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Testimony for the Record, Marvin S. Fertel, Energy and Natural Resources Committee, U.S. Senate

Testimony for the Record

Marvin S. Fertel
President and Chief Executive Officer
Nuclear Energy Institute
to the
Senate Energy and Natural Resources Committee
July 30, 2013

Chairman Wyden, Ranking Member Murkowski, members of the committee, thank you for the opportunity to speak today about the recently introduced Nuclear Waste Administration Act of 2013.  I am Marvin Fertel, President and CEO of the Nuclear Energy Institute (NEI).  NEI is responsible for establishing unified nuclear industry policy on regulatory, financial, technical and legislative issues affecting the industry.  NEI members include all companies licensed to operate commercial nuclear power plants in the United States, nuclear plant designers, major architect/engineering firms, fuel cycle facilities, materials licensees, labor organizations, universities and other organizations and individuals involved in the nuclear energy industry.

We welcome the Senate’s leadership in addressing the federal government’s role in the safe and secure management and disposal of commercial used nuclear fuel through this legislation.  We also applaud Senators Wyden, Murkowski, Feinstein, and Alexander for leading the effort and for releasing a discussion draft to obtain stakeholder comments before introducing the legislation; a process which resulted in beneficial changes.  Although the proposed legislation represents a positive start to overhauling the federal program and incorporates some of the stakeholder comments provided on the discussion draft, additional enhancements should be made to ensure the creation of a sustainable integrated program.

Over the past 70 years, applications of nuclear fission – including research, medicine, naval propulsion and power production – have produced immeasurable benefits for our society.  They have also resulted in a large and growing inventory of used nuclear fuel and high-level radioactive waste.  The commercial nuclear industry and the federal government have demonstrated that they can safely and securely store used nuclear fuel and high-level radioactive material.  About 70,000 metric tons of uranium (MTU) of commercial used fuel is safely managed at nuclear energy facilities, but storing the fuel on site was never meant to be a long-term solution.  By now, pursuant to the Nuclear Waste Policy Act (NWPA), the Department of Energy (DOE) should have already moved more than 28,000 MTU of reactor fuel from our sites and should be moving an additional 3,000 MTU every year.

Consumers of electricity generated at nuclear energy facilities have committed more than $35 billion since 1982 to the Nuclear Waste Fund for the federal program that should have begun removing used fuel from commercial nuclear power plant sites 15 years ago.  The Department of Energy continues to collect more than $750 million per year from consumers, and the fund accrues more than $1 billion in investment income on the remaining balance of over $28 billion.  The collection of Nuclear Waste Fund fees is ongoing, despite the fact that the Department of Energy, without any technical basis, terminated the Yucca Mountain repository project in 2010 and has yet to implement a new program.

The industry and the DOE had been working for decades with considerable success on the development of a deep geologic repository in the United States for used nuclear fuel and high-level radioactive waste, until the program was terminated and the Office of Civilian Radioactive Waste Management (OCRWM) dissolved in 2010.  These decisions were not supported by the industry and have resulted in court actions that would have otherwise been unnecessary.  The industry continues to support the completion of the Yucca Mountain licensing process and, as a result of the Administration’s actions, the industry has filed suit against DOE challenging the continued collection of the Nuclear Waste Fee in the absence of a federal program.  Oral arguments in the case are scheduled for September.

The Path to Success

The nation would be best served by adherence to the following principles that will ensure the establishment of a stable used nuclear fuel management policy and program:

  • The United States must have a durable policy supported by a dedicated and sustainable infrastructure to manage used nuclear fuel and high-level radioactive waste responsibly.
  • The United States must have a plan for the ultimate disposal of the byproducts from nuclear energy.
  • An ideal technical solution is not required to begin implementation of a new policy direction. Evolutionary, and perhaps revolutionary, advances in technology improvements can be incorporated over time without deferring decisions until decades of research are completed.
  • The successes and failures of the past must be understood to help guide future innovation, policies, and management, while building public trust in the systems and facilities ultimately developed.

