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ISSUES IN FEDERAL GOVERNMENT FINANCIAL

LIABILITIES: COMMERCIAL NUCLEAR WASTE

HEARING

BEFORE THE

COMMITTEE ON THE BUDGET 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

HEARING HELD IN WASHINGTON, DC, OCTOBER 4, 2007

Serial No. 110–20

Printed for the use of the Committee on the Budget

(

Available on the Internet: 

http://www.gpoaccess.gov/congress/house/budget/index.html 

(II)

COMMITTEE ON THE BUDGET 

JOHN M. SPRATT, JR., South Carolina, Chairman 

ROSA L. DELAURO, Connecticut, 

CHET EDWARDS, Texas 

JIM COOPER, Tennessee 

THOMAS H. ALLEN, Maine 

ALLYSON Y. SCHWARTZ, Pennsylvania 

MARCY KAPTUR, Ohio 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL BLUMENAUER, Oregon 

MARION BERRY, Arkansas 

ALLEN BOYD, Florida 

JAMES P. MCGOVERN, Massachusetts 

ROBERT E. ANDREWS, New Jersey 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

BOB ETHERIDGE, North Carolina 

DARLENE HOOLEY, Oregon 

BRIAN BAIRD, Washington 

DENNIS MOORE, Kansas 

TIMOTHY H. BISHOP, New York 

GWEN MOORE, Wisconsin 

[Vacancy] 

PAUL RYAN, Wisconsin, 

Ranking Minority Member 

J. GRESHAM BARRETT, South Carolina 

JO BONNER, Alabama 

SCOTT GARRETT, New Jersey 

MARIO DIAZ–BALART, Florida 

JEB HENSARLING, Texas 

DANIEL E. LUNGREN, California 

MICHAEL K. SIMPSON, Idaho 

PATRICK T. MCHENRY, North Carolina 

CONNIE MACK, Florida 

K. MICHAEL CONAWAY, Texas 

JOHN CAMPBELL, California 

PATRICK J. TIBERI, Ohio 

JON C. PORTER, Nevada 

RODNEY ALEXANDER, Louisiana 

ADRIAN SMITH, Nebraska 

[Vacancy] 

PROFESSIONAL STAFF

THOMAS S. KAHN, Staff Director and Chief Counsel 

JAMES T. BATES, Minority Chief of Staff 

(III)

C O N T E N T S

Page 

Hearing held in Washington, DC, October 4, 2007 ............................................... 1

Statement of: 

Hon. John M. Spratt, Jr., Chairman, House Committee on the Budget ..... 1

Hon. Jon C. Porter, a Representative in Congress from the State of 

Nevada ........................................................................................................... 2

Edward F. Sproat III, Director, Office of Civilian Radioactive Waste Management, U.S. Department of Energy ......................................................... 4

Prepared statement of ............................................................................... 9

Michael F. Hertz, Deputy Assistant Attorney General, Civil Division, 

U.S. Department of Justice .......................................................................... 11

Prepared statement of ............................................................................... 14

Kim Cawley, Chief, Natural and Physical Resources Cost Estimates Unit, 

Congressional Budget Office ........................................................................ 16

Prepared statement of ............................................................................... 17

Hon. J. Gresham Barrett, a Representative in Congress from the State 

of South Carolina: 

Questions for the record and responses from Mr. Sproat ...................... 36

Questions for the record and responses from Mr. Cawley ..................... 37

(1)

ISSUES IN FEDERAL GOVERNMENT

FINANCIAL LIABILITIES: 

COMMERCIAL NUCLEAR WASTE 

THURSDAY, OCTOBER 4, 2007

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE BUDGET, 

Washington, DC. 

The committee met, pursuant to call, at 10:00 a.m. in room 210, 

Cannon House Office Building, Hon. John Spratt [chairman of the 

committee] presiding. 

Present: Representatives Spratt, Doggett, Berry, McGovern, 

Etheridge, Moore, Ryan, Simpson, Porter, Alexander, and Smith. 

Chairman SPRATT. Good morning and welcome to the House 

Budget Committee’s hearing on Federal Government Liabilities 

and in particular this morning on commercial nuclear waste. 

We have an excellent panel of government witnesses before us 

who have thought long and hard about this question and I want 

to thank them for their participation; their willing and enthusiastic 

participation in this hearing today. 

Given the fiscal challenges that we face in the years ahead, it is 

important to gain insight into the nature of the Federal Government’s unfunded liability. As policy makers we express concern 

most audibly and consistently about liabilities that relate to the 

aging of the U.S. population and the impact on our Federal retirement government programs like social security and medicare. But 

there are additional liabilities, small in magnitude but deserving of 

scrutiny and understanding. 

Our goal for this hearing is to gain the insight we seek into the 

government’s financial liabilities rising from DOEs missed 1998 

deadline by which it was to begin disposing of spent nuclear fuel 

as specified in the Nuclear Waste Policy Act of 1982. 

As a result of this failure, there are now scores of active cases 

pending in the Federal Court of Claims and various appeals courts 

from which from affected civilian nuclear waste power plants all receiving recovery from DOE for breach of the 1998 contract. Present 

estimates range from $7 billion to $30 billion. 

Ultimately, while we may call spent nuclear fuel a liability issue, 

it is a taxpayer liability issue. As such, the Committee would like 

to better understand how future cash flows, budgets, and baselines 

are all affected under different scenarios, with particular emphasis 

on how we can minimize the cost to the taxpayer. 

2

In the final analysis, everyone in this room has the same goal of 

minimizing taxpayer liability associated with spent nuclear fuel 

while persevering equity across all stakeholders. 

We very much appreciate you coming today, but before turning 

to you for your testimony, let me turn to our Ranking Member, Mr. 

Ryan for any statement he cares to make to open this up. 

Mr. RYAN. Thank you, Chairman Spratt. I appreciate this opportunity to get a better understanding of our federal liability stemming from the nuclear utilities breach of contract lawsuits. I look 

forward to receiving this testimony before. I would like to yield the 

balance of my time to the gentleman from Nevada, Mr. Porter, who 

has a particularly strong home State interest in this matter. 

Mr. Porter. 

Mr. PORTER. Thank you very much, and Chairman, I appreciate 

this opportunity. And as mentioned, we are here today to examine 

the Federal Government’s financial liability for DOEs nuclear utility lawsuits. And as mentioned in the opening statements, we certainly appreciate the panelists that are here and to the Director, 

thank you for being very responsive. Not that we always agree, but 

I certainly appreciate your responsiveness to the rest of the panel. 

And as was mentioned, the aim of the hearing is to look at the 

budget impact of 56 pending civil lawsuits regarding the breach of 

the 1998 contracts. To date we have paid about $300 million so far 

to 90 something, give or take. I am assuming that probably does 

not include our costs in litigation, with potentially paying out another $7 billion by the year 2017. You know we talk a lot about 

dollars and cents and sometimes I question that we make sense, 

but we are looking at a project today with a total life cost of close 

to $56 billion once it is constructed. 

What I would like to do is just take a moment, with the Chairman’s support, and go back to 1982 when this started. And I do not 

know how many people in this room were alive in 1982, maybe a 

couple of us. But 1982, that is the year that Sony launched the first 

compact disc player. In 1982, when this project started, the Dow 

Jones average was about 1,000 points. It is now over or close to 

13,000. Ronald Regan was President in 1982. Where was the cell 

phone? Where was the internet? Al Gore was a member of this 

House in 1982. 

Here we are 25 years later in 2007 and we are basically where 

we started in 1982. You know Brezhnev was in office half of that 

year of 1982. Korvachef and pardon me, Anderpoff that shared that 

year. Korvechef was not even in office yet when we started this 

project in 1982. We started the ground breaking for the Vietnam 

Memorial. 

And I give this as an example of in 25 years we have studied a 

whole in the ground to death. Management has changed, Congress 

has changed, I am not sure how many members of this body of this 

U.S. Congress were in office then and how many changes there 

have been. But if you look at the Department of Energy and how 

it has evolved, there has been a change in leadership, change in 

management, multiple presidents, and we are where we started 25 

years ago. 

And I know that we think that this is just in Nevada not in my 

backyard argument, but I know what we are here today to talk 

3

about costs. But we are looking at a hole to nowhere and I encourage every member of this Congress to visit this hole to nowhere 

that is a hole in the ground that we have spent $10 or $11 billion 

on so far and we have not moved one inch on the playing field. 

Now, I understand that each State has its challenges of what to 

do with nuclear waste. I understand that. And I understand the 

bulk of this body, both democrats and republicans are looking for 

a place to put nuclear waste. And I support nuclear energy. But I 

don’t know how much longer this body can look at this liability, not 

only from a science perspective of a science that is untested. We 

are going to have close to 50 years in this project before it opens. 

How many projects will this body—talk about unfunded liability. 

How many projects will this body say that we are going to take 50 

years to build? I just think that is unacceptable to the American 

people. 

It is a hole in the ground. Literally it is a tunnel where we have 

spent billions of dollars. And I don’t know how, with a straight 

face, this Congress can say, ‘‘Keep digging.’’ I don’t know how this 

Congress can say, ‘‘We should throw more money at this project.’’ 

Again, almost 50 years is going to pass before this project is up and 

running. If it started today, if it was available for storage today, 

it would be full. 

Mr. Chairman, I appreciate this opportunity and I am sure that 

again there are other members of this body, this Congress that 

want to find a place that is out of sight, out of mind so they don’t 

have to think about it. And I am concerned for the safety of Nevadans and I am concerned about the science. And I have spent a lot 

of time investigating the project. I had one of the largest investigations of this project in the history of Congress. But this Congress 

has not met its obligation to the American people by throwing 

money at a project that is not going to succeed. It has proven to 

be unsafe. It is being built on an earthquake fault line. We have 

redone the science over and over again. There is proof that we are 

already a huge liability. 

So, Mr. Chairman, I understand that members may have a different perspective than I do. But I think as we look at a project 

that is going to cost $50 or $60 billion that we have been studying 

now for almost 30 years and still have another 20 years to go. We 

have to say, ‘‘Lets stop and take a time out and look at where we 

are going and find a new approach to storage nuclear waste.’’

So, Mr. Chairman, thank you and I appreciate the panelist. 

Chairman SPRATT. Thank you, Mr. Porter. We are going to put 

you down as leaning no? [Laughter.] 

Let’s now turn to Edward F. Sproat who is the Director of the 

Office of Civilian Radioactive Waste Management. And as with all 

of the witnesses, if you would simply submit your statements for 

the record without objection they will be made part of the record 

and you can summarize them as you see fit. 

But Mr. Sproat, the floor is yours and then we will turn to the 

other witnesses. Thank you for coming. 

4

STATEMENT OF THE HONORABLE EDWARD F. SPROAT, III, DIRECTOR, OFFICE OF CIVILIAN RADIOACTIVE WASTE MANAGEMENT, U.S. DEPARTMENT OF ENERGY 

Mr. SPROAT. Good morning, Mr. Chairman and Mr. Ryan and fellow members of the Committee. Thank you very much for this invitation to address the Committee this morning about this very important issue. I do request that my formal testimony be submitted 

for the record. 

What I would like to do is first of all let you know a little bit 

about myself. It has been 16 months since I was confirmed by the 

Senate for this position. I am bringing with me 29 years of senior 

management experience in the nuclear industry with me. I have 

been in charge of nuclear plant design, licensing, construction and 

operations. I ran an international joint venture in South Africa to 

help them develop an advanced nuclear reactor down there. And I 

am also a registered professional engineer. 

So the issues we are going to talk about this morning are of a 

technical nature and a project management nature. I have a lot of 

experience and I am bringing that to this job. 

My first hearing after I got confirmed was in July of 2006 in 

front of the House Subcommittee on Energy and Air Quality. I committed to that House Committee in July of 2006 that we would 

submit our license application to the Nuclear Regulatory Commission no later than Monday, June 30, 2008. I am here to tell this 

Committee today we will meet or beat that date. 

That is critical because getting the license application in and getting the license application review by the Nuclear Regulatory Commission done is on the critical path to moving the Yucca Mountain 

Program forward. 

Now, DOE is almost 20 years late in meeting its obligation to 

pick up spent nuclear fuel. And as of right now and what I told the 

Committee back in July of last year was that our best achievable 

date, if everything was to go right, our best achievable date to be 

able to pick up start performing on the standard contracts is March 

of 2017. Now there are some provisos about that best achievable 

date. One of the key issues is that the schedule assumes unconstrained cash flow so that we are able to maintain critical path activities on this project on our best achievable schedule. 

As a result of DOE’s partial breach of our standard contracts, in 

other words because we didn’t start picking up fuel in 1998 as required, if we open the repository on our best achievable date of 

2017 we are estimating that the total taxpayer liability to the commercial nuclear plant contract holders will total about $7 billion. 

Can I bring up the first slide, please.

5

Mr. SPROAT. On this chart let me just point out three lines. The 

yellow line shows what we, Department of Energy, projected our 

acceptance rate and pick up rate of spent nuclear fuel would be if 

we started picking up in 1998. And this yellow curve is the line we 

use in our settlement discussions with the contract holders. 

The green line is our projection of what we will be able to pick 

up if we open the repository in 2017. The red line is our projection 

of what we would be able to pick up by if we open the repository 

three years later in 2020. 

Where those red and green lines cross the yellow line is where 

we project we will have caught up with our contractual obligation 

to the utilities. And what that graph shows you is that if we open 

the repository at our best achievable date, in 2017, we will catch 

up in the year 2046 and our projected total taxpayer liability is $7 

billion. With just a three year delay, we won’t catch up until the 

year 2056 and the total liability will have grown an additional $4 

billion to about $11 billion. 

