established by DOE Orders.
A large backlog of bioassay samples (>100) accumulated because reliable
laboratory services were not procured by the contractor. Ultimately, a
large percentage of one group of workers tested positive for actinium-
227 (15 of 31); however, the contractor withheld this information from
the DOE for 9 months. An assessment team was assembled in 1994 and
found that the contractor did not have a functioning dosimetry program,
was out of compliance with DOE's laboratory accreditation program,
radiation worker training was out of compliance with DOE's radiation
control manual and PAAA regulations, radiation control technician
training was out of compliance, and individual exposure reports were
not provided to workers for 3 years. Alarmed by a contractor whose rad
program had veered out of control, twelve Mound workers and OCAW filed
a class action suit seeking to: (1) enjoin the contractor from
violating rad protection rules, (2) bring in an expert to assess the
root cause of problems at the site, (3) provide health care and (4)
compensate workers for harms.
After implementing a ``recovery plan'', the contractor, EG&G, self-
assessed its rad program in December 1996 and opined that it had
established a sound rad protection program. However, in May 1997, DOE
HQ conducted a review after a worker questioned why the contractor
waited 7 months to obtain a bioassay sample to determine whether she
received internal doses of high fired oxides of plutonium-238. This
DOE-HQ team found that the Mound contractor had been woefully
undercounting doses of radiation by failing to set the proper Minimum
Detectable Activity Levels (MDA), and improperly calculating worker
uptakes in a way that concluded no uptake had occurred when in fact
many results were positive. The contractor was not ensuring that
workers were participating in the bioassay program, thus resulting in
situations where workers could have an uptake of radionuclides and not
be identified. In turn, this could lead to a failure to remove over-
exposed workers from further workplace exposures of radiation. At the
same time, the contractor was not requiring respiratory protection--
despite worker protests--where it was needed to prevent the ingestion
of high fired oxides of plutonium. Assistant Secretary of Energy Al Alm
visited the site and urged the DOE, management and workers to jointly
develop a reliable bioassay program. Finally, DOE's PAAA enforcement
office investigated and proposed penalties for 2 sets of violations
against EG&G Applied Technologies totaling $112,500--at the time the
largest PAAA penalty ever assessed.
Later in 1997, DOE brought in a new site contractor, Babcock and
Wilcox. However, events discovered in early 1998 compelled our local
union leaders to once again write the PAAA Enforcement staff with. PACE
learned that 1,440 bioassay samples were improperly analyzed because
background levels had been deducted twice, and 409 americium bioassay
samples dating back to July 1997 had yet to be assessed. On May 1, 1998
the site manager, Leah Dever, ordered the second radiation ``stand
down'' related to these breakdowns in the rad protection program. The
PAAA Enforcement Program subsequently fined Babcock & Wilcox $165,000
for 2 sets of violations in 1988. Subsequently, the site discovered it
lacks an adequate bioassay program for metal tritites (metallic forms
of tritium) and the Defense Nuclear Facilities Safety Board (DNFSB) is
providing technical assistance.
B. Award fees incentives, while a plausibly helpful tool, are a weak
mechanism to protect workers on the front line who need
immediate intervention and a strong hand to alter contractor
misconduct.
The civil penalty metered out by the PAAA Office of Enforcement
combined with the Mound contractor's award fee reduction totaled over
$400,000 in 1997. This monetary disincentive was not sufficient to
alter the conduct of the Mound contractor in 1998, as the subsequent
enforcement action illustrates. Incentive fees do not change a
bureaucratic culture saturated with cynicism and disregard for
authority. Only persistent accountability actions that punish bad
behavior can alter that culture.
C. DOE-EH has persistently failed to build an adequate staff or request
adequate funding for the PAAA program, due to the push-back by
the contractor and Field Organizations to accountability
measures.
DOE has nuclear operations at 34 sites in 13 states. Nuclear safety
regulations are enforced by a staff of 5 PAAA investigators nationwide
who rely, almost exclusively, on the self reporting of non-compliance
events by their contractors. Contractors employ almost 100,000 workers.
In addition, DOE relies upon 50 or so non-dedicated Price-Anderson
``coordinators'' who, in general, serve as points of contact within the
various field offices, but do not act as independent oversight and
enforcement officials. These ``coordinators'' are not accountable to
the Office of Enforcement, but serve under the direction of DOE's Field
Offices.
The PAAA program relies upon taking a few high impact enforcement
actions intended to send a signal that the Enforcement Program means
business. This is a reasonable approach for a small program take in
order to leverage its limited resources.
The problem, of course, is that the contractors are not intimidated
unless there are repeated citations or, where there is a high degree of
public concern in a locale, intense adverse publicity. Contractors also
know that the DOE's entire budget for the PAAA program is approximately
$600,000 per year, and efforts to increase this amount have been
defeated. This sends a second signal that DOE's enforcement program
will be exceptionally modest, and that the probability of detection for
not self-reporting most violations is very low. Moreover, DOE's
increased reliance on ``privatization'' and subcontracting means that
there are a gaggle of contractors coming and going at any given time
who are operating under fixed price contracts that often place safety
in competition with productivity and profits. Unfortunately these fixed
price contractors are largely left to self-regulate this conflict,
undeterred by a nearly invisible Price Anderson enforcement program.
Today, the PAAA program is more like the mouse that roared, than
the daunting enforcer that DOE contractors would have you believe.
Prior to the passage of PAAA in 1988, DOE's nuclear safety
requirements were embodied in ``Orders'', which were legally
unenforceable. After the PAAA was signed into law, DOE announced it
would convert its 11 nuclear safety orders into rules so that they
could be clarified and rendered enforceable. As DOE admits, it has only
promulgated only 2 of 11 rules in the past 11 years.
However, if and when these 9 other rules are promulgated, it is
likely contractors will be obligated to self report added non-
compliance events that now go unreported. This will add to the burdens
already imposed on the five person program staff. Likewise, the
Costello Amendment to the FY 2000 Defense Authorization Act requires
the PAAA program to impose civil monetary penalties against for-profit
and non-profit contractors for violations of the Department of Energy
rules and regulations regarding security of classified or sensitive
information or data. If incorporated into law, this provision will add
further responsibilities to the five person enforcement program.
As part of the settlement of the Mound lawsuit, DOE had begun
funding a $250,000 contract for a jointly-selected health physicist to
assess the Mound's rad protection program (press release attached). The
expert reports non compliance to the PAAA Enforcement Office. The
expert has been so beneficial that the DOE's Ohio Field Office Manager
Leah Dever has agreed to extend the expert's tenure after his initial
contract expires at the end of this year. DOE has effectively
privatized its PAAA oversight function because it lacks the staff to
police the Mound facility. The PAAA ``coordinator'' does not, and
cannot, fulfill this function.
All of these factors point to the need for a more robust program
which can conduct regular wall-to-wall inspections, and respond readily
to concerns of workers. The PAAA could be substantially bolstered
without additional appropriations by redeploying existing underutilized
staff resources. Currently 14-17 FTE's who have been serving as site
reps are going to be cut loose from the Office of Environment Safety
and Health when the Program is formally terminated. These slots could
and should be made immediately available to the PAAA program.
2) should the non-profit contractors be subjected to the payment of
fines in penalties in the same manner as for-profit contractors?
There is no reason to exempt non-profit contractors from paying
fines and penalties for nuclear safety violations. To the extent that
Universities are concerned about the financial exposure of their
institution, we believe that fines and penalties can be capped by the
maximum total fees that have been paid by the DOE over the past three
years to that non-profit institution. Alternatively, the contractor's
fees can be reduced by the dollar amount of civil penalties.
We find it ironic that a several non-profits were participating in
DOE sponsored pilot programs for external regulation under NRC and
OSHA, but at no time was this shift to external regulation predicated
on an exemption from fines and penalties.
3) what obstacles have impaired doe's promulgation of nuclear safety
rules?
As noted above, DOE has only promulgated 2 of 11 rules in the 11
years since Congress passed PAAA. These 2 rules, Quality Assurance and
Radiation Protection for Occupational Exposure, are not sufficient to
protect workers at DOE sites, especially where there is no other
oversight mechanism in place. DOE has failed to promulgate rules for
Training and Certification, Unreviewed Safety Questions, Conduct of
Operations, Radiation Protection of the Public and Environment,
Technical Safety Requirements, Maintenance Management, and Conduct of
Operations.
GAO has noted several causes for the 11 year delay: a decision to
work on other safety issues, internal disagreement about the
desirability of having an enforcement program, and preference for an
integrated safety management approach over enforceable regulations.
A related reason for delay is that DOE won't finalize a regulation
unless there has been consensus from all program offices. In other
words, objections from any corner of DOE can kill the issuance of a
final rule. Consequently, the Office of Environment, Safety and Health
has been deprived of the tools to hold contractors accountable for
safety by internal bureaucratic obstructionism and lowest common
denominator decision making. When it comes to protecting health and
safety, the DOE Assistant Secretary of Energy for Environment Safety &
Health has traditionally had to seek permission from the system to
impose accountability--a system that fiercely resists accountability.
This pattern of bureaucratic undermining of accountability for
safety is strikingly similar to the undermining of security controls
identified by the Special Panel of the President's Foreign Intelligence
Advisory Board (``FIAB'') Report.<SUP>1</SUP> The FIAB panel found that
the ``DOE and weapons laboratories have a deeply rooted culture of low
regard for and, at times, hostility to security issues, which has
continually frustrated the efforts of its internal and external
critics, notably the GAO and the House Energy and Commerce
Committee.<SUP>2</SUP>''
---------------------------------------------------------------------------
\1\ Science at its Best, Security at its Worst, June 1999
\2\ Foreword to the Report Science at its Best, Security at its
Worst, pp iii
---------------------------------------------------------------------------
Even when there has been leadership that supported accountability
measures, the bureaucracy has advantages--time and proven skills at
artful dodging and passive intransigence <SUP>3</SUP>--that has given
them the upper hand to ward off efforts to get rules out of the door
over the past 11 years. It can be summarized as ``bureaucratic
insolence to dispute, delay and resist implementation.'' These same
words were used by the FIAB to describe why nuclear security measures
were never implemented, despite Presidential directives.
---------------------------------------------------------------------------
\3\ Ibid, pp.5
---------------------------------------------------------------------------
In its May 17, 1999 response to the GAO's draft report DOE's
Nuclear Safety Enforcement Program Should be Strengthened (June 1999),
DOE builds in the option for backing out of any hard commitments to
issuing the 9 overdue nuclear safety rules. The DOE states:
The Department agrees that it needs to complete the process
of issuing enforceable rules covering fundamental nuclear
safety requirements. As the report mentions there is a renewed
effort within DOE to do this. This effort will consider ongoing
efforts to implement Integrated Safety Management to ensure
that the rulemaking does not hinder or impede ISM development.
Further rulemaking will need to ensure the compatibility of
enforceable rules with the Department's efforts on ISM. The
Department expects to make a final decision on the rules by
October 1999 and issue them by January 2000.
DOE does not need to ``consider ongoing efforts to implement
Integrated Safety Management'' in deciding when and whether to issue
rules. Integrated Safety Management is simply a work planning process
which includes the front line workers and managers. What DOE does with
ISM should not affect the promulgation of enforceable rules.
4) should congress pass legislation to improve doe's implementation and
contractor performance under the paaa program?
We recommend that the Commerce Committee accept DOE's commitment to
have all of its nuclear safety rules issued and enforceable by January
2000. However, to assure that there is no slippage, we recommend that
the Committee pass legislation which sets this January 2000 date into
law, and provide the public with a right of action to sue the
Department in federal court if it doesn't meet this deadline. It is
time for Congress to hold the DOE accountable.
We recommend that Congress provide citizens and workers with a
self-help provision to enforce the PAAA rules. This would allow workers
and the public to bring legal actions to enjoin violations of Price
Anderson Act violations actions--not seek fines or penalties--when the
Department of Energy fails or is unable to investigate violations of
its rules.
Precedent for allowing third parties to seek enforcement was
established in the settlement of the suit brought by the workers at the
Mound facility. Under this settlement, the DOE agreed that in those
cases where the contractor failed to correct a violation of Price
Anderson rules and the DOE Assistant Secretary of ES&H , after notice,
declined to investigate or make a finding, PACE members at Mound could
seek enforcement through an arbitrator.
Where DOE's program lacks enough staff investigators, and DOE is
refusing to bring in external regulation, self-help mechanisms such as
a citizen suit remedy is in order.
5) what commitments are needed from doe to render the paaa program
credible?
DOE should commit to shift the qualified personnel from the Site
Rep Program (that it is abolishing) over to the PAAA enforcement
program. This will allow DOE to immediately assign 14-17 added
investigators to the field to conduct investigations of nuclear
facilities and follow up on the contractors' reports to the DOE's
Noncompliance Tracking System. While this shift of 14-17 staff slots
will not result in a robust program staff, it is an incremental step
towards strengthening the program and protecting workers. Given the
absence of external regulation, anything less should be considered a
lost opportunity and an abrogation of DOE's responsibility to its
workforce.
DOE should also provide workers and the public with access to the
Noncompliance Tracking System (NTS), which is the computerized system
into which contractors file non-compliance reports. Contractors should
be required to post these reports on bulletin boards at the DOE sites.
If workers are kept in the dark about nuclear safety reports under the
PAAA program, they are unable to take proactive steps to assure that
these problems have been corrected.
summary
The DOE must strengthen the Price Anderson Enforcement Program by
transferring staff slots from the soon-to-be disbanded Site
Representative program, requiring non profits to pay fines and
penalties up to the limits of their fees, providing workers with the
tools to take enforcement actions against DOE when it fails to protect
their safety, and promulgating the 9 overdue regulations no later than
January 2000.
Mr. Upton. Thank you. Mr. Van Ness.
TESTIMONY OF ROBERT L. VAN NESS
Mr. Van Ness. Mr. Chairman and members of the committee, I
appreciate the opportunity to come before the subcommittee to
discuss implementation of nuclear safety regulations at the
University of California to operate a Department of Energy
Laboratories and the exemption of nonprofit institutions from
civil fines and penalties for Price-Anderson Act violations.
The University of California has enjoyed an outstanding
record of accomplishment in science, education, and technology.
That reputation of excellence is the single most valuable asset
that the University possesses, both at our campuses and at the
national laboratories that we operate for Department of Energy.
It is that reputation that continues to draw outstanding
scientists to our doors and retains them to carry out world
class research.
Today's student does not typically set as his or her goal
to become a nuclear weapons scientist. But the intellectual
challenges--theoretical, mathematical, chemical, metallurgical,
and engineering--inherent in nuclear weapons and other ``big
science'' projects at the Department of Energy laboratories
will continue to attract the finest minds if the opportunity
remains to work with colleagues of national and international
repute. The University has that reputation because of the
quality of staff we attract and retain.
Having recruited this outstanding workforce we are
committed to providing them with a safe workplace. Because our
work includes nuclear hazards not only must our workers be
safe, but we must assure the public that they too will not be
harmed. The University is committed to this standard of safety.
In my written statement I have outlined the integrated
safety management programs at our laboratories, our record of
overall performance improvement including safety performance
accomplished through the effective use of performance-based
management methodologies. Our work smart standards program and
our practice of encouraging employees to report safety problems
and to stop work if it cannot be safely done.
In spit of our commitment and the excellence of our overall
safety record there have been three instances in which nuclear
safety violations were deemed serious enough for DOE
enforcement action under the Price-Anderson Amendments Act.
I have included in the written statement information on
those enforcement actions and other noncompliances. The
violations were self-reported and our laboratories have
responded aggressively to correct deficiencies and to
discipline employees who violated procedures.
The University supports continuing the exemption for
nonprofit contractors and in support of that I offer five
points. First, academic institutions and other nonprofit
organizations have created environments at the national
laboratories that attract the finest scientific talent to work
on problems of significance to a Nation. It is important to
retain these environments to maintain the quality of science
being accomplished by the national laboratories.
Second, obtaining better performance from academic
institutions and other nonprofit organizations is an important
objective including high performance in the areas of
environment, safety and health. But the mechanisms that
encourage improvements should not undermine the nonprofit and
the public service nature and motivations.
Third, financial rewards and punishments are inconsistent
with the fundamental character of these institutions and are a
serious challenge to their public service orientation. At some
point the level of financial risks inherent in DOE contracts
may drive nonprofits from the ranks of Government contractors.
My written statement includes the efforts the University
has made to cover risks without undermining our public service
orientation.
Fourth, because of the trend over the last 15 years to
impose more operating risks on contractors, nonprofits have
begun to take fees. Fees are another cost of doing business
that must be born by funds appropriated to conduct scientific
research. You increase the need for fee, you reduce the amount
of science that can be produced for any given amount of
funding. This cost may be justified if it motivates and
improves safety. But as I have indicated fines and penalties
are neither the only means nor the most effective means of
motivating improvement for nonprofit organizations.
Finally, there are an abundant set of contract management
tools already available to DOE to ensure contractor compliance
and performance improvement. These include performance
assessments, adjustable fees, fee at risk under zero tolerance
policies, reduction in programmatic funding, and partial or
complete contract terminations. These are reinforced in the
National Laboratories by the commitment to excellence of the
scientific staff and the management practices that hold
individuals accountable for their performance.
To ensure the continued vitality of our not-for-profit
research environments these existing DOE and laboratory
management tools should be used in lieu of Price-Anderson Act
fines and penalties. Thank you for your attention to this
matter and I will answer any questions.
