[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
                WORKER SAFETY AT DOE NUCLEAR FACILITIES

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                      OVERSIGHT AND INVESTIGATIONS

                                 of the

                         COMMITTEE ON COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 29, 1999

                               __________

                           Serial No. 106-43

                               __________

            Printed for the use of the Committee on Commerce



                      U.S. GOVERNMENT PRINTING OFFICE
58-494 CC                     WASHINGTON : 1999



                         COMMITTEE ON COMMERCE

                     TOM BLILEY, Virginia, Chairman

W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio               HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas                    RALPH M. HALL, Texas
FRED UPTON, Michigan                 RICK BOUCHER, Virginia
CLIFF STEARNS, Florida               EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio                FRANK PALLONE, Jr., New Jersey
  Vice Chairman                      SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania     BART GORDON, Tennessee
CHRISTOPHER COX, California          PETER DEUTSCH, Florida
NATHAN DEAL, Georgia                 BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma              ANNA G. ESHOO, California
RICHARD BURR, North Carolina         RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California         BART STUPAK, Michigan
ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
GREG GANSKE, Iowa                    THOMAS C. SAWYER, Ohio
CHARLIE NORWOOD, Georgia             ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma              GENE GREEN, Texas
RICK LAZIO, New York                 KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming               TED STRICKLAND, Ohio
JAMES E. ROGAN, California           DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois               THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico           BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona             LOIS CAPPS, California
CHARLES W. ``CHIP'' PICKERING, 
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland

                   James E. Derderian, Chief of Staff

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

              Subcommittee on Oversight and Investigations

                     FRED UPTON, Michigan, Chairman

JOE BARTON, Texas                    RON KLINK, Pennsylvania
CHRISTOPHER COX, California          HENRY A. WAXMAN, California
RICHARD BURR, North Carolina         BART STUPAK, Michigan
  Vice Chairman                      GENE GREEN, Texas
BRIAN P. BILBRAY, California         KAREN McCARTHY, Missouri
ED WHITFIELD, Kentucky               TED STRICKLAND, Ohio
GREG GANSKE, Iowa                    DIANA DeGETTE, Colorado
ROY BLUNT, Missouri                  JOHN D. DINGELL, Michigan,
ED BRYANT, Tennessee                   (Ex Officio)
TOM BLILEY, Virginia,
  (Ex Officio)

                                  (ii)



                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Card, Robert G., President, Kaiser-Hill Company, L.L.C., 
      Rocky Flats Environment Technology Site....................    82
    Hall, Lincoln E., Vice President for Operations, Energy & 
      Environment Sector, Lockheed Martin Corporation............    95
    Jones, Gary L., Associate Director, Energy, Resources and 
      Sciences Issues, accompanied by William Swick, Assistant 
      Director for Energy Issues, General Accounting Office......     7
    Michaels, David M., Assistant Secretary for Environment, 
      Safety and Health, accompanied by Keith Christopher, 
      Director, Office of Enforcement and Investigation, 
      Department of Energy.......................................    13
    Miller, Richard D., Policy Analyst, Paper, Allied-Industrial, 
      Chemical and Energy Workers Union..........................    55
    Sussman, Arthur M., Vice President, Argonne National 
      Laboratory, University of Chicago..........................    68
    Van Ness, Robert L., Senior Vice President, University of 
      California.................................................    61
Material submitted for the record by:
    Michaels, David M., Assistant Secretary for Environment, 
      Safety and Health, Department of Energy, responses for the 
      record.....................................................   108

                                 (iii)

  