That tells you there is a real cost to the U.S. taxpayer in terms 

of projected liability year by year this program is delayed. And I 

want to remind the Committee that the 2017 date or quite frankly 

any other date after that is very dependent on us having a cash 

flow required to meet our schedule and maintain the shortest possible critical path activities on this program. And I will talk about 

those in a minute. 

If I can go to the next chart.


sproa1.eps
6

Mr. SPROAT. The next chart is the total budgetary authority requirements that we have projected will be needed to build and operate the repository through the year 2023. In other words, these 

budget authority cash flows we will need to meet that 2017 date. 

These numbers were developed over the past six months. I presented them to the House Appropriations Subcommittee on Energy 

back in April. 

These numbers were developed by an interdisciplinary team of 

both DOE and outside experts. They were independently reviewed 

by a company that has nuclear construction experience. They include sufficient contingency and management reserve to give us an 

80 percent confidence factor that the actual cost of building and operating this repository will come in at or below these numbers. 

So these are the best numbers we have and are, I believe, very 

credible numbers in terms of what it is going to take to build and 

operate the repository. 

What you will notice is the annual budgetary authority requirements on this cash flow starting in fiscal year 2009 are between 

one and a half to two billion dollars a year. Now that is to meet 

the 2017 date. I will compare that to our existing and historical 

budget authority on this project which is running between $350 

and $500 million a year. And when you take a look at the budget 

targets in the out years, in 2009 and beyond, they are continuing 

in that historical range of between $350 to $450 million a year. 

That is a substantial, a huge gap between what is currently 

being planned for under the current budgetary authority system 

and what is needed to actually build and operate this repository. 

Bottom line is that if we are not able to achieve this kind of funding requirement for this program, the repository will not get built. 

You will not be able to build the repository, then a required rail 


sproa2.eps
7

line, do the engineering, do the procurements, buy the waste packages, buy the rail cars that are needed to execute this best achievable schedule at the kind of projected budgetary authority that 

right now the system is giving us. 

So basically, unless we fix this issue and are able to achieve 

these cash flows to build this repository, the liability of the Federal 

Government and the U.S. taxpayers will continue to grow 

unabated. 

One of the things I want to talk about just briefly is so how 

should we be funding this cash flow for this program? The Nuclear 

Waste Policy Act mandated that the generators of nuclear waste 

need to pay for its disposal. And they also determined that the program should not compete with other federal programs so that we 

could achieve these kinds of cash flows and build this repository on 

the shortest possible schedule. 

Therefore, what Congress did back in the 1980s was to establish 

the Nuclear Waste Fund. And they established a fee to be charged 

to the nuclear generators and the Secretary of Energy has the capability to set that fee, which has been at one mil per kilowatt hour 

since the mid 1980s. That generates $750 million of revenue for the 

Federal Government annually and any of that money that is not 

appropriated on an annual basis goes into the Nuclear Waste 

Fund. 

The Nuclear Waste Fund has a current balance on the books of 

about $20.5 billion. A substantial amount of money. However, due 

to the passage of Gramm-Rudman-Hollings back in the mid 1980s, 

the Nuclear Waste Fund revenue fees have been classified as mandatory receipts and the program is classified as a discretionary program. 

As a result, the fees are not dedicated to offset the appropriations on the program, and therefore, both the fees and the interest 

generated on the fund are used as offsets against the total federal 

deficit. Essentially, we have $20.5 billion in the Nuclear Waste 

Fund, but we are not able to use it for its intended purpose to actually build the repository. 

Can I have the next slide, please?

8

Mr. SPROAT. The blue line on this graph shows you the civilian 

portion of the cash flow that I showed you on the previous slide. 

In other words, the civilian portion, which is about 80 percent of 

the total cost of the repository, what the civilian portion is to build 

and fund that cash flow that I just showed you. What the gray bar on each of those years shows you is the $750 

million of revenue coming into the Federal Government from the 

nuclear waste generators. The yellow line is the interest being generated or projected to be generated on the Nuclear Waste Fund balance. What this chart shows you is that with the exception of one 

year, if the Department of Energy had access to the fees and the 

interest on the Nuclear Waste Fund, we could fund the entire construction and operation of the repository without even touching the 

corpus of the Nuclear Waste Fund. 

However, eventually, after all the nuclear plants shut down, we 

will need to tap the corpus of the Waste Fund. But because the Nuclear Waste Fund has already been used as off-sets against the federal deficit on a per year basis, whenever funds are appropriated 

from the Nuclear Waste Fund they will need to be scored against 

the deficit. 

And so we are either going to need to score them all at one time; 

we are going to need to score them a little bit at a time; or we will 

never score them and never spend the Nuclear Waste Fund. A decision needs to be made on how we are going to do that. 

And I am here to submit to the Committee that taxpayers are 

incurring significant liability from both commercial spent nuclear 

fuel as well as government high-level nuclear waste that is still sitting at 121 sites around the country in 39 different States. The rate 

payers have paid into the Nuclear Waste Fund is over $11 billion. 

The repository must be built for DOE to be able to meet its obligaVerDate 0ct 09 2002 14:49 Feb 01, 2008 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 J:\DOCS\HEARINGS\110TH\110-20\39989.TXT HBUD1 PsN: DICK

sproa3.eps
9

tions under the Act and under our standard contracts. And that a 

funding mechanism to fund these cash flows for this repository 

must be put in place and must be fixed. 

And we are asking the help of this Committee to help craft a solution to do that. And I will be happy to answer any questions after 

the other statements of the other witnesses. 

[The prepared statement of Edward F. Sproat, III, follows:]

PREPARED STATEMENT OF EDWARD F. SPROAT III, DIRECTOR, OFFICE OF CIVILIAN

RADIOACTIVE WASTE MANAGEMENT, U.S. DEPARTMENT OF ENERGY

Mr. Chairman and Members of the Committee, I am Edward F. Sproat III, Director of the Department of Energy’s (DOE) Office of Civilian Radioactive Waste Management (OCRWM). I appreciate the invitation to appear before the Committee to 

discuss the funding and liability issues associated with the development and operation of the Yucca Mountain repository. Your request to address the Government’s 

financial position and future cash flows that impact the budget allows me the opportunity to discuss the much needed funding reform for the Program. Funding reform 

is vital to the Government’s ability to build the repository and minimize the Government’s existing liability. 

I want to state my appreciation for the staff at the Department of Justice who 

have worked tirelessly on the 67 cases filed against the Government by the holders 

of the Standard Contract. I believe Mr. Hertz will address your questions regarding 

the lawsuits and payments from the Judgment Fund. 

Minimizing the Government’s liability associated with the unmet contractual obligations to move spent nuclear fuel from nuclear plant sites is one of the four strategic objectives for the Program that I set when I was confirmed. In the simplest 

of terms, the best way to reduce the Government’s liability is to complete the Yucca 

Mountain repository and begin the acceptance of spent nuclear fuel from the Nation’s nuclear reactor sites. Meeting the other three strategic objectives and fixing 

the broken funding mechanism for this Program is how the Government is to expedite the acceptance of spent nuclear fuel. The other three strategic objectives are 

to: • Submit a high-quality and docketable License Application to the Nuclear Regulatory Commission (NRC) no later than June 30, 2008; • Design, staff, and train the OCRWM organization such that it has the skills 

and culture needed to design, license, and manage the construction and operation 

of the Yucca Mountain Project with safety, quality, and cost effectiveness; and • Develop and begin implementation of a comprehensive national transportation 

plan that accommodates State, local and Tribal concerns and input to the greatest 

extent practicable. 

STATUS OF THE PROGRAM

In support of meeting these objectives, I am confident that in FY 2008 we will: 

• Certify the Licensing Support Network in accordance with NRC requirements 

and regulations; • Complete the Repository Supplemental Environmental Impact Statement; • Submit the License Application for construction authorization to NRC by June, 

2008 and begin its defense; • Design the Transportation, Aging and Disposal canisters to be used by the industry to package and ship spent nuclear fuel to the repository; • Deliver the report to Congress required by the Nuclear Waste Policy Act on the 

need for a second repository; and • Resolve comments and issue the final environment impact statement for the 

Nevada Rail Line which is required to transport spent nuclear fuel to the repository. 

FUTURE FUNDING—THE NEED FOR FUNDING REFORM

To have confidence in any milestones after 2008, it is imperative that the funding 

process for the Program allows the Nuclear Waste Fund and the annual receipts 

from the nuclear waste generators to be used for their intended purpose. The Nuclear Waste Policy Act established the requirement that the generators of spent nuclear fuel must pay for its disposal costs. As a result, the Nuclear Waste Fund was 

created and is funded by a 1 mil per kilowatt-hour fee on all nuclear generation in 

this country. As of today, the Fund has a balance of approximately $20.7 billion 

which is invested in U.S. Treasury instruments. The Government receives approximately $750 million per year in revenues from on-going nuclear generation and the 

10

Fund averages about 5.5 percent annual return on its investments. The Secretary 

of Energy has the responsibility to annually assess the adequacy of the fee and is 

authorized to adjust it as necessary. 

At the present time, due to technical scoring requirements, the Department cannot receive appropriations from the Nuclear Waste Fund equal to its annual receipts, interest, or corpus for their intended purpose without a significant recorded 

negative impact on the Federal budget deficit. The monies collected are counted as 

mandatory receipts in the budgetary process, and spending from the Nuclear Waste 

Fund is scored against discretionary funding caps for the appropriations process. 

The Administration proposed fixing this problem by reclassifying mandatory Nuclear Waste Fund fees as discretionary, in an amount equal to appropriations from 

the Fund for authorized waste disposal activities. Funding for the Program would 

still have to be requested by the President and appropriated by the Congress from 

the Nuclear Waste Fund. 

The projected budget authority needed through repository construction is well 

above current and historic levels, and the current funding levels are insufficient to 

build the repository and the transportation system. If the Program is funded at its 

current levels without fixing the current funding mechanism, the shortfall in the 

funding needed would be between $1.0 billion and $1.5 billion per year. This funding shortfall will not allow the placement of the design and construction contracts 

for the repository or the transportation systems. In short, DOE will not be able to 

execute its responsibilities under the Nuclear Waste Policy Act and will not be able 

to set a date for meeting its contractual obligations. Government liability will continue to grow with no apparent limit. 

In order for the Government to meet its obligations under the Nuclear Waste Policy Act, the funding mechanism for this Program must be designed to provide the 

following to DOE: 

• Appropriations of amounts sufficient to allow funding of long term engineering, 

construction and procurement contracts; and, 

• Authority to collect and utilize the fees from the nuclear waste generators for 

the management of spent fuel as required by the Nuclear Waste Policy Act and 

made available in the year they are received. 

Funding from the annual Nuclear Waste Fund fees alone at the current 1 mil per 

kilowatt-hour level will not be sufficient to fund the Program at the required levels. 

The Administration will address the Program’s funding needs in the context of developing the President’s annual budget. 

LIABILITY COSTS

Litigation settlements or damages are not paid from the Yucca Mountain Program 

appropriations. Rather, damages or settlement payments to utilities for the Department’s delay are paid from the Judgment Fund, which is a permanent indefinite appropriation funded by taxpayer dollars. In 2002, the U.S Court of Appeals for the 

11th Circuit ruled that the Department was not authorized under the Nuclear 

Waste Policy Act to spend Nuclear Waste Fund monies on settlement agreements 

aimed at compensating utilities for onsite storage costs. 

The estimated current potential liability is approximately $7.0 billion which is 

predicated on the Department beginning operations at Yucca Mountain in 2017. Delaying the opening of the repository to 2020 could cost taxpayers as much as an additional $4 billion from the Judgment Fund to pay damages. 

PROGRAM COSTS

The Program has spent $11 billion in 2000 constant dollars since 1983. The 2001 

total life cycle cost estimate for the Program was $57.5 billion in 2000 constant dollars, which included costs already incurred. The Program is expected to release a 

revised total system life cycle cost estimate shortly. The estimate will include the 

costs for accepting approximately 30 percent more spent nuclear fuel into the system and will estimate costs through the repository’s closing in year 2133. Based on 

our recently completed Program schedule and cost estimate, annual funding will be 

needed at levels 2 to 3 times the current appropriations starting in FY 2009. If the 

requested fixes to the funding process are not put into place, DOE will not be able 

to set a credible opening date for the repository and Government liability will continue to grow. 

Therefore, I respectfully urge the Congress to consider that it is in the taxpayers’ 

best interest to provide funding reform to expedite the procurement activities, engineering and construction of the repository and the associated transportation systems. It will limit the taxpayer’s burden of billions of dollars in liability and stop 

the waste of Nuclear Waste Fund dollars by delays due to inadequate funding. 

11

Thank you for this opportunity to discuss these issues, and I would be pleased 

to answer any questions the Committee may have at this time.

Chairman SPRATT. Thank you very much, Mr. Sproat. Now lets 

turn to Mr. Hertz. And your statements, too, will be made part of 

the record. 

STATEMENT OF MICHAEL F. HERTZ, DEPUTY ASSISTANT ATTORNEY GENERAL, CIVIL DIVISION, U.S. DEPARTMENT OF 

JUSTICE 

Mr. HERTZ. Good morning, Mr. Chairman. I am happy to submit 

my statement for the record. 

Good morning, Mr. Chairman, other members of the Committee, 

I appreciate this invitation to the Department of Justice to testify 

this morning. 

