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41–134 PDF 2008

S. HRG. 110–307

URANIUM ENRICHMENT FUND

HEARING

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

TO

RECEIVE TESTIMONY ON S. 2203, A BILL TO REAUTHORIZE THE URANIUM ENRICHMENT DECONTAMINATION AND DECOMMISSIONING 

FUND, AND FOR OTHER PURPOSES

November 15, 2007

(

Printed for the use of the 

Committee on Energy and Natural Resources 

(II)

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico, Chairman

DANIEL K. AKAKA, Hawaii 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

KEN SALAZAR, Colorado 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

JON TESTER, Montana 

PETE V. DOMENICI, New Mexico 

LARRY E. CRAIG, Idaho 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JIM DEMINT, South Carolina 

BOB CORKER, Tennessee 

JOHN BARRASSO, Wyoming 

JEFF SESSIONS, Alabama 

GORDON H. SMITH, Oregon 

JIM BUNNING, Kentucky 

MEL MARTINEZ, Florida

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

FRANK MACCHIAROLA, Republican Staff Director 

JUDITH K. PENSABENE, Republican Chief Counsel 

(III)

C O N T E N T S 

STATEMENTS 

Page

Bingaman, Hon. Jeff, U.S. Senator From New Mexico ........................................ 1

Brown, Hon. Sherrod, U.S. Senator From Ohio .................................................... 2

Bunning, Hon. Jim, U.S. Senator From Kentucky ............................................... 3

Domenici, Hon. Pete V., U.S. Senator From New Mexico .................................... 10

Fertel, Marvin S., Senior Vice President and Chief Nuclear Officer, Nuclear 

Energy Institute ................................................................................................... 21

Longenecker, John R., Longenecker & Associates, Inc., Las Vegas, NV ............ 32

Nazzaro, Robin M., Director, National Resources and Environment, Government Accountability Office .................................................................................. 12

Rispoli, James A., Assistant Secretary for Environmental Management, Department of Energy .............................................................................................. 4

Salazar, Hon. Ken, U.S. Senator From Colorado .................................................. 2

Warren, Wesley P., Director of Programs, Natural Resources Defense Council 25

APPENDIX 

Responses to additional questions .......................................................................... 45

(1)

URANIUM ENRICHMENT FUND 

THURSDAY, NOVEMBER 15, 2007

U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. 

The committee met, pursuant to notice, at 10:08 a.m. in room 

SD–366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 

chairman, presiding. 

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. 

SENATOR FROM NEW MEXICO 

The CHAIRMAN. Why don’t we go ahead and get started. As you 

might guess, this sort of bumping up against the end of this week 

a little bit, we’re going to have some people coming and going, including myself, here, as we proceed. 

But let me start, and make a few statements and then call on 

Senator Bunning for any comments he’s got, and then hear from 

our Assistant Secretary and then we’ll bring on the next panel, as 

well. 

The purpose of today’s hearing is to receive testimony on 

S. 2203, the Uranium Enrichment and Decontamination and Decommissioning Fund Reauthorization Act of 2007. 

We thank the witnesses for taking time from their schedules to 

be here. 

The bill that has been referred to the committee, proposes to reauthorize section 1802 of the Atomic Energy Act, more commonly 

known as the Uranium Enrichment and Decontamination and Decommissioning Fund. This was a bill enacted into law by the 1992 

Energy Policy Act. At The time that this section was enacted we 

were privatizing our government’s uranium enrichment facilities, 

which had entered into contracts with the utilities to enrich uranium for our light water reactors. This was in addition to producing enriched uranium for our nuclear weapons program. 

As part of that privatization, the Congress determined that the 

utilities should contribute an equitable amount toward the cleanup 

of these enrichment plants, prior to the date of privatization. The 

utilities’ share was determined to be $150 million annually for 15 

years, capped at $2.2 billion, with the government paying, on average, $30 million annually, to make an annual contribution of $480 

million. 

The Act’s authorization has expired, but the cleanup continues at 

the plant in Oak Ridge, Tennessee. It has not yet begun in earnest 

at the two other facilities in Paducah, Kentucky, and Portsmouth, 

Ohio. The Paducah plant is still operated by the United States EnVerDate 0ct 09 2002 12:47 Mar 11, 2008 Jkt 040443 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 G:\DOCS\41134.TXT SENERGY2 PsN: MONICA
2

richment Corporation, USEC, with operations ending in 2012. The 

Portsmouth plant is currently leased to USEC until 2009, where 

USEC is also building a new centrifuge facility. 

In a report to Congress, the Department of Energy notes the Fund has receipts of $9.2 billion, has spent $4.2 billion, and 

projects cleanup to extend to the year 2044 with an $11 billion 

shortfall. 

The bill before us today proposes to reauthorize the existing pro- gram for another 10 years, raising the annual cap to $700 million. 

It continues the $150 million annual assessment on the utilities, 

capped again at $2.2 billion, referenced from the date of the reauthorization. 

I look forward to hearing the views of all witnesses on the subject, and let me call on Senator Bunning for any comment he has. 

[The prepared statements of Senators Salazar and Brown follow:]

PREPARED STATEMENT OF HON. KEN SALAZAR, U.S. SENATOR FROM COLORADO

Thank you Mr. Chairman and Ranking Member Domenici for holding today’s 

hearing on the reauthorization of the Department of Energy’s Uranium Enrichment 

Decontamination and Decommissioning Fund. The D&D Fund is critical to the ongoing cleanup of several contaminated sites across the Nation, and today’s hearing is 

an important opportunity to assess the Fund’s framework. 

The legacy left by decades of uranium mining and enrichment activities has been 

a number of environmentally contaminated sites in need of remediation. The environmental damage wrought by uranium mining and enrichment is a burden that 

we still bear, and our shared duty to clean up these sites and repair the land has 

not yet been discharged. 

Fifteen years ago, Congress did the right thing by creating the D&D Fund. The 

sites and communities that mined and enriched uranium provided a crucial service 

to our military and our domestic nuclear utilities. Their product clearly had broad 

societal benefits. The Fund’s original principle that the cost of cleanup should be 

shared between the Government and the electric utilities was sound in 1992 and 

is sound today. 

My state of Colorado has benefited directly from the Fund. While the principal 

reason the Fund was created was to cleanup the three legacy uranium enrichment 

facilities in Tennessee, Kentucky and Ohio, cleanup of a number of uranium 

mines—including two in my state—has also been facilitated by the Fund. In fact, 

nearly $53 million has been provided by the fund to cleanup uranium mine tailings 

in two Colorado communities. 

By failing to reauthorize the Fund, we would jeopardize the continuation of these 

important environmental remediation projects. As stewards of our land, water, and 

air, we owe it to future generations to restore our environment where past acts of 

necessity have caused harm. The D&D Fund is a critical tool in minimizing the 

long-term environmental impacts of our past uranium production and enrichment 

efforts. We should act to ensure that the Fund provides sufficient resources to 

achieve these goals. 

I look forward to hearing from the members of our distinguished panel and discussing this important legislation. 

PREPARED STATEMENT OF HON. SHERROD BROWN, U.S. SENATOR FROM OHIO

Thank you Chairman Bingaman and members of the Committee. 

I appreciate the opportunity to submit testimony on behalf of the people of Pike 

County, Ohio and McCracken County, Kentucky, for whom a stable and fully-funded 

Decontamination and Decommissioning (D & D) Fund is critically important. 

We need to ensure we clean up our nuclear legacy sites and we need to do this 

as part of our future policy regarding nuclear energy. If we don’t clean up our nuclear waste, we can’t in good faith consider a future for nuclear energy in this country. 

In 1992, Congress created the D & D fund. The program was to clean up the old 

gaseous diffusion enrichment plants in Tennessee, Kentucky, and Ohio. The fund 

was designed as a partnership between the nuclear industry and the federal government. 

3

The commercial nuclear power industry has long benefited from its partnership 

with the federal government. The government transferred domestic nuclear technology it had invented to private companies for domestic electricity production. As 

part of this partnership, the nuclear industry has and continues to purchase enriched uranium from the old enrichment plants. 

After nearly 50 years of operation, these enrichment plants are some of the most 

contaminated areas in our country. Since Paducah and Piketon are both within the 

Ohio River Basin’s watershed, without the proper cleanup, contamination from 

these facilities could endanger the entire population from Cincinnati to New Orleans. The D & D fund has worked. But, as we all know, much more needs to be done. 

Decades of cleanup remain. 

We can debate the numbers and the amount of money it will cost to clean up the 

sites, but we all know that the current account of the fund is woefully short. After 

15 years, the D & D fund was supposed to expire. In those 15 years, we’ve learned 

that the cleanup is going to cost much more than originally thought. 

S. 2203, the Uranium Enrichment Decontamination and Decommissioning Fund 

Reauthorization Act of 2007, is a straight reauthorization. It simply extends the D 

& D hind for 10 more years. 

We know after these 10 years there still might not be enough money to complete 

the cleanup, but this is a fair amount of time to start the work and after a decade, 

we can better determine how to go forward. S. 2203 also calls for a study by DOE 

to look into how best to use the uranium tails at Piketon and Paducah for the benefit of the sites. 

This provision will permit all parties to come together and determine how best 

to use a federal government asset for the betterment of its people. 

For too long, policies have pitted the people of the Appalachian cities of Paducah 

and Piketon against one another. This has to end. This bill works with, rather than 

dictates to, the people of the enrichment communities. S. 2203 aims to bring everyone to the table to figure out how to go forward. 

These communities helped the United States win the Cold War and have supplied 

the commercial nuclear power industry for decades. We can’t turn out backs on 

them. 

The need for the D & D fund is just as great today as when it was created. S. 

2203 is a fair and forward looking bill that will help clean up our nuclear past. If 

we do not plan for this clean up in a responsible manner, that breach of trust will 

surely compromise support for nuclear power in the future. 

Thank you Mr. Chairman.

STATEMENT OF HON. JIM BUNNING, U.S. SENATOR

FROM KENTUCKY 

Senator BUNNING. Thank you, Mr. Chairman. I would like to 

thank the witnesses for appearing here this morning, to discuss 

this important issue. 

There are three plants, as the Chairman has said, one in Tennessee, one in Kentucky, and one in Ohio, that together allowed 

America to make rapid advancements in nuclear energy and weapon technology in the last century. 

These plants push the envelope, often without realizing the environmental and safety consequences. I have worked tirelessly to ensure that the uranium worker in Paducah, Kentucky, and the other 

two plants, receive the medical benefits they deserve for their services. 

I appreciate this committee’s help in the last few years, as we 

moved the Energy Employees Occupational Illness Compensation 

Program from the DOE to the DOL, and as I have worked for more 

funding for the Farmer Medical Workers Screening Program. 

We have a Federal obligation to these workers, and I am proud 

to work for their benefits in Congress. 

But today we will address—as the Senator from New Mexico has 

said—S.2203, the cleanup at the plants themselves. This has been 

a 15-year agreement, since 1992, on decontamination and decomVerDate 0ct 09 2002 12:47 Mar 11, 2008 Jkt 040443 PO 00000 Frm 00007 Fmt 6633 Sfmt 6602 G:\DOCS\41134.TXT SENERGY2 PsN: MONICA
4

missioning of these plants. As the GAO will tell us today, we have 

not had enough money in the D&D Fund to accomplish our goals. 

I would like to hear from the witnesses today about the Federal 

Government’s responsibility to clean up these three plants. The 

proposals for moving forward, and what Congress needs to do to 

ensure a fair outcome for the taxpayers, the communities, in particular, and the nuclear energy industry, also. 

I believe that we owe it to these communities—I can only talk 

to you about two, I have not been to the Tennessee plant, but I 

have been to the one in Portsmouth, and the one in Paducah numerous times—and the cleanup, as the Chairman said, is only occurring in Tennessee. We have some cleanup, but not the decontamination and decommissioning going forward at all, because 

they’re still producing enriched uranium at those two plants, one 

in Paducah and one in Portsmouth. 

I believe that we owe it to the communities, particularly, and the 

land that they sacrifice for our national security, and the nuclear 

energy industry. 

I look forward to the testimony today. Thank you very much, Mr. 

Chairman. 

The CHAIRMAN. Thank you very much. 

Let me see, Senator Domenici, did you wish to make a statement 

now, or to wait until after this witness? 

Senator DOMENICI. I’ll wait and when I make my first questions, 

I’ll do that. 

The CHAIRMAN. All right, very good. 

Our first witness is Assistant Secretary of the Department of Energy for Environmental Management, Mr. James Rispoli, and we 

very much appreciate you being here. Go right ahead. 

STATEMENT OF JAMES A. RISPOLI, ASSISTANT SECRETARY 

FOR ENVIRONMENTAL MANAGEMENT, DEPARTMENT OF ENERGY 

Mr. RISPOLI. Good morning, Mr. Chairman, Senator Domenici, 

Senator Bunning. It’s good to be here, I’m happy to be here to address questions and issues, regarding the Uranium Enrichment 

and Decontamination and Decommissioning Fund. I particularly 

want to thank you, Mr. Chairman for—and the committee—for 

your interest in the D&D of the Nation’s gaseous diffusion plants 

in Tennessee, in Kentucky and in Ohio. 

These three plants were used to support the production of nuclear materials for the Nation’s weapons program, and also, to support the commercial nuclear power industry, and are some of the 

largest buildings ever constructed. 

Since the establishment of the Fund, the Department has completed cleanup of three out the 12 very large, massive process 

buildings, 242 of 523 support facilities, and 116 of 231 planned environmental remedial action. As a direct result of past cleanup efforts, we have made significant headway at the first of the three 

gaseous diffusion plants. 

That is, the one in Tennessee at the East Tennessee Technology 

Park, formerly known as the K–25 plant, and of course it’s on the 

Oak Ridge reservation in Tennessee. The East Tennessee Technology Park’s five main processing buildings alone, covered 114 

5

acres. I would just interject that the other two plants are not quite 

as big, but they’re in the same range of size. The one in Tennessee 

is 114 acres under roof, in just the main process plants. 

To put that in perspective, that is bigger than all of Rocky Flats 

which, as you know, we had to D&D and clean up, and an older 

golf course, a regulation golf course, typically an older one would 

be about 100 acres. Today, if you build golf courses of that scale, 

they’re 80 to 120 acres. We have 114 acres under roof at ATTP. 

Very, very significant sized buildings. 

Much cleanup still must be performed at these gaseous diffusion 

plants. In order to sustain funding over the life cycle of this D&D 

and environmental remedial action, the Department of Energy is 

recommending that the Fund be reauthorized to allow the government to make up its contribution shortfall to the fund. 

These shortfalls date from the first 3 years of the fund. If the 

Congress reauthorizes the Fund to allow the government to complete its contribution obligation under the Energy Policy Act of 

1992, if we do that, then we project that the Fund will remain sufficient until approximately 2020. 

If you look in the report we’ve provided, there’s a base case, but 

again, the range is—we are quite sure it would be sufficient until 

2020. 

To complete all of the gaseous diffusion plant cleanup, our conclusion is that an additional $8 billion to $21 billion more will be 

needed. Our 2007 report to the Congress, as I mentioned, does 

present a base case, and calculates a shortfall of about $11 billion 

in current year dollars, to complete the gaseous diffusion plant 

cleanup activities. 

We also recommend that environmental remedial action activities, an integral part of the D&D work scope, continue to be funded 

from this Fund, to provide stability and consistency in the cleanup 

efforts. 

Thank you for allowing me this opportunity to testify. I would be 

pleased to take any questions at this time. 

[The prepared statement of Mr. Rispoli follows:]

PREPARED STATEMENT OF JAMES A. RISPOLI, ASSISTANT SECRETARY FOR

ENVIRONMENTAL MANAGEMENT, DEPARTMENT OF ENERGY

Good morning. My name is James Rispoli, Assistant Secretary for Environmental 

Management at the Department of Energy (DOE). I am pleased to be here today 

to answer your questions regarding the Uranium Enrichment Decontamination and 

Decommissioning (UED&D) Fund. Mr. Chairman, I want to thank you and the 

Committee for your interest in this complex and challenging program of decontaminating and decommissioning the Nation’s gaseous diffusion uranium enrichment 

plants—also called ‘‘GDPs’’—in Oak Ridge, Tennessee; Paducah, Kentucky and 

Piketon, Ohio. These three uranium isotope separation facilities were created in 

part to support the production of nuclear materials for the Nation’s weapons arsenal 

and are some of the largest buildings ever constructed. 

In 1992, the U.S. Congress enacted the Energy Policy Act of 1992 (EPAct 1992), 

which amended the Atomic Energy Act of 1954 and created the UED&D Fund. The 

primary purpose of the Fund is to provide resources for the cleanup liability of past 

uranium enrichment operations at the GDPs 1 through deposits from annual appropriations, domestic nuclear utility contributions, and accumulated interest. EPAct 

1992 provided that as long as sufficient funds remained, all costs for decontamination and decommissioning and environmental remedial action cleanup efforts of the 

Department shall be paid from the Fund until such time as the Secretary certifies 

and Congress concurs that such activities are completed. 

6

* Report has been retained in committee files. 

Much work remains to complete this important program. The task of completing 

decontamination, decommissioning and environmental remedial action projects involves the planning and execution of large projects. These facilities are contaminated with a mixture of industrial, chemical, special nuclear and radiological materials. Since the establishment of the Fund, the Department has completed cleanup 

of three out of the 12 massive process buildings, 242 of 523 support facilities, 116 

of 231 planned environmental remedial actions, and disposal of 12.8 million cubic 

feet of the expected 46 million cubic feet of waste materials. As a direct result of 

past cleanup efforts, we are nearing the completion of cleanup at the first of the 

three GDPs, namely, the East Tennessee Technology Park (ETTP), formally known 

as the K-25 Plant, in Oak Ridge, Tennessee. The ETTP’s five main process buildings 

alone covered 114 acres. Our current projection to 2 complete the cleanup of this 

site is 2012. Detailed progress for each site is contained within DOE’s fifth Triennial 

Uranium Enrichment Decontamination and Decommissioning Report (fifth Triennial 

Report),* which the Department recently provided to Congress. 

A major benefit of the work completed at ETTP and the other plant sites is the 

accumulation of project experience upon which to base a more accurate cost estimate 

for the remaining work. In order to provide the Congress with this information, the 

Department has recently completed an extensive revision of the previously reported 

cost estimates including independent cost estimates for the Portsmouth and Paducah Plants by the U.S. Army Corps of Engineers. The results of this revised estimate are captured in a ‘‘Base Case’’ to illustrate a projected cost estimate and several sensitivity cases. The Base and sensitivity cases address a range of economic 

factors, scope, and schedule assumptions. Utilizing this recent information, the 

‘‘Base Case’’ and sensitivity case options became the cornerstone of the Fund analysis provided in the fifth Triennial Report. Our conclusion is that the UED&D Fund 

would need, in addition to the current balance of $4.1 billion, between $8 billion to 

$21 billion more to complete the GDP cleanup activities, with $11 billion estimated 

under the Base Case. All estimates assume that the 3 Government will make up 

its contribution shortfalls which occurred when the Department did not deposit its 

full obligations during the first three years of the UED&D Fund. 

Significant cleanup activities remain to be performed at the GDPs. In order to 

sustain funding over the life-cycle of these D&D and environmental remedial action 

projects, DOE is recommending that the UED&D Fund be reauthorized to allow the 

Government to make up its contribution shortfalls to the Fund. If the Congress reauthorizes the Fund to allow the Government to complete its obligation under 

EPAct 1992, we project the Fund will remain sufficient until approximately the 

2020 timeframe. We also recommend that environmental remedial action activities, 

as an integral part of the D&D workscope, continue to be funded from the UED&D 

Fund. The Department recognizes that there are a range of options available to address the projected shortfall in the Fund: Government only contributions, both Government and nuclear utility contributions, direct appropriations, or some combination of these options. One of these options will be needed to provide funding to complete the cleanup at the three GDP sites. As required by EPAct 1992, the Secretary 

of Energy was directed to collect special assessments from domestic utilities that 

benefited from the uranium 4 enrichment operations. The assessments were based 

upon a ratio of each utility’s share of material purchased from the government resulting in a total annual assessment of $150 million, adjusted for inflation, for the 

15 years. In FY 2007, the domestic nuclear utilities completed their 15-year assessment obligation as enacted in EPAct 1992. 