[The prepared statement of Robert L. Van Ness follows:]
Prepared Statement of Robert L. Van Ness, Assistant Vice President for
Laboratory Administration, University of California
Mr. Chairman and Members of the Committee, I am Robert L. Van Ness,
Assistant Vice President for Laboratory Administration for the
University of California (UC). The University operates three DOE
laboratories--the Los Alamos National Laboratory (LANL), the Lawrence
Livermore National Laboratory (LLNL), and the Lawrence Berkeley
National Laboratory (LBNL). My responsibilities include administering
the performance-based management aspects of our contracts with the
Department of Energy (DOE) and conducting oversight of the
administrative and operational activities of the laboratories.
The University is indemnified against public liability under the
Price-Anderson Amendments Act (PAAA), and, as such, is subject to DOE
nuclear safety regulations at the three laboratories. The University is
also one of the entities exempt from the civil fines and penalties
under Section 234A (d) of the Act.
Thank you for the opportunity to appear before you today to address
the Committee's concerns regarding the implementation of nuclear safety
rules at our laboratories and consideration of extending the statutory
exemption from civil fines and penalties under the Act.
seeking excellence and maintaining a reputation for excellence
The University of California is an institution that has enjoyed an
outstanding record of accomplishment in science, education, and
technology. Our faculty and staff have produced an enviable body of
work that is reflected through numerous awards and honors. That
reputation of excellence is the single most valuable asset that the
University possesses, both at our campuses and at the national
laboratories we operate for DOE. It is that reputation that continues
to draw outstanding scientists to our doors and retains them to carry
out world class research. A student does not typically set as his or
her goal to become a nuclear weapons designer. But the intellectual
challenges--theoretical, mathematical, chemical, metallurgical, and
engineering--inherent in nuclear weapons and other ``big science''
projects at the DOE laboratories will continue to attract the finest
minds if the opportunity remains to work with colleagues of national
and international repute. The University has that reputation because of
the quality of staff we attract and retain.
The future of the University depends on its ability to obtain
excellence in all endeavors. This objective is as true for the
administration and operations in support of science as it is for the
scientific programs themselves. When our competence is challenged, in
any field, it has a significant adverse effect on the reputation of the
people involved and the University. We compete in the marketplace for
the best minds and talent. We want and need our employees to be proud
of their institution and to feel that there is no better institution
with which to be associated. When we make a mistake, we respond by
taking aggressive corrective action, immediately addressing
deficiencies, modifying systems to anticipate and avoid future
problems, and better communicating with our stakeholders about what we
are doing.
The University conducts significant nuclear operations at our two
DOE national security laboratories. We well appreciate that nuclear
hazards are a mystery to many Americans; that mystery requires that we
not only be safe, but be seen to be safe. Our reputation for nuclear
safety is as important to the University as is our record for
outstanding scientific research. We are fully committed to the safety
of the public and our workers. Our commitment to the DOE is a public
service. Our commitment to the safety of the public and our workers is
a public trust. Our future depends on maintaining that public trust.
implementation of nuclear safety
University-operated facilities are safe
The University is fully committed to protecting the health and
safety of its employees and the public as our first priority. This
commitment is embodied in our contract with DOE in a number of ways. We
have the standard contract clause that requires compliance with all
applicable laws and regulations. We commit to performing the work in a
manner that ensures protection of the employees and the public and to
being accountable for the safe performance of work. The performance
evaluation and management plans in our contracts measure our results in
worker safety, waste minimization, and environmental compliance.
The University follows through on its ES&H commitments through its
performance-based management system and has demonstrated success over
the past six years. Our results show the laboratories' success in
maintaining radiation exposures to workers far below regulatory
standards and consistent with ALARA (As Low As Reasonably Achievable)
goals. Public exposure to radiation from our laboratories is far below
National Emission Standards for Hazardous Air Pollutants (NESHAPS) set
by the US Environmental Protection Agency and below DOE standards for
radiation exposure from all pathways. Occupational illness and injury
rates show a declining trend approaching ``best-in-class'' performance
as determined through benchmarking with the private sector.
Performance-based management
The University's performance-based management system as expressed
in our contracts with DOE is designed to provide assurance that our
employees and the public are being protected and to drive improvement
of the performance of our laboratories over time. It relies on
establishing and maintaining effective working relationships with DOE
and the public and on a robust self-assessment program that includes
reviews by line and support organizations within the laboratories.
Since the University's implementation of performance-based management
in 1993, there has been a trend of continuous improvement in all
administration and operations areas of the DOE laboratories, with DOE
ratings moving from barely satisfactory to excellent overall.
Performance metrics are negotiated annually between the University,
the DOE and the laboratories. These metrics describe what is to be
measured and contain target performance levels that are used to rate
performance as part of an annual contract appraisal process. All three
parties monitor performance during the year and performance is
evaluated at the end of the year by the University and DOE. The ES&H
performance metrics are designed to evaluate both the ES&H outcomes as
discussed above and the management systems that produce those outcomes.
The DOE, the laboratories and the University have been working to
understand the ES&H performance metrics used by the best performing
organizations in both the public and private sectors and have adopted
or adapted their methods and their performance measures where
applicable. Overall ES&H performance has improved substantially over
the past 6 years using performance-based contracting techniques.
The University-operated DOE laboratories are, of course, also
subject to the PAAA rules. Each DOE laboratory maintains an independent
office reporting at the highest levels of laboratory management to
provide independent review and reporting of potential violations of the
requirements in these rules, and to track corrective actions when
deficiencies are identified. The PAAA requirements are of the utmost
importance to both the University and the laboratories, and violations
of these requirements are treated very seriously. We have taken
aggressive corrective actions to address the deficiencies that led to
those events with the intent of avoiding similar safety incidents in
the future.
Integrated Safety Management
The University is fully committed to Integrated Safety Management
(ISM) as a method for integrating ES&H into our work. This means that:
line management is responsible for the protection of employees, the
public and the environment; there are clear and unambiguous lines of
authority and responsibility for ES&H; our personnel possess the
experience, knowledge, skills and abilities that are necessary to
discharge our responsibilities; resources are effectively allocated to
address ES&H, programmatic and operational considerations; before work
is performed, the associated hazards are evaluated and an agreed-upon
set of ES&H standards and requirements are established; administrative
and engineering controls to prevent and mitigate hazards are tailored
to the work being performed and its associated hazards; and the
conditions and requirements to be satisfied for operations to be
initiated and conducted are established and agreed-upon by DOE and the
University.
The ISM systems at our laboratories generally describe how the work
scope is defined, how hazards associated with the work are identified
and analyzed, how the hazards are controlled, how work is performed
within the controls, and how information is fed back to improve safety
management. This approach applies to all work at the laboratories,
including that subject to compliance with PAAA.
The worker plays a key role in this framework and is responsible
for doing the work safely. If the worker notices an unsafe situation or
a situation that could cause harm to the public or the environment, he
or she has the authority to stop the work.
The PAAA compliance program at the laboratories is fully aligned
with ISM at the laboratories. It relies on self-assessment/reporting
and a mechanism for feedback to both the DOE and the University and is
part of the continuous improvement cycle that is at the core of ISM.
The controls that are identified and implemented through ISM are
drawn from a set of external and DOE derived standards that have been
incorporated into our contract. These standards come from external
regulatory agencies, industry standard setting organizations and the
DOE. For those operations subject to PAAA compliance, the standards
that have been selected are those developed by DOE in the area of
nuclear safety. The University believes that these standards (Work
Smart Standards) are effective for managing nuclear safety at our
laboratories.
Management, Oversight and Accountability for PAAA Compliance
The University takes PAAA compliance very seriously. At the
laboratories, management and employees in nuclear facilities are
trained in procedures for safe operations and for reporting violations
of procedures or other incidents to the PAAA Coordinator who reports to
the Deputy Director for Operations. The PAAA Coordinator also
independently reviews other sources of information about ES&H matters
in the area of nuclear safety, such as external audit reports and
Defense Nuclear Facility Safety Board (DNFSB) staff issue reports. The
PAAA Coordinator evaluates self-reported incidents to determine if a
noncompliance with DOE nuclear safety rules has occurred. If an
incident is determined to be a noncompliance, it is reported either to
DOE's Noncompliance Tracking System (NTS) or to an internal tracking
system maintained by each laboratory, following guidance provided by
the DOE Office of Enforcement and Investigation in its Operational
Procedures. The noncompliance report, whether internal or to the NTS,
describes associated corrective actions including a schedule of their
completion. The PAAA Coordinator routinely does analysis and trending
of violations to see if there are systemic concerns or programmatic
weaknesses that need to be addressed. In the course of identifying,
categorizing, and tracking PAAA noncompliances, the PAAA Coordinator at
each laboratory works closely with his or her respective DOE PAAA
Coordinator. The laboratory PAAA Coordinators periodically meet with
other DOE contractors and the DOE PAAA enforcement staff to review
complex-wide information on nuclear safety. The laboratories also
conduct independent assessments to determine if the self-reporting
system needs improvement. The laboratories use a combination of line
management safety evaluations, independent laboratory safety
evaluations, DOE evaluations and management reviews as part of the
overall safety program at the laboratories.
The University has established two additional safety review and
improvement mechanisms called the Laboratory Operations Management
Committee (LOMC) and the ES&H Panel of the President's Council on the
National Laboratories. The LOMC includes the three Deputy Directors for
Operations from the three laboratories and the Assistant Vice President
and Executive Director for Operations from the UC Laboratory
Administration Office, and is staffed by the ES&H specialists at the
University and at the laboratories. The LOMC works to ensure that the
best practices in government and industry are being applied to safety
at the laboratories and that the three laboratories work in concert to
improve operations. The ES&H Panel consists of experts in environmental
protection, safety and health from industry and academia who
independently review ES&H performance at the laboratories and advise
the President's Council on the National Laboratories on the quality of
those programs.
As part of the system for ensuring accountability for safety
performance, laboratory managers and workers are assessed annually on
their personal performance as part of the laboratory management system.
Performance in safety is an important component of this assessment. The
University holds managers and workers accountable as part of the review
of safety events. In the case of the three FY1998 PAAA violations and a
safety incident in FY1999, disciplinary actions were taken against
managers and workers.
Account of PAAA Nuclear Safety Incidents
Since the beginning of the PAAA enforcement program, there have
been 45 nuclear safety noncompliance events reportable under the DOE
Noncompliance Tracking System (NTS) at the three DOE laboratories
operated by the University of California. Three of these incidents have
resulted in a Notice of Violation (NOV) being issued by DOE. Another
event is currently under investigation to determine whether a NOV is
appropriate.
All three NOVs were issued during calendar year 1998 for violations
that occurred in 1997. One NOV involved a shredding incident in which
five workers were exposed to levels of airborne radioactive material
(curium-244) at the Hazardous Waste Management Facility at LLNL. One of
the workers received a dose in excess of federal limits, and he is not
expected to have any long term health consequences. No radioactive
material left the laboratory and no members of the general public were
affected by this event. A second NOV involved multiple infractions of
criticality safety controls in the Plutonium Handling Facility at LLNL.
These infractions demonstrated a lack of rigor in the handling of
special nuclear material that could not assure criticality safety to
the level required by either the laboratory or the DOE. There was a
voluntary and complete multi-month stand-down of operations at the
plutonium facility and a retraining of the staff; full operations were
gradually restored only after a comprehensive Activity Resumption Plan,
developed under DOE oversight and incorporating extensive corrective
actions, was implemented. The third involved a fire and explosion at
the LANL Chemistry and Metallurgy Research Building that involved
radioactive material and other related events in that facility that
demonstrated a lack of adequate work planning and work controls to
manage the facility safely. No individuals were injured or
contaminated, but there was the potential for serious harm. The
facility stood down for a number of months during which a significant
number of upgrades to the facility were made and all employees working
in the building were retrained.
All three of these violations resulted in disciplinary actions
taken against the individuals who did not comply with safety
requirements--including workers, their supervisors, and more senior
personnel. The prompt actions by the laboratories and the
implementation of a comprehensive set of corrective actions resulted in
DOE determining that substantial mitigation existed in the assessment
of each of the enforcement actions.
A fourth incident involved a LANL worker being exposed to radiation
in the Chemistry and Metallurgy Research Building in November 1998.
Additional retraining has been specified for the individuals involved,
and disciplinary action has been taken against individuals who ignored
procedures. Discussions are ongoing to determine if DOE enforcement
action is appropriate.
All of the above incidents and the subsequent Price-Anderson Act
implications were self-reported by the laboratories and immediate
actions were taken to review the incidents and develop corrective
actions while the PAAA implications were unfolding. The laboratories
have systems in place to respond to any radiological or nuclear-related
event in an expeditious manner to determine the consequences and
develop corrective actions.
statutory exemption from civil penalties
The University concurs in DOE's recommendation that the statutory
exemption from civil fines and penalties be retained and consideration
be given to extending the exemption to all non-profit contractors and
subcontractors.
The University has operated three DOE laboratories from their
inception as a public service without the desire for financial gain.
The University, as a non-profit entity, has consistently opposed
federal contract policies that have at their base a financial reward or
punishment purpose. We believe this approach blurs the important line
between for-profit and non-profit motivations and is fundamentally
inconsistent with the nature and character of the University. The non-
profit nature of the University is an essential element of our makeup
and is critical to providing the extraordinarily successful environment
for the conduct of outstanding science at the University and its
laboratories. That environment is often cited as the principal
attraction in the recruitment and retention of the world's leading
scientists.
At the time of the Price-Anderson Amendments Act, the University
and a number of other DOE laboratory operators performed contract work
solely on a cost-reimbursable basis. In the 1980's there was a series
of investigations conducted by the federal government that revealed
serious abuses of cost-reimbursement contracts in the defense industry.
These investigations led to legislation affecting defense contracts
that were later extended government-wide. The legislation failed to
distinguish between for-profit and non-profit contractors, particularly
where those contractors were engaged in large cost reimbursable
contracts of the type that DOE uses at its federally-funded research
and development centers (the DOE laboratories). As a consequence,
nearly all non-profit contractors have entered into some form of fee
arrangement in the last decade. They did so not to enrich themselves,
but to make it possible to continue their public service to the nation
given these new risks and the inappropriateness of applying funds from
their endowments to the costs of operating DOE laboratories. Non-profit
contractors, such as the University, have a track record of attracting
scientific talent to the DOE laboratories that would be lost should
non-profit organizations become unable to manage the laboratories
because of financial risk.
Fees are paid as part of the cost of performing scientific programs
funded by the Congress. The greater the fee, the lesser the funds are
available to perform scientific research for any given amount of
federal appropriation. Non-financial rewards and punishments are
important alternatives to fines in order to maximize the amount of
science produced at the national laboratories. (It should be noted that
fees to non-profit contractors average less than 1% of budgets at the
facilities they operate as compared to about 6% of budget at facilities
operated by for-profit contractors.)
The University accepted a fee starting in 1992 that enabled us to
continue performing a public service for the nation in the face of
increasing risks of non-reimbursement for laboratory operating costs
and assessment of penalties. (To do otherwise would be inconsistent
with our fiduciary obligation to the State of California, its citizens,
and our students and donors.) That does not confer immunity to the
University from any consequences associated with poor management. As
mentioned above, our most important asset is our reputation for
excellence that enables us to attract and retain outstanding workers.
Laboratories with poor records run the risk of adverse contract
actions, having their facilities shut down, funding from sponsors
decreased, loss of confidence in the surrounding communities, and loss
of employee morale. Avoiding these consequences is a strong motivation
for the University. On the other hand, being known as one of the
``best-in-class'' managers creates an environment where reputation is
enhanced, additional work is funded, communities are highly supportive,
and employees thrive and attract more quality workers.
The DOE submitted a report in March recommending that the statutory
exemption be continued and expanded to include all non-profit
contractors and subcontractors. Others have made arguments against the
statutory exemption, citing the current practice of fees being paid to
non-profits, the practice of regulatory agencies, and the need for
stronger enforcement tools. In response, it is important to note,
again, that the fee paid to the University is not for the generation of
a profit which would inure to the financial benefit of the University,
but is solely to meet our fiduciary obligation to the State of
California, its citizens, and our students and donors. This is a very
different circumstance than that of a for-profit contractor. In our
current contract the fee has been structured to be adjustable based on
our performance in accordance with the DOE's contract reform
initiatives. Consistent with our non-profit character and our desire to
maximize the conduct of scientific programs, we use every dollar not
required to meet our fiduciary obligations to the conduct of research
at or for the DOE laboratories. We understand that the DOE has the
ability to tailor fines to minimize the impact on science, but that
impact would still be greater than it is now. With regard to the fact
that regulatory agencies fine non-profits, we believe it is important
to note that such agencies do not have the contract mechanisms
currently available to the DOE such as adjustable fees, changes in the
amount of programmatic work, annual performance ratings, fee at risk in
special circumstances and partial or complete terminations. The
potential loss of the contract is much more significant than any fine
that would be assessed. Similarly, poor DOE contract ratings have a
profound adverse effect on the reputation of the University and the
laboratory staff, and may reduce the opportunity for future assignment
of programmatic work. In addition there is the capacity in the DOE's
various fee mechanisms for significant financial impact. The DOE's
contract management tools are supplemented and reinforced at the
laboratories in their strong culture of excellence in all endeavors and
in the reflection of safety performance in individual performance
assessments. We do not believe that adding fines would be a useful
addition to this existing set of mechanisms.
