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22–126 2017

S. HRG. 114–473 

THE NOMINATION OF SUSAN FAYE BEARD TO 

BE INSPECTOR GENERAL AT THE DEPARTMENT 

OF ENERGY 

HEARING 

BEFORE THE 

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

MAY 12, 2016 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 

Available via the World Wide Web: http://fdsys.gov 

(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

LISA MURKOWSKI, Alaska, Chairman 

JOHN BARRASSO, Wyoming 

JAMES E. RISCH, Idaho 

MIKE LEE, Utah 

JEFF FLAKE, Arizona 

STEVE DAINES, Montana 

BILL CASSIDY, Louisiana 

CORY GARDNER, Colorado 

ROB PORTMAN, Ohio 

JOHN HOEVEN, North Dakota 

LAMAR ALEXANDER, Tennessee 

SHELLEY MOORE CAPITO, West Virginia 

MARIA CANTWELL, Washington 

RON WYDEN, Oregon 

BERNARD SANDERS, Vermont 

DEBBIE STABENOW, Michigan 

AL FRANKEN, Minnesota 

JOE MANCHIN III, West Virginia 

MARTIN HEINRICH, New Mexico 

MAZIE K. HIRONO, Hawaii 

ANGUS S. KING, JR., Maine 

ELIZABETH WARREN, Massachusetts 

COLIN HAYES, Staff Director 

PATRICK J. MCCORMICK III, Chief Counsel 

KELLIE DONNELLY, Deputy Chief Counsel 

ANGELA BECKER-DIPPMANN, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Murkowski, Hon. Lisa, Chairman, and a U.S. Senator from Alaska .................. 1 

Cantwell, Hon. Maria, Ranking Member, and a U.S. Senator from Washington .................................................................................................................... 2 

WITNESSES 

Beard, Susan Faye, nominated to be Inspector General at the Department 

of Energy ............................................................................................................... 4 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED 

Beard, Susan Faye: 

Opening Statement ........................................................................................... 4 

Written Testimony ............................................................................................ 6 

Response for the Hearing Record to Question from Senator Wyden ........... 24 

Responses to Questions for the Record ........................................................... 30 

Cantwell, Hon. Maria: 

Opening Statement ........................................................................................... 2 

Murkowski, Hon. Lisa: 

Opening Statement ........................................................................................... 1 

(1) 

THE NOMINATION OF SUSAN FAYE BEARD TO 

BE INSPECTOR GENERAL AT THE DEPARTMENT OF ENERGY 

THURSDAY, MAY 12, 2016 

U.S. SENATE, 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:07 a.m. in Room 

SD–366, Dirksen Senate Office Building, Hon. Lisa Murkowski, 

Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. LISA MURKOWSKI, 

U.S. SENATOR FROM ALASKA 

The CHAIRMAN. Good morning, everyone. The Committee will 

come to order so that we can consider the nomination of Ms. Susan 

Beard to be the Inspector General (IG) of the Department of Energy. 

This is an important position at a large agency, and by looking 

back at its origin we can understand what Congress intended with 

its creation. 

In 1977 with energy in crisis and of note, the very year that this 

Committee was reconstituted with express jurisdiction over the nation’s energy policy, Congress established both the Department of 

Energy (DOE) and the Office of the Inspector General (OIG) within 

it. The Department of Energy Organization Act requires the President to appoint an Inspector General to lead the OIG. I quote, 

‘‘Solely on the basis of integrity and demonstrated ability and without regard to political affiliation.’’ Notably the DOE’s IG was one 

of the first in the government, preceding the IGs established by the 

Inspector General Act of 1978. 

Given the significance of the Department’s mission, the DOE Act 

specifically requires the IG as one of a few primary responsibilities 

to, and again I quote, to ‘‘Keep the Secretary and the Congress 

fully and currently informed concerning fraud and other serious 

abuses, problems and deficiencies relating to the administration of 

programs and operations administered or financed by the Department, to recommend corrective action concerning problems, abuses 

and deficiencies and to report on progress.’’ 

The only way that an Inspector General can discharge these important responsibilities is to be fully qualified and to maintain his 

or her independence from the rest of the Energy Department. Indeed, the DOE Act expressly provides that ‘‘The IG shall report to 

the Secretary, but shall not be under the control of or subject to 

2 

supervision by any other officer of the Department except in the 

case of an express delegation by the Secretary or the Deputy Secretary.’’ 

Ever since Gregory Friedman retired last fall—after serving as 

Inspector General for 17 years and as a professional in that office 

for another 16 years before being promoted to IG—the office has 

been under the direction of an Acting IG. 

As a starting point, I think we can all agree that DOE needs a 

permanent Inspector General. However, I think we can also agree 

that given the importance of this position, we have to be sure we 

have the right person before we confirm anyone to it. 

So make no mistake, this is a big job. The Washington Post, 

when it reported on Mr. Friedman’s retirement last year, noted the 

many politically sensitive cases he has investigated. These include 

the controversial case of a scientist named Wen Ho Lee who was 

wrongly charged with stealing secrets about the U.S. nuclear arsenal; the Solyndra scandal that left taxpayers on the hook for $535 

million in loan guarantees; and the arrest of three activists who 

penetrated the Energy Department’s nuclear weapons production 

facility in Oak Ridge, Tennessee. Those are just a few of the reasons why I am committed to ensuring that the individual we confirm is fully independent with good judgment in difficult situations. 

The candidate must also have a firm grasp of the responsibilities 

of an Inspector General, responsibilities not only to the Secretary 

but to the Congress as well. The law requires an IG to meet his 

or her independent obligations to Congress, and while we expect 

the IG to approach the work with civility, the independence of the 

Office of Inspector General must never be compromised. 

Ms. Beard has been an attorney within the Energy Department’s 

Office of General Counsel for the past 27 years, clearly an admirable career. But after almost three decades with DOE it may be 

difficult to transition from defending the agency’s interest as an attorney to scrutinizing the Department’s actions as the Inspector 

General. 

I am interested this morning to learn how the nominee intends 

to ensure the independence of the Office of Inspector General as it 

audits and investigates all operations of DOE including those areas 

that have been under her jurisdiction as Senior Agency Lawyer. 

I am also keen to learn more about the nominee’s experience, 

qualifications and intended approach for the serious responsibilities 

that come with this position. Because confirmation would be tantamount to a lifetime appointment, the bar for an IG nominee is especially high. 

We are here today to ask questions and raise attention to whether Ms. Beard is the right fit for this permanent position, and I look 

forward to this morning’s discussions. 

With that, Senator Cantwell, good morning. 

STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM 

WASHINGTON 

Senator CANTWELL. Thank you, Madam Chairman, for scheduling this hearing, and Ms. Beard, for your willingness to serve in 

this capacity as Inspector General for the Department of Energy. 

3 

The role of Inspector General, as my colleague has said, is a very 

important role in any agency, but an Inspector General charged 

with the task of this particular agency, detection of fraud and 

abuse in its programs and operations, is key. 

The responsibility is especially great because it is, with its $30 

billion budget, responsible for maintaining and safeguarding our 

nuclear arsenal, preserving our nuclear secrets, cleaning up some 

of the most hazardous contaminated places on earth and conducting cutting edge research, development and distant edges of 

science and understanding. The job calls for someone with both integrity and demonstrated ability who is familiar with the Department’s many programs but can still maintain independence from 

the agency. The Inspector General must be able to identify the Department’s failings, recommend corrective actions and ensure that 

progress is being made to correct the problems. This is something 

I will touch on in my questions. 

This is especially important to me and the State of Washington 

because we have a long history of leaking nuclear waste tanks, 

missed clean-up deadlines and workers being exposed to toxic vapors at Hanford. The former Inspector General has well documented many of these in past reports, but I will be looking for assurances that we will be able to hold the Department accountable 

and ensure that it meets its cleanup responsibilities and protects 

its workers. As you probably know we have a tri-party agreement, 

the State of Washington with DOE, on meeting these deadlines. 

I believe Ms. Beard has good credentials. She knows the Department. She has spent 27 years as the attorney in the General Counsel’s Office of the Department of Energy and the Department’s designated ethics officer. She has been responsible for administrating 

the Ethics in the Government Act with the Department and guarding against conflicts of interest. She has demonstrated good integrity and legal capabilities within that job. 

I will also be looking forward to questioning about what vigilant 

watch dog role you can play in holding this very, very important 

agency accountable. 

Thank you very much for your willingness to serve. 

The CHAIRMAN. Thank you, Senator Cantwell. 

Ms. Beard, the rules of the Committee—which apply to all nominees—require that they be sworn in, in connection with their testimony, so I ask that you please rise and raise your right hand. 

Do you solemnly affirm that the testimony you are about to give 

to the Senate Committee on Energy and Natural Resources shall 

be the truth, the whole truth and nothing but the truth? 

Ms. BEARD. I do. 

The CHAIRMAN. You can go ahead and be seated. 

Before you begin your statement I will ask you three questions 

addressed to each nominee before this Committee. 

Will you be available to appear before this Committee and other 

Congressional committees to represent departmental positions and 

respond to issues of concern to the Congress? 

Ms. BEARD. Yes, I will. 

The CHAIRMAN. Are you aware of any personal holdings, investments or interests that could constitute a conflict or create an apVerDate Nov 24 2008 15:31 Jan 24, 2017 Jkt 022126 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\22126\D22126.TXT D22126
4 

pearance of such of conflict should you be confirmed and assume 

the office to which you have been nominated by the President? 

Ms. BEARD. My investments, personal holdings and other interests have been reviewed both by myself and appropriate ethics 

counselors within the Federal Government. I have taken appropriate action to avoid any conflicts of interest, and there are no 

conflicts of interests or appearances thereof to my knowledge. 

The CHAIRMAN. Are you involved or do you have any assets held 

in blind trust? 

Ms. BEARD. No, I do not. 

The CHAIRMAN. Thank you, Ms. Beard. 

You may now proceed with your opening comments and then 

members of the Committee will have an opportunity to present 

their questions. 

Thank you and go ahead. 

STATEMENT OF SUSAN FAYE BEARD, NOMINEE TO BE 

INSPECTOR GENERAL AT THE DEPARTMENT OF ENERGY 

Ms. BEARD. Chairman Murkowski, Ranking Member Cantwell, 

distinguished members of the Committee, thank you for the opportunity to appear before you today. It is a great privilege. 

I’m honored to have been nominated by the President and to be 

considered by this Committee for confirmation as the Inspector 

General for the Department of Energy. 

I would like to start by thanking, from the very bottom of my 

heart, my husband, Charles Klingman and our children, Adina and 

Jacob. Charles has been extraordinarily supportive of me throughout our 27 years of marriage. Without his unending support I 

would not be able to be here today and would not have had the 

meaningful and rewarding career I’ve had as a career member of 

the Senior Executive Service while raising two wonderful children. 

Our marriage has truly been a team effort which I greatly appreciate, especially in light of the fact that our youngest child has significant developmental disabilities. 

I would also like to take this opportunity to thank my sister, 

Karen Yaghoubian. Even though Karen is only five years older 

than me, she really helped raised me. Our mother was diagnosed 

with breast cancer when I was three years old and passed away 

when I was 14. Without Karen’s support, I would not have been 

able to attend college and law school. I would simply not be the 

person I am today. 

I was born in Chicago and my family moved to Los Angeles when 

I was young. I received my BA from Pomona College and my law 

degree from UCLA. While in law school I spent a summer as a law 

clerk for a law firm in Anchorage. It was a wonderful experience 

and exposed me to the warm people of Alaska and its breathtaking 

surroundings. 

After graduating from law school I worked for a short time in 

private practice for a law firm in Los Angeles. I then moved to 

Washington, DC to become a staff attorney with the Federal Election Commission, a position I held until I came to the Department 

of Energy in 1989. I also taught legal research and writing in a 

part time capacity at American University’s Law School. 

5 

I strongly believe in the importance and value of public service. 

I have been a career employee, Federal employee, for almost 29 

years and a member of the Senior Executive Service for more than 

13 years. I’ve been in an attorney position for all of my Federal career. In 2008 I was honored to receive a Senior Executive Service 

meritorious rank award from President George W. Bush. 

I have managed the Department of Energy’s ethics program as 

the designated agency ethics official or the alternate designated 

agency ethics official for almost 20 years. For the last 13 years I 

have served the Department as the Assistant General Counsel for 

General Law. In this capacity I not only manage the ethics program but also provide legal advice on a wide range of matters that 

impact all of the department’s Federal workforce and, to a much 

lesser extent, the Department’s contractors. The legal areas under 

my purview include Federal personnel law, information law, and 

appropriations law. I also manage the largest team of attorneys 

within the Department’s Office of General Counsel. 

Over the years I’ve had the pleasure of working with the Office 

of Inspector General. The majority of this work dealt with allegations of statutory or regulatory ethics violations by current or 

former Federal employees. I’ve also worked on Federal personnel 

law issues, appropriations law and Freedom of Information Act 

matters with the Office of Inspector General. 

I believe strongly in the role of the Office of Inspector General 

as an independent office within the Department of Energy. If I’m 

fortunate enough to be confirmed to this position, I commit to you 

that I will uphold the standard of excellence and independence. 

In my role as the Department’s designated agency ethics official 

I am responsible for advising the Department’s most senior leaders 

to ensure compliance with the ethics requirements. I have never refrained from providing honest and unbiased legal advice. If I am 

confirmed, I will apply that same independence to the work of the 

Office of Inspector General. 

I believe the Office of Inspector General must apply the law and 

conduct thorough investigations, audits and inspections regardless 

of where the matter may lead. If I am confirmed, I pledge to work 

with this Committee and the full Congress to execute its important 

oversight duties. 

Madam Chairman, Ranking Member Cantwell, and members of 

the Committee, thank you again for the opportunity to appear before you. I look forward to answering any questions you may have. 

[The prepared statement of Ms. Beard follows:] 

6 


Insert offset folio 1 here 22126.001

Statement of 

Susan Beard 

Nominee to be 

Inspector General 

U.S. Department of Energy 

Before the 

Senate Committee on Energy and Natural Resources 

May12,2016 

Chairman Murkowski, Ranking Member Cantwell, distinguished Members of the Committee, thank 

you for the opportunity to appear before you today. It is a great privilege. 

I am honored to have been nominated by the President and to be considered by this 

Committee for confirmation as the Inspector General for the Department of Energy. 

I would like to start by thanking, from the very bottom of my heart, my husband Charles Klingman, 

and our children Adina and Jacob. Charles has been extraordinarily supportive of me throughout 

our 27 years of marriage. Without his unending support, I would not be able to be here today and 

have the meaningful and rewarding career I have had as a career member of the Senior Executive 

Service while raising two wonderful children. Our marriage has truly been a team effort which I 

greatly appreciate, especially in light of the fact that our youngest child has significant 

developmental disabilities. 

I would also like to take this opportunity to thank my sister, Karen Yaghoubian. Even though Karen 

is only five years older than me, she really helped raise me. Our mother was diagnosed with breast 

cancer when I was three years old and passed away when I was fourteen. Without Karen's support, 

I would not have been able to attend college and law school. I would simply not be the person I am 

today. 

I was born in Chicago, Illinois, and my family moved to Los Angeles, California when I was young. 

received my B.A. from Pomona College and my law degree from UCLA. While in law school, I spent 

a summer as a law clerk for a law firm in Anchorage, Alaska. It was a wonderful experience and 

exposed me to the warm people of Alaska and its breathtaking surroundings. After graduating from 

law school, I worked for a short time in private practice for a law firm in los Angeles. I then moved 

to Washington, D.C. to become a staff attorney with the Federal Election Commission, a position I 

held until I came to the Department in 1989. I also taught legal research and writing in a part-time 

capacity at American University's law School. 

I strongly believe in the importance and value of public service. I have been a career Federal 

employee for almost 29 years and a member of the Senior Executive Service for more than 13 years. 

I have been in an attorney position for all of my Federal career. In 2008, I was honored to receive a 

Senior Executive Service Meritorious Rank Award from President George W. Bush. 
7 


Insert offset folio 2 here 22126.002

I have managed the Department of Energy's ethics program as the Designated Agency Ethics Official 

or the Alternate Designated Agency Ethics Official for almost 20 years. For the last 13 years, I have 

served the Department as the Assistant General Counsel for General Law. In this capacity, I not only 

manage the ethics program but also provide legal advice on a wide range of matters that impact all 

of the Department's Federal workforce and, to a much lesser extent, the Department's contractors. 

The legal areas under my purview include Federal personnel law, information law, and 

appropriations law. I also manage the largest team of attorneys within the Department's Office of 

the General Counsel. 

Over the years, I have had the pleasure of working with the Office of Inspector General. The 

majority of this work dealt with allegations of statutory or regulatory ethics violations by current or 

former Federal employees. I also have worked on Federal personnel law issues, appropriations law 

and Freedom of Information Act matters with the Office of Inspector General. 

I believe strongly in the role of the Office of Inspector General as an independent office within the 

Department of Energy .. If I am fortunate enough to be confirmed to this position, I commit to you 

that I will uphold this standard of excellence and independence. In my role as the Department's 

Designated Agency Ethics Official, I am responsible for advising the Department's most senior 

leaders to ensure compliance with ethics requirements. I have never refrained from providing 

honest and unbiased legal advice. 

If I am confirmed, I will apply that same independence to the work of the Office of Inspector 

General. I believe the Office of Inspector General must apply the law and conduct thorough 

investigations, regardless of where such an investigation may lead. If I am confirmed, I pledge to 

work with this Committee and with the full Congress to execute its important oversight duties. 

Madam Chairman, Ranking Member Cantwell, and Members of the Committee, thank you again for 

the opportunity to appear before you. I look forward to answering any questions you may have. 
8 

The CHAIRMAN. Thank you, Ms. Beard, and again, thank you for 

your willingness to take on this task. 

As I mentioned in my opening comments, I feel very strongly 

that in order to have an effective Inspector General within the Department of Energy or any agency the independence is the priority. 

As you have noted, you have been within the Department of Energy now as an attorney for the past 27 years. The concern, as I 

look at your background and your credentials, it is that significant 

experience, and I understand that, but the roles are very different 

from what you have been doing as effectively a counselor or an advocate within the Department of Energy to now one where you 

would be scrutinizing the Department that you have been working 

within for these past 27 years looking for areas to deal with waste, 

fraud and abuse. 

Can you outline for me, with greater specificity, how you envision 

a transition from your current position as the Assistant General 

Counsel for General Law to now serving as the DOE IG? 

Ms. BEARD. Senator, thank you very much, and thank you very 

much for the question. 

I agree with you that independence is paramount for an Inspector General. As the Assistant General Counsel for General Law, I 

have no programmatic responsibilities as a program counsel for any 

of the Department’s major programs. While I am very familiar with 

the Department and its activities, I serve a special role in the sense 

that it’s mostly personnel law and the ethics program which I’ve 

had the most experience in. 

And as my role as the Designated Agency Ethics Official, I had 

to preserve the public’s trust in Federal employees. And so, for example, over the years, many—there have been a number of occasions where I have referred current and former Federal DOE employees to the Inspector General’s Office for review because I was 

concerned they had information that may have violated criminal 

statute or regulation. 

So even though I am a Department’s—an attorney with the Department, I have this extra role of independence, and I really 

strongly believe in my independence as the Designated Agency Ethics Official. And I would carry that forward if I’m fortunate enough 

to be confirmed. 

The CHAIRMAN. Let me ask then about the duty to Congress, and 

this relates primarily to reports to Congress itself. How will you 

ensure that you are using every appropriate means that you have 

with regards to communication to make sure that Congress is fully 

informed of the proper operations of the Department of Energy? 

And how do you see this role here? 

For us here in Congress we think it is pretty clearly delineated. 

But the responsibility to report to Congress when you see things, 

how would you ensure that you are fulfilling that duty and that responsibility? 

Ms. BEARD. Thank you again for the question, Madam Chairman. 

As you pointed out in your opening remarks, the DOE Act itself 

refers to the Department of Energy’s Inspector General and its role 

dealing with Congress. And I take the law very seriously and 

would follow that. 

9 

It’s important not only to issue our reports and make them publicly available and make them aware to the Congress and the 

American public but also working with staff and Committee and 

members to make sure that issues are appropriately addressed. 

The CHAIRMAN. What do you do then when you are unable to 

gain the information that you feel can best inform you that in turn 

can best inform Congress? How would you view your responsibility 

to obtain that full and factual information? 

Ms. BEARD. Again, thank you. 

For me, as far as I’m aware and this is based on conversations 

I’ve had with the former Inspector General while he was still at the 

Department, historically there has not been a problem at the Department with getting information that’s needed from the Department for the Inspector General’s Office. 

And I, in order for the Inspector General to do his or her job and 

the staff of the Office to do their job, they must have access to that 

information. And if it ever arose that we were not gained appropriate access, if I was confirmed, I would take serious and prompt 

action to make sure that we got everything we needed in order to 

do our jobs and conduct audits, inspections and investigations. 