                WORKER SAFETY AT DOE NUCLEAR FACILITIES

                              ----------                              


                         TUESDAY, JUNE 29, 1999

                  House of Representatives,
                             Committee on Commerce,
               Subcomittee on Oversight and Investigations,
                                                    Washington, DC.
    The subcommittee met at 11 a.m., in room 2125, Rayburn 
House Office Building, Hon. Fred Upton, (chairman) presiding.
    Members present: Upton, Burr, Bilbray, Whitfield, Bryant, 
Klink, Stupak, and Strickland.
    Staff present: Mark Paoletta, majority counsel; Dwight 
Cates, investigator; Edith Holleman, minority counsel; and Penn 
Crawford, legislative clerk.
    Mr. Upton. Thank you everyone for coming. With the end of 
the cold war, the Department of Energy's nuclear weapons 
production responsibilities have subsided. The risk of exposure 
to radioactivity at DOE nuclear facilities, however, has 
increased for thousands of workers now engaged in the clean up 
of the nuclear weapons complex.
    In addition to DOE's remaining weapons research and 
production responsibilities, nuclear activities at DOE 
facilities now include decontamination of nuclear reactors, 
stabilization and safe storage of spent nuclear fuel, and clean 
up of radioactively contaminated soil and groundwater.
    Significant occupational risks associated with these 
activities are not regulated by the NRC or OSHA. Currently we 
rely on DOE to self-regulate nuclear and industrial safety at 
its facilities. Accordingly, in the absence of external 
regulation it is critical that DOE establishes a credible and 
effective worker safety program.
    Today's hearing will focus on DOE's efforts to hold its 
contractors accountable for protecting workers engaged in 
nuclear activities at DOE facilities as required by the Price-
Anderson Amendment Act of 1998. We will also review whether 
nonprofit, educational institutions that manage many DOE labs 
should continue to be exempt from paying civil penalties for 
nuclear safety violations.
    In 1957 Congress enacted the Price-Anderson Act which 
indemnified private companies engaged in nuclear activities 
from financial liabilities associated with any damage or injury 
caused by nuclear accidents. Price-Anderson Amendments Act of 
1988 reauthorized and expanded this indemnification, but in 
light of significant safety problems uncovered at DOE 
facilities Congress also required DOE to impose civil penalties 
on indemnified DOE contractors that violate nuclear safety 
rules.
    At the same time Congress exempted several educational 
institutions including the University of California, Los 
Alamos, and Lawrence Livermore in the University of Chicago at 
Argonne Labs from paying these civil penalties due to their 
nonprofit status.
    Established in 1996, DOE's Office of Enforcement and 
Investigations which reports to the Assistant Secretary for 
Enforcement, Safety, and Health is responsible for 
investigating nuclear safety violations and imposing civil 
penalties or other corrective actions when appropriate. DOE 
relies on its contractors to identify and report on nuclear 
safety violations when they occur.
    In determining whether enforcement action is necessary DOE 
considers the safety significance of the violation, the 
contractor's willingness to take corrective action, the 
contractor's ability to pay, and prior history of other 
violations.
    DOE will frequently decline enforcement action when a 
contractor quickly identifies and corrects nuclear safety 
problems. To date, DOE's Office of Enforcement has identified 
more than a thousand cases of nuclear safety noncompliance and 
has issued only 33 notices of violation and assessed $1.8 
million in civil penalties.
    Of the $1.8 million in fines, nonprofit contractors were 
exempted from $605,000 or a third of the assessed fines. Of 
that $605,000 in phantom fines assessed on nonprofits, the 
University of California is by far the leader with $425,000 or 
70 percent.
    University of California at Lawrence Livermore was cited 
for two of the largest safety violations in 1998 including 
severity level-one violations. In one occurrence a Lawrence 
Livermore employee received such an enormous internal dose of 
radioactivity that even after treatment to remove the 
radioactive material his dose still exceeded regulatory limits. 
This exposure may have been prevented, but someone had turned 
off the radioactivity alarm in the room that the man was 
working in.
    However, we cannot measure the effectiveness of DOE's 
enforcement program or the impact that it has had on worker 
safety simply by looking at an individual case of noncompliance 
or the total number of violations and assessed penalties.
    In a report released today the GAO finds that DOE has not 
been aggressive in issuing nuclear safety rules or in holding 
its contractors accountable for complying with some nuclear 
safety requirements. According to this report DOE's inaction in 
converting several nuclear safety requirements to enforceable 
rules has limited the overall effectiveness of DOE's 
enforcement program.
    Furthermore, DOE has not properly classified exactly how 
many facilities should be subject to its nuclear safety 
requirements. How could DOE have an effective nuclear safety 
program if it doesn't know how many facilities to which the 
rules apply? These and other issues are significant because DOE 
is not externally regulated and it must rely on the strength of 
its own oversight to hold contractors accountable.
    In addition to these findings DOE also recommends an end to 
the civil penalty exemption for nonprofit, educational 