DOE continues to focus on the recommendations from the GAO and the Congress 

to improve our cost estimates, schedules and plans for the GDPs. We continue to 

seek disposal alternatives and recycling opportunities with our stakeholders to reduce cost and shorten cleanup schedules. Our most recent initiatives include a business strategy to develop a competitive procurement for the cleanup of the Portsmouth facilities. We are leaning heavily on our lessons learned from projects at 

ETTP and other decontamination projects with a history of waste minimization. We 

look forward to continued discussions with the Congress as new opportunities are 

realized, and as our GDP cleanup projects progress. 

Thank you for allowing me this opportunity to testify before your Committee. This 

completes my formal statement. At this time, I would be pleased to answer any 

questions.

The CHAIRMAN. All right, let me start and ask a few questions 

here. 

7

Let me just clarify, as I understand your testimony, the Department is not in favor of the reauthorization of this provision of law, 

is that right? Or is it in favor? 

Mr. RISPOLI. Mr. Chairman, the Department recommends that 

the law be reauthorized to permit the government to make up its 

shortfall in its contribution that dates back to the first several 

years of the Fund’s establishment back in the early 1990s. So, we 

do request—and have requested in writing—that the Act be reauthorized to permit us to do that. Now, to put that in perspective, we have a shortfall of about $1.8 

billion, including the interest that would have accrued on this, had 

the money been in since the days it should have been. We’ve been 

putting in $450 million a year, roughly, so we would like to restore 

the $1.8 million contribution, as we calculate it would be necessary 

to make the government’s contribution whole and current. 

The CHAIRMAN. You believe you have to have additional legal authority to do that? 

Mr. RISPOLI. As we understand the law, Mr. Chairman, we have 

the authority to keep withdrawing from the Fund, we don’t have 

the authority to deposit to the Fund. The authorization has expired. So, we would request the reauthorization for several years 

to be able to contribute the overdue, the government share that 

was not put in back in the early 1990s. 

The CHAIRMAN. Your view is that industry should not have to 

contribute any additional funds. 

Mr. RISPOLI. At that point in time we have not taken a position 

either that industry should, or should not, contribute. We are asking, however, that the Fund be reauthorized to permit us to make 

up, as I stated, that government contribution. 

The CHAIRMAN. I think a key part of what this committee is 

going to have to decide if we vote on this legislation, is whether we 

believe that the law should direct that industry continue contributing. But you take no position on that? 

Mr. RISPOLI. That is correct at that time, Mr. Chairman. 

I might add that we have done early analysis, we understand 

that there are pluses and minuses to any option that we take. The 

options, of course, would be the government contributes alone—

only the government contributes in the future. Another would be 

that both the government and industry contribute. A third might 

be that, after the government makes up its overdue payment, that 

the Fund would not be reauthorized, and we would pay from annual appropriations. 

We like the Fund, because it gives us the stability to foresee how 

much is there, we know that we can afford to do the work that has 

to be done with minimal impact to the actual progress of the work. 

But clearly there are options we need to evaluate. We would like 

to dialog with Members of Congress, with this committee, other interested committees, stakeholders, before we make a recommendation as to whether or not industry should contribute, or in fact, 

which of those options, or any others, that might be presented 

would be the best option. 

The CHAIRMAN. Am I right in the information that I have here 

that the cleanup of these three plants is expected to continue until 

2044, is that your estimate? 

8

Mr. RISPOLI. Yes, Mr. Chairman, that is correct. 

The CHAIRMAN. Let me just have you repeat again how much of 

a shortfall you see in the funding. I mean, if we go ahead and contribute the $1.8 billion that you 

have indicated you would like authority to contribute, there is still 

a substantial shortfall projected, as I understand it, between what 

would, has been raised, or is authorized to be raised, and how 

much it will cost to do these cleanups. Do you know what that figure is, again? 

Mr. RISPOLI. Yes, Mr. Chairman, we’ve spent a good amount of 

effort—as you might know—we had the U.S. Army Corps of Engineers review all of the estimates we have. They did the review in 

late 2006, so that now we have a much higher degree of confidence. 

I might state that ever since the day the Fund was established, 

both we and the GAO have recognized that the Fund would not be 

sufficient with the 15-year authorization for contributions when it 

was set up. So, that’s not a surprise, that the Fund is not sufficient. 

To more directly answer your question, after the Army Corps of 

Engineers did their review, they looked at several cases. The base 

case that I will refer to you is that the Fund will be deficit by about 

$11 billion. 

Now, on page 34 of the report, for your future reference, is a simplified table that shows different scenarios, where the range would 

go from being short about $11 billion, the low point is being short 

about $8.2 billion, but the high point would go all the way to about 

$21 billion. 

So, there is still a range, but the base case would represent about $11 billion shortfall. 

The CHAIRMAN. All right, let me defer to Senator Domenici or 

Senator Bunning. I’m going to have to run to another meeting, and 

so I’ll just ask Senator Domenici or Senator Bunning to conduct the 

hearing until I’m able to return. 

Thank you. 

Senator DOMENICI. How long will you be, Mr. Chairman? 

The CHAIRMAN. Maybe a half hour. 

Senator DOMENICI. We’ll make it. 

The CHAIRMAN. If you’re not able to——

Senator BUNNING. We’ll make it. 

The CHAIRMAN. You guys can handle it until then, and we’re told 

Senator Tester is coming to ask some questions and to participate, 

too. So, he can participate. 

Senator BUNNING [presiding]. Mr. Secretary, you testified based 

on the updated DOE projection, that the shortfall will be anywhere 

between $8 and $21 billion. 

You also, if I heard your earlier testimony right, said that there 

is a surplus in the Fund presently, that we haven’t spent out all 

that is in the Fund, is that incorrect or correct? 

Mr. RISPOLI. Senator, that is correct. The balance as of today is somewhere close to $4 billion. 

Senator BUNNING. You need us to act so that you can spend out $1.8 billion that you think the Federal Government ought to make 

up the shortfall that they fell in the first 2 or 3 years of the program? 

9

Mr. RISPOLI. Senator——

Senator BUNNING. That’s all been done at Tennessee, though, 

hasn’t it? All of the decommissioning and the things that are in 

this bill? 

Mr. RISPOLI. The bulk of the work to this date was, in fact, done 

in Tennessee. Small amounts of work are being, and have been 

done in Portsmouth and Paducah. There actually is—in the report, 

at page, it’s in Tab B, there’s a separate sheet for Tennessee, 

there’s a separate sheet for Portsmouth, Ohio, an actual piped-in 

plant, and there’s also a separate sheet for Paducah that shows, by 

year, what the funding plans are, for funding the work on——

Senator BUNNING. I’ve seen the remediation and the changes 

made in Paducah, in person, on the scrap heap and all of those 

kind of things that have been done. But, they’re still producing uranium at Paducah. So, therefore you’re not going to decommission 

the plant until they stop producing it. That’s supposed to be about 

2012. Or thereabouts, depending on what USEC does in Portsmouth with their new projected plant, if they do actually build 

their new projected plant in Portsmouth. 

My question to you is, why shouldn’t the nuclear power energy 

people that are using a product that’s being produced at Paducah, 

the enriched uranium, at their power plants, help defer the costs 

of cleaning up those power plants? 

Mr. RISPOLI. Senator, I do understand your question, I will indicate to you that the Department is looking at that, we’re in fact 

looking for views from Senators and Members of Congress on 

whether or not industry should contribute, whether the government should do all future contributions, how to fund the balance 

of the cleanup. We’d like to also have dialog with stakeholders. 

I think, again, there are pros and cons either way, as to whether 

or not industry should continue to contribute, but we have not 

made a determination, or a recommendation. 

Senator BUNNING. But we’re talking about a bill, presently. 

S.2203, that indicates that we think, as a committee, the stakeholders are those who use the products that are produced, should 

have a stake in cleaning up the area that is producing that uranium. That’s what we’re asking for information from you about. 

We think that there’s a stake in the power industry—particularly 

our nuclear power industry—it isn’t a big burden on those who use 

it, but it’s a portion of the overall D&D commissioning, decommissioning, that we think would help meet that shortfall in the out 

years. Particularly, when you’re talking about going to 2020, and 

knowing full-well that we’re going to 2044. There’s going to be a 

time that the Federal Government’s going to have a responsibility, 

and we’d like someone else—if they’re using that enriched uranium 

to make energy, and they sell it to the public, they ought to be able 

to help us pay for the cleanup. 

Mr. RISPOLI. Yes, Senator. I understand that position, and we at 

the Department understand that position. 

Senator BUNNING. You just don’t have a position on that. 

Mr. RISPOLI. We just don’t have a recommendation to the Congress as to which way to go. 

What we have asked by letter and in our testimony is that this 

Act be reauthorized, so that we can make up the contributions that 

10

the government owes, and if it were, say, reauthorized for 3 or 4 

years, we would be able to get to you a recommendation, after we 

consult with you, and other Senators and Congressmen and the industry as to a—as a departmental and a——

Senator BUNNING. Then, you’d rather have a short-term, rather 

than a long-term reauthorization. 

Mr. RISPOLI. At the present time, that’s what we have asked for, 

yes sir. 

Senator BUNNING. The bill that we’re considering is a 10-year 

program. 

Mr. RISPOLI. I understand that, that’s right. 

Senator BUNNING. OK, I’ve already gone over my time. 

Senator TESTER [presiding]. Senator Domenici. 

Senator DOMENICI. Thank you very much, Mr. Chairman. 

I arrived late and did not have any opening remarks, and I was 

going to give them just before my questions, that was what we arranged, and I’m going to do that, it’s very brief. 

Senator TESTER. That’s fine. 

STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM 

NEW MEXICO 

Senator DOMENICI. Welcome to all of the witnesses, I hope we 

won’t keep you long. I’m pleased that Senator Bingaman scheduled 

this hearing, to examine the uranium enrichment D&D fund and 

possible need to reauthorize payments into the Fund. 

That said, we have not had a hearing on this program since we 

created the Fund in the Energy Policy Act of 1992, 15 years ago. 

We know very little about the operation of the Fund; you know a 

lot. We know very little about the Department of Energy’s use of 

the moneys thus far, or the future cleanup plans. 

It is somewhat strange to me, why the committee has rushed to 

legislative hearings on S. 2203, that would simply increase annual 

deposits and extend the Fund for 10 years. This seems premature, 

and it would seem that we need to know an awful lot more. It’s 

very complex. It’s not as simple as just saying, let’s redo it. Fifteen 

years has seen dramatic change in this industry, in decontamination and the way we do it. 

There have been tremendous changes, as I indicated, in 15 years, 

and all of the circumstances surrounding the former DOE enrichment enterprise, its utility customers, the clean up technology, and 

a host of other variables that I’m sure will affect our decision on 

reauthorization and the details of any legislation. 

With that in mind, for myself, I intend to proceed very thoughtfully and carefully to examine all of the issues related to reauthorization of the Fund, and the options that might be available. Hopefully, today’s hearing will be a first good step in getting us, and 

others, current in a way that will be understandable and useable 

by Congress, and as we look forward to extension of the Fund 

through authorization, it is my hope that we will also look at other 

issues that surround this complex matter. 

There are others besides just reauthorizing this fund, are there 

not, Secretary Rispoli? 

Mr. RISPOLI. Senator Domenici, I believe we in the Department 

would fully endorse your statement. We realize this is, on the surVerDate 0ct 09 2002 12:47 Mar 11, 2008 Jkt 040443 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 G:\DOCS\41134.TXT SENERGY2 PsN: MONICA
11

face might be a simple question, like does a utility contribute or 

not, and for how long? But we recognize that all—it’s part of a 

much more complex overall issues, and that is why the Department 

would like to take the time to study the options, discuss the options 

with the stakeholders, prior to making a recommendation to the 

Congress, and that is why we’ve asked for a relatively short-term 

reauthorization to deposit to the fund, so the government can restore its share while we dialog on those other issues that are all 

interrelated. 

Senator DOMENICI. I just wanted to say to the members, and put 

on the record before I yield back to the Chairman two things, very 

briefly. 

You know, we’ve been using a formula for the low-level radiation—I think you’re aware of the very big dispute that exists as 

to whether the formula that we’ve used in the past properly determines the negative effect of low-level radiation. 

That’s very important, what you use as the standard, because 

that determines how much it will cost to clean up. In some instances, when you’re using the dosage concern that is out there, 

you spend great deals of money just moving earth around, just to 

make sure that you put enough on there, tons and tons, so that the 

low-level radiation is measured right at the surface. 

I understand the Department, under a mandate from this committee from 3 or 4 years ago—5 years, 6 years, 7 years ago—is in 

the process of analyzing that standard, that has been in the law 

and very questioned by many. If that’s solved, while you’re busy 

doing this cleanup, it would cause a real change in the cost, as you 

well know. As it’s doing for many sites. 

I also note, with reference to the industry that in the bill that 

we passed—the Energy Policy Act in 1992, we indicated that the 

total contribution, or the collection of $2.25 billion to be annually 

adjusted for inflation using the consumer price index, et cetera, 

was the amount that was to be paid in, and that was all. So we 

are taking a giant step if we decide that that’s not right any longer 

and we’ve got to have more. 

We’ve got to also know what we’re doing, and I, for one, think 

that this is going to be a very big, long-term cleanup job. I would 

hope that if we’re going to do this legislatively we do it in as simple 

a form as we can, using the intervening time to really push and 

insist that the plans be done in a most modern way, and that we 

understand what’s going on. Otherwise, we’ll end up with an openended obligation, where we’ll be paying through the nose forever, 

if we’re not careful. It will be much more expensive than it would 

have to be. 

I have a number of questions; I’ll submit them in writing. Answer them as soon as you can. 

Thanks for the work you do. You’ve done a good job in a very 

tough office. 

[The prepared statement of Senator Domenici follows:]

PREPARED STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM

NEW MEXICO

Good morning, and welcome to all of our witnesses. I am pleased that Senator 

Bingaman scheduled this hearing to examine the Uranium Enrichment D&D Fund 

and the possible need to reauthorize payments into the Fund. That said, we have 

12

not had a hearing on this program since we created the Fund in the Energy Policy 

Act of 1992 fifteen years ago. We know very little about the operation of the Fund, 

the Department of Energy’s use of the monies thus far, or their future cleanup 

plans. It is somewhat perplexing to me, then, why the Committee has rushed to a 

legislative hearing on S. 2203 that would simply increase annual deposits and extend the Fund for ten years. This seems premature, at best, to me. 

There have been tremendous changes in the past fifteen years in all of the circumstances surrounding the former DOE enrichment enterprise, its utility customers, cleanup technologies and plans, and a host of other variables that I am sure 

will affect our decision on reauthorization and the details of any legislation. With 

this in mind, I intend to proceed very thoughtfully and carefully to examine all of 

the issues related to reauthorization of the Fund and the legislative options that 

might be available. Hopefully, today’s hearing will be a good first step in that process. 

I look forward to the witnesses’ testimony.

Mr. RISPOLI. Thank you, Senator. Thank you very much. 

Senator TESTER. Senator Bunning, did you have any further 

questions you wanted to ask? 

Senator BUNNING. Not for this witness, for the next witnesses. 

Senator TESTER. With that, thank you very much, Assistant Secretary, and we’ll bring up the next panel. 

The next panel consists of Robin Nazzaro, Director of Natural 

Resources and Environment, the Government Accountability Office. 

Marv Fertel of the Nuclear Energy Institute here in Washington, 

D.C. 

Wesley Warren, Natural Resources Defense Council, here in 

Washington, D.C. 

John Longenecker, Longenecker and Associates, Las Vegas, Nevada. 

Welcome, gentlemen. 

Welcome, Robin, we’re going to start with your testimony. I appreciate you all being here this morning. We will go with 5 minutes, if you can make your comments concise to 5 minutes, it would 

be much appreciated. 

Go ahead, thank you. 

STATEMENT OF ROBIN M. NAZZARO, DIRECTOR, NATIONAL 

RESOURCES AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. NAZZARO. Thank you, Mr. Chairman and members of the 

committee. I’m pleased to be here today to discuss the sufficiency 

of the Uranium Enrichment Decontamination and Decommissioning Fund. 

As was discussed today, the Fund was established in 1992 as the 

government’s principal source of funding for the decontamination 

and decommissioning of the Department of Energy’s three uranium 

enrichment plants, located near Oak Ridge, Tennessee; Portsmouth, Ohio; and Paducah, Kentucky. The cleanup of these plants 

will cost billions of dollars and could span several decades. Fund 

revenues come from Federal Government appropriations and an assessment on domestic utilities which as been, for the past 15 years, 

and scheduled to end in 2007. 

In 2004, we reported on the extent to which the Fund is sufficient to cover authorized activities. Because we found that the 

Fund would likely be insufficient, we recommended that Congress 

consider reauthorizing the Fund for three more years, to 2010, and 

13

require DOE to assess the sufficiency of the Fund before it expired, 

to determine if extensions beyond 2010 would be necessary. 

Additionally, to reduce uncertainty regarding the sufficiency of 

the Fund, we recommended that the Secretary of Energy develop 

decontamination and decommissioning plans for the Portsmouth 

and Paducah plants that would identify the most probable time 

frames and costs for completing the cleanup work. 

My testimony today summarizes the findings from our 2004 report regarding the extent to which the Fund will be sufficient to 

cover authorized activities, and an update on DOE’s progress in developing decontamination and decommissioning plans at the Portsmouth and Paducah plants. 

In summary, the Fund will be insufficient to cover all of its authorized activities. Using DOE’s estimates for the cleanup costs at 

the three plants, and current and likely revenue projections, GAO 

developed a number of simulation models that factored in annual 

cost and revenue projections, and uncertainties surrounding inflation rates, costs, revenues and the timing of the final cleanup work 

at the plants. Specifically, our baseline model showed that by 2044, 

which was the most likely timeframe for completing all cleanup activities at the plants, cleanup costs will have exceeded revenues by 

between $3.8 billion to $6.2 billion, in 2007 dollars. 

Irrespective of which model we used, we found that the fund 

would be insufficient. Each of the alternative models, including accelerated time frames, deferred timeframes and baseline timeframes with additional revenues from government contributions as 

authorized under current law, demonstrated that the cleanup costs 

would exceed revenues. 

Uncertainty over the extent of the Fund’s sufficiency remains because DOE had at the time, not issued plans that identified the 

most probable timeframes and costs for the decontamination and 

decommissioning of the Portsmouth and Paducah plants. In 2004, 

DOE began developing a report to Congress containing such information, but because DOE was in the process of significantly revising its cost estimates, it determined the report would not be accurate, and it did not finalize it. According to DOE officials, the Department is now in the process of finalizing a report that contains 

new schedule and cost information for both plants and addresses 

the sufficiency of the Fund. However, DOE did not make that information available to GAO and, therefore, we are unable to assess 

how any new schedule or cost estimates may affect the Fund’s sufficiency. 

In closing, we believe that an extension to the Fund may be necessary to cover the cleanup costs at the Nation’s three uranium enrichment plants. The information currently available on the projected costs and revenues authorized by the Fund suggest that the 

Fund will be insufficient by up to several billion dollars. DOE appears to be taking steps to develop more detailed timeframes and 

costs estimates for the decontamination and decommissioning of 

the uranium enrichment plants. In the meantime, unless the Fund 

is extended beyond its current expiration in 2007, cleanup activities could not be paid for from the Fund due to a shortfall may 

have to be financed entirely by the Federal Government and could 

14

1 All further references to the Energy Policy Act refer to the Energy Policy Act, as amended. 

add an additional fiscal burden at a time when our government is 

already facing significant long-term fiscal challenges. 

Mr. Chairman, this completes my prepared statement. I’d be 

happy to respond to any questions that you or members of the committee might have at this time. 