The CHAIRMAN. Well I think that that is an important part because we, I think, have seen recently some interactions between 

some IGs, not necessarily within the Department of Energy, but 

some IGs and their agencies that have had a situation where that 

access to information has not been made readily available and that 

has been a situation of conflict. 

Let me turn to my colleague, Senator Cantwell. 

Senator CANTWELL. Thank you, Madam Chair. 

Ms. Beard, obviously, as I mentioned in my opening statement, 

the issue of Hanford cleanup is a big concern to, I think, the whole 

nation but certainly the State of Washington continues to be a 

watch dog on this issue as well. Both my colleague and I have 

pushed the Secretary on the implementation of a 2014 report from 

Savannah River on their issues of cleaning up as it relates to worker safety and making sure that tank vapors and things of that nature are dealt with. 

So I plan to follow up this week with the Secretary on the implementation of that plan and his commitment to it. But I am curious, 

because I know we have had many reports, I think, from the Inspector General’s Office in the past. I think there have been worker 

safety issues including as many as weaknesses in 16 different Inspector General reports. So this is not about publishing a report. 

This is about getting results. Can you comment on how you would 

correct just publicizing these issues as opposed to helping to elevate? 

My opinion is that I have been with Inspector Generals at various oversight hearings for other Committee members, and I have 

seen which Inspector Generals have used their authority to elevate 

the issues in a way that certainly captures the attention of the people needed. 

How would you address the fact that a lot of worker safety issues 

have been in previous reports but we have not created the culture 

to address all of them? 

Ms. BEARD. Thank you for the question, Senator. 

10 

I agree with you that issuing all the reports in the world does 

not make a difference if action isn’t taken on them. And in fact I 

was just looking, not long ago, at an inspector general’s report that 

was issued by the Department that pointed out issues that had 

been around. The last time they looked at the issue five years previously had not been adequately addressed in that five-year period. 

If I’m confirmed I would like to take a more robust approach to 

making sure that the—of tracking and making sure that the Department is taking corrective action on recommendations that are 

made and making sure we are making it public as well when actions are not being taken, whether through webpage, issuing special notices or reports and making sure that there is a very robust 

follow up on recommendations. 

Senator CANTWELL. So you believe in escalating those issues in 

a public way that causes action to happen? 

Ms. BEARD. If it doesn’t happen I do believe in—— 

Senator CANTWELL. Well wouldn’t you say five years is long 

enough? 

Ms. BEARD. Five years is more than long enough. 

And so it would be much shorter than five years but that was 

a report I saw recently. And I think it does need to get taken seriously and action needs to be taken. And I do believe it should be 

done quickly and more robust follow up I think is needed. 

Senator CANTWELL. What role do you think whistleblowers play? 

Ms. BEARD. I think whistleblowers play—thank you again for the 

question. 

I think whistleblowers play a very important role. And it’s very 

important that whistleblowers feel and are, in fact, protected from 

retaliation. 

Senator CANTWELL. To the Chairwoman’s question about your 

past relationship with the agency and then moving over to this 

issue, how would you best address this using your past experiences 

to show your fortitude in making sure that your former colleagues 

are inspected in a robust way as you just mentioned? 

Ms. BEARD. I personally have not been involved in any contract 

or whistleblower issues. I’m aware of a number of them just because of my time at the Department. 

But I think it’s very important that the Department take the 

steps it needs to take to make sure that whistleblowers are protected and that the law is fully followed in this area. And it’s something that we would put adequate resources on within the Inspector General’s Office, if I am confirmed, to ensure those actions are 

being taken. 

The fact that it’s been involved, an ongoing issue at the Department, even though I have not been involved in it, I do not have any 

particular background in it. But it’s something that I’m very well 

aware of. 

Senator CANTWELL. Thank you, Madam Chair. 

The CHAIRMAN. Thank you, Senator Cantwell. 

Senator Barrasso? 

Senator BARRASSO. Thank you, Madam Chairman. 

Following up on some of the things that Senator Murkowski 

asked and said in her opening statement. You have served at the 

Department of Energy since 1989 as Senator Murkowski menVerDate Nov 24 2008 15:31 Jan 24, 2017 Jkt 022126 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\22126\D22126.TXT D22126
11 

tioned, a long, distinguished career. You have been a legal advocate 

for the agency for 27 years. The position to which you have been 

nominated, the position of Inspector General, is effectively a lifetime appointment. If confirmed, you will be asked to audit and investigate an agency that you have promoted for decades, as Senator Murkowski has said. If confirmed, you will be asked to audit 

and investigate colleagues, people with whom you have worked 

with decades and who made decisions based upon your own advice. 

I think all of us have questions about whether you or anyone in 

these circumstances would be able to exercise sufficient independence and objectivity to be an effective Inspector General. 

I understand that prior to your nomination the General Counsel 

of the Department asked you if you had an interest in filling this 

vacancy. To be candid, I find that cause for concern that they 

would ask if you were willing to fill the vacancy. Is it reasonable 

for us to assume that after 27 years, as an advocate for the Department, that you will be an effective watch dog of that same Department? 

Ms. BEARD. Thank you for the question, Senator. 

Most of my Federal career at the Department has been in the 

Department’s Ethics program where I was responsible for ensuring 

that the Department’s employees followed the statutes, the laws, 

and regulations on confidential matters and part of that is making 

sure that the American public and the Congress have the, to show 

the trust that they can have on our public service, in our public 

servants. 

In that capacity I have given advice to employees regarding conflicts of interest and other matters. During those 27 years I’ve been 

at the Department no legal advice that I’ve ever given has been before the Inspector General’s Office. I do not envision that any legal 

advice I give in the future, that I’ve given, in the future will be in 

front of the Inspector General’s Office for review. 

But as part of that I actually have told employees they can’t do 

things. I mentioned in my opening comments that I give honest 

and unbiased advice. 

What I did not mention in my opening comments is often the advice I give is something the employee does not want to hear. It has 

never stopped me from giving the advice I think is appropriate, and 

I would continue to follow that independence if I was confirmed as 

Inspector General. 

I think it’s very important in my ethics capacity as well if I was 

to be confirmed as Inspector General is to discover the facts, apply 

the law and follow wherever they lead fearlessly, without being 

concerned about where they may point. And that is what I’ve done 

in my last 27 years as a Federal employee, and I would continue 

to do that, Senator. 

Senator BARRASSO. You have served as Assistant General Counsel for General Law at the Department since 2004, so the last 11/ 

12 years. In this capacity you have addressed questions concerning 

the Department’s compliance with Federal law including the Freedom of Information Act, ethics laws, Congressional appropriations. 

Have you also worked on issues related to the Department’s compliance with what is called the Miscellaneous Receipts Statute? 

That is the law that requires officials who receive proceeds on beVerDate Nov 24 2008 15:31 Jan 24, 2017 Jkt 022126 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\22126\D22126.TXT D22126
12 

half of the Federal Government to deposit those proceeds into the 

Treasury. 

Ms. BEARD. Yes, Senator, appropriations law is within the area 

of my office. 

Senator BARRASSO. In 2011 the Government Accountability Office 

(GAO) found that the Department’s transfers of excess uranium to 

USEC into Fluor Corporation violated the Miscellaneous Receipts 

Statute. The Office of General Counsel disputed the GAO’s findings. Have you worked on issues related to the Miscellaneous Receipts Statute and the Department’s transfers of excess uranium, 

that specific component? 

Ms. BEARD. Yes, Senator, my office as well as several others in 

the Office of General Counsel did work on that. 

Senator BARRASSO. So if confirmed will you recuse yourself then 

from matters involving the Department’s transfers of excess uranium? 

Ms. BEARD. Senator, if a matter comes up regarding the legal 

opinion that I was one of the people who worked on comes up? Yes, 

I would recuse myself. I have not been involved itself in any particular transfers involving excess uranium. 

Senator BARRASSO. Have you worked on issues related to the Department’s compliance with the Atomic Energy Act and the USEC 

Privatization Act? 

Ms. BEARD. I have—I’m thinking off the top of my head, sir. My 

recollection is I’ve not worked on anything exactly involving the 

USEC Privatization Act. 

Senator BARRASSO. In going through all this, because in September 2015 the Inspector General issued a report on enforcement 

activities at the Federal Energy Regulatory Commission (FERC). 

Among other things, the report examined whether FERC and the 

utility, Exelon, arranged a quid pro quo connecting FERC’s approval of Exelon’s merger with Constellation Energy to Constellation’s settlement with FERC. 

I have to tell you I was very unimpressed with the Inspector 

General’s investigation into the matter. I was especially disappointed that the Inspector General was unwilling to speak with 

individuals outside of FERC during this year-long investigation. 

I know you may not be completely familiar with the details of the 

report, but as a general matter, do you believe an Inspector General should be willing to speak with individuals outside of the government when investigating the government? 

Ms. BEARD. Thank you for the question, Senator. 

I’m not familiar with the FERC matter. I have never had any responsibility regarding FERC in my job at the Department of Energy. 

I do think it’s important that the Inspector General’s Office gather all relevant facts in order to pursue a matter it is looking at, 

regardless of where the individuals are who have those facts. 

Senator BARRASSO. Thank you. 

Thank you, Madam Chairman. 

The CHAIRMAN. Thank you. 

Senator Warren? 

Senator WARREN. Thank you, Madam Chairman. 

Ms. Beard, thank you for being here today. 

13 

In recent years several massive new natural gas pipelines have 

been proposed in New England. Over and over again I have heard 

from citizens and from elected officials in Massachusetts who are 

deeply concerned about the impact of these projects on their property and in their communities. They feel like their voices have not 

been heard and their interests have not been represented. 

These complaints have been much stronger even for Kinder Morgan’s Northeast Energy Direct project, and that specific pipeline 

was recently suspended. But others like Spectra’s Access Northeast 

project are still moving forward, and believe me, concerns about 

pipeline projects are not going away. 

The Federal agency tasked with approving these pipelines is the 

Federal Energy Regulatory Commission, or FERC, for which the 

Department of Energy’s Inspector General has oversight. For the 

last several years the Office of the Inspector General has proposed 

an audit of FERC’s permitting process. Ms. Beard, what is the status of this audit, as you understand it? 

Ms. BEARD. Thank you for the question, Senator. 

It is my understanding that the audit is ongoing at this time, but 

I’m not privy to any information regarding it other than that. 

Senator WARREN. Let me ask the question then another way. If 

confirmed, will you prioritize the completion of this audit? 

Ms. BEARD. Again, thank you, Senator. 

If confirmed I will prioritize the completion of the audit. My understanding, I should have added, is that right now considerable 

resources are being used on it. 

Senator WARREN. But you will make this a priority? 

Ms. BEARD. But I will make it a priority. 

Senator WARREN. You personally will make this a priority. 

I know that Senator Shaheen and the rest of the New Hampshire 

delegation have raised this with the Office of the Inspector General 

before, but I think that it is extremely important that this audit 

thoroughly reviews the way that FERC involves the public in the 

permitting process. Will this audit focus on FERC’s role in facilitating public involvement in the permitting process? 

Ms. BEARD. My understanding and again, I do not have a very 

much specific since this is an ongoing matter within the Office of 

Inspector General, is that it’s looking at the law, policies and procedures which includes public engagement. 

Senator WARREN. Alright. And you will make a commitment to 

make sure it is looking at public engagement? 

Ms. BEARD. My understanding, again Senator, is that is within 

the scope of the audit right now. 

Senator WARREN. Excellent. 

I appreciate that FERC’s permitting process is being reviewed by 

the Inspector General’s Office, and I look forward to seeing the results of this audit. 

But even outside the purview of this particular audit, it is extremely important that FERC is making decisions that are really 

in the best interest of the people who will be most directly affected. 

If you are confirmed will you commit to working with me to address concerns about FERC’s responsiveness to the public interest? 

Ms. BEARD. Senator, again, thank you for the question. 

14 

If confirmed I do commit to work with you and your staff regarding making sure that FERC is following the laws, policies and procedures. 

Senator WARREN. Thank you, Ms. Beard. 

This is very important to me. Pipelines affect people’s homes, 

their property, their communities and they have every right to be 

heard by the government on issues about pipeline permits. I just 

want to make sure that happens. 

I appreciate your coming here today to testify, and I look forward 

to continuing to work with you on these issues. Thank you. 

Thank you, Madam Chair. 

The CHAIRMAN. Thank you, Senator Warren. 

Senator Daines? 

Senator DAINES. Thank you, Madam Chair. 

Ms. Beard, thank you for coming here today. I know it is an exciting moment, and it is great to have your family here with you 

as well. 

I also want to thank you for your long service to our country. 

Twenty-seven years at the DOE is impressive as well as commendable. 

As you know the Office of the Inspector General is the so-called 

watch dog of the Department of Energy. Their primary role is to 

perform regular audits, inspections and investigations along with 

being a resource to Congress. Because of this role the Inspector 

General is often at odds with the Department. That is really what 

they are called to do. Yet you have spent most of your career as 

a lawyer for the Department of Energy and your specialties have 

been focused on ethics and general law, not necessarily auditing 

and investigations. 

The question is do you think that you will be able to transition 

into the watch dog role and do you think that your lack of experience in auditing and investigations will help or hinder that transition? 

Ms. BEARD. Thank you very much for the question, Senator. 

I think already in my role in ethics it is a semi-watch dog role 

because of—it is my job to ensure that the Department has a robust ethics program and that includes, when need be, just referring 

employees and former employees to the Inspector General’s Office 

which I have done on numerous occasions in the past, including 

employees who I personally knew well and personally liked. And so 

I really strongly believe in my independence in that role and I 

would believe I would carry that independence forward if I became 

Inspector General and was fortunate enough to be confirmed. 

I have been involved in a number of audits with the Inspector 

General’s Office involving personnel law matters at the Department as well as some investigations as well involving some issues 

that do touch general law matters. I do have experience in both of 

those areas even though I’m not, obviously, an accountant. 

Senator DAINES. Curious given you have a long history in the 

DOE you have a track record of working with the IG in the past. 

As you look at the IGs who have performed in the past, what would 

you say that you would like to do as you get a chance to put your 

fingerprints on this IG role that would make the IG role even more 

15 

effective given you seem to have a lot of experience working with 

the IG? 

Ms. BEARD. Thank you again for the question, Senator. 

One of the areas where I would like to see some changes is more 

robust follow up on recommendations that are being made and 

making sure that the Department is taking or FERC is taking action as recommended by the Inspector General in the reports that 

are issued. 

Senator DAINES. Okay. 

I am going to pivot over and talk about energy. Energy production is a major part of our economy in Montana. We had an energy 

summit in Montana about a month ago. Looking forward over the 

next 35 years, with projections out to 2050, we had a representative from the U.S. Chamber that came and spoke. Energy consumption in the world is going to be up 84 percent according to their 

forecast, because we are going to add two billion more people to the 

planet between now and 2050. 

He said we have an abundance of traditional fuels like oil, gas 

and coal as well as renewables such as wind and hydroelectric in 

Montana. We see the importance of having a diverse energy portfolio, not only for our economy but also for our national security, 

in providing the necessary power to keep the lights on and keep 

our mobile devices charged. 

In the eastern half of our state coal is that major player. Montana has some of the cleanest coal out there, but it is becoming 

more and more obvious that this Administration is attempting to 

shut down coal and kill hundreds of jobs in Montana instead of investing in clean coal technology or in mines that produce cleaner 

coal like we have in Montana. 

There was a recent report from the Inspector General’s Office 

that recommends stopping the funding of a clean coal project ran 

by Summit Texas Clean Energy, LLC. First of all, are you aware 

of that report? 

Ms. BEARD. Senator, I’m aware the report was issued. 

Senator DAINES. I think the official number for the file was 

OIGSR1602. Did you have a chance to see what the findings were 

in that report? 

Ms. BEARD. I looked at it briefly, but I’m not that familiar with 

it, sir. 

Senator DAINES. Do you think that the potential Inspector General, as the potential IG, that you should at least have a working 

knowledge of past decisions, especially one that was as recent as 

last month? 

Ms. BEARD. Again, Senator, I have looked at it but I’m—all I’ve— 

I’m aware of the issues that was in the report. 

Senator DAINES. I will say, each year I am disappointed in the 

Administration’s lack of prioritization of clean coal technology and 

funding in its budget, and I do think we need to continue funding 

clean coal technology and do it responsibly. 

Thanks for your time. 

The CHAIRMAN. Thank you, Senator Daines. 

Senator Cassidy? 

Senator CASSIDY. Hello, Ms. Beard. Handsome family. 

16 

How important is programmatic knowledge, because clearly one 

of the things that you would bring to the table verses someone who 

might have more previous experience as an IG is that you have 

been within the Department of Administration. If you will, I can 

imagine that you could, particularly as an ethics officer have, kind 

of, studied, looked around over the years and thought well maybe 

that would be a place to investigate or this would be a place that 

would I be in a different role. Can’t say that because, obviously, as 

an ethics officer you have to think about such things. So my first 

question is how important is programmatic knowledge as regards 

the execution of your duties? I will start with that. 

Ms. BEARD. Obviously—thank you again for the question, Senator. 

Obviously I’ve been at the Department a long time, and I have 

broad general knowledge of the Department’s programs. I have 

never been in a position where I’m setting policy for the Department or actually running programs for the Department other than 

the ethics program. 

Senator CASSIDY. Except that. 

Now I am from Louisiana. I am a doctor, but I know a fair 

amount about energy just because energy is so much a part of my 

economy. So patients would come, and they did some aspect of energy and you make chit chat. 

So let me ask. Is your awareness of the issues at the DOE along 

the line of mine as a physician, you know, the people you just talk 

to over the water cooler, so to speak, or would it be of a deeper 

level? 

Ms. BEARD. It’s probably a deeper level than that, Senator. But 

again, I do not have programmatic responsibilities of those areas, 

but I have been in many meetings where issues have been discussed and I’ve learned about them over the years. 

Senator CASSIDY. How important is in depth programmatic understanding? I do not know the answer to this. I am asking how 

important is great depth of programmatic knowledge? How important is it? 

Ms. BEARD. I think to me, Senator, the advantage of somebody 

from within the Department becoming the Inspector General is 

that I’m not going to have to spend the first six months learning 

about the various programs and the acronyms and what not for the 

Department. I do have a general programmatic knowledge, but not 

an in depth programmatic knowledge. But that’s something that I 

think I can pick up quickly as we’re looking at various audits and 

inspections. 

Senator CASSIDY. So the general knowledge portion of the learning curve you have under your belt. But if I were to ask a particular question, for example, in Louisiana the Strategic Petroleum 

Reserve, that would require more research on your part? 

Ms. BEARD. I’m aware of the Strategic Petroleum Reserve and 

issues, for example, involving draw down of the reserve, but I’m 

not, I’ve never worked on an actual draw down matter. 

Senator CASSIDY. Gotcha. 

It has come to my attention that Mr. Rickey Hass, the Acting Inspector General at DOE and the former Deputy Inspector General 

for Audit Services, plans to retire. Now I gather as an ethics person 

17 

audits was not your bailiwick, if you will. You have mentioned 

that. 

Do you have a sense of who you are going to hire and, if appointed, what characteristics you would look for in such a person? 

Ms. BEARD. I have—thank you again for the question, Senator. 

I have no sense of who I would hire. It would be an open competition to fill the position. 

I would look for somebody with a strong auditing background 

and he also was in charge of investigations as well, so a strong investigation background as well. 

Senator CASSIDY. Now you also have a law enforcement responsibility. You could pack heat if you wished. 

But again, in ethics that is quite a different, I think, mindset. 

How do you adjust from the mindset of, kind of, okay, this is what 

you need to do, listen you will get in trouble if you cross the line 

and do not cross that line, but if you cross the line I have to report 

you verses up against the wall. Do you follow what I am saying? 

Ms. BEARD. Yes, Senator, I do follow what you’re saying. 

As a lawyer I take following the law very seriously. I believe in 

having a very robust investigation program within the Department, 

and I would hope I would continue making sure that we have a 

very strong law enforcement process. 

Senator CASSIDY. Okay, I get that. 

It does seem that there is going to have to be some sort of an 

adjustment in how you approach an issue. I presume the gravity 

of something which was related to law enforcement may just be 

more. 

My aide just passed me something. If I could read his writing, 

I would have another question. [Laughter.] 

I yield back. Thank you. 

The CHAIRMAN. Senator Franken. 

Senator FRANKEN. I want to thank my staff for typing out the 

questions. 

First of all, Ms. Beard, thank you for your 25 years with the Department of Energy and your dedication to serving the public good. 

Sometimes I think that when we hear criticisms of unelected bureaucrats I wish those people could meet unelected bureaucrats 

like yourself. So thank you. 