institutions. DOE believes that it's unwise to limit any tools 
that can be used to ensure safe nuclear practices by its 
contractors.
    In contrast, the NRC, as well as other Federal regulatory 
agencies do not exempt nonprofit organizations from penalties 
for safety violations. Instead the NRC reduces the civil 
penalty for nonprofit contractors based on their ability to 
pay. DOE could similiarly establish such a reduced penalty 
system.
    Furthermore, the Department's nonprofit contractors now 
earn annual performance fees that could be used to pay any 
civil penalties. DOE, however, believes that the civil penalty 
exemption should be continued and even expanded. DOE believes 
that contract mechanisms can be used to ensure nuclear safety 
performance, but that GAO reports that DOE has so far been 
unsuccessful in applying contractual mechanisms to encourage 
nuclear safety.
    Congress and nuclear workers should not have to rely on the 
Department's enforcement program to ensure a safe work 
environment. DOE contractors must work proactively to establish 
effective nuclear safety programs in a field which prevent 
nuclear safety accidents from ever occurring.
    Line management in the field is responsible for the 
institutionalization of safe operations, however, if a 
contractor is unable to prioritize and implement safety 
considerations, then DOE should not be reluctant to apply every 
tool possible to make it so.
    Today we will hear from DOE, GAO, several nonprofit and 
for-profit contractors and a union representative of DOE 
workers on how we can improve nuclear safety at DOE facilities.
    I yield at this time for an opening statement from the 
ranking member, Mr. Klink.
    Mr. Klink. Thank you, Mr. Chairman, that was a good 
statement. I associate myself with most of it.
    Mr. Chairman, I think this is a particularly appropriate 
time to be holding this hearing in light of the hearing we held 
just last week on the Rudman Report and the House and Senate 
consideration of restructuring the Department of Energy. One of 
the outcomes, I think, of last week's hearing was the 
realization that people such as Senator Rudman who are focused 
on the safeguards and the security problems in DOE's weapons 
complex have no understanding or plan for carrying out the 
environmental, safety, or health responsibilities of DOE. A 
theme relevant to today's hearing was the difficulty in 
changing the entrenched DOE culture.
    In June 1989, shortly after Admiral James Watkins took over 
the Department, he stated that. ``For over four decades DOE and 
its contractors have accepted that its national security 
mission was incompatible with creating a health and safety 
environment.'' He said, ``The chickens have finally come home 
to roost and the years of inattention to changing standards and 
demands regarding the environment, safety, and health are 
vividly exposed.''
    Admiral Watkins proposed to lead DOE to a new culture. 
Priorities would be changed and environment, safety, and health 
would receive more weight than weapons production. Indeed, he 
said that 51 percent of the contract award fee would be based 
on environmental, safe, and health requirements, and all of the 
award fee would be at risk for failure in any one of those 
three categories.
    Well, this never happened. In fact, our DOE witness today--
a decade later--will tell us that DOE just recently revised its 
fee policy to allow putting the entire fee at risk because of 
poor safety performance. We will hear today about recalcitrant 
nonprofit and for-profit contractors.
    The Price-Anderson Amendments holding contractors liable 
for their nuclear safety violations through the use of civil 
penalties were written in this committee and passed by Congress 
in 1988. It was to be an interim provision until the nuclear 
facilities came under the control of the Nuclear Regulatory 
Commission and the Occupational Safety and Health 
Administration. Not only has the Department's record in 
implementing that law been abominable, we learned recently that 
it has abandoned external regulations because of the usual 
internal disputes among the programs.
    On Price-Anderson enforcement, the Department has moved 
with all deliberate speed. You see, we already have noted it 
has finalized two of 11 rules that it drafted. Fortunately, the 
workers' protection rule was one because the General Accounting 
had found in 1990 that radiological protection programs were a 
major deficiency at DOE. But it is our understanding that the 
program offices objected to the other rules. Just as adequate 
security costs money, adequate worker safety protection costs 
money.
    The program offices and the contractors like to use as much 
of their funds as possible for program purposes and don't want 
to be interfered with. And, as a result, for 7 years, Mr. 
Chairman, the rulemaking has been under discussion and then 
suspended.
    DOE has lots of excuses such as they were reinventing 
Government; working on other solutions to the health and safety 
problems. But if every agency or every citizen of this country 
took DOE's position that they didn't have to enforce the laws, 
then our country would simply not be able to function.
    The enforcement program we authorized in 1988 was finally 
in place in 1996 and today it has a total of five people 
working for it. Obviously it cannot pursue all or even most of 
the violations.
    The site representation program which was going to put a 
DOE employee at every site to monitor health and safety issues 
was never staffed up and is now going to be eliminated. DOE 
will probably say that it and its contractors have all the 
Price-Anderson coordinators at each site. Well, these are 
usually people with other responsibilities. And our staffs' 