The University believes that the DOE's Performance-Based Management
initiative has proven to be a highly effective management improvement
program. At the University of California-operated DOE laboratories we
have seen substantial improvements in the management of our
administrative and operational functions, including safety. Our record
of improvement over the past six years is exemplary. In the past six
years the DOE rating of our performance in these areas has gone from
barely satisfactory to excellent while at the same time we have reduced
the annual cost of these operations by well over $100 million. Our
procurement and property operations, once seen as unsatisfactory, are
now at the level of the best in the DOE complex. The performance-based
management system in our contract with the DOE promotes the commitment
of laboratory management and employees to safety and ensures that there
is an active driver for ongoing improvement in all aspects of
laboratory operations.
summary
The future success of the University at both its campuses and the
DOE laboratories requires that we have and maintain a reputation for
excellence in all endeavors, including nuclear safety. The University
employs a performance-based management system in conjunction with the
DOE that conveys expectations, measures results and encourages everyone
to identify problems and make corrections. The University-operated DOE
laboratories have made tangible improvements in administration and
operations, including environment, safety and health and are committed
to make excellence a reality in all management aspects of the
laboratories.
Improvement is not perfection. We have learned from these incidents
and are taking aggressive measures to prevent similar problems from
arising in the future.
The University concurs with the DOE's recommendation that Congress
retain the statutory exemption and consider expanding it to all non-
profit contractors and subcontractors. This recommendation is
consistent with the public service nature of non-profit management of
the DOE laboratories and the objective to keep costs of scientific
research as low as practicable. Fees paid to DOE laboratory non-profit
contractors are driven by statutory and policy changes over the last
fifteen years. Non-profit organizations face the dilemma of either
obtaining a fee or declining to operate national laboratories. Fees are
paid for out of the funds appropriated by Congress for the conduct of
scientific programs. The need for fee must be minimized to maintain the
lowest practicable cost of conducting scientific research. There are an
abundant set of contract management tools already available to the DOE
to ensure contractor compliance and performance improvement. This is
reinforced within the laboratories through the commitment to
maintaining a reputation for excellence and individual safety
performance assessments. These existing DOE and laboratory management
tools should be used in lieu of PAAA fines and penalties.
Mr. Upton. Thank you. Mr. Sussman.
TESTIMONY OF ARTHUR M. SUSSMAN
Mr. Sussman. I thought I could start before you----
Mr. Upton. Yes----
Mr. Sussman. Thank you very much for inviting me to speak
with you today regarding the important issues of worker safety
at DOE nuclear facilities.
The University of Chicago, is a private, not-for-profit
educational institution. They managed Argonne National
Laboratory, a multipurpose basic research and development
laboratory whose mission includes nuclear research activities
since its inception, in fact, prior to its inception dating
back to the Manhattan project which had its origins underneath
the stands of the University's football stadium where Enrico
Fermi and his colleagues performed the first sustained chain
reaction.
From it's beginnings to the present time the University has
successfully managed this national enterprise which controls
nuclear hazards where control of nuclear hazards was and
remains a primary responsibility.
Why has the University remained as a contractor for Argonne
National Laboratory? The University's commitment to Argonne is
a commitment to the national laboratory system and the
importance of research university involvement in this vital
segment of our national research infrastructure. We agree with
the Calvin Commission--Calvin Commission that the national
laboratories are important. The Department of Energy and it's
predecessors have contracted with different entities for the
governance of the national laboratories, including a consortia
of universities for-profit entities and individual
universities.
We believe it is important in this mix of contractors that
the major research universities of this country remain linked
to the national laboratories. We believe we can bring to the
laboratories the values of inquiry and excellence that define
our institution; values which can, in addition to other things,
be of assistance to the laboratories in recruiting some of the
best scientists and engineers.
The University of Chicago is therefore part of the
laboratory system not out of seeking financial gain, but
because we believe it is part of the public service mission of
the University. This is not about profit.
In 1988 and again in 1998 the University stated on the
record that Price-Anderson indemnification which protects the
public against nuclear risk is also vital to the University's
ability to continue as a contractor. The trustees of the
University of Chicago have an obligation under law to protect
the University's endowment and to use it for the purposes for
which it was donated, that is to support the core educational
and research missions of the University. The contractual
obligations the University undertakes with the Department of
Energy as contractor for Argonne are ones that the University
may not put its endowment at risk for.
Having said this, I want to now say with this testimony
that this testimony is not about a refusal to be accountable.
Nor is this nor should this be a question of safety and
adversarial matter. The University takes its responsibilities
for the safety of its workers seriously and believes that it
should be and is held accountable for its stewardship of
Argonne in a number of significant ways.
First and foremost, we put at risk our reputation, not a
trivial matter to our community and not a trivial matter to our
trustees.
Second, the University is contractually obligated to
fulfill many safety and environmental responsibilities
including full compliance with DOE's nuclear safety
requirements under Price-Anderson.
As part of these obligations, the University has agreed to
put its entire performance fee on the line. In addition the
University is already, as has been pointed out earlier, subject
to exposures beyond the fee. Removal of the exemption from
civil penalties for violation of nuclear safety requirements
under Price-Anderson would greatly add to these exposures
without adequate protection for the University endowment.
So let me say again, this is not about a commitment to
safety, or about accountability for the university's actions.
Through it's board of Governors for Argonne National Laboratory
and in particular the safety committee as well as through the
University's contract with DOE and procedures for implementing
its requirements, the University clearly states and performs
its commitment to worker and environmental safety.
What we want understood is that we believe that our ability
to remain as a contractor for this laboratory is dependent up
on the willingness of the Government to understand both the
value that not-for-profit educational institutions can bring to
the management of the labs as well as the fact that a not-for-
profit can only take risks consistent with its trustees
fiduciary obligations to its donor and to the management of its
endowment.
Thank you very much and I'll be happy to answer any
questions.
[The prepared statement of Arthur M. Sussman follows:]
Prepared Statement of Arthur M. Sussman, Vice-President for Argonne
National Laboratory, The University of Chicago
Mr. Chairman and members of the Committee, thank you for the
invitation to come before you to discuss the important issues of worker
safety at the Department of Energy (DOE) nuclear facilities and DOE's
enforcement of its nuclear safety requirements under the Price-Anderson
Amendments Act of 1988.
The University of Chicago is the management and operating
contractor for the Department of Energy's Argonne National Laboratory
(Argonne). Argonne is a multiprogram basic research and development
laboratory, whose mission includes certain research and development
activities in the field of nuclear energy; approximately 5000 people
work at Argonne, in locations in Illinois and Idaho. The University of
Chicago, a not-for-profit educational institution, is directly
responsible and liable for performance under the contract with the
United States government, through DOE, for the management and operation
of Argonne.
The University of Chicago has been the contractor for Argonne from
its inception in 1946, and before that was the contractor with the
Manhattan District for the project at the University campus during
World War II that included the Fermi experiment, under the stands of
our football field, that ushered in the nuclear age. Throughout this
period, the University has acted in the belief that its stewardship of
Argonne is a public service. The Laboratory has made and continues to
make outstanding contributions to the nation's programs in many areas
of science and technology.
Argonne's work encompasses a broad array of research, ranging from
studies of the atomic nucleus to global climate change research to
innovative ways to detect disease and develop medicines to treat
them.<SUP>1</SUP> Argonne research has led to important discoveries and
inventions, such as a new biological microchip technology that could
dramatically speed the discovery of the genetic causes of disease,
identification of infectious diseases and presence of biological
warfare agents, and one day may help doctors diagnose illness and offer
customized treatments based on an individual's genetic makeup. Other
Argonne research has led to the development of an ultrahard coating
that is many times slicker than Teflon, and that may have the lowest
coefficient of friction of any carbon-based material in the world;
promising applications include automobile and engine parts such as fuel
injector components, oilless bearings, and spacecraft mechanisms.
Another important recent invention, which arose out of research in the
area of nuclear reactor safety, is an early warning expert system for
monitoring the performance of sensors, equipment and plant processes
that detects the smallest developing faults at the earliest possible
time, thereby substantially enhancing system safety, availability, and
operating efficiency for a wide range of applications in utilities,
manufacturing, aerospace, telecommunications and other
industries.<SUP>2</SUP>
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\1\ Argonne's research encompasses four major categories: Basic
Science, which seeks solutions to a wide variety of scientific
challenges. This includes experimental and theoretical work in
materials science, physics, chemistry, biology, high-energy physics,
mathematics and computer science, including high-performance computing;
Scientific Facilities, which are sophisticated research facilities,
such as Argonne's Advanced Photon Source, designed, built and operated
by the laboratory that would be too expensive or impractical for a
single company or university to build and operate. They are used by
scientists from Argonne, industry, academia, other national
laboratories and agencies, as well as by scientists from other nations.
The laboratory is also home to the Intense Pulsed Neutron Source and
the Argonne Tandem Linear Accelerator System, among other facilities;
Energy Resources programs, which help insure a reliable supply of
efficient and clean energy for the future. Argonne scientists and
engineers are developing advanced batteries and fuel cells, as well as
advanced electric power generation and storage systems. They also are
working to improve the safety and longevity of both American and
Soviet-designed nuclear reactors; and, Environmental Management, which
includes work on managing and solving the nation's environmental
problems and promoting environmental stewardship. Research in this area
includes alternative energy systems, environmental risk and economic
impact assessments, hazardous waste site analysis and remediation
planning, electrometallurgical treatment to prepare spent nuclear fuel
for disposal, and new technologies for decontaminating and
decommissioning aging nuclear reactors.
\2\ This, as well as the near-frictionless-carbon coating,
inventions were each recipients of an 1998 ``R&D 100'' Award.
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In addition, visiting researchers working at Argonne's renowned
User Facilities such as the Advanced Photon Source (APS) have made
``breakthrough'' discoveries in their fields; research demonstrating
that x-ray analysis of human hair could become an early-warning test
for the incidence of, and predisposition for, breast cancer recently
was performed at the APS. Since 1990, Argonne researchers have worked
with more than 600 companies, numerous federal agencies and other
institutions in pursuit of broad-based scientific and technological
objectives.
The University's commitment to Argonne is a commitment to the
national laboratory system and the importance of research-university
involvement in this vital segment of the national science
infrastructure; as noted in the Galvin Report, ``the laboratories''
research role is a part of an essential, fundamental cornerstone for
continuing [scientific] leadership by the United States.'' <SUP>3</SUP>
The University believes that it is important that the major research
institutions of this country remain linked to the national
laboratories. We bring to the laboratories the research and educational
values of our institutions. We assist the laboratories in recruiting
some of the best scientists and engineers to work at the national
laboratories. We, therefore, are part of the laboratory system because
we believe that it is a part of the public service mission of the
University.
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\3\ See ``Alternative Futures for the Department of Energy National
Laboratories,'' Prepared by the Secretary of Energy Advisory Board Task
Force on Alternative Futures for the Department of Energy National
Laboratories, February, 1995, commonly referred to as ``the Galvin
Report''.
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A cornerstone of the University's stewardship of Argonne always has
been to fulfill Argonne's scientific mission in a manner that preserves
and enhances the safety, health and environment of Argonne's employees
and the public in all areas. The University remains committed to being
directly accountable for these important responsibilities. To this end,
given the unique safety and environmental challenges presented by
scientific work involving nuclear activities, throughout the history of
our management of Argonne we have been especially sensitive to
addressing safety and environmental issues presented by such work. We
firmly support the specific focus on nuclear safety issues provided by
the Price-Anderson Act and DOE's accompanying nuclear safety
requirements and rules under Price-Anderson. Under our contract with
DOE, we are formally obligated to adhere to these requirements and
rules, and follow specific policies and procedures for implementing
them.
In addition, we have established a track record of implementing
detailed policies, procedures (including those related to self-
reporting of deficiencies or incidents), and independent oversight,
audit and governance mechanisms by which risk of harm from nuclear and
other activities is minimized, and errors or potential faults in our
safety system are identified and remedied. The University's Board of
Governors for Argonne, through its Safety and Environment Committee,
performs special responsibilities in this regard; the Board's official
policy statement proclaims that ``worker and public safety is given the
highest priority in the conduct of Laboratory activities including the
safety of nuclear operations, and the protection of the environment.''
Also, our performance-based contract with the Government for the
management and operation of Argonne, which has been in place since
1995, requires us to meet a variety of detailed safety measures, rules
and regulations; specifically included are the DOE's nuclear safety
rules and requirements under the Price-Anderson Act. Failure to meet
these, as well as other requirements, can result in significant adverse
impact to the University's reputation (e.g., through the occurrence of
an accident, and/or imposition of an Enforcement Action/Notice of
Violation), the loss of all of the performance fee provided in the
contract, and even the University's removal as the contractor for
Argonne. While the University strives for continuous improvement in
important areas of performance such as environment, safety and health,
as well as science and technology, to date Argonne has performed very
highly overall in these critical areas.
The Price-Anderson Act provides ample and prompt means with which
to protect the public against nuclear risks, which in general are
uninsurable, through its mandate that DOE provide complete
indemnification in its contracts that involve the risk of a nuclear
incident (Indemnification). The Indemnification allows Argonne to
fulfill its mission involving nuclear activities, and allows the
University to continue to serve as the steward for Argonne. In addition
to protecting the public from nuclear risks, the University, as a not-
for-profit educational institution whose assets are dedicated to its
mission of education and research, is thus able to protect its
endowment and other assets from the special and distinct risks of the
nuclear field. Indeed, such indemnification has been a fundamental
condition of the University's undertaking nuclear activities at Argonne
because the University's Trustees have a fiduciary obligation to
protect the University's endowment and to use the endowment for the
support of the educational and research missions of the University; the
contractual obligations the University undertakes with DOE as
contractor for Argonne are obligations for which the University may not
put its endowment at risk.
When Congress extended Price-Anderson's Indemnification in 1988, it
again recognized that DOE's ability to attract and retain high-quality
not-for-profit educational institutions to serve as contractors for its
research laboratories is fundamental to DOE's ability to fulfill its
mission. It did this by exempting certain named not-for-profit
educational institutions from civil penalties for violations of nuclear
safety requirements for as long as these entities served as contractors
of these facilities,<SUP>4</SUP> because it recognized that such
entities do not undertake to manage DOE facilities for profit, do not
receive fees on the basis of risk-taking analysis, and cannot risk
their endowments for undertaking the special risks inherent in the
nuclear field.
---------------------------------------------------------------------------
\4\ See Senate Report No. 100-70, p.23.
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We recently have completed negotiations with DOE for a five-year
extension to the contract for the management and operation of Argonne,
to begin on October 1, 1999. Under the contract, the University will
continue to be responsible for specific performance requirements in
many areas, including the implementation of, and adherence to, a system
of integrated safety management, nuclear safety requirements under
Price-Anderson, and the exposure to penalties (including placing all
fee at risk) and liabilities. We believe that the contract's terms and
the University's record of running Argonne demonstrate that adequate
and appropriate mechanisms are in place to ensure the highest possible
level of worker and public safety, and to minimize risks, with respect
to nuclear and other activities carried out at Argonne.
The new contract and its predecessor already have significantly
increased the financial risk facing the University due to the
imposition of certain statutory, regulatory, and contractual liability
provisions; in fact, at present the University's fees received from the
operation of Argonne already are less than the costs and risks
undertaken by the University in operating Argonne. This contract
assumes continuation of the Price-Anderson Indemnification and the
continuation of an exemption from civil penalties. Any change in the
rules in this regard would cause the University to reconsider whether
it can continue its stewardship of the contract for the management and
operation of Argonne.
The University of Chicago continues to strongly support the
implementation and enforcement by DOE of its nuclear safety
requirements under the Price-Anderson Act; we believe that the most
effective means by which to do so are through mechanisms currently
available to, and utilized by, the Department. In addition, the
University supports extension of the Price-Anderson Indemnification,
and continuation of the exemption of not-for-profit educational
institutions from civil penalties (See January 30, 1998 The University
of Chicago Comments on DOE Notice of Inquiry Concerning Preparation of
Report to Congress on the Price-Anderson Act, attached). The University
believes that the nation's vital science and technology mission
continues to benefit from having not-for-profit educational
institutions such as the University serve as stewards of its national
laboratories: Any changes to the rules with respect to Price-Anderson
should not act to discourage nonprofit educational entities from
operating these laboratories.
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Mr. Upton. Thank you. Mr. Card, welcome.
TESTIMONY OF ROBERT G. CARD
Mr. Card. Thank you. Mr. Chairman and members of the
subcommittee, my name is Bob Card, President and CEO of Kaiser-
Hill Company. We operate the Rocky Flats Environmental
Technology Site.
Kaiser-Hill's mission at Rocky Flats is to safely close the
site the year 2006. Accomplishing this mission will: No. 1,
eliminate worker and public risks from the sites many hazards;
No. 2, make over 6,000 acres of prime suburban Denver property
available for other uses; No. 3, save taxpayers over $400
million per year of basic future operating costs; No. 4,
increase the nation's safeguards and security posture by moving
weapons components and weapons grade material to more suitable
long-term storage; and No. 5, reduce the Government's safety,
environmental and natural resources liability.