As you know probably better than anybody else in this room the 

Inspector General is constantly faced with politically heated issues 

but must remain nonpartisan and impartial to external pressures. 

Could you tell me about how you view the role of the Office of Inspector General as an independent entity? 

Ms. BEARD. Thank you very much for the question, Senator. 

To me, the Inspector General is the main watch dog for the Department, for the public as well as for the Congress. And as it was 

pointed out in the Department of Energy Organization Act, it reports it has responsibility both to the Secretary of Energy as well 

as to the Congress as far as these reporting mechanisms and making sure that issues come to public light. 

I think it’s very important. I think having a strong, independent 

Inspector General helps an agency complete its mission, and it 

really is a furtherance and a great help to the agency. 

Senator FRANKEN. Thank you. 

18 

Ms. Beard, I want to hear your thoughts about the DOE-administered mixed oxide fuel fabrication facility, the MOX facility for 

short. When construction of the MOX facility commenced in 2007, 

estimated costs for the project were about $5 billion. U.S. taxpayers 

have already spent that amount on the project, but now the expected costs have ballooned to up to $30 billion. 

While I understand it is impossible to perfectly estimate the 

costs of some of these projects, I am concerned about funding a 

project that seems to get more expensive by the day. The Office of 

the Inspector General at DOE seems to share these concerns which 

they expressed in an audit report in May 2014. 

If you are confirmed how would you follow up with the Inspector 

General’s concerns regarding the cost and management of the MOX 

project? And has DOE been doing an adequate job inspecting the 

ongoing work of the MOX facility? 

Ms. BEARD. Thank you for the question, Senator. 

I share your concern about making sure that taxpayer dollars are 

well spent. They are all of our money, and I’d like to see them 

spent wisely across all agencies including the Department. 

And as I was talking about earlier, I’d like to see a more robust 

follow up within the Office of Inspector General and some recommendations. I would ensure that whether any recommendations 

were in that particular report were implemented, whether the Department has taken actions on them and what the timeframe of 

those actions are, and if need be, do additional work at MOX because, obviously, there’s a very major project the Department has. 

Senator FRANKEN. Yes, this has expanded from an estimated $5 billion to an estimated up to $30 billion. While you are obviously 

not in a policy making position, there has to be decisions made 

about whether to spend that extra $25 billion and go forward with 

it. 

How does your role as Inspector General inform the policy makers’ decisions about whether to go forward with this, because there 

are alternative ways to use this fuel or we are attempting to make 

it fuel with this material from weapons? 

Ms. BEARD. Senator, I know you’re well aware Inspector Generals do not set policy; however, they can put out facts and information to inform policy makers so they can make better decisions. 

And so part of that process of making sure that the facts are out 

there so policy makers can use them to make decisions on whether 

something like MOX should go forward. 

Senator FRANKEN. Right, because I would think that for the policy makers there are going to be decisions that have to be made 

about this whether to go forward, and I think a lot of that will be 

based on the conclusions that the Inspector General’s Office comes 

up with. 

Thank you for your testimony, and thank you for your service to 

this country. 

Madam Chair. 

The CHAIRMAN. Thank you, Senator Franken. 

I appreciate you bringing up the issue of the MOX facility and 

how you might deal with that. There has obviously been a great 

deal of discussion about that in the Committee over, certainly, the 

past year, if not more. 

19 

I am going to ask what will probably be a very general question 

by using a specific example. The Iran deal, clearly a divergence of 

views on that. I am one who has expressed a great deal of concern 

about the Iran deal. While this Committee does not have jurisdiction over foreign affairs, there are certain aspects of implementation of this agreement that, as IG, you would have oversight of 

whether it is NNSA, DOE, EIA. They are part of the implementation and the monitoring. 

You have politics at play. I know people would be shocked to 

hear that. But you, again, are in this role as an independent entity. 

Are you concerned that you could be in situations where the Administration has clearly taken a very specific position and given 

that does it put undue political pressure on career professionals 

who may perhaps hold back on their own views because of the nature of the agreement but where they sit? 

It is a very general question and perhaps not clearly articulated, 

but it is one that we deal with in our world where how you balance 

the politics of an issue verses just being able to look straight forward at the facts and making sure that you, as an IG, are the one 

who really is intent on gaining information, factual information 

and moving forward recommendations in an unbiased and really 

not influenced by political view. I am not asking you to opine one 

way or another on the Iran deal, but I use that as an example of 

something that can be very politically charged. How will you navigate that? 

Ms. BEARD. Thank you very much for the question, Madam 

Chairman. 

I think in my role already in the General Counsel’s Office, as the 

designated agency ethics official and if I were fortunate enough to 

be confirmed as Inspector General, the key here is independence 

and being willing to follow, to find the facts, follow the law, apply 

the law and see where it goes without being concerned about 

where—without fearlessly and not being concerned on the outcome 

of no matter where it may point. To me it’s really important that 

the Inspector General have that, to be able to do that. 

I think that in the DOE Organization Act, you know, it’s clear 

that the Inspector General reports to the Secretary, only the Deputy Secretary. 

And it also is clear, you know, there’s no time limit on the position. I’ve worked previously with both, in both Republican and 

Democratic Administrations, and I think that I would be able to do 

that as Inspector General and carry that forward and be independent in that way and not worry about it. 

I also have the advantage, I will admit this, of being almost retirement eligible, so I don’t have to worry about it from that perspective either. [Laughter.] 

The CHAIRMAN. You have thought about that. 

Let me ask about contract management because so much of what 

comes through DOE is managed by contractors as opposed to Federal employees. So the task of directing and managing and overseeing and really incentivizing these contractors, I think, is important for the success of the mission. 

I have two questions here. What do you view is the DOE IG’s 

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cause that has got to be a priority? But also in evaluating and scrutinizing contractor award fees because there have been issues that 

have presented themselves in terms of mission and scope of the 

contracts and how these award fees are balanced with that. So if 

you can speak generally to the role of contract management and 

specific to award fees. 

Ms. BEARD. Thank you very much for the question, Madam 

Chairman. 

As you are all well aware the Department does the vast majority 

of its business through major contracts. I have not personally been 

involved in any award fee issues while I was in the Counsel’s Office, but clearly if you are looking at how taxpayer dollars are being 

spent at the Department that’s where the vast majority of money 

is going. 

I think the role of Inspector General, again, is policing as a 

watch dog of how prudently that money is spent. Issues like award 

fees would obviously be an issue that an Inspector General would 

look at. 

The CHAIRMAN. Let me turn to Senator Wyden. 

Senator WYDEN. Thank you very much. 

Senator FRANKEN. Madam Chair? 

Madam Chair, since you brought it up I think it would be a really good idea to ask the nominee her personal views on the Iran 

deal. 

The CHAIRMAN. I am not going to get into—— 

Senator FRANKEN. I am joking, that was just—I just wanted to 

get that out of the way. I knew that you were not asking that. 

The CHAIRMAN. Senator Wyden? 

Senator WYDEN. Thank you very much, Madam Chair. 

Ms. Beard, as we visited yesterday, Hanford and the high level 

radioactive wastes there join the Columbia River which is the lifeblood of my state and the lifeblood for everything from recreation 

to business, environmental values. This is right at the heart of the 

DNA of the people that I represent. I was there last week, and the 

Hanford site’s legacy of failed performance and retaliation against 

whistleblowers and workers who raised safety concerns is alive and 

well. 

The GAO pointed out last year $19 billion has been spent over 

the past 25 years to clean up these high level, radioactive wastes 

at Hanford. So far not a gallon, not a single gallon, of high level, 

radioactive waste has actually been treated. Under the current 

schedule the waste treatment plant will not be in full operation for 

another 20 years. If getting this waste cleaned up was not so essential to public health and environmental protection, I guess it might 

be a sequel for the movie, Money Pit. 

What I would like to know is what we talked about yesterday. 

What, as Inspector General, would you do, specifically, to end business as usual at Hanford? 

Ms. BEARD. Thank you very much for the question, Senator. 

I share your concerns about how taxpayer money is being spent 

at Hanford, and I also share your concerns regarding worker safety 

that we talked about yesterday as well. 

The Office of Inspector General has a history of issuing a number 

of reports concerning the Hanford site. If I were fortunate enough 

21 

to be confirmed, I envision that that history would continue and 

with additional reports. 

As I also mentioned I’d like to see a more robust follow up on 

the recommendations that are made in the reports issued by the 

Inspector General’s Office. And that would be a main focus of mine 

if I were fortunate enough to be confirmed, is that follow up to 

making sure the Department is actually taking the actions that are 

being recommended. 

Senator WYDEN. So I listened carefully to those words. 

You share my concerns. I cannot tell you, and I say this respectfully because I enjoyed visiting with you and I was Chair of this 

Committee so I know this is a tough job, I cannot tell you how 

many times a nominee has said, ‘‘I share your concerns.’’ Then you 

said you are going to do reports, and I cannot tell you how many 

times I heard about reports. Then something about action, although I was not really clear what that was all about. 

But that is not changing business as usual, Ms. Beard, that is 

more of the same. Now if you told me that it was your plan, after 

a report was issued, to come up with a timetable to implement the 

recommendations within a specific period of time, I might say that, 

at least, sounds like something might change. 

But what has concerned me is you have been there at the Department of Energy for 27 years, not specifically on these kinds of 

issues, and I have real questions, particularly when there is such 

a need to change business as usual and produce some new accountability and change the policies. 

When I was there last week, for example, it just seemed like it 

took forever to drag out what was going to be done to inspect the 

bottom of the really dangerous tank. I was told, well gee, technologically we couldn’t do it but we were going to look at such and 

such. Finally after going round and round there was something 

about some sort of science grant that could produce some changes. 

You are going to walk in to an area where you are going to see 

a huge array of pressing safety concerns at a time when vast sums 

of money are going to be going out the door, as has been the case 

for decades now, and it does not seem like much is going to change. 

So let me give you another round at it. I thought the last part 

of your answer at least suggested a kernel of reform. But why don’t 

you take another crack at it? 

Ms. BEARD. Thank you very much, Senator. 

I may have not been clear. Let me talk a little bit more about 

what I envision for robust follow up. 

What I’ve seen in some cases in my time at the Department is 

when it comes to reports issued by the Office of Inspector General 

is they issue a report, it has recommendations, and the Department does not do a lot with them or takes an awful long time to 

do anything with them. 

I was mentioning earlier a report I had just seen recently, those 

issued by the Inspector General, which basically found that they 

were looking at something five years later and still nothing had 

been done. And that’s not acceptable. 

And so what I was talking about from the Inspector General’s 

point of view, if I’m fortunate enough to be confirmed, is to have 

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tion. And if the Department is not taking action, to be more public 

about the action that’s not being taken and working with the Congress and working with the Secretary to make sure the Secretary 

is aware and the Congress is aware that actions are not being 

taken, if that’s the case. 

Senator WYDEN. I am over my time. I don’t know where you are, 

Madam Chair, in terms of numbers of rounds and who is where. 

Whenever you—— 

The CHAIRMAN. We are working on seconds. 

Senator WYDEN. Great, then I will wait for the second round. 

The CHAIRMAN. Senator Franken is next. 

Senator WYDEN. I will wait for that. 

Senator FRANKEN. No, go ahead, please. 

Senator WYDEN. No, no, I am—whatever. 

Senator FRANKEN. No, no, I think you are on to—— 

The CHAIRMAN. Senator Wyden, you can continue. 

Senator FRANKEN. Continue if you want. 

Senator WYDEN. I just have two other questions real briefly. 

Why don’t you furnish me in writing how you would make a 

change and a specific kind of timetable for implementing the recommendations of the Inspector General, because I know that the 

Committee under the Chair wants to move quickly. Why don’t we 

say 72 hours? Just give me some answers on the timetable. 

Second, we have a very serious problem with whistleblowers. 

I went with the Attorney General, outstanding Attorney General 

Bob Ferguson, and met with the tank farm workers who have been 

exposed to these hazardous chemical vapors. Four dozen workers 

have complained of chemical exposure in the past ten days, just in 

the last ten days. This isn’t some kind of abstraction from eons ago. 

But in ten days 48 workers have complained of chemical exposure, 

and the Department says it is not a problem. 

The workers say that they’re being threatened with losing their 

jobs. Hard to see why they wouldn’t be worried because there are 

loads of examples. These problems exist throughout the DOE complex. We saw it at Savannah River. This is an area my colleagues, 

Senators McCaskill, Markey, and I have been in together. 

What will you do to blow the whistle on the Department’s chronic 

mistreatment of whistleblowers? 

Ms. BEARD. Thank you again for the question, Senator. 

In the past I know that the Office of Inspector General has 

looked at the whistleblower issue previously. I think that it’s a very 

important issue. I think whistleblowers play a very important role 

in making sure that the public is aware and the government is 

aware of some things that are of inappropriate activities that are 

going on. And I also think it’s very important that whistleblowers 

be free of retaliation and be able to feel that they can come forward 

without fear of losing their jobs. 

In the past, as I mentioned earlier, the Office of Inspector General has looked at some matters regarding whistleblowers. If I’m 

fortunate enough to be confirmed, I would do that again. 

In addition, I know there are some matters pending right now 

within the Office of Inspector General regarding whistleblowers 

and I would work to make sure those are handled promptly and 

made—and resolve it as quickly as possible. 

23 

Senator WYDEN. I am way over my time. 

I hope in writing you will tell me specifically what would change 

because the answer you gave me on that point is virtually identical 

to what I have heard from individuals with respect to this position 

year after year. 

So hold the record open. I would like to know specifically what 

is going to change with respect to these whistleblowers. 

[The information referred to follows:] 

24 


Insert offset folio 3 here 22126.003

Susan Beard- Confirmation Hearing to Be Inspector General of the 

U.S. Department of Energy 

Before the Senate Committee on Energy and Natural Resources, 12 May 2016, 

1000, Room 366, Dirksen Senate Office Building 

Senator Wyden, thank you for your questions during the May 12, 2016 hearing on my 

nomination to be the Inspector General of the Department of Energy (DOE). As I noted at the 

hearing, I agree with you that the safety of workers at Hanford, and across the DOE complex, 

and the treatment of whistleblowers are very serious matters and they deserve the upmost 

attention by the Office of Inspector General (OIG). During the hearing you requested that I 

provided written responses to your questions concerning implementation of recommendations 

made by the Inspector General and the treatment of whistleblowers. Please find my answers to 

those questions below. 

In order to ensure a timely and accurate response to the issue you raised, I have culled the 

questions below from an initial transcript of the hearing. 

1) "How you would make a change, and a specific timetable, for implementing 

recommendations of the Inspector General?" 

If confirmed, I would start by evaluating current practices within the OIG related to the 

conduct of audits and the procedures for monitoring and following-up on 

recommendations made by the OIG in its reports. Based on this review, I would 

immediately begin to intensify OIG efforts in this critically important area where 

appropriate. This would include benchmarking the practices of the Department of 

Energy OIG against those of other Inspectors General in comparable agencies. As a 

secondary but equally important step, I would use the review to highlight and make 

recommendations on how DOE should improve its efforts to respond to 

recommendations and implement recommendations from the Department's OIG. 

Although I cannot make any predetermined judgments on the outcome of this review, if 

I am confirmed, I would propose to take the following initial steps regarding the general 

practices ofthe OIG: 

(1) Work with internal and external stakeholders, including the Congress, concerning 

prominently highlighting within the audit or inspection report the timeframe in 

which the Department of Energy commits to take action in response to OIG 

recommendations. In cases in which the Department does not specify a time frame, 

that would be highlighted as well. In a related vein, I am interested in learning 

whether and to what extent other Inspectors General assign probable completion 

times for any recommendations. 

(2) Going forward, as part of each audit and inspection, I will determine whether the 

Department has appropriately established commitments for major initiatives. In 

addition to describing the status of such commitments as part of the normal 

reporting process, I would also commit to notifying Congress and creating a publicly 
25 


Insert offset folio 4 here 22126.004

Susan Beard- Confirmation Hearing to Be Inspector General of the 

U.S. Department of Energy 

Before the Senate Committee on Energy and Natural Resources, 12 May 2016, 

1000, Room 366, Dirksen Senate Office Building 

available summary of DOE commitments and whether such commitments were met, 

in whole, in part, or not at all. 

(3) While all OIG recommendations are aimed at assisting the Department in its efforts 

to execute its mission more economically, efficiently, and safely, some OIG 

recommendations have highly significant fiscal ramifications or involve critical 

issues, such as worker or public safety. If confirmed, I will work to ensure 

recommendations associated within these key areas are closely monitored and 

followed to ensure the Department is taking prompt, decisive action; and that any 

failure to act is properly documented and addressed, including highlighting 

deficiencies to Members of Congress, the public, and any specific stakeholders or 

other federal agencies as appropriate. For recommendations that involve an 

imminent or near-term serious threat to human health or safety, I will issue targeted 

management alerts and reports for immediate action that can be readily understood 

by the Department, Members of Congress, and the public. In such instances, I will 

also work with appropriate offices within the Department which directly notify 

public health officials so that they will be aware of such an imminent or near-term 

serious threat to human health or human safety. For broader OIG investigations, 

particularly those that include recommendations for Departmental activities that 

have highly significant fiscal ramifications, I will ensure that the OIG reports and 

recommendations are specifically flagged for awareness by all stakeholders, 

including Members of Congress, and the committees responsible for authorization 

and appropriation of DOE funding. 

2) "What will you do to blow the whistle on the Department's chronic mistreatment of 

whistleblowers? I'd like to know specifically what is going to change with respect to 

these whistleblowers." 

If confirmed, I would address these concerns on several levels. First and foremost as 

Inspector General, I would be charged with protecting and finding the truth about 

information that is brought to OIG by a whistleblower. One of my greatest 

responsibilities would be to those who come to me with information of wrongdoing. 

To this end, I understand the General Accounting Office (GAO) is currently working on 

two reports related to whistleblower protection. I understand that one report, which is 

focused on DOE, is nearing completion and the other is just starting. If confirmed, I 

would review the soon to be issued report in order to determine whether any additional 

audits should be performed. My understanding is that the GAO report that is about to 

start will be a multi-agency report and will include an evaluation of Offices of Inspectors 

General efforts to address whistle blower protection efforts. If confirmed, I am 
26 


Insert offset folio 5 here 22126.005

Susan Beard - Confirmation Hearing to Be Inspector General of the 

U.S. Department of Energy 

Before the Senate Committee on Energy and Natural Resources, 12 May 2016, 

1000, Room 366, Dirksen Senate Office Building 

committed to promptly reviewing and implementing any appropriate recommendations 

for the Department's OIG that GAO makes. 

I also commit, if confirmed, to act promptly to address any mistreatment of 

whistleblowers reported to the OIG, including highlighting the issue, as appropriate, 

with all relevant stakeholders and calling for swift attention and action by the 

Department's leadership to address any shortcomings or specific remedies deemed 

necessary. 

Additionally, I understand that some Inspectors General have undertaken efforts to 

coordinate information regarding whistleblower complaints with the Office of Special 

Counsel and relevant authorities responsible for handling contractor employee 

whistleblower complaints. I support such efforts and will work in a similar manner if 

confirmed as Inspector General. I will also seek to determine best practices regarding 

the treatment of whistleblower complaints within the scope and function of the OIG and 

implement any needed improvements. 

More specifically, I am also aware that the Department and the OIG are currently 

engaged in a range of outreach efforts to educate Federal and contractor employees 

about the rights of whistle blowers and whistleblower protections. I fully support those 

efforts and, if confirmed, I will continue this engagement, including by instituting 

improvements within the OIG as necessary. 

My understanding is that the OIG currently uses a number of methods to inform both 

Federal employees and contractor employees of their rights and responsibilities relating 

to whistleblower protections, practices, and procedures. These include: a 

whistleblower rights section of the OIG's website, highlighting Inspector General Hotline 

information, DOECASTS (DOE all-employee email communications) and Fraud 

Awareness Briefings. If confirmed, I commit to reviewing and broadening these outreach 

and education efforts as needed. 

For instance, the OIG's Fraud Awareness Briefings are in-person briefings conducted by 

OIG law enforcement officers. Both federal and contractor employees are informed of 

these briefings and may choose to attend. It is my understanding that these briefings 

contain considerable information about the rights of whistleblowers and the protections 

afforded to them. I strongly believe that in-person briefings are a powerful educational 

tool. If confirmed, I am inclined to create video and pod cast training on these topics to 

supplement the in-person briefings to prevent any instance in which employee 

attendance at these briefings may be impacted by fears of retaliation for even attending 

the briefing. This training would be accessible on a public website that contractor 

employees could watch or listen to from the privacy of their home without the 
27 


Insert offset folio 6 here 22126.006

Susan Beard- Confirmation Hearing to Be Inspector General of the 

U.S. Department of Energy 

Before the Senate Committee on Energy and Natural Resources, 12 May 2016, 

1000, Room 366, Dirksen Senate Office Building 

knowledge of their employer or fear of retaliation. These new outreach and training 

efforts would include information about the requirements for protecting 

whistleblowers, address concerns expressed by whistleblowers, and discuss the 

consequences for failing to protect whistleblowers. 