[The prepared statement of Ms. Nazzaro follows:]

PREPARED STATEMENT OF ROBIN M. NAZZARO, DIRECTOR NATURAL RESOURCES AND

ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE

WHY GAO DID THIS STUDY

Cleaning up the nation’s three uranium enrichment plants will cost billions of dollars and could span decades. These plants—located near Oak Ridge, Tenn.; Paducah, Ky.; and Portsmouth, Ohio—are contaminated with radioactive and hazardous 

materials. In 1992, the Energy Policy Act created the Uranium Enrichment Decontamination and Decommissioning Fund (Fund) to pay for plant cleanup. Fund revenues come from an assessment on domestic utilities and federal government appropriations. 

In 2004, GAO reported on the Fund’s sufficiency to cover authorized activities. 

GAO recommended that Congress consider reauthorizing the Fund for 3 more years, 

to 2010, and require the Department of Energy (DOE) to reassess the Fund’s sufficiency before it expired to determine if further extensions were needed. Because decisions not yet made by DOE could affect the cost of cleanup and the Fund’s sufficiency, GAO also recommended that DOE develop decontamination and decommissioning plans for the Paducah and Portsmouth plants that would identify the most 

probable time frames and costs for completing the cleanup work. 

This testimony is based on GAO’s 2004 report. It summarizes the extent to which 

the Fund may be sufficient to cover authorized activities and the status of DOE’s 

progress in developing decontamination and decommissioning plans for the Paducah 

and Portsmouth plants. 

WHAT GAO FOUND

GAO’s analysis showed that the Fund will be insufficient to cover all authorized 

activities. Using DOE’s estimates for the cleanup costs at the three plants and current and likely revenue projections, GAO developed a number of simulation models 

that factored in annual cost and revenue projections and uncertainties surrounding 

inflation rates, costs, revenues, and the timing of the final cleanup work at the Paducah and Portsmouth plants. Specifically, GAO’s baseline model demonstrated that 

by 2044, the most likely date for completing all cleanup activities at the plants, 

cleanup costs will have exceeded revenues by $3.8 billion to $6.2 billion (in 2007 dollars). Importantly, GAO found that the Fund would be insufficient irrespective of 

which estimates were used or what time frames were assumed. 

DOE has not yet issued plans for the decontamination and decommissioning of 

the Paducah and Portsmouth plants as GAO recommended. According to DOE officials, the department is developing a report to Congress that will contain updated 

information for both plants. DOE did not make that information available to GAO, 

however, and hence GAO was unable to assess how any new schedule or cost estimates may affect the Fund’s sufficiency. Until DOE issues plans that provide the 

most probable time frames and costs for completing decontamination and decommissioning at the Paducah and Portsmouth plants, it is not possible to more precisely 

determine the total funding needed to cover the authorized cleanup activities. 

Mr. Chairman and Members of the Committee: Thank you for the opportunity to 

discuss our work on the sufficiency of the Uranium Enrichment Decontamination 

and Decommissioning Fund (Fund) as you consider its reauthorization. As you 

know, the 1992 Energy Policy Act, as amended,1 established the Fund and authorized contributions for 15 years (ending in 2007) to be made by federal government 

appropriations and payments from domestic utility companies. The Fund is the government’s principal source of funding for the decontamination and decommissioning 

of the Department of Energy’s (DOE) three uranium enrichment plants, located near 

Oak Ridge, Tennessee; Paducah, Kentucky; and Portsmouth, Ohio. These plants, 

which encompass more than 30 million square feet of floor space, miles of interconnecting pipes, and thousands of acres of land, are contaminated with radioactive 

and hazardous materials. The cleanup of these plants—the responsibility of DOE’s 

15

2GAO, Uranium Enrichment: Decontamination and Decommissioning Fund Is Insufficient to 

Cover Cleanup Costs, GAO-04-692 (Washington, D.C.: July 2, 2004). 

Office of Environmental Management—will cost billions of dollars and could span 

several decades. Cleanup activities include assessing, treating, and disposing of the 

contamination found at the plants and the decontamination and decommissioning 

of inactive facilities. DOE conducts its cleanup activities under the requirements of 

several federal environmental laws and compliance agreements with relevant regulatory authorities, including the Environmental Protection Agency and state regulatory agencies. 

In 2004, we reported on actions DOE had taken to reduce the cleanup costs the 

Fund is authorized to support and the extent to which the Fund is sufficient to 

cover authorized activities.2 Because we found that the Fund would likely be insufficient, we recommended that Congress consider reauthorizing the Fund for an additional 3 years, to 2010, and require DOE to reassess the Fund’s sufficiency before 

the 2007 expiration date to determine if extensions beyond 2010 would be needed. 

Additionally, to reduce uncertainty regarding the Fund’s sufficiency, we recommended that the Secretary of Energy develop decontamination and decommissioning plans for the Paducah and Portsmouth plants that would identify the most 

probable time frames and costs for completing the cleanup work. My testimony 

today (1) includes findings from our 2004 report, which examined the extent to 

which the Fund was sufficient to Page 1GAO-08-277T cover authorized activities, 

and (2) provides an update on DOE’s progress in developing decontamination and 

decommissioning plans at the Paducah and Portsmouth plants. 

In preparing our 2004 report, we obtained DOE’s estimates for cleanup and other 

key costs at the three plants, and current and likely revenue projections. We assessed the reliability of these data and determined that they were sufficiently reliable for the purposes of our report. We used the data to develop a number of simulation models, which factored in cost and revenue projections on an annual basis, as 

well as uncertainties surrounding inflation rates, interest rates, the costs and revenues, and the timing of the final decontamination and decommissioning work at the 

Paducah and Portsmouth plants. In addition, to prepare for this testimony, we reviewed DOE’s status reports developed in response to our 2004 report and interviewed DOE headquarters officials to determine DOE’s progress to date in developing decontamination and decommissioning plans at Paducah and Portsmouth. We 

performed our work in accordance with generally accepted government auditing 

standards. 

In summary,

• The Fund will be insufficient to cover all of its authorized activities. Specifically, our baseline model showed that by 2044, the most likely date for completing all cleanup activities at the plants, cleanup costs will have exceeded revenues by $3.8 billion to $6.2 billion (in 2007 dollars). Irrespective of which 

model we used, we found that the Fund would be insufficient. Each of the alternative models—(1) accelerated time frames, (2) deferred time frames, and (3) 

baseline time frames with additional revenues from government contributions 

as authorized under current law—demonstrated that the cleanup costs would 

exceed revenues. We recommended that Congress consider reauthorizing the 

Fund for an additional 3 years, to 2010, and require DOE to reassess the Fund’s 

sufficiency before the expiration date to determine if extensions beyond 2010 

would be needed. 

• DOE has not yet issued plans for the decontamination and decommissioning of 

the Paducah and Portsmouth plants as GAO recommended. According to DOE 

officials, the department is now in the process of finalizing a report that contains new schedule and cost information for both plants and addresses the sufficiency of the Fund. However, DOE did not make that information available to 

GAO and therefore, we were unable to assess how any new schedule or cost estimates may affect the Fund’s sufficiency. Until DOE issues plans that provide 

the most probable time frames and costs for completing decontamination and 

decommissioning at the Paducah and Portsmouth plants, it is not possible to 

more precisely determine the total funding needed to cover the authorized 

cleanup activities. 

BACKGROUND

The federal government has enriched uranium for use by commercial nuclear 

power plants and for defense-related purposes for more than 40 years at three 

plants, located near Oak Ridge, Tennessee; Paducah, Kentucky; and Portsmouth, 

16

* Graphic has been retained in committee files. 

3 USEC was also responsible for uranium enrichment before operations ceased and it has 

begun construction on a new centrifuge uranium enrichment plant at this site. 4 Remedial actions refer to environmental cleanup activities directed at eliminating or reducing contaminant sources and contaminated soil and groundwater. 5GAO, Uranium Enrichment: Analysis of Decontamination and Decommissioning Scenarios, 

GAO/RCED-92-77BR (Washington, D.C.: Nov. 15, 1991). 6GAO, Comments on Proposed Legislation to Restructure DOE’s Uranium Enrichment Program, GAO/T-RCED-92-14 (Washington, D.C.: Oct. 29, 1991). 7This assessment is based on a given utility’s share of the total enriched uranium purchased 

from DOE, including enriched uranium purchased for defense purposes. 8The following revenue amounts are authorized: $480 million for fiscal years 1992-1998; 

$488.3 million for fiscal years 1999-2001; and $518.2 million for fiscal years 2002-2007. Both 

domestic utility assessments and government appropriations are to be adjusted annually for increases in the consumer price index. 

Ohio (see fig. 1).* The Oak Ridge plant, known as East Tennessee Technology Park, 

is located on 1,500 acres of land; the oldest of the three plants, it has not produced 

enriched uranium since 1985. The Paducah plant, located on about 3,500 acres, continues to enrich uranium for commercial nuclear power plants under a lease to a 

private company, the United States Enrichment Corporation (USEC). The Portsmouth plant, a 3,700-acre site, ceased enriching uranium in May 2001 because of 

reductions in the commercial market for enriched uranium. Later that year, the 

plant was placed on cold standby (an inactive status that maintains the plant in 

a usable condition), so that production at the facility could be restarted in the event 

of a significant disruption in the nation’s supply of enriched uranium. USEC was 

awarded the contract to maintain the plant in cold standby, a condition that continues today.3 Yet because of newer, more efficient enrichment technologies and the 

globalization of the uranium enrichment market, all three uranium enrichment 

plants have become largely obsolete. Therefore, DOE now faces the task of decontaminating, decommissioning, and undertaking other remedial actions4 at these 

large and complex plants, which are contaminated with hazardous industrial, chemical, nuclear, and radiological materials. 

In 1991, at the request of the House Subcommittee on Energy and Power, GAO analyzed the adequacy of a $500 million annual deposit into a fund to pay for the 

cost of cleanup at DOE’s three uranium enrichment plants.5 We reported that a $500 million deposit indexed to inflation would likely be adequate, assuming that 

deposits would be made annually into the fund as long as cleanup costs were expected to be incurred, which, at the time of our study, was until 2040. Additionally, 

in a related report, we concluded that the decommissioning costs at the plants 

should be paid by the beneficiaries of the services provided by DOE—in this case, 

DOE’s commercial and governmental customers.6

In 1992, the Congress passed the Energy Policy Act, which established the Uranium Enrichment Decontamination and Decommissioning Fund to pay for the costs 

of decontaminating and decommissioning the nation’s three uranium enrichment 

plants. The Energy Policy Act also authorized the Fund to pay remedial action costs 

associated with the plants’ operation, to the extent that funds were available, and 

to reimburse uranium and thorium licensees for the portion of their cleanup costs 

associated with the sale of these materials to the federal government. The act authorized the collection of revenues for 15 years, ending in 2007, to pay for the authorized cleanup costs. Revenues to the Fund are derived from (1) an assessment, 

of up to $150 million annually, on domestic utilities that used the enriched uranium 

produced by DOE’s plants for nuclear power generation7 and (2) federal government 

appropriations amounting to the difference between the authorized funding under 

the Energy Policy Act and the assessment on utilities.8 Congress specified that any 

unused balances in the Fund were to be invested in Treasury securities and any 

interest earned made available to pay for activities covered under the Fund. 

DOE’s Office of Environmental Management is responsible for managing the Fund 

and plant cleanup activities, which, through fiscal year 2003, were mostly carried 

out by DOE contractor Bechtel Jacobs. The department’s Oak Ridge Operations Office in Oak Ridge, Tennessee, had historically provided day-to-day Fund management and oversight of cleanup activities at all three plants. In October 2003, however, DOE established a new office in Lexington, Kentucky, to directly manage the 

cleanup activities at the Paducah and Portsmouth plants. The Oak Ridge Operations Office continues to manage the Fund and the cleanup activities at the Oak 

Ridge plant. 

Currently, the Fund is used to pay for the following activities:

• Reimbursements to uranium and thorium licensees. The Energy Policy Act provides that the Fund be used to reimburse licensees of active uranium and thoVerDate 0ct 09 2002 12:47 Mar 11, 2008 Jkt 040443 PO 00000 Frm 00020 Fmt 6633 Sfmt 6621 G:\DOCS\41134.TXT SENERGY2 PsN: MONICA
17

9The Energy Policy Act authorizes reimbursements to uranium licensees not to exceed $350 million and reimbursements to the thorium licensee not to exceed $365 million for the portion 

of their cleanup costs associated with the sale of these materials to the federal government. The 

remaining unused authorized amounts are adjusted annually based upon the consumer price 

index. 10 Cleanup activities are conducted under the requirements of the Resource Conservation and 

Recovery Act of 1976, as amended (RCRA); the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA); and compliance agreements with 

regulatory authorities, which include the Environmental Protection Agency and state regulatory 

agencies in Kentucky, Ohio, and Tennessee. 11 In our 2004 report, we reported the projected costs in 2004 dollars. For this testimony, we 

converted the figures to 2007 dollars.

rium processing sites for the portion of their decontamination and decommissioning activities, reclamation efforts, and other cleanup costs attributable to 

the uranium and thorium they sold to the federal government.9 From fiscal year 1994, when the Fund began incurring costs, through fiscal year 2003, $447 million was used from the Fund for uranium and thorium reimbursements (in 2004 

dollars). • Cleanup activities at the uranium enrichment plants.10 Cleanup activities at 

the plants include remedial actions, such as assessing and treating groundwater 

or soil contamination; waste management activities, such as disposing of contaminated materials; the surveillance and maintenance of the plants, such as 

providing security and making general repairs to keep the plants in a safe condition; the decontamination and decommissioning of inactive facilities by either 

cleaning them up so they can be reused or demolishing them; and other activities, such as covering litigation costs at the three plants and supporting sitespecific advisory boards. From fiscal year 1994 through fiscal year 2003, a total 

of $2.7 billion from the Fund was used for these cleanup activities (in 2004 dollars). 

AT PROJECTED COSTS AND REVENUES, THE FUND WILL BE INSUFFICIENT TO COMPLETE

CLEANUP AT THE THREE PLANTS

Under a variety of models using DOE’s projected costs and revenues, the Fund 

will be insufficient to cover all of its authorized activities. Using DOE’s projections 

that 2044 would be the most likely date for completion of cleanup at the plants, we 

estimated that cleanup costs would exceed Fund revenues by $3.8 billion to $6.2 billion (in 2007 dollars).11 Because DOE had not determined when decontamination 

and decommissioning work would begin at the Paducah and Portsmouth plants, and 

because federal contributions to the Fund have been less than the authorized 

amount, we developed several alternative models to assess the effects of different 

assumptions on the Fund’s sufficiency. Specifically, we developed the following models: 

• Baseline model. This model was developed in consultation with DOE and its 

contractor officials about what the most likely cleanup time frames would be 

and used cost estimates assuming that cleanup at all plants would be completed 

by 2044. • Accelerated model. Because DOE had not determined when the final decontamination and decommissioning would begin at its Paducah and Portsmouth 

plants, we developed the accelerated model under the assumption that cleanup 

work could be completed faster than under the baseline model, given unconstrained funding. DOE and its contractor officials provided additional cost estimates, where Paducah’s final work would begin in 2010 and be completed by 

2024 and Portsmouth’s final decontamination and decommissioning work would 

begin in 2007 and be completed by 2024. 

• Deferred model. This model was developed under the assumption that, given 

current funding constraints, it may not be realistic for two major decontamination and decommissioning projects to be done concurrently. Thus, deferred time 

frames were determined by DOE, assuming that all work would be completed 

at the Portsmouth plant first and then initiated at the Paducah plant. For the 

deferred model, Portsmouth’s final decontamination and decommissioning work 

was estimated to be completed from 2010 to 2037 and Paducah’s from 2038 to 

2052. 

• Revenue-added model. This model was developed to assess the effect of the government’s meeting its total authorized annual contributions on the balance of 

the Fund, which by the start of fiscal year 2004, was $707 million less than authorized under the Energy Policy Act. For the revenue-added model, we used 

baseline time frames but assumed that government contributions to the Fund 

18

would continue annually at the 2004 authorized level until all government contributions as authorized by law had been met, which would occur in fiscal year 

2009. 

• Revenue-added-plus-interest model. For this model, we built on the revenueadded model to include the effect of forgone interest that the Fund could have 

earned had the government contributed the full authorized amount. We assumed that these additional payments would be made to the Fund in the same 

amounts as the 2004 annual authorized amount and extended payments 

through fiscal year 2010.

Irrespective of which model we used, we found that the Fund would be insufficient to cover the projected cleanup costs at the uranium enrichment plants (see 

table 1). At best, assuming no additional funding is provided beyond the 2007 authorized amount, Fund costs could outweigh revenues by $3.8 billion (in 2007 dollars). Even with current authorized amounts extended out through fiscal year 2010, 

the Fund could still be insufficient by close to $0.46 billion (in 2007 dollars).

19

TABLE 1: FUND BALANCE AT COMPLETION OF ALL CLEANUP UNDER DIFFERENT MODEL SCENARIOS 

Dollars in Billions 

Baseline model Accelerated model Deferred model Revenue-added model Revenue-added-plus-inter- est model 

Completion date (fiscal year) 2044 2024 2052 2044 2044Constant 2007 dollars -$6.2 to -$3.8 

(-$5.3) 

-$5.7 to -$4.4 

(-$5.0) 

-$6.8 to -$4.4 

(-$5.7) 

-$5.2 to -$2.0 

(-$3.9) 

-$4.6 to -$0.46 

(-$3.0)

Current dollars -$18.5 to -$7.6 

(-$12.5) 

-$9.8 to -$5.7 

(-$7.6) 

-$26.4 to -$8.8 

(-$16.7) 

-$15.1 to -$4.3 

(-$9.3) 

-$13.3 to -$1.0 

(-$7.1)

Present-value 2007 dollars* -$3.4 to -$0.84 

(-$1.9) 

-$4.2 to -$2.0 

(-$3.0) 

-$3.4 to -$0.69 

(-$1.6) 

-$2.8 to -$0.69 

(-$1.4) 

-$2.5 to -$0.098 

(-$1.1) 

Source: GAO analysis of DOE data. Note: Fund balances given as range, with mean in parentheses. 

* Because of the difference in completion dates, a comparison of the Fund balances in constant 2007 dollars would not be meaningful. To make comparison of 

the various models possible, we estimated the present value of the Fund’s blance in 2007 dollars. Because present-value analysis reflects the time value of money—that costs are worth more if they are incurred sooner and worth less if they occur in the future—the present value under the deferral model declines more than in the other options. In reality, however, the net effect would depend on many other factors. If, for example, deferral would add substantially to such costs as safeguarding and security or costs associated with increased health risks, then the reduction due to adjusting for the time value of money could be more than offset by increases in other costs. 

20

12This end date does not include final decontamination and decommissioning of the plant but 

only the major remedial actions planned at the site. 13 According to the Energy Policy Act, the Secretary of DOE shall provide a report to Congress 

at least once every 3 years on progress made under title XI of the act. 14 According to the Energy Policy Act, the fifth report to Congress was to contain recommendations by the Secretary for the reauthorization of the program and Fund under title XI. 

Although our analysis was able to capture several uncertainties potentially affecting the Fund—including interest rates, inflation rates, cost and revenue variances, 

and the timing of decontamination and decommissioning—additional uncertainties 

exist that we could not capture. These uncertainties included possible changes to the 

scope of the cleanup; whether the Fund would be required to pay for additional activities, such as long-term water monitoring once the plants were closed; and the 

extent of potential future litigation costs that the Fund would have to support. For 

example, a risk analysis completed by DOE in 2004 for the Paducah plant indicated 

that changes in the scope of cleanup could increase cleanup costs by more than $3 

billion and extend the time frame for cleanup to more than 30 years past the original scheduled date of 2019.12 In addition, when they developed their cleanup cost 

estimates, DOE officials assumed that the costs of long-term stewardship activities—such as groundwater monitoring, which may continue after all necessary 

cleanup costs have been completed—would be covered by a separate funding source. 

DOE officials acknowledged, however, that if another funding source were not available, they may be required to use resources from the Fund. 