Safety is a core component of Kaiser-Hill's strategy for
closing Rocky Flats. It's part of our business strategy to
position for other nuclear work in a very safety-conscious
industry. Additionally because we have a stop work for any
safety condition culture at Rocky Flats coupled with aging
facilities and safety infrastructure, safety is the key enabler
to allow us to accomplish our 2006 closure date an maximize or
incentive fee.
Through our contract DOE can retain part or all of our
incentive fee, even terminate our contract for safety
shortcomings, many of which do not have to result in actual
injuries. And they actually have implemented that portion of
our contract to Rocky Flats.
The Defense Nuclear Facility Safety Board, another--we view
them as a regulator, although I guess technically they are not,
can refuse startup permission for key activities and issue
embarrassing letters pointing out safety concerns. And by the
way, if we can't startup, then we don't earn any fee.
Last, but not least, DOE can embarrass and fine us through
enforcement of Price-Anderson rules. I believe that the results
of our safety first strategy have been very impressive. We
dramatically reduce public and worker risks and exposure by
eliminating more than 80 percent from the clean up schedule and
work effort. After delivering more than 30 million work hours,
Kaiser-Hill has never experienced a single debilitating injury
or radiological or chemical exposure above regulatory limits.
We made significant improvements in key safety performance
measures while making step change increases in productivity and
I included some of those in my written testimony.
DOE headquarters assessments before and after Kaiser-Hill's
takeover validate improvements in the safety culture and
infrastructure. Price-Anderson has been a useful component in
our safety improvement. It provides a structured approach to
identify and address safety issues and their deep underlying
causes well before they can become a significant event.
It's financial and image impact is sufficient to cause
senior executive management to personally engage in important
safety issues. And importantly we believe that Price-Anderson
along with the Defense Board provides our community and
stakeholders comfort that a tough regulator is watching. This
in turn helps build support for us engaging in the high-risk,
non-routine work required to close the site.
And at Rocky Flats, I want to comment that we believe
Price-Anderson has been administered fairly a politically. Form
our perspective we would recommend that the Price-Anderson
status quo be continued with two caveats. One, while we're
impressed with the management of the program to date, there is
a lot of flexibility in there for the program to become
politicized and bureaucratized under different future
leadership and we would like to see that tightened up.
Second, we believe that QA rule provides all the
enforcement leverage needed and no further rules are
necessarily unless they are designed to streamline work and
make it safer.
As Dr. Michaels testified, DOE orders already contain all
the necessarily language. Although we wouldn't be opposed to
rules and in fact, streamline the work. We find that safety and
complexity are inversely related and the more targeting concise
regulations the better.
Thank you.
[The prepared statement of Robert G. Card follows:]
Prepared Statement of Robert G. Card, President and CEO, Kaiser-Hill
Company, LLC
Mr. Chairman and Members of the Subcommittee, my name is Bob Card,
and I am the President and Chief Executive Officer of Kaiser-Hill
Company, the management and integration (M&I) contractor at the Rocky
Flats Environmental Technology Site (RFETS, or ``the site'') near
Denver, Colorado. Kaiser-Hill has managed Rocky Flats since 1995, when
it was awarded one of the Department of Energy's (DOE's) first
significant performance-based contracts.
Kaiser-Hill's efforts at Rocky Flats are familiar to the
Subcommittee. As you know, when we first arrived at the site, it was
estimated that the cleanup effort would not be completed until the year
2060 at a cost of over $37 billion. With an aggressive project planning
and management approach, we are in the process of slashing that
estimate and transitioning the site to a planned 2006 closure at a cost
of under $7 billion. This will save U.S. taxpayers more than $30
billion dollars, and will result in a more timely and responsible
cleanup for the communities surrounding Rocky Flats. As you will see
from my later testimony, it also provides a safer cleanup of the
facility.
The matter before the Subcommittee today is worker safety at DOE
facilities, and the impact of Price-Anderson Act requirements on our
safety culture. In order to fully understand how Price-Anderson fits
into our regulatory framework, it is important to have some background
on Kaiser-Hill's approach to safety at Rocky Flats.
Kaiser-Hill's Business Philosophy
First of all, we have not just a legal responsibility, but a moral
and ethical responsibility to provide a safe environment for our
workers. RFETS has some of the most hazardous environmental problems in
the United States. Even in the midst of these dangers, however, I can
confidently say that we do not have the most hazardous working
conditions in the nation. Our record is the proof of this: it shows
that we are safe, and we are getting safer. For our workers, the price
of failure can be a high one. For that reason, it is the
responsibility--the obligation, even--of each individual employee to
stop any work activity he or she feels is unsafe. While this does
produce a higher-than-average number of work stoppages, it is far
easier to rethink the work logic of an activity at the front end than
to undo the damage of a job gone wrong.
Safety is also a core business value of Kaiser-Hill. The structure
of our contract with DOE--its emphasis on performance and production--
demands a strong commitment to safety. Nuclear and radiological safety
issues account for a significant percentage of down time at Rocky
Flats. If our safety program is not operating properly, we do not work.
If we are not working, we cannot perform. If we cannot perform, we are
not earning the contract incentives needed to make Rocky Flats a viable
business enterprise. I am pleased to be able to tell you that our
commitment to safety is paying off. We are accomplishing much at Rocky
Flats, and taxpayers are saving a lot of money because of it.
Kaiser-Hill also needs a strong safety posture to maintain its role
in the nuclear industry. If we are not operating safely, we will not
attract the type of high-quality, qualified people we need to make our
business work at Rocky Flats. As we hope to finish our cleanup of the
site by 2006, we need an impeccable safety record if we are to have any
hope of succeeding with other projects and ensuring our business
viability in the future.
In short, it's pretty simple. Safety is one of the most important
keys to productivity at Rocky Flats and Kaiser-Hill's success as a
business. If we don't operate safely, we don't operate at all.
The Challenge at Rocky Flats
The Subcommittee is already familiar with the magnitude of what we
are trying to accomplish at Rocky Flats. As I testified last month, we
are fairly fortunate not to have technological hurdles of the
proportions seen at some other DOE sites. However, this should not
detract from the challenges we face at RFETS. When we started the
Closure Project, Rocky Flats had more bulk plutonium than any other
site in the DOE complex. We have over 500,000 square feet of
contaminated building space in production buildings, about 80
contaminated soil sites, and about three million total square feet of
office and industrial space.
Accomplishing a 2006 closure requires us to properly execute an
immense amount of work over the next seven years. We have to
decontaminate and decommission the site's nuclear facilities--an
enormous undertaking that requires us, among other things, to drain and
stabilize a total of 26,500 liters of plutonium and highly enriched
uranium solutions, stabilize and repackage a total of 106,000 kilograms
of plutonium residues, and ship all of the site's inventory of special
nuclear materials to other locations in the DOE complex. We must
demolish all of RFETS's 700 buildings, and conduct environmental
restoration of the site's contaminated areas. And we must conduct every
one of these activities safely. I could go on about the challenges we
face in shutting down Rocky Flats, but I think this rough sketch is
sufficient to put the importance of our safety strategy into context.
Kaiser-Hill's Safety Strategy
Kaiser-Hill takes a preventative approach to safety, attempting to
anticipate problems before they become problems. One of the most
important elements of this is the implementation of Integrated Safety
Management (ISM) at the site. It involves five steps that seem like
simple common sense--and they are--but which still require a conscious
commitment to execute properly. First, we define the scope of work to
be completed, whether it is the entire Rocky Flats Closure Project or
an individual work activity. Second, we identify and analyze the
hazards we expect to encounter during the work. Third, we identify and
implement controls to mitigate those hazards. Only at that point do we
move to step four: actually performing the work. Fifth, and very
important from an efficiency and productivity standpoint, we provide
feedback to apply to future activities.
With ISM, we are hopefully identifying problems and hazards before
they have a chance to negatively impact our work at the site. When
problems do arise, we can take those lessons learned, incorporate them
into our future efforts, and avoid complications and contingencies with
our remaining work.
Kaiser-Hill also takes an honest approach to safety. We need an
open, truthful, blunt, and communicative process from bottom to top--
from the radiation worker on the floor through every management level--
in order to accurately assess the work we are doing and whether these
activities are being conducted safely. Again, we operate this way for
two reasons: first, because our workers deserve it, and, second,
because it just makes good business sense.
Ultimately, Kaiser-Hill is responsible for all aspects of site
safety. We are the ones responsible for maintaining a safe operating
environment, both for our workers and the surrounding communities. We
expect to be held accountable for our safety performance. On the one
side of the coin, we recognize that we should be negatively affected
when our safety performance does not match regulatory and statutory
requirements. On the other side, we also expect to be rewarded when our
safety performance exceeds expectations and allows the site's cleanup
work to progress more quickly than anticipated.
The Results at Rocky Flats
Kaiser-Hill has made significant strides in safety at Rocky Flats
since we began managing the site in 1995. I can sum up these
improvements with the help of a few of our safety statistics. Figure 1
shows the Rocky Flats total recordable case rate, which is a standard
Occupational Safety and Health Administration (OSHA) measurement. This
measures the number of recordable injuries per 200,000 hours of work.
As you can see, we have reduced our recordable case rate from about
five in 1995 to just over three today--well below the national
construction industry average of almost ten. Another OSHA indicator,
the lost workday case rate, is shown in Figure 2. This measurement is a
subset of the recordable case rate, and indicates the number of cases
resulting in lost workdays per 200,000 hours. Again, we have shown a
steady reduction since 1995, and we are well below the construction
industry average in lost workdays.
We also track a number of safety indicators on our own at Rocky
Flats. The next three figures are self-assessments Kaiser-Hill uses to
track the health of its safety regime. Figure 3 shows the number of
radiological infractions at the site by month. A radiological
infraction as charted here can be as simple as forgetting to properly
sign into a controlled area, or failing to wear a dosimeter in a
radiological area. It still reflects an improper procedure and a failed
attention to detail. We view these infractions as precursors to the
potential for more serious incidents--our canary in the coal mine.
Figure 4 is another self-assessment we have at Rocky Flats, and
measures our nuclear licensing infractions. These point to possible
actions that would violate the safety requirements of our authorization
basis--DOE's version of the Nuclear Regulatory Commission operating
license. From a Kaiser-Hill standpoint, these are the most troubling
violations we have at the site, and the ones we hope to keep to a
minimum.
Finally, Figure 5 measures our criticality safety infractions.
Again, this is another self-assessment Kaiser-Hill tracks at Rocky
Flats. It does not indicate that a criticality occurred--in fact,
during Rocky Flats' entire existence, there has never been an actual
criticality event at the site. Instead, this tracks the precursor
events and conditions that, if left unchecked and combined with other
failures, could have eventually led to a criticality event.
All in all, each of these major indicators shows a steady trend of
improvement. These gains are even more impressive because the level of
work, and the possibility of exposures to workers, has increased
dramatically during that time. Our work activity has been increasing,
and our incident rate per work unit has been decreasing steadily. As
the Subcommittee knows, Kaiser-Hill recently submitted its proposal to
achieve a 2006 closure at the site. From a safety standpoint, this
impressive schedule compression would provide major reductions of total
risk for both our workers and the surrounding communities, as shown in
Figure 6.
These improvements have been validated by DOE's Office of
Environment, Safety and Health (EH), in its assessments of safety at
Rocky Flats. EH conducted comprehensive evaluations of the site just
before our takeover in March 1995 and again in May of this year. In its
May 1999 report, Focused Safety Management Evaluation of the Rocky
Flats Environmental Technology Site, EH found that ``[t]he improvements
in the RFETS safety management program since the 1995 Oversight
evaluation is notable . . . Much of the progress in the past four years
can be attributed to the attention and leadership by managers at all
levels . . .'' Three of the noteworthy practices it identified were our
strong subcontractor accountability mechanisms, our site-wide work
planning and control approach, and our lessons-learned database. These
tools, along with others, are important components of achieving
continued improvement in our safety management efforts.
Price-Anderson and Kaiser-Hill
The Department of Energy's judicious application of Price-Anderson
enforcement, as set forth in 10 CFR 820 Appendix A, has been an
important ingredient in safety improvement at Rocky Flats. At the site,
Price-Anderson is viewed not as a regulatory burden, but as a problem
detection and process improvement program. We view the self-
identification, reporting, and corrective action program of Price-
Anderson as an important tool in maintaining a safe work place at Rocky
Flats. As such, the message of Price-Anderson enforcement has been well
received at Rocky Flats.
This is primarily due to the manner in which the policy is applied
at Rocky Flats. It is not a dogmatic or control-oriented regulatory
hammer, but is truly aimed at safety improvement. Price-Anderson's
basis in sound nuclear safety principles promotes a fair process
designed to maximize a safe working environment. If I am presenting a
picture of Price-Anderson as a toothless tiger, however, let me quickly
eliminate that impression. We take the requirements of Price-Anderson
very seriously, and recognize that it has the ability to quickly shut
down operations at Rocky Flats and result in substantial financial
penalties for Kaiser-Hill. If the positive incentives of our
performance-based contract are the carrot to accomplishing the safe
closure of the site, Price-Anderson is certainly one of the sticks
which requires us to conduct a safe and responsible cleanup.
The Price-Anderson enforcement process is very comprehensive
compared to other enforcement mechanisms. It looks at underlying
factors in its enforcement investigations. The enforcement focus of
Price-Anderson is the identification and correction of programmatic
failures, and no credit is given for responding to individual incidents
which collectively indicate larger programmatic issues. This has helped
to focus our senior management on important issues that were not
receiving appropriate priority. As a result, Kaiser-Hill has instituted
major overhauls in our safety approach. For example, problem management
does not simply examine the event of the moment, but expands beyond
those borders to investigate deep causal factors that could have
contributed to the condition. As a result, ensuring the effectiveness
of our corrective actions has become much more significant, and we have
heightened the accountability of our organization--especially the lower
tier--to be responsible for identifying and exposing safety problems.
Throughout Rocky Flats, I can say that we have experienced little
unjustified cost due to the Price-Anderson enforcement process. The
process has identified real gaps in our safety approach, and the cost
of rectifying these problems was a necessary expense not just from a
regulatory standpoint, but from an operational standpoint. Since taking
over the Rocky Flats site in 1995, Kaiser-Hill has received three
enforcement actions under Price-Anderson--including two fines--and in
each case, unfortunately, the action was well deserved.
For Kaiser-Hill, a regulatory enforcement action--even with no
fine--is a major concern as it cuts to the core of our ethical and
moral responsibility to our workers and to our competitive strategy:
the ability to efficiently, responsibly, and safely accelerate the
cleanup of RFETS. We go to great lengths to attempt to stay out of
compliance space, a concept we call ``regulatory margin.'' Regulatory
margin requires us to go above and beyond the call of duty in matters
of regulatory compliance. Rather than skirting right at the edge of
compliance, we would prefer to operate with some breathing space
between our actual performance and the requirements of our regulators.
Price-Anderson requirements help us establish the thresholds for events
and trends from a regulatory standpoint, providing a real-time screen
for nuclear and radiological safety performance. This, in turn, allows
Kaiser-Hill to establish bounds for its own expectations of
performance, which then translates into the regulatory margin we hope
to accomplish.
One important component of this effort is the timely self-reporting
of violations and declining trends in safety. Self-reports show that we
understand the facts and conditions at the site and are willing to face
up to them--a necessary first step in correcting problems. Timely
reporting may not prevent violations, but it does ensure that we and
our regulators are aware of problem situations and taking steps to fix
them.
Price-Anderson's Quality Assurance Role
Price-Anderson has a dual purpose in ensuring confidence in the
activities we are undertaking at Rocky Flats. First, and most
important, is the validation Price-Anderson provides for the safety of
our work logic and execution. This has required Kaiser-Hill to
translate best-in-class commercial practices to the DOE environment. It
includes an aggressive implementation of ALARA (As Low As Reasonably
Achievable) principles to reduce worker exposure to radioactivity to
the greatest extent possible, and a concerted effort to bring private
sector expertise in safety systems and decontamination and
decommissioning licensing to Rocky Flats.
Implementation of Price-Anderson at the site establishes a very
clear line of responsibility for actions and problems. Deniability is
not an option, as there is full disclosure of information and a full,
prompt investigation of any possible safety shortcoming. Kaiser-Hill
views the primary importance of Price-Anderson not as a regulatory
enforcement regime, but as a mechanism to help the site establish and
maintain a safe and efficient operating environment. Often, an event
investigation into one condition will reveal other conditions adverse
to proper safety management, giving us an opportunity to correct a
deficiency before it can lead to a consequential event. With the
emphasis of Price-Anderson on preventing repeat events or events that
follow obvious precursors, Kaiser-Hill has begun to treat non-
consequential ``near-misses'' just like real, consequential events. The
actions we have taken to mitigate these precursor conditions have quite
likely prevented consequential events.
Price-Anderson has also helped build confidence with our
stakeholders. The public needs to know that a strong, committed, and
capable regulator is present at Rocky Flats. Lack of regulation is
generally not a problem at the site: we have multiple layers of
oversight, including the Department of Energy, the Environmental
Protection Agency, the Defense Nuclear Facilities Safety Board, the
State of Colorado, and local governments. Effective oversight and
regulation helps establish the comfort level among stakeholders that
Kaiser-Hill needs to execute the more complicated activities we have to
accomplish to achieve an accelerated closure of the site. If they do
not trust the regulatory framework to ensure a safe working
environment, achieving stakeholder acceptance for the work is much more
difficult.