contact with these people did not leave a great impression of 
either their knowledge or their ability to effect change.
    When Secretary Richardson gave up external regulations, he 
did promise, however, that the following steps would be taken 
to enhance safety. First, DOE's acquisition regulation would be 
revised so that the contractor's entire fee would be at risk 
for poor performance of safety measures; second, that oversight 
and enforcement programs would be strengthened; third, there 
would be a complex wide tracking system to make sure that 
actions to correct safety and emergency management defects 
would be identified and completed on an expedited basis; and 
fourth, a Secretarial Safety Council would be established.
    I note, Mr. Chairman, the Secretary did not mention this--
mention issuing the lost Price-Anderson regulations, and that 
the proposal to change the acquisition regulations was 
published in April 1998, and still is not finalized.
    Is the enforcement program strengthened? Not that we can 
see.
    Dr. Michaels is going to tell us today that he will have 
those regulations in place by January of next year. I have to 
tell you, Mr. Chairman, I am hopeful that he is right, but yet 
I'm very skeptical of that promise or any others that are made 
by the Department.
    Let me just say one comment about the exemption from civil 
penalties for nonprofits. It doesn't appear that it's working. 
According to the enforcement staff, the labs have been 
extremely difficult to work with. As scientists they believe 
that they know better. I know we are going to discuss today 
with the University of California the careless behavior 
demonstrated by the Lawrence-Livermore National Laboratory. 
What's even more distressing was the lab's ability to stop the 
issuance of a departmental press release concerning its 
violations. There's something seriously wrong at the Department 
when contractors have that amount of power.
    I also must express bewilderment by the Department's 
statement that fines work very well with private contractors, 
but don't work well for recalcitrant labs.
    I look forward to today's testimony and the response to our 
questions.
    Mr. Upton. Thank you, Mr. Klink.
    Mr. Whitfield, do you have an opening statement?
    Mr. Whitfield. Mr. Chairman, I do not have an opening 
statement. I'll just file one for the record. Thank you.
    Mr. Upton. That's fine. Thank you.
    I would note for the record that originally we were 
supposed to be in session with votes yesterday. On Friday 
afternoon that was changed so the House is not yet in session 
and all members of this subcommittee, I'll ask unanimous 
consent, will be able to file an opening statement by unanimous 
consent if they so desire, and we expect a number of members to 
come as their planes arrive as the House is not yet into 
session this week.
    [Additional statements submitted for the record follow:]
  Prepared Statement of Hon. Joe Barton, a Representative in Congress 
                        from the State of Texas
    I would like to thank Chairman Upton for scheduling this hearing on 
the very important subject of worker safety at DOE Nuclear Facilities. 
This is a timely subcommittee hearing as it comes a week after the full 
Commerce Committee hearing on June 22, 1999, on the Rudman Report and 
its analysis of the security problem at DOE facilities. Any legislative 
effort to reorganize the Department of Energy will have to come through 
the Commerce Committee and is of great interest and concern to the 
Members of the Committee.
    I commend the witnesses we have here today for testifying on the 
issue of worker safety at DOE Nuclear Facilities. For an issue as 
important as this to our national security, we need to hear from all 
parties involved, and I think we have a good representation here today.
    Since my days as a White House Fellow working at DOE, I have 
personally witnessed the organizational problems at the department. I 
have always been concerned about these problems, as many have, and now 
our worst fears apparently have occurred. Espionage by the Chinese on 
our nuclear weapons designs has occurred at Los Alamos lab, and there 
is additional evidence of national security breaches at the other DOE 
labs. There have to be changes made in response to these problems.
    What are the steps that must be taken now to make sure this does 
not happen again? To begin with, I believe that those at fault in these 
security breaches must be held accountable. DOE must be held 
accountable as well as the contract personnel working at the labs. 
There is mounting evidence that something is seriously wrong in the 
management of these labs and in the security operation throughout the 
DOE lab organization.
    I believe that at the labs where these national security breaches 
have occurred there needs to be serious consideration given to the role 
of the contractors in contributing to these problems. I support 
terminating the University of California's contract because of the 
evidence of negligence involved in the managing of the Los Alamos lab. 
I also believe that because of all of these problems with the 
management of the DOE labs, it is necessary to relocate the functions 
of the labs completely out of DOE.
    As Chairman of the Subcommittee on Energy and Power, I look forward 
to being involved in legislation to address these security problems 
which would come though my subcommittee. This is an important issue for 
our country and one which we cannot ignore. Again, I thank Chairman 
Upton for holding the hearing and I thank the witnesses for taking time 
to appear before this committee.
                                 ______
                                 