UNCERTAINTY OVER THE EXTENT OF THE FUND’S INSUFFICIENCY REMAINS BECAUSE

DOE HAS YET TO ISSUE PLANS FOR THE PADUCAH AND PORTSMOUTH PLANTS

Uncertainty over the extent of the Fund’s insufficiency remains because DOE has 

not issued plans that identify the most probable time frames and costs for the decontamination and decommissioning of the Paducah and Portsmouth plants. DOE 

was required to develop a report to Congress containing such information, but because DOE was significantly revising its cost estimates, it determined the report 

would not be accurate and did not finalize it.13 According to DOE officials, it is now 

in the process of finalizing a report that contains new schedule and cost information 

for both plants and addresses the sufficiency of the Fund.14 This report was due to 

Congress in October 2007 but has yet to be issued by DOE. Because the report has 

not been finalized, DOE officials were unwilling to provide us with updated information on current schedule and cost estimates. As a result, we are unable to assess 

how any new information may affect the Fund’s sufficiency. Until DOE resolves uncertainties surrounding the plants’ cleanup, including when cleanup activities are 

expected to both begin and end, it is not possible to more precisely determine the 

total funding needed to cover the authorized cleanup activities. If, however, closure 

and cleanup time frames extend past the originally projected schedules at the 

plants, then the total costs the Fund is authorized to support may increase, particularly costs for maintenance, safety, and security activities and other fixed costs that 

must be maintained until cleanup work at the plants is complete. 

In closing, we believe that an extension to the Fund may be necessary to cover 

cleanup costs at the nation’s three uranium enrichment plants. The information currently available on the projected costs and revenues authorized by the Fund suggests that it may be insufficient by up to several billion dollars. DOE appears to 

be taking steps to develop new, detailed time frames and cost estimates for the decontamination and decommissioning of its uranium enrichment plants. However, 

until this detailed information is made available, we cannot assess how DOE’s updated time frames and cost estimates may affect the Fund’s sufficiency. As a result, 

we believe that DOE should finalize plans for the Paducah and Portsmouth plants 

so that it can better determine the extent to which Fund extensions may be needed. 

Unless the Fund is extended beyond its current expiration in 2007, cleanup activities that could not be paid for from the Fund because of a shortfall may have to 

be financed entirely by the federal government and could add an additional fiscal 

burden at a time when our government is facing already significant long-term fiscal 

challenges. 

Mr. Chairman, this completes my prepared statement. I would be happy to respond to any questions you or other Members of the Committee may have at this 

time.

Senator TESTER. Thank you, Robin. I’m sure there will be questions, we’re going to go through all of the witnesses and then we’ll 

come back. 

21

Marv Fertel. Thank you for being here. 

STATEMENT OF MARVIN S. FERTEL, SENIOR VICE PRESIDENT 

AND CHIEF NUCLEAR OFFICER, NUCLEAR ENERGY INSTITUTE 

Mr. FERTEL. Thank you very much, Mr. Chairman, Senator 

Domenici, Senator Bunning. 

As you know, NEI represents all of the nuclear generating com- panies that have already paid almost $2.7 billion into the D&D 

fund for the GDPs, and could be subject to additional liabilities 

under S. 2203. 

The industry fully supports the need to assure that the decontamination and decommissioning of the GDPs is accomplished in a 

safe, environmentally responsible and economically efficient manner. The communities that host these facilities should expect nothing less from the Federal Government. 

This industry position is totally consistent with the responsibility 

each operator of a commercially licensed power plant or fuels facility has for providing adequate assurance for the protection of the 

health and safety of the public surrounding those facilities during 

operation, and for safely and responsibly decommissioning the commercial facilities once they stop operating. 

In this regard, nuclear energy is unique as a source of electricity 

generation, in that it internalizes all of its costs in the price of electricity. Nuclear reactors and fuel facilities must provide dedicated 

decontamination and decommissioning funds as part of the terms 

at licensing. Nuclear generation pays for its regulation through licensing fees, and pays for waste disposal through the fee to the 

U.S. Department of Energy. No other energy source provides this 

explicit cradle-to-grave, full cost accounting. 

From the first days of commercial nuclear generation through 

the mid-1980s, the U.S. Government was the sole source of enrichment services available to domestic utilities. The enrichment was 

provided by the three federally built, owned and operated gaseous 

diffusion plants, which were originally built to provide uranium enrichment for the government defense programs. 

These facilities were contaminated as a result of their use for Defense programs about 15 years prior to the provision of any services 

to the commercial sector. 

As such, the D&D burden would have been the same for the government if the facilities would never used to service the commercial 

sector. 

Also, the contract signed by electric utilities with the Federal 

Government for the enrichment services provided by the GDPs, 

were required, by law, to include all costs which should have included any perceived additional D&D costs. 

Given the above facts, the industry would have expected it had 

no future liability for the D&D of the GDPs. The Energy Policy Act 

of 1992 created the Uranium Enrichment and Decontamination 

and Decommissioning Fund. The D&D Fund supports cleanup of 

the three gaseous diffusion plants. 

In the interests of moving forward with the restructuring of the 

enrichment enterprise, the commercial industry—working through 

ANEC and the Edison Electric Institute, agreed to a compromise 

in the EPACTS that resulted in a special assessment of $2.25 bilVerDate 0ct 09 2002 12:47 Mar 11, 2008 Jkt 040443 PO 00000 Frm 00025 Fmt 6633 Sfmt 6602 G:\DOCS\41134.TXT SENERGY2 PsN: MONICA
22

lion, based on pre-1992 purchases of enrichment services by utilities. 

The DOE had, in fact, estimated that the appropriate share of fee utilities was only $1.6 billion. The industry agreed to the higher 

amount, in return for a cap and a total amount to be paid, and a 

provision that the fees could be included in the nuclear fuel 

charges. 

Beginning in Fiscal Year 1993, domestic utilities were assessed up to $150 million per year, adjusted for inflation. As of October 

24 of this year, the utilities have completed their contribution to 

the Fund. The remainder of the annual deposit was to have come 

from the Federal Government appropriations, however, based on a 

report I saw last night, the government still owes about $1.6 billion. 

The industry is fully supportive of Congress taking appropriate 

actions to assure that adequate funding is available for the safe 

and environmentally responsible D&D of the government-owned 

GDPs. In this regard, the industry recommends that as you systematically discuss S. 2203, you consider modifying it, as follows. 

One, extend the collection of D&D Fund contributions from the 

Federal Government to require it to immediately contribute the 

$1.6 billion that is in arrears for the period 1992 through 2007. 

Two, extend the collection of D&D Fund contributions from the 

Federal Government prospectively, to ensure adequate funding of 

the D&D Fund. 

Three, prohibit the use of D&D Fund contributions for use in addressing cleanup requirements created by ongoing operations of the 

GDPs. 

Four, eliminate the reinstatement of the D&D Fund on nuclear 

generators, since they should have no residual liability or obligation for the D&D, going forward. 

Five, instruct the DOE to conduct a study on the most effective 

and responsible way to sell future, U.S. Government surplus, highly enriched uranium into the commercial market. 

Six, require the DOE to sell its existing supply of surplus nuclear 

fuel into the commercial market in a responsible way. 

Seven, instruct the DOE to enter into contracts for the re-enrichment of depleted uranium tails, and to sell the resulting uranium 

into the commercial market in a responsible way, and finally, grant 

DOE receipt authority for the sale of the surplus nuclear fuels into 

the market, and use the receipts for first, payment to re-enrich depleted tails and deal with that waste, two, provided contributions 

to the GDP D&D fund, if required, to make up any deficit, and 

three, be available for use in other DOE priority programs. 

Also, we encourage the DOE to pursue commercial proposals for 

the D&D that provide innovative and risk-sharing from imminently 

qualified organizations. 

Finally, we commend this committee for its active interest in 

pursuing effective D&D of the GDPs, and encourage the committee 

to provide robust oversight to the overall situation, including the 

use of a D&D Fund, the disposition of the surplus government inventories, and the actual activities to D&D the GDPs. 

Thank you, and I’d be glad to answer any questions. 

[The prepared statement of Mr. Fertel follows:]

23

PREPARED STATEMENT OF MARVIN S. FERTEL, SENIOR VICE PRESIDENT AND CHIEF

NUCLEAR OFFICER, NUCLEAR ENERGY INSTITUTE

The Nuclear Energy Institute (NEI), on behalf of the nuclear energy industry, appreciates the opportunity to provide this testimony for the record regarding the Uranium Enrichment Decontamination and Decommissioning Fund and on Senate Bill 

S. 2203, a bill to reauthorize the Uranium Enrichment Decontamination and Decommissioning Fund. 

NEI is the organization responsible for establishing unified nuclear industry policy on matters affecting the nuclear energy industry, including the regulatory aspects of generic operational and technical issues. NEI’s members include all utilities 

licensed to operate commercial nuclear power plants in the United States, nuclear 

plants designers, major architect/engineering firms, fuel fabrication facilities, materials licensees, and other organizations and individuals involved in the nuclear energy industry. NEI’s members are the commercial entities that have paid into the 

D&D fund since 1993. 

Nuclear energy currently supplies twenty percent of our nation’s electricity supply, and is America’s largest source of clean-air, carbon-free electricity, producing no 

greenhouse gases or other air pollutants. Nuclear energy accounts for 71 percent of 

the nation’s clean-air electricity generation. In 2006, U.S. nuclear plants prevented 

the discharge of 681 million metric tons of carbon dioxide into the atmosphere. This 

is nearly as much carbon dioxide as is released from all U.S. passenger cars. The 

industry is committed to maintaining the benefits of nuclear energy to benefit the 

United States and the world. 

Because of the growing need for additional baseload electricity in the United 

States, nuclear generating companies are currently planning to submit license applications for potentially 31 new plants that could be built in the 2015-2020 time period. Also, one new centrifuge enrichment facility is being built in New Mexico, and 

at least three other advanced enrichment technology facilities are being considered 

for deployment in the United States. The deployment of new advanced technology 

enrichment facilities in the United States will both enhance our energy security and 

increase the likelihood that the existing gaseous diffusion plants (GDP) will be retired and decommissioned. 

The industry is committed to continuing to be a major contributor to meeting both 

the nation’s electricity demand and its environmental goals. In this regard, the industry fully supports the need to assure that the decontamination and decommissioning of the GDP’s is accomplished in a safe, environmentally responsible and economically efficient manner. The communities that host these facilities should expect 

nothing less from the federal government. The industry position is totally consistent 

with the responsibility each operator of a commercially licensed power plant or fuels 

facility has for providing adequate assurance of the protection of the health and 

safety of the public surrounding these facilities during operation and for safely and 

responsibly decommissioning the commercial facilities once they stop operating. In 

this regard, nuclear energy is unique as a source of electricity generation in that 

it internalizes all of its costs in the price of electricity. Nuclear reactor facilities and 

fuel facilities must provide dedicated decontamination and decommissioning funds 

as part of the terms of licensing. Nuclear generation pays for its regulation through 

licensing fees, and pays for waste disposal through the fee to the U.S. Department 

of Energy. No other energy source provides this explicit, cradle-to-grave full cost accounting. 

From the first days of commercial nuclear generation through the mid 1980s, the 

U.S government was the sole source of enrichment services available to domestic 

utilities that operated nuclear power plants. Enrichment services were sold to utilities by the U.S. government under long-term, cost recovery contracts. The enrichment was provided by the three federally built, owned and operated gaseous diffusion plants (Oak Ridge, TN; Paducah, KY; Portsmouth, OH), the same plants that 

were created to and did provide uranium enrichment for the Governments postWWII defense programs. These facilities were contaminated as a result of their use 

for defense programs about 15 years prior to the provision of any services to the 

commercial sector. As such, the D&D burden would have been the same for the government if the facilities were never used to service the commercial sector. Furthermore, the contracts signed by electric utilities with the federal government for the 

enrichment services provided by the GDP’s were required by law to include all costs, 

which should have included any perceived additional D&D cost. Given the above 

facts, the industry would have expected it has no future liability for the D&D of 

the GDP’s. 

When the Congress decided to privatize the enrichment enterprise in the 1990s, 

the privatized company was not held responsible for decontamination and decomVerDate 0ct 09 2002 12:47 Mar 11, 2008 Jkt 040443 PO 00000 Frm 00027 Fmt 6633 Sfmt 6621 G:\DOCS\41134.TXT SENERGY2 PsN: MONICA
24

missioning needed as a result of activities that took place before privatization. That 

would remain the responsibility of the U.S. government. The government then decided that the utilities that had purchased enrichment services from DOE or its 

predecessors should be required to contribute to the clean-up, even though they 

should not have had any residual liability for the D&D. 

The Energy Policy Act of 1992 created the Uranium Enrichment Decontamination 

& Decommissioning Fund (D&D Fund). The D&D Fund, managed by DOE, supports 

clean-up at the three government-owned gaseous diffusion plants. The D&D Fund 

also supports a reimbursement program for clean-up of uranium and thorium processing sites that sold their products to the US government. The utilities maintained 

that the prices paid for enrichment services prior to privatization of the government’s enrichment services had taken the cost of D&D into account, so the assessment in the EPACT was not justified. Further, the enrichment facilities were created for national security purposes and would have required D&D regardless of 

whether any enrichment was sold for civilian use. In the interest of moving forward 

with the restructuring of the enrichment enterprise, the commercial industry, working through the American Nuclear Energy Council and the Edison Electric Institute, 

ultimately agreed to a compromise in the EPACT that resulted in a special assessment of $2.25 billion based on pre-1992 purchases of U.S. government enrichment 

services by domestic utilities. The DOE had in fact estimated that an appropriate 

share for the utilities was $1.6 billion. The industry agreed to the higher amount 

in return for a cap on the total amount to be paid and a provision that the charges 

could be included in the nuclear fuel charges. Beginning in Fiscal Year 1993, domestic utilities were assessed up to $150 million 

per year, adjusted for inflation, for 15 years based on their historic purchases of uranium enrichment services from the federal government, prior to the privatization of 

the enrichment enterprise. The EPACT language specifically provided for termination of the assessment against utilities after the earlier of 1) 15 years after October 24, 1992 or 2) the collection of $2,250,000,000 adjusted for inflation. Currently, 

based on an industry estimate, the fund has accumulated over $2.5 billion from the 

industry and the 15 year time period has expired on October 24, 2007. Therefore, 

the utilities have completed their contribution to the Fund, as specified by the law. 

The remainder of the annual deposit was to come from federal government appropriations. However, based on the best information available, the government still 

has not provided its full share. 

Turning now specifically to S.2203, the ‘‘Uranium Enrichment Decontamination 

and Decommissioning Fund Reauthorization Act of 2007.’’ The industry is fully supportive of Congress taking appropriate action to assure that adequate funding is 

available for the safe and environmentally responsible D&D of the government 

owned GDP’s. In this regard, the industry recommends that S.2203 be modified as 

follows:

(1) Extend the collection of D&D fund contributions from the federal government to require it to immediately contribute all money that is in arrears for 

the period 1992-2007. 

(2) Extend the collection of D&D fund contributions from the federal government prospectively to ensure adequate funding of the D&D fund. 

(3) Prohibit the use of D&D fund contributions for use in addressing cleanup 

requirements created by ongoing operations of the GDP’s. 

(4) Eliminate the reinstatement of the D&D fee on nuclear generators, since 

they should have no residual liability or obligation for the D&D. 

(5) Instruct the DOE to conduct a study on the most effective way to sell future U.S. government surplus highly enriched uranium (HEU) into the commercial market in the future, particularly given the end of the U.S.-Russian HEU 

Agreement in 2013. 

(6) Require the DOE to sell its existing supply of surplus nuclear fuel into 

the commercial market in a responsible way. 

(7) Instruct the DOE to enter into contracts for the re-enrichment of depleted 

uranium tails and to sell the resulting uranium into the commercial market in 

a responsible way. 

(8) Grant DOE receipt authority for the sale of surplus nuclear fuel into the 

commercial market and use the receipts for: (1) payment to re-enrich depleted 

uranium tails; (2) contributions to the GDP-D&D fund, if required to make up 

deficits; and (3) if available for use on DOE priority programs.

With respect to the sale of uranium that could be generated by re-enrichment of 

the substantial quantities of depleted uranium now stored at DOE sites, this approach is most effective if implemented in the near term rather than being studied 

for a year. Currently, the nuclear energy industry is expanding throughout the 

25

world and several applications for new nuclear plants have been submitted to the 

U.S. Nuclear Regulatory Commission. This resurgence of interest in nuclear power 

combined with the draw down on nuclear fuel inventory has resulted in considerable 

tightening of the nuclear fuel market. This has been most notably in the uranium 

market. Pursuing this activity in the near-term would both address the issue of disposing of the existing tails, by turning them into an asset, and would also allow the 

government to sell them into a market that is seeing its highest prices in decades. 

Another significant consideration should be to ensure the effective and responsible 

management of the D&D efforts. Money in the D&D fund should be designated for 

D&D efforts only, and should not be available for diversion to unrelated projects. 

The D&D of the gaseous diffusion plants will be ongoing for several decades and 

the Fund has the potential for considerable interest earnings if it is appropriately 

set aside. Currently, our understanding is, the fund is being accessed for remediation of events which occur during the existing operation. The rational is that the 

spills would need to be remediated during the decommissioning phase. Events which 

occur doing current operations should be remediated out of current operating funds. 

Additionally, areas which are remediated through the use of the funds should then 

be excluded from any additional radioactive material involvement. If this is not the 

case the area will be recontaminated and require additional draw down of the fund 

to remediate again. Also, we encourage the DOE to pursue commercial proposals for 

the D&D that provide innovative and risk-sharing approaches, from imminently 

qualified organizations. 

Finally, we commend this Committee for its active interest in pursuing effective 

D&D of the GDP’s and encourage the Committee to provide robust oversight to the 

overall situation, including the use of the D&D funds, the disposition of surplus government inventories and the actual activities to D&D the GDP’s. 

NEI appreciates the opportunity to address the subcommittee and would be happy 

to answer any questions you may have.

Senator TESTER. Thank you very much, Mr. Fertel. 

Mr. Warren. 

STATEMENT OF WESLEY P. WARREN, DIRECTOR OF 

PROGRAMS, NATURAL RESOURCES DEFENSE COUNCIL 

Mr. WARREN. Thank you, Senator Tester. I would like to thank 

the entire committee for the opportunity to testify today, including 

Senators Domenici, and Senator Bunning. 

My name is Wesley Warren, I’m Director of Programs for the 

Natural Resources Defense Council, an environmental advocacy 

group. I’ve worked in Washington for about 23 years on environmental and energy issues, and I’m a former Associate Director for 

the Office of Management and Budget. 

I read with great interest the DOE report that just came out, 

and I think that that really could be the focus of much of our attention today at this hearing. 

In fact, it supersedes a lot of the preliminary analysis that we 

had in my testimony, so I would really like to address my oral comments on what the implications of the DOE report are. 

I think there’s three main implications. One, the DOE report acknowledges that cleaning up these facilities is a serious problem 

that needs to be addressed, and it’s something that the communities and the workers at these facilities deserve. 

Two, that the 15-year program that was authorized in Energy 

Policy Act in 1992 had been very successful at starting to address 

these needs, especially the work that’s been done at the Oak Ridge 

facility. That a key part to the success, including bringing the overall cost estimates down, is the substantial money that’s being provided, and the stable source of money, including the distribution of 

the cost between the beneficiaries of the program in the past, the 

government and the utilities. 

26

But third of all, the report indicates that much still needs to be done. The base case acknowledges an $11 billion shortfall, assuming the government makes up its missing contribution, which is—

and without that, the fund essentially goes bankrupt in the year 

2020, which will be here before the 15-year program period of time, 

that previously the program has been underway. So, it’s going to 

be here before you know it. 

Where will that money come from? I think that’s the big question. The Department of Energy does not have a proposal for making up that shortfall—what does that mean? At Oak Ridge are we 

going to cut research programs to pay for cleanup programs? Are 

we going to cut other DOE laboratory work to pay for cleanup at 

Portsmouth? Are we going to reduce DOE defense activities to pay 

for cleanup at Paducah? 