Price-Anderson at Rocky Flats
While Price-Anderson has been a positive force at Rocky Flats, it
is important to recognize that it is only one of the tools DOE has at
its disposal to enforce regulatory compliance. The structure of our
performance-based contract with DOE is also a major compliance driver.
The fact that we are only rewarded for performance is a significant
inducement to remain in compliance with applicable regulations. These
provisions are highly positive aspects of the contract and ensure a
high priority for safety. On the other hand, our contract also provides
DOE several tools to penalize unsafe behaviors.
For example, one quarter of our annual fee is at risk should a
fatality occur at the site--an event we will hopefully avoid at Rocky
Flats. However, under construction industry standard measurements,
statistics indicate that several fatalities would be expected at a
comparable commercial site of this magnitude. It has nothing to do with
the radiological dangers involved at Rocky Flats, but simply reflects
the fact that the site is a very large industrial area with a major
demolition effort underway. What it means for Kaiser-Hill is that we
must strive to operate significantly more safely than best-in-class
industry standards for our business to succeed at RFETS.
Another significant contract matter is Kaiser-Hill's liability for
problems at the site. In essence, Kaiser-Hill has the full
responsibility for anything that goes wrong. We have unlimited
liability for fines and penalties incurred for site operations. We have
liability for claims from third parties, for any lost or damaged
property at Rocky Flats, and management liability for business
judgments that result in an improper use of taxpayer monies, all as
defined by our contract.
We view these elements--at-risk fee and liability--as end-of-
process penalties. If Kaiser-Hill is doing its job responsibly and
properly from the beginning, we will hopefully never be subject to
these penalties. This is why Price-Anderson has an important role at
Rocky Flats. We view Price-Anderson as one of the primary ways in which
we guarantee quality assurance from start to finish in the work at the
site.
Observations and Recommendations
One of our primary concerns with Price-Anderson is its uncertainty.
At Rocky Flats, at least, we strongly support the manner in which
Price-Anderson has been interpreted and implemented by DOE. Our fear,
however, is that the program may be too dependent upon personality.
Used by judicious and intelligent management, as is our current
experience, Price-Anderson is a highly valuable tool to help DOE sites
raise the bar on nuclear safety. In less capable hands, there are few
safeguards to prevent Price-Anderson from becoming a meddlesome,
bureaucratic, and political monster that could severely hamper the
effort to get work accomplished at Rocky Flats and other DOE sites, and
could, in fact, actually undermine safety at sites. Under such
circumstances, obviously, our support for the Price-Anderson structure
would quickly evaporate.
As you look forward to the reauthorization of Price-Anderson in the
next Congress, I do have a couple of recommendations how to ensure the
effectiveness of the enforcement policy. At this point, given the
responsible manner in which it is being implemented, Kaiser-Hill does
support maintaining the enforcement policy and program as it is
currently functioning. The most helpful actions you could take would be
those designed to institutionalize DOE's current management of the
program, removing the potential for improper or subjective
interpretation of the statute.
The other recommendation is that no further rulemaking is necessary
or desired to ensure the effectiveness of Price-Anderson. The
radiological control rule, as set forth in 10 CFR 835, and the quality
assurance rule, as found in 10 CFR 830.120, are sufficient. The quality
assurance rule currently provides all the regulatory enforcement
leverage DOE will ever need. It is akin to the Nuclear Regulatory
Commission's 10 CFR 50 Appendix B, which has been the basis for the
majority of enforcement actions against commercial nuclear facilities.
Conclusion
Price-Anderson, as it is currently being implemented, has been a
very helpful and positive influence at Rocky Flats. It has prompted
significant changes in the safety culture of the site, and its strong
emphasis on catching problems early has provided our local communities
in Colorado with an additional sense of security in the work Kaiser-
Hill is managing at RFETS. Our goal of a 2006 closure at Rocky Flats
will be a difficult endeavor, and we hope the requirements of Price-
Anderson will continue to assist our efforts to accomplish the closure
safer, better, cheaper, and faster.
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Mr. Upton. Thank you. Mr. Hall.
TESTIMONY OF LINCOLN E. HALL
Mr. Hall. Thank you, Mr. Chairman and members of the
subcommittee. I represent Lockheed Martin. We operate the Y-12
plant in East Tennessee, Oakridge National Lab--excuse me--in
East Tennessee, Sandia National Lab in New Mexico which has an
extension in California. Currently we operate the Idaho
National Lab in Idaho. We have major subcontracts to Fluor
Daniel at Hanford, we operate the tank farm and the retrieval
there. And we also have a major subcontract with Bechtel in the
Nevada test site.
As a corporation we work very diligently to define the
requirements in such a way that verbatim compliance is a given
in the work that we do. We fully applaud any attempt on the
part of the Department to increase rigor and discipline in the
implementation of the work and the work processes as they
pertain to all of the DOE site, not just what would be
classified as a nuclear facility.
Recently the DOE has in fact stepped up its Price-Anderson
enforcement and oversight activity. I would like to applaud
that because this--I am seeing evidence that this increased
activity is having a significant and a very positive impact on
our DOE sites. It is in fact contributing to and helping the
create a compliance-based culture; it is improving DOE and
contractor leadership toward achieving compliance; it is
stressing senior management involvement in and participation in
the line activities out in the field; and it is helping to
create an environment of managing and corrective actions in a
very timely manner. And we believe in and support these
principles.
We would like to point out also though that those
activities are largely driven by a multiple set of DOE orders
that are in effect and are in fact incorporated in our
contracts. On balance, I believe these orders are effective, we
have experienced in our facilities few nuclear exposures and no
fusel events in such form and quality that would threaten the
public or workers or the environment.
We believe that the Price-Anderson enforcement and
oversight has a specific mission to assure that operations of
nuclear facilities meets the public law. And what is relevant
in my discussion is what constitutes a nuclear facility as
opposed to what constitutes all of the facilities on a DOE
site.
Toward that end, contractors from the promulgative roles in
1994 and 1995 developed and they performed to develop
implementation plans and they have subsequently operated to the
implementation plans. Although there was no real specific
guidance in terms of the standard of what constitutes a
facility that is within Price-Anderson enforcement space, the
DOE did provide provisions that would allow contractors to take
a graded approach to their facilities and those facilities that
fell within a category 1, 2, or 3 classification was defined
under DOD MIL Standard 1027 where in fact put into the
implementation plans and defined as and operated as a Price-
Anderson enforcement facility.
Recently and as recent here in the beginning of the year,
initiatives by DOE have been to expand the Price-Anderson
enforcement provisions under the 10 CFR 831.20 quality
assurance rule that in my opinion would effectively expand
enforcement activities over the entire site.
DOE already has at its disposal remedies that are
substantially punitive such as zeroing out our fee, that has
occurred. Putting these site-wide management issues into
enforcement space, we believe, would be onerous. We believe
that it would not be apparent to us that putting site-wide
management issues into enforcement space would increase either
the operating health or safety to our workers or to the public.
Thank you very much.
[The prepared statement of Lincoln E. Hall follows:]
Prepared Statement of Lincoln E. Hall, Vice President Operations,
Energy and Environment Sector, Lockheed Martin Corporation
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to testify before you today on Worker Safety at DOE Nuclear
Facilities with focus on a review of the department of Energy's
enforcement of the Price-Anderson Act nuclear safety requirements. By
way of background, I have been a businessman for 38 years, managing
both commercial and government lines of business. I began my career
with the Glenn L. Martin Company. I spent 30 years holding various
positions in DOD Aerospace programs. In 1993, I assumed the Martin
Marietta Corporation position of vice president of Environmental
Management in Oak Ridge. In 1996, I became president of Lockheed Martin
Hanford Corporation with responsibility for the Tank Waste Remediation
System in Hanford, Washington. In January 1999, I assumed the position
of vice president of Operations for the Lockheed Martin Energy and
Environment Sector.
introduction
Lockheed Martin Corporation appreciates the opportunity to provide
testimony to this Committee regarding DOE's enforcement of Price-
Anderson Act nuclear safety requirements. This testimony represents the
collective thinking of those Lockheed Martin Corporation operating
entities in which we are pleased to hold contracts with the DOE. These
include the Oak Ridge National Laboratory and the Y-12 plant in
Tennessee, the Sandia National Laboratories in New Mexico and
California, and the Idaho National Engineering and Environmental
Laboratory. We also hold major subcontracts to Bechtel at the Nevada
Test Site and to Fluor Daniel at the Hanford, Washington Site.
The Price-Anderson legislation and the DOE rules created for its
implementation, and their enforcement, are very important parts of the
safety management framework established by congress and DOE for nuclear
facilities. DOE's Price-Anderson rules are consistent with established
U.S. Industry and International safety standards. Other safety
requirements for nuclear facilities are prescribed in DOE directives
made applicable through contract terms. These requirements include
federal occupational safety and environmental regulations as well as
DOE orders. Contractors recognize their responsibility to effectively
implement DOE's Price-Anderson rules and other requirements to assure
compliant and safe operation. Implementation plans are submitted to and
approved by DOE.
Lockheed Martin has placed great emphasis on rigorous compliance
with the actions specified in these plans. We appreciate that
requirements and standards must be succinct, unambiguous and
implementable.
importance of price-anderson to safe operation of doe facilities
The Price-Anderson Act which was enacted in 1957 as an amendment to
the 1954 Atomic Energy Act (AEA) Act established provisions under which
financial protection is provided for public liability associated with a
nuclear incident. DOE is required to include that indemnification
provision in each of its contracts that involves the risk of a nuclear
incident.
The Price-Anderson Amendments Act (PAAA) of 1988 made changes to
the 1957 PAA, one of which established a system of civil penalties for
indemnified DOE contractors, subcontractors and suppliers for violation
of any rule, regulation, or order, related to nuclear safety.
This enforcement authority is a necessary and valuable tool for DOE
to assure effective implementation of nuclear safety requirement by
contractors, and Lockheed Martin fully supports DOE in this enforcement
authority.
contractor implementation of nuclear safety requirements
The DOE Price-Anderson nuclear safety requirements as published for
comment were applicable to reactor and non-reactor nuclear facilities.
There were several comments during the Public comment period on 10 CFR
830 stating that the term ``nonreactor nuclear facility'' was too
vague. In the preamble to the final 10 CFR 830.120 Quality Assurance
rule, the DOE disagreed with these comments because:
The proposed definition was intended to cover all situations
(other than nuclear reactors) with the potential to cause
radiological harm. The reference to the graded approach was
included to take into account the differences that exist
between facilities and, thus, to avoid a rigid application of
nuclear safety requirements to divergent facilities and to
encourage the taking of actions appropriate for particular
facilities. [emphasis added]
Consequently, contractors prepared and submitted Implementation
Plans to the 10 CFR 830.120 Quality Assurance rule in late fall 1994.
These Implementation Plans are the basis used to determine compliance
with the relevant nuclear safety requirements. Although the regulations
did not provide guidance as to the required scope of the Implementation
Plans, in September of 1994, the Director of the Office of Nuclear
Safety Enforcement, Mr. Richard Black issued a memorandum recommending
that:
The nuclear facility threshold for direct applicability of Part
830 shall be those facilities that are Category 3 and above per
DOE-STD-1027.
In 1995, the DOE Office of the General Counsel issued Price-
Anderson ruling 1995-1 concerning 10 CFR Parts 830 (Nuclear Safety
Management) and 10 CFR 835 (Occupational Radiation Protection). The
ruling defines a nonreactor nuclear facility under 830 to mean those
activities or operations that involve radioactive and/or fissionable
materials in such form and quantity that a nuclear hazard potentially
exists to the employees or the general public. Incidental use and
generating of radioactive materials in a facility operation (e.g.,
check and calibration sources, use of radioactive sources in research
and experimental and analytical laboratory activities, electron
microscopes, and x-ray machines) would not ordinarily require the
facility to be included in this definition.
Thus, the initial contractor implementation plans submitted to DOE
were constructed such that they were applicable to Category 1, 2, or 3
nuclear facilities as defined by DOE-STD-1027. After a series of
reviews, the Implementation Plans were approved by DOE.
Through 1998, contractors annually submitted updated implementation
plans that only addressed category 1, 2, and 3 nuclear facilities and
these plans were subsequently approved by DOE.
current situation
In the 1998 Annual Report by DOE's Office of Enforcement and
Investigation, DOE stated in part:
Contractor organizations have incorrectly assumed that the
Quality Assurance Rule (10 CFR 830.120) did not apply to a
facility, area, or activity if it was classified as less than
Hazard Category 3 under DOE Standard 1027-92 (Hazard
Categorization and Accident Analysis Techniques for compliance
with DOE Order 5480.23, Nuclear Safety Analysis Reports).
Standard 1027 provides guidance for determining whether a
facility, activity or area requires a SAR based on inventory.
However, it does not provide a basis for exclusion from the
provisions of 10 CFR 830.120. [emphasis added]
This DOE position was further formalized in a letter dated February
4, 1999 from the EH-10 division of DOE addressed to our Lockheed Martin
Contractor Operating Presidents. The subject of the letter was
``Request for Updated Implementation Plans for your Quality Assurance
and Radiation Protection Programs.'' This letter, notes that the
requested updates provided the contractors the opportunity ``to correct
inappropriate classification of what constitutes a nuclear facility
under the Quality Assurance Rule.''
In summary, we are currently in a period of transition and
uncertainty that is based on the following:
1). We believe the Act(s) were clearly intended to address the
contractors' management of nuclear and non-nuclear facilities that
involve radioactive and fissionable material in such form and quantity
that a nuclear hazard potentially exists to workers safety, the public,
or the environment.
2). Contractors have responded to the requirements of the QA rule
using DOE-STD-1027 as the guide for determining which facilities fall
under the provisions of the QA rule. Implementation plans written,
based on this interpretation, have been submitted to DOE. These have
been approved by DOE and budgets constructed accordingly (although the
DOE disagreed with the limitation of the rule in its preamble to the
final rule, the DOE's application of the rule has been consistent with
DOE-STD-1027 until now).
3) The DOE now wishes to modify application of the QA rule pursuant
to the OGC ruling 1995-1 such that virtually the entirety of a DOE site
would be subject to PAAA regulation under the QA rule with little
correlation between the risk of a nuclear incident and the
requirements.
doe enforcement of price-anderson
It is clear in the DOE language that has been promulgated through
its correspondence to its contractors, that verbatim compliance is
expected, and if such compliance is lacking for those activities
regulated under Price-Anderson then the contractors are subject to
fines and penalties. We at Lockheed Martin expect to be held
accountable for compliance. However, ``verbatim compliance'' can only
be derived from ``verbatim requirements.'' Implicit in the concept of
``verbatim compliance'' and ``verbatim requirements'' is the
fundamental principle that regulations should provide precise and
unambiguous clarity regarding the types of activities that are covered.
We believe Congress has exercised its fiduciary responsibility to
the public to not only minimize the public's risk resulting from the
management of nuclear and non-nuclear facilities, but to also minimize
the cost to the public in carrying out this mandate. One sure way of
minimizing costs is to minimize and streamline regulatory requirements
such that compliance with these requirements can be straightforward and
unambiguous. Currently, DOE facilities are operating under a multiple
set of requirements--many of which are subject to interpretation.
For those facilities that are currently not covered by PAAA, we
believe that DOE has put in place an effective oversight program,
executed under its contract authority, for those contractors' health
and safety activities. We therefore question the need for PAAA to be
expanded to cover what could become all of these facilities that are
under this oversight program. Although an expansion of Price-Anderson's
space is likely to increase administrative cost, it is not apparent to
us that such increased Price-Anderson expansion would measurably
increase the operating health and safety to the workers and the public.
conclusion
The full implications of expanding PAAA are not yet fully
understood and are related to the actual results of the ``graded
approach'' for each DOE facility. The term ``graded approach'' is
interpretative and therefore subject to re-interpretation and
therefore, runs counter to the concept of unambiguous requirements.
With regard to the DOE enforcement of Price-Anderson nuclear safety
requirements, it has helped create a Compliance Based culture that is
improving. We applaud the increased Price-Anderson support and
attention to contractor leadership needed to achieve a total quality
compliance culture in DOE's facilities.
Safety requirements established in DOE's directives are effective
for facilities not currently in implementation plans for Price-Anderson
rules. Broadened applicability of the rule is not necessary to assure
safety.
Mr. Chairman, the Members of this Subcommittee, we look forward to
working with you and the DOE to help protect this nation as we manage
the nuclear and non-nuclear facilities under our control.
Thank you!
Mr. Upton. Thank you, Mr. Hall.
Mr. Van Ness, I noticed in your testimony you said a number
of things. You were obviously concerned about the University of
California's reputation and you wanted to do--you're right, you
had a commitment to performing well and yet as I look at some
of the comments particularly with regard to some of the fines
this past year, 1998, I see these things.
I see a nuclear facility appraisal conducted by LLNL
identified significant and potentially widespread problems with
workers not adhering to nuclear safety procedures.
I see that five workers were contaminated with
radioactivity at building 513 during waste processing
activities that were in fact the radioactivity alarm in the
building had been turned off.
I see that Lawrence Livermore was fined $160,000 of one of
those phantom penalties for unnecessarily exposing the workers
to radioactivity and DOE noted numerous failures by University
of California to implement the established protection
requirements and quality controls.
I see that DOE issued a criticality safety appraisal that
identified significant problems with building 332.