 Prepared Statement of Hon. Tom Bliley, Chairman, Committee on Commerce
    Mr. Chairman, thank you for holding this important hearing. Today 
we will review the Department of Energy's implementation of its 
enforceable nuclear safety program required by the Price Anderson 
Amendments Act of 1988. Congress expects DOE to hold its contractors 
accountable for the protection of workers engaged in the important 
nuclear research and cleanup activities at DOE sites across the 
country. That is why Congress gave DOE civil penalty authority to 
oversee and fine contractors that violate nuclear safety rules. In 
addition to this civil penalty authority, DOE also can demand 
corrective action of its contractors to ensure that nuclear mistakes 
are not repeated. Our review of the Department's implementation of 
nuclear safety requirements will also include a review of the safety 
performance of several of DOE's largest contractors.
    Proper planning and contractor control over risky nuclear 
activities can prevent nuclear accidents. Workers should expect a safe 
work environment. Unfortunately, several nuclear violations have 
occurred--and in some cases recurred--at a few DOE sites operated by 
contractors that have been slow to learn and understand the importance 
of nuclear safety. It is not enough for a contractor to simply pledge 
to respond quickly and implement corrective actions after a nuclear 
accident has happened. I am particularly concerned about an apparent 
pattern of unsafe nuclear work at Los Alamos and Lawrence Livermore 
National Labs. For example:
          In November 1996, there was a fire and explosion involving 
        radioactive material at Los Alamos. Two years after this 
        serious accident, DOE fined the University of California for 
        refusing to implement radiation protection requirements the 
        University had agreed to implement.
          In November 1996, a Nuclear Facility Appraisal identified 
        significant and widespread problems with nuclear safety 
        procedures at Lawrence Livermore. Eight months later, five 
        workers were exposed to high amounts of radioactivity during 
        waste processing activities.
          In May 1996, a DOE appraisal identified significant problems 
        with Lawrence Livermore's criticality safety program. One year 
        later, multiple and recurring criticality safety failures 
        occurred at Lawrence Livermore, including loss of control of 
        plutonium at Building 332.
    These significant nuclear safety violations seem to demonstrate the 
same pattern of organizational disarray, and managerial neglect, 
identified by the Rudman report with respect to security violations at 
the labs. Even more troubling, DOE seems to be unable to hold the 
University of California accountable for these violations or identify 
the corrective actions to prevent these violations from recurring. Due 
to statutory exemptions, the University of California has not paid any 
of the $425,000 in fines the DOE has assessed for these violations. 
Furthermore, in spite of these serious safety violations, DOE continues 
to rate the University of California's health and safety performance as 
``good,'' and has awarded all base performance fees associated with 
health and safety activities. In light of these circumstances, I may 
seriously consider GAO's recommendation to end the civil penalty 
exemption for nonprofit educational institutions.
    I want to make it clear that hundreds of nuclear activities are 
safely performed at DOE sites every day. Several DOE contractors have 
established sound nuclear safety programs that protect workers. 
However, in written testimony today, GAO reports that there are many 
holes in the Department's nuclear safety program. Mr. Chairman, where 
there are gaps in nuclear safety programs, there are nuclear accidents 
waiting to happen. I look forward to working with the Subcommittee 
today and in the future to identify ways to improve the Department's 
nuclear safety program and to hold contractors accountable for poor 
safety performance.

