Public Policy

Chairman Hall, Ranking Member Boucher and distinguished members of the committee, I am Angie Howard, executive vice president at the Nuclear Energy Institute. I am pleased to have this opportunity to testify on legislation to restore the Nuclear Waste Fund to the purposes established in the Nuclear Waste Policy Act of 1982 and on the progress toward establishing appropriate funding for the used nuclear fuel repository at Yucca Mountain, Nev.

NEI is responsible for developing policy for the U.S. nuclear industry. Our organization’s 270 member companies represent a broad spectrum of interests, including every U.S. energy company that operates a nuclear power plant. NEI’s membership also includes nuclear fuel cycle companies, suppliers, engineering and consulting firms, national research laboratories, manufacturers of radiopharmaceuticals, universities, labor unions and law firms.

America’s 103 nuclear power plants are the most efficient and reliable in the world. Nuclear energy is the largest source of emission-free electricity generation in the United States, providing electricity for one of every five U.S. homes and businesses. Given this essential contribution to our nation’s energy security and economic growth, Congress should adopt policies that foster the further development of emission-free nuclear energy as a vital part of our nation’s diverse energy mix—and fulfill existing federal obligations, including the disposal of used nuclear fuel.

My testimony will focus on two issues. The first involves making necessary funding available in a timely manner to meet Yucca Mountain program milestones and maintain established operational schedules. NEI believes that legislation is needed to restore the clear link between electricity consumer fees and expenditures for the nation’s used nuclear fuel disposal program. The second is the industry’s assessment of the Department of Energy’s progress with the nuclear waste management program.

Meeting DOE’s schedule for initial repository operations in 2010 requires certainty in funding for the program, particularly given projected expenditures exceeding $1 billion beginning in fiscal 2006. The Yucca Mountain program has a history of funding shortfalls. Despite consistent support for DOE’s budget requests for Yucca Mountain in the House, billions of dollars contributed by American consumers solely for the federal government’s used fuel programs have been diverted for other use. The program has experienced a $723-million shortfall below DOE’s budget requests in the past 11 years. While the reduction in fiscal 2004 was a modest $11 million, funding was preserved only because House conference managers made it their top priority.

Program opponents attempt to delay the program through budget cuts and litigation. They attempt to use delay to effectively negate scientific consensus and the will of Congress to develop a repository at Yucca Mountain, subject to Nuclear Regulatory Commission approval. These dilatory tactics would set responsible environmental management back to square one. The Nuclear Waste Policy Act of 1982 created the Nuclear Waste Fund based on the premise that electricity consumers who benefit from nuclear energy should pay for the used nuclear fuel disposal program. To effectively implement this relationship, funds should be available when justified and not conditioned on annual budget constraints.

Funding shortfalls in past years have caused DOE to defer important programs, including procuring transportation containers for used reactor fuel; acquiring transportation and logistics services; creating the final grant process for providing emergency responder assistance; developing a transportation infrastructure in Nevada; and working with regional, state, tribal and local representatives from across the nation on transportation planning.

Further delay in the repository program will have significant financial implications. As Secretary of Energy Spencer Abraham stated in his Feb. 27 letter to Chairman Barton: “Each year of delay could add nearly $1 billion per year in costs for commercial utilities and federal defense nuclear waste sites to continue to provide temporary storage. These costs would be borne by the federal government, based on its existing contracts with electric utility companies.”

Consumer fees, including interest, committed into the Nuclear Waste Fund since its formation in 1983 total $23 billion. Consumers are projected to pay between $750 million to $800 million to the fund each year. Yet only about $8 billion¹ has been used for the program. The balance in the fund is nearly $15 billion. In each of the past several years, there has been a dramatic gap between the annual fee income and disbursements from the fund (see chart).

The Nuclear Waste Fund has three unique characteristics that justify modifying the current budget rules governing its use:

• The fund is intended to cover the entire cost of the federal government’s commercial used fuel management program over several decades.
• The federal government is obligated by law and contracts signed with electric companies that operate nuclear power plants to implement the used fuel management program.
• The disposal of used nuclear fuel from commercial reactors is financed entirely through a 1 mill per kilowatt-hour fee established by federal law and paid by consumers of electricity generated at nuclear power plants. Not having these funds fully dedicated to the disposal program constitutes a taking from the American people.