I see that DOE found multiple and reoccurring failures to
follow criticality safety requirements in that same building
May through December 1997. I see that another $155,000 phantom
penalty was waived because of inadequate oversight in
assessment over the criticality safety program over a number of
years.
I saw a fire and explosion in the chemistry and metallurgy
research facility in 1996. I saw an enforcement letter that
went out, but it refused to penalize Los Alamos correcting work
planning and work control programs. I saw Los Alamos refuse to
implement radiation protection requirements that they had
agreed to in July and September 1997, and multiple failures
were identified at the same case for including failure to
ensure systems prevent release of contamination. And I saw that
the DOE found or fined Los Alamos $112,000 for nuclear safety
violations but, again, in fact that penalty was waived in
September 1998.
And I see this letter that you--I think you were here to
see the Dr. Lappa letter, and it was referred to by a number of
members on this panel, and I listened to Dr. Michaels at the
end when he testified in response to a question from Mr. Burr
where he said that simply alone the fines merely alone won't
improve the safety performance and it was of a great concern.
When I look at all these different violations, when I listen to
your report, your testimony, and I see that a number of--most
of these, I think--the penalties were waived, what is it that
we can do to in fact make sure that your testimony is accurate?
Is your concern about the reputation and workers and what
is it that DOE can do and the Congress can do to make sure that
these types of violations don't happen again?
Mr. Van Ness. Well, we have taken strong corrective actions
in response to each of those failures. We regarded them as
extremely serious. We regret that they happened, and we have
taken actions to ensure accountability with the individuals who
failed to follow appropriate procedures.
I do want to say that those violations are serious and have
our direct attention and have been aggressively responded to.
They do not characterize the overall safety performance at
those laboratories. When you look at things like radiation
exposure to workers, we are far below the a ALARA goals at each
of our laboratories. When we look at public exposures we are
far below the NESHAP goals, the National Emission Standards for
Hazardous Air Pollution, and when you look at occupational
illness and injury rates, we have shown a significant
improvement at each of these laboratories and in fact are
moving toward benchmark best in class levels.
We are working hard to improve safety at each of our
laboratories. We have not reached the point where obviously we
can avoid the kinds of incidents that happened. We are trying
to limit that.
Mr. Upton. Would you say that the case involving Mr. Lappa
is an aberration?
Mr. Van Ness. Yes, I--actually I believe that to be the
case. Mr. Lappa's case is one where he was a member of a team
reviewing one of the Livermore events that resulted in a notice
of violation. He had an opinion with regard to whether there
was some deliberate activity on the part of some of the workers
that was not concurred in by all of the members of the team. He
refused to sign the report which did not indicate his belief
that there had been some deliberate activity, and subsequently
felt that he was retaliated against for taking that position.
He did file a complaint with the Department of Energy and
the Department of Labor. The Department of Labor took
jurisdiction and there was a review made and in the course of
those deliberations there was a settlement reached with Mr.
Lappa and since then he has again indicated that he feels there
has been retaliation and has filed suit in a State court. That
matter is now approaching litigation.
Mr. Upton. Mr. Whitfield?
Mr. Whitfield. Mr. Chairman, I'm going to allow Mr. Burr to
take my time because he has another appointment and then I'll
ask questions after he finishes.
Mr. Burr. I thank my colleague.
Mr. Sussman, let me ask you, does the University of Chicago
have to compete for the contract for the Argonne Labs?
Mr. Sussman. The University of Chicago in the current
renewal of the contract did not compete. The department
determined----
Mr. Burr. Have they ever?
Mr. Sussman. No. The answer is no.
Mr. Burr. Under the contract that you're currently under,
and I haven't had an opportunity to read it, is there--are
there performance fees?
Mr. Sussman. Yes, sir.
Mr. Burr. And are those performance fees at risk if you
don't get an adequate rating----
Mr. Sussman. Yes, sir.
Mr. Burr. [continuing] from the Department of Energy?
Mr. Sussman. Yes, sir.
Mr. Burr. The State of Illinois has regulatory authority
over the University of Chicago as it relates to the NRC license
and clearly has the ability of civil fines; am I correct?
Mr. Sussman. Yes, sir.
Mr. Burr. Have they ever exercised that?
Mr. Sussman. I have a list--in terms of the University
now----
Mr. Burr. Correct.
Mr. Sussman. [continuing] or in terms of Argonne, I'm
sorry?
Mr. Burr. In terms of the University.
Mr. Sussman. I am not as I sit here aware of that, sir.
Mr. Burr. What are the trustees of the University's
position as it relates to the State's ability to institute
civil fines on you?
Mr. Sussman. In terms of the activities conducted on the
University campus there are very minimal nuclear activities on
the campus and they are part of the basic and overall
research----
Mr. Burr. But they have--the State has authority over civil
fines; am I correct?
Mr. Sussman. Yes, sir. Yes, sir.
Mr. Burr. Okay. So the trustees don't hold the same concern
that the State might fine you for the limited amount of----
Mr. Sussman. If the question--if I understand the question
correctly, sir, if the question is regarding the assets of the
University and concern, it is part of the cost reviewed of
doing the academic and research business of the University.
If the question is whether the trustees have the same
reputational concerns that I expressed in my testimony, my
answer would be, yes, they would have those reputational
concerns.
Mr. Burr. Let me ask you, you expressed your concern with
finance being extended to nonprofit entities.
Mr. Sussman. Yes.
Mr. Burr. Yet you said there has to be some structure, we
need--we need to fulfill our safety obligations?
Mr. Sussman. Yes, sir.
Mr. Burr. Let me ask you, if we modified Price-Anderson to
extend it but to suggest that the Department of Energy has the
ability to place civil fines not to exceed the performance fees
of the contract, what would be the University of Chicago's
position?
Mr. Sussman. As I indicated, Mr. Burr, in my testimony, the
University at present has its entire performance fee at risk by
virtue of the Department. And that if that performance fee was
at risk as a result of Price-Anderson liability as against the
Department, that would be, in my judgment, a pretty similar
situation.
Mr. Burr. So you see----
Mr. Sussman. As long as, if I might add, sir, as long as
we're not subject to double penalties. In other words, Price-
Anderson and the Department of Energy----
Mr. Burr. You know the Federal Government well?
Mr. Sussman. We have experience with it, as you do, sir.
Mr. Burr. Mr. Van Ness, let me ask you a similar question.
Would the University of California be supportive of a modified
Price-Anderson where civil fines could be placed by the
Department of Energy not to exceed the amount of the
performance fee?
Mr. Van Ness. I believe we could work with that situation.
Mr. Burr. Has the University of California ever had to
compete for the Los Alamos or the Lawrence Livermore contracts?
Mr. Van Ness. No, it has not.
Mr. Burr. Did you negotiate the latest contracts?
Mr. Van Ness. Yes, I did.
Mr. Burr. You did?
Mr. Upton. You might just pull that mic a little bit
closer.
Mr. Burr. Let me ask you, Mr. Van Ness, does the University
of California have a policy that limits or prohibits certain
types of communication with Congress by its employees?
Mr. Van Ness. Not that I'm aware of, no, sir.
Mr. Burr. Mr. Lappa stated in his letter that--in the last
paragraph--``that I regret that my civil suit complicates my
communications with your staff. UC policy strictly prohibits
certain types of communication with Congress and my attorneys
therefore have instructed me to proceed cautiously in that
regard.'' You're not aware of anything at the University of
California that would have led his attorneys to make that
caveat to his letter?
Mr. Van Ness. No, I'm not.
Mr. Burr. With the Chair's indulgence, I would ask for 2
additional minutes?
Mr. Upton. Go ahead.
Mr. Burr. Let me ask you what the procedure is at the
University of California for handling a safety complaint?
Mr. Van Ness. The safety complaints would be--depending on
what area it's in, it may or may not include the involvement of
the Price-Anderson Act coordinator, but certainly the folks in
the environmental, safety, and health organization at the
laboratory would investigate that question or that allegation.
And depending on circumstances personnel from my staff might be
involved in that----
Mr. Burr. Was your staff involved in any way, shape, or
form in the concerns raised by Mr. Lappa?
Mr. Van Ness. I believe we had discussions with the
laboratory on the essence of the allegations.
Mr. Burr. Are you aware of any investigation that the
laboratory took on based upon the claims that Mr. Lappa made?
Mr. Van Ness. I'm not directly aware, but I do believe that
was the case.
Mr. Burr. Would you share with this committee in writing
what procedures in fact took place at your directive or based
upon the procedures in place at the University of California
relative to his complaint?
Mr. Van Ness. Yes.
Mr. Burr. Let me ask you if you believe that the University
of California is bound to adhere to DOE zero tolerance policy
on employees that are whistle-blowers?
Mr. Van Ness. Yes, I do.
Mr. Burr. You believe that any contractor is bound to that
policy?
Mr. Van Ness. Yes, I do.
Mr. Burr. Okay. Let me ask you just a couple more questions
relative to the contracts. To your knowledge has the University
of California in the last 5 years received anything below a
good rating for safety or security?
Mr. Van Ness. Not in the contract ratings. We have received
below good in reviews made by headquarters review teams.
Mr. Burr. Does the headquarters review teams affect your
performance fee?
Mr. Van Ness. It can.
Mr. Burr. Does it?
Mr. Van Ness. It is taken into account, yes.
Mr. Burr. Has the University of California ever been cited
for security violations?
Mr. Van Ness. Well, we've had security lapses.
Mr. Burr. Have you ever been penalized based upon your
performance fee for lapses in security?
Mr. Van Ness. We have not been penalized. We have not
achieved incentive fees that would have been available to us
had our performance been of higher--at a higher standard in
that area.
Mr. Burr. Do you know what that rating was that you
received that affected your performance?
Mr. Van Ness. I believe it was good.
Mr. Burr. Based upon the contract, anything that received a
good rating, the DOE would be unable to cut your performance
fee?
Mr. Van Ness. That's correct.
Mr. Burr. So the likelihood is that you did not have your
performance fee cut based upon security violations?
Mr. Van Ness. No, we did not have it cut. As I said, what
we didn't have was we didn't get any additional dollars because
we did not perform at a high enough standard.
Mr. Burr. So does that pertain to the million dollars
additional fee in the contract that was awarded for exemplary--
--
Mr. Van Ness. Yes.
Mr. Burr. [continuing] performance?
Mr. Van Ness. Yes.
Mr. Burr. But the standard $4.9 million, if I'm correct, of
performance fees that there was an annual evaluation on, there
was never a reduction in that based upon security lapses?
Mr. Van Ness. That's correct.
Mr. Burr. And to your knowledge, in the last 5 years the
University of California has never received anything lower than
a good rating on security; am I correct?
Mr. Van Ness. In contract ratings that is correct.
Mr. Burr. Thanks. Mr. Chairman, I thank you for your
indulgence and for the indulgence of my colleagues and would
yield back.
Mr. Upton. I have a slow watch.
Mr. Whitfield?
Mr. Whitfield. Thank you, Mr. Chairman.
Mr. Miller, Dr. Michaels testified that the Department
intended to finish the promulgation of three additional nuclear
safety rules by the end of the year and originally there were
going to be nine additional rules. Do you have any thoughts on
their intentions to do three rules instead of nine?
Mr. Miller. Well, Mr. Whitfield, the number of rules
probably is less important than the content of them. DOE as was
earlier discussed has a number of orders which govern areas
which include training and certification, unreviewed safety
questions, conduct of operations, radiation protection of the
public and the environment, technical safety requirements,
maintenance management, and defect identification. If all of
those matters were consolidated into one rule, that would be
fine; if they want to do separate rules for each of those
areas, that would be fine. But it's very important particularly
where this is a system which relies on contractor self-
identification of deficiencies and reporting through a computer
system that all of these areas be tracked and self-reported so
that there is some signaling and a red flag that goes up when
there's a problem.
If you don't have a rule for each of these areas, no red
flag goes up, there's no Price-Anderson investigation. And so
from our point of view, we think that Dr. Michaels, depending
on what he meant by three rules may be either was or was not
sufficient, but in our view everything that was initially
contemplated needs to be there. We do not agree that the
quality assurance rule is a sufficiently broad catch-all rule
because it is too vague.
Mr. Whitfield. But if he does cover these areas that you
mentioned in a very clear way, then you really do not have any
problem on his approach?
Mr. Miller. His approach would be fine as long as he
actually gets it done by January of 2000. As I probably said
earlier, we are a little bit troubled that we've waited 11
years and I don't know at this rate would we get two more rules
in another 11 years? And I guess I would just encourage you all
to think about perhaps holding the Department's feet to the
fire on that.
Mr. Whitfield. Okay. Thank you.
Mr. Card, it's my understanding that the Price-Anderson Act
indemnifies DOE contractors for all legal liability even in the
case of gross negligence or willful conduct. And in reading
your testimony, and I think that you're company should
certainly be commended because evidently originally Rocky Flats
was supposed to be completed in 2060 at a cost of $37 billion
and you all are thinking you can do it by 2006 for $7 billion,
so that's a considerable difference. But in your testimony you
say, ``another significant contract matter is Kaiser-Hill's
liability for problems at the site. In essence Kaiser-Hill has
the full responsibility for anything that goes wrong, we have
unlimited liability for fines and penalties incurred for the
site, we have liability for claims from third parties for any
lost or damaged property at Rocky Flats.'' Why are you liable
under your contract where evidently other DOE contractors have
an indemnification from the Department?
Mr. Card. Okay. Well, there's two kinds there. First of
all, we don't have any contract limits on our liabilities. If
there's protection outside of our contract Price-Anderson is
one case. In exchange for the a hammer you get the protection.
So that exists outside of our contract. But our contract was
the first contract that included all of the elements of
contract reform, and one of those was to remove, before you
would get fined, and I don't know if this occurs in other DOE
contracts or not, and you would simply pass the bill on the DOE
for that. And I think this committee and others had problems
with that. Our contract has no pass the bill along. So anything
that we get fined for or we lose judgments on, we're
responsible for it just like we would be for a commercial
customer. So it's really no different than that.
Mr. Whitfield. I see.
Mr. Card. I think it would be the same as a supplier for a
commercial nuclear facility that gets some of the benefits of
Price-Anderson but are subject to NRC regulation in exchange
for that.
Mr. Whitfield. Okay. Thank you, Mr. Chairman.
Mr. Upton. Thank you.
Have all of you been able to look at this report? I know it
just sort of came out this week. Have you all had a chance to
look at it?
[Chorus of yeas.]
Mr. Upton. I have a question as it relates to the nine
requirements. This is a report that DOE indicated they do by
October 1. The nine requirements that are proposed, but rules
have not been issued in this. I look in scanning and go very
briefly through these safety analysis report, unreviewed safety
questions, defect identification reporting, conduct of
operations at DOE nuclear facilities, technical safety
requirements which establish in documents that the facility's
operating limits and other requirements are in place, training
and certification, ensuring that employees whose performance is
vital to the safe operation of DOE nuclear facilities are
trained to conduct duties in a safe and effective manner,
maintenance management, radiation protection, et cetera.
Are there any of these that you currently are not doing now
at your facilities? I mean, Mr. Card?
Mr. Card. I'll just respond the that, we have--those are
well incorporated in our contract. They contain full
enforcement provisions otherwise, and I can't think of a single
case where we've had any issue with those that aren't also
Price-Anderson issues. In fact, we have included the list and
it's, by the way, publicly on our web site all of our NTS
filings. So, Rocky Flats, I am bothered a bit because I have a
lot of respect for Mr. Miller why we seem to have a difference
here and it may be the types of sites, because our site is a
full nuclear site. There is no question what's in or out at
Rocky Flats. And perhaps that's the basis why we have a
different opinion than others.
Mr. Upton. Mr. Hall, do you have any comment on these nine?
Mr. Hall. I was just looking at the list to make sure
that----
Mr. Upton. I mean, I would imagine----
Mr. Hall. [continuing] if my statement is accurate.
Mr. Upton. [continuing] as I look at all of these, it seems
like most companies, universities would already have something
in place already in all these nine, am I not correct?
Mr. Hall. In each of our sites where we have either a
radiological facility or any categorization of a nuclear
facility, each and every one of these requirements are an
integral part of what we do.
Mr. Upton. Mr. Sussman?
Mr. Sussman. You know, I have not looked at this list, but
I would concur with the answer that it is part of our general
activities. We do take a very broad view under the quality
assurance of what is covered and what our responsibilities are.
So as I look at the list very quickly, Mr. Chairman, it appears
to be covered.
Mr. Upton. Mr. Van Ness, the same?
Mr. Van Ness. The same.
Mr. Upton. Mr. Miller?
Mr. Miller. Well, I don't have----
Mr. Upton. I know, you don't have your own, maybe you don't
want one.
Mr. Miller. But at this point right now, our concern is
that when there is noncompliance events with this, there is no
trigger for the contractor to self-identify and report this.
There is no enforcement capacity an what it does is it sort of
gets, and there's no site representatives onsite which could be
able to, quote ``tap people on the shoulder'' and say, you have
untrained people operating at facility X, how come, and what
are you doing to fix it?
Mr. Upton. Has DOE contacted you at all in terms of the
best way that you all may think that they might want to
approach these nine, as whether they incorporated it as two
rules or three, or four, or whatever it might be? Has there
been any interaction between DOE and your group?