    Mr. Upton. Our two first witnesses include Ms. Gary Jones, 
Associate Director for Energy Issues at GAO. She is accompanied 
by Mr. William Swick, Assistant Director for Energy Issues at 
GAO. Also testifying is Dr. David Michaels who is Assistant 
Secretary for Environment, Safety and Health at the Department 
of Energy, and he is accompanied by Mr. Keith Christopher, 
Director of the Office of Enforcement and Investigation.
    As you may know, this subcommittee has a long tradition of 
taking testimony under oath and do you have any objection to 
that?
    [No response.]
    Mr. Upton. Hearing none, we also have--you're allowed to 
have to counsel in addition to the folks that are with you now, 
and if you don't have any need for that, if you would just 
stand and raise your right hand.
    Do you swear to tell the whole truth and nothing but the 
truth so help you God?
    Ms. Jones. I do.
    Dr. Michaels. I do.
    Mr. Upton. They are now under oath. We'll start with GAO, 
Ms. Jones, do you want to go with your testimony. Again, you 
have been a frequent visitor here; you know I would like you to 
keep your comments or your opening statement limited to 5 
minutes and the little egg timer is--I don't know if this is 
poached or whatever, but 5 minutes is now yours.
    Ms. Jones. And you promised to give that to me at the last 
hearing if I----
    Mr. Upton. No, I don't know that I made that promise. You 
might have made that request.