Legislative action is needed to put such an enduring policy and program in place.  The industry supports an integrated used nuclear fuel management strategy consisting of six basic elements:

  • A new management and disposal organization outside of the Department of Energy (DOE).
  • Access to the Nuclear Waste Fund and annual fees for their intended purpose, without reliance on the annual appropriations process but with appropriate Congressional oversight.
  • Completion of the Yucca Mountain repository license review.  Nuclear electric consumers deserve to know whether Yucca Mountain is a safe site for the permanent disposal of high-level radioactive waste, as billions of dollars and years of independent scientific research suggest.
  • A consolidated storage facility for used nuclear fuel and DOE’s high-level radioactive waste in a willing host community and state and substantial progress toward developing the Yucca Mountain site and/or a second geologic repository.  A consolidated storage facility would enable the DOE or a new management entity to move used nuclear fuel from decommissioned and operating plants long before a repository or recycling facilities begin operations. Used fuel from decommissioned commercial reactor sites without an operating reactor should have priority when shipping commercial used fuel to the storage facility.
  • Research, development and demonstration on improved or advanced fuel-cycle technologies to close the nuclear fuel cycle.
  • NRC’s promulgation of a temporary storage rule and an eventual legislative determination of waste confidence supported by a sustainable federal program founded on the elements above.

Since the Obama Administration suspended the NRC’s review of the Yucca Mountain repository license application in 2010, the federal government has not had a viable used fuel management program.  The Administration’s Blue Ribbon Commission on America’s Nuclear Future (BRC), established to recommend a new direction for the program, published its final report in January 2012.  Among its key recommendations were:

  • A new, consent-based approach to siting future nuclear waste management facilities.
  • A new organization dedicated solely to implementing the waste management program and empowered with the authority and resources to succeed.
  • Access to the funds nuclear utility ratepayers are providing for the purpose of nuclear waste management.
  • Prompt efforts to develop one or more geological disposal facilities.
  • Prompt efforts to develop one or more consolidated storage facilities.

The BRC’s recommendations are generally consistent with the industry’s integrated used nuclear fuel management strategy and are supported by the industry with the exception that the BRC did not address the need to complete the Yucca Mountain licensing process.

In January 2013, the Obama Administration released its “Strategy for the Management and Disposal of Used Nuclear Fuel and High-Level Radioactive Waste.”  This strategy is also generally consistent with the industry strategy but is dependent upon Congress to establish direction and create a program.

Growing Federal Liability

Even before the Office of Civilian Radioactive Waste Management was closed, the urgency for DOE to fulfill its statutory and contractual responsibilities to manage used fuel and high-level radioactive waste was growing, as was the associated cost to the taxpayer.  The DOE was required by statute and contract to begin moving used fuel from reactor sites in 1998.  The taxpayers, through payments from the taxpayer-funded Judgment Fund, are paying for court-awarded damages from DOE’s partial breach of its contracts with electric companies.  The BRC report estimated that the damage awards from the Judgment Fund will total $20.8 billion if the federal government begins accepting used fuel in 2020 and may increase by as much as $500 million for each year after 2020 that DOE does not begin to accept used fuel.  To date, approximately $2 billion has already been paid in damage and settlement awards.  This expense, for which the taxpayer receives no benefit, is in addition to monies paid into the Nuclear Waste Fund by consumers of electricity produced from nuclear energy.  Given the absence of any federal program, it has become virtually impossible for the DOE to begin to meet its obligation to move used fuel before 2020.

The industry is committed to reducing the growing federal liability through the establishment of a sustainable federal program.  The Nuclear Waste Administration Act of 2013 also recognizes the need to reduce the federal liability as quickly as possible.  However, the liability can only be reduced through the establishment of a program and execution of the program by the new management entity in a timely manner.  The industry disagrees with the provision in the draft legislation which tries to reduce liability by requiring contract holders to settle all claims against the United States as a condition precedent for taking title to and moving used fuel to a storage facility.  This forced settlement provision should be removed from the proposed bill.  The industry has already demonstrated its commitment to negotiate settlements in good faith.  However, the effect of this provision would be a denial of a utility’s right under the Standard Contract to have its used fuel taken by the federal government unless the utility agreed to accept a settlement of its breach of contract claims on whatever terms the government wanted to impose.  That would effectively deprive the utilities of their contractual rights, under which the government is supposed to take their spent fuel in exchange for many hundreds of millions of dollars in Nuclear Waste Fees paid to the government.  A more effective and fairer approach would be to direct the Department of Justice to settle the breach of contract lawsuits on reasonable terms with willing contract holders without imposing conditions on the settlements.