Mr. Hall. DOE has not approached us with the question of
what would be our reaction to incorporating these under Price-
Anderson enforcement space. However, each and every one of
these requirements are integral to our contracts, flow down to
us from the orders and are very enforceable. The authority that
is given to the field office manager to approve a safety
authorization basis under which we can do work and the
precision under which we address an unreviewed safety question
is very strictly enforced on all of our sites. So each and
every one of these are applicable to the site.
With regard to self-identification, a great deal of
emphasis has been given by us and I believe every contractor
that we know of to flow safety down such that each and every
worker feels responsible for the identification of any safety
issue and we are encouraging each and every worker to, under no
circumstances proceed with work if you perceive or believe or
know that there's a safety issue associated with it.
Furthermore, each and every worker has the authority to stop
work if they perceive that there is a problem. Each and every
one of those self-identified occurrences as they do occur are
in fact reported into the DOE reporting system. Each and every
one of them is in fact screened as to whether or not it screens
into Price-Anderson enforcement space and therefore is reported
into the NTS or not.
Mr. Upton. Thank you. Thank you.
Anybody else want to comment?
Mr. Card. Yes, I just want to clarify for the committee
that our reticence to endorse all of these new rules has
nothing to do with liability. We believe there would be zero
effect on exposure--liability exposure for us by adopting them.
It costs us up to $2 million per rule to change all of our
procedures simply to change the name and other things in there.
So--and then retrain the people on minor differences in it so
that we don't have a slip up. So our main concern is the
administrative cost of making the change from the DOE order to
the rule. If the rule is rewritten to simplify the procedure,
then it would be a benefit and we would support it.
Mr. Upton. I know that--I think Mr. Stupak was intending to
come back, but I would ask that all members may have a chance
perhaps to respond with written questions and I'll take a
moment to recognize Mr. Strickland with a question if he----
[Pause.]
Mr. Strickland. Thank you, sir. Let me catch my breath.
I understand that there have been comments here that the
fines and loss of performance fees do not order contractor
misconduct. I think Mr. Miller, did you make such a statement?
Mr. Miller. Yes. Yes, Mr. Strickland.
Mr. Strickland. And you said that only persistent
accountability actions can change the culture. And I was
wondering if you could explain to me what you had perceived
those actions to be or what they should be?
Mr. Miller. Thank you, Mr. Strickland. In our view we have
encountered what we would view to be substantially--substantial
noncompliance over protracted periods of time within certain
DOE facilities. Let me give an example. In your home State of
Ohio, at the Miamisburg facility we have had a situation where
workers have endured almost a decade of questionable radiation
protection.
We have had bioassay samples sitting on shelves for 3
years, over half of which came back hot. We have had workers
who have had their dosages of plutonium undercounted and so
they don't know how hot they are or whether they should even be
sent back into a hot area again.
We have had workers who were pressured not to use
respirators because they were criticized for being excessively
conservative and in effect slowing down the work process.
We have had situations, as we've heard here in the panel
today, and at facilities where we represent workers where
radiation monitors are turned off. Perhaps under the mistaken
notion that the hazards were not as real or didn't merit
further investigation.
We have had two extended work stand downs at the Miamisburg
facility which cost the Government a good sum simply because no
radiation work could proceed forward during those protracted
stand downs. And so in that particular circumstance, as we have
seen there and elsewhere, we are concerned that award fees--
reducing award fees have not had a beneficial effect in
improving contractor performance. We had over $400,000
reduction to that contractor, but problems continued to
persist.
At the Idaho National Engineering labs, just if I may point
out, we had a major fatality there where--shall we say--
inadequate work planning took place, and that was in a site
where we had extensive incentive fee provisions written into
the contract. The reality is there is no substitute for close
policing of the work because there are contradictory incentive
fees that DOE has set up. They have said work faster, work
faster, we need to get out of these sites quicker.
Mr. Card is under tremendous pressure at Rocky Flats to get
out by 2006 and he's taking tremendous efforts to get there.
But with all of those pressures incentive on one side, on the
other side there were also incentivizing contractors to operate
more safely. The problem is that they often wind up in
competition with each other.
Mr. Strickland. So if I take the implications of your
statement as I perceive them to be, you're saying that human
beings are being injured and perhaps even losing their lives
because of inappropriate pressures being placed upon
contractors to get work done more quickly? Is that a fair----
Mr. Miller. Well, I would say that those pressures exist. I
would also say that the Department, in fairness, has only
requested $600,000 per year in its budget request for the
Price-Anderson program. It has five people to enforce nuclear
safety at 2,000 facilities nationwide, and we believe that the
Department needs to step up to the plate with a more staffed
program. I don't believe we've ever had a Price-Anderson
investigator come to the Portsmouth gaseous diffusion plant,
and, yet, we know of substantial problems at that facility
including inadequate monitoring of neutron exposures to the
workers at that facility.
So our view is that we need a more beefed up program, and
frankly we think the Department should allocate its resources
accordingly and we would appreciate some leadership, I guess,
from the Department in coming forward with somebody more than--
with something more than five people to police an entire
nationwide nuclear complex.
Mr. Strickland. So when you say ``persistent accountability
actions'' those actions would be possible in your judgment if
there were greater resources available?
Mr. Miller. That's correct, Mr. Strickland.
Mr. Strickland. Thank you, Mr. Miller.
Thank you, Mr. Chairman.
Mr. Upton. Thank you. Appreciate your testimony. It will
certainly help us in the days ahead, and we are now excused.
[Whereupon, at 1:23 p.m., the hearing was adjourned.]
[Additional material submitted for the record follows:]
Responses for the Record of David M. Michaels, Assistant Secretary for
Environment, Safety and Health, Department of Energy
questions from the house committee on commerce
Question 1: In your written testimony, you note that field office
coordinators serve a critical role in the enforcement program, but,
``we've found this arrangement to be working better at some sites than
in others, depending on the commitment of the individual field office
management.'' In this regard, please identify which three offices need
to place greater emphasis on enforcement. Please also identify what
specific steps you will take to address these gaps.
Answer 1: The success of the nuclear safety enforcement program
depends on contractors taking a positive and proactive approach that
identifies and resolves problems, negative trends and precursor events
before a serious event occurs. In the several years that the program
has been in operation, we have worked closely with field offices to
encourage such a proactive approach. Examples of the criteria we would
use to defining a successful field office would include the following:
<bullet> The Field Office Coordinator is qualified and knowledgeable of
enforcement policy and process, has a good general knowledge of
nuclear safety requirements, and has a demonstrated supportive
senior management.
<bullet> The Field office is proactive and has a questioning attitude
regarding issues and their significance, and uses enforcement
as an integral part of the sites' overall safety management
program.
<bullet> The Field Office demonstrates knowledge of thresholds for
reporting regarding programmatic issues, negative trends,
precursor events and repetitive violations
<bullet> The Field Office performs objective evaluations of the safety
significance of violations.
<bullet> The Field Office Coordinator and site management routinely
engage in open and candid communication with the Office of
Enforcement & Investigation.
<bullet> The Field Office supports and participates in investigations,
reviews, and inquiries related to potential noncompliances and
PAAA program weaknesses.
<bullet> The Field Office encourages rigorous determination of
underlying causes and comprehensive corrective actions by their
contractor, and perform timely confirmation of corrective
action completion and verification of effectiveness. Few
violations are disclosed by events, with most being identified
through contractor self-assessment or DOE oversight.
Based on these criteria, we are working with several sites that we
believe could further improve their role in the enforcement process
through a more proactive approach, including DOE Oakland, DOE Chicago
and DOE Savannah River. At the same time, sites such as DOE Richland,
DOE Rocky Flats and DOE Idaho have generally taken a more proactive
approach to the regulatory enforcement process.
We are undertaking several steps to improve the overall
effectiveness of the field offices in the enforcement program. First, I
am communicating directly to the field office managers those attributes
that are necessary to improve their integration into the program.
Second, the Office of Enforcement is also increasing the number of site
visits to those sites that have been less proactive. Finally, the
Office of Enforcement has initiated discussions with the Office of
Oversight to increase their role in the regulatory arena with a
particular focus on those sites that need to be more actively engaged
in the enforcement program.
question from representative upton
Question 2: In your written testimony, you note that non-profit
contractors would require an increase in base, incentive, and award
fees if they were subject to civil penalties for nuclear safety
violations. For each of your major site management contracts with non-
profit educational institutions, what portion of the base, incentive,
and /or award fees are associated with the risk of civil penalty
pursuant to the Resource Conservation and Recovery Act?
Answer 2: We cannot quantify the portion of fees attributable to
RCRA penalty risks. Based on a survey of the Department's Operations
offices, the responders indicated that the cost risks associated with
civil penalties under RCRA normally were not specifically addressed as
part of the fee negotiations.
question from representative upton
Question 3: For each of DOE's major contracts with non-profit
educational institutions, please explain how performance-based
contracting has been used for improved safety performance. For each
contract, please list each safety-related objective, and the total fees
tied to each objective for fiscal years 1996-1999. Please also provide
the total fee earned for each safety related objective for fiscal years
1996-1998.
Answer 3: One of the underlying reasons for the Department's
Contract Reform Initiative was to deal more effectively with
environmental, health, and safety (ES&H) issues. This was accomplished
through the use of a number of interrelated contract mechanisms:
(a) a new ES&H clause, which requires the contractor to develop and
implement an integrated safety management system;
(b) a revised directives system clause that provides for the
implementation of new ES&H standards as appropriate during the
term of the contract;
(c) performance objectives related to ES&H matters; and
(d) a conditional payment of fee provision which permits DOE to
withhold some or all of an otherwise earned fee for safety and
health infractions;
These mechanisms have strengthened contractor accountability for
ES&H performance by requiring the integration of ES&H into business
systems and work management processes. They also delineate basic safety
system requirements for all DOE operating contractors in order to help
ensure work is conducted safely. One of the key features is that the
contractor must submit documentation of its ES&H management system for
DOE for review and approval, and the contractor is contractually bound
to operate in the manner described.
Submitted for the record is a detailed response to this question
for each DOE management and operating contract with an educational
institution. (The information follows:)
specific management and operating contracts with educational
institutions
UNIVERSITY OF CHICAGO at Argonne National Laboratory: Fees are not
tied directly to specific ES&H objectives; however, performance-based
contracting that considers ES&H objectives is one reason for improved
safety performance.
For 1996, the maximum performance fee was $4.7 million, of which
$4.2 million was earned. The earned fee was based upon a combination of
approximately equal weightings of science/technology and operations.
ES&H was evaluated within the operations area as one of several
functional areas, but specific weights were not assigned. The safety
related performance measures for the 1996 contract were: contractor to
improve environmental quality; contractor to provide safe work
environment; contractor to maintain continuous improvement; contractor
to protect environment, public and workers.
For 1997, the maximum performance fee was $4.7 million, of which
$4.2 million was earned. The fee was earned based upon a combination of
equal weights for the science/technology area and operations. Within
operations, ES&H was 16%, or 8% of the total value. The safety related
performance measures for the 1997 contract year were: contractor to
provide safe work environment and contractor to maintain continuous
improvement
For 1998, the maximum performance fee available was $3.5 million of
which the University earned $3.425 million. Of the $3.425 million, $3
million was earned for an overall excellent rating. Additional fee was
earned for outstanding ratings in science/technology and projects and
infrastructure. ES&H was rated as excellent. The safety related
performance measures for the1998 contract year were: contractor to
provide safe work environment; contractor to implement ISM; and
contractor to maintain continuous improvement.
For 1999, the same method is being employed as was used in 1998.
The safety related performance measures for the 1999 contract year
were: contractor to provide safe work environment; contractor to
implement ISM; and contractor to protect the environment.
BROOKHAVEN SCIENCES ASSOCIATES at Brookhaven National Laboratory:
Fees are not directly tied to specific ES&H objectives; however,
performance-based contracting that considers ES&H objectives is one
reason for improved safety performance.
For 1996, there was a fixed fee of $3.8 million paid to Associated
Universities, Inc. (AUI), the predecessor contractor for management and
operation of BNL. This fee was not tied directly to any performance
activity. The safety related performance measures for the 1996 contract
were: contractor to improve environmental quality; contractor to
provide safe work environment; contractor to maintain continuous
improvement; contractor to protect environment, public and workers. Due
to poor ES&H practices by AUI and the disintegration of public trust in
the laboratory, the AUI contract was terminated and a competitive
solicitation was issued to select a successor contractor to operate
BNL.
During 1997 a new contractor was being competitively selected. The
existing contract with AUI did not contain any specific performance
measures. A fixed fee for 1997 of $4.1 million was negotiated. In
addition, a $1.7 million fixed fee was negotiated with AUI for a
portion of FY98 to cover the last period of AUI involvement at BNL.
For the balance of 1998, Brookhaven Science Associates (BSA) was
selected to operate and manage BNL. The company received a fixed fee of
$3.574 million. The only areas in which performance measures were
established were ES&H (30%), science (50%), and community involvement
(20%). The performance measures did not have direct fee amounts
associated with them. The safety related performance measures for the
1998 contract year were: contractor to develop safe work environment
and contractor to implement ISM.
For 1999, a maximum performance fee of $7.0 million was negotiated
with ES&H weighted 15% of the total, science and technology weighted
60%, communications and trust weighted 10%, and environmental
stewardship weighted 15%. The final determination of fee will be in
FY00. The safety related performance measures for the 1999 contract
year were: contractor to perform in ES&H compliant manner; contractor
to implement ES&H management systems; and contractor to designate
quality managers and leaders.
IOWA STATE UNIVERSITY at Ames Laboratory: Fees are not tied to
specific ES&H objectives. However, for 1997 a total fee of $60,000 was
available for all contract activity subject to performance based fees
(50% was allocated to non-science activity and 50% to science
activity). ES&H measures represented 20% of the fee associated with
non-science activities (amounting to 10% of the total available). The
contractor earned $54,000 of the $60,000 available, $24,000 for non-
science activities and $30,000 for science activities. Safety related
performance measures were: contractor to acknowledge employee concerns
within two business days of receipt; contractor to allow time to
address employees' concerns; and contractor to minimize reportable
injury/illness rate and lost workday case rate.
For 1998 a total fee of $75,000 was available for all contract
activity (20% was allocated to nonscience activity and 80% was
allocated to science activity). ES&H measures represented 60% of the
fee associated with non-science activity (amounting to 12% of the total
available). The contractor earned $70,000 of the $75,000 available,
$10,000 for non-science activities and $60,000 for science activities.
Safety related performance measures were: contractor to conduct
activity reviews of laboratory work; contractor to conduct activity
review of all work involving lasers, x-rays, radiological materials,
hot work, working in confined space, or activities involving Facility
Services Group operating machinery and not previously subjected to an
activity review during 1998 contract year; contractor to prevent
fatalities, injuries, incidents of illness, exposures and releases (in
excess of established limits); contractor to minimize total recordable
case rate and lost workday case rate; and contractor to achieve the
waste minimization/pollution prevention goals delineated in the Ames
Laboratory Pollution Prevention Program Plan.
For 1999 a total fee of $100,000 was available for all contract
activity (40% is allocated to nonscience activity and 60% is allocated
to science activity). ES&H measures represented 62.5% of the fee
associated with non-science activity (amounting to 25% of the total
available). The fee determination for this year has not yet been made.
Safety related performance measures were: contractor to implement
agreed to corrective actions to address ISMS gaps; contractor to notify
Ames Group that laboratory is ready for Phase I and Phase H
Verification Review; contractor will apply activity review process to
all research and support activities not reviewed in 1998 contract year;
contractor to minimize total recordable case rate and lost workday case
rate; and contractor to achieve the waste minimization/pollution
prevention goals delineated in the Ames Laboratory Pollution Prevention
Program Plan.
PRINCETON UNIVERSITY at Princeton Plasma Physics Laboratory:
Princeton University received a $10,000 fixed fee for contract years
1997, 1998, and 1999. As a result, fees are not tied to specific ES&H
objectives; however, performance-based contracting that considers ES&H
objectives is one reason for improved safety performance. There were no
safety related performance measures for the 1996 contract year because
the contract had not been converted to a performance-based management
contract.
The safety related performance measures for the 1997 contract were:
contractor to maintain environmental quality and contractor to provide
safe working environment.
The safety related performance measures for the 1998 contract were:
contractor to provide safe working environment; contractor to measure
environmental performance; and contractor to implement ISM.
The safety related performance measures for the 1999 contract were:
contractor to provide safe working environment; contractor to measure
environmental performance; and contractor to implement ISM.
UNIVERSITIES RESEARCH ASSOCIATES at Fermi National Accelerator
Laboratory: Universities Research Associates received a fixed fee. As a
result, fees are not tied to specific ES&H objectives; however,
performance-based contracting that considers ES&H objectives is one
reason for improved safety performance. There were no safety related
performance measures for the 1996 contract year since the contract had
not been converted to a performance-based management contract.
For 1997, URA received a fixed fee of $3.2 million. ES&H related
performance measures for the 1997 contract year were: empowerment and
training of workers, institution of a work related injury reduction
program, minimization of wastes and promotion of recycling.
For 1998 URA received a fixed fee of $2.75 million. The safety
related performance measures for the 1998 contract year were:
contractor to provide safe working environment; contractor to minimize
waste and promote recycling; and contractor to implement ISM.
For 1999, URA received a fixed fee of $2.88 million. The safety
related performance measures for the 1999 contract year were:
contractor to provide safe working environment; contractor to minimize
waste and promote recycling; and contractor to implement ISM.