These are very hard choices, and really is where, I think, the legislation that we’re looking at today, S. 2203, comes in. Because it 

offers a 10-year plan to answer that question, and where do we 

come up with the money, substantial, stable source of revenue. The legislation authorizes $700 million a year for 10 years, that’s 

indexed to inflation, as the program has been in the past. Leaving 

inflation out, that’s $7 million right there. That takes out a big 

chunk of the missing amount of money, when you add interest that 

the Fund might be generating during that period of time, it could 

make up the entire shortfall. 

But, the key is it’s an opportunity for the committee, in passing 

this legislation to really address most of the serious, remaining, 

outstanding shortfall. 

An additional point I would make about the legislation, is that 

it continues this very successful philosophy that was embodied in 

the 1992 Act, which is that the beneficiaries of the program in the 

past, should be the one to share the contributions to the Fund. 

That contribution has been basically on a two-to-one ration—that 

the government got about two-thirds of the benefits of the program, 

in terms of the enrichment services, private sector got about a 

third, that was the ratio in the Act, and the legislation would continue that ratio going forward. We think that this is very fair 

where the taxpayer is concerned. 

The previous witness, by the way, mentioned an estimate that 

the Department of Energy had of $1.6 billion in terms of their 

original obligation. I would like to say that that estimate was based 

on a DOE study from 1987, that said the cost of cleanup was only 

going to be $3 billion, and that it should be split 50/50. 

We now know the cost is going to be much more. We’re, in this 

legislation, only endorsing a two-to-one ratio, and believe that it’s 

an important principle to embrace. 

The last thing that I would mention that’s in the legislation is 

a study about depleted tails, which are an asset that the government has, with rising uranium prices, that they could, perhaps, 

auction off to the private sector, and realize some revenue toward 

this program. 

If they do, we have two important points that we would emphasize. One, that’s a government asset, any proceeds that are realized 

should go for the government’s contribution, including any missing 

past payments—not for the utility’s share of the contribution, 

27

which we think they should be making—and finally, that the government should not be drawn back into the uranium enrichment 

business, which they got out of in 1992. 

Thank you very much, I’d be willing to answer any questions. 

[The prepared statement of Mr. Warren follows:]

PREPARED STATEMENT OF WESLEY P. WARREN, DIRECTOR OF PROGRAMS, NATURAL

RESOURCES DEFENSE COUNCIL

Good morning Mr. Chairman and Members of the Committee. My name is Wesley 

Warren and I am the Director of Programs for the Natural Resources Defense Council (NRDC). NRDC is a not-for-profit environmental advocacy organization with over 

1 million members and activists whose mission is to safeguard the Earth: its people, 

its plants and animals and the natural systems on which all life depends. Before 

joining NRDC, I served as Associate Director for Natural Resources, Energy and 

Science at the Office of Management and Budget and the Chief of Staff for the 

Council on Environmental Quality in the White House. I thank the Committee for 

inviting me to testify today and I am here in support of Senator Sherrod Brown’s 

bill, S. 2203, to reauthorize the Uranium Enrichment Decontamination and Decommissioning Fund. 

S. 2203 solves an important problem in a direct and equitable fashion. The legal 

authority for the Uranium Enrichment Decommissioning and Decontamination 

Fund (D&D Fund) of the Department of Energy (DOE), established in the Energy 

Policy Act of 1992 (hereafter EPACT), expires this year and needs to be extended. 

This extension should apply both to the authorization to spend money to cleanup 

contaminated nuclear sites and to the authority to collect contributions from the 

beneficiaries of the program. S. 2203 performs this task in the simplest fashion possible, by extending the framework of the current program for ten additional years. 

We urge your support for this important bill. 

BACKGROUND

The nuclear weapons program of the DOE has supported the military forces of 

the federal government by producing nuclear material for warheads and reactor fuel 

for the navy. Even before DOE—and its predecessor, the Atomic Energy Commission—were created, the government for decades has relied on nuclear materials produced from the mining, milling and processing of raw uranium at numerous sites 

across the country, and enriched into a usable form at special government plants. 

Starting in 1964 the government’s three uranium enrichment plants (located at Oak 

Ridge, Tennessee; Paducah, Kentucky; and Portsmouth, Ohio) were put into service 

enriching uranium for commercial reactor fuel at electric utility power plants, subject to a legal requirement that the utilities pay the full costs of operating the plants 

to provide that service (section 161v of the Atomic Energy Act). 

This arrangement was highly beneficial to the electric utility industry, which was 

spared the cost of financing, building, and operating a completely new enrichment 

plant, including paying all the costs of the eventual cleanup of the plant. However, 

during the decades that this arrangement was in effect and despite the full cost recovery requirement in law, no money was set aside by the nuclear utilities to pay 

their fair share of the cost of decommissioning and decontaminating the existing 

three enrichment plants. This situation left the taxpayer facing a cleanup effort that 

was expected to take decades to complete and cost billions of dollars. 

EPACT rectified this situation by creating a Decommissioning and Decontamination (D&D) Fund that would cleanup old uranium and thorium mill tailings sites 

and the three DOE enrichment plants. The design of the D&D Fund and the contributions to it was based on three general principles:

• The amount of money going into the Fund should be sufficient to achieve its 

environmental purpose of cleaning up the contamination at these facilities; 

• The taxpayer should not have to pick up all the costs of cleanup, rather, the 

costs should be split with the other beneficiaries of the program and allocated 

according to the benefits received; and 

• The activities at the three uranium enrichment plants should contribute to the 

well-being of the local communities, including jobs from the cleanup efforts.

The cleanup work at the uranium enrichment facilities is far from concluded and 

adherence to these principles is just as necessary and relevant today as it was when 

the Fund was created. In a timely fashion, S. 2203 addresses the looming shortfall 

discussed below. 

28

SUFFICIENCY OF FUNDING

In an attempt to help evaluate and contain the eventual cost of enrichment plant 

cleanup, the 1992 EPACT mandated a report by the National Academy of Science, 

which was completed in 1996. This study made 13 major recommendations for reducing cost, which the DOE has generally followed, according to the non-partisan 

General Accounting Office (GAO) in a 2004 review of the program. Estimates in this 

testimony are largely based on NRDC’s calculations derived from information in this 

GAO report. 

However, the GAO also concluded that, if the authority to collect revenue expires 

in 2007, then the contributions to the Fund will fall short of the amount necessary 

to finish cleanup activities. More specifically GAO’s baseline model determined that 

the Fund would have sufficient revenue to reimburse uranium and thorium licensees for cleanup at processing sites, but that it would fall short of completing work 

at the three enrichment plants by up to $5.7 billion in 2004 dollars—which would 

be about $6.5 billion in 2008 dollars. GAO also projects cleanup activities would 

need to continue at least through 2044. 

Furthermore, GAO acknowledges that the upper end of this estimate could be too 

low, contingent on the additional cleanup activities that may need to be performed, 

such as long-term groundwater monitoring—work that could add another estimated 

$3 billion in costs to the project. Indeed, DOE currently lacks comprehensive longterm cleanup plans and appropriate cleanup standards for the Paducah and Portsmouth plants, and both sites will require long-term stewardship. 

We note for the Committee that the D&D Fund has an existing projected balance 

of $4.4 billion for the end of FY 2007, according to the Office of Management and 

Budget (OMB). However, this net balance is not available to offset the $6.5 billion 

shortfall, since GAO has already assumed that the net balance in the Fund will be 

used to help pay for cleanup, so the shortfall that needs to be made up is in addition 

to the existing Fund balance. 

TAXPAYER EQUITY

EPACT provided that both the taxpayers and the utilities that benefited from the 

program would make contributions to the cleanup fund, and that those contributions 

would be allocated in proportion to the benefits each had received from the program. 

Benefits are calculated based on a standard unit used to measure enrichment services called a Separative Work Unit (SWU). GAO has also historically endorsed this 

principle of ‘‘beneficiary pays’’ for revenue collection under the program and in its 

recent July 2004 report. Section 2 of S. 2203 continues the status quo of this equitable agreement and ensures that the states of Ohio, Tennessee, and Kentucky 

avoid a serious problem. 

Using the original EPACT formula, the overall cap on revenue was set at $480 

million a year, indexed to inflation, with a subcap on utility contributions of $150 

million (31.4% of the total), a figure also indexed to inflation. Taxpayers paid the 

difference (68.6%) to cover services received by the government and by foreign utilities for which there was no certain mechanism by which fees could be collected. The 

utility sector portion was further prorated among individual utilities in proportion 

to the amount of SWU that had been contained in fuel shipments that they had received from DOE in the past. 

Since the original passage of the Act, Congress has twice raised the overall funding cap somewhat (mainly to authorize additional appropriations for a thorium site) 

while leaving the utility contribution the same, potentially shifting more of the relative cost of the program to the taxpayer. However, analysis by NRDC indicates 

that actual payments to the Fund have closely approximated the original ratio set 

out in EPACT based on SWU benefits. In the 15-year period from FY 1993 to FY 

2007, taxpayers seem to have contributed about $5.27 billion (66.4%) compared to 

the nuclear utility contribution of $2.66 billion (33.6%), based on an examination of 

annual budget documents from OMB. 

If, as we urge, Congress passes and the President signs S. 2203, then the current 

status quo and an equitable management of long-term cleanup liabilities will continue. In short, if S. 2203 is adopted into law, both the taxpayer and the utility contribution, indexed to inflation, will extend for ten years and the overall cap on revenue will be set in proportion to the original benefits-based ratio contained in 

EPACT. Following the formula set out in EPACT, S. 2203 sets the overall authorization cap on contributions to the Fund in FY 2008 at about $700 million, with the 

utility contribution set at $220 million. As has been done in the past, S. 2203 directs 

that both caps be indexed to inflation. 

29

1The sufficiency of Section 2 of S. 2203 can be calculated by dividing the $6.5 billion estimated shortfall by the proposed $700 million a year in collections for a total period of 9.3 years, 

rounded up to an even 10 years for the reauthorization period. 

WELL-BEING OF THE COMMUNITIES

Title X of the 1992 EPACT was meant to help serve the interests of the local communities affected by mill tailings sites and enrichment plants in several ways, and 

Section 2 and Section 3 of S. 2203 continues that work. For all of the affected communities there was a concern that greater certainty be brought to the process for 

cleaning up contaminated materials. In addition to the potential public health and 

environmental benefits of greater certainty, there are also technical and economic 

benefits to having a sure and predictable way of maintaining a trained and experience workforce in cleanup operations. 

Section 2 of S. 2203 ensures both sufficiency and certainty in future funding by 

extending revenue contributions to the D&D Fund for 10 years. In 2004 GAO recommended a three-year extension in the program while DOE considered longer-term 

issues. However, that period of time has passed and the authority for the entire 

cleanup expires this year. S. 2203 addresses the issue of funding sufficiency by providing enough time to ensure the collection of sufficient revenues to pay for the projected shortfall.1 Meanwhile, S. 2203 presumes vigorous ongoing oversight to DOE’s 

cleanup activities at these sites. 

In continuing the original framework of the EPACT D&D program, S. 2203 serves 

the parallel interest Congress had in reforming the longstanding DOE program that 

provided uranium enrichment services to the private sector. For decades, in addition 

to failing to collect money to pay for cleanup costs, DOE had undercharged nuclear 

utilities billions of dollars for the enrichment services that it provided to them, with 

some of the past GAO estimates of the unrecovered costs running between $3 billion 

and $11 billion. At the same time growing international competition in the uranium 

enrichment market had limited the ability of DOE to hike its charges to collect 

these past debts. To help address these matters, EPACT authorized the eventual 

privatization of the DOE program into the United States Enrichment Corporation 

(USEC). 

Importantly, I would like to raise one final issue concerning S. 2203 and the potential impact of the cleanup fee on nuclear utilities and their decisions regarding 

whether to purchase enrichment services from USEC in the future. Since the fee 

is based on historical purchases prior to October 24, 1992, there would be no additional fee payments associated with present or future utility purchases of enrichment services from USEC or any other source. Therefore, the extension of the special assessment should have no impact on trade balances or future utility decisionmaking about the use of nuclear power. 

And last, Section 3 of S. 2203 directs the DOE, not later than 1 year after enactment, to complete a study for the use of proceeds from the sale of the product of 

enriching uranium tailings. This sensible provision, which we support, provides both 

the Administration and the Congress an opportunity to assess whether additional 

enrichment of uranium tailings may be used to supplement the taxpayer contribution to the cleanup fund and to provide assistance to local government and community reuse organizations. We also believe any final decision to sell off this government asset: (1) should use the proceeds to help pay for obligations that would otherwise be borne by taxpayers and not to relieve the industry of its contribution to 

cleanup; (2) should not draw the government back into the uranium enrichment 

business but should leave those activities to the private sector; and (3) should comply with all environmental laws, including the National Environmental policy Act. 

RESPONSE TO CONCERNS OF THE NUCLEAR INDUSTRY

At the present time and in the past, nuclear utilities have opposed paying into 

the cleanup fund a special assessment based on the concept of ‘‘beneficiaries pay.’’ 

They have generally offered two objections—in their view the fee costs them too 

much and they have already paid their share. However, both of these arguments 

are flawed and so I will briefly examine each in turn to explain. 

First, the special assessment is a minor expense to the utility industry but makes 

a major contribution to the DOE cleanup fund. For the past 15 years, the special 

assessment has provided nearly a third of the cleanup expenses of the D&D Fund, 

helping to ensure the program’s solvency and the adequacy of environmental cleanup. Without this stream of revenue the overall success of the program, which until 

now has run fairly smoothly, would be brought seriously into doubt. 

By contrast the size of the contribution from utilities to the Fund is so small in 

comparison to their annual revenue that it is almost difficult to calculate precisely 

30

what it equals. In 2005 (the last year for which there are consistent data for these 

calculations) total utility revenue was $298 billion, of which the special assessment 

was less than seven-tenths of one percent of the total. Another way to think about 

this is to consider the overall increase in residential electricity prices including inflation in the 15 years between 1991 and 2006. That increase was 29.35% including 

the special assessment; but an almost indistinguishable 29.29% without it. Finally, 

one could consider that the amount of the fee paid monthly by the average residential customer is just over a nickel (5.6 cents), or less than the cost of a stamp for 

the average household. 

Second, the special assessment is a fair share for the utilities to pay and is fair 

to the taxpayer too. The special assessment is allocated based on the relative proportion of enrichment services received by the two main beneficiaries of the program, nuclear utilities and the government. Utilities have argued in the past that 

they should have to pay little or nothing to this program because the plants were 

already contaminated by defense use before they started receiving services, and so 

they should only have to pay at most incremental expenses. However, this position 

is contrary to the history of the program and a basic sense of fairness to those taxpayers who did not benefit from the nuclear power that was produced in the past. 

During the 1960s when the government made fuel services available to electric 

utilities the question was raised about what to charge for enrichment services and 

how to treat the fixed overhead costs of the plants that were already built. The decision was made then that utilities should not only pay for the variable costs of providing those services but also a share of the fixed costs, such as plant depreciation. 

This policy position was embodied in the famed ‘‘Conway’’ formula, and was adopted 

by the Atomic Energy Commission and supported by Congress in part because of 

a desire even then to pave the way for privatizing these plants by charging full production prices for their services. 

After it was realized that DOE had failed to collect sufficient revenue to pay for 

the cost of cleanup of the enrichment plants, Congress made the decision then in 

EPACT to allocate the costs in proportion to the services provided to these two sets 

of beneficiaries. DOE testified in 1991 in support of the principle that the costs of 

cleanup should be divided between government and civilian beneficiaries based on 

past purchases of SWU. The next year, the first proposal for a fee on utilities to 

collect their share of the allocation was included in the budget of President George 

H.W. Bush. 

Nuclear utilities have maintained that they agreed to a 15-year, $2.25 billion payment and that they have now paid their share. However, the conference report for 

EPACT records no such agreement. Indeed if Congress had meant to strike such a 

deal, it would have extended the authorization for the government’s share for an 

additional 25 years, the period of time estimated in 1992 that it would take to complete cleanup. In addition, the behavior of nuclear utilities since 1992 belies that 

there was any such deal to which they were a party, since they have repeatedly 

brought (and lost) lawsuits to keep from paying any of the special assessment. 

In any case, since no past Congress can in fact bind the actions of a future Congress, the real question is, what is the fair decision to make? The need for cleanup 

at DOE’s cleanup plants continues to be a pressing need to protect the environment 

and the nearby communities. If utilities do not pay their share of the costs, then 

all of the remaining expenses will fall on the taxpayer. While it may be true that 

all ratepayers of nuclear utilities are also taxpayers, it is not true that all taxpayers 

get their electricity from nuclear power. Even now 19 states get no power from nuclear power. It is quite simply not fair for the taxpayers who did not benefit from 

the below-cost power to shoulder all of the remaining cost of that cleanup. 

CONCLUSION

S. 2203 addresses the serious issues raised by the expiring authorities for the 

DOE’s uranium cleanup D&D Fund by reauthorizing the Fund and ensuring the 

sufficiency of environmental funding, taxpayer protection, and community well 

being. We strongly urge your support for it. 

Thank you for allowing me to testify and I look forward to your questions.

31


warren111507.eps
32

Senator TESTER. Thank you, Mr. Warren. 

Mr. Longenecker. 

STATEMENT OF JOHN R. LONGENECKER, LONGENECKER & 

ASSOCIATES, INC., LAS VEGAS, NV 

Mr. LONGENECKER. Thank you, Senator Tester, Senator Domenici, Senator Bunning, it’s a pleasure to be here today. 

A little more than 20 years ago when I first testified before the 

Senate on the subject of uranium enrichment, at that time, I was 

the Deputy Assistant Secretary of DOE, for Uranium Enrichment, 

so this is a subject that I know quite well. 

As such, I believe strongly that the issue of how to decontaminate and decommission the existing GDPs is really, vitally important. Certainly important to everybody who lives around those 

three GDP sites, but it’s also vitally important to the nuclear industry, the electric rate-payers, and the Federal Government. 

Now, there’s no question that the GDP sites—all three of them—

must be cleaned up. DOE is working to define the how, you know, 

the specific scenario under which they can be cleaned up. However 

there are significant public policy questions regarding how to pay 

for the GDP D&D. 

I strongly believe that the U.S. Government should be liable for 

all the future cost of GDP cleanup, just as they were prior to the 

enactment of this provision in 1992. 

The U.S. Government can secure all the funds required for GDP 

cleanup by selling, in a controlled manner, its excess inventories of 

highly enriched uranium and other forms of uranium, including 

high-assay tails. 

Now, this highly enriched uranium and these other forms of uranium were generated by the gaseous diffusion plants as part of the 

Nation’s defense effort under programs that were paid for by all of 

the taxpayers. It seems a reasonable public policy to recover the 

value of this material, and to use the proceeds for a range of DOE 

and other programs that have broad public benefit, such as GDP 

cleanup, to provide supplies, security for new nuclear power plants 

in the United States, as a key part of U.S. non-proliferation policy, 

and to help stabilize future nuclear fuel prices. 

This approach is particularly attractive, given the recent increase 

in uranium and enrichment prices. 

Now, there’s a strong factual base that U.S. utilities were not responsible for the radioactive contamination of these plants. Essentially, all of the contamination at the GDP sites occurred during 

the first 15 to 20 years of their operation, when they operated solely to produce highly enriched uranium for the military. 

When these plants were taken over for commercial enrichment in 

1969, 15 to 20 years after each of them was built, they were fully 

and totally contaminated. 

The three GDPs, when they were operated for commercial enrichment, which was my responsibility when I was in the Department 

of Energy, established its pricing structure to include all program 

costs, including the eventual D&D of these plants. 

Now USECs GDP lease, which was approved by DOE in 1993, 

1 year after the enactment of this Act, reflects this fact with USEC 

having no residual GDP D&D liability for either Portsmouth or PaVerDate 0ct 09 2002 12:47 Mar 11, 2008 Jkt 040443 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 G:\DOCS\41134.TXT SENERGY2 PsN: MONICA
33

ducah. As a commercial enterprise, USEC has the liability for any 

depleted uranium and other waste that it generates after 1993, and 

for any new facilities that it constructs, like the advanced centrifuge plant. Seems to me, that this definition of liability is fair 

and equitable and also should extend, in the future, to the U.S. 

utilities that purchased enrichment services produced by the GDPs 

in the past. 