A New Federal Used Fuel Management Corporation is Needed

A key element to the long-term success of a federal program is establishing a new entity to assume program management responsibility from the DOE.  Industry and numerous stakeholders support the concept of a federal corporation.  The operating characteristics of a new management entity must more closely resemble those of a corporation with a clear mission rather than a federal agency in order to succeed.  The new management entity must come as close as possible to the decision-making and project management capability and discipline that is more characteristic of a corporate organization.

Similar to commercial companies, the chief executive officer of the new management entity should be selected and appointed by a board of directors.  The board should be appointed by the President with the advice and consent of the Senate for terms that would span at least two presidential administrations.  The industry recommends that at least three members of the board be appointed from entities that contribute or have contributed to the Nuclear Waste Fund and that at least two members of the board be appointed from state public utility commissions or representatives thereof.  The legislation should also specify minimum qualifications for board members and define a quorum as being simply more than half of the standing directors.  The chairman of the board should be elected by its members.  The CEO should not be subjected to the political uncertainties associated with presidential appointments so that he or she, while remaining accountable to the board, can focus entirely on performing the task at hand with the requisite attention to nuclear safety and security that is expected from all employees of a nuclear industrial company.  The instability that can be created as a result of the political appointment process is well-illustrated by the now-defunct Office of Civilian Radioactive Waste Management (OCRWM).  This office, whose director was appointed by the President and confirmed by the Senate, never realized stable long-term leadership because of the turnover of directors associated with changes at the White House.  From 1983 to 2010, OCWRM had six appointed and confirmed directors and nine acting directors.  The incumbent director was replaced with every new administration.  It is also essential that the CEO of the organization have the authority to hire his or her senior staff and deputies, in consultation with the board as appropriate, rather than having them appointed by the President.  Since this new management entity will be in existence as long as commercial nuclear power is used in the United States, and beyond, the CEO must have the flexibility to reorganize the management structure when appropriate, without artificial constraints imposed by legislation.

The Nuclear Waste Administration Act of 2013, as currently structured, would not sufficiently insulate the new Nuclear Waste Administration leadership from the political process since both the administrator and deputy administrator would be appointed by the President with the advice and consent of the Senate, as are the members of the proposed oversight committee.  Numerous studies of the management issue have been carried out over the past decades, from the Congressionally mandated Advisory Panel on Alternate Financing and Managing Radioactive Waste Facilities Report in 1984 through the BRC recommendations in 2012.  The studies advocate consistently for a management entity with a corporate structure providing continuity, efficiency and an appropriate degree of insulation from undue political influence.

When the new management entity is created, Congress and the Administration should retain an oversight authority, but this role should be structured to avoid creating an impediment to the efficient operation of a new management entity.  The Nuclear Waste Administration Act of 2013 addresses Congressional oversight appropriately but, in one instance, reduces this oversight compared to the Nuclear Waste Policy Act by removing Congressional review of changes in the nuclear waste fee.  The industry recommends that Congressional oversight over the nuclear waste fee be maintained.

Direct Access to Sufficient Funding

Enduring leadership is essential, but not sufficient in its own right to create a successful and sustainable program.  As the Nuclear Waste Administration Act of 2013 recognizes and addresses, a new management entity must have direct access to, and control over, the funds necessary to implement the program.  The industry and consumers have provided and continue to provide these funds which should be secure and available to program managers.  Unfortunately, this has not been the case.  The Congressional budgeting and appropriations processes have resulted in appropriations to OCRWM being considered in the context of the overall DOE and federal government budget and not simply in the context of the available funds in the Nuclear Waste Fund.  Historically, this resulted in lower appropriations than requested which contributed to project and schedule delays.  The BRC report, which discusses the Nuclear Waste Fund in great detail, states that “a program that was intended to be fully self-financing now has to compete for limited discretionary funding in the annual appropriations process, while the contractual user fees intended to prevent this from happening are treated just like tax revenues and used to reduce the apparent deficit on the mandatory side of the federal budget (which deals with expenditures and receipts that are not subject to annual appropriations).”  Recognizing that these funds were collected with the indisputable intention of supporting clear statutory and contractual obligations, there is not a rational basis for considering their use discretionary.