UNIVERSITY OF CALIFORNIA at Los Alamos National Laboratory: There
was no fee arrangement for FY93-FY97. During that period a management
allowance of $14 million was paid to the University of California for
operation of LANL, LLNL, and LLBL.
For the period FY98-02, there is an annual program performance fee
range of $4.9 million to $8 million, the target being $7 million. Fee
amounts in excess of the $7 million target would be earned for
exceptional performance in science and technology as well as ten
operational and administrative areas, one of which is environment,
health, and safety (ES&H). For FY98 the University earned $7.65 million
as a program performance fee. During that period, its ES&H rating was
``good.'' None of the $650,000 exceptional performance fee resulted
from ES&H performance.
UNIVERSITY OF CALIFORNIA at Lawrence Livermore National Laboratory:
There was no fee arrangement for FY93-FY97. During that period a
management allowance of $14 million was paid to the University of
California for operation of LANL, LLNL, and LLBL.
For the period FY98-02, there is a maximum annual performance-based
fee of $6.4 million. The fee consists of an ``at risk'' amount and an
amount for exceptional performance. The fee is allocated for science
and technology and ten operational and administrative areas, one of
which is environment, health, and safety (ES&H). For FY98 the
University earned $6.162 million as a program performance fee. During
that period, its ES&H rating was ``good.'' None of the exceptional
performance fee resulted from ES&H performance.
UNIVERSITY OF CALIFORNIA at Lawrence Berkeley National Laboratory:
There was no fee arrangement for FY93-FY97. During that period a
management allowance of $14 million was paid to the University of
California for operation of LANL, LLNL, and LLBL.
For the period FY98-02, there is a maximum annual performance-based
fee of $1.6 million. The fee consists of an ``at risk'' amount and an
amount for exceptional performance. The fee is allocated for science
and technology and nine operational and administrative areas, one of
which is environment, health, and safety (ES&H). For FY98 the
University earned $1.484 million as a program performance fee. During
that period, its ES&H rating was ``excellent,'' giving rise to the
award of $3,889 in exceptional performance fee attributable to ES&H
performance.
OAK RIDGE RESEARCH ASSOCIATED UNIVERSITIES at Oak Ridge National
Laboratory: For fiscal years 1996-1999, there were no specific safety-
related objectives with fees tied to those objectives; however, safety
performance, along with other facets of performance, was considered and
evaluated in the determination of final fee amounts
BATTELLE MEMORIAL INSTITUTE at Pacific Northwest Laboratory: Fees
are generally not directly tied to specific ES&H objectives.
For 1996, of the total $13,800,000 available fee, $2,000,000 was
available for safety-related objectives and conduct of operations. The
total earned fee for 1996 for safety related objectives and conduct of
operations was $1,300,000.
For 1997, the laboratory received a fixed fee of $6,000,000 with no
assignment to specific critical outcome or objective.
For 1998, the laboratory received a fixed fee of $5,600,000 with no
assignment to specific critical outcome or objective.
For 1999, the laboratory's total available performance fee is
$7,100,000, of which approximately $280,000 is directly associated with
ES&H performance measures.
STANFORD UNIVERSITY at Stanford Linear Accelerator Center: Stanford
University is paid no fee for the period of FY87 to FY02. The
contractor's ES&H performance is evaluated against established
performance measures.
SOUTHWEST UNIVERSITIES RESEARCH ASSOCIATES at Thomas Jefferson
National Accelerator Facility: Environmental, Health, and Safety is one
of seven major categories of performance measures in this contract. Fee
is not tied directly to performance.
The contractor was paid a fixed management fee of $2.2 million for
contract year 1996.
The contractor was paid a fixed management fee of $1.9 million for
contract year 1997.
The contractor was paid a fixed management fee of $1.8 million for
contract year 1998.
The contractor will be paid a fixed management fee of $1.9 million
for contract year 1999.
question from representative upton
Question 4: For each of DOE's major non-profit educational
institution contractors that have received an enforcement letter or
notice of violation from the Office of Enforcement, please describe
what base, incentive or award fee was reduced or eliminated as a result
of the enforcement action.
Answer 4: The information follows:
UNIVERSITY OF CHICAGO at Argonne National Laboratory: Has
occasionally received enforcement letters; however, fees have not been
affected. The contract provides DOE with the ability to withhold some
or all of the fee, should a significant ES&H event occur.
BROOKHAVEN SCIENCES ASSOCIATES at Brookhaven National Laboratory:
Has occasionally received notices of violation. One event, under the
site's previous contractor Associated Universities, led to a reduction
in fee and ultimately to the termination of the contract. The new
contract provides DOE with the ability to withhold some or all of the
fee, should a significant ES&H event occur.
IOWA STATE UNIVERSITY at Ames Laboratory: Has not received such
letters or notices. The contract provides DOE with the ability to
withhold some or all of the fee, should a significant ES&H event occur.
PRINCETON UNIVERSITY at Princeton Plasma Physics Laboratory: Has
not received such letters or notices. The contract provides DOE with
the ability to withhold some or all of the fee, should a significant
ES&H event occur.
UNIVERSITIES RESEARCH ASSOCIATES at Fermi National Accelerator
Laboratory: Has not received such letters or notices. The contract
provides DOE with the ability to withhold some or all of the fee,
should a significant ES&H event occur.
UNIVERSITY OF CALIFORNIA at Los Alamos National Laboratory: The
FY98 Annual Appraisal Report for LANL noted that it received 5 EPA
``notices of excedances'' for National Pollutant Discharge Elimination
System parameter requirements and three Resource Conservation Recovery
Act compliance orders from the State of New Mexico. The fee paid is a
culmination of all performance under the contract. The ES&H rating was
``Good'' for contract year 1998, and the overall fee paid considered
this incident.
UNIVERSITY OF CALIFORNIA at Lawrence Livermore National Laboratory:
On March 9, 1998, a DOE Notice of Violation was issued for a HEPA
filter shredding accident which had occurred in July of 1997. The
incident was addressed in the 1997 Annual Appraisal Report and rating.
There was no fee arrangement in effect at that time.
On September 17, 1998, a DOE Final Notice of Violation was issued
for exceeding administrative mass control in Building 332. This
incident was addressed in the 1998 Annual Appraisal Report and rating.
The fee paid is a culmination of all performance under the contract.
The ES&H rating was ``Good'' for contract year 1998, and the overall
fee paid considered this incident.
UNIVERSITY OF CALIFORNIA at Lawrence Berkeley National Laboratory:
One enforcement letter was issued in 1998 for the spread of beryllium
in the 88-inch cyclotron. This incident will be reflected in the 1999
Annual Appraisal Report and rating and should affect the program
performance fee for ES&H performance.
OAK RIDGE RESEARCH ASSOCIATED UNIVERSITIES at Oak Ridge National
Laboratory: The contractor has not received any enforcement letters or
notices of violations. A significant event in ES&H or other performance
areas could result in a reduction of the fee pool available.
BATTELLE MEMORIAL INSTITUTE at Pacific Northwest Laboratory: One
enforcement action was issued in 1996 for collectively significant
related occurrences in the Building 325 laboratory vacuum system. The
action resulted in a Preliminary Notice of Violation, but no Final
Notice of Violation was ever issued. No reduction of fee resulted from
the Preliminary Notice of Violation. The contract provides DOE with the
ability to withhold some or all of the fee, should a significant ES&H
event occur.
STANFORD UNIVERSITY at Stanford Linear Accelerator Center: Stanford
University has not received any enforcement letters or notices of
violation. Such incidents would be addressed in the Annual Appraisal
Report. There is no fee in this contract.
SOUTHWEST UNIVERSITIES RESEARCH ASSOCIATES at Thomas Jefferson
National Accelerator Facility: The contractor has received no such
letters or notices. The current contract provides DOE with the ability
to lower the contractor's year end performance evaluation rating should
such letters or notices be issued. The follow-on contract, which will
be effective on October 1, 1999, provides the Department the ability to
withhold some or all of the fee should a significant ES&H event occur,
in addition to lowering the contractor's year end performance
evaluation rating.
question from representative upton
Estimate of Lost Productivity from Nuclear Safety Violations
Question 5: Please list and estimate the total direct-and indirect-
cost overruns that have resulted from stop work orders and/or facility
stand downs that have occurred due to nuclear safety violations at DOE
facilities managed by the University of California.
Answer 5: In the last two years, there have been a total of five
stand downs at the Los Alamos National Laboratory (LANL) and the
Lawrence Livermore National Laboratory (LLNL). The ``cost overrun''
estimates provided below reflect estimates of the ``cost'' of lost
productivity (the amount spent during the stand down that otherwise
could have been spent on operations).
<bullet> Chemistry and Metallurgy Research (CMR) Facility at LANL--From
September 1997 to April 1998, normal operations at the CMR
facility were suspended due to a series of recurring problems
with work control, work authorization, and safety issues. The
CMR facility is the only laboratory facility with full
capability for performing analytical chemistry and materials
science for special nuclear materials--plutonium and highly
enriched uranium--in support of the Department's nuclear
programs. The estimated cost was $9 million.
<bullet> Technical Area 18 (TA-18) Facility at LANL--From August 1998
to April 1999, the TA-18 Facility, which handles special
nuclear materials and is involved in nuclear detection
development, criticality safety experiments and other nuclear
related functions, was placed in a stand down following a
criticality safety infraction. The estimated cost in lost
productivity was $6 million.
<bullet> Los Alamos Neutron Science Center (LANSCE) experimental
facility at LANL--From February 1999 to June 30, 1999,
Technical Area 53 was placed in stand-down mode by the facility
landlord in response to several relatively minor safety
incidents. These incidents were not nuclear safety violations
and there were no injuries to workers or the public. A few of
these incidents involved very low levels of radioactive
contamination. The objectives of the stand down were to review
the conduct of operations at the facility, train staff,
demonstrate management commitment to safety and preclude
further and possibly more serious incidents. The estimated cost
in lost productivity is $6 million. Extensive training and
procedure reviews were conducted during the shutdown.
Building 332 at LLNL--From July 1997 to April 1999, Building 332, a
plutonium processing facility, was placed in a stand-down mode in order
to address the cause of a series of safety incidences and then upgrade
the facility to meet the new DOE Integrated Safety Management
standards. This action was precipitated by a plutonium glovebox
procedural error relating to criticality safety. The facility went
through an extended resumption plan that was monitored by the DOE and
the Defense Nuclear Facility Safety Board. The facility has resumed
operations with significantly improved conduct of operations and is
about to undergo a Integrated Safety Management verification. The
estimated cost in lost productivity was $2.7 million.
<bullet> Building 513 at LLNL--From July 1997 to October 1997, Building
513, a mixed waste processing facility, was placed in a stand-
down mode as the result of an accident involving the uptake of
curium while shredding high efficiency particulate air filters
prior to disposal. The shredder process area involved in the
incident is being decommissioned. All other activities in the
facility were resumed, however. The estimated cost in lost
productivity was $2 million.
Question 6: In response to questions at the hearing, Mr. Keith
Christopher indicated that his staff made several unsuccessful
information requests to the Department of Labor (DOL) regarding their
investigation and June 29, 1998 finding of retaliation taken by the
University of California against Mr. David Lappa at Lawrence Livermore.
Why is the Office of Enforcement unable to obtain this information in a
timely manner?
Answer 6: On or about October 1, 1998, the Office of Enforcement
contacted DOL and requested a copy of its decision in the Lappa
discrimination case. DOL provided the document in a timely manner. The
Office of Enforcement reviewed this document and determined that it
would be necessary to obtain any investigative reports prepared by DOL
to legally support any Notice of Violation that the Department was to
issue to LLNL. Therefore, Enforcement staff made several telephone
requests for the report, followed by a formal written request to DOL
dated March 19, 1999. DOL has recently indicated that the documents
cannot be made available because the Department of Energy does not have
a Memorandum of Understanding with the Department of Labor to
facilitate access to such information.
Question 7: When was the Office of Enforcement made aware of the
allegation that UC had retaliated against Mr. Lappa?
Answer 7: In January 1998, the Office of Enforcement learned of
reports in newspaper articles that David Lappa, an employee at LLNL,
had raised nuclear safety concerns to his employer pertaining to
plutonium operations. According to the articles, Mr. Lappa filed a
formal complaint with another office in the Department alleging that
LLNL retaliated against him for raising these concerns.
In response to these newspaper articles, the Office of Enforcement
contacted Mr. Lappa, and asked him to cooperate with enforcement office
personnel in exploring the underlying nuclear safety concerns that
ultimately led to his complaint of reprisal. Mr. Lappa agreed and on
February 19, 1998, he provided sworn testimony to the Office of
Enforcement staff regarding the technical aspects of his nuclear safety
concerns.
Question 8: Did the Office of Enforcement interview Mr. David Lappa
in the course of its investigation into criticality safety infractions
in building 332 at Lawrence Livermore? If so, did Mr. Lappa identify
alleged acts of retaliation taken against him by UC? Please provide the
committee with a transcript of any interview.
Answer 8: On February 19, 1998, the Office of Enforcement took
sworn testimony from Mr. David Lappa concerning criticality safety
infractions at building 332 at Lawrence Livermore. Mr. Lappa testified
that when he made his concerns regarding the plutonium facility known,
he began to experience intimidation, coercive, discriminatory and
retaliatory treatment from his management.
Section 5.3.3, General Guidelines for Processing Whistleblower
Complaints Involving Nuclear Safety Issues, of the Operational
Procedures for Enforcement, provides for the following:
<bullet> Without regard to the status of any related whistleblower
reprisal complaint, the Director will conduct all necessary
investigations and take appropriate enforcement action with
respect to the underlying nuclear safety concerns(s). In that
regard . . . review of the underlying nuclear safety concern(s)
would not include review of the reprisal aspect of a case.
<bullet> . . . the director will await the completion of the IG
investigation of the whistleblower complaint. Additionally, DOE
would wait for the results of any subsequent adjudication by
the Office of Hearings and Appeal, before deciding whether to
initiate PAAA enforcement action against a contractor for
alleged acts of reprisal against contractor employees in
violation of the Part 708 Whistleblower Rule.
Since Mr. Lappa testified that he was working with the IG in
resolving the reprisal aspect of his concerns, in accordance with the
above procedures, the Office of Enforcement did not pursue a line of
questioning with Mr. Lappa regarding specific acts of retaliation that
would provide a sufficient informational basis to investigate these
allegations.
Question 9: What is the appropriate or required administrative
response by DOE or the Office of Enforcement when it learns of
potential acts of retaliation?
Answer 9: In general, the Office of Enforcement has the
discretionary authority to issue a Notice of Violation and civil
penalties to a DOE contractor who is determined to have retaliated
against a contractor employee for raising a nuclear safety concern. In
cases involving non-profit contractors, the DOE is authorized to issue
a Notice of Violation, as appropriate, but not civil penalties. When a
finding of retaliation is made by either DOE or the Department of
Labor, the Office of Enforcement evaluates the evidence gathered by
decision making body in order to develop sufficient factual information
to determine whether a Notice of Violation and civil penalties can be
issued. The purpose for issuing such an enforcement action is to deter
retaliatory action by the contractor that would have a chilling effect
on the willingness of other employees to openly and freely express
safety concerns without fear of retaliation. In the Lappa case, such
information has been requested from the Department of Labor.
question from house commerce subcommittee on oversight and
investigations
Question 10: In Mr. Lappa's case, what is the appropriate or
required administrative response by DOE once DOL had concluded the
retaliation had occurred?
Answer 10: In March 1999, Secretary Richardson issued a policy
statement on ``Safety Accountability and Performance.'' In this
directive, he said that ``there must be open communication between
management and employees and a zero tolerance policy for reprisals
against those who raise safety concerns. Free and open expression of
employee concerns is essential to safe and efficient accomplishment of
the Department's missions.''
The Secretary relies on DOE line and program management to enforce
this policy. Our office has worked with DOE field offices and
contractors on an ongoing basis for more than ten years to develop the
tools to prevent retaliation of any type. We have generally been
successful. When there are cases where retaliation has been determined
to have occurred, Secretary Richardson counts on his line managers to
take appropriate actions. DOE's contract with the University of
California prohibits the University from retaliating against employees
for whistleblowing. Accordingly, the University's fee evaluation plan
will be reviewed to determine whether the fee can be reduced in
response to a finding of employee retaliation.
Separately, through the enforcement process of 10 CFR Part 820, DOE
has the discretionary authority to issue a Notice of Violation, when
appropriate, to a contractor who is determined to have retaliated
against a contractor employee for raising a nuclear safety concern. In
the case of Mr. Lappa, the Department of Labor issued an opinion that
Mr. Lappa was subject to reprisal. DOE is awaiting information from the
Department of Labor to determine whether there is a sufficient basis
upon which to issue a Notice of Violation.
Question 11: Now that DOE is aware DOL concluded that Mr. Lappa
suffered retaliation, what is DOE doing to rectify this specific case
and ensure that similar acts of retaliation are not repeated at DOE
facilities operated by the University of California?
Answer 11: Secretary Richardson has indicated directly to his line
management that he will hold them personally accountable for failure to
implement the ``zero tolerance'' policy for retaliation against
whistleblowers. As indicated, in its contract with DOE, the University
of California is prohibited from retaliating against employees for
whistleblowing. Accordingly, the University's fee evaluation plan will
be reviewed to determine whether the fee can be reduced in response to
a finding of employee retaliation.