I would like to touch on three points this morning. First, the origins of the litigation that we are now handling. Second, the current 

status of the litigation. And, third, some of the funding, the liabilities that we are facing in the litigation and the funding of that litigation. 

As it has been stated, after the Nuclear Waste Power Act was enacted in 1983, DOE entered into 76 standard contracts with members of the commercial and nuclear utility industry. The contracts 

required that the Department of Energy, beginning in January of 

1998, pick up spent nuclear fuel and store it. Utilities, as part of 

that contract, agreed to make quarterly payments into the Nuclear 

Waste Fund. And they have been making those payments since 

1983. 

In May 1995 the Department of Energy announced that it would 

be unable to begin acceptance of the spent nuclear fuel in January 

of 1998. A number of utilities went to the United States Court of 

Appeals for the District of Columbia to challenge that determination. The District of Columbia Court of Appeals determined that in 

fact DOE was required to pick up that spent nuclear fuel that the 

it was not conditioned on the opening of a repository but that was 

an obligation that the Department of Energy had to meet not withstanding the opening—of a failure to open repository. 

Subsequent to that decision, the Department of Energy announced that it would still be unable to accept the waste and suggested that they might avoid liability pursuant to the unavoidable 

delays clause in the standard contract. 

Utilities went back to the United States Court of Appeals for the 

District of Columbia Circuit and the Court again determined that 

DOE had a responsibility to pick up this material. They were not 

going to issue a mandatory writ ordering that it be picked up, because the Court determined that the utilities had an adequate contract breach remedy that they could assert. But they did order that 

the Department of Energy would not be allowed to rely on the unavoidable delay clause in the standard contract in defending any of 

those breach of contract actions. 

With regard to the current status of the litigation, to date, the 

utility companies have filed 67 cases in the United States Court of 

Federal Claims. They seek damages largely for the cost that they 

have incurred to store spent nuclear fuel that they allege that the 

12

Department of Energy would of been obliged to pick up had they 

not breached the contract. 

The utility industry estimates that these claims will eventually 

total about $50 billion, which far exceeds the approximate $15.5 

billion that the utilities have paid into the Nuclear Waste Fund. As 

you heard, DOEs most recent estimate of potential liability is $7 

billion based on a projected start date of the repository of 2017. 

The United States Court of Appeals for the Federal Circuit to 

which the appeals from the Court of Claims go, has determined 

that the Department of Energy is in breach of its obligation to pick 

up this waste. They have determined that to date this constitutes 

a partial breach. Not a total breach of the contract. And that as 

such the utilities can seek damages only up to the point of time 

that they have filed their complaint. 

What that means of course is that the utilities will have to go 

back to Court at least once every six years to file a new claims to 

comply with the statute of limitations and seek their damages for 

the preceding six year period. And what it also means is it will ensure that we will continue to litigate these cases until after DOE 

begins performance of the standard contracts. 

Of the 67 suits filed, 56 cases remain pending either in the Court 

of Federal Claims or in the Court of Appeals for the Federal Circuit. Seven have been settled; two were voluntarily dismissed; and 

two have been litigated through final unappealable judgement. 

While we have asserted legitimate defenses to these cases in litigation, we have also made concerted efforts to settle these cases. 

We have had settlements resolving seven of these cases and those 

seven cases have settled for $255 million. In addition, there is one 

final unappealable judgement against the United States for $35 

million. 

Of the 56 remaining cases, the Trial Court has entered judgement in eight and so far six of those have been appealed. The past 

damages in those eight cases total approximately $420 million. 

Taking the judgements and the settlements together, although 

parts of the judgements are still subject to be challenged by the 

United States on appeal, the current government liability stands at 

$710 million. This reflects essentially cost claimed by the utilities 

from 1998 through 2004 in the cases where we have nine judgements, and through 2006 for the seven settlements. What that suggests of cost is that there is a lot of liability still to be incurred for 

the dates after 2004 and 2006. 

We have mentioned two significant issues that are on appeal in 

the United States of Court of Appeals for the Federal Circuit. The 

first relates to the unavoidable delay clause. Notwithstanding the 

D.C. Circuit’s determination that the Department of Energy could 

not rely on that clause, which would be a complete defense to liability, a Court of Federal Claims Judge determined that his view 

was that the D.C. Circuit lacked jurisdiction to enter that writ of 

mandamus. 

That decision has been appealed by the utility to the United 

States Court of Federal Claims—United States Court of Appeals 

for the Federal Circuit, and the briefing has been completed in that 

case. And at some point we will have arguments and get a decision 

13

from the Federal Circuit about whether the United States can raise 

the unavoidable delay clause. 

The second significant issue in a number of the appeals deals 

with the scope of the government’s obligation regarding the amount 

of spent nuclear fuel that had to be accepted under the standard 

contract. The utilities claims are uniformly premised upon arguments that DOE was contractually obligated to accept much larger 

amounts of spent nuclear fuel on an annual basis than the government believes that the obligation to be. And we will get, hopefully, 

a decision from the Court of Appeals for the Federal Circuit again 

on that issue as well. 

Finally, a word about the source of funding for the government’s 

liability and the litigation cost that we are facing. To date, all of 

the settlements and all of the judgements have been paid from the 

Judgement Fund. The government’s initial position was that in fact 

the Nuclear Waste Fund should be available to pay for these judgements and settlements, but the United States Court of Appeals for 

the 11 Circuit interpreting the statute determined that that fund 

was not available to pay for settlements and judgements. 

This of course means that the Judgement Fund, as you know, is 

essentially a bottomless pit in terms it doesn’t require annual appropriations. And the Department of Energy is not responsible, the 

Nuclear Waste Fund is not responsible for paying any of these 

damages not withstanding that presumably a large portion of those 

damages deal with storage costs that otherwise would have been 

borne by the Department of Energy had they been able to perform 

under the contract. 

With regard to litigation costs, to date, the Department of Justice has spent almost $95 million. This involves about $17 million in attorney costs, $55 million in expert funds, and $22 million in litigation support cost in defense of these suits. We are averaging about 

12—the equivalent of 12 attorneys per year working on these cases. 

This is relatively lean staffing. We are up against large utilities. 

We have had to date trials in 13 cases. We expect over the next 

year to have trials in six cases. These trials generally last two to 

four weeks, one lasting as long as eight weeks. 

In the next year, just to give you an example, currently we are 

in trial on a case where the claimant is seeking $91 million. Next 

month we go to trial on a case where the claimant is seeking $90 

million. In January a case where the claimant is seeking $53 million. In April of 2008 two cases where the claimants are seeking 

$52 million in one case and $123 million in another case. And finally in October of 2008 this case is scheduled to go to trail where 

the claimant is seeking $96 million. All in all in excess of a half 

of a billion dollars going to trial in the next year. 

As I said, these cases will continue to be filed, because these 

cases only deal with the partial breach up through the date those 

complaints will be filed. We are looking at litigation at least 

through 2017 and potentially beyond or at least liability through 

then and beyond. And the government will continue to incur liability until DOE is able to perform on these contracts. 

I thank you for your patience and I look forward to your questions. 

[The prepared statement of Michael F. Hertz follows:]

14

PREPARED STATEMENT OF MICHAEL F. HERTZ, DEPUTY ASSISTANT ATTORNEY

GENERAL, CIVIL DIVISION, U.S. DEPARTMENT OF JUSTICE

Mr. Chairman, and members of the Committee, I am Michael F. Hertz, and I am 

a Deputy Assistant Attorney General of the Department of Justice, Civil Division. 

I am pleased to testify today regarding the status of litigation concerning the Department of Energy’s obligations under the Nuclear Waste Policy Act (NWPA) of 

1982. 

Let me note at the outset that much of the litigation about which you have asked 

the Department of Justice to provide testimony is still pending in the Federal 

courts. As a result, the Department’s pending matter policy applies to any discussion of those cases. Pursuant to that policy, I will be happy to discuss matters that 

are in the public record. 

BACKGROUND

In 1983, pursuant to the NWPA, the Department of Energy (DOE) entered into 

76 standard contracts with entities, mostly commercial utilities, that were producing 

nuclear power. Through the standard contracts, DOE agreed that by January 31, 

1998, it would begin accepting spent nuclear fuel and high-level radioactive waste 

collectively, (SNF) created by the utilities. In return, the utilities agreed to make 

quarterly payments into the Nuclear Waste Fund (NWF) created by the statute. The 

utilities began making payments into the NWF in 1983. 

In 1987, Congress designated Yucca Mountain in Nevada as the sole site for a 

Federal repository for disposal of the SNF. DOE has been unable to begin construction of the federal repository, however, and anticipates that it will be unable to 

begin SNF acceptance until at least 2017. 

In May 1995, DOE published a notice in the Federal Register advising the utilities that held standard contracts and others that DOE would be unable to begin acceptance of SNF on January 31, 1998. The notice also explained that DOE’s acceptance beginning on that date was conditioned upon the existence of an operational 

repository. 60 Fed. Reg. 21793 (May 3, 1995). 

In response to this notice, several nuclear utilities filed suit in the United States 

Court of Appeals for the District of Columbia challenging DOE’s understanding. The 

District of Columbia Circuit held that DOE was required to begin SNF acceptance 

in some type of facility by January 31, 1998. See Indiana Michigan Power Co. v. 

Department of Energy, 88 F.3d 1272, 1277 (D.C. Cir. 1996). After DOE continued 

to inform utilities that it would be unable to begin accepting SNF by January 31, 

1998, the utilities again sued and requested an order directing that DOE perform 

under the Standard Contract. The District of Columbia Circuit denied the utilities’ 

request and instead found that the utilities’ remedy could be addressed through 

breach of contract claims. Northern States Power Co. v. United States, 128 F.3d 

754, 759 (D.C. Cir. 1997), cert. denied, 525 U.S. 1015 & 1016 (1998). The court did, 

however, issue an order that barred DOE from asserting that its delays in performing the standard contract were (unavoidable), and, therefore, excused pursuant 

to the (unavoidable delays) provision of the standard contracts. 

STATUS OF COURT OF FEDERAL CLAIMS LITIGATION

To date, utility companies have filed 67 cases in the United States Court of Federal Claims, alleging that DOE’s delay in beginning SNF acceptance constituted a 

breach of contract. The Court of Appeals for the Federal Circuit, in Maine Yankee 

Atomic Power Co. v. United States, 225 F.3d 1336 (Fed. Cir. 2000), has ruled that 

the delay constitutes such a breach. 

The utilities’ damages claims largely are for the costs incurred to store SNF that 

they allege DOE would have accepted from them absent the breach. Specifically, 

storage costs that utilities allege they would not have expended had DOE begun 

timely performance under the Standard Contract. In addition, several utilities have 

alleged damages arising from the (diminution-in-value) of their plants as the result 

of DOE’s delay, claiming that they realized these damages when they sold their 

plants to other utilities as part of the sale. 

Utility industry reports estimate that the claims will total about $50 billion, 

which far exceeds the amount the utilities have paid into the NWF pursuant to the 

Standard Contract. DOE’s most recent estimate of potential liability is $7 billion, 

based upon a projected start date of 2017. These estimates do not fully take into 

account the Government’s defenses or the possibility that plaintiffs will be able to 

prove the full extent of their claims. 

In the first case to proceed to trial on the merits in March 2004, the trial court 

found that the utility had not incurred any damages as a result of the partial breach 

15

of contract through the date of trial and denied any monetary recovery, although 

it ruled that the utility may return to court if and when it incurs damage because 

of the delay in spent fuel acceptance. Indiana Michigan Power Co. v. United States, 

60 Fed. Cl. 639 (2004). In affirming this ruling on appeal, the appellate court held 

that all claims for breach of the standard contracts may only be through the date 

of the complaint and that utilities must file new complaints with the trial court 

seeking damages as they are incurred. Indiana Michigan Power Co. v. United 

States, 422 F.3d 1369 (Fed. Cir. 2005). 

As a result of this ruling, utilities must file new cases with the trial court at least 

every six years to recover any costs incurred as the result of DOE’s delay, and we 

will continue to litigate these claims until after DOE begins performance of the 

standard contracts. We recently received our first new complaint implementing this 

ruling, filed by Northern States Power Company, which was filed shortly before the 

trial court issued a decision on the first claim filed by Northern States in 1998. 

Of the 67 lawsuits filed, 56 cases remain pending either in the Court of Federal 

Claims or in the Court of Appeals for the Federal Circuit, seven have settled, two 

were voluntarily withdrawn, and only two have been litigated through final 

unappealable judgment. 

While asserting legitimate defenses to plaintiffs’ claims in litigation, we also have 

made concerted efforts to settle claims. The settlements resolving seven of the cases 

involve four companies: Exelon Generation, LLC, South Carolina Electric & Gas 

Company, Omaha Public Power District and Duke Power Company. These settlements provide for the periodic submission of claims to the contracting officer for 

costs incurred since the date of the last submission. In total, the Government has 

paid $290 million pursuant to these settlements and one trial court judgment that 

was not appealed. 

Of those 56 pending cases, the trial court has entered judgment in eight, and so 

far six of those have been appealed. The past damages awarded in these eight judgments total approximately $420 million, with the trial court holding that the plaintiffs could return to court after they had incurred additional damages as a result 

of DOE’s delay. Between judgments and settlements, the Government’s liability currently stands at $710 million. This reflects costs claimed by utilities from 1998 

through 2004 for the nine judgments, and through 2006 for the seven settlements. 