To avoid perpetuating the current funding limitations and inequities, a new management entity must be given unrestricted access to both the Nuclear Waste Fees and the Nuclear Waste Fund with Congressional oversight of the efficient use of these funds continuing.  This will enable the new management entity to appropriately manage and fund, without reliance on Congressional appropriations, the development of storage and disposal facilities consistent with standard industry practices for other large-scale nuclear safety-related projects.  The current legislation achieves this goal for the Nuclear Waste Fee payments. The industry, though, believes that the corpus of the Nuclear Waste Fund and its earned interest, in addition to the Nuclear Waste Fees, also must be made available to the new management entity for its intended purpose without being subject to competing appropriations.  This, however, could be accomplished with transfers to the new management entity over a reasonable schedule defined within the legislation.

Geologic Disposal and Consolidated Storage are Critical

In the current fuel cycle and in all foreseeable advanced fuel cycles, a geologic repository will be required.  Pursuit of a geologic repository and a consolidated storage facility should occur simultaneously, as the Nuclear Waste Administration Act of 2013 would require.  A consolidated storage facility would enable the management entity to move used nuclear fuel from shutdown and operating plants long before a repository or recycling facilities begin operations and is the quickest way to stem the increase in damage awards beyond the estimated $20.8 billion through 2020.

Developing consolidated storage would be an appropriate use of resources and a prudent financial investment that would permit the federal government to begin meeting its obligations, limiting the damages paid by the taxpayers, restoring faith in the federal program, and paving the road for a repository.  As the industry is well aware, technical and political hurdles can arise which can significantly delay a project or curtail the operation of a facility.  A consolidated storage program is a good contingency in case the repository program suffers delays either as a result of funding issues or unforeseen circumstances.  In addition to the industry and the BRC, the National Conference of State Legislatures, the governors of Maine, Maryland, Pennsylvania, and Vermont and many other organizations and political leaders have all called publicly for action to implement the BRC recommendations and, specifically, development of a consolidated storage facility.  

Attachment 1 provides a comparison of hypothetical timelines for the development of a consolidated storage facility using a consent-based siting process and the Yucca Mountain repository assuming that both programs are underway in 2014.  As the attachment illustrates, the completion date for Yucca Mountain will be highly dependent on the rate at which funds are expended.  Despite the fact that the Nuclear Waste Fund has more than sufficient funding to complete the Yucca Mountain project, it is highly unlikely that, in the absence of a new management entity with direct access to the Nuclear Waste Fees and Fund, the program could be appropriated sufficient funding necessary (approaching $2 billion annually) to complete licensing and construction in the near term.  The 2027 opening date for Yucca Mountain, shown in Attachment 1, assumes successful NRC licensing, efficient management, full funding, and positive support from the State of Nevada.  Even if these assumptions are met, it will still be challenging to complete the Yucca Mountain project by 2027; an endeavor that will cost more than $14 billion in 2012 dollars.  Until it is clear that all of these assumptions can be met, the industry strongly believes that it is prudent to pursue consolidated storage in parallel with repository activities.  If a second repository is pursued, the siting, licensing, and construction will most likely take close to three decades.  By 2040, the damages paid by the taxpayer could be as much as $30 billion.  

A consolidated storage facility could be built at a fraction of the cost of a repository.  The Electric Power Research Institute (EPRI) estimates a 40,000 MTU storage facility could be built for approximately $525 million in 2012 dollars.  As Attachment 1 illustrates, the industry estimates that a consolidated storage facility could be opened by 2024 in a willing host community and state if work begins in 2014.  The main assumption in this estimate is the 3-year time to execute a consent-based siting process.  The industry feels this is a reasonable assumption for a consolidated storage facility but that a consent-based siting process for a second repository could take substantially longer.  The estimated times for design, licensing, and construction are based on a review of licensed and constructed dry cask storage facilities at reactor sites and the Idaho National Laboratory.  To ensure that the licensing process is efficient, the industry requests that the legislation instruct the NRC to issue a final decision approving or disapproving a license for a consolidated storage facility no later than two years after the date of submission.