Mr. Chairman, in summary I believe that the U.S. Government 

should be liable for all future costs of GDP cleanup, as it was prior 

to the enactment of this provision in 1992. U.S. utility payments 

over the past 15 years of approximately $2.66 billion more than 

satisfy the desire for industry to make an equitable contribution to 

GDP cleanup in the public interest. The U.S. Government can secure all of the funds required for GDP cleanup by selling its excess 

inventories in a controlled manner of highly enriched uranium and 

other forms of uranium. These inventories, again, were purchased 

by the government using taxpayer money are now excess to need, 

and certainly from a public policy point of view, it seems to me, 

selling them to clean up the GDPs just makes good sense. 

The quantities to be sold, however, the timing and the sales process have got to be carefully developed with strong industry participation, to assure that a healthy domestic nuclear fuel cycle industry continues in the future. 

Now, the fact is the industry knows these excess inventories are 

there, and they’re concerned that the government is going to sell 

them someday, and they want the certainty of having a firm plan 

as to when they’ll be sold, at what rate, and by whom. So, developing that plan would provide certainty to USEC and to everybody 

else who wants, who aspires to be in this business in the future 

in the United States. 

It’s troubling to me, 25 years later that today we’re more highly 

dependent in this country on uranium enrichment services than we 

are on crude oil. We actually import more of our uranium enrichment services for nuclear fuel than we do crude oil. The USEC 

market share of the world market is substantially less, almost half 

of what it was 20 years ago. So, this definition of what we do with 

these inventories can be a key part of rebuilding a viable commercial nuclear fuel cycle industry in the United States. 

Thank you for your attention, I’d be pleased to respond to any 

of your questions. 

[The prepared statement of Mr. Longenecker follows:]

PREPARED STATEMENT OF JOHN R. LONGENECKER, LONGENECKER & ASSOCIATES, 

INC., LAS VEGAS, NV 

Mr. Chairman, thank you for the opportunity to appear today to present my views 

on the Uranium Enrichment D&D Fund. The United States has an overarching 

need for a comprehensive strategy for how to maintain viable, competitive nuclear 

fuel cycle companies in this country for the decades ahead. Addressing nuclear fuel 

cycle issues is a key element in allowing the US to continue to rely on nuclear power 

in the future. Over the past several years DOE has been working to put in place 

the policy and technology base for a sustainable, competitive domestic nuclear fuel 

industry for the future. 

A healthy US uranium enrichment business is a key part of a sustainable domestic nuclear fuel industry. It’s troubling that today the US imports a higher percentage of its uranium enrichment services for nuclear fuel than it does crude oil. However, it’s gratifying to see that there are multiple efforts underway to construct new 

uranium enrichment capacity in the US. 

34

The issue of how to decommission and decontaminate the existing GDPs is also 

vitally important. GDP D&D is an important issue to those who reside in the vicinity of the three US GDP sites, the nuclear industry, electric ratepayers, and the federal government. 

There is no question that the GDPs sites must be remediated, and DOE is working to define the most effective approach to that task. However, there are significant 

public policy questions regarding how to pay for the GDP D&D. 

I strongly believe that the US government should be liable for all future costs of 

GDP D&D, just as they were prior to the enactment of this provision in 1992. The 

US government can secure all of the funds required for GDP D&D by selling in a 

controlled manner its excess inventories of HEU and other forms of uranium, including high assay tails, material previously considered as waste. 

US HEU was generated by the GDPs as part of the nation’s defense effort under 

programs that were paid for by all taxpayers. It seems reasonable public policy to 

recover the value of this material, and to use the proceeds for a range of DOE and 

other programs that have broad public benefit, such as GDP D&D. 

There is a strong factual base that US utilities were not responsible for the radioactive contamination of the gaseous diffusion plants. Essentially all of the contamination at the three GDP sites occurred during the first 15-20 years of operation, 

during which time these plants were devoted solely to generating enriched uranium 

for US military needs. When the GDPs began operating for commercial fuel enrichment in the late 1960’s, the three GDPs were already highly contaminated. When 

DOE managed the GDPs for commercial enrichment operations, its pricing structure 

was developed to include all program costs, including the eventual D&D of the 

GDPs. 

USEC’s GDP lease, that was approved in 1993, reflects this fact, with USEC having no GDP D&D liability for either the Portsmouth or Paducah GDPs. As a commercial enterprise, USEC has the liability for any depleted uranium that it generates, and for new facilities that it constructs like the Advanced Centrifuge Plant. 

It seems to me that this definition of D&D liability is fair and equitable, and also 

should extend to the US utilities that purchased enrichment services produced by 

the GDPs in the past. 

Despite this, over the past 15 years, utilities were assessed more than $2.5 billion 

for GDP D&D, as well as uranium and thorium mill tailing remediation costs. 

Extension of the current tax on utilities that operate nuclear power plants to fund 

future D&D activities could place added pressures on USEC and other evolving US 

uranium enrichment businesses that are already under strong competitive pressures. 

Taxes like this lead utilities to be concerned about future assessments to generate 

funds for US government programs, and are just one additional factor encouraging 

US utilities to buy enrichment services from foreign suppliers. Since this provision 

was enacted in 1992, USEC’s share of the US SWU market has decreased from 

more than 80% to about 45% in 2006. Even more striking, this reduction in market 

share occurred in the face of trade sanctions imposed against foreign competitors. 

Also, of the SWU delivered to US utilities today, an overwhelming majority is obtained by USEC from Russia under the Megatons to Megawatts program, which 

downblends weapons grade uranium for commercial use. The Russian government 

agreed to downblend 500 MT of its HEU inventories in 1993 and this program has 

had significant non proliferation benefits. 

But, the US now is very dependent on these supplies from Russia, and deliveries 

are scheduled to terminate in six years. 

Based on the success of the Russian HEU downblending program, it seems that 

there is an obvious and equitable source for funding future GDP D&D—namely, the 

downblending and sale in a controlled manner of a portion of the excess inventories 

of US HEU and other forms of uranium. This HEU was produced by the US GDPs, 

and can be used to fund their clean up, to provide supply security for new nuclear 

power plants in the US, as a key part of US non proliferation policy, and to help 

stabilize future nuclear fuel prices.. This approach is particularly attractive given 

the increase in uranium and enrichment prices. 

The quantities to be sold, the timing, and the sales process must be carefully developed to assure that a healthy domestic nuclear fuel cycle industry continues in 

the future. Since the existence of large government inventories of HEU and other 

forms of uranium will always be a concern impacting future investment in the commercial nuclear fuel cycle industry, a firm disposition plan and schedule are essential. 

35

SUMMARY

In summary, I believe that the US government should be liable for all future costs 

of GDP D&D as it was prior to the enactment of this provision in 1992. US utility 

payments over the past 15 years of approximately $2.66 billion more than satisfy 

the desire for industry to make an equitable contribution to GDP D&D in the public 

interest. 

The US government can secure all of the funds required for GDP D&D by selling 

in a controlled manner its excess inventories of HEU and other forms of uranium. 

US HEU was generated by the GDPs as part of the nation’s defense effort, and was 

paid for by all taxpayers. Its seems reasonable public policy to recover the value of 

this material and to use the proceeds for a range of programs that have broad public 

benefit. 

Thank you for your attention.

Senator TESTER. I want to thank you for your testimony, too, and 

I want to thank the entire panel for their conciseness in their remarks. 

Thank you much, we’re going to start with Senator Domenici. 

Senator DOMENICI. Let me say to you, Mr. Longenecker, I hope 

that record is brief, but I hope your description of who you are adequately depicts you as an expert in this field. 

Now, you’ve been doing these kinds of things for an awful long 

time, at a very high level of participation, and so it is good to hear 

from you because you kind of were there when it happened. Even 

though you’re not 100 years old, you still look pretty good. 

Mr. LONGENECKER. It could prove that working in the nuclear industry has positive health effects. 

[Laughter.] 

Senator DOMENICI. That’s true, there’s no question about it. 

Some people say that’s true. 

Let’s see, I had one question that I thought was very interesting. 

You were talking about, Mr. Longenecker, in the closing remarks 

about U.S. dependency—if we are going to go have a renaissance 

and start building nuclear power plants, and it looks like we are 

unless something or someone throws a wrench into the wheel—it 

seems to me that the question of where we’re going to get our enriched uranium is very important. 

I think it’s absolutely important that we further clarify your 

statement, because there is a new enrichment plant that’s up and 

going, and belongs to LES. It’s going to be a major plant, and it’s 

in New Mexico, so I know more about it than normal. It’s a twin 

to the one that they have in Europe, which we’ve seen. 

Now, AREVA has just announced that they are going to build a 

uranium enrichment plant in the United States, so that’s two that 

we didn’t have when we started preparing for these hearings. 

Those two will help the shortfall, will they it not, that you have 

been talking about? 

Mr. LONGENECKER. They will, indeed, and I think it’s, again, it’s 

gratifying that we have those three companies interested in building new capacity in the United States which will provide supply security, but again the issue that I mentioned, the existence of the 

government inventories, as well as responding to Senator 

Bunning’s question as to whether the government is going to place 

a surcharge on enriched uranium services produced in the United 

States is very important to whether they continue those plants. 

Because if I were a U.S. utility, when I was running the business, this happened all the time. If we raised the price or placed 

36

a surcharge on them, they just got it abroad. Today we’re getting, 

you know, 80 percent of our enrichment services generated overseas, and there is excess capacity in other countries, not in this 

country—but they do have an option as to why they buy. 

So to create the market for those, it’s going to be very important 

that we set good public policy, and a level playing field. 

Senator DOMENICI. You bet. I mean those who are looking at the 

United States don’t expect a surcharge at this point, they don’t expect the excess or assets that are held by the Department, and they 

don’t expect them to be thrown on the market, willy-nilly. At least 

they’re making business judgments and assume the government 

will make business judgments as they dispose of their assets. 

I think that it would be important to find out what the Department intends in that regard, and I’m going to ask the Chairman, 

and then I’m finished here, if we could come up with a joint letter 

that him and I would sign, asking the Department if they have any 

plans with reference to the disposition of tails and the other things 

and also remind them that if they are going to, they ought to do 

that in a manner that provides a calmness to the market so everybody can expect a game plan that is participatory of what the private sector’s planning, not just arbitrarily coming up with how 

they’re going to dispose. 

We’ve heard that they have a lot of assets that might pay part 

of this, a big part of their bill here. You weren’t in when that happened, but I don’t think we know enough about it, about what they 

plan, and I think we should now try to compose a letter and see 

if it makes sense. 

With that, I just want to say to all of you, thank you very much. 

Mr. Warren, knowing who you represent and what your main interest is, I can say I was very interested in your testimony. We 

don’t agree on certain things, but I thought it surely indicated that 

you know what you’re talking about, so I thank you for that. You’re 

not coming too off the wall like some used to 15 years ago, this is 

very good. 

Mr. WARREN. I appreciate that. 

Senator DOMENICI. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN [presiding]. Senator Bunning. 

Senator BUNNING. Thank you very much. 

There are so many questions because if you look at the agreement that was struck in 1992, and the sharing of the burden between the industry and the Federal Government for the last 15 

years, you wonder why—as Mr. Warren said—there’s not going to 

be a continued sharing, realizing that we are in competition worldwide for enriched uranium. 

I have a son who works at a nuclear power plant, who’s a nuclear 

power plant operator, and they buy their enriched uranium not 

only from Paducah, but from other places. So if there is a surcharge put on domestic enriched uranium, we have real problem. 

Because, I am sure if I were a commercial operator of the nuclear 

power plant, like Excelon or someone like that, and enriched uranium from Europe was cheaper than it was from Paducah, I would 

be buying it from the best place possible. 

37

So, there’s a balance we have to strike in this new agreement 

that we’re trying to come to, where we’re seeking information, and 

the reason we’re seeking information is that this thing has worked, 

and there’s a shortfall. Because, I guarantee you, none of us are 

going to be alive when—and I don’t care how young you are when 

this thing’s finished. If you go to Paducah, or go to Portsmouth and 

look at—including you, Senator Tester, and I know you’re younger 

than the rest of us—if you look at the contamination that occurred 

prior to commercial uranium being sold on the market in 1992 

when the commercial agreement was reached, contamination occurred 30, 40 years prior to that, when we started building nuclear 

bombs for our products for our military. 

So, we’re trying to determine who’s responsible. Who owns the 

tails? The DOE does. So, they should use some of that money, in 

my opinion, to pay for the cleanup of what they contaminated during the use of those plants, prior to this agreement. 

But, we’ve got bills going in the House that say the operators, 

USEC, should get some of that money. Yes, they should get money 

for processing it, but not for the ownership of those tails. The DOE 

owns those. 

My question to all of you is, what portion—or should all of 

those—tails be sold and owned by the DOE, should that money go 

into the funding to be used for the cleanup? I want to ask the GAO, 

because they’ve been here longer than all of us. 

Not you, specifically——

[Laughter.] 

Senator DOMENICI. The organization. 

Senator BUNNING. Not you——

Ms. NAZZARO. Not me, personally. 

[Laughter.] 

Senator BUNNING. Not you, but your capacity as an entity. So, 

can you give us a handle on that? 

Ms. NAZZARO. Senator, we haven’t looked at that issue. What 

you’d want to look at is, how much is there, and what is it worth? 

What can the market really bear, because, I mean, you can’t dump 

it all into the market immediately. We’d want to be able to do some 

analysis to figure out, whether that makes sense. 

Senator BUNNING. The DOE——

Ms. NAZZARO. It sounds like from a conceptual point of view, to 

be able to sell off some of that to help offset costs, certainly makes 

sense. How much? I couldn’t tell you just off the top of my head. 

Senator BUNNING. But that would be a source of revenue that is 

not anticipated in any agreements that we now have? 

Ms. NAZZARO. Not from what I’ve seen, no. 

Mr. FERTEL. Senator, that’s clearly what we’re proposing be 

looked at. I think John Longenecker said it the right way—you 

don’t want to just dump material on the market, because then you 

hurt the uranium market in this country, you can hurt the enrichment market if you dump other things. So, it’s a matter of selling 

it smart. One of those things that you’ve said, and the Secretary 

said, is this is a long-term project that goes out to at least 2040. 

You can do it smart, and you can generate the revenue. 

38

From a commercial standpoint, we have paid—we think—our obligation, not only to the GDPs, but we do it at our facilities right 

now, we put aside decommissioning funds——

Senator BUNNING. For your local facilities. 

Mr. FERTEL. Our understanding, and Mr. Longenecker mentioned in his testimony was that the price of the product that the 

companies bought included whatever D&D cost——

Senator BUNNING. It was supposed to. 

Mr. FERTEL. It was supposed to. 

Senator BUNNING. Sometimes, in competition, it did not. 

Mr. FERTEL. I know, I know in the world of government from we 

know from the waste fund, we don’t always have a contract work 

the same way we expect it works in the commercial world, but usually when you sign a contract and you pay your part, you get your 

product. They don’t come back later and say, ‘‘Gee, we forgot something.’’

Senator BUNNING. ‘‘By the way, you owe us——’’

Mr. FERTEL. So, we honestly have always met our obligation 

when we believe we have one. If we don’t think we have one, we 

look for another way to generate revenue for you, and I think 

again, John Longenecker offered up a good point—the GDPs 

produce the excess HEU that we have, it produced the tails that 

we have with taxpayer money. Figuring out how to use that surplus HEU, and use these tails as an asset, and put them in the 

market in a way that doesn’t disrupt the market—and you have a 

lot of time to do it—will be a major revenue source that could be 

used to make up deficits on the GDP D&D Fund. 

Senator BUNNING. If the Department of Energy would just come 

forward and say, ‘‘Yes, we own these things,’’ it would really be a 

big step forward. Because I know there’s going to be some things 

put in the House that say that the plant operators who have produced these tails in the production of enriched uranium have a legitimate interest in owning them. Or, the communities, for that 

matter, would like to see some of that money come back into the 

communities. 

For the cleanup of those plants, I agree, that that may be the use 

of it. 

Thank you very much for your—go ahead, Mr. Warren. 

Mr. WARREN. I’m sorry, Senator, if I could just address a couple 

of issues briefly. 

The 1992 Act did several balancing acts. One was what should 

the ratio between the beneficiaries be, and it was based on services 

received. But another was this issue of not wanting to injure the 

trade position of the domestic enrichment industry. 

So, I want to dispel what, I think, might be a misconception, 

which is that the portion which is collected from the utility sector 

is not done as a surcharge on enrichment services. That the 1992 

Act, in effect, said that for the utilities that received past services, 

this is your share of the total, we’re going to send you a bill. They 

basically sent a bill. 

So now it’s free to USEC and other domestic producers to go out 

and produce their product at a competitive market rate, and without prejudice toward utilities buying domestically. 

39

So, I just wanted to make it clear that if this legislation, 2203, 

extends that special assessment, it would not be in the form of a 

surcharge on enrichment services. 

Mr. LONGENECKER. Can I just address that? Because, if I’m a 

utility, and you’re placing a $200 to $300 million surcharge retroactively if I buy domestically, and I have no surcharge if I buy foreign, I think I’d continue to buy foreign, basically to avoid the risk 

that I could get a surcharge like this in the future. 

Senator Bunning, on the depleted uranium, I think the key 

there, because you raise a very, very good point—if we don’t re-enrich those tails, and there’s several billion dollars out of residual 

uranium value there in today’s prices, the plan would be to dispose 

of them as waste. 

So, we have something, again, paid for from taxpayer dollars that 

we can either pay to dispose of as waste in the DUF6 plants, or 

have someone re-enrich and get back with the taxpayers, and it can 

be used for GDP D&D or any other thing that Congress decides. 

But there is several billion dollars of residual value there, that 

can be obtained by finding an economic enrichment source to strip 

them and get that uranium. 

It does seem logical to me that since they were generated by the 

GDPs, that you would devote those revenues to GDP cleanup. But 

that’s a decision for Congress to make. 

Senator BUNNING. Thank you very much. 

Senator TESTER. Ms. Nazzaro, I’ve got a question, in regards to 

the shortfall in the report that you’ve mentioned. I guess the question is, when was—I assume there’s a previous report to this one—

it put out? Then, can you tell me the correlation between that report, whether there was a potential shortfall in it or not, and this 

report? 

Ms. NAZZARO. Between the DOE reports? 

Senator TESTER. I assumed it was——

Ms. NAZZARO. You’re referring to DOE, which did a report in 

2001——

Senator TESTER. That’d be fine. The DOE report is fine, and I 

would assume there was a previous DOE report——

Ms. NAZZARO. Right. In 2001, DOE did a report. 

Senator TESTER. Right. 

Ms. NAZZARO. DOE did not do one in 2004, and they just did one 

now in 2007, which we have not really had time to analyze. They 

would not share the information with us. Committee staff did share 

it with us late yesterday afternoon. We do see that there are some 

date changes, although very modest, and we do see some number 

changes. We would really have to take some time to go in and analyze the numbers, verify the accuracy, and look at the source of 

those numbers. 

But, we are concerned that this not be considered even as a final 

plan, because DOE has continued to identify a number of uncertainties. For example, one of them has to do with the onsite storage 

issue at Portsmouth and Paducah, which has not been resolved 

with the State. 

So, if onsite storage is not a strategy that’s pursued, that could 

add additional money, to the cleanup exercise. So, really what DOE 

40

is laying out right now still may not be even the final numbers of 

what this is all going to cost. 

Senator TESTER. OK. 

Ms. NAZZARO. That was where, in 2004, we were suggesting, extend the Fund until 2010, and give DOE time to develop a report 

that would give us that final data. The final report on the D&D 

was supposed to come from DOE in 2007, that was due October 

2007. So, what we would like to still see, is that they develop this 

report, tell us what it’s going to cost, so we can make some assumptions, as to how we’re going to pay for it. 

Senator TESTER. OK, thank you. 

Mr. Warren, as far as re-enrichment of the leftover material, do 

you support doing that to defray costs? I thought you indicated that 

in your comments, but I just wanted to make sure. 