The following chart summarizes the status of the 67 cases that have been filed:

Number of cases Status/Comments 

2 Voluntarily withdrawn 

7 Settled (settlements cover 1998 through 2006) 

2 Final unappealable judgments (judgments cover 1998 through 2004) 

6 Final judgments on appeal (judgments cover 1998 through 2004) 

2 Final judgments/time to appeal has not yet run (judgments cover 1998 through 2004) 

48 Pending/no judgment (includes new complaint filed August 2007)

67 Total 

SIGNIFICANT ISSUES ON APPEAL

There are two major issues that should be decided in the pending appeals which 

will have a significant effect upon the Government’s continuing liability in these 

cases. The first issue concerns the Government’s ability to present a defense based 

upon the (unavoidable delays) clause in the contracts. As noted, the District of Columbia Circuit, in Northern States, mandated that the Government could not rely 

upon such a defense in its litigation of delay claims arising from its breach. One 

of the trial court judges at the Court of Federal Claims found the District of Columbia Circuit’s writ of mandamus to be void and that DOE is entitled to raise the (unavoidable delays) defense. Nebraska Public Power District v. United States, 73 Fed. 

Cl. 650 (2006). That ruling is on appeal to the Federal Circuit and, if affirmed, the 

Government may be able to pursue an absolute defense to the utilities’ damages 

claims. 

The second major issue to be decided in the cases on appeal is the scope of the 

Government’s obligation to utilities regarding the amount of SNF to be accepted. 

The utilities’ claims are uniformly premised upon arguments that DOE was contractually obligated to accept much larger amounts of SNF on an annual basis than the 

Government believes that obligation to be. This issue is squarely presented in several of the pending appeals and, depending upon how the appellate court decides 

16

the issue, will significantly inform the size of the damages awards that utilities receive in these cases. 

PAYMENT OF JUDGMENTS AND SETTLEMENTS

To date, all payments to the utilities have come from the Judgment Fund. In Alabama Power Co. v. United States Department of Energy, 307 F.3d 1300 (11th Cir. 

2002), the Court of Appeals for the Eleventh Circuit ruled that the Government 

could not use the NWF to pay for any of the damages that the utilities incur as 

a result of DOE’s delay. The only other available funding source that has been identified to date is the Judgment Fund. We are also unaware of any statutory requirement that DOE be required to reimburse the Judgment Fund for judgments paid, 

unlike other statutory schemes that govern the adjudication of contract and other 

monetary disputes with the Government. 

LITIGATION COSTS

The costs to the Government to litigate these cases are significant. The Department of Justice has expended approximately $17 million in attorney costs, $55 million in expert funds and $22 million in litigation support costs in defense of these 

suits. These costs represent nearly a third of the expenditures since 1998, for the 

component within the Civil Division responsible for litigating these suits. In addition, DOE and the Nuclear Regulatory Commission have expended many manhours 

to support this effort. Given that these cases will continue to be filed and litigated 

into the foreseeable future, these costs will continue to be incurred. 

Although these cases are similar in dollar amount to other cases defended by the 

Commercial Litigation Branch of the Department of Justice, these cases are distinct 

in two key aspects. First, the standardized contract at issue requires the Government to provide the services at issue and the utilities pay the costs for those services, rather than the reverse. Second, the Government will continue to incur liability 

for its inability to perform these contracts until after DOE begins to accept SNF 

waste—either at Yucca Mountain or some other facility—in amounts that DOE 

would have accepted if performance had begun in January 1998. 

In summary, the SNF litigation has already cost the Government significant sums 

in terms of liability and litigation costs and will most likely continue to do so into 

the foreseeable future.

The CHAIRMAN. Lets turn to Kim Cawley who is the Chief of the 

Natural and Physical Resources Cost Estimates Unit at the Congressional Budget Office. 

Mr. Cawley, welcome this morning. We will put your statement 

in full in the record and you can summarize it as you see fit. Thank 

you for coming. 

STATEMENT OF KIM P. CAWLEY, UNIT CHIEF, NATURAL AND 

PHYSICAL RESOURCES COST ESTIMATES UNIT, CONGRESSIONAL BUDGET OFFICE 

Mr. CAWLEY. Thank you, Mr. Chairman, Congressman Ryan, 

members of the Committee. Happy to be here this morning to discuss the Nuclear Waste Program. I would like to emphasize just a 

couple points from my written statement. 

It is likely that the Nuclear Waste Program will add to the size 

of the federal deficit in future years for two reasons. First, that the 

Department obtains regulatory approvals to proceed with building 

the facility of plans for Yucca Mountain. Projected spending for 

that construction will exceed the annual fees of $800 million—$700 

million that are paid each year by utilities for the disposal service. 

And second the Courts have held that taxpayers, not nuclear 

power customers, must bear the cost of the delay in the disposal 

program that has occurred since 1998. So far the Judgement Fund 

has paid about $300 million in compensation to utilities. 

On my first point, since 1993 when the Waste Fund was established on the budget, utilities have paid about $15 billion in fees 

17

towards their share of a permanent waste repository. Spending 

form the fund over that same period has been less than the fees 

collected by about seven billion dollars. Because nearly all the receipts and spending in the federal budget are recorded on a cash 

basis, we could say that so far the Waste Fund has contributed to 

reducing the size of past deficits. But that situation can be reversed 

if the Department is able to proceed with construction and it receives annual appropriations in the future that are larger than the 

Fund’s annual income. At that point the Programs operations 

would be adding to the size of deficits or reducing the size of surpluses in the future. 

Just on my second point about payments from the Judgement 

Fund. The Judgement Fund is a permanent appropriation, permanent authority to pay for all kinds of judgements and settlements 

against the government. For example, in 2006 the Fund paid over 

8,000 individual claims of all kinds ranging from traffic accidents 

to medical malpractice and contract disputes. Over the past ten 

years payments from the Fund have averaged about $1.2 billion a 

year. How much the Fund will pay in future nuclear waste settlements is uncertain. 

DOE has estimated those damage claims could amount to $7 billion to $11 billion depending on when the waste site could begin 

operating. Those estimates are for the sum of total claims that 

might be paid over 30 years or more. Ultimately, the size of the 

claims will depend on the types of damages that the courts allow 

and how long it takes DOE to move the waste from individual utility storage sites. 

Finally, I wanted to mention the legal capacity of the Yucca 

Mountain site. Under the Waste Policy Act 70,000 metric tons of 

waste could be sent to that facility, but commercial plants and the 

governments own waste from it’s Defense Programs have already 

generated about 65,000 tons. The industry now produces around 

2,000 tons a year so all of that legal capacity will be spoken for 

soon, years before the site could open. Without a solution to that 

capacity limit, taxpayer liabilities for waste disposal could grow for 

the waste expected from current plants that are operating today as 

well as for many new power plants that might be built. 

Thanks again for the opportunity to be here. And I would be 

happy to answer any questions about my written statement. 

[The prepared statement of Kim P. Cawley follows:]

PREPARED STATEMENT OF KIM CAWLEY, CHIEF, NATURAL AND PHYSICAL RESOURCES

COST ESTIMATES UNIT, CONGRESSIONAL BUDGET OFFICE

Mr. Chairman, Congressman Ryan, and Members of the Committee, I am pleased 

to appear before you today to discuss issues related to the Federal Government’s liability under the Nuclear Waste Policy Act of 1982 (NWPA). 

My testimony today makes the following points: 

• By law, the Federal Government is responsible for permanently disposing of 

spent nuclear fuel generated by civilian facilities, which pay fees for that waste disposal service. Regardless of how the government meets that responsibility, discharging those liabilities will require significant federal spending over many decades. 

• The Nuclear Waste Policy Act authorized a system to manage radioactive waste, 

including an underground repository to permanently dispose of spent nuclear fuel 

from civilian facilities. Currently, the Federal Government is 10 years behind schedule in its contractual obligations to remove and dispose of such waste; by the time 

the repository might be opened, it is likely to face at least a 20-year waste backlog. 

18

• In the absence of a federal underground repository to accept nuclear waste for 

storage, taxpayers are now starting to pay—in the form of legal settlements with 

utilities—for a decentralized waste storage system at sites around the country. 

(Those payments are being made from the Department of the Treasury’s Judgment 

Fund.) The Department of Energy (DOE) currently estimates that payments to utilities pursuant to such settlements will total at least $7 billion, and possibly much 

more if the program’s schedule continues to slip. Regardless of whether or when the 

government opens the planned repository, those payments are likely to continue for 

several decades. 

• Ultimately, the repository that is now authorized under NWPA will not provide 

sufficient capacity to store all of the waste for which the Federal Government is responsible. The statutory cap on the amount of waste that can be stored there is significantly lower than the volume of waste that DOE expects will be generated during the lifetimes of existing nuclear facilities, let alone the additional volume from 

any new facilities that may be built. Without a change in law to allow construction 

of disposal facilities with sufficient capacity to accommodate all of the waste that 

will be generated, taxpayers will need to pay utilities to dispose of a substantial 

amount of additional waste in the future. 

• Contractual liabilities associated with nuclear waste from civilian power plants 

are one component of the government’s broader liabilities for remedying environmental contamination, much of which results from operating the nation’s nuclear 

weapons complex. 

THE FEDERAL GOVERNMENT’S RESPONSIBILITIES UNDER THE NUCLEAR WASTE POLICY

ACT

The Nuclear Waste Policy Act gave the Federal Government statutory responsibility for permanently disposing of spent nuclear fuel generated at civilian nuclear 

reactors and for disposing of radioactive waste generated as a result of federal activities related to the manufacturing of nuclear weapons. Under the law, the Federal 

Government, through the Department of Energy, faces substantial costs to establish 

a federal repository for the nation’s nuclear waste. It has also incurred contractual 

obligations to remove waste from civilian nuclear facilities. 

Under NWPA, the Federal Government will have to spend tens of billions of dollars over many decades to fulfill its obligations to dispose of waste from the current 

generation of civilian nuclear reactors. The government will also be responsible for 

waste from any new facilities that may be brought online in the future. However, 

the waste from those new facilities cannot be accommodated in the repository envisioned under NWPA because of statutory constraints on the amount of waste the 

repository can store. 

THE FEDERAL REPOSITORY AUTHORIZED FOR YUCCA MOUNTAIN

The Nuclear Waste Policy Act authorized DOE to build a geologic repository to 

permanently store up to 70,000 metric tons of spent nuclear fuel generated by civilian nuclear power plants and high-level radioactive waste generated by federal facilities. Under current law, Yucca Mountain in Nevada is the only place where such 

a repository may be located. To proceed with construction and operation of the facility, DOE must apply for and receive a license from the Nuclear Regulatory Commission (NRC). DOE expects to submit that application for authority to begin constructing the repository in 2008. (To date, many of DOE’s activities have focused on 

analyses required to support the license application.) If the NRC approves the application within three years and if other key regulatory requirements are subsequently 

met, DOE expects the planned repository at Yucca Mountain to begin accepting 

waste in 2017, although the department has recently indicated that this planned 

schedule could slip further.1

The law also addressed how the disposal of spent nuclear fuel and defense-related 

waste was to be paid for. Under NWPA, the costs for disposing of the waste are to 

be borne by the parties that generate it, and the law authorizes DOE to levy fees 

on the nuclear power industry to cover those costs. The law also authorizes appropriations from the Treasury’s general fund to pay for disposing of high-level radioactive waste generated by the nation’s defense programs.

19

The cash flows since 1983 for major components of the nuclear waste disposal program (summarized in Table 1) are described in the following sections. 

FINANCING THE COST OF DISPOSING OF CIVILIAN NUCLEAR WASTE

Starting in 1983, NWPA authorized DOE to charge electric utilities fees to cover 

the cost of disposing of the nuclear waste they generate. Utilities today pay annual 

fees at a rate of 1 mil (0.1 cent) per kilowatt-hour of electricity generated and sold 

by nuclear power plants. The fees, which are recorded in the budget as mandatory 

offsetting receipts (a credit against direct spending), are deposited into the Nuclear 

Waste Fund, or NWF (a special fund in the Treasury that records cash flows associated with the civilian nuclear waste program). Amounts in that fund are available 

for spending only to the extent provided in annual appropriation acts. Under 

NWPA, DOE is required to periodically review and, if necessary, adjust those fees 

to ensure that the fund has sufficient resources to pay for disposing of the utility 

industry’s nuclear waste. DOE has not increased that annual charge since 1983. 

In addition to the ongoing yearly fees, NWPA established one-time fees to cover 

the cost of disposing of waste that was generated before the law was enacted. DOE 

provided utilities with several options for paying that one-time charge, but several 

utilities have not yet paid the fee, and a significant amount remains uncollected. 

The Nuclear Waste Policy Act authorized appropriations from the Nuclear Waste 

Fund to cover the costs of the civilian nuclear waste program and also permitted 

DOE to borrow from the Treasury (subject to approval in appropriation acts) if balances in the fund were insufficient to cover the program’s immediate costs. (The law 

stipulates that amounts borrowed from the Treasury must be repaid from future fee 

collections.) In addition, the law authorized the Secretary of the Treasury to invest 

the fund’s unspent balances in nonmarketable Treasury securities, which are credited with interest. 

As shown in Table 1, $25.7 billion has been credited to the NWF from its inception in 1983 through the end of fiscal year 2006. That amount includes fees paid 

by the nuclear industry totaling $14.8 billion as well as $10.9 billion from 

intragovernmental transfers of interest earnings. Cumulative expenditures from the 

fund during that period totaled about $6.7 billion, mostly for analyses related to the 

waste disposal program and for appropriations to DOE for initial design work on 

the Yucca Mountain facility. The NRC and other federal entities also received modest appropriations from the fund for work related to the program, leaving an 


cawley-1.eps
20

unspent balance of about $19.0 billion at the end of 2006. The Congressional Budget 

Office (CBO) estimates that in 2007, another $1.6 billion was credited to the fund—

half of which came from fees and half from interest. Expenditures in 2007 totaled 

$0.2 billion, bringing the fund’s current balance to $20.4 billion, in CBO’s estimation. 