In sum, as I stated in my testimony to the Committee, I am honored to be nominated for 

the position of Inspector General and take very seriously the role and responsibilities of 

the Office of Inspector General to provide independent and effective oversight of the 

Department to advance the Department's mission, support its workforce, and maintain 

the enduring trust of the public for which it serves. 
28 

Senator WYDEN. Thank you, Madam Chair. Thank you for the 

extra time. 

The CHAIRMAN. Thank you, Senator Wyden. We would ask that 

the nominee please provide the information. As Senator Wyden has 

said, the more expeditiously we can get responses to the members’ 

requests, the more quickly we can move. So thank you, Senator 

Wyden and thank you, Senator Franken. 

I have just one final question and then we will wrap up here this 

morning. 

There has been great discussion about your years of service within the Department, 27 years within the Department of Law. That 

is considerable legal background. I also understand your comment 

about not being involved in the programmatic areas but having a 

very keen focus on the ethics and other areas as well. 

But so much of what IGs are tasked to do relates to the auditing 

that goes on. Looking at your background I do not see anything 

that relates to direct auditing experience. So if you can give me either anything that you might think would be helpful in that regard 

in terms of your experience or inform me how you would intend to 

manage a group of professionals who perform these audits and inspections and evaluations without having performed such roles 

yourself? 

Ms. BEARD. Thank you very much for the question, Senator. 

Well, I’ve never been an auditor. I’m not an accountant. I do 

have a background in a lot of appropriations areas which does have 

some similar aspects to it. 

The CHAIRMAN. Did you get that within DOE? 

Ms. BEARD. Yes, I do appropriations work for the Department. 

But in addition, if I was fortunate enough to be confirmed, there 

are many other Inspector Generals who are lawyers. And I know 

there are certain continuing education classes you can take regarding the auditing function that some of them, I think, are offered by 

the Council of the Inspectors General on Integrity and Efficiency 

(CIGIE) and other groups. And that is something that I would definitely do to make sure I could do that and so I can help make sure 

while I’m supervising the teams of auditors, that I have the necessary background in that area. 

The CHAIRMAN. Well it is, indeed, a big task and an incredibly 

important position, and as I noted in my comments, for all intents 

and purposes this is not just an appointment to a position that 

lasts for a term of an Administration but continues beyond. So the 

process, the vetting process, that we are going through right now 

as a Committee is an important one. As you know, it will not be 

the only one that you will go through, but taking that first cut here 

this morning before the Energy Committee is important. 

I appreciate your responses. I will appreciate, as I know other 

colleagues will, your prompt replies to any questions that you feel 

need to be supplemented today. 

Again, we appreciate your willingness to step forward. To your 

family who have joined you this morning and have been very patient with the time, thank you very much. 

We stand adjourned. 

[Whereupon, at 11:14 a.m. the hearing was adjourned.] 

(29) 

APPENDIX MATERIAL SUBMITTED 

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U.S. Senate Committee on Energy and Natural Resources 

May 12, 2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

Questions from Chairman Lisa Murkowski 

Question 1: How will you shift from defending the Department of Energy's (DOE or 

Department) interests or serving as a counselor or an advocate to scrutinizing DOE's 

actions to eliminate waste, fraud and abuse? 

My role at the Department of Energy, has been: (1) to interpret and apply the law, 

in accordance with my understanding of the law, (2) to determine and then apply 

my understanding of the facts, and (3) to serve as an advocate for legal 

interpretations based on law and facts, while 4) taking into account where 

possible the desired policy direction of DOE policymakers. 

My role, if I were to be confirmed as the Inspector General (IG), would be in 

many ways very similar to my current role at DOE in a general legal sense. It 

would be (1) to investigate and to determine the facts, (2) to interpret and apply 

the law, in accordance with my understanding of the law and of the facts, and (3) 

to serve as an advocate for the impartial, lawful application of the law to the facts 

as they are known. 

The largest difference would be that the law itself- the will of Congress as 

codified would be the sole direction. The law is clear that waste, fraud and 

abuse are to be forcefully addressed, and as such, my duties would be clear. If 

confirmed, I am committed to executing this duty with purpose and independence, 

regardless of my past experience and proximity to the Department. 

As an attorney at DOE, I have frequently been a consumer of audit reports and 

fact finding investigation reports. 

As the Inspector General, my duty would be to ensure that clear, cogent, factually 

accurate and well-reasoned audit, inspections and investigations are conducted 

and that reports of such audits, inspections and investigations are presented to 

their stakeholders. 

Inasmuch as I have been a consumer of such audit and inspection reports and 

consulted on legal issues in some investigations, and I have been responsible for 

the creation of clear, cogent, factually accurate and well-reasoned legal opinions 

and memoranda, I believe that I am well positioned to make such a shift. 

Question 2: What steps will you take to ensure the independence of your office as it 

audits and investigates all operations of DOE, including those arenas that may have 

historically been under your jurisdiction as a DOE lawyer? 
31 


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U.S. Senate Committee on Energy and Natuml Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

The DOE Office of Inspector General (OIG) has a long history of operating 

independently of DOE. Independence, transparency and impartiality are hallmarks 

of the OIG. If confirmed, I am committed to upholding these values and 

protecting the long history of the Department's OIG in successfully executing its 

independent oversight role. 

If confirmed, I would maintain my independence in all circumstances. As I noted 

during my testimony, I was not deeply involved in programmatic actions and as 

such, there are few specific issues that would require that I recuse myself. In the 

event that the OIG becomes involved in a matter over which I had direct 

involvement, I would not hesitate to recuse myself from those matters. 

Question 3: Will you make sure that any Member promptly receives information he or 

she requests, or is provided a prompt and clear explanation as to why that information is 

being withheld from release? 

Yes. If confirmed, I will work to ensure the OIG is fully responsive to Congress 

in recognition of the important oversight role of the Legislative branch, and 

particularly of the Committees of jurisdiction for the Department of Energy. 

Question 4: With respect to the authority of an Inspector General (IG), what is your view 

of the recent Office of Legal Counsel opinion that concludes that an agency may 

withhold information from an IG if that information is protected by certain statutory 

nondisclosure provisions? 

a. Is there information that you believe an agency may withhold from its 

IG? Please explain your response. 

No. I agree with the position that was taken by the Department of 

Justice's OIG that section 6(a)(l) of the Inspector General Act of 1978 

grants an Inspector General an unqualified right of access to Department 

records relevant to audits, investigations and reviews that are being 

undertaken. 

b. With respect to IG independence, how should an IG balance the 

necessity that the IG' s office retains an efilcient working relationship 

with agency ofilcials with the need for IG independence from agency 

influence during an investigation? 

The Inspector General must uphold its primary duty to be independent 

and objective. To be independent and fully execute its duties, the OIG 

should have a productive working relationship with agency officials. In 

those rare situations where that is not possible, such as potentially 

2 
32 


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U.S. Senate Committee on Energy and Natuml Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

criminal investigation of a senior agency official, the primary duty of the 

OIG remains to act independently and in full accordance with the law. 

The conduct of OIG business must be done without fear of or favor 

towards any agency official, and solely in accordance with the law, the 

facts, and best practice standards. 

c. Is it appropriate for agency officials to participate in an IG investigation? 

Please explain your response. 

It is not appropriate for agency officials outside of the OIG to conduct an 

IG investigation or act on behalf of the OIG. Non-OIG officials must 

not participate more than the minimum needed for the conduct of an 

investigation, such as a witness or to provide information that is needed 

for the investigation. What is never appropriate is that an agency official 

either conduct an IG investigation or be privy to more than the minimum 

needed to successfully pursue such as investigation. 

d. To what degree should an IG comply with agency requests to alter a 

report at the request of the agency? 

The IG should never alter a report at an agency's request, particularly if 

the agency request is an attempt to modify or influence the outcome of 

an OIG report or action. Likewise, reports should never be delayed to 

accommodate an agency's desire to avoid publication until a defense can 

be developed or constructed. 

However, under limited circumstances, a report may require amendment 

if the agency provides new facts or information not previously disclosed 

to the OIG. In such instances, the OIG must be responsible for making 

clear the facts and rationale for any deviation from the OIG's initial 

conclusion. For example, if a draft report is provided to the agency for 

comment, and the agency officials realize that they have provided 

incomplete, inaccurate or misleading information, they may then choose 

to amend the information provided. If such new facts or information is 

provided to the OIG, then that information, once examined for accuracy, 

completeness and applicability, may then be used to amend or alter the 

report. 

Ouestion 5 If the purchase agreement for Iranian heavy water is completed, how will 

you ensure that the excess heavy water, purchased by the U.S. is used for non-nefarious 

purposes? What kind of vetting process will companies go through to purchase the heavy 

water from the DOE? Do the proper authorizations allow such a resale, and are the proper 

oversight mechanisms in place for such purchase agreements? 

3 
33 


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U.S. Senate Committee on Energy and Natuml Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

The responsibility for developing and implementing safeguards and internal 

controls over the acquisition and use of heavy water rests with the Department of 

Energy. As noted in my previous answer related to independence, the OIG cannot 

make and later audit policies for which the OIG participated in their development. 

Question 6: The National Nuclear Security Administration (NNSA) has an essential role 

in protecting American lives, monitoring and safeguarding radiological threats. With the 

cost ovemms at various NNSA projects, including the MOX project, there is a limited 

budget for this important nuclear security work. 

a. How will you ensure that taxpayer dollars are spent effectively to 

further the NNSA mission? 

If confirmed, I would continue the practice the OIG has undertaken to 

focus particular attention to ensure Departmental projects at the 

highest risk for significant cost, schedule and project management 

problems are audited and inspected. 

Based on the results of those efforts and as appropriate, I would 

recommend that the Department take action necessary to resolve any 

findings with an expectation of the Department providing a clear and 

detailed response. As with all recommendations, I would ensure that 

corrective actions are tracked to resolution and that follow-up reviews 

are conducted as necessary. 

b. How will you ensure the American people that countries like Iran are 

meeting international obligations and not pursuing a nuclear weapon? 

If confirmed, I would work to ensure that appropriate levels of 

oversight are in place and applied to determine whether the 

Department is fulfilling its obligations. Findings from such efforts 

would be provided to those in Congress with oversight responsibilities 

for such agency efforts. 

Question 7: How will you assure the American taxpayer that DOE has properly 

estimated the costs of future projects, including the proposed MOX alternative, the down 

blend and disposal option? How will you conduct oversight of current projects, including 

the MOX project to hold contractors accountable? 

If confirmed, I will uphold the OIG's mission to investigate waste, fraud, and 

abuse. Consistent with principle, and as stated in response to question 6(a), I will 

maintain the OIG's focus on Departmental projects at the highest risk for 

significant cost, schedule and project management. 

Question 8: The law states that Yucca Mountain is the nuclear waste repository for the 

nation. I have cosponsored legislation, called the Nuclear Waste Administration Act, to 

4 
34 


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U.S. Senate Committee on Energy and Natuml Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

establish a consent-based-sited interim storage facility. This would also authorize the 

creation of the Nuclear Waste Administration, which would oversee the nuclear waste 

program, effectively removing it from the responsibility and jurisdiction of DOE. If this 

legislation is not turned into law, how do you plan to conduct oversight of the civilian 

nuclear waste program? 

If confirmed, I pledge to work with Congress to understand what information 

from the OIG would be of use to Congress as it considers this complex set of 

issues. I will also seek to understand from other stakeholders what information 

from the OIG would be of use to advance the goal of safely storing nuclear waste. 

My goal would be for the OIG to impartially and objectively provide wellreasoned, cogent and factually accurate analyses of the law and agency policies as 

they have been implemented and applied to the situation and facts. 

Question 9: How will you prioritize office of inspector general (OIG) resources when 

determining which reviews and investigations to undertake? How will you ensure that 

information from outside the government that may be relevant to an inquiry or an 

investigation will be considered by OlG personnel and accounted for in reports provide to 

Congress and the public? 

It is my understanding that the OIG currently employs a risk-based approach to 

resource allocation. The approach evaluates factors such as cost, previous audit 

coverage and adverse findings, known cost and schedule issues, etc. Projects are 

then scored and the highest risk projects are chosen for review. To help ensure 

that lower cost/risk projects are not immune from audit coverage and to help serve 

a deterrent effect, certain projects that do not meet the high risk criteria are 

subjected to review. 

Where appropriate and when considered relevant to the audit, inspection, or 

investigation, I would ensure that information from outside the government is 

considered during each of our efforts. 

Question 10: What assurances will you provide the committee that you will keep 

Congress informed of serious problems, abuses and deficiencies in programs 

administered or financed by DO£? 

If confirmed, I commit to inform the Congress of these matters when they are 

revealed by OIG efforts. 

Question 11: What are the most effective ways that Congress can communicate to you its 

priorities for the DOE IG? Is there information that you could foresee withholding from a 

proper formal inquiry from Congress? If so, please include in your answer the legal 

authorities under which such information must or may be withheld. 

5 
35 


Insert offset folio 12 here 22126.012

U.S. Senate Committee on Energy and Natural Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

If confirmed, I pledge to make working with Congress a top priority. A key 

element of this priority is to engage in frequent communication between DOE IG 

and Congress as needed to support the mission of the OIG. I believe that frequent 

interaction by me and my staff would provide me with the most effective way to 

communicate Congressional priorities. If confirmed, I will uphold my oath to be 

fully responsive to Congress in the execution of my duties as Inspector General. I 

will personally be available to all Members, and I will seek to be available to the 

maximum extent possible to your staff to directly hear from you what those 

priorities are. 

Additionally, I am not aware of any circumstances with the scope of the OIG 

where it would be appropriate to withhold information from a proper, formal 

inquiry from Congress. The duty of the Inspector General under statute is to the 

Congress, as well as the Secretary, and I will fully discharge that duty, should I be 

confirmed. 

Question 12: In August 2014, 47 Inspectors General wrote to Congress regarding the 

importance of access to records at federal agencies and their difficulties in obtaining such 

infonnation from this Administration. DOE's then IG, Gregory Friedman, declined to 

join that letter. 

a. If you know, please tell us why the Department's IG decided against signing on. 

I personally discussed this matter with the former IG. While I cannot speak for 

Mr. Friedman, he indicated to me that he did not sign the letter because he did not 

view this matter as a problem at the Department. 

b. Do you have independent knowledge of an occasion where the Department did 

not respond to a request from the IG or from Congress for access to Departmental 

employees or information? 

I do not have such knowledge. 

c. If not, what indirect understanding do you have about the experience of the IG's 

office with respect to gaining access to employees or information at or from the 

Department of Energy? 

I have no knowledge that the Department has ever failed to respond to a request 

for information from the OIG. lam aware, however, that there have been limited 

instances when individual employees initially objected to providing information, 

but ultimately cooperated with the OIG's request. 

6 
36 


Insert offset folio 13 here 22126.013

U.S. Senate Committee on Energy and Natuml Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

Question 13: Do you commit to safeguarding the integrity of the Energy Information 

Administration as an independent statistical agency of the United States government? 

Yes. The Energy Infonnation Administration (EIA) is established by statute, and 

statutorily cannot be required by any officer or employee of the Department to 

obtain his approval in connection with the collection or analysis of any 

information. Moreover, EIA cannot be required, prior to publication, to obtain the 

approval of any other officer or employee of the United States with respect to the 

substance of any statistical or forecasting technical reports which it has prepared 

in accordance with law. 

As an element within the Department, EIA is expressly subject to oversight by the 

OlG. The OIG is responsible for examining compliance with the law, and I 

would therefore ensure that there is a process to examine, as appropriate and 

warranted, whether the independence ofEIA to collect, analyze, publish or 

forecast is maintained both by EIA and by the rest of the Department. 

Question 14: IGs often have legal or auditing backgrounds. Your resume includes 

various law-related positions in the Department and elsewhere with the federal 

government, but indicates no direct auditing experience. How will you ensure that your 

office meets or exceeds the standards of the Generally Accepted Government Auditing 

Standards as well as the Quality Standards for Investigations, among other IG quality 

standards requirements? 

Based on my interactions with the OIG during my tenure at the Department, I 

believe that the OIG has a strong and well-qualified senior leadership team in 

place. If confirmed, I would rely on the expertise of those audit, inspection and 

investigation professionals and their staff to advise me on those matters. As noted 

in my response to questions #17 below, my understanding is that peer reviews 

required by professional standards have found that the current audits and 

investigations functions comply with all quality standards. I plan to complete the 

continuing professional education necessary for me to gain a working 

understanding of each of these disciplines. 

Question 15: The 2016 report "Management Challenges at the Department of EnergyFiscal Year 2016" identified several areas as issues for DOE going forward, such as 

Contract Management, Cybersecurity, Environmental Cleanup, and Infrastructure 

Modernization. How can the OIG help improve the performance of DOE in these areas? 

The OIG plays an important role in helping to improve the Department's 

performance in these critical areas through focused audits and inspections, 

7 
37 


Insert offset folio 14 here 22126.014

U.S. Senate Committee on Energy and Natural Resources 

May 12, 2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

producing recommendations to address any weaknesses discovered. Tracking and 

follow-up on recommendations are critical to ensuring that the Department 

sustains any corrective action taken in response to the findings. 

Question 16: Your employment background includes several federal positions serving in 

the capacity of an assistant and deputy in the federal government. 

a. In these positions, how many employees did you manage? 

In the supervisory positions I held before I became the Assistant General 

Counsel for General Law in 2004, I generally was the direct supervisor for 

less than I 0 employees. I currently supervise 23 employees in addition to 

a revolving group of legal fellows. In addition, with regard to the 

Department's ethics program, I direct approximately 72 other employees 

across the DOE Federal complex concerning how to carry out their duties 

with regards to administering the Department's ethics program. 

b. How has your previous management experience provided you the ability 

to serve as the head of an office with an FY2015 budget appropriation of 

$41 million and 277 full-time equivalent employees? 

My management experience has provided me with skills in the 

administration of budgets, personnel management, and other matters. If 

confirmed, the IG position will also require thought leadership on issues, 

and my role in ensuring that DOE has an active and well-respected ethics 

law program has given me the ability to provide thought leadership on 

issues, including to my peers in other agencies. 

c. Given the often technical nature of DOE's missions areas, do you think 

the staff of the DOE IG is adequately trained in nuclear physics, 

engineering, and other technical fields to be able to interact with DOE 

employees and their contractors to adequately scrutinize DOE programs 

and project? 

It is difficult for me to assess the answer to this question fully in my 

current position, but if confirmed, I would review both the overall capacity 

and issue expertise of the current OIG staff to ensure it was adequate to 

fully carry out the mission of the office. Within this limitation, my current 

understanding is that the OIG is strongly staffed with very capable and 

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U.S. Senate Committee on Energy and Natuml Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

experienced individuals and that additional technical expertise is obtained 

by staff when needed to address particular topics. I strongly support 

maintaining qualified staff and believe that OIG staff must have access to 

sufficient expertise to fairly and independently evaluate the 

implementation oflaw and policies. 

Question 17: According to the DOE IG website, in 2012, the Treasury Inspector General 

for Tax Administration performed a peer review of the DOE IG auditing operations and 

the Department of Justice Inspector General peer reviewed the DOE IG's investigative 

operations. Both the auditing and investigative operations were found to be in compliance 

with required quality standards. Peer reviews of IG auditing operations are required every 

three years. However, September 2015 marked a three-year period between audit 

operations peer reviews for the DOE IG so it appears that the Department is now overdue 

for its peer review. 

a. Are you aware of any ongoing peer review of the DOE's auditing or 

investigative operations? 

My understanding is that the most recent peer review for the OIG' s auditing 

function was completed by the Department of Defense Inspector General on 

March 29, 2016. The OIG transmitted the results to the Secretary and the 

appropriate Congressional oversight committees on May 6, 2016. The results 

were posted to the OIG web site on May 9, 2016. The link is: 

http:/ I energy. gov /sites/prod/fil es/20 l6/05/f31 /Department%20of'l/o20Energy% 

20Peer%20Review%20for%20the%20Fiscai%20Year%20Ending%20Septem 

ber%2030%202015%20(002).pdf 

The investigation function was the subject of a peer review by the Department 

of Veteran's Affairs OIG in July 2014. The review revealed that the 

investigation function complied with quality standards. The next scheduled 

peer review will be performed by the Department of Transportation OIG 

during the February- April 2017 timeframe, consistent with Council of 

Inspectors General on Integrity and Efficiency established schedule and 

frequency guidelines. 

b. If there are no ongoing or recently completed peer reviews conducted, how 

long would you need to prepare the DOE IG for such peer reviews to ensure 

quality standards? 