Mr. WARREN. What we support is the approach in this legislation 

which is to have the Department do a study of it. What we want 

to emphasize, is that that study should be guided by certain principles. One would be that any revenue that might be realized from 

this process—which we believe would take in the form of some kind 

of controlled auction of the depleted tails to the private sector, that 

you want to maximize the return to the taxpayer, you want to get 

fair market value for it, and then you want to take that money toward the taxpayer’s obligations, not toward the utility sector’s obligations. 

The second principle is that you don’t want to get the government back in the uranium enrichment business. It was a long journey to get us where we are now, where that’s a private sector activity, and that’s what’s appropriate. So that would be the second 

principle. 

Then, of course, compliance with all environmental laws. 

Senator TESTER. All right, so do you support the re-enrichment 

of that material? 

Mr. WARREN. We’re open to that. We think that, depending on 

what the study comes back and recommends, we’ll have a betterinformed decision, but we think it’s well worth looking into. It 

could provide a valuable contribution toward the government’s 

share. 

Senator TESTER. OK. 

Ms. NAZZARO. Senator. 

Senator TESTER. Yes. 

Ms. NAZZARO. It’s my understanding that the committee has 

asked GAO to look into that. Apparently, we’re looking at whether 

advocating it is selling the HEU into the marketplace, or re-enriching leftover high SA material from prior enrichment operations. It’s 

my understanding that it’s too preliminary for me to give you any 

results at this time, but early Spring, we should be able to brief 

the committee on that study. 

Senator TESTER. That would be good, that would very good. 

Mr. Longenecker, you had said in your statement that the contamination of the plants that occurred prior to 1969, which you had 

said was only used for military purposes at that point in time. The 

plants were—I believe you said fully contaminated by the time the 

contracts were entered into with the utilities. 

Mr. LONGENECKER. That’s correct. 

41

Senator TESTER. Could you explain that a little bit, and really, 

what I’m looking for is that statement indicates to me that the utilities have no liability whatsoever, because it was fully contaminated. I guess, if you started at ground zero, and I don’t know a 

lot about uranium or atomic power or whatever—but if you started 

at ground zero, would there be contamination that occurs simply by 

the enrichment. Do you see what I’m saying? 

Mr. LONGENECKER. When the plants were built, what you had 

was, basically, clean steel, nickel and other alloys sitting there. 

When the military began using them, first at Oak Ridge to generate highly enriched uranium for the bomb, we had all types of 

radioactive and non-radioactive components to those, and operating 

them, particularly the major cost of cleaning up those plants is getting rid of the large volumes—uranium-contaminated—metal, although it’s low-enriched, and the barium in them is classified, putting in a classified burial ground. 

So, from the time over the first year, certainly in the 15 years, 

20 years that Oak Ridge ran, that plant was fully radioactively 

contaminated. The same with the chemicals that it had in it. 

The residual contamination that you would have from continued 

operation after AEC, ERDA, DOE took them over in 1969, was the 

depleted uranium, the tails that we’re talking about here today, 

that’s being handled separately, and of course USEC and LES and 

AREVA will all pay to have their depleted uranium disposed of. 

But the plant proper, excluding the tails, the waste stream, the 

plant proper was contaminated as soon as you loaded it with nuclear material and generated the first highly enriched uranium. 

You had this large volumes, huge volumes, of metal and concrete 

that were radioactively and chemically contaminated. 

Senator TESTER. If such a plant were built today, that would be 

the same case. 

Mr. LONGENECKER. That would be exactly the same case. 

Senator TESTER. OK. So your contention is that, because it was 

used for military purposes first, that the utilities really have no liability there, even though utilities have been getting a benefit from 

it? 

Mr. LONGENECKER. That’s correct and, you know, again, look at 

how the USEC lease was generated. USEC is a commercial company, when DOE gave USEC the lease for the GDPs, and that was 

signed in 1993, it said the plants are fully contaminated, and 

USEC will only be liable for residual contamination that it creates. 

the depleted uranium, any additional waste that it generated, and 

if USEC built new facilities. 

Now, that is a different thing if USEC were to build the American centrifuge plant, they would be liable for that, but otherwise, 

those things were fully contaminated, paid for by the taxpayer, and 

we told—when I was selling enrichment services to customers, because it was very important, that D&D was in our price, and it was 

all in price, and we wouldn’t be coming back to them. 

What I think was interesting we haven’t talked about today, in 

1992 the surcharge that we put on utilities, we excluded all of the 

non-U.S. buyers of enrichment services. So, all of the non-U.S. companies that bought enrichment services to run their nuclear plants 

that are our commercial competitors aren’t paying a surcharge. 

42

Senator TESTER. OK. 

Mr. LONGENECKER. So we excluded them because we couldn’t 

find a way to tax them, but that’s why it is not good public policy, 

it seems to me, to continue that, either for our domestic industry 

or for competitive position in the world. 

Senator TESTER. OK, Mr. Warren, you had a comment to that? 

Mr. WARREN. Yes, this issue has come up a couple of times, and 

it is a key issue in terms of the plants were already contaminated, 

so why should the utilities have to pay anything for it? So, I’d like 

to focus on that for a moment. 

You have to go back in time to the 1960s, really, which was before my time on this issue. But, at that time, basically there was 

a choice that the Nation faced. We wanted to promote nuclear 

power as a domestic source, we had these military facilities. Either 

the domestic industry could have built its own enrichment plants, 

or the government could make its facilities available. 

If the private sector had built its own plants, it would have been 

responsible for 100 percent of those cleanup costs. Instead, we 

thought it made better sense to take advantage of these existing 

facilities with the understanding that the private sector would 

pay—not only the variable costs of operating them—but pay toward 

the fixed plant investment. 

Now, at that time, we didn’t have a very sophisticated understanding of cleanup, and so we didn’t, you know, estimate and set 

the money aside in the way that we should have. 

But the philosophy was that, we were saving the industry this 

fixed investment, they had to contribute to the government’s fixed 

investment. 

So, then you have to jump forward to the 1990s, and when we 

sort of said, ‘‘We have this cleanup liability, the Atomic Energy Act 

Section 161(v) said, we’re supposed to collect all of the costs, but 

we haven’t, so now how are we going to pay for the cost?’’

At that time, the DOE testified, in 1991, that it should be on the 

basis of enrichment services purchased, which they estimated to be 

about 50/50. It’s true, we couldn’t collect from foreign utilities, and 

so the government picked that up, so it went down to a third. 

But they said that the concept would be 50/50, based on enrichment services. The next year, the first Bush Administration, President Bush, in 1991 said, the way to collect it is on a fee on utilities. 

So, that decision then became embodied in the 1992 Energy Policy 

Act and really is the basis for our position that that should be the 

philosophy going forward. 

Senator TESTER. Gotcha. 

Mr. FERTEL. Senator, I feel like Paul Harvey—and now the rest 

of the story—Wes is right, the government did have the utilities 

use their facilities, because the utilities weren’t—the commercial 

industry was not allowed to have the technology to build enrichment facilities in our country so, we ought to be clear, it wasn’t an 

option, the commercial industry had at all. 

Having said that, he’s right—161(v), which is the Atomic Energy 

Act—required the government to collect all of the appropriate costs, 

as Mr. Longenecker said, he ran the program, they did look at 

D&D costs, there is a requirement in the Code of Federal regulations that they include certain D&D costs, it should have been 

43

looking at disposal tails—that’s what we would have assumed, 

again, from a commercial standpoint. You’re buying and paying for 

a service. You don’t have any choice but to buy it from this one 

supplier, who is the Federal Government, at this point, they’re 

pricing it at whatever price they want, and you’re paying for it. 

You’re told it includes everything, including D&D, and in 1992, 

when Wes was on the House side, and believes firmly in what he’s 

saying, because he believed it then, a deal was struck—not a contract, not an assessment—a deal. 

The deal was, the industry would make the payments they’re 

making, they would go through as a fuel adjustment clause payment, and we’ve done that. The government hasn’t met its part of 

the 1992 deal. 

There were some utilities that went to court, because the deal 

was cut, and people testified before this committee and before the 

House committee at that time, the courts didn’t rule in favor of the 

utilities, because they said, ‘‘You agreed to it.’’ OK? That wasn’t because they thought they had the obligation, they were doing a deal. 

So, what we need to do is look at this, and figure out how to do 

the right thing for the GDPs. We’ve got to clean them up. It’s a 

long-term thing. Studying what to do with HEU—we can study it 

to death, we ought to figure out how to do it—it’s not a study of 

can you do it, it’s how you put it in the market so you don’t disrupt 

the market, the surplus HEU, and also re-enriching the tails. 

Don’t wait forever on re-enriching the tails, because the reason 

it’s become an asset is uranium prices are high. Uranium prices 

will stay way above where they were for a long time, but the reason it’s a real good asset now is because they are high. So, begin 

to figure out how to take advantage of that. 

There is about 74 million pounds of U308 equivalent in the tails. 

At today’s price, which you probably couldn’t get forever, that 

would be $7 billion, if you could sell it. 

So, we ought to figure out how to use the waste which is now 

an asset, and the assets that came out of the GDPs to help solve 

this problem and move forward on it, and that’s a good solution in 

using material the government produced. 

The CHAIRMAN. No problem, thanks for those good questions. 

Let me just ask one question, Mr. Longenecker, as you, under 

this Energy Policy Act of 1992, the special assessment on utilities 

was imposed on the basis of, ‘‘the total amount of seperative work 

units purchased from the Department of Energy before the date of 

enactment of that bill.’’

The bill before us, the one we’re now considering, does not 

change that basis for additional assessments. So, if we were to go 

ahead with this bill, how would the bill provide a disincentive to 

future purchases from LES or USEC, if the assessments are made 

on the basis of past purchases from DOE. 

Mr. LONGENECKER. Senator, I think my position on that is, if 

you’re buying from a U.S. supplier, and the utilities who are just 

a handful of major commercial nuclear utilities realize that buying 

from a domestic supplier, they were one, subject to a retroactive assessment, and they may be again under U.S. law. If I were them, 

I would make that a consideration. Because, again, the $200 million a year, I’d say, ‘‘If I bought AREVA or the Russians, I’m not 

44

facing that, I don’t have to face a U.S. Government surcharge, and 

if I buy from them 20 years in the future, the U.S. Government 

may decide again that they need funds for some environmental 

cleanup and they may tax me.’’ That’s the concern I have. 

The fact that, for a lot of reasons, one would be this type of surcharge, USEC’s market share went from 80 percent of the United 

States in 1992 when this bill was passed, to, you know, less than 

half now. So, I mean, there has been a significant impact, people 

are not buying enrichment services in this country, and my thought 

is, from a public policy point of view, we ought to give the utilities 

in this country as few reasons as possible to buy offshore. 

The CHAIRMAN. OK. 

Mr. LONGENECKER. It’s not a direct linkage, I would agree, 

but——

The CHAIRMAN. Mr. Warren. 

Mr. WARREN. I would certainly agree that there’s no direct linkage, and we have 15 years of experience since 1992, and I don’t 

think there’s any evidence that there’s been a prejudice against 

buying U.S. services because of this special assessment. 

If you bought enrichment services before 1992, and really, the 

question for the committee now is, going forward, whether you 

want to say future purchases are not going to have to pay a surcharge, we’re just going to collect this special assessment on these 

pre-1992 services. So, I think that the trade issue is really a bit of 

a canard. 

But the one issue that I want to make sure that I address is this 

notion that there was a deal in 1992, that the nuclear utility industry would never have to pay anything again. In fact, the deal in 

1992 was, utility industry would pay for 15 years, not more than 

two and a quarter billion dollars, and that the government would 

pay for 15 years, the difference, which was about $15 billion, adjusted for inflation. That was the deal. 

Then it left open what Congress would do in the future when, at 

the end of that 15-year period when we could assess the success of 

the program. Now we’re at that point in time, and I believe that 

the philosophic principle that was established in 1992 should be 

the governing principle, which is the beneficiaries of the program 

should share the expense, and in proportion to which they got enrichment services. 

The CHAIRMAN. Why don’t we stop with that, thank you all, it’s 

been very useful testimony, a good hearing, and that will conclude 

the hearing. 

[Whereupon, at 11:33 a.m., the hearing was adjourned.] 

(45)

APPENDIX 

RESPONSES TO ADDITIONAL QUESTIONS

RESPONSES OF MARVIN S. FERTEL TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Your testimony indicates that the contracts signed by the utilities 

with the government included all costs including any D&D costs—can you please 

explain that in more detail—was it part of the contract that the utilities were paying into a D&D fund? 

Answer. The ‘‘established DOE pricing policy’’ at the time the parties contracted 

was that DOE’s prices would recover only the government’s costs over a reasonable 

period of time. This policy was mandated by section 161(v) of the Atomic Energy 

Act of 1954, which provided that ‘‘any prices established under this subsection shall 

be on a basis of recovery of the Government’s costs over a reasonable period of 

time.’’ 42 U.S.C. § 2201(v) (1988). Section 161(v), as amended, also directed DOE 

to ‘‘establish criteria in writing setting forth the terms and conditions under which 

services provided under this subsection shall be made available.’’ Id. Pursuant to 

this directive, see 10 C.F.R. § 762.1(a) (1987) (‘‘these criteria are established pursuant to section 161(v)’’), DOE published its Uranium Enrichment Services Criteria 

(Enrichment Criteria). The final Enrichment Criteria were published in 1986 and 

echoed section 161(v)’s cost-recovery based pricing policy. See id. § 762.5. The Enrichment Criteria also listed the costs included in DOE’s charge, which included, 

inter alia, certain decontamination and decommissioning (D & D) costs. 

Question 2. Approximately how much percentage wise is the assessment on the 

net revenues of the industry? 

Answer. As stated in my testimony, the industry is fully supportive of Congress 

taking appropriate action to assure that adequate funding is available for the safe 

and environmentally responsible D&D of the government owned GDP’s. In this regard, as required by EPACT, the industry has already fully paid its obligation of 

$2.6 billion to the fund. Further, as indicated during the hearing, Mr. Longenecker, 

who was the DOE official responsible for the government’s enrichment program, indicated that the commercial sector should not have any additional liability for D&D 

at the GDP’s. Unlike any other source of electricity, nuclear power plants have internalized the costs for externalities, including the cost for waste disposal, decommissioning, fees paid to the NRC and FEMA, etc. As such, we are committed to paying for those obligation and liabilities legitimately owed. In the case of additional 

payments to the D&D fund for the GDP’s, regardless of whether they are a large 

or small portion of net revenues, we do not see this additional cost as a legitimate 

charge that the consumers of electricity from nuclear power plants should have to 

bear. 

Question 3. Your recommendation includes sales of the HEU stockpile and the 

supply of surplus nuclear fuel into the markets in a ‘‘responsible way’’—can you 

please explain this in more detail? 

Answer. Sales of HEU stockpile need to be metered into the market in order to 

not disrupt the developing uranium recovery and enrichment facilities deployment 

in the United States. It is important to have a domestic supply of uranium, conversion, enrichment and fabrication. For the past ten years there was no uranium production to speak of and the US industry was and still is limited to a sole domestic 

supplier of enrichment services, which doesn’t have the capacity to meet 100% of 

domestic demand. Currently uranium mining is staging a come back as well as four 

companies have either started licensing and construction or announced plans for enrichment facilities in the US. While the market can accommodate the introduction 

of surplus US government nuclear fuel and still support the development of new primary production facilities in the US, its introduction into the market needs to be 

done in a fair, transparent, limited and certain manner. 

46

Question 4. Since you have mentioned the HEU stockpile and US-Russian HEU 

agreement to blend down Russian weapons HEU, our understanding is Russia has 

stated they do not want to extend it—would the NEI support extending it? 

Answer. Clearly, from a non-proliferation perspective, the existing US-Russian 

HEU Agreement and any extension of it is extremely positive and NEI is fully supportive of achieving this desirable non-proliferation goal. We understand that after 

2013 Russia may desire to continue to blend-down HEU and to sell the LEU, or its 

component parts into the global market, but we also understand they likely will not 

continue to do so, post-2013, in the same way they do under the current agreement. 

RESPONSES OF JOHN R. LONGENECKER TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. You advocate selling HEU from the U.S.—Russian HEU agreement 

to offset the cost of clean up of these plants, would it be both U.S. and Russian HEU 

or just U.S.? 

Answer. My testimony referred solely to surplus US HEU held by DOE. 

Question 2. Your testimony mentions ‘‘other forms of uranium’’—is re-enriching 

the existing left over material or tails of high assay content at the existing plants 

a feasible option for generating clean up revenue as compared to the sale of down 

blended HEU? 

Answer. Yes, reenrichment of the high assay tails and the sale of the recovered 

natural-assay uranium, worth several billion dollars at today’s market prices, is 

both feasible and desirable, in my opinion. 

Question 3. Your testimony indicates that the plants were already contaminated 

by the time they entered into contracts with the utilities—can you please explain 

this in more detail. 

Answer. The GDPs were radioactively contaminated when enrichment operations 

for defense purposes began. Since the GDPs began operation in the late 1940s and 

early 1950s, the volume of equipment in each plant that must be disposed of as 

LLW has not changed, and thus the government’s total liability for D&D was unchanged when the three GDPs were subsequently dedicated to commercial enrichment operations in 1969, 15-20 years after they were built. 

USEC’s GDP lease, that was approved in 1993, reflects this fact, with USEC having no GDP D&D liability for either the Portsmouth or Paducah GDPs. It seems to 

me that this recognition of the government’s D&D liability is fair and equitable, and 

also should extend to the US utilities that purchased enrichment services produced 

by the GDPs in the past. 

Question 4. My understanding is that when we build an enrichment plant such 

as the one in New Mexico, the cost of the clean up bond is most likely built into 

the cost of conversion for the utility—did the government do this as well? 

Answer. DOE did include D&D in its price for enrichment services charged to utilities, but did not accrue the money so generated in a special fund set aside for D&D, 

as LES and USEC are now doing. 

RESPONSES OF JOHN R. LONGENECKER TO QUESTIONS FROM SENATOR DOMENICI

Question 1. You stated that there are a number of ways that the Department of 

Energy can raise the necessary funds required for cleanup of the plants by selling 

excess HEU and other material previously considered as waste. Recognizing that 

you are no longer with the Department, do you nevertheless have a rough estimate 

of what this material might be worth? 

Answer. The value depends on the market price of uranium, conversion and SWU 

when the inventories are sold, less the processing cost to prepare the material for 

sale; but at today’s prices the total value of all excess government inventories is in 

the tens of billions of dollars. As an example, DOE’s declared excess inventory of 

160.3 Million lbs U3O8e at $100 /lb U3O8 would be worth approximately $16 Billion. The value of LEU that would be generated by downblending 500 MT of US 

HEU would be approximately $22 Billion. 

Question 2. Your testimony notes that when the GDP’s began operating for commercial enrichment, the facilities were already completely contaminated from earlier 

weapons production. Can you elaborate on why the commercial operations did not 

further add to the contamination of the facilities? 

Answer. The basic hardware in the three GDPs was radioactively contaminated 

when enrichment operations for defense purposes began in the late 1940s and early 

1950s. This was because a portion of the GDP feed at that time was reprocessed 

uranium from the defense fuel cycle. That uranium contained some radioactive materials that resulted in contamination of the processing equipment in the three 

47

GDPs. For commercial uranium enrichment operations, that began in 1969, only 

natural uranium was used as feed in the U.S. plants. 

Since the GDPs began operation, the volume of equipment in each plant that 

must be disposed of as LLW has not changed, and thus the government’s total liability for D&D was unchanged when the plants were subsequently dedicated to commercial enrichment operations, 15-20 years after they were built. As I mentioned 

in my testimony, USEC’s GDP lease, that was signed in 1993, reflects this fact, with 

USEC having no GDP D&D liability for either the Portsmouth or Paducah GDPs. 

Question 3. You also note that the commercial pricing structure from the very beginning took into account the eventual D&D of the plants, as reflected in the United 

States Enrichment Corporation’s lease. Could you please elaborate on that point? 

Answer. DOE acknowledged that it had to decontaminate and decommission 

(D&D) the GDPs at the end of their useful life. The assumption when I was managing the program, was that D&D would be paid for out of annual revenues from 

the uranium enrichment program. That is, the cost of D&D would be expensed in 

the year that costs were incurred. 