If all of today’s 104 licensed nuclear reactors continue to generate electricity, future annual receipts from industry fees are likely to average between $750 million 

and $800 million. Most U.S. nuclear power plants began operating in the mid-1970s 

or during the 1980s under 40-year licenses. The NRC has approved 20-year extensions to the licenses of nearly half of the plants in operation today, and it anticipates that many of the others will apply for such licenses. When those plants reach 

the end of their license extensions (or their economically useful lives) and cease operations—probably in the 2030s and 2040s—they will pay no additional fees to the 

Nuclear Waste Fund to cover long-term costs related to their waste. 

Receipts from the one-time fees that remain unpaid and become due once the federal repository is opened currently amount to about $3 billion, DOE estimates.2 Interest accrues on the balances due from those one-time fees until the utilities pay 

them to the government. Also accruing and adding significantly to the fund’s balances are credits of interest on the fund’s unspent dollars. Those amounts are 

intragovernmental transfers and do not create net receipts to the Federal Government. However, they do add to the resources that are authorized to be used for the 

waste disposal program. 

FINANCING THE COSTS ASSOCIATED WITH DEFENSE-RELATED NUCLEAR WASTE

In addition to the amounts appropriated from the fees and interest credited to the 

NWF, the Congress has made annual appropriations to the nuclear waste program 

to cover the costs that DOE estimates are related to the disposal of nuclear waste 

generated by federal defense programs. In 2001, DOE determined that just over 

one-fourth of the total costs of the waste disposal program are attributable to the 

disposal of defense-related nuclear waste and that this share of the program’s total 

costs should be paid for with appropriations from the general fund of the Treasury.3

Since 1993, the Congress has provided nearly $3.4 billion from the general fund for 

such costs. 

ESTIMATES OF TOTAL LIFE-CYCLE COSTS

In 2001, DOE published an estimate of the total costs—including transportation 

and project management—associated with the planned underground nuclear waste 

disposal facility. In DOE’s estimation, the project would cost $57.5 billion in 2000 

dollars (with an associated range of accuracy of plus or minus 40 percent) over an 

operating period of more than 100 years.4 DOE estimated that nearly three-fourths 

of the facility’s total life-cycle costs would be attributable to waste generated by civilian facilities; the remaining portion would be attributable to defense-related 

waste. 

DOE also published a study in 2001 reporting on whether the annual fee charged 

for nuclear waste disposal would generate enough money in the Nuclear Waste 

Fund—including the interest anticipated on unspent fees—to pay for the estimated 

life-cycle costs associated with disposing of civilian waste.5 In that study, key findings of which are summarized in Figure 1, DOE estimated that fees paid by commercial nuclear power plants would cover 44 percent of the program’s total costs, 

and interest credited to unspent NWF balances of fees would cover 27 percent. DOE 

assumed that appropriations for costs attributable to defense-related waste would 

cover the remaining 29 percent of total costs. 

Using its 2001 program design as a reference case, DOE determined that the annual fee (plus accrued interest) was likely to generate sufficient balances to cover 

the estimated costs of civilian waste disposal. The agency reaffirmed that determination in 2002 but has not completed an updated study of fee adequacy since that 

time.6

21

Judgments about whether the fee is adequate are highly sensitive to estimates of 

certain key variables, such as project costs and inflation. Determinations of adequacy are also sensitive to estimates of the interest credited to the fund—estimates 

that are a function of interest rates and fund balances, which in turn depend on 

projections of appropriated spending from the fund. In CBO’s view, DOE’s 2001 and 

2002 analyses used reasonable economic assumptions, but it is unclear whether 

other assumptions—particularly those related to the program’s scope and costs—are 

still an appropriate basis for determining the adequacy of utilities’ annual fees. For 

example, because many plants have received 20-year license extensions, the total 

volume of waste that those plants are expected to generate—and thus the scope of 

a federal program necessary to manage it—have increased significantly since 2001. 

An updated analysis would need to take that factor into account, as well as the impact of escalating construction costs and delays in the scheduled opening of a federal 

repository. The Government Accountability Office, looking back, found that many 

DOE construction projects involving complex technologies had exceeded their original estimates of costs and experienced delays in their schedules.7

FEDERAL CONTRACTUAL OBLIGATIONS AND LIABILITIES FOR NUCLEAR WASTE

Under contracts signed with electric utilities pursuant to NWPA, DOE was scheduled to start removing waste from storage sites at individual power plants for transport to a federal storage or disposal facility by 1998. DOE documents suggest that 

the planned underground nuclear waste disposal site at Yucca Mountain will not 

be ready to accept waste before 2017—or nearly 20 years late.8 Moreover, that 

schedule assumes that legislation, which has not been enacted, will make changes 

to the nuclear waste program—in particular, to simplify key regulatory procedures. 

Without those changes, according to DOE, the actual date that the agency begins 

to accept waste is likely to be even later. 

After the Federal Government missed its 1998 contractual deadline to start collecting waste, electric utilities began—successfully—to sue the government for damages incurred as a result of the agency’s failure to meet that deadline. In seeking 

to resolve the initial lawsuits, DOE anticipated that it would pay court-awarded 

damages to individual utilities from amounts appropriated from the Nuclear Waste 

Fund or by issuing credits to those utilities (to reduce their future fee payments to 

the fund) in the amount of the damages that had been awarded. 


cawley-2.eps
22

In 2002, however, the U.S. Court of Appeals for the Eleventh Circuit held that 

DOE could not use the Nuclear Waste Fund to pay the damages resulting from the 

government’s breach of its contracts.9 According to the court, the costs of interim 

storage incurred by the utilities because of the breach were not within the uses of 

the fund that were permitted under NWPA. Also, the court pointed out, the department would inevitably raise future fees to compensate for any such payments—so 

that the injured utilities would ultimately bear the costs of the contract breach if 

they were paid from the fund. In addition, utilities that did not litigate their claims 

would end up paying larger fees to cover the cost of damage claims made by other 

utilities. Agreeing with the parties that brought the lawsuit, the court stated that 

making utilities contribute to a fund that disproportionately paid the storage costs 

of other utilities would raise a serious constitutional ‘‘takings’’ question. Following 

the court’s decision, the government subsequently paid damages to the utilities from 

the Treasury’s Judgment Fund. 

THE JUDGMENT FUND

The Judgment Fund is a permanent, indefinite appropriation from the Treasury 

that is available to pay final judgments and awards against the United States that 

cannot legally be paid from any other existing appropriation.10 (The fund has no fiscal year limitations, and there is no need for the Congress to appropriate money to 

replenish it.) The fund provides the authority for the government to pay for most 

court judgments and settlement agreements entered into by the Department of Justice to resolve actual or imminent lawsuits against the Federal Government. Generally, agencies are not required to reimburse the Judgment Fund for payments 

made on their behalf unless the Congress appropriates money specifically for that 

purpose. 

JUDGMENTS AWARDED AND PAID TO UTILITIES UNDER THE NUCLEAR WASTE POLICY ACT

Under the Department of Justice’s settlements with electric utilities, utilities have 

been reimbursed for the actual costs they incurred because of DOE’s partial breach 

of its contracts. Such costs are unique to each nuclear power plant and depend partly on the age and operating status of the plant and the size and configuration of 

the plant’s available space for nuclear waste storage. 

The Judgment Fund has paid $290 million to four electric utilities as compensation for the costs they incurred because the Federal Government could not begin to 

accept nuclear waste for disposal in 1998. That amount includes a payment of $35 

million to the federally owned Tennessee Valley Authority. The government has appealed (or may appeal) judgments worth another $337 million. Five additional trials 

for damages have been completed and are awaiting judgments, and 44 other cases 

have not yet been tried. Because judicial claims for damages are made retrospectively, many more cases can be expected in the coming decades as utilities seek to 

recover their ongoing costs for storing nuclear waste long after they expected it to 

be removed to a permanent disposal site. 

FUTURE SETTLEMENTS UNDER THE NUCLEAR WASTE POLICY ACT

Litigation is ongoing regarding how to calculate damages for DOE’s partial breach 

of its contractual commitments. DOE currently estimates that if the agency begins 

to accept waste in 2017, taxpayers’ total liabilities to electric utilities will total 

roughly $7 billion (in today’s dollars). Further, it anticipates that payments from the 

Judgment Fund will span a number of decades after 2017.11

DOE’s estimate of future damages is uncertain and is predicated on the department’s views of the types of additional business and waste storage expenses that 

the courts will determine are appropriate and reasonable and should be paid by 

DOE. Those determinations will depend on such factors as the estimated rate at 

which DOE would have removed waste from a particular facility if the agency had 

been able to accept waste in 1998. If utilities successfully argue that the waste-acceptance rate used for the purpose of calculating damages should exceed the rate 

used in DOE’s projections of liabilities, costs would probably surpass $7 billion. 

Similarly, costs may be greater if the courts take a broader view of the types of 

expenses for which utilities should be compensated. Although the Federal Government is responsible for the permanent disposal of nuclear waste, individual utilities 

are responsible for storing the waste until it can be delivered to a permanent storage facility. Because the site characteristics of individual utilities vary, the determination of incremental expenses incurred at particular sites must be made on a 

case-by-case basis and will ultimately depend on the courts’ views, which could differ from DOE’s. 

23

Estimates of liabilities will increase if the schedule for completing the planned repository slips further and waste continues to accumulate at utilities’ storage sites. 

For example, according to DOE, estimated liabilities will increase from $7 billion 

to $11 billion if the agency starts accepting waste in 2020.12 And even then, it will 

face a backlog that, at best, will take more than 20 years to eliminate. As long as 

the agency remains behind schedule, taxpayers will continue to incur liabilities. 

THE OUTLOOK FOR THE FEDERAL GOVERNMENT’S LIABILITIES

The Nuclear Waste Policy Act sets the storage capacity of the Yucca Mountain 

site at no more than 70,000 metric tons. DOE estimates that roughly 65,000 metric 

tons of existing spent nuclear fuel and high-level defense waste are currently slated 

for disposal there. The nation’s existing nuclear power plants generate another 

2,000 metric tons of waste per year. If they continue to produce waste at that rate, 

the total volume will exceed Yucca Mountain’s statutory capacity within a few years, 

well before the repository is scheduled to open. 

As a result, without a change in law to expand the Yucca Mountain facility or 

designate another site for disposal, there will be insufficient capacity to dispose of 

wastes generated over the lifetimes of the nuclear power plants that are operating 

today. The resulting waste storage compensation payments to utilities from the 

Judgment Fund for waste that cannot be permanently disposed of would add significantly to federal liabilities. 

Moreover, the NRC has announced that it expects to receive applications for licenses to build 32 new nuclear power plants in the next few years. If constructed, 

each of those plants would produce around 20 metric tons of waste per year, or 

about 1,000 metric tons over a 40- to 60-year period of operations. Such plants 

would also pay fees to the Nuclear Waste Fund, and their waste would become a 

federal liability because under NWPA, nuclear plants are required to sign waste disposal agreements with DOE. Without additional storage capacity, that waste could 

become an additional liability of the Judgment Fund. 

ACCOUNTING AND BUDGETING FOR FEDERAL LIABILITIES

The Federal Government issues two different reports on its fiscal performance: 

the budget and The Financial Report of the United States Government. The budget 

largely measures cash flows in and out of the Treasury. The financial report, by contrast, primarily uses an accrual basis of accounting to measure assets, liabilities, 

revenues, and expenses. The principal difference between accrual and cash accounting is the timing of the recognition of transactions: An accrual system generally recognizes them when an economic event occurs rather than when the resulting cash 

flows take place.13

On the federal balance sheet, liabilities reflect obligations of the Federal Government that result from prior actions but that will require financial resources in the 

future. Regardless of whether or how particular liabilities are captured on the federal balance sheet, the budget records cash flows related to those liabilities when 

the flows occur. 

RECORDING NUCLEAR WASTE DISPOSAL CASH FLOWS IN THE BUDGET

Over the 1983—2006 period, the fees paid by nuclear utilities under NWPA totaled $14.8 billion, whereas expenditures totaled only $6.7 billion. As a result, the 

nuclear waste disposal program has reduced the cumulative net deficit (and thus 

the need for federal borrowing) by about $8 billion. 

Because receipts to the Nuclear Waste Fund have exceeded spending, balances 

have grown significantly since the fund’s inception, and significant amounts of interest have been credited to the fund. Intragovernmental interest is not a budgetary 

receipt and does not affect the size of annual deficits; however, it does add to the 

total amount of resources authorized to be made available for nuclear waste disposal. 

Going forward, any future expenditures from the Nuclear Waste Fund in excess 

of annual receipts from industry fees—that is, drawing down the balances in the 

fund or spending the interest being credited to the fund—will increase annual deficits or reduce future surpluses. Under current budgetary procedures, all spending 

from the fund is considered discretionary and counts against the appropriation committees’ spending allocations. Income from fees, by contrast, is recorded on the mandatory side of the budget. 