Scoring the net budget impact of the used fuel disposal program is consistent with general federal budget accounting principles, because it more accurately reflects the complete impact of the program on federal budget and discretionary spending totals and is consistent with treatment of industry user fees to the Nuclear Regulatory Commission. It will not adversely impact deficits. In fact, by reducing the risk of program delay, it should improve the long-term federal accounts balance.

Although the program should remain subject to congressional oversight, Yucca Mountain program appropriations should not compete each year for funding with unrelated programs. The industry commends the committee for its longstanding support for reform of Yucca Mountain program budgeting, as most recently evidenced in the committee’s approval of H.R. 45 during the 106th Congress and in H.R. 4 in 2002. During this committee’s 1999 hearings on the issue, Chairman Barton noted that one of the objectives of the legislation was to “protect consumers by halting the diversion of consumer fees to fund other federal programs.”

Last year, Committee Ranking Democrat John Dingell, in a letter to Energy Secretary Abraham, wrote:

“It has been clear for some time that absent legislative action, money paid into the [Nuclear Waste] Fund will continue to be diverted to other purposes—an inequitable use of funds collected from utility ratepayers specifically to pay for the repository. If this continues, construction could be delayed even in the event DOE had already received NRC approval to build a repository at Yucca Mountain. In that event, waste would remain in de facto permanent storage at dozens of facilities which were not designed for this purpose—in Michigan and many other states, at even greater cost to ratepayers. Moreover, damages in breach of contract lawsuits against DOE would continue to mount and, as I understand it, could be paid from general taxpayer revenues.”

This year, the administration submitted to Congress proposed legislation to authorize the reclassification of fees paid into the Nuclear Waste Fund as offsetting collections, in an amount equal to appropriations for nuclear waste disposal. Chairman Barton recently introduced the proposal as H.R. 3981. That bill is substantively similar to H.R. 3429, introduced by Reps. Shimkus and Rush last November and co-sponsored by six other committee members, including five members of the subcommittee.

Reforming the funding process is vital in FY2005, with the budget request for the program increasing to $880 million, more than $300 million above FY2004. These funds are necessary to support NRC review of the license application, to acquire long-lead items to support the transportation system and to execute detailed facility design.
   
The need to reform the funding profile is even more critical in view of the administration’s assumption in its FY2005 budget that this legislation would be enacted. In addition, absent congressional action, the Appropriations Committee will have to address a significant shortfall within the discretionary spending totals to fully fund the $880 million request.

Under the legislation, Congress could limit obligations in any year for the Yucca Mountain project if it determines less funding is needed, or could provide additional funds from the Nuclear Waste Fund balance, if required. In the latter case, funding above annual receipts into the Nuclear Waste Fund would be subject to discretionary spending limitations. Funding for the program from DOE’s defense program account would remain subject to discretionary spending limitations. This approach, if enacted in FY2005, would provide sufficient funding for the nondefense portion of the program, based on DOE’s requirements through completion of the surface facilities. The industry strongly urges the committee to approve offsetting collections legislation.

Although adequate and predictable funding is a prerequisite for program success, it is not by itself sufficient. DOE and its contractor(s) must continue to effectively manage the program. The Energy Department also must demonstrate that it will meet NRC requirements for the safe and secure permanent disposal of used nuclear fuel at Yucca Mountain before it can operate the repository. President Bush in 2002 signed legislation designating Yucca Mountain as the site for a national used fuel repository. DOE and its contractors are preparing an application to build the repository and are expected to submit it to the NRC in December. If approved, the license will permit DOE to build and operate the repository.

Congress approved Yucca Mountain as the site of the national repository in 2002. The policy question now before Congress is: When will Yucca Mountain be ready to accept used nuclear fuel? DOE plans to begin accepting used fuel in 2010—12 years behind the statutory deadline in the Nuclear Waste Policy Act. That law required DOE to begin accepting used fuel by Jan. 31, 1998.