As referenced in response to questions (a), my understanding is that both 

required peer reviews were completed on schedule and both revealed that the 

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U.S. Senate Committee on Energy and Natuml Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

audits and investigations functions are meeting applicable quality standards. 

See: 

Question 18: The IG's Work Plan for Fiscal Year 2016 shows that the Western Audit 

Division will be looking at the Used Nuclear Fuel Disposition program. 

a. What aspects of this program are being examined? 

My understanding is that the OIG plans to review the types of R&D being 

performed regarding waste disposal in deep boreholes. It also plans to 

review actions that were taken in response to the $150M in funding 

provided by Congress in FY15 to have the Department continue statutorily 

required activities for the Yucca Mountain license application. 

b. Will this audit look at the program's difficulties in getting state and local 

approval for drilling deep boreholes for research? 

My understanding from the OIG is that the General Accounting Office 

(GAO) recently began work in this area. The Department's OIG is 

coordinating with GAO to determine the extent of its involvement and 

may modify the OIG approach to avoid duplication of effort. 

Question 19: Environmental remediation at DOE's legacy nuclear defense and energy 

research sites is a $6 billion annual responsibility for the agency. How can OIG help 

improve DOE's risk-based strategy (that is, giving priority to funding the highest risk 

activities that threaten health and safety or further environmental degradation) for the 

evaluation of environmental remediation efforts for nuclear defense sites? 

The OIG can evaluate the DOE risk-based strategy, for ways it could help 

improve that strategy. Among things that I would consider, ifl were to be 

confirmed, is whether the in-depth expertise of any outside entities might assist 

the DOE. I have been advised by the OIG that the OIG has audited the 

prioritization process several times. If confirmed, I pledge to review this matter 

as necessary. 

Question 20: Does OIG have any plans to evaluate the Title XVII program in order to 

assess the functional performance of the program office, and determine reasons for the 

dearth of projects within the Title XVII Section 1703 program? 

I do not have independent information on this point in my current position, but 

my understanding from the OIG is that during FY 2017 the OlG plans to review 

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U.S. Senate Committee on Energy and Natural Resources 

May 12, 2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

selected projects within the Department's loan guarantee program under Title 

XVII, Section 1703. 

Question 21: What formal relationship, if any, exists between the Federal Energy 

Regulatory Commission (FER C) and the DOE OIG? What office, if any, fulfills the 

functions of an IG for FERC? What should the relationship be between DOE OIG and 

FERC? How familiar are you with the mission and programs of FERC? 

By statute, the DOE OIG serves as the Inspector General for FERC. If confirmed, 

l will continue to exercise appropriate oversight of the FERC, as well as 

enhancing my existing knowledge ofFERC's mission and programs. 

Question 22: Today's evolving natural gas and electric markets require increasingly 

sophisticated data collection and analysis for effective oversight. Both natural gas and 

electric energy are traded in a variety of ways in a variety of markets which range from 

extremely complex transactions, requiring in-depth and time consuming data analysis, to 

relatively straightforward one-to-one interactions. Do you believe that the DOE-IG's 

office has the technical capabilities to provide oversight ofFERC's market manipulation 

enforcement activities? 

In my current position, I am not familiar with the specific technical capabilities of 

the DOE IG regarding oversight ofFERC market manipulation civil enforcement 

activities are. l would, if confirmed, determine what those capabilities are, and 

whether they are appropriate and sufficient to provide the appropriate level of 

oversight. 

Question 23: FERC performs detailed transaction analysis throughout the lifecycle of 

market manipulation investigations. This forensic analysis, which requires the assessment 

of millions oflines of sensitive data, allows FERC to create a more complete picture of 

the trading activities under review. 

a. To what extent is the DOE-IG's office equipped to analyze such data? 

In my current position, I am not familiar with the specific technical 

capabilities of the DOE IG to analyze such trading data. I would, if 

confirmed, determine if the OIG' s current the technical capabilities and 

expertise are sufficient to conduct the appropriate level of oversight of 

FERC activities. For example, l might consult with IG personnel at other 

agencies that examine market manipulation, such as the Securities and 

Exchange Commission and the Commodities Futures Trading 

Commission. 

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U.S. Senate Committee on Energy and Natuml Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

b. Does the IG have the analytic capacity to help FERC use its data to 

effectively eliminate waste, fraud, and abuse? 

The responsibility of the DOE IG is to provide independent oversight of 

FERC, including within one of the OIG's central missions of addressing 

waste fraud and abuse. If confirmed, I would review the OIG's 

capabilities in this area to ensure the appropriate level of oversight can be 

conducted. 

Question 24: In furtherance of its enforcement efforts, FERC opened 19 new 

investigations in fiscal year 2015, and closed 22 pending investigations with either no 

action or a PERC-approved settlement. The settlements involved agreements with 11 

separate subjects, assessing a total of approximately $26 million in civil penalties and 

disgorgement of nearly $1 million. Six of these matters involved market manipulation, 

four involved violations of reliability standards, and one involved violations of tariff 

provisions. 

a. Some have suggested that the settlement process at FERC obscures the 

definition of what constitutes market manipulation. Do you agree or 

disagree? Why? 

In my current position, I am not familiar with specifics of the civil 

enforcement process ofFERC or of its settlement process. Should I be 

confirmed as the Department's Inspector General, I would become 

familiar with this process to determine whether the OIG' s capabilities in 

this area are adequate to ensure the appropriate level of oversight. 

b. Do you believe the DOE-IG's office should have a role in matters 

regarding the due process afforded to entities facing market manipulation 

accusations? 

As noted previously, to remain independent, the OIG must not involve 

itself in programmatic or regulatory functions. The OIG' s role is to 

evaluate the extent to which FERC's processes are appropriate, are being 

followed, and are subjected to quality control procedures. If confirmed, l 

would familiarize myself with these due process protections to determine 

whether the OIG's capabilities in this area are adequate for conducting the 

appropriate scope and level of oversight. 

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U.S. Senate Committee on Energy and Natuml Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

c. In your opinion and in light of the work that DOE's OIGundertook in 

response to correspondence from Senators Barrasso and Collins, does 

FERC have sufficient organizational "separation" between its functional 

review of mergers, acquisitions and corporate transactions, and the 

Commission's oversight of energy markets? 

In my current position, I am not familiar with specific issue at the FER C. 

However, if confirmed, I would familiarize myself with the issues 

surrounding the FERC's review of mergers, acquisitions and corporate 

transactions, and oversight of energy markets to determine whether the 

OIG's capabilities are adequate for conducting the appropriate scope and 

level of oversight in this area. 

Question 25: Do you believe the co-existence of the Office of International Affairs at the 

Department of Energy and the Bureau of Energy Resources at the Department of State 

gives rise to potential duplicative efforts? 

In my current position, I am not familiar with the specifics of this issue. 

However, if confirmed, I would research this issue further to determine if there is 

an appropriate role for the OIG to assess this topic. 

Question 26: The Department of Energy frequently contracts to outside consultancies to 

produce economic and technical analysis. Do you believe it is appropriate for the 

Department to delay the public release of these completed reports, which are funded by 

taxpayer dollars, until such time as it is deemed politically expedient? Or should such 

public reports be released in a timely fashion even if their political consequences may be 

inconvenient? For example, DOE delayed the public release ofNERAEconomic 

Consulting's LNG Exports study in 2012 until after the election. Do you believe that 

delay was appropriate? 

In my current position, I have not been involved with nor received any 

information on this study. However, in general, I do believe that studies funded 

with taxpayer resources should be made available in a timely and transparent 

fashion, as appropriate, and free of any political considerations. 

Question 27: The Strategic Petroleum Reserve is currently undergoing an extensive longrange review by the Department and outside experts. 

a. Do you believe expensive modernization decisions should be made based 

upon this review? 

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U.S. Senate Committee on Energy and Natuml Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

While I am generally aware that such review is in process and was 

recommended by the OIG, l do not have information within the scope of 

my current position at the Department regarding any preliminary findings 

or results of such review. If confirmed, I will continue to exercise the 

OIG's appropriate role in this review, including using the review to take 

any actions within the scope of the OIG. 

b. Would it be ill-advised for the Department to carry out such actions even 

before the review is completed? 

Generally, other than to address exigent health, safety or operational 

needs, or address specific issues related to waste, fraud, or abuse, I am not 

aware of any efforts to extensively modify the Strategic Petroleum 

Reserve facilities until information supporting such large-scale 

modernization efforts becomes available, as well as information regarding 

the benefits, costs and effectiveness of any such extensive modifications. 

Question 28: In 2012, the U.S. Department of Treasury Inspector General began an 

investigation into a number of U.S. solar companies' participation in the 1603 Treasury 

grant program. The concern was and is that these companies may have over-valued their 

solar projects to inflate the value of the grants received from the federal government in 

lieu of the 30 percent investment tax credit as part of the 1603 grant program. As of 

December 31, 2015, $24.9 billion in such cash grants had been awarded through this 

program. Yet, the Department of Treasury's investigation is apparently still ongoing and 

there has not been any update given since I, along with several other Senators specifically 

asked for one in a letter on November 13, 2015. In your view, is this kind oftimeline for 

an investigation of this nature reasonable? 

As a public official, I strongly believe information should be provided to 

Congress to conduct its oversight and responsibilities as soon as possible. With 

that said, I have no information regarding the complexity or difficulties involved 

in conducting the specific investigation to which this question refers. 

Question 29: SolarCity, specifically, had reportedly received about $501.3 million in 

1603 cash grants as of October 30, 2015. If the Department of Treasury's investigation 

eventually reveals wrongdoing on the part of SolarCity or any of the solar companies 

being looked into, won't they have been allowed to potentially continue these bad 

practices for several years while the investigation was ongoing? How would you 

anticipate handling this type of investigation in your role as the Department of Energy's 

Inspector General? 

I am not familiar with this investigation. If confirmed, I would look into whether 

the DOE's OIG has an appropriate role in this Department of Treasury 

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U.S. Senate Committee on Energy and Natural Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

investigation. Should I be confronted with a similar investigation, I would 

endeavor to complete it as soon as possible. 

Question 30: DOE is currently undertaking a rulemaking to consider new energy 

conservation standards for residential furnaces. In February, 2015, DOE issued its notice 

of the proposed rulemaking that would increase the energy-efficiency standard for 

residential non-weatherized gas furnaces. The rulemaking process has been somewhat 

contentious, as there remain serious concerns from some stakeholders about the potential 

negative impacts of DOE's proposed standard. 

Specific to the process itself, however, the American Public Gas Association (APGA) on 

November 18, 2015, officially filed a complaint to the DOE Inspector General's office 

which claims that, "The responsible DOE ofticials have engaged in conduct that has 

resulted in waste, abuse, and mismanagement to the severe prejudice of APGA'' 

In short, APGA asserts that DOE unfairly manipulated aspects of the rulemaking process 

to favor "parties allied" with the agency. The complaint focuses mainly on the fact that 

DOE never responded to APGA's September 15, 2015 request for an extension of the 

October 14, 2015, deadline for comments on DOE's issued Notice of Data Availability. 

Thus, APGA complied with the October 14 deadline. Many of the "parties allied" did not 

Then, on October 15, one day after the original deadline, DOE responded via email to 

APGA indicating that it was in fact responding to the extension request and the new 

deadline would be November 6, 2015. The timing of events seemed suspicious to APGA, 

and they are still awaiting a response to their complaint 

a. If you are confirmed as DOE's Inspector General, will you commit into looking 

into APGA's complaint and providing this Committee with a substantive response 

as to its status as expeditiously as circumstances allow'? 

Yes, if confirmed, I will commit to reviewing this issue. 

Question 31: The NNSA works with the International Atomic Energy Agency to 

complete safeguards missions and the U.S. contributes a significant portion of the annual 

IAEA budget. How will you ensure that the NNSA is leveraging its resources to work 

strategically with the IAEA to stop the spread of nuclear weapons technologies'? 

If confirmed, I would familiarize myself with these programs, assess the risk 

associated with them and audit, inspect, and investigate these issues as 

appropriate. 

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U.S. Senate Committee on Energy and Natural Resources 

May 12, 2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

Question 32: If Yucca Mountain is constructed, as the law states it should be, how will 

you ensure that the project remains safe for workers, on time, and on budget? If the 

Nuclear Waste Administration Act is signed into law, how will your oversight role at 

DOE change in relation to the new Nuclear Waste Administration? 

If confirmed, I will continue the OIG's long-standing practice to review major 

Departmental projects, including evaluating project management, health and 

safety and other matters as appropriate. If the Yucca Mountain project is 

advanced and/or completed, this same practice by the OIG would apply. As for 

the OIG' s role in relation to the proposed Nuclear Waste Administration, the OIG 

would follow the guidance provided by the underlying statute, if enacted. 

Question 33: The Waste Isolation Pilot Plant (WTPP) was closed nearly two years ago 

following a fire. DOE anticipates that it will reopen by the end of2016. How will you 

ensure that WIPP reopens and operates safely, while staying on schedule and on budget? 

Do you foresee any challenges that could lead to further delays? 

If confirmed, I commit to evaluating DOE's efforts to bring the WTPP back to full 

operation and to monitor its operations as appropriate to ensure the facility 

operates safely and efficiently. 

Question 34: Our nuclear weapons programs created a great deal of radioactive liquid 

waste. DOE has been working on building facilities and a program to tum that liquid 

waste into a stable glass waste form for disposal in a permanent nuclear waste repository 

as high level nuclear waste. These programs have been behind schedule and over budget 

in South Carolina at the Savannah River Site and in Washington at the Hanford site. 

a. How will you conduct oversight to ensure that these programs are 

completed safely, on time, and on budget? 

It is the responsibility of the DOE to ensure that these programs are 

completed safely, on time, and on budget. If confirmed, I will ensure the 

OIG appropriately assesses DOE's work to implement these programs and 

projects safely and efficiently and take appropriate actions within the 

scope of the OIG as needed. 

b. How will you ensure that future projects of this type are completed on 

time and on budget? 

If confirmed, I will ensure the OIG appropriately assesses DOE's work to 

implement these programs and projects safely and efficiently and take 

appropriate actions within the scope of the OIG as needed. 

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U.S. Senate Committee on Energy and Natural Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

c. Will you be willing to end contracts and terminate employment of 

companies and individuals that cannot meet their obligations to the 

American taxpayer? 

It is the responsibility ofthe DOE to make employment decisions, 

including hiring and termination of employees. If confirmed, I commit to 

continue the important role of the OIG in providing independent oversight 

of the Department's contracts and to take appropriate actions as necessary. 

Question 35: There are many nuclear sites, such as the Portsmouth Ohio and Paducah 

Kentucky Gaseous Diffusion Plants, which have been continuously underfunded for 

cleanup. How will you ensure that cleanup efforts continue as efficiently as possible and 

commitments made to these sites are fulfilled? 

It is the responsibility of the DOE to ensure that cleanup efforts continue as 

efficiently as possible and commitments made to these sites are fulfilled. If 

confirmed, I commit to continue the important role of the OIG in providing 

independent oversight of the Department's mission and obligation to complete 

clean-up oflegacy nuclear sites and facilities, and taking appropriate actions as 

necessary. 

Questions from Senator Ron Wyden 

Question 1: As we discussed during your confirmation hearing, I am extremely 

concerned about the lack of progress at Hanford. As GAO pointed out last year, $19 

billion has been spent over the 25 years to clean-up waste at Hanford 

and so far not a gallon of waste has been treated. What, as ln<:nc>r.tr•r 

General, are you to do to the way business is done at Hanford? 

If cont1nned, I commit to the 

high-level waste at the Hanford site. In doing so, I will 

utilize OIG audits and as well as reviews and 

GAO, to determine how the OIG can most 

enable the to complete its mission and to remediate 

Hanford. As part of the O!G's continued I will 

not hesitate to initiate new audits or as warranted to facilitate the 

safe and effective of the Hanford facilities, such as the Waste 

Treatment Plant and their continued operation until the effort is 

successfully finished. 

As a first step, I would develop a clear of what efforts DOE is 

and to address the concems raised 

of high-level waste at Hanford. Second, I would evaluate 

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U.S. Senate Committee on Energy and Natural Resources 

May 12, 2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

the timeframes, that are to each step of these If no clear 

plans are provided, or if no clear timeframes are provided, I would use my 

position as Inspector General to highlight that critical deficiency to those in an 

oversight role, the Department and to the public. I would, if confirmed as the 

Inspector General, also want to consider whether, in some situations, the OIG may 

be able to recommend any timeframes for tasks if the Department provides no 

such timeframes. In short, I commit to the way business is done at 

Hanford and where the facts and risks lead me. While it is not the role 

of the Inspector General to 

environmental management sites, 

the clean-up efforts at Hanford and other 

of these efforts would be a priority 

for me if confirmed as General. 

Also as we discussed during the hearing, the General for the 

Bob -and I met last week with tank farm workers who 

have been to hazardous chemical vapors from the tanks. Some 4 dozen 

workers have complained of chemical exposure in the past 10 The workers told us 

that they are threatened with their jobs and retaliated against for 

concerns. There are plenty of other at Hanford ofwhistleblower retaliation, 

u".w'~u'"' Walt Tamosaitis and Donna Busche, who worked for URS at the Waste 

Treatment Plant, and Doss who worked for the tank farm contractor -- WRPS, 

and of Science who were all fired for 

at Hanford. The DOE Office of lnsoec:tor 

an employee concerns manager at 

into the effectiveness of 

Pm:nll>Vf'" concerns programs. The DOE Inspector General has the legal 

whistleblower as do all IGs. As the Inspector General, what will 

you do to blow the whistle on the chronic mistreatment ofwhistleblowers at DOE? 

The DOE and its contractors are prohibited from retaliating against 

whistleblowers. The Department's OIG plays a pivotal role in ensuring the 

Department and its contractors adhere to this prohibition. If confirmed, I commit 

to 1) evaluate any alleged retaliation towards whistleblowers, 2) highlight the 

rights that whistleblowers have, 3) understand whether, and if so to what extent, 

patterns and practices of mistreatment ofwhistleblowers exist, and 4) undertake 

audits and inspections to uncover any abuses concerning whether whistleblowers 

are mistreated. Further, I commit to rigorous oversite of the Department's effort 

to timely and effectively implement improvements and recommendations by the 

OIG and other oversight entities as appropriate. 

With regard to the potential exposure of Hanford workers to harmful tank vapors, 

on Tuesday May 24, 2016, the Office of Inspector General announced its 

intention to conduct a Special Review of The Department of Energy's actions 

taken to address employee concerns regarding vapor exposures at the Hanford 

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U.S. Senate Committee on Energy and Natural Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

Tank Farm. If confirmed, I commit to rigorously continuing this special review or 

initiating subsequent audits or inspections as necessary to fully ensure worker 

health and safety. Should the OIG's initial findings include recommendations for 

the Department, I pledge to closely monitor the Department's efforts to act 

quickly to complete any needed corrective actions. 

ft is my understanding that as Assistant General Counsel for General Law 

you are for matters related to the 

Federal workforce. At Hanford, Federal employees were required to 

non-disclosure statements that violated the letter and the of the Whistleblower 

Protection Enhancement Act of2012 

Steve to issue 

remind management and 

of this Act 

whistleblower statutes as 

General Counsel 

office? To what extent, when, and how did you learn of these nonat Hanford? 

The Office of the Assistant General Counsel for General Law is responsible for 

providing legal assistance to Departmental elements at DOE headquarters by 

providing legal guidance to address potential whistleblower violations and taking 

corrective action if needed. As part of providing this service, the Office of 

Assistant General Counsel for General Law communicates regularly with the 

Office of Special Counsel, which has oversight authority over Executive branch 

agencies for alleged whistleblower violations concerning Federal employees. 

With regard to the matter of the advice issued by the Department's General 

Counsel in 2015, the Office of Assistant General Counsel for General Law 

provides regular advice to the General Counsel, including in the review of 

guidance issued by the General Counsel concerning whistleblower protections. To 

the best of my recollection, I first learned of this specific non-disclosure practice 

at Hanford on July 15, 2015, when my staff was contacted by local Office of 

Chief Counsel staff at Hanford regarding a union matter concerning the use of 

non-disclosure agreements. I take very seriously the obligation of the Federal 

government to protect whistleblowers and maintain an environment where 

employees feel free to raise concerns without the fear of retaliation. If confirmed 

as Inspector General, I will continue to take these matters very seriously and 

execute the duties of the OIG in a manner that upholds these important 

safe~:,>uards. 