24

ENVIRONMENTAL AND DISPOSAL LIABILITIES ON THE FEDERAL BALANCE SHEET

Along with DOE’s liability for the costs of disposing of civilian nuclear waste, the 

Federal Government has substantial liabilities related to the costs of mitigating hazardous and radioactive waste that the government generated (or is required, by law 

or regulation, to remediate). Most of those liabilities involve the contamination of 

soil, water, and facilities at thousands of sites, contamination that arose from operating the nation’s nuclear weapons complex. Federal financial statements prepared 

by the Department of the Treasury indicate that over the next 75 years, the government faces more than $300 billion in costs to clean up, dispose of, and monitor that 

contamination.14

ENDNOTES

1Statement of Edward F. Sproat III, Director, Office of Civilian Radioactive Waste Management, Department of Energy, before the Subcommittee on Energy and Water Development of 

the House Committee on Appropriations, March 28, 2007. 2Data supplied to the Congressional Budget Office in September 2007 by the Department of 

Energy’s Office of Civilian Radioactive Waste Management. 3Department of Energy, Office of Civilian Radioactive Waste Management, Analysis of the 

Total System Life Cycle Cost of the Civilian Radioactive Waste Management Program, DOE/

RW-0533 (May 2001). 4 Ibid. 

5Department of Energy, Office of Civilian Radioactive Waste Management, Nuclear Waste 

Fund Fee Adequacy: An Assessment, DOE-RW-0534 (May 2001). 6 Bechtel SAIC Company, L.L.C., Total System Life Cycle Cost for Site Recommendation: Letter Report, TDR-CRW-AD-000001 REV 00 (prepared for the Department of Energy, Office of Civilian Radioactive Waste Management, February 2002). 7Government Accountability Office, Department of Energy: Major Construction Projects Need 

a Consistent Approach for Assessing Technology Readiness to Help Avoid Cost Increases and 

Delays, GAO-07-336 (March 2007). 8Statement of Edward F. Sproat III, March 28, 2007. 

9 Alabama Power Co. v. United States, 307 F.3d 1300 (2002). 

10 In 2006, more than 8,000 individual payments from the Judgment Fund amounted to nearly $0.7 billion; over the past 10 years, such payments have averaged around $1.2 billion annually. 

Most of the payments are made to settle claims related to federal employment, torts, property 

loss, discrimination, medical malpractice, and contract disputes. 11Statement of Edward F. Sproat III, March 28, 2007. 12 Ibid. 13For more discussion, see Congressional Budget Office, Comparing Budget and Accounting 

Measures of the Federal Government’s Fiscal Condition (December 2006). 14See Department of the Treasury, Financial Management Service, 2006 Financial Report of 

the United States Government, available at www.fms.treas.gov/fr/06frusg/06frusg.pdf.

Chairman SPRATT. Thank you very much. Mr. Sproat, I think it 

would help us if you went back and explained a bit more deliberately the fiscal situation we have now with respect to classification of receipts on the one hand, and expenditures on the other. 

And why there is a mismatch that dooms your program to being 

under funded on into the future. 

Mr. SPROAT. Okay. Thank you, Mr. Chairman. This is certainly 

not my area of expertise and I suspect the Committee’s staff is 

much more well versed in this than I am, but I will give it an attempt. 

When the Nuclear Waste Policy Act was passed and the basic 

premise of requiring that waste generators to pay for the cost of 

disposal was set, the concept that the Congress set up was a one 

mill per kilo-watt hour fee paid for by the utilities based on their 

generation. The Secretary of Energy had the responsibility on an 

annual basis to assess the adequacy of that fee to allow the Department to fully carry out its responsibilities under the Nuclear Waste 

Policy Act, with the idea being that on an annualized basis any of 

that amount of fee that was not appropriated in that year of receipt 

would be placed into the Nuclear Waste Fund. And that the Nuclear Waste Fund would be used to pay for the actual construction 

and operation of the repository well into the future until it was 

eventually closed. 

25

When Gramm-Rudman-Hollings—when the bills were passed in 

the mid 1980s that set up the concept of mandatory and discretionary receipts and expenditures, the fees coming into the Nuclear 

Waste Fund were classified as mandatory receipts. And the Program was treated as a discretionary Program. And as I think I understand how this works, basically you can’t use mandatory receipts to offset the appropriations for discretionary programs. 

And so as a result we ended up with this mismatch between 

what the fees were to be used for versus how they were actually 

being used. But the surplus of fees coming in on an annual basis 

continued to be positive, and as a result, the Nuclear Waste Fund 

has continued to grow. My organization, my office has the responsibility to manage that fund. We have a laddered portfolio of treasury instrument, zero coupon bonds, and T-Bills. And we manage 

that to return between 5.3 and 5.5 percent a year, which sounds 

very good. And that is how we got to a $20.5 billion balance in the 

Nuclear Waste Fund. 

Unfortunately, because those revenues come in on an annual basis, that $750 million a year is generating interest, which is basically an interagency transfer on the books within the Treasury. 

The interest being generated on the funds those two revenue 

streams or I should say those dollars are treated as offsets in the 

current year they are booked. And as a result that $20.5 billion in 

the Waste Fund, while it is there on the books, if and when that 

money is needed to actually build the repository it will be scored 

as deficit spending, because it is already been accounted for in the 

books in the year the revenue was booked. 

Chairman SPRATT. So what you are asking is that the funds coming in by virtue of the fee payments and classified as offsetting 

mandatory receipts be instead made offsetting receipts for discretionary spending? 

Mr. SPROAT. That is correct. That is at least one of the solutions 

we will need to put in place to help solve this problem. 

Chairman SPRATT. Do you know to which account or which appropriations bill the offsetting receipts, mandatory offsetting receipts now go? Is it in the Energy and Water appropriations? 

Mr. SPROAT. It is Energy and Water Appropriations. I have a 

copy of the 2008 Energy and Water Appropriations bill language 

here. And both the receipts show up as a line item that says, ‘‘Intra 

fund transactions earning on investments, Nuclear Waste Fund, 

$954 million and proprietary receipts from the public Nuclear 

Waste Fund, $770 million.’’

Chairman SPRATT. And you are saying if you are able to use 

those receipts for this program alone without offsetting them 

against an extraneous program, another program, and also are 

given credit for interest accruing on the balances, you will have 

funds through the foreseeable future adequate to meet your obligation? 

Mr. SPROAT. That is correct. 

Chairman SPRATT. Construction obligation? 

Mr. SPROAT. That is correct, Mr. Chairman. 

Chairman SPRATT. Let me ask you this, Mr. Hertz, has the issue 

been raised in any of this litigation that this is a trust fund and 

that the funds deposited to it are imbued with that trust? They are 

26

obligated and encumbered and therefore the Court can direct that 

the monies accumulating in this trust fund be used for their intended trust purpose? 

Mr. HERTZ. Well, the only litigation that I am aware dealing 

with the fund itself is whether the fund was available to pay settlements and judgements. And to those extent that those settlements 

and judgements are essentially damages for storage that would of 

otherwise been done under the contract, that the contract had not 

been breached, you have the situation where the Judgement Fund 

is essentially paying part of the expenses that otherwise would of 

been bourne by the Nuclear Waste Fund. 

But the Court ruled against the government’s position in that 

case and said that the statutory language of the Nuclear Waste 

Policy Act did not allow the Department of Energy to take funds 

from the Nuclear Waste Fund and pay settlements for the breach 

of contract. 

Chairman SPRATT. Of course that involves some equity about 

those who are paying in may have to pay twice. But has the issue 

been raised and litigated that this is a trust fund that the monies 

deposited to it accredited to it have a particular purpose and that 

the government as trustee is obligated to fulfill that purpose with 

the funds available? 

Mr. HERTZ. Not that I am aware of. 

Chairman SPRATT. You think it is a valid argument? 

Mr. HERTZ. I would have to take it back and think about it. I 

am not sure—in other words—I am not sure. I think it is contemplated that the funds are going to be used to build the repository and to operate the repository. I don’t know that it has been 

litigated yet in terms of how the funds have actually been treated 

for budget purposes and whether there is anything improper about 

that. 

Chairman SPRATT. Mr. Sproat, are you getting an appropriation 

from the Energy and Water Appropriations bill of about $350 to 

$400 million a year? 

Mr. SPROAT. Yes, Mr. Chairman. We requested for fiscal year 2008, $495 million. The House appropriated $495 or $494.5 and the 

Senate appropriated approximately $50 million less than that. And 

we are waiting to see what happens here through the continuing 

resolution. 

Chairman SPRATT. And do you also have available to you the interest is credited to the trust fund account? 

Mr. SPROAT. No, sir, I don’t. 

Chairman SPRATT. You can’t draw it down without an appropriation either? 

Mr. SPROAT. That is correct. 

Chairman SPRATT. It is credited to your account, but it is not 

available to you? 

Mr. SPROAT. That is correct. 

Chairman SPRATT. And is that because of PayGo considerations 

at this point in time? 

Mr. SPROAT. I guess I am not the best person to answer that 

question, Mr. Chairman. I could certainly take that question for 

the record, but I might suggest——

[Mr. Sproat’s response for the record follows:]

27

Amounts in the Nuclear Waste Fund are available only to the extent provided in 

annual appropriations. Under current budgetary procedures, all spending from the 

Fund is considered discretionary and counts against the Appropriation Committees’ 

spending allocations. Income from fees, by contrast, is recorded on the mandatory 

side of the budget. Any expenditure from the Nuclear Waste Fund in excess of annual receipts from industry fees—that is, drawing down the balances in the fund 

or spending the interest being credited to the fund—will increase annual deficits or 

reduce future surpluses. PayGo considerations, therefore, play a role in the calculations only in terms of spending against the corpus of the Fund or the interest 

earned, but not for spending the annual income from the utility fees collected.

Chairman SPRATT. Mr. Cawley, do you have an opinion about 

that? 

Mr. CAWLEY. Yeah. I would say that the budgetary classification 

of the cash flows related to the Nuclear Waste Program are laid out 

in the 1982 Energy Policy Act. In that Act it specifies that the fees 

be considered as offsetting receipts for a business like activity. 

They are mandatory collections. They are not dependant upon any 

other future action of the Congress. 

The collection of those fees really has nothing to do with the annual appropriations process. That is a separate activity. So those 

the Act envisioned that the fees would be collected and credited 

with any interest earnings on the unspent balances. 

The Act clearly says that amounts from the fund should be made 

available through the appropriations process, annual decisions that 

the Congress makes to decide the funding levels. 

In addition, maybe I wasn’t clear, that the Department sort of receives two different appropriations. It receives an appropriation 

from the Nuclear Waste Fund as well as an appropriation from the 

general fund for the portion of the repository that is considered a 

cost of the Defense Programs and will be used by the Defense Programs. 

Chairman SPRATT. Well is the Energy and Water Subcommittee 

using these receipts as mandatory offsetting receipts that free up 

spending on mandatory programs under their jurisdiction? 

Mr. CAWLEY. Just like all kinds of other offsetting receipts or 

revenues, those receipts offset all federal spending. 

Chairman SPRATT. All for——

Mr. CAWLEY. They are not particularly designated to an individual committee or anything like that. No. 

Chairman SPRATT. Okay. Mr. Ryan. 

Mr. RYAN. Thank you, Chairman. Kim, let me—let me go down 

this path a little bit farther. 

So we are getting these mandatory receipts coming in. It is to the 

tune of how much each year right now on average? 

Mr. CAWLEY. Seven fifty. 

Mr. RYAN. Seven fifty. And that creates $750 million of room 

under the 302 ‘‘A’’ which can then be allocated how ever the Appropriation Committee determines? 

Mr. CAWLEY. Those receipts aren’t credit in the appropriations 

process. They are mandatory receipts. 

Mr. RYAN. No, I realize that. They are mandatory receipts, but 

they are offsetting, right? 

Mr. CAWLEY. No. 

Mr. RYAN. Okay. Let me ask it a different way. I understand 

your point. What is the delta between what we are—and this is, 

I think, for you Mr. Sproat. What is the delta between what we are 

28

spending now and what we need to be spending to meet your deadline in 2017? 

Mr. SPROAT. Yeah, Mr. Ryan, the chart that I showed that had 

the——

Mr. RYAN. Yeah. 

Mr. SPROAT [continuing]. Blue and the orange. That shows you 

our projected annual budget authority requirements to meet the 

2017 date. And that delta, those cash flow budget authority requirements are fluctuating between $1.3 to $1.9 billion a year. 

Mr. RYAN. And we are at? 

Mr. SPROAT. And right now we are at approximately $450 million 

a year. 

Mr. RYAN. Four fifty? 

Mr. SPROAT. Yes. 

Mr. RYAN. Okay. And we are bringing in $750 million? 

Mr. CAWLEY. Correct. 

Mr. SPROAT. Seven fifty plus the interest on the fund. 

Mr. RYAN. And the interest on the fund annually is approximately? 

Mr. SPROAT. Is approximate about $900 million. 

Mr. RYAN. Okay. And if we met those targets the discretionary 

spending would have to go up by that amount from the Energy and 

Water Committee, correct? 

Mr. CAWLEY. The way things are currently. So I—yeah. 

Mr. RYAN. Right. Okay. Mr. Sproat, what is the projection on the 

life of Yucca on how long can it operate continuing to take all of 

the waste from around the country at the pace that we currently 

project——

Mr. SPROAT. Sure. 

Mr. RYAN [continuing]. It is going to be produced? 

Mr. SPROAT. In the Nuclear Waste Policy Act there was an administrative limit of 70,000 metric tons of heavy metal content 

spent nuclear fuel and high-level waste that could be put in Yucca 

Mountain. 