DOE later recognized that it needed to change this assumption when a government corporation, USEC, was formed. The utilities were charged for the D&D in the 

SWU price. However, the Government did not set up a special fund to hold the D&D 

funds, but rather used these funds for other purposes. 

Question 4. What is your opinion of the payment from the Fund to owners of uranium and thorium mill tailing sites for their cleanup costs coming partially from 

funds contributed to the Fund by utilities? 

Answer. US utilities should have no liability for these costs. There has never been 

a commercial thorium fuel cycle in the US, to my knowledge, with the vast majority 

of thorium being used for non nuclear industrial applications. Funds for uranium 

mine cleanup costs were to be set aside by the mining companies to pay for eventual 

cleanup of the properties and structures. 

RESPONSES OF WESLEY P. WARREN TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Does NRDC advocate paying the utility assessment as long as the 

fund exists? 

Answer. NRDC supports S. 2203—legislation to reauthorize the Department of 

Energy’s (DOE) uranium enrichment Decommissioning and Decontamination (D&D) 

Fund established in the Energy Policy Act of 1992 (EPACT 1992), including extension of its cleanup fee on the nuclear power industry. Central features of any reauthorization should be that it adequately addresses issues of the sufficiency of funding to complete cleanup, the equitable distribution of costs between the taxpayer 

and the utility industry, and the well-being of the community. 

Before the enactment of EPACT 1992, the DOE and the GAO both endorsed the 

concept that the costs of cleanup for the government’s old enrichment plants should 

be split in proportion to the services that the beneficiaries had received from those 

plants. OMB under the first Bush administration proposed that this utility industry 

share be collected in the form of a fee. However, at the time the estimates for what 

the cleanup would eventually costs were quite uncertain, although the total amount 

of time was expected to take at least 40 years. 

The agreement on the D&D Fund in EPACT 1992 contained certain key elements: 

(1) that the percentage of the fee that domestic utilities paid would be equal to the 

benefits they had historically received from the plants; (2) that the fee paid by the 

domestic utilities would be considered a necessary and reasonable fuel charge for 

ratemaking purposes; (3) that the National Academy of Sciences would conduct an 

assessment of how to reduce the costs of cleanup; and (4) that neither the taxpayer 

nor the utility industry would be subject to an open-end and uncapped obligation 

to pay for cleanup. 

The cap that was eventually placed on taxpayers and the industry was a payment 

obligation for a 15-year period, not to exceed $2.25 billion for the utilities. While 

there was not a determination in EPACT 1992 that utilities would never have to 

make another contribution, there was an understanding that they neither they nor 

the taxpayer should face an unlimited obligation until more information about the 

ultimate costs of cleanup were available. As with other elements of the agreement 

in EPACT 1992, this general approach is the right one to use as a model. 

Thus NRDC supports extending the fee for a fixed period that is likely to be sufficient to pay for the cost of the cleanup, with a cap to be placed on utility and taxpayer contributions during that period equal to the proportional benefits that they 

received from the plants. S. 2203 follows this approach by extending the fee for 10 

years. However, recent information from the DOE indicates that this period of may 

48

not ensure sufficient contributions to the D&D Fund. Therefore Congress should 

consider a fixed period of time that is greater than 10 years if that is what is needed 

to ensure that payments to the Fund are sufficient. 

Question 2. Your testimony indicates that the annual cap on contributions will be $700 million with a utility contribution set at $220 million—can you please explain 

this since the legislation calls out an indexed to inflation amount of $150 million? 

Answer. NRDC supports allocating the costs of the cleanup at DOE’s old enrichment plants based on the proportion of past services the program provided to its 

beneficiaries—nuclear utilities and the taxpayer. The original contributions to the 

D&D Fund established in EPACT 1992 were based on this division of costs, with 

$150 million allocated to utilities and $330 million to the taxpayer for a total of 

$480 million a year. 

Another provision of EPACT 1992 indexed all of these figures to inflation. NRDC 

estimates that inflation from 1993-2008 would increase these figures about 46%. 

Therefore, the original authorization numbers in EPACT 1992 for annual contributions of $150 million for the utility fee and $480 million overall should be adjusted 

in 2008 to $220 million and $700 million respectively (and indexed to inflation 

thereafter). 

These revised authorization figures estimated by NRDC are consistent with those 

specified in S. 2203. However, please note that S. 2203 explicitly sets the FY 2008 

total authorized contribution to the D&D Fund at $700 million but simply extends 

the utility fee at its current level, which would be $150 million in 1992 dollars indexed to inflation to FY 2008 and beyond. 

Question 3. Do you support the possible re-enrichment of the left over material 

or tails to help defray the costs? Won’t running the tail back throught the same 

plant further contaminate it and extend the date at which it shuts down? 

Answer. NRDC supports the approach proposed in S. 2203 to study the financial, 

economic and environmental implications of re-enriching depleted uranium tails 

owned by the government. This assessment would provide better information than 

is currently available on issues such as the environmental consequences of re-enrichment activities at specific plants. 

It is true that re-enriching depleted tails may lead to additional contamination at 

an existing enrichment facility and could extend the life of that plant. However, any 

additional contamination that might result should be the responsibility of the private sector entity doing the re-enrichment and should be included in the pricing of 

that product. It may also be the case that re-enrichment of depleted tails is actually 

environmentally preferable to the mining, transportation and processing of raw uranium to produce a feedstock for current enrichment activities. Finally, continuing 

the operation of the plant could be beneficial to the economic well-being of the surrounding community. Therefore, NRDC is open-minded on the subject of making 

government owned tails available for re-enrichment by the private sector. 

Nevertheless, we feel it is important to note that any such decision needs to be 

guided by three fundamental principles. First, as a government asset these tails are 

really owned by the taxpayers, so any proceeds from the sale of these assets should 

be used to pay for a taxpayer need. This could include the taxpayer’s share of the 

cost of cleaning up the old enrichment plants but must not include paying for the 

utilities share of the cleanup cost. 

Second, if these depleted tails are made available to the private sector, it should 

be done in a way that does not draw the government back into the enrichment business, which was privatized as a result of EPACT 1992. The simplest way to achieve 

this would be to directly auction the depleted tails to the private sector in a way 

that permits the tails to be enriched by a private sector entity without liability to 

the government. 

Finally, any plan for the re-enrichment of depleted tails must comply with all environmental laws, including the National Environmental Policy Act (NEPA). A full 

NEPA review would in fact provide a detailed answer to the question you have 

posed. 

RESPONSES OF ROBIN M. NAZZARO TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. It is my understanding that the DOE’s report on the fund came in 

yesterday—has the GAO had time to review the report and assess whether the over 

all costs have changed since the last report? 

Answer. Similar to our 2004 report, DOE’s 2007 report to the Congress on the 

Uranium Decontamination and Decommissioning Fund (Fund) found that the Fund 

will be insufficient. While some of DOE’s assumptions differed from those used in 

our analyses, DOE found, as we did, that the Fund would be insufficient under any 

49

of the scenarios that it considered. For example, in developing our baseline model, 

we assumed that final decontamination and decommissioning (D&D) would occur 

between 2018 and 2032 at the Paducah plant. DOE’s report assumes that Paducah 

D&D will start in 2017 and be complete in 2040. Although DOE’s 2007 report states 

that cleanup and decontamination and decommissioning costs have been revised significantly, without a more in-depth review of the cost estimates DOE used to develop its report, we cannot determine how DOE’s cost estimates changed or the reasons for any changes. 

Question 2. All of the non-governmental witnesses have advocated either selling 

HEU into the market or re-enriching left over high assay material from prior enrichment operations, has the GAO looked at this issue and do they have any comment? 

Answer. At the request of the Senate Committee on Energy and Natural Resources, the House Committee on Energy and Commerce, and the Chairman of the 

Subcommittee on Oversight and Investigations, House Committee on Energy and 

Commerce, we are currently examining DOE’s options for beneficially re-using depleted uranium hexafluoride left over from prior uranium enrichment operations. 

Although our work is not yet completed and it is therefore premature to comment 

on our findings, we have briefed members of your staff on our work and expect to 

complete our review by the end of March 2008. 

Question 3. Does GAO have any comment on the range of cost projections offered 

by the DOE in the latest report? Do you think they could go higher? 

Answer. The scenarios used by DOE to develop the range of shortfalls reported 

in its 2007 report are similar to the baseline and alternative simulation models we 

developed to determine the sufficiency of the Fund. For example, similar to our 2004 

report, DOE looked at the impact that delaying the final decontamination and decommissioning at the uranium enrichment plants would have on the Fund’s sufficiency. Although DOE’s analyses incorporated a range of economic factors, scope, 

and schedule assumptions, many of the uncertainties that we believed could impact 

the costs of cleanup have not yet been resolved. For example, in 2004, we reported 

that DOE cost estimates assumed that on-site disposal facilities will be built at Paducah and Portsmouth, but that if DOE cannot build these on-site facilities, waste 

disposal costs could increase substantially. In its 2007 report, DOE listed the construction of on-site disposal facilities at both Paducah and Portsmouth as key uncertainties associated with the cleanup of these plants. Until DOE resolves the uncertainties that we (and DOE) identified, we cannot determine the impact on the 

Fund’s sufficiency. However, it is possible that additional demands could be placed 

on the Fund. 

RESPONSES OF ROBIN M. NAZZARO TO QUESTIONS FROM SENATOR DOMENICI

Question 1. You stated that by 2044, there would be a shortfall in the Fund somewhere between roughly 3 to 6 billion dollars. What portion of your estimate of the 

total cost of the cleanup is attributable to annual remedial actions that have been 

taken or will be taken since the Fund was created in 1992? 

Answer. Although we obtained DOE’s remedial action cost estimates as a part of 

our review, we merged all of authorized cleanup cost estimates together when analyzing the extent to which the Fund would be sufficient. Because we developed a 

range of potential cost projections based on randomly selected values for such variables as interest rates, inflation rates, and cleanup costs, we cannot say specifically 

what portion of the projected shortfall might be attributable to remedial actions. 

However, according to DOE cost estimates, remedial action costs appear to be a relatively small portion of the total projected costs. For example, in 2004, DOE estimated that remedial action costs would represent about 21 percent of the total 

cleanup costs remaining at the Oak Ridge site where decontamination and decommissioning work is well underway. Similarly, one of the scenarios presented in 

DOE’s 2007 report was its base case with remedial actions removed. Under this scenario, the Fund’s projected shortfall declined by $2.7 billion or about 25 percent of 

the $10.9 billion projected shortfall under the base case scenario. 

Question 2. Of the total amount that will be required to clean up the three sites, 

how much is attributable to enrichment activities that have or will be undertaken 

at the sites since 1992? 

Answer. The objective of our work was to determine the extent to which the Fund 

would be sufficient and did not include an assessment of how much of the cleanup 

may be attributable to enrichment activities that have or will be undertaken at the 

uranium enrichment sites since 1992. 

50

RESPONSE OF ROBIN M. NAZZARO TO QUESTION FROM SENATOR SALAZAR

Question 1. The hearing generated discussion of the possible future use of the 

Government’s existing surplus uranium mine tailings. I would like a clearer picture 

of this resource and its history. Why have these tailings not been used to produce 

usable uranium? Please provide information regarding the size of this surplus and 

its legal status (i.e., under whose control it resides). Please also provide an estimate 

of the potential value of the tailings as compared to present U.S. share of the global 

uranium market. 

Answer. DOE has almost 500,000 metric tons of uranium in the form of depleted 

uranium hexafluoride, the leftover ‘‘tails’’ remaining from the uranium enrichment 

process—a process that increases the concentration of the fissile uranium-235 isotope used in nuclear weapons and in nuclear reactors. This material is currently 

stored at DOE facilities near Piketon, Ohio, and Paducah, Kentucky. DOE has determined that about 78,000 metric tons of these tails have enough of the useful 

uranum-235 isotope remaining to make them potentially valuable, especially given 

recent increases in the price of uranium. This depleted uranium could be sent 

through the enrichment process again, re-enriching it for potential use as nuclear 

reactor fuel. At the request of the Senate Committee on Energy and Natural Resources, the House Committee on Energy and Commerce, and the Chairman of the 

Subcommittee on Oversight and Investigations, House Committee on Energy and 

Commerce, GAO is currently reviewing DOE’s options for beneficially re-using depleted uranium hexafluoride left over from prior uranium enrichment operations. 

Our work is incomplete and it is therefore premature to provide an estimate of the 

potential value of these tails. We expect to complete our review by the end of March 

2008. 

RESPONSES OF JAMES A. RISPOLI TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. It is my understanding that the clean up for the three plants will not 

end until 2044—why does the Department maintain that the industry assessment 

is not required at the end of the first 15 years? 

Answer. The Department of Energy (the Department) has not yet taken a position 

as to whether the nuclear utilities should continue to pay into the Fund to complete 

the cleanup. The Department recognizes that there are several options to fund the 

cleanup of the three Gaseous Diffusion Plants, including continued assessments of 

the nuclear utilities. The Department is currently evaluating these options, as well 

as having further discussions with Congress and stakeholders, before formulating 

a recommendation. 

Question 2. What are the ranges from worst to best case total costs on the clean 

up and why? Answer. The best case is approximately a $21.9 billion lifecycle cost estimate and the worst is $33.6 billion, with a ‘‘Base Case’’ (as described in the Uranium Enrichment Decontamination & Decommissioning Fund 2007 Report to Congress) life cycle 

cost estimate of $24.0 billion. The best case assumes that remedial actions would 

not be funded from the UED&D fund (but would have to be funded from a general 

fund appropriation). The worst case is based on future economic conditions (lower 

interest rates coupled with higher rates of inflation) that are far more pessimistic 

than recent history. 

Question 3. What is the government’s shortfall in contributions to the fund and 

how long will it take to make that up? Answer. The government contribution shortfall is $918.6 million. Since this shortfall occurred in the first three years of the fund, the amount of lost interest is an 

additional $670.3 million for a total of about $1.6 billion. The number of years required to make up the shortfall depends on annual appropriations made by the Congress. 

Question 4. What is the Department’s opinion of re-enriching high assay tails to 

help pay for the cost of clean up? 

Answer. The Department is evaluating this option as part of developing a comprehensive Uranium Management Strategy. 

Question 5. Is it true that under the current contract with the tails deconversion 

company they have an option to keep a percentage of the proceeds of the sale of 

the converted uranium? 

Answer. The contract for the Design, Construction, and Operation of DUF6 Conversion Plants at the Portsmouth and Paducah sites with Uranium Disposition 

Services, LX, does not contain an ‘‘option’’ as such. but it does contain Clause li. 32 

‘‘Sale of Product or By-Product.’’ Under this clause, the contractor may conduct sales 

for the Government and proceeds may offset allowable contract costs. Under this 

51

clause there also is a possibility for the contractor to share, in certain limited circumstances, in ‘‘net acquisition savings’’ if such savings (a defined term) result from 

implementation of the Contractor’s proposal, which proposal must be approved by 

the Contracting Officer. The clause is very clear that a decision to accept or reject 

all or any part of the Contractor’s proposal is a unilateral decision of the Contracting Officer, and a rejection of the Contractor’s proposal provides no claim for 

lost opportunity cost against the Government. Lastly the Government reserved the 

right to use or otherwise dispose of any and all DUF6 and uranium products including disposition to third parties. 

RESPONSES OF JAMES A. RISPOLI TO QUESTIONS FROM SENATOR DOMENICI

You noted that since establishment of the Fund, the Department has completed 

116 of 231 planned environmental remedial actions. 

Question 1a. How much was spent on these 116 remedial actions? 

Answer. As of the end of FY 2006, the Department has spent $1.5 billion and completed 116 of the 231 planned environmental remedial actions. 

Question 1b. What percentage of the total amount spent from the Fund since its 

establishment does this represent? 

Answer. As of the end of FY 2006, the Department has spent $4.2 billion from 

the Fund, of which, 35 percent ($1.5 billion) was spent towards environmental remedial actions at all three Gaseous Diffusion Plants (GDP). The balance of the funds 

was primarily spent on the major decontamination and decommissioning (D&D) activities at the Oak Ridge GDP. 

Question 2a. The 1992 Energy Policy Act makes a distinction between decontamination and decommissioning costs and remedial action costs. It allows expenditures from the Fund for the annual cost of remedial actions to the extent the Fund 

is sufficient. 

How does DOE interpret the provision to allow payment for remedial actions in 

light of its determination that the Fund is not sufficient to do all of the required 

D&D? 

Answer. Since the establishment of the Fund in 1992, the Department and GAO 

have, on several occasions, estimated that the total cost for cleanup would most likely exceed the availability of funds as authorized over the 15 year period. Throughout 

this period, the Department has requested and Congress has approved the expense 

of remedial actions from the Fund. The Department estimates that the Fund will 

remain sufficient into the 2020 timeframe provided the Government makes up its 

shortfall in contributions including lost interest. The Department recommends that 

funding for remedial actions associated with the decontamination and decommissioning of the Gaseous Diffusion Plants (GDP) continue to come from the Fund, particularly since remedial actions remain to be performed beneath the facilities that 

are yet to be decontaminated and decommissioned. 

Question 2b. How much of DOE’s estimated shortfall in the Fund is attributable 

to remedial actions? 

Answer. Included in the estimated $11 billion shortfall needed to complete cleanup of the three GDPs (per the ‘‘Base Case’’ in the Uranium Enrichment Decontamination & Decommissioning Fund 2007 Report to Congress) is an estimated 

$2.33 billion in remedial actions that remain to be completed. 

Question 3a. You stated that if payments to the Fund by the Government are authorized to ‘‘complete its obligation under EPAct 1992,’’ you project the Fund would 

remain sufficient until the 2020 timeframe. Are you referring only to a short-term 

reauthorization to capture the shortfalls in government payments during the first 

three years of the Fund? 

Answer. Yes. 

Question 3b. Are you saying, then, that assuming those additional payments, 

there would be enough in the Fund to allow you to complete all of the activities you 

have planned through 2020? 

Answer. Yes. The Department has estimated that there would be enough money 

in the Fund through the approximate 2020 timeframe, provided that the Government contributes an additional $1.8 billion including lost interest. 

Question 3c. Is the Department’s position that the Fund should be reauthorized 

through 2010 to authorize Government contributions to the Fund as requested by 

Secretary Bodman in his letter of July, 2006? 

Answer. Yes. 

Question 4. Please provide an estimate of DOE’s annual cost to provide adequate 

safeguards to protect its stockpiles of uranium, uranium mill tailings, and HEU. 

Answer. The estimate to provide adequate safeguards to protect the uranium, depleted uranium hexafluoride (DUF6), and highly enriched uranium (HEU) at the 

52

Portsmouth ($14 M) and Paducah ($9M) site or approximately $23 million annually. 

This figure however is the total site wide safeguards and security annual cost (FY 

2007 dollars). Isolated pro-rata costs for individual materials or on site facilities 

safeguards and security are not available. In addition to the above EM costs, there 

are safeguards and security costs for uranium stockpiles managed by NNSA and 

NE. 

RESPONSES OF JAMES A. RISPOLI TO QUESTIONS FROM SENATOR SALAZAR

Question 1. When will DOE provide cost estimates and plans for cleanup of the 

Paducah and Portsmouth enrichment plants and when will this information be 

shared with Congress and the GAO? 

Answer. The Department provided the cost estimates and plans for clean up of 

these sites in the Uranium Enrichment Decontamination & Decommissioning Fund 

2007 Report to Congress that was transmitted to Congress and the GAO on November 14, 2007. 

Question 2. The hearing generated discussion of the possible future use of the 

Government’s existing surplus uranium mine tailings. What barriers exist to the future use of this resource? 

Answer. Uranium mine tailings are the residues of commercial uranium mining 

and milling operations which produced uranium oxides and have little or no economic value. However, the potential reuse and/or sale of depleted uranium 

hexafluoride (DUF6) tails was discussed at the hearing. DUF6, resulting from over 

40 years of Gaseous Diffusion Plant (GDP) operations, has been stockpiled in large 

quantities at both the Portsmouth and Paducah GDPs. The Department is currently 

evaluating the cost effective re-use or sale of DUF6 tails.

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