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U.S. Senate Committee on Energy and Natuml Resources 

May 12,2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

It is also my understanding that there are DOE Federal concerns 

cases that have for years without resolution. As noted in 4, GAO is 

a review of DOE's whistleblower and concerns This 

done at the request of Sen. McCaskill, Sen. and me. Please 

the number of concerns filed by Federal employees at DOE for each 

of the past ten years and the length of time it has taken to and resolve each 

of those concerns. Please describe the role that your office plays in the 

Federal 

I have been informed that the OIG does not have data the number of 

employee concerns tlled Federal employees at DOE for each of the past ten 

years and the length of time it has taken to 

employees' concerns. lf confirmed, I commit to 

the GAO and what actions that the OIG can take to 

pnlcesstng of employee concerns. The office in which I currently 

\Vork in the Office of the General Counsel does not any role in the Federal 

concerns process. 

Questions from Senator Jeff Flake 

Ouestion 1: The Office of the Inspector's mission statement on the strategic plan is "to 

strengthen the integrity, economy and efficiency of the Department's programs and 

operations." My amendment 3056 to the Energy Policy Modernization Act of2016 

would direct the Government Accountability Office (GAO) to conduct a study on 

potentially duplicative green building programs administered through the Department and 

listed in the GAO report "2012 Annual Report: Opportunities to Reduce Duplication, 

Overlap and Fragmentation, Achieve Savings, and Enhance Revenue". Spending 

taxpayer money on duplicative programs between federal agencies directly contradicts 

this mission statement and the Inspector's role in addressing waste and abuse. How 

would you ensure that the Department is not engaging in programs that are duplicative 

between agencies in order to meet this mission statement as well as the aforementioned 

goal of a positive return for tax dollars invested in OIG activities? 

It is the responsibility of the Department, at times working with other 

Departments or agencies, to ensure that the Department is not engaging in 

programs that are duplicative between agencies to prevent waste or abuse of 

taxpayer resources. If such unnecessary duplication of efforts is identified by 

GAO, the DOE OIG may then evaluate whether and to what extent DOE has or 

plans to take actions to eliminate such unnecessary duplication of efforts. If 

appropriate, DOE OIG may then make recommendations regarding such plans, or 

the absence of any such plans. 

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U.S. Senate Committee on Energy and Natural Resources 

May 12, 2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

Question 2: Western Area Power Association (W APA) has been the subject of recent 

scrutiny due to customer concerns that W AP A has been expanding its overhead and 

authority without desired transparency and accountability. 

a. Please describe the Inspector's ability and responsibility to oversee customer 

complaints regarding W AP A. 

The DOE OIG has the authority to conduct audits, inspections and 

investigations concerning W AP A and the other Power Marketing 

Administrations (PMAs). The DOE OIG has responsibilities to evaluate 

conformity with the law by WAPA, and to evaluate its efficiency and integrity. 

Moreover, the DOE OIG has responsibilities for criminal law enforcement 

issues that involve W AP A and the other PMAs 

b. Appropriated funds for Western's annual expenses are offset by the deposit of 

power sale revenue, resulting in a "Net Zero" impact. Please describe what 

effect (if any) that Net Zero has on the Inspector's ability to oversee the use of 

appropriated funds in the marketing and transmission of hydropower in the 

west. 

I do not have sufficient information to answer this question. If I were to be 

confirmed as the Inspector General, I would familiarize myself with the any 

issues involving the offset of power sale revenue against appropriated funds 

used for W APA annual expenses to determine what further actions, if any, 

would be appropriate to undertake. 

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U.S. Senate Committee on Energy and Natural Resources 

May 12, 2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

Questions from Senator John Barrasso 

Question 1: On July 12, 2006, the Government Accountability Office (GAO) wrote a 

letter to Senator Pete Domenici, then Chairman of the Committee on Energy and Natural 

Resources. GAO's letter found that the Department of Energy (DOE) violated the 

miscellaneous receipts statute when it transferred $62 million in excess uranium to 

USE C. 

In response, Eric l Fygi, Deputy General Counsel, wrote a letter (including an 

enclosure), dated May 2, 2006, to GAO, disputing GAO's finding. 

During the hearing, you testified that you have worked on the miscellaneous receipts 

statute as it relates to DOE's transfers of excess uranium. 

A. Did you provide any legal advice with respect to DOE's transfers of excess uranium to 

USEC that were the subject of GAO's July 12, 2006letter? 

Yes, to the best of my recollection. 

B. Did you contribute, in any way, to, or provide any work product that was used as the 

basis of, the December 10, 2004 Agreement between DOE and USEC? 

Yes, to the best of my recoil ecti on. 

C. Did you contribute, in any way, to, or provide any work product that was used as the 

basis of, DOE's May 2, 2006letter (including the enclosure) to GAO? 

Yes, to the best of my recollection. 

Question 2: In September 2011, GAO issued a report entitled, "Excess Uranium 

Inventories: Clarifying DOE's Disposition Options Could Help Avoid Further Legal 

Violations." GAO's report found that DOE violated the miscellaneous receipts statute 

when it transferred $256 million in excess uranium to USEC and Fluor-B&W Portsmouth 

(FBP) in exchange for decommissioning services at DOE's gaseous diffusion plant in 

Piketon, Ohio. 

In response, Peter B. Lyons, Assistant Secretary for Nuclear Energy, and Eric l Fygi, 

Deputy General Counsel, wrote a letter, dated September 12, 2011, to GAO, disputing 

GAO's finding. 

During the hearing, you testified that you have worked on the miscellaneous receipts 

statute as it relates to DOE's transfers of excess uranium. 
52 


Insert offset folio 29 here 22126.029

U.S. Senate Committee on Energy and Natural Resources 

May 12, 2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

A. Did you provide any legal advice with respect to any of the transactions that were the 

subject of GAO's September 2011 report? 

Not to the best of my recollection. 

B. Did you contribute, in any way, to, or provide any work product that was used as the 

basis of, DOE's September 12, 2011 letter to GAO? 

Yes, to the best of my recollection. 

C. Have you provided any legal advice with respect to any of DOE's excess uranium 

transactions involving FBP that have taken place since June 20 ll? 

Not to the best of my recollection. 

Question 3: In May 2014, GAO issued a report entitled, "Department ofEnergy: 

Enhanced Transparency Could Clarify Costs, Market Impact, Risk, and Legal Authority 

to Conduct Future Uranium Transactions." GAO's report found that DOE violated the 

USEC Privatization Act and the Atomic Energy Act with respect to four uranium 

transactions involving USEC in 2012 and 2013. 

In response, Eric J. Fygi, Deputy General Counsel, wrote a letter (including an 

enclosure), dated April18, 2014, to GAO, disputing GAO's finding. 

During the hearing, it was unclear from your testimony whether you have worked on the 

USEC Privatization Act or the Atomic Energy Act as it relates to the transactions at issue 

in GAO's May 2014 report. 

A. Did you provide any legal advice with respect to any of the transactions that were the 

subject of GAO's May 2014 report? 

Not to the best of my recollection. 

B. Did you contribute, in any way, to, or provide any work product that was used as the 

basis of, DOE's April 18, 2014letter (including the enclosure) to GAO? 

Not to the best of my recollection. 

C. Please provide a copy of the enclosure to DOE's April 18, 2014letter to GAO. 

Copy enclosed. 

2 
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Insert offset folio 30 here 22126.030

U.S. Senate Committee on Energy and Natural Resources 

May 12, 2016 Hearing: Nomination of Susan Beard 

to be Inspector General of the U.S. Department of Energy 

Questions for the Record Submitted to Ms. Susan Beard 

Question 4: Who, if anyone, according to DOE's Office of General Counsel, has 

standing to file a complaint in federal court alleging a violation of the miscellaneous 

receipts statute as it relates to DOE's transfers of excess uranium? 

I do not have the authority to speak on behalf of the General Counsel on this 

matter; therefore, I am not in a position to answer this question. 

Question 5: If you did not identify a party with standing (or describe the characteristics 

of a party who would have standing) in question 4, how do you propose to resolve the 

legal question as to whether DOE's transfers of excess uranium violate or have violated 

the miscellaneous receipts statute? 

I do not have the authority to speak on behalf of the General Counsel on this 

matter; therefore, I am not in a position to answer this question. 

Question 6: During the hearing, you stated that you would recuse yourself from matters 

involving legal opinions, related to excess uranium transfers, to which you contributed. 

If confirmed, would you be willing to recuse yourself from all matters related to DOE's 

transfers of excess uranium? If not, please describe, in detail, the extent to which you will 

recuse yourself from matters related to DOE's transfers of excess uranium? 

If I am confirmed, I would recuse myself from any Office oflnspector General 

matter regarding a legal opinion I worked on while employed in the Office of General 

Counsel. I would rely on the advice of the Office of Counsel to the Inspector General in 

determining which matters require my recusal. 

3 
54 


Insert offset folio 31 here 22126.031

Mr. David Trimble 

Department of Energy 

Washington, DC 20585 

Aprill8, 2014 

Director, Natural Resources and Environment 

U.S. Govemment Accountability Office 

441 G Street, NW 

Washington, DC 20548 

Dear Mr. Trimble, 

Thank you for providing a copy of your draft report, "Department of Energy: Enhanced 

Transparency Could Clarify Costs, Market Impact, Risk, and Legal Authority to Conduct 

Future Uranium Transactions" (the GAO draft repmt). The GAO draft report describes 

the conclusions drawn fi·om the GAO's audit of four Depatiment of Energy (DOE or the 

Department) uranium transactions in 2012 and 2013. 

The heart of the GAO draft report is that two elements of the USEC Pl'ivatization Act~ 

sections 3112 and 3113 ~ by their silence have repealed express provisions of the Atomic 

Energy Act (AEA) that explicitly authorize DOE to engage in certain transactions 

involving uranium and other materials. The analysis contained in the GAO draft repmt is 

legally unfounded because it is based on a sub silentio implied repeal of a variety of 

specific AEA provisions, directly contrary to the Supreme Court's teaching that it is a 

"cardinal rule [of construction) that repeals by implication are not favored [lest] 

congressional silence [be read] as effecting a repeal by implication [ ofj a longstanding, 

imp01tant component of the Govemment's [atomic energy) program." Morton v. 

Mancari, 417 U.S. 535, 549-550 (1974) (internal citations and punctuation omitted). 

Such patently enoneous legal contentions cannot contribute to meaningful assessments of 

the Department's performance of its various responsibilities. We should remain mindful 

to heed the Supreme Court's guidance for the Comptroller General that "[i]nterpreting a 

law enacted by Congress to implement the legislative mandate is the very essence of 

'execution' of the law, [and may not be done by] an officer under [Congress'] control." 

Bowsher v. Synro·, 478 U.S.7l4, 732,726 (1986). 

First, the GAO draft report repeats its previous and unpersuasive position that the 

Department does not have the authority to transfer depleted uranium. GAO's position is 

based on its incorrect belief that the USEC Privatization Act, in patticular section 

3112(a), repealed or amended the Department's authorities under the Atomic Energy Act 

(AEA) to distribute or sell depleted uranium (which is source material). Section3112(a) 

requires that any uranium transfers or sales be "consistent with this section." The 

remainder of section 3112 places restrictions on transfers or sales of other Departmental 

uranium, creating an overlay on the Department's more general AEA authorities to 

® Prin!ed w~th soy ink on recycled paper 
55 


Insert offset folio 32 here 22126.032

transfer or sell uranium, but places no such restrictions on the sale or transfer of depleted 

uranium. GAO disregards a fundamental canon of statutory interpretation and reads 

section 3112 to implicitly remove the Department's AEA authorities with regard to the 

distribution or sale of source material even though it is well established that in 

intCI1Jreting a statute, repeals by implication are disfavored. 

Second, the GAO draft report wrongly contends that section 3113 of the USEC 

Privatization Act is the sole mechanism through which the Department could accept title 

to, and eventual disposal responsibility for, depleted uranium. Section 3113 requires 

DOE to accept for disposal low level waste (including depleted uranium that is ultimately 

detem1ined to be low level waste) at the request of the generator. Nothing in section 

3113 directs or implies that all depleted uranium accepted by the Department is or 

necessarily will be determined to be low level waste. Further, section 3113 does not 

supplant the Department's autllority under section 66 of the AEA "to purchase, take, 

requisition, condemn, or otherwise acquire supplies of source material," which includes 

DUF6. 

This error is compounded with the GAO draft report's contention that the Department did 

not receive adequate compensation for the depleted uranium it sold or accepted. GAO's 

arguments are premised upon its erroneous conclusion that section 3113 is the only 

authority the Department has for accepting depleted uranium and its incorrect asse1tion 

that DOE must set a monetary price for its depleted uranium and make its sales or 

transfers consistent with that price. As noted above, section 3113 is not the sole 

mechanism for DOE acceptance of depleted uranium and its provisions regarding 

compensation do not control the analyzed transactions in which the Depa1tment took title 

to, and eventual disposal responsibility tor, depleted uranium. Further, the requirements 

under the AEA (sections 63 and 161m.) for DOE to receive reasonable compensation for 

its source material are not so rigid as to require compensation only in accordance with a 

set monetary price. 

Finally, the GAO draft rep01t incorrectly contends the Department did not comply with 

the requirements of section 3ll2(d) in its March 2013 transfer of low enriched uranium 

(LEU) to USEC. The GAO draft repoti alleges, witllout merit, that the Department did 

not obtain a determination from the President that the material was not necessary for 

national security purposes. The LEU was not included in the Nuclear Weapons Stockpile 

Plan (Plan), a document listing material necessary for defense purposes and signed by the 

President. The Department's standard practice has been that the last signed Nuclear 

Weapons Stockpile Plan is valid as a Presidential policy directive and is the standing 

authority until it has been replaced by an updated plan. The fact that the LEU was 

obtained by DOE, and then transferred to USEC, after the date of the Nuclear Weapons 

Stockpile Plan does not undercut the Department's position: the absence of the LEU in 

the Plan in effect at tl1e time of the transfer meets the requirement of section 

3112( d)(2)(A). 

2 
56 


Insert offset folio 33 here 22126.033

The GAO draft report contains five recommendations. The Department notes that many 

of these recommendations advocate actions by the Department that go far beyond the 

statutory obligations related to uranium transfers and at least one asks the Department to 

forego the protections generally afforded to pre-decisional or attorney-client 

communications. Several of these recommendations could actually have the effect of 

decreasing the value the government receives from uranium transactions. 

• First, the GAO draft report recommends that DOE clarify the total amount of 

depleted uranium hexafluoride (DUF6 or tails) it intended to accept from USEC 

in a June 2012 cooperative agreement and, if necessary, amend this cooperative 

agreement to ensure that DOE is not required to accept additional tails liability at 

a later date. In accordance with the terms of Cooperative Agreement DENE0000530, the Department provided 80% cost share for Budget Period 1 of the 

June 2012 cooperative agreement by accepting title and liability for up to 39,200 

MT of Depleted Uranium Hexafluoride (DUF6). The patties to the cooperative 

agreement agreed that this acceptance would be treated as DOE providing 

$87,670,184 in cost share contribution (80% of the total estimated cost of the 

agreement's Budget Period 1). DOE has accepted 38,317 MT DUF6 to meet this 

Budget Period 1 cost share obligation. No further action is required to ensure 

compliance with the terms of the cooperative agreement. 

• Second, the draft GAO report recommends that for each uranium transaction it 

conducts, the Department prepare a document outlining the legal authority for the 

transaction and outlining how the transaction complies with the cited authority 

and that the Department make this document publicly available. The Department 

will comply with all legal requirements for future transactions, but will not create 

and make publicly available documents that are not required by law and would 

traditionally be protected as attorney work product or privileged pre-decisional 

documents. 

• Third, the draft GAO report recommends that DGE develop guidance establishing 

a method for determining the value of depleted uranium for any future transfers 

and that DOE apply this method consistently and transparently in those transfers. 

The Department will determine the value of depleted uranium in any given 

transaction and ensure that the Department receives reasonable compensation in 

the transaction. The Depat"tment is not required to establish guidance or a pricing 

policy for depleted uranium, and to do so would hinder the Department's ability 

to maximize the value received by the govermnent in a given transaction. 

• FoUI1h, the draft GAO repott recommends that the Department "take steps to 

mitigate the risks" for uranium transactions where the expected benefits rely on 

third party contracts. The programs have advised us that, where appropriate or 

feasible, the Depattment will take steps to mitigate risks. However, the 

Department cannot control the actions of third parties in agreements to which it 

was not a party and must not attempt to exe11 control or influence in a way that 

establishes an agency or apparent agency relationship. 

3 
57 


Insert offset folio 34 here 22126.034

• Fifth, the draft GAO report recommends that DOE conduct a "rigorous and 

documented" internal review of its independent expert's analysis of the market 

impact of these transactions and, to the extent DOE makes the analyses publicly 

available, that they be consistent with DOE's Information Quality Guidelines. 

We have been advised by the Office of Nuclear Energy that it will continue to 

consider the applicability of the Information Quality Guidelines to independent 

analyses of the potentia! market impact of proposed transactions and, if they are 

applicable, will take appropriate steps to ensure they are satisfied. 

• Finally, as part of the fifth recommendation, the GAO draft report recommends 

that the Department "seek and consider" input from industry on the amounts of 

DOE transfers and whether the Department should reinstitute a prior guideline on 

the amounts of uranium transfers it would generally consider in a given year. The 

Office of Nuclear Energy (NE) advises us that it has met in the past and continues 

to meet regularly with industry parties, both at conferences and in meetings with 

Departmental officials when those meetings are requested. In those 

conversations, NE makes it clear it is open to receiving information from industry 

and takes that information under advisement as it makes futme plans. 

The enclosed memorandum provides a more thorough response to these and GAO draft 

!'CpO!t's other contentions. 

Sincerely, 

~~ Deputy General Counsel 

Enclosure 

4 
58 


Insert offset folio 35 here 22126.035

Department of Ene1·gy Analysis of Legal and Other Issues 

Raised in GAO D1·aft Reuort 

The GAO draft report "Depatiment of Energy: Enhm1ced Transparency Could Clarify Costs, 

Market Impact, Risk, and Legal Authority to Conduct Future Uranium Transactions" (GA0-14-

291) (the GAO draft rep01i) analyzes four specific transactions conducted by the Department of 

Energy (DOE or the Department) and discusses several perceived legal issues and other issues in 

the analyzed transactions. The GAO draft report characterizes all of these transactions as 

"involving" the United States Enrichment Corporation (USEC), but DOE notes that it only had 

direct contractual relationships with USEC in tlu·ee of the four transactions. The Department 

disagrees with GAO's legal and other analyses, and its detailed analysis of the GAO draft 

report's legal and other contentions follows. 

A. May 2012 Depleted Uranium Enrichment Project 

In May 2012, the Department transferred a quantity of high-assay depleted uranium hexafluoride 

(DUF6, depleted uranium, or tails) to Energy Northwest (ENW) in the first of a series of 

interrelated transactions known as the Depleted Uranium Emichment Project. In a series of 

agreements to which the DepaTtment was not a pmiy, ENW contracted with USEC for the 

enrichment of the tails at the Paducah Gaseous Diffusion Plant (GDP), owned by DOE but leased 

and operated by USEC. ENW then agreed to sell a portion of the resultant LEU, which was USorigin and unobligated by peaceful use assurances, to the Tennessee Valley Authority (TVA). 

Tlu·ough an interagency agreement (IA) with NNSA, TVA acquires and burns US-origin LEU in 

a specified reactor that produces tritium. The Department's other involvement in this series of 

transactions was a modification to the existing TV A-NNSA IA to produce additional tritium 

using this LEU. 

1. Authority to Transfer Depleted Uranium 

TI1is is not the first time that GAO has challenged the Depmtment's authority to transfer depleted 

uranium, and the GAO draft repoti rests on GAO's prior legal position on this matter. As stated 

in the GAO draft report, the Department does not endorse or accept GAO's legal interpretation, 

atld DOE believes it has authority to transfer depleted uranilm1. 

GAO's opinion, espoused in both an earlier letter report1 and again in this draft rep01t, is based 

on its view of the effect of section 3112 of the USEC Privatization Ace on the Department's 

authorities under the Atomic Energy Act of1954, as amended (AEA). Section3112(a) states the 

Department "shall not provide emiclunent services or transfer or sell any uranium (including 

natural uranium concentrates, natural uranium hexafluoride, or emiched uranium in any form) to 

any person except as consistent with this section. "3 Although the remainder of section 3112 has 

provisions peliaining to the sale of natural or low enriched uranium and to other types of 

uranium inventories held by the Department, it is silent as to the sale, transfer, or other 

1 "Nuclear Material: DOE Has Several Potential Options for Dealing with Depleted Uranium Tails, Each of Which 

Could Benefit the Government," March 31,2008 (GAO 08-606R). 2 42 U.S.C. § 2297h-IO. 3 42 U,S.C. § 2297h-IO(a). 
59 


Insert offset folio 36 here 22126.036

disposition ofDUF6. GAO reasons that because the remainder of section 3112 provides 

conditions upon which natural or enriched uranium can be sold or transferred, but does not 

mention depleted uranium, the Department lacks authority to sell depleted uranium because it is 

covered under the general language regarding transfers or sales in section 3112{a). 