The Administration has submitted legislation to the Congress to 

lift that 70,000 metric ton limit and let the Nuclear Regulatory 

Commission decide what the maximum allowable technical limit 

should be. With that 70,000 metric ton limit with the existing fleet 

of nuclear plants, and no new nuclear plants being built, the 70,000 

metric tons will be fully committed by early 2010. 

So in other words, Yucca Mountain will be full under the 70,000 

metric ton administrative limit in another two, two and a half 

years. 

Mr. RYAN. What is the estimate as to the maximum capacity of 

the site? Regardless of the statutory limit, what is the——

Mr. SPROAT. Sure. 

Mr. RYAN [continuing]. What do you project to be the maximum 

capacity? 

Mr. SPROAT. In our environmental impact study of the site that 

we did in preparation for the site recommendation as well as the 

supplement to that, which we are about ready to release, we have 

evaluated about 135,000 metric tons. 

Mr. RYAN. Okay. And what is the——

29

Mr. SPROAT. Which is the full expected inventory to be discharged from the existing fleet of nuclear plants. 

Mr. RYAN. Okay. Okay. So Yucca is big enough to handle 

135,000? 

Mr. SPROAT. We believe it is at least big enough to handle that. 

Mr. RYAN. Okay. And the 135,000——

Mr. SPROAT. Technically. 

Mr. RYAN [continuing]. Is the full output of all the fleet of current fleet of plants? 

Mr. SPROAT. That is correct. 

Mr. RYAN. And that takes us to what year? 

Mr. SPROAT. The last plant—I don’t have the exact—I will have 

to get back to you with the exact year. We—that projects to the last 

of those plants would shut down. It is somewhere in the 2035, 2040 

range. Maybe a little bit earlier than that. 

Mr. RYAN. So the best case scenario, funding occurs, you hit your 

deadlines. Best case scenario is it is filled up by 20—somewhere in 

the middle of 2030s? 

Mr. SPROAT. Yes. 

Mr. RYAN. And then we have to figure out something else? 

Mr. SPROAT. Obviously at that point in time we would know 

whether or not there are additional nuclear plants being built. 

Mr. RYAN. Right. 

Mr. SPROAT. Assuming we get a license to build the repository, 

this issue of what the maximum limit will come probably in front 

of the Congress because one of the other things the Nuclear Waste 

Policy Act requires is that the Secretary of Energy needs to report 

to Congress no later than January of 2010 on the need for a second 

repository. 

We are going to provide that report to Congress in 2008. Probably in the first half of 2008. And based on just straight very easy 

math, we need a second repository if the 70,000 metric ton limit 

isn’t changed. 

Mr. RYAN. Okay. Thank you. 

Chairman SPRATT. Thank you, Mr. Ryan. Mr. Berry. 

(No response.) 

Chairman SPRATT. Mr. Moore. 

(No response.) 

Chairman SPRATT. Mr. Porter. I think you have a question or 

two. 

Mr. PORTER. Thank you, Mr. Chairman. Of course my perspective is that of seeing it first hand and I think maybe, Director, if 

you could take a moment and just describe this hole. What it is. 

Mr. SPROAT. I think your previous description of a tunnel is very 

accurate. The Yucca Mountain site is located on the nuclear test 

site in South Western Nevada on federal land. It is adjacent to the 

Nellis test range in Southwestern Nevada, about 100 miles outside 

of Las Vegas. 

It is a ridge of mountain ranges out there. And the actual repository would be located off a tunnel that goes through a mountain 

ridge and the nuclear waste would be placed about 1,000 feet below 

the surface in that mountain ridge. 

30

Mr. PORTER. And you said that with a straight face. I appreciate 

that, because it—we had a chance to tour it together and I appreciated your time. 

But, Mr. Chairman, this has to be the largest earmark in the his- tory of our country. A $50 billion earmark that has an insatiable 

appetite while Congress turns a blind eye to it is an incredible 

waste of money. 

But what I would like to know is, again Director, I appreciate 

working with you through the years. Can you explain for this body 

how literally we had to change the whole science in the last year 

because of finding faults in the documents? 

Mr. SPROAT. I would say, Congressman, that is probably not an 

accurate characterization. We didn’t find—I am assuming you are 

referring to this Bow Ridge fault question that has come up recently? 

Mr. PORTER. Actually it is about the science that we—we had the 

emails where scientists were changing the information. So you 

have spent $27 million changing the——

Mr. SPROAT. Yes. 

Mr. PORTER [continuing]. Information because it wasn’t accurate. 

Mr. SPROAT. And that particular issue has to do with models that 

were developed by the U.S. Geological Society, USGS on how much 

water would infiltrate into the repository from rainfall. And so the 

key issue was from emails, there were emails discovered by the Department of Energy, which we made public, that indicated that at 

least there was a perception that some of the scientist were working and developing these mathematical models on water infiltration 

were ‘‘fudging the data.’’

So there was——

Mr. PORTER. Excuse me. But you then re-did the science. 

Mr. SPROAT. We basically did an investigation. There was both 

a criminal and a civil investigation. We had independent reviews 

of the work they did and as an added level of confidence we basically developed a whole separate independent infiltration model by 

Sandia National Labs. And that independent model is the one we 

are going to use. 

But the Congressman is correct. We spent a lot of money investigating this issue and redoing some of the work to make sure we 

got it right. 

Mr. PORTER. Thank you. Thank you, Mr. Chairman. 

Chairman SPRATT. Mr. Simpson. 

Mr. SIMPSON. Thank you. I thank you all for being here today. 

I appreciate the work you are doing. I know it is a tough job and 

a thankless job. I think most of us understand you have been trying to get it. But I appreciate the job you are doing down there. 

It is very difficult. But first let me ask Mr. Hertz a couple of questions. 

You mentioned these funds that are being paid—these court 

cases that there is a claim for like $91 million and another one 

case coming up for $56 million or something like that. Is that for 

the cost that the utility has incurred in storing the spent nuclear 

fuel that should of been accepted by the government or are there 

other liability cost that are included in there? Are there pain and 

suffering costs? 

31

Mr. HERTZ. No, no. Well, you know, that is the claim. And the 

legal basis for the claim is the expenditures they made that 

wouldn’t otherwise have to make. And we will be litigating whether 

all those expenditures were the result of the breach whether some 

of those expenditures would of been necessary regardless whether 

there had been no breach. But the legal theory is it is not pain and 

suffering or anything like. It is really and it should be you know 

the cost that they incurred. 

Mr. SIMPSON. Actual cost? 

Mr. HERTZ. Yeah. 

Mr. SIMPSON. This has been being paid out of the Judgement 

Fund for some time, but it is an anticipated cost. We know that it 

is out there. Should this be continued to be part of the Judgement 

Fund or should DOE start budgeting for it in their annual budget? 

Mr. HERTZ. Well the Judgement Fund is available when there is 

no other available fund to pay—and it is the only time the Judgement Fund is available 

Mr. SIMPSON. Right. 

Mr. HERTZ [continuing]. When there is no other available fund. 

So the only available fund that we were aware of was the Nuclear 

Waste Fund and the Court said that is not available. I think at 

this point what you are looking at is if you wanted to change that, 

that would require new legislation to make either the Nuclear 

Waste Fund available or some other fund available to pay these 

judgements. 

Mr. SIMPSON. Mr. Sproat, you mentioned this 70,000 metric tons 

available. You said that that was an administrative limit. Is it a 

statutory limit, administrative, or? 

Mr. SPROAT. Thank you for that clarification. It is a statutory 

limit that is contained in the Nuclear Waste Policy Act. 

Mr. SIMPSON. And so that it would take the legislation that you 

have submitted to Congress in order to change that statutory limit? 

Mr. SPROAT. Yes, sir. 

Mr. SIMPSON. Is—obviously, I shouldn’t say obviously, I guess. 

The Nuclear Waste Fund is not being used to build the repository 

in the way it was anticipated, I wouldn’t suspect? 

Mr. SPROAT. It is not being used at all right now at this stage 

of the game, other than on an annual basis its interest component 

is offsetting general government deficits. 

Mr. SIMPSON. We have a lot of trust funds that do that. Whether 

it is the Aviation Trust Fund, the Harbor Trust Fund, Inland Waterways Trust Fund, the Highway Trust Fund. Anytime they build 

a surplus it is used to offset the size of the deficit. We have taken 

some action as an example in the transportation area to spend 

down that trust fund. If the taxpayers are paying that money for 

a specific purpose and the roads are getting bad, we assume that 

it was a good idea to spend the money on building the roads. Isn’t 

the same thing true here that the rate payers that have paid this 

kilowatt tax assume this is being used to build the repository to 

take care of the spent nuclear fuel? 

Mr. SPROAT. Yes, sir, they do assume that. I am both a nuclear 

rate payer in Pennsylvania and I am a taxpayer. So I am paying 

for both the judgements and into the Nuclear Waste Fund. And it 

is a very frustrating experience. And I know I am not alone in that. 

32

Mr. SIMPSON. It is frustrating to me that I don’t know why it 

would take a legislative change to or fix to change that so that the 

Appropriations Committee could be using the trust fund to pay the 

cost of building the repository. 

Mr. SPROAT. I would——

Mr. SIMPSON. I guess I haven’t got it clear in my mind what we 

have got to do yet. 

Mr. SPROAT. I would defer to Mr. Cawley to answer that. 

Mr. CAWLEY. I guess the current budgetary treatment we have 

is the budgetary treatment that the Congress wanted to have in 

2000—or excuse me—in 1982. 

And you mentioned the Highway Trust Fund and the Aviation 

Fund and a few other funds like that where revenues in one form 

or another or fees in one form or another are brought into the government. And Congress makes annual decisions about how much 

of that money will be appropriated. 

This is a similar situation where Congress is making annual decisions about how much of this money should be appropriated. 

Mr. SIMPSON. It wouldn’t take any changes to the Budget Act or 

anything like that to change how we spend that trust fund? 

Mr. CAWLEY. We are spending the trust fund now. It is spent 

through annual decisions made by the Appropriations Committee. 

What isn’t happening is that the monies being collected are considered a mandatory receipt and they do not accrue to any credit to 

the Appropriations Committee. You know, nor do the revenues for 

example from the Highway gasoline tax accrue to the Appropriations Committee. 

Mr. SIMPSON. So this is all paper? 

Mr. CAWLEY. I don’t know what you mean. 

Mr. SIMPSON. It is all paper stuff. It is figures on a piece of paper 

is what it is. 

Mr. CAWLEY. Well I think the issue——

Mr. SIMPSON. To make one thing look bigger than, you know, to 

make the deficit look smaller than it is or something else. And——

Mr. CAWLEY. All of the revenues being collected from nuclear 

rate payers are offsetting the deficit. They are not at this moment 

offsetting the spending decisions made by the Appropriations Committee individually but they are offsetting all spending. 

Mr. SIMPSON. Mr. Sproat, we mentioned that you had—that I 

think the House Appropriations Committee appropriated the full 

amount that you had requested——

Mr. SPROAT. That is correct. 

Mr. SIMPSON [continuing]. $495 million. 

Mr. SPROAT. For fiscal year 2008. That is correct, sir. 

Mr. SIMPSON. Yeah. And we had the discussion here that we are 

going to be spending one and a half to two billion dollars is going 

to be necessary in the future. I assume this testimony is going to 

be cleared with OMB? 

Mr. SPROAT. Yes, sir. 

Mr. SIMPSON. And we are anticipating those costs in the future. 

But we are fully funding what you have requested in the current 

year? 

Mr. SPROAT. In the current year—well assuming we will see how 

the continuing resolution goes, but as of right now the answer to 

33

that is yes. We will have to see what happens in conference between the House and the Senate what number comes out of that. 

Mr. SIMPSON. As soon as Yucca Mountain is open, the liabilities 

don’t drop to zero. 

Mr. SPROAT. No, that is correct. And——

Mr. SIMPSON. Because it takes a while to move waste there 

and——

Mr. SPROAT. Yes, sir. That is exactly the point I wanted to 

show—I intended to show with the very first slide that I put up 

which showed the yellow line and the crossover between the green 

and red lines. That indicates the year that we will catch up and 

that liabilities will continue to accumulate even after Yucca is open 

until we hit that catch up point. 

Mr. SIMPSON. I am—I have heard the numbers tossed around on 

the actual liability of what we pay annually in these costs. That we 

spend about a billion dollars a year in costs because we haven’t 

opened Yucca Mountain yet. Is that—they say it is about $500 million in liability cost but there is another $500 million a year cost for the government nuclear materials that should of gone to Yucca Mountain. Is that anywhere near an accurate number? Am I just throwing things out 

there? 

Mr. SPROAT. Well I think in terms of the civilian component from 

the civilian nuclear plants, our working assumption and based on 

those graphs I showed you that on average, and it does vary from 

year to year and it varies by time period. But on average we are 

expecting that the liability to the commercial sector is about a half 

a billion dollars per year of delay on average. 

But in addition to that there is the defense liability. And when 

I say, obviously, we don’t—the government doesn’t owe liability 

payments to itself. But 20 percent of the repository is earmarked, 

plus or minus, for defense waste both Naval nuclear spent fuel, defense waste that is currently at Hanford from the Legacy Defense 

programs. All of that is going to Yucca and it can’t be moved until 

the repository opens. 

So obviously there are added costs to the government to keep the 

existing government storage facilities open at about a half a billion 

dollars a year is probably not a bad number and maybe is even a 

little low. 

Mr. SIMPSON. Okay. When we talk about the 70,000 metric tons, 

you said 20 percent of it give or take is set aside for defense nuclear waste? 