DOE has improved management at the Office of Civilian Radioactive Waste Management (OCRWM), giving the industry more confidence that the agency can meet its 2010 deadline for opening the repository, assuming sufficient funding for the next six years. In addition, OCRWM has effectively implemented a Management Improvement Initiative using the same management principles that the nuclear energy industry has applied in building an exemplary safety record at the nation’s nuclear power plants. The creation of DOE’s Office of Repository Development in 2002 established strong project management. DOE also has made substantial progress in resolving the NRC’s outstanding key technical issues for the Yucca Mountain project. The transition from scientific research to a licensing project team has been a critical transition at the Yucca Mountain site. Recently, DOE announced that it is pursuing several other far-reaching management initiatives, including annual comprehensive independent external financial, schedule and technical audits of the program.

These programs are further evidence of the Energy Department’s commitment to a sound scientific basis for the project. The integrity of the scientists working on the program, the extensive and ongoing independent review process, the conservatism built into performance assumptions, and the extensive NRC review of the license application all enhance public and policymaker confidence in the Yucca Mountain repository. Repository operations will not begin until DOE can meet strict standards established for public safety and environmental protection.

Several critical milestones must be met to maintain the 2010 target for repository operation. The most significant of these—submitting a construction license application to the NRC—must be accomplished by the end of this year. The industry expects DOE to meet this milestone. After DOE files its license application, the NRC must issue a decision on the application and conduct public hearings within four years, using the same safety-focused, performance-based principles it applies to licensing nuclear power plants.

DOE also must proceed with land withdrawal and transfers, site preparation, and preliminary construction to meet the 2010 date. Congress should specifically instruct DOE to begin these activities before the NRC’s final authorization of repository construction.

Planning for a comprehensive transportation program to transfer used fuel to the repository also must be fully developed. This planning will build on the comprehensive transportation program that has been used for 40 years to safely transport 3,000 shipments of used fuel across 1.7 million miles. In December 2003, DOE issued a National Transportation Strategic Plan for developing a nationwide transportation program, with input from state, local and tribal governments, as well as the industry. DOE must implement this strategy.

The industry’s transportation policy endorses a predominantly rail scenario contained in DOE’s Yucca Mountain Environmental Impact Statement. This scenario recently was identified by the department as its preferred transportation strategy. NEI also supports the use of dedicated trains for used fuel transportation to the repository. Transportation planning must include extensive consultation with state and local officials consistent with DOE’s December 2003 strategy.

It is encouraging that the Secretary of Energy has also identified a preferred rail corridor within Nevada for transportation of used nuclear fuel to the repository. The Secretary’s action is consistent with direction provided last year by the House, which concluded that the Caliente route is the most feasible corridor to Yucca Mountain. It is also consistent with what Nevadans prefer. In a June 2003 public opinion survey of Nevadans by Voter Consumer Research, 56 percent said they would find “acceptable” rail transport of used nuclear fuel through rural routes, away from major cities like Reno or Las Vegas. In contrast, 88 percent find truck transport through major cities like Reno or Las Vegas unacceptable.

The industry encourages DOE to proceed further with the development of a comprehensive transportation program.

This timely action supports the department’s objective of beginning construction of a rail line immediately after a decision on construction authorization, expected by 2008. That would make rail transportation available for used fuel shipments early in the program and minimize the need for truck shipments within the state.

The industry also supports funding the state of Nevada and affected units of local governments for appropriate oversight of the repository project and local transportation preparedness. This would include federal assistance to mitigate the social and economic impacts of the program, consistent with Section 116 of the Nuclear Waste Policy Act. Each of these DOE milestones must have a clearly defined schedule, with implementation plans linked to funding requirements, if the federal government is to meet its 2010 goal for opening the repository.

Conclusion
The industry thanks the committee for its long-standing commitment to implementing public policy that ensures the safe and secure management of used nuclear fuel from nuclear power plants and high-level radioactive waste from the nation’s defense programs. Developing a new funding process for the Yucca Mountain project is essential to complete one of the world’s most important environmental facilities and pave the way for the U.S. government to begin fulfilling its legal obligation to move used nuclear fuel from 40 states to a secure and safe federal repository.

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¹ $7.6 billion has been used by DOE, $350 million by other federal agencies