As noted in the GAO draft report, the Department's interpretation of the effect of section 3112 of 

the USEC Privatization Act on its existing AEA authorities is different.4 The text of section 

3ll2(a) does not create a blanket prohibition on uranium transfers or sales and then permit 

specified sales. Rather, it requires that any transfers or sales be "consistent with this section." 

Section 3112 places no restrictions on transfers or sales of depleted uranium, but does place 

restrictions on transfers or sales of other Departmental material, which function as an overlay on 

the Department's more general AEA authorities to transfer or sell that material. Accordingly, the 

Department's transfer of depleted uranium would be "consistent with" section 3112. 

Section 63. of the AEA authorizes the Department to distribute source material, which includes 

DUF6, and the USEC Privatization Act did not expressly repeal or amend this existing transfer 

authority under the AEA. Nevertheless, GAO reads section 3112 to implicitly remove the 

Department's AEA authorities with regard to distribution or sale of source material. Repeals by 

implication, however, are disfavored by the courts.5 "When there are two acts upon the same 

subject, the mle is to give effect to both ifpossible."6 GAO makes no effott to read the AEA and 

the USEC Privatization Act as consistent with one another. The Department's position, on the 

other hand, gives effect to both statutes, with the specific restrictions in the USEC Privatization 

Act constituting an overlay to the general authorities granted to the Department by the AEA. 

It should also be noted that Congress took no action to disapprove of the Depattment's earlier 

transfer of tails to the Bonneville Power Administration in a pilot project or to "clarify" the 

Department's authority, although such a clarification was recommended by GAO in the 2008 

letter report. 

2. Control of Third Parties/Risk Mitigation 

The GAO draft report states that the Department "did not take steps to mitigate risks associated 

with its reliance on third patty contracts for the May 2012 tails transfer to ensure that the 

expected benefit of the transfer would be achieved."7 The GAO draft report stated that the 

Department identified the general risks associated with the transfer, including that the expected 

benefit was reliant upon third patiy contracts, but contends that DOE did not take steps that 

could have mitigated some of these risks- including a right of first refusal for the purchase of 

the LEU or an overarchlng memorandum of agreement (MOA). 

4 See, e.g., Letter from Eric J. Fygi, DOE Deputy General Counsel, to Susan D. Sawtelle, GAO Managing Associate 

General Counsel (Dec. 21, 2007), relating DOE's conclusion that the 2005 transaction involving the transfer of 

depleted uranium to Bonneville Power Administration did not fall within the particular constmints of section 3112 

ofthe USEC Privatization Act. 5 See, e.g., Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1017 (1984)(citing Regional Rail Reorganization Act 

Cases, 419 U.S. 102,133 (1974)). 6 United States v. Borden Co., 308 U.S. 188, 198 (1939). 7 GAO draft report at 43. 

2 
60 


Insert offset folio 37 here 22126.037

The Department was well aware of the risks of the transaction and believed that its 

understanding of the third party contracts, and the various cross-defaults or "off ramps" within 

those agreements, protected the integrity of the series of transactions. In addition, the Department 

was cognizant of criticisms it has received from GAO in the past,8 and was very careful to 

structure its contracts and its involvement with third party contracts to avoid an agency 

relationship or the appearance of an agency relationship. Although the Depattment did anticipate 

receiving a benefit through the eventual use of the US-origin LEU for the production of tritium, 

the LEU was not being produced on the Depattment's behalf, and the Department did not want 

to overly involve itself in the third party's contracts. 

The Department did not have privity of contract with any of the parties to the transactions other 

than its transfer to ENW and its IA with TV A. The parties understood the overall goal of the 

series of transactions, and the Depatiment was as involved in the transactions as it could be 

without giving rise to an agency relationship or the appearance of an agency relationship. Even if 

the agreements following enriclm1cnt of the DUF6 were to fall apart for some reason, the 

Department would still be able to receive the henefit of an increased volume of domestic-origin 

LEU on the market, which would create a pool of material available for TV A to purchase or for 

obligation-swapping. 

A MOA or other memorandum of understanding would not have provided any additional 

assurance, as it would not have been enforceable and the Department could not exert any control 

over third party agreements to which it was not a party. In addition, a right of first refusal for 

LEU produced tlll'ough ENW's enrichment contract with USEC would have created the 

appearance of an agency relationship or the appearance that ENW was emiching the DUF6 on 

the Depruiment's behalf.9 The Department's involvement in the Depleted Uranium Enrichment 

Project was limited to the two agreements to which it was a party, and it was aware of the risks 

and managed them as appropriately as possible when it entered into its agreements. 

B. March 2012 SWU Procurement 

In March 2012, the Depmtment procured separative work units (SWU), the unit of measure for 

enrichment services, from USEC. As compensation, the Department took title to, and eventual 

disposal responsibility for, a set quantity ofDUF6 or tails, thereby freeing up cash that USEC 

had held as surety for disposal bonds it held to fulfill Nuclear Regulatory Commission (NRC) 

requirements. In the uraniummm·ket, an entity purchasing SWU provides feedstock in the form 

of natural uranium hexafluoride (UF6), which is enriched, producing low emiched uranium 

(LEU). The market operates on a principle of fungibility, meaning that the LEU a party 

purchasing SWU receives may not contain the actual UF6 provided, but it is treated as if it does. 

DOE provided USEC with a quantity of Russian-origin UF6 and, after the SWU value was 

applied, received back US-origin LEU.10 This LEU, again in terms of how the uranirun market 

8 "Excess Uranium Inventories: Clarifying DOE's Disposition Options Could Help Avoid Further Legal Violations," 

September 20 II (GA0-11-846). 9 Such an agreement would also have been inconsistent with the TVA-NNSA JA, which does not contemplate the 

Depat1ment's purchasing the LEU needed lor tritium production. Under the !A, TVA purchases unencumbered LEU 

and NNSA reimburses it the difference in cost needed to purchase US-origin material. 10 TI1e fact that DOE received back US-origin LEU was of import to the Department, which needs material free from 

peaceful use restrictions for tritium production and other defense purposes, but the market permits "flag swapping" 

3 
61 


Insert offset folio 38 here 22126.038

views these types of transactions, contained both the UF6 DOE provided to USEC for 

enrichment and the SWU it purchased. 

l. Apj>licability of Section 3112 of the USEC Privatization Act 

The GAO draft report concludes that section 3!12(b) of the USEC Privatization Act governed 

this provision of Russian-origin UF6 feedstock to USEC, and that the exchange was a transfer of 

uranium from DOE to USEC that should have been accounted for in DOE's market impact 

analyses supporting secretarial determinations under section 3112(d) for other uranium 

transactions in that time period. 

Section 31!2(b )(2) directs the Department to sell within seven years of enactment certain 

inventories of Russian-origin UF6 delivered to the Department under section 3112(b )( 1 ). Section 

3112(b )(2) requires that the Department "sen and receive payment for" the UF6 received under 

section 3112(b )(1) within seven years of enactment. The Department did not sell all of the 

material received under section 3112(b)(l); as reflected in its summaries of its inventory in its 

2009 and 2013 Excess Uranium Inventory Management Plans, the Department has 1,079 MTU 

of that material remaining. That fact, however, has no bearing on the legal question at hand. The 

provision of the material to USEC as feedstock could not be considered a "sale" under section 

3112(b )(2), or a sale or transfer under section 3112( d) because, as explained above, it was a 

transaction for the purchase of SWU from USEC and not a transaction for the sale or transfer of 

uranium. Accordingly, it did not need to be accounted for in DOE's market impact analysis for 

other transactions in that time period. 

~. Authority of the Department to Assnme Title to and Disposal Responsibility for DUF6 

In the context of both this transaction and the June 2012 tails transaction, discussed in section D, 

if!fi·a, the GAO draft report contends that the Department's only authority for taking title to, and 

eventual disposal responsibility for, DUF6 is section3113 of the USEC Privatization Act. 

Section 3113, "Low Level Waste," states that the Department, "at the request of the generator, 

shall accept for disposal low-level radioactive waste, including depleted uranium if it were 

ultimately determined to be low-level radioactive waste," generated by USEC tlu·ough operation 

of the GDPs and any other enrichment provider licensed by the NRC. Pursuant to section 3113, 

if the Department accepts material under section 3113, "the generator shalt reimburse the 

Secretary for the disposal ... in an amount equal to the [Department's] costs, including a pro rata 

share of any capital costs." 

Section 66. of the AEA authorizes the Depatiment "to purchase, take, requisition, condemn, or 

otherwise acquire supplies of source material."!! Nevertheless, the GAO draft report reads 

section 3113 of the USEC Privatization Act as the sole mechanism by which the Department 

and other fictions based upon the fungibility of uranium, so the change in origin, or "flag", does not alter the 

fundamental nature of the transaction. 11 Although not specifically citing section 66. of the AEA, the Depmtment used its AEA authority to accept roughly 

!9, 700 metric tons uranium (MTU) of depleted uranium tails as its cost share in a 2010 cooperative agreement with 

USEC to support the continued development and demonstration ofUSEC's American Centrifuge Technology. 

4 
62 


Insert offset folio 39 here 22126.039

could take title to DUF6. (This error by GAO also plays into its discussion of the compensation it 

believes the Department should have received, discussed in section E(2), irifhi.) The USEC 

Privatization Act, however, did not remove or repeal the Department's existing section 66. 

authorities to "purchase, take, requisition, condemn, or otherwise acquire" som·ce material, 

including DUF6. Section 3113 requires the Department to take title to and dispose of depleted 

uranium if a generator declares it low level waste and asks the Department, pursuant to section 

3113, to accept it for disposal. As such, section 3113 is not an authorization statute, and it is not 

a statutory direction that any depleted uranium accepted by the Depmiment from a generator is 

de facto low level waste. Instead, it functions as a guarantee, for generators, that the Department 

must, at a cost, accept its depleted uranium detenuined to be low level waste for disposal if the 

generator so chooses. Generators are not required to send depleted uranium detetmined to be low 

level waste to DOE for disposal; alternative disposal options are permissible. USEC did not 

invoke section 3113 in its proposal to the Department in the SWU procurement, and the 

Department relied on its section 66. authority to "take, requisition, condemn, or otherwise 

acquire" DUF6, not on its obligation under section 3113 to dispose of low level waste, if 

requested, for a generator. 

C. March 2013 LEU Transfer 

In March2013, the Department transferred the same LEU it had received as a result of its SWU 

procurement to USEC. In exchange, DOE rccei ved the feed component of the LEU back and 

applied the value of the SWU component of the LEU (which DOE and USEC agreed was 

approximately $44.4million) as patt of the government cost share of its June 2012 research, 

development, and demonstration (RD&D) cooperative agreement with USEC. 

1. Complia!1Ce with requirements of section 3112(d)(2)(A) 

Section 3112( d){2)(A) requires that for covered transfers, the President must determine that the 

uranium is not necessary for national security needs. 'l11e Department has historically treated 

material not included in the Nuclear Weapons Stockpile Plan, a memorandum signed by the 

President that identifies uranium necessary for defense needs, as having been determined by the 

President as not being necessary for national security needs. 

The GAO draft report posits that because the Nuclear Weapons Stockpile Plan, which is updated 

periodically, had not been updated since DOE added the LEU to its inventory after procuring the 

SWU from USEC, the Department could not rely on the Nuclear Weapons Stockpile Plan to 

satisfy t11e requirements of section 3112(d)(2)(A). 12 The GAO draft report further contends that 

the LEU must have been necessary for national security needs because DOE justified the 

procurement of the SWU13 as saying the resultant unobligated LEU was necessary for national 

security purposes and DOE has repeatedly linked the need for a domestic cnriclm1ent capability 

with national security purposes. 

"GAO draft report at 36-37. 13 The GAO draft report incorrectly analyzes this transaction saying the Depat1ment "acquired" the LEU. This 

underscores the rep01t's fundamental misunderstanding of the March 2012 transaction. GAO draft report at 86 (" ... 

when the department acquired this same LEU in March 2012 ... ").The Depattment did not acquire LEU, it 

procured SWU, which was applied to the feedstock provided by the Depattment, resulting in the LEU. 

5 
63 


Insert offset folio 40 here 22126.040

The Department's standard practice has always been that the last signed Nuclear Weapons 

Stockpile Plan is valid as a Presidential policy directive and is the standing authority until it has 

been replaced by an updated plan. The Nuclear Weapons Stockpile Plan in effect at the time of 

the transaction, dated July 2011, had not been updated. The fact that the LEU was obtained by 

DOE, and then transferred to USEC, after the date of the Plan does not undercut the 

Department's position: the absence of the LEU in the Plan in effect at the time of the transfer 

meets the requirement of section 3112(d)(2)(A). Second, the Secretarial Determination under 

section 3112(d) is a general statement indicating the material is excess and not needed now, and 

thus does not undem1ine the Nuclear Weapons Stockpile Plan. 

The Depattment did state in the Justification for Other Than Full and Open Competition for the 

SWU procurement that DOE needs unencumbered LEU for tritium production and defense 

purposes and that USEC was the only company that could provide enrichment services that were 

fi·ee from peaceful use assurances. 14 However, in the time between the March 2012 and June 

2012 transactions, the Department executed its agreements in the Depleted Uranium Enriclunent 

Project, a series of agreements that provided unobligated LEU for up to 15 years of tritium 

production and increased the quantity of US-origin LEU available for flag-swapping or origin 

exchanges. 

D. June 2012 Tails Acceptance 

In June 2012, the Department agreed to accept title to, and eventual disposal responsibility fm, a 

quantity ofDUF6 from USEC in exchange for an agreed upon value being applied as the 

govermnent cost share for a portion of the June 2012 RD&D Agreement. 

1. Autl1ority to Accept DUF6 

In its analysis of this transaction, the GAO draft report makes the same enurs as it did in 

analyzing the acceptance ofDUF6 by the Department in the March 2012 SWU procurement. The 

GAO draft report again contends that section 3113 of the USEC Privatization Act is the proper 

authorizing authority. The GAO draft report's interpretation of section 3113 as being the 

Department's sole authority to take title to DUF6 is incorrect, as discussed in section B(2), 

supra. 

E. Compensation Issues 

1. Compensation for Transfer of Depleted Uranium 

Section 63. of the AEA provides that for source material distributed to a commercial licensee, 

the Depatiment "shall make reasonable chm·ge determined pursuant to section 16lm."15 Section 

161m. provides that for sales, leases, or other transactions making source or special nuclear 

material available to licensees, the Department 

14 Justification for Other Than Full and Open Competition Procurement Request Number l2NEOOO 165 (February 7, 

2012). 

15 Section 63.(c) (42 U.S. C. 2093(c}). 

6 
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Insert offset folio 41 here 22126.041

shall establish prices to be paid by licensees for material or services to be 

furnished by the [Department] pursuant to this subsection, which prices shall be 

established on such a nondiscriminatory basis as, in the opinion of the 

[Department] will provide reasonable compensation to the Government for such 

material or services and will not discourage the development of sources of supply 

independent of the [Department].16 

The draft report then describes several ways in which it views the Department's transfer of 

DUF6 to ENW as failing to comply with these requirements. The Department addresses each of 

these issues below. 

a. The Department is not required to establish a monetary price fOr. source 

materifll 

The GAO draft report focuses on the language in section63.(c) that the Depru.tment "shall make 

a reasonable chru.·ge" for source material trru.1sferred to commercial licensees and contends that a 

"charge" requires a monetary price or fue. 

In focusing on just the definition of"charge" however, the GAO draft repmt ignores the 

remainder of the requirement of section 63.( c), which states that the Department must make a 

"reasonable charge determined pursuant to section 16lm." 17 Therefore, interpreting section 

63.(c) requires that section 161m. be examined. Section 161m. requires that the Department 

establish prices that "in the opinion of the [Department] will provide reasonable compensation to 

the Government ... " 18 

Charge is defined as "the price demanded for a thing or service. "'9 The first definition for price is 

"genuine and inherent value," which is followed by "the amount of money given or set as the 

amount to be given as consideration for the sale of a specified thing. "

20 Thus, in reading the 

relevant statutes regru.·ding the compensation the Department must receive for transfers or sales 

of source material, the Department must establish a "charge" or "price" -the value of 

consideration to be given- for the DUF6 that, in the Department's opinion provides "reasonable 

compensation" to the Depattment. 

The GAO draft repoit reads this to mea11 that the Depmtment must receive "reasonable 

compensation" from the price charged to the recipient, and contends that other factors may not 

be considered as contributing to the compensation considered by the Department This reads 

more into the statute than is written -the statue requires that the Department must establish a 

price that will provide reasonable compensation to the government for the material, not that the 

price must be a predetermined monetary value and the exclusive means of determining 

reasonable compensation to the govenunent for the material. Establish is defined as "to set or fix 

16 Section 161m. (42 U.S.C. 220l(m)). 17 Section 63.(c) (emphasis added). 18 Section l6Jg. (emphasis added). 19 WEBSTER'S T!IIRD INTERNATIONAL DICTIONARY OF THE ENGLISH LANGUAGE (UNABRIDGED) at 377. 

'"!d. at 1798. 

7 
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Insert offset folio 42 here 22126.042

after consideration."21 Thus, it is fuir for the Department to consider a transaction as a whole, 

consider the entirety of the benefits to the Department, and charge no monetary price and sti!l, in 

its opinion, receive reasonable compensation. 

b. The Department is nottequired to publish a pricing poli!;y_ 

The GAO draft report states that the Department's historical practice of"establishing prices" has 

been to set standard, monetary charges that it published in the Federal Register along with its 

prices for the provision of emichment service at the GDPs. The Federal Register notice GAO has 

located22 is from over thirty years ago. The notice updates prior notices on "charges and other 

information with respect to plutonium and uranium emiched in the isotope U-233" from as early 

as 1963.23 • 

In the formation ofUSEC as a government corporation in EPACT 1992, Congress established 

the corporation as the "exclusive marketing agent on behalf of the United States Government for 

entering into contracts for providing enriched uranium (including low-enriched uranium derived 

from highly enriched uranium) and uranium enrichment and related services." Along with this, in 

an effort to make the govemment corporation competitive in the commercial field, Congress 

provided that "[t]he Corporation shall establish prices for its products, materials, and services 

provided to customers other than the Department on a basis that will allow it to attain the normal 

business objectives of a profit making corporation."24 Accordingly, the government was no 

longer required to establish and publicize prices, which obviated the need for notices and pricing 

policies like those found in the 1982 Federal Register notice brought to DOE's attention. 

Thereafter, when USEC was privatized, the USEC Privatization Aet clarified that DOE could 

sell or transfer natmal and enriched uranium from its uranium inventories consistent with section 

3112 and its existing ABA authorities. No mention of publicized pricing was carried over into 

the new legislative framework. Accordingly, the 1982 notice found by GAO that preceded 

privatization by more than 15 years was part of a framework that is not applicable or existent 

today. DOE is permitted to sell uranium directly into the market in accordance with its applicable 

laws and regulations, and is not required to publish pricing policies in the Federal Register. 

c. The Department received reasonable compensation tor the DUF6 tnms[erred 

toENW 

The GAO draft report dismisses the intangible benefits and value the Department received under 

the Depleted Uranium Enrichment Project as comprising "reasonable compensation" based on its 

restrictive and incorrect reading of the requirements of sections 63. and 161m. of the AEA. As 

discussed above, sections 63. and 161m. require that the Department must, in its opinion, receive 

"reasonable compensation" for source or special nuclear material provided to commercial 

21 Id at 778. 22 47F;d, Reg. !7llO(April21, 1982) 23 28 Fed. Reg. 53!4 (May 28, 1963). The 1963 notice did not cover distribution to commercial licensees because no 

such licenses had been issued in 1963. 24 EPACT 1992 section !402. 

8 
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Insert offset folio 43 here 22126.043

licensees. Reasonable compensation is not defined in the AEA, and the Department has 

considered tangible and intangible benefits in assessing reasonable compensation. 

At the time of transfer, the Department considered the DUF6 transfened to ENW a liability with 

a negative value on the Department's books. The material was slated for processing at the 

Department's DUF6 conversion facility into a more stable form and for eventual disposal. 