Mr. SPROAT. That is correct. 

Mr. SIMPSON. So it is not just a matter of when we reach a total 

of 70,000 metric tons across the country. As I understand it there 

is not a path forward for some of the defense nuclear waste that 

currently exist? 

Mr. SPROAT. That is correct. 

Mr. SIMPSON. Tough job. But it——

Mr. SPROAT. Somebody has got to do it. 

Mr. SIMPSON. Somebody has got to do it and ultimately other 

countries are facing this same problem. France, as you know, is 

trying to find a deep repository for their waste. So is Scandinavia 

and some other places. And hopefully I know that Mr. Porter has 

34

a different opinion on that. And I understand that. But hopefully 

we will keep on schedule. 

What is your thoughts of actually being able to meet the 2000—

you know that is your best estimate of 2017. What is your realistic 

estimate? 

Mr. SPROAT. Well I have been asked that question before in hearings and my answer is that best achievable is not necessarily the 

most probable. And on the critical path to achieving that date is 

the getting the license application to the Nuclear Regulatory Commission. We will get that license application in or before the date 

I set last year of June 30, 2008. 

Once it is in to the NRC, the Nuclear Waste Policy Act gives the 

NRC three years to do their review and make their decision with 

a fourth year if they come back to Congress and say they need a 

fourth year. 

Our 2017 date assumes that three year period. Personally, they 

are going to need at least the fourth year, because this is a first 

of a kind regulation; a first of the kind facility anywhere in the 

world. So it is going to take a while. 

In addition, there is clearly going to be litigation associated with 

this. And how long that litigation takes, whether or not there are 

stays placed on the construction authorization, if we get it, who 

knows. 

So I would say more likely that licensing period from the time 

we submit to the time we actually get authorization to build, assuming we do, it is probably more around seven years—six to seven 

years as opposed to three years. 

All that said though, if we don’t address this issue of funding and this delta between the existing $450 million a year versus $1.9 billion a year to execute that critical path cash flow, it will never ever 

get built. 

Mr. SIMPSON. Right. 

Chairman SPRATT. Will the gentleman yield? 

Mr. SIMPSON. Certainly. 

Chairman SPRATT. What is the limitation, when do you hit the 

limit of what can be stored on site? 

Mr. SPROAT. The 70,000 metric tons? 

Chairman SPRATT. Right. 

Mr. SPROAT. That the repository——

Chairman SPRATT. No, not at Yucca Mountain but at individual 

nuclear reactor sites around the country. 

Mr. SPROAT. That varies. I used to be a vice president at Peco 

Nuclear and at Excelon and have some experience in this. 

Each of the nuclear power plants has a wet spent fuel storage 

pool adjacent to the reactor. And they were designed when the 

plant was built for varying lengths of time. But just about all of 

those—just about all plants now have those pools either filled or 

very close to capacity. And as a result a number of plants have already started taking fuel out of the pool, putting them in casks and 

putting them outside on pads in interim spent fuel storage facilities. Storing them dry in those casks. 

Most plants have a lot space on their sites and could probably 

continue to store that fuel on interim basis on their sites. So it 

really does vary from plant to plant. 

35

Mr. SIMPSON. Safety wise, we would be better off having a nuclear repository in Yucca Mountain or 121 sites with nuclear waste 

stored on site? 

Mr. SPROAT. Well, having been personally involved in licensing 

the spent fuel and the spent fuel storage facility at our at the 

Peach Bottom Plant that Excelon owns, it is a very safe means of 

storage. However, we currently have between the civilian sites and 

the government sites 121 different sites around the country with 

either spent nuclear fuel or high level radioactive waste in 39 different States. 

It would seem to me the prudent thing to do is put it all in one 

place. 

Mr. SIMPSON. Have we thought about has DOE looked at interim 

storage? The possibility of interim storage taking ownership of this 

spent nuclear fuel around the country building an interim storage 

facility and——

Mr. SPROAT. Yes, sir, we have to an extent. Let me explain. That 

solution has been offered by a number of people of a way of minimizing the continued growth of liability, regardless of what happens with Yucca Mountain. Why doesn’t the Department take title 

and take possession of the spent nuclear fuel and either manage 

it where it is at the reactor sites or condense it and put it into centralized locations at either one or several government sites. 

That idea would require legislation. The Department is prohibited by the Nuclear Waste Policy Act of doing any interim storage 

until Yucca Mountain gets a construction authorization from the 

Nuclear Regulatory Commission. 

So, number one, that would require legislation. Assuming we 

would get that legislation, the second question is so we had that 

authority now we have to start spending money on finding a site 

or sites, doing the environmental impact studies, doing the engineering, getting a license for that facility, and buying the transportation casks. The question comes, so are we really saving time and 

money by taking that approach? 

In my judgement the answer is no. 

Mr. SIMPSON. One final question, if I could ask it? When a license is applied for today for a new nuclear facility, they have to 

have a path to disposal of their nuclear waste, don’t they? 

Mr. SPROAT. They will have to show the Nuclear Regulatory 

Commission that they have a contract with the Federal Government so that the Federal Government is committed to eventually 

taking their spent nuclear fuel. 

Mr. SIMPSON. How is that going to happen if Yucca Mountain is 

not open? We don’t know if it is going to open. What is the path 

they are going to show? 

Mr. SPROAT. They would need to have a contract or an amendment to the existing standard contract signed between the Federal 

Government and the potential licensee indicating under what 

terms the Federal Government would accept their spent nuclear 

fuel. 

And we are currently in the process of drafting such an amendment to the standard contract. 

36

Mr. SIMPSON. Before the Federal Government is going to sign 

any contract like that, they are going to have to have some assurance that they are going to have a place to put it. 

Mr. SPROAT. That is correct. 

Mr. SIMPSON. Thank you. 

Chairman SPRATT. Mr. Porter, you have some parting shots? 

[Laughter.] 

Mr. PORTER. Thank you, Mr. Chairman. Just to highlight, 1982 

Michael Jackson’s song ‘‘Thriller’’ was popular when we started 

this project. And I think that was very appropriate. It has been a 

thriller of ride seeing, like I said, the largest earmark in the history of the country. If I had asked for this earmark, can you imagine what this Congress would say? So again, thank you for this opportunity. 

I have had numerous opportunities with our panel and I appreciate your being here and thank you very, very much. 

Mr. SPROAT. You are welcome. 

Chairman SPRATT. Thank you very much. Mr. Sproat, Mr. Hertz, 

Mr. Cawley, thank you very much. You have enriched our understanding of this, not that we have ready solutions, but we certainly 

understand it better. We have gained some insight and we will 

take under advisement. 

Thank you very much for you participation today. 

Mr. SPROAT. Thank you, Mr. Chairman. 

Mr. HERTZ. Thank you. 

[Responses to Mr. Barrett’s questions from Mr. Sproat follow:]

RESPONSES TO MR. BARRETT’S QUESTIONS FOR THE RECORD FROM MR. SPROAT

Q1a. The goal laid out in the Nuclear Waste Policy Act was to begin loading commercial waste into the Yucca Mountain repository in 1998, but due to several circumstances, DOE now does not expect to open the facility until 2017 at the earliest. 

This delay has led to substantial costs for the federal government because it has 

failed to live up to its contractual obligations to move this waste from commercial 

sites. What do you estimate the cost incurred by the federal government will be for 

each year that the opening of Yucca Mountain is delayed past the 2017 date due to 

liability costs for waste remaining at commercial sites?

A1a. The Department notes a mistake in one of the premises of this question. Although the question indicates that the ‘‘goal laid out in the Nuclear Waste Policy 

Act was to begin loading commercial waste into the Yucca Mountain repository in 

1998,’’ the United States Court of Appeals for the District of Columbia Circuit in 

Indiana Michigan Power Co. v. United States Department of Energy, 88 F.3d 1272 

(D.C. Cir. 1996), has held that the 1998 acceptance date was not tied to the repository and that, although the Department was obligated to begin accepting commercial waste at some facility by 1998, the Nuclear Waste Policy Act did not obligate 

it to have a repository in place by that date. Nevertheless, the Department acknowledges that it has not yet been able to open any facility for commercial waste acceptance, and the Department is currently focusing all of its efforts on the development 

of a repository, rather than some alternative storage facility. 

The Department estimates that U.S. taxpayers’ potential liability to contract holders who have paid into the Nuclear Waste Fund will be approximately $7.0 billion 

if the Department begins to accept spent nuclear fuel in 2017. If, as a result of expected delays due to limitations on funding and other factors, the opening date for 

the repository is 2020, the estimated potential liability will increase to approximately $11 billion. Although the increase in estimated potential liability is not a linear function, as a general matter, the average potential increase is approximately 

$500 million for each year the opening of the repository is delayed. There will also 

be added costs associated with keeping defense waste sites open longer than originally anticipated. The Department has not yet estimated those costs. It can be seen, 

however, that each year of delay in opening the repository has significant taxpayer 

cost implications.

37

Q1b. What can Congress do to ensure the plans at Yucca Mountain continue on 

schedule?

A1b. The Congress can pass the Administration’s proposed legislation or similar 

legislation to provide funding reform for the Yucca Mountain Program in a budgetneutral manner. Funding reform can facilitate the Department’s access to the Nuclear Waste Fund as intended in the Nuclear Waste Policy Act. 

The Administration’s proposed legislation will allow the Department to receive appropriations from the Nuclear Waste Fund equal to its annual receipts from utilities. Funding for the Program would still have to be requested by the President and 

appropriated by the Congress from the Nuclear Waste Fund.

Q2. Furthermore, I understand there [sic] some issues with DOE being able to access monies within the Nuclear Waste Fund for construction of Yucca Mountain. I 

know a few legislative fixes have been suggested by both the Administration and 

Members of Congress. Are there any additional approaches available to resolve the 

funding issues for Yucca Mountain?

A2. The Administration is committed to work with Congress to resolve the funding issue. The Administration has proposed legislation to fix the funding issue by 

reclassifying mandatory Nuclear Waste Fund fees as discretionary in an amount 

equal to appropriations from the Fund for authorized waste disposal activities. Alternative approaches to resolve the funding issue have been reviewed in the past. 

Some of these approaches, such as the use of a revolving fund, are set forth and 

discussed in Alternative Means of Financing and Managing the Civilian Radioactive 

Waste Management Program (http://www.ocrwm.doe.gov/about/pm/pdf/amfm—

report.pdf), a report issued by the Department in 2001.

[Responses to Mr. Barrett’s questions from Mr. Cawley follow:]

December 19, 2007. 

Hon. J. GRESHAM BARRETT, 

Committee on the Budget, U.S. House of Representatives, Washington, DC. 

DEAR CONGRESSMAN: This letter responds to your questions concerning the Congressional Budget Office’s testimony before the House Budget Committee on October 

4, 2007, regarding the Nuclear Waste Disposal Program. 

1. What is your estimate of the federal liabilities that would be incurred each year 

if the Yucca Mountain nuclear waste disposal facility is unable to accept waste in 

2017 and the Department of Energy (DOE) must continue to reimburse utilities for 

the costs of onsite storage of waste? 

CBO has no independent estimates of the federal government’s liabilities to electric utilities resulting from DOE’s partial breach of contractual obligations to accept 

nuclear waste from civilian facilities. DOE currently estimates that if the agency begins to accept such waste in 2017, taxpayers’ liabilities will total roughly $7 billion 

(in 2007 dollars). DOE further estimates that for each additional year that schedule 

is delayed, liabilities will increase by at least $500 million, reaching $11 billion by 

2020 if the agency begins to accept waste that year. 

2. Are there any additional approaches available to resolve the funding issues for 

Yucca Mountain—particularly related to DOE’s access to funds within the Nuclear 

Waste Fund? 

One alternative to providing the department with annual appropriations from the 

Nuclear Waste Fund would be to change the law and give the department access 

to the trust fund balances without further appropriation action. Providing such authority would result in new direct spending, however. 

The Nuclear Waste Fund is credited with waste disposal fees paid by electric utilities as well as interest on the unspent balances of those fees. At the end of 2007, 

the fund had a balance of just over $20 billion. Under the Nuclear Waste Policy Act, 

amounts credited to the fund are available, subject to appropriation, to DOE for the 

construction and operation of the Yucca Mountain facility and other activities related to managing nuclear waste. In 2007, the Congress appropriated $99 million 

from the fund to DOE; deposits from fees paid by utilities totaled about $750 million. 

3. Do you believe the Global Nuclear Energy Partnership (GNEP) can help reduce 

the liability costs incurred by the government by lessening the volume of waste 

being temporarily stored at commercial nuclear sites across the country? 

Dr. Orszag recently testified on the potential for the reprocessing of spent nuclear 

fuel (a component of GNEP) to reduce the estimated cost of the nuclear waste disposal program (see enclosed testimony presented to the Senate Committee on Energy and Natural Resources on November 14, 2007). Although GNEP could reduce 

the volume of waste by reprocessing it, CBO found that the total cost of managing 

the fuel cycle would be more with reprocessing than it would be under the alterVerDate 0ct 09 2002 14:49 Feb 01, 2008 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6621 J:\DOCS\HEARINGS\110TH\110-20\39989.TXT HBUD1 PsN: DICK
38

native where spent fuel is stored temporarily and then placed in a long-term repository. 

I hope this information is helpful to you. If you have additional questions, please 

contact the CBO staff. 

Sincerely, 

KIM PAUL CAWLEY, 

Chief, Natural and Physical Resources Cost Estimates Unit.

[Whereupon, at 11:12 a.m., the Committee was adjourned.]

Æ