A consolidated storage facility would be used to meet DOE’s statutory and contractual obligations by removing used fuel from commercial nuclear power sites, taking title to the used fuel, and shipping it to the storage facility, which could be collocated with the repository, where it would be stored until a final disposal or alternate disposition pathway is available.  In addition to storing used nuclear fuel from commercial facilities, a consolidated storage facility could also store DOE and U.S. naval reactor fuel.  This could provide a pathway for the federal government to meet its obligations to remove this material from the various states where it is stored and eventually prepare it for final disposal.

Although the industry supports the completion of the Yucca Mountain licensing effort, we recognize that it may be appropriate for the new management entity to begin efforts to site a second repository.  Since we expect nuclear power to continue to be a significant contributor of electricity in the United States, used fuel will continue to be produced.  It is generally agreed that Yucca Mountain can accommodate significantly more used fuel than the 70,000 MTU limit imposed in the NWPA.  Even though the limit is appropriately removed in this legislation, it may still be necessary to site a second repository.  Since the NRC and the Environmental Protection Agency have Yucca Mountain repository-specific regulations and the generic repository regulations are generally considered to be out of date, the industry recommends that the NRC and the Environmental Protection Agency be instructed, in this legislation, to develop new generic repository regulations.  The search for a new repository will not be successful unless the regulatory structure is properly defined prior to the search.

Priority to Shutdown Sites

The Department of Energy and eventually the new federal management entity should collaborate with industry to ensure that transportation issues, including efficient ordering of used fuel acceptance from commercial sites, are addressed appropriately.  Prior to removing used fuel from operating plant sites, the industry agrees that priority should be given to the shutdown commercial sites that no longer have an operating reactor.  This approach, supported by the BRC and the Nuclear Waste Administration Act of 2013, has numerous advantages.  It would permit shutdown sites, which in many cases have only used fuel storage remaining at the site, to be fully decommissioned and the land used for other purposes.  In addition, the taxpayer, through the taxpayer-funded Judgment Fund, would no longer be liable for the continued cost of storing used fuel at these shutdown sites at a cost of millions of dollars per year per site.

Consent-Based Facility Siting

Strength of leadership and financial resources alone will not guarantee success in siting new facilities.  As the BRC recommends and the Nuclear Waste Administration Act of 2013 proposes, a consent-based siting process is essential to developing enduring local and state support for new facilities.  Since the release of the BRC report, the consent-based siting recommendation has received significant support and prompted questions about how such a process would be implemented.

A consent-based siting process should not be defined prescriptively, but permitted to develop organically among the interested parties.  Regardless of the specific process for developing consent, success will be measured by an agreement among the interested parties that is legally enforceable as described in the Nuclear Waste Administration Act of 2013.  During the process, the parties involved must negotiate in good faith and be open to creative solutions to address issues that arise, including oversight, incentives and benefits.  The industry does not believe that it is necessary to establish multiple additional criteria – or linkage between development of consolidated storage and permanent disposal – that, in essence, are intended to “protect” the state, affected local community and/or tribe from being forced to host an unwanted facility.  In this regard, we appreciate the changes made from the discussion draft that provide more responsibility to the communities and states to establish the framework and conditions under which they wish to operate a consolidated storage facility.  There are communities that would see hosting such facilities as a benefit.  The siting and operation of the Waste Isolation Pilot Plant in New Mexico is proof that such a process can be successful.

Conclusion

Energy companies, their local communities and states, and American taxpayers deserve to have confidence in a federal program that will meet its statutory and contractual obligations to safely and securely accept, transport, store, and ultimately dispose of used nuclear fuel and high-level radioactive waste.  The Nuclear Waste Administration Act of 2013 is a significant step forward and, with the enhancements proposed here, it could create a sustainable program that would garner wide stakeholder support.  In addition to the enhancements mentioned above, the industry has developed legislative principles for nuclear waste reform, included as Attachment 2, which should also be considered when revising the Nuclear Waste Administration Act of 2013.  While the industry has and always will manage its used nuclear fuel safely and securely, we believe that action by Congress is necessary now to establish a sustainable program and reduce the liabilities for the taxpayer as quickly as possible.