Although the DUF6 had potential value, the value of the DUF6 outside of the Depleted Uranium 

Enrichment Project was not clear for several reasons. The DUF6 had value only if it was 

enriched, and the Department could not enrich the material because it did not have appropriated 

funds to enter into a contract for enrichment services. Nevertheless, the Department recognized 

that outside parties may contend that the DUF6 has potential value and the Department must be 

compensated for the potential value of the material. Based on the prices of natural uranium and 

the costs of the emichment services that would be required to enrich the DUF6 to natural 

uranium assays at the time of the transfer, the DUF6 was imputed to have a potential value of 

$300M.25 

ln the series of transactions in the Depleted Uranium Enrichment Project, several Departmental 

elements received a mm1ber of benefits that amounted to reasonable compensation. NNSA was 

projected to receive a benefit through the guaranteed source of unobligated LEU that will be 

used in the TVA reactors to produce sufficient quantities of tritium to supply the tritium program 

for up to 15 years. Although it was difficult to quantify the benefit to the Depattment of that 

assmed supply of LEU, this outcome serves important Departmental objectives: keeping the 

tritium supply at appropriate levels and avoiding the need to downblcnd HEU that is suitable for 

use in Naval Reactor programs. The Department projected that there could be savings for NNSA 

if the costs to produce tritium in TV A reactors using unobligated LEU purchased by TV A are 

less than the costs to downblend HEU. Down blending HEU removes it from the Depa1iment's 

stockpiles, and there is no cu!1'ent emichment capability that ean produce additional HEU should 

it be needed for Naval Reactor or other defense purposes. Preserving HEU inventory is thus 

extremely important to the Department. 

Finally, EM was projected to receive a benefit in deferred and avoided costs because the 

Depleted Uranium Enrichment Project kept the Paducah GDP operating for an additional year. 

The Depleted Uranium Enrichment Project - with transfers from the Department to ENW at the 

Paducah GDP beginning on May 15,2012- was anticipated to keep the GDP operating for 

approximately one year beyond when USEC has indicated it would shut the facility down. 

Surveillance and maintenance (S&M) activities would need to take place until the Department 

could begin cleanup and decontamination and decommissioning (D&D) services at the facility. 

Finally, EM also projected savings because the DUF6 it transferred was slated for conversion 

and disposal. EM took title to the secondary tails from the emiclunent process, but those tails are 

of a smaller quantity than the DUF6 being transferred to ENW. 

Although the Department has traditionally accepted "compensation" for nuclear material in the 

form of money or services that can have a monetary value attached to them, it is reasonable to 

view intangible benefits as compensation as well. In Regents of the University o.fCalifornia v. 

25 This value is arrived at by taking the value of natural uranium at the time of transfer and subtracting the costs of 

the enrichment services that would be needed to enrich the DUF6 to natural uranium assay levels. 

9 
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Insert offset folio 44 here 22126.044

Public Employment Relations Board, the Supreme Comt considered the "private hands 

exception" to the general statutory prohibition on entities other than the Postal Service conveying 

or transmitting letters along postal routes, which applies when the services are provided "without 

compensation." 26 In determining that direct monetary exchange was not necessary to establish 

compensation, the Court gave the term compensation "its normal meaning" and found that it 

"includes indirect as well as direct compensation. ,m The intangible beneilts in that case included 

the provision of a service that employees would otherwise pay for with union dues.28 The court 

further stated, "Common-law notions of consideration ... do not control the interpretation of this 

statute. Congress, after all, used the generic term 'compensation,' which can include less direct 

exchanges of benefits. "

29 

Other case law also demonstrates that intangible benefits can be considered compensation in 

many different kinds of circumstances. 30 Accordingly, the language in sections 53. and 161m. 

requiring "reasonable compensation" can include "less direet exchanges of benefits"31 like the 

intangible benefits the Department anticipated it would realize in this transaction. The intangible 

benefits to the tritium program, combined with the tangible projected savings to the tritium 

program, projected reduced rates for BPA ratepayers, and the deferred and avoided costs for EM, 

amounted to reasonable value for the DUF6 transferred to ENW. 

2. Compensation for Accepting Tail:~for Disposal of Depleted Uranium 

As discussed more fully in section B(3), supra, the GAO draft report incorrectly contends that 

the Department's sole authority for taking title to, and eventual disposal responsibility for, DUF6 

is section 3113 of the USEC Privatization Act. Based on its incorrect conclusion that the 

Department may only accept tails under section 3113, the GAO draft report contends that the 

Department may have been undereompensated because section 3113 requires the generator to 

reimburse the department for "for the disposal of depleted uranium pursuant to paragraph (1) in 

an amount equal to the [Department's J costs, including a pro rata share of any capital costs." 

This requirement was not applicable to the transactions in which the Department accepted title 

to, and eventual disposal responsibility for, DUF6 because the Department did not accept them 

pursuant to section 3113 of the USEC Privatization Act, but rather relied upon its section 66. 

authorities. 

26 485 u.s. 589, 597 (1988). 27 !d. at 598, 600. 

"!d. at 29 !d. at 600·601. 30 See, e.g., Clair Aero, Inc. v. Nat. Transp. Safety Board, 2007 WL 754789 (D.C. Cir. 2007) (NTSB precedent 

"establishes that the receipt of intangible benefits such as goodwill or the expectation of future economic benefits is 

compensation under the regulations"); Sec. and Exchange Comm. v. Yun, 148 F.Supp.2d 1287, 1291-92 (M.D. Fla. 

2001) (where defendant in insider trading scheme received intangible unjust enrichment, com1recognized that as 

sufficient receipt of profits to require defendant to disgorge profits); Leik v. Comm 'r of Intemal Revenue, 1948 WL 

7098 (U.S. Tax Ct. 1948) (where a contract for sale of tangible and intangible assets specifically lists only tangible 

assets, no need to compensate for intangible assets). 31 Regents of the University ofCalifomia, 485 U.S. at 601. 

10 
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Insert offset folio 45 here 22126.045

Even without this requirement, however, in both the SWU procurement and the June 2012 tails 

transaction, the Depru1ment conducted a thorough cost-benefit analysis to ensure that the 

transactions were favorable to the Department. 

F. Market Impact Analysis Thoroughness, Reliability, Publication 

I, The ERI Analyses Supported the Secretary's Related Determinations 

The GAO draft report criticizes the two ERI analyses the Deprutment commissioned that formed 

the bases of the May 2012 and June 2012 Secretarial Determinations. Although the GAO draft 

report does not explicitly say that it believes the Secretary's detenninations that the proposed 

transactions would not have an adverse material impact on the domestic uranium mining, 

conversion or elll'iclm1ent industry were improper, it does say that DOE "cannot be certain of the 

studies' conclusions,"32 and that casts doubt on the determinations. 

Section 3112( d)(2)(B)' s requirement that the Secretary determine that covered transactions will 

not have an adverse material impact on the domestic uranium mining, conversion, or emichment 

industry does not contain any language on how that obligation must be fulfilled or what the 

foundation of that determination must be. For most covered transactions, the Department has 

historically contracted with ERI for ERI to conduct and produce an independent assessment of 

the impact the proposed transfers will have on the specified industries. Su~ject matter experts 

within the Department then review the independent assessment and compare it to their own 

understanding of the uranium market and advise the Secretary on whether to make the 

determination of no adverse material impact The Secretary, relying on the totality of infonnation 

available to him or her, then makes that determination. The Department notes that although the 

ERI analyses may have contained conclusions, the determination of the impact of the covered 

transactions was not made by ERI, but instead was made by the Secretary. 

The GAO draft rep01t states that peer review or other methods of assessing ERI's methodology 

and assumptions were necessary for the studies to be sufficiently reliable for the Secretary to 

make the determinations. Nevertheless, GAO's own assessment of the ERI analyses folmd that 

they did not contain "significant flaws"33and that ERI's approach was "generally reasonable."34 

The GAO draft report notes that it believes ERI based its analyses on incomplete data because it 

did not include data that uranium producers do not reveal in filings with the Securities and 

Exchange Commission or other public forums. The GAO draft repott also contends that the ERI 

analyses did not account for the cumulative effects of the transfers or consider what the GAO 

considers "all relevant factors" that could affect prices.35 

The Department tasked ERI to provide an independent assessment of the impact of proposed 

transfers on the domestic uranium mining, conversion, and enrichment industry. The fact that 

expetis may disagree as to the factors or other information in an analysis does not necessarily 

mean the analysis is incorrect, however. The Depmiment is not convinced that the GAO draft 

32 GAO draft report at 50. 33 GAO draft report at 94. 

" GAO draft report at 95. 35 GAO draft report at 97. 

11 
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Insert offset folio 46 here 22126.046

report's cited flaws, which by the GAO draft report's own opinion are not "significant," call into 

question the information in the analyses or the validity of the Secretarial Determinations. That 

said, the Depatiment does take note of input it receives from industry and other sources 

regarding these analyses and adjusts its work scope ot· direction for ERI based upon reflected 

concerns. Thus, although the Department docs not believe that the ERI analyses were flawed or 

insufficient to form the bases for the Secretarial determinations, the Department will keep the 

GAO draft report's concerns in mind as it moves forward with future determinations. 

?. The Department Satisfied its "Information Quality Guidelines" in Reviewing the ERI 

Analvses 

The GAO draft report mentions the Depmiment's "Information Quality Guidelines"36 (DOE 

Guidelines) and states that the ERI analyses, which "could be seen as detailing influential 

financial information,"37 did not comply with these requirements. 

The DOE Guidelines apply to the distribution of information to the public initiated or sponsored 

by the Depatiment. The DOE Guidelines define "influential" information, when used in the 

context of scientific, financial or statistical information, to mean 

information (I) that is subject to embm·go until its dissemination by DOE or a 

DOE element. .. because of potential market effects [this provision applies to 

information disseminated by the Energy Information Administration); (2) that is 

the basis for a DOE action that may result in an annual effect on the economy of 

$100 million or more; or (3) that is designated by a DOE Element as 'influential'. 

In addition, the DOE Guidelines provide for pre-dissemination review procedures that require 

the Depm1ment, before disseminating information to the public, to "en sur[ e] that the information 

is consistent with the OMB and DOE Guidelines and that the information is of adequate quality 

for dissemination." For "influential" information, to the extent practicable, the DOE Guidelines 

state that the relevant DOE Element should provide for "higher level review of the originating 

oftice's conclusions." 

Assuming for purposes of this response that the ERI analyses constituted "influential" financial 

information, as suggested by the GAO, the Department provides for pre-dissemination review of 

analyses conducted by ERI (including those analyses described in the GAO draft repOti) as 

follows. Once DOE receives an analysis, conducted pursuant to a DOE-provided statement of 

work to analyze a prescribed transaction or set of transactions, Depatiment staff with subject 

matter expertise review the analysis for completeness and to determine if the analyses comport 

Vi>ith their understanding of the uranium, conversion and enrichment markets. The Department 

can provide additional comments or questions for portions of the repmi it would like clarified or 

fmiher explored. Depatiment staff then make a recommendation to the Secretary based on their 

understanding of the nuclear fuel markets, the ERI repmi and other pertinent data or information. 

36 Available at http://energy.gov/siteslprod/files/cioprQ_dl;:!ocuments/finalinfQ.g\l&lityguidelines030720 l Lllllf. 31 GAO draft report at 50, fn 85. 

12 
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Insert offset folio 47 here 22126.047

Going forward, the Department will continue to consider the applicability of the Information 

Quality Guidelines to independent analyses of the potential market impact of proposed 

transactions and, if it determines the Information Quality Guidelines apply to those analyses, it 

will take appropriate steps to ensure the Information Quality Guidelines are met. 

3. The Depatimen!'s Provision of Natural Uranium to USEC in the SWU Procurement 

did not Need to be Considered in Subsequent Market Impact Analyses 

As discussed in section B(l ), supra, the Depatiment's provision of natural uranium as feed in the 

S\:VU procurement was not a transfer or sale under section 3112 of the USEC Privatization Act. 

The GAO contends, however, that sect1on3112(d)(2)(B) requires that the department "account 

for Russian-origin uranium" in its market impact analyses. The statute requires that the 

Depatiment must take "into account the sales or uranium under the Russian HEU Agreement and 

the Suspension Agreement," neither of which apply to the provision of feedstock to USEC in the 

SWU procurement. It is also worth noting again that the uranium market, using the principles of 

fungibility upon which it is based, views the feedstock provided to USEC as being contained in 

the LEU the Department received as a result of the procurement. 

G. Apm·opriate Weight to be Given to GAO's Legal Analysis and Other Conclusions 

The GAO draft report hinges most of its criticisms of the Depatiment's transactions upon GAO's 

interpretation of applicable statutory provisions. Because of that, it is worth noting the 

appropriate weight that should be given to GAO's interpretation ofDOE's statutes and the 

deference that DOE's intetpretations arc due. The Supreme Court has consistently espoused the 

view that an agency interpretation is entitled to some degree of deference.38 The more deferential 

Chevron39 deference applies to adjudications, rulemakings, and certain other agency 

interpretations can-ying the force oflaw.40 However, as the Supreme Court reaffirmed in United 

States v. Mead Corp., even those agency interpretations that do not fall under the Chevron 

doctrine are still entitled to deference under Skidmore v. Swifl. 41 

In Skidmore, the Supreme Court recognized that where agency interpretations are· "based upon 

more specialized experience and broader investigations and information than is likely to come to 

a judge in a particular ease" they may "constitute a body of experience and informed judgment to 

38 See Cluysler v, Brown, 441 U.S. 281,315 (1979) ("[A] court is not required to give effect to an interpretative 

regulation. Varying degrees of deference are accorded to administrative interpretations, based on such factors as the 

timing and consistency of the agency's position, and the nature of its expertise." (quoting Bailer/on v. Francis, 432 

u.s. 416,424-25 (1977))). 39 Chevron U.S.A., Inc. v. Natural Res. Def Council, 467 U.S. 837 (I 984). 40 In United States v, Mead Corp., 533 U.S. 218 (2001), the majority held:"administrative implementation of a 

particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to 

the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference 

was promulgated in the exercise ofthat authority." 533 U.S. at 22~27. Bamharl v. Walton, 535 U.S. 212 (2002), 

articulated a slightly difterent standard for when interpretations should receive Chevron, rather than deference based 

on Skidmore v. Swif/, 323 U.S, 134 (!944), finding that "the interstitial nature of the legal question, the related 

expertise of the Agency, the impoliance of the question to administration of the statute, the complexity of that 

administration, and the carelhl consideration the Agency has given the question over a long period of time" may all 

indicate that an interpretation should get Chevron deference rather than Skidmore deference. 535 U.S. at 222, 41 323 u.s. 134 (1944). 

13 
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Insert offset folio 48 here 22126.048

which courts and litigants may properly resort for guidance."42 Skidmore held that in considering 

the weight to give an agency interpretation, a court should evaluate, "the thoroughness evident in 

its consideration, the validity of its reasoning, its consistency with earlier and later 

pronouncements, and all those factors which give it power to persuade, if lacking power to 

control. "

43 

In this case, as the agency that owns and transfers uranium, DOE has the "specialized 

experience" and broader information upon which a court could rely for guidance. DOE's 

interpretation of its authorities to transfer uranium and the requirements for those transfer have 

been visited on many prior occasions, which has resulted in thorough consideration based upon 

the history of transfers, the legal requirements for those transfers, and analysis of prior GAO 

reports. In looking at the "validity" of DOE's reasoning, a court should view DOE's position as a 

permissible interpretation of its transfer authorities. DOE's interpretation has many factors that 

should have power to persuade the comi, including DOE's history of uranium transfeTs and 

complying with the legal requirements for those transfers. This all suppotis the conclusion that 

the DOE's interpretation should be given considerable weight in any review. 

Finally, we note that that the opinions of GAO in the draft GAO report and in the pdor letter 

regarding depleted uranium transfers are not binding upon DOE. The GAO is an instrmnentality 

of the legislative branch that cannot exercise executive functions.44 Because "[i]nterpreting a law 

enacted bls Congress to implement the legislative mandate is the very essence of' execution' of 

the law," , whatever GAO's examination of these questions might reveal to those in the GAO or 

elsewhere would not be any soti of legally-authoritative "determination" of what the law actually 

is that bore on the transactions about which GAO wrote. 46 While DOE would carefully consider 

any legal analysis GAO might provide for its persuasive value in DOE's determination of the 

legal question addressed in considering a transaction, ultimately DOE is responsible for any 

dispositive legal examination of the issues presented. The Depat1ment has given careful and 

respectful consideration of the analysis and conclusion reached in the draft GAO repot1. 

Nevertheless, the Department adheres to its view that it was authorized to enter into the analyzed 

transactions and that it complied with all applicable legal requirements for those transactions. 

H. Factual Clarifications 

• On the cover page, the summary concludes with a statement regarding the Department's 

market impact analyses and states that they had conclusions of "no market impact." This 

is not what those studies concluded. Moreover, the studies presented information and the 

Secretaty makes the dete1mination, based on information in the studies and advice fi'Om 

42 !d. at 139-40. 43 ld. at 140. 44 Bowsher v. Synar, 478 U.S. 714,732 (1986). 45 /d. at 733. 

'

16 The Office of Legal Counsel in the Deparnnent of Justice has noted on several occasiOils that "Although the 

opinions and legal interpretations of the GAO and the Comptroller General often provide helpful guidance on 

appropriations matters and related issues, they are not binding upon departments, agencies, or· officers of the 

executive branch." Memorandum for Lois J. Schiffer, Assistant Attorney General, Environment and Natural 

Resources Division and for John D. Leshy, Solicitor, Department of the Interior, fi·om Todd David Peterson, Deputy 

Assistant Attorney General, Re: Administrative Settlement of Royalty Determinations at n. 7 (July 28, 1998). 

14 
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Insert offset folio 49 here 22126.049

Depat1mental program experts, that covered transfers will not have an adverse material 

impact on the domestic uranium mining, conversion, or enrichment industry. 

• Page 3, Footnote 9, the Portsmouth GDP produced HEU until 1992, not 1991. 

• Page 12, sidebar and text, both refer to tails as a "byproduct" of the enrichment process. 

The tails are not a byproduct, but rather a product of the enrichment process. The 

enrichment process creates two streams of product, emiched uranium and depleted 

uranium. Byproduct material is defined in section 11 e. of the AEA, and depleted uranium 

does not fit within this definition. 

• Page 14, Paragraph 1, third from last complete sentence reads: "For example, according 

to DOE, retention of the existing cleanup and decommissioning obligations was essential 

to provide a positive value to the government at privatization." This sentence is confusing 

as drafted. The GDP Lease obligates DOE to perform and pay fm cleanup work for 

contamination that occmTed prior to the lease. This is because the GDPs were operated 

by the Department for some time prior to the lease to the government corporation, and 

thus the Department agreed to be responsible for the cleanup of the pre-existing 

contamination. The Department is unclem· how this decision is interpreted as being 

"essential" to providing positive value to the government at privatization -the agreement 

pre-dated privatization, and the Department retained the obligation after privatization. 

• On page 25, the draft report states that "DOE decided that the tails had no value in this 

transaction, and therefore the transaction had no cost to the department." This is 

inco!Tect. In fact, DOE determined that the tails identified in this transfer would have an 

imputed value as a result of the transaction, corresponding to the difference between the 

value of the resultant LEU and the cost to enrich the tails. 

• Page 26 (Line 1): "Beginning in May 2012, DOE transferred 9,092 MTU of U.S. origin 

high-assay depleted uranium tails ... " DOE transferred 9,075 MTU of U.S. origin highassay depleted uranhnn tails. 

• Page 31, figure 5 says "DOE transferred 48 MTU of domestic LEU to USEC (equivalent 

to 409 MTU of natural uranium plus $44.4 million of enrichment services [SWUJ) 

credited toward DOE's commitment to support the RD&D agreement." It is unclear to 

DOE if this is a punctuation error or a drafting error (i.e., if the closing parentheses 

should be at the end of the sentence instead of where it is.) The sentence reads as if the 

entire value of the 48 MTU of LEU was credited to the RD&D Agreement, which it was 

not. Even if the punctuation were correct, however, the sentence still somewhat misstates 

the agreement. The enrichment services were also not applied as a portion of the 

government cost share; USEC and DOE agreed to a value for the SWU component of the 

LEU and that value was applied as a portion of the government cost share on the 

cooperative agreement. 

I. Errata Edits 

• Page 1, Paragraph 1, last sentence: There is a missing word. The sentence currently 

states, "Since then, shares ofUSEC been publicly traded on the New York Stock 

Exchange." Add the word "have" before "been." 

Page 10, first full paragraph, 2"d sentence: Insett "types of": "Uranium buyers, such as 

power utilities ... into nuclear fuel in two different types of markets." 

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Insert offset folio 50 here 22126.050

• Page 10, first fi.tll paragraph, 3'd sentence: Insert "or services": "In the "term" market, 

buyers contract with sellers for the delivery of a quantity of material or services over a 

period of years. 

• Page 54, line 21-22 states that USEC "is the only supplier of enrichment services that is 

not subject to obligations under certain international agreements." This should be updated 

to reflect that USEC is no longer supplying emichment services; therefore, it "was" the 

only supplier of emichment services not subject to peaceful use assurances. 

• On page 83, lines 9-I 0, the draft report states that "DOE agreed to accept title to, and 

eventual disposal responsibility for about 39,200 MTU ofUSEC's tails ... " DOE agreed 

to accept 39,200 MT ofDUF6not 39,200 MTU. 

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