    TESTIMONY OF GARY L. JONES, ASSOCIATE DIRECTOR, ENERGY, 
 RESOURCES AND SCIENCES ISSUES, ACCOMPANIED BY WILLIAM SWICK, 
   ASSISTANT DIRECTOR FOR ENERGY ISSUES, GENERAL ACCOUNTING 
    OFFICE; AND DAVID M. MICHAELS, ASSISTANT SECRETARY FOR 
     ENVIRONMENT, SAFETY AND HEALTH, ACCOMPANIED BY KEITH 
CHRISTOPHER, DIRECTOR, OFFICE OF ENFORCEMENT AND INVESTIGATION, 
                      DEPARTMENT OF ENERGY

    Ms. Jones. Thank you, Mr. Chairman.
    We are here today to discuss the Department of Energy's 
efforts to hold its contractors accountable for nuclear safety 
requirements.
    Let me take just a minute the define the framework within 
which the safety enforcement program operates.
    As you mentioned, Mr. Chairman, independent regulators do 
not help ensure that DOE operations are safe. Instead, DOE 
relies on its own staff to ensure safety.
    One mechanism to hold contractors accountable for safety 
was provided by legislation passed in 1988 which allows DOE to 
impose civil monetary penalties on those contractors not 
meeting nuclear safety requirements. However, that law named 
seven contractors and research laboratories that along with 
their subcontractors and suppliers were exempt from having to 
pay penalties.
    The legislation also gave the Secretary of Energy the 
authority to exempt nonprofit educational institutions under 
contract to DOE from paying penalties. Given that backdrop, let 
me discuss the results of our work.
    DOE determined that to be able to assess civil penalties 
existing safety requirements in DOE orders would have to be 
reissued as enforceable rules. However, over 10 years after the 
Congress authorized DOE to assess civil penalties, DOE has 
issued enforceable rules covering only 2 of the 11 safety areas 
originally proposed; radiation protection for workers and 
quality assurance.
    The other nine safety areas not included as rules include 
training and certification of employees performing vital 
operations and the preparation of safety analysis reports. DOE 
did not complete the remaining rules because of work on other 
safety issues and internal discussions about how best to ensure 
nuclear safety. Not issuing these enforceable rules has limited 
the overall effectiveness of the enforcement program because 
DOE has fewer options to ensure that contractors are meeting 
safety requirements.
    In commenting on our report DOE agreed that it should issue 
additional rules and outlined the strategy for doing so.
    We also found that DOE has been inconsistent in placing 
nuclear facilities under the quality assurance rule. Nuclear 
facilities are defined as having a nuclear reactor or 
activities where a nuclear hazard to employees or the public 
potentially exists. Based on this definition, there are a 
number of facilities that should have been included under this 
rule but were not.
    For example, Savannah River categorized its reactors as 
nuclear facilities, Hanford did not. Although none of the 
reactors are currently operating, radiation exposure remains a 
potential problem at both sites.
    Incorrectly categorizing facilities could affect the type 
of safety oversight being done as well as the enforcement 
activity undertaken. DOE agreed that the scope of the quality 
assurance rule should be clarified and is taking action to do 
so.
    DOE concluded that the enforcement program is a valuable 
tool for increasing the emphasis on nuclear safety. While DOE 
assessed penalties against both for-profit and not-for-profit 
contractors, it collected penalties only from the for-profit 
contractors.
    DOE recommended in March 1999 that the statutory exemption 
from paying penalties be continued and expanded to include all 
nonprofit contractors, subcontractors, and suppliers. However, 
DOE has not made a convincing case for doing so.
    First, DOE states that the exemption should be continued 
because major universities and other nonprofit contractors 
would not be willing to put their assets at risk paying civil 
penalties. However, under performance-based contracting for 
fiscal year 1999, all but one of the contractors that manage 
and operate DOE facilities, including the nonprofit 
contractors, can earn a fee. Nonprofit contractors use this fee 
for unallowable and administrative costs and to conduct 
laboratory-directed research. The fee could also be used to pay 
any civil penalties imposed on the contractor.
    Second, DOE stated that the contract provisions are a 
better mechanism than civil penalties for holding nonprofit 
contractors accountable for safe nuclear practices. Although 
performance-based contracting can be an effective way to 
emphasize safety, DOE has not taken full advantage of this 
mechanism. For example, the University of California, DOE's 
contractor at Livermore, received 96 percent of the $6.4 
million fee available in fiscal year 1998 even though it had 
significant nuclear safety deficiencies resulting in 
enforcement actions.
    Third, DOE states that its current approach is consistent 
with the Nuclear Regulatory Commission's treatment of nonprofit 
organizations. We don't agree. NRC can and does impose 
penalties for violating safety requirements on any organization 
that it regulates without regard for the profit-making status 
of that organization. However, it usually sets lower penalty 
amounts for nonprofit organizations.
    In addition, both NRC and other regulatory agencies have 
collected penalties for violating nuclear safety requirements 
from organizations that DOE exempts from payment.
    Mr. Chairman, the GAO report that you have released today 
suggests that the Congress consider eliminating the statutory 
and administrative exemptions that currently apply to certain 
nonprofit contractors. By making that change, all contractors 
would be held equally accountable for violating nuclear safety 
rules.
    Thank you, Mr. Chairman.
    [The prepared statement of Gary L. Jones follows:]
   Prepared Statement of Gary L. Jones, Associate Director, Energy, 
   Resources, and Science Issues, Resources, Community, and Economic 
            Development Division, General Accounting Office
    Mr. Chairman and Members of the Subcommittee: We are here today to 
discuss the Department of Energy's (DOE) efforts to hold its 
contractors accountable for nuclear safety requirements. DOE has a 
widespread complex of research and nuclear facilities that contain 
large quantities of nuclear materials. Some of the materials are in a 
deteriorated condition, not properly packaged for storage, and may pose 
a significant risk to workers, the public, and the environment. With 
few exceptions, DOE's facilities are not inspected or licensed by 
independent regulators to help ensure that operations are safe. 
Instead, since 1946, DOE and the agencies that preceded it have relied 
on their own staff to ensure the safety of these facilities.
    Most of the work at DOE facilities is carried out by organizations 
under contract to DOE. Because of the risks and the potential 
liabilities inherent with handling nuclear materials, the law 
authorizes DOE to indemnify, or agree to pay damages for, those 
contractors that could have an accident associated with handling 
nuclear materials, and whose actions could cause damage. In 1988, the 
Congress enacted legislation permitting DOE to hold its contractors 
accountable for meeting its nuclear safety requirements through a 
system of civil monetary penalties. DOE determined that to be able to 
assess civil penalties, existing safety requirements would have to be 
reissued as enforceable rules. The legislation also named seven 
contractors at research laboratories, that along with their 
subcontractors and suppliers, were exempt from having to pay the 
penalties. In addition, the legislation gave the Secretary of Energy 
the authority to exempt from paying penalties other nonprofit 
educational institutions under contract to DOE.
    On the basis of the report we prepared for the Committee and are 
releasing today,1 our testimony will address (1) what 
enforceable nuclear safety rules DOE has issued; (2) which DOE 
facilities and contractors are covered by these rules; (3) how DOE has 
enforced the nuclear safety rules; and (4) whether there is a continued 
need for exempting certain contractors from paying penalties for 
violating nuclear safety rules.
---------------------------------------------------------------------------
    \1\ Department of Energy: DOE's Nuclear Safety Enforcement Program 
Should Be Strengthened (GAO/RCED-99-146, Jun. 10, 1999).
---------------------------------------------------------------------------
    In summary, we found the following:

 Since 1988, DOE has issued enforceable rules covering only 2 
        of 11 safety areas originally proposed--radiation protection 
        for workers and quality assurance issues that define how work 
        is planned and carried out. The other nine safety areas not 
        included in the rules, such as training and certification of 
        employees performing vital operations, are still covered in DOE 
        orders, and DOE generally includes compliance with them as part 
        of its contracts. However, not elevating safety orders to the 
        status of enforceable rules has limited the overall 
        effectiveness of the enforcement program because DOE has fewer 
        options to ensure that contractors are meeting safety 
        requirements and correcting any deficiencies.
 Nuclear safety rules are to be enforced at any DOE facility 
        with the potential to cause radiological harm to the public, 
        workers, or the environment. Although no problems have been 
        identified with the application of the radiation protection for 
        workers rule to the activities of DOE's contractors, DOE field 
        offices have been inconsistent in the degree to which they have 
        placed nuclear facilities under the quality assurance rule. Not 
        properly categorizing DOE facilities as subject to the rules 
        could potentially affect the type of safety oversight carried 
        out by contractors, as well as the enforcement activity 
        undertaken by DOE.
 DOE began its enforcement program in 1996 and concentrates its 
        investigations and enforcement actions on those violations of 
        nuclear safety rules that are the most significant. Between 
        1996 and 1998, DOE has taken 33 enforcement actions and 
        assessed more than $1.8 million in penalties. Violations have 
        included such things as unnecessarily exposing workers to 
        radioactivity and not following procedures intended to prevent 
        an uncontrolled nuclear reaction from occurring. DOE has 
        concluded that the enforcement program is a valuable tool for 
        increasing the emphasis on nuclear safety.
 Although DOE recommended in March 1999 that the statutory 
        exemption from paying penalties be continued and expanded to 
        include all nonprofit contractors, subcontractors, and 
        suppliers, the exemption may no longer be needed. DOE cited 
        three reasons for continuing the exemption--nonprofit 
        contractors' unwillingness to put their assets at risk if 
        required to pay civil penalties, effectiveness of existing 
        contract mechanisms in obtaining compliance, and consistency 
        with other regulatory agencies' treatment of nonprofit 
        organizations. However, nonprofit contractors now have 
        contract-related fees available that could be used to pay 
        penalties, contract mechanisms have not been effectively used 
        to address safety-related problems, and, in contrast to DOE, 
        other regulatory agencies collect penalties and administrative 
        costs from nonprofit organizations.
    Mr. Chairman, our work clearly shows that, although DOE is 
ultimately responsible for ensuring nuclear safety at its facilities, 
the Department has not been aggressive in issuing nuclear safety rules 
or in holding contractors accountable for complying with the quality 
assurance rule. The enforcement program is an important complement to 
existing contract-related mechanisms for ensuring that contractors have 
safe nuclear practices. Therefore, in the report we are releasing 
today, we are recommending that the Secretary of Energy take steps to 
strengthen DOE's nuclear safety enforcement program, and we are 
suggesting that the Congress consider eliminating the statutory and 
administrative exemptions--that currently apply to certain nonprofit 
contractors--so that those contractors would be required to pay the 
civil penalties assessed for violating nuclear safety rules.
    Mr. Chairman, now I would like to discuss our findings in greater 
detail.
DOE Issued Fewer Nuclear Safety Rules Than Initially Planned
    DOE's progress in its efforts to re-issue existing nuclear safety 
requirements as enforceable rules has fallen far short of its original 
goal of converting all requirements into rules. Although DOE issued 
proposed rules covering a broad range of safety issues, only two areas 
of safety requirements have been addressed with completed rules. DOE 
largely suspended work on the nine remaining proposed rules because of 
work on other safety issues and internal discussions about how best to 
ensure nuclear safety.
    DOE issued several proposed safety rules beginning in December 
1991.2 These proposed rules included existing DOE orders on 
such matters as protecting workers from exposure to radiation, issuing 
safety analysis reports, reporting defective items and services, and 
reporting safety-related problems. In March 1993, DOE issued one more 
proposed rule dealing with the protection of the public and the 
environment from radiation. After a public comment and review process, 
DOE issued two of the rules as final--the rule on radiation protection 
of occupational workers in December 1993 and the rule on quality 
assurance requirements in April 1994. The remaining rules have not been 
finalized.
---------------------------------------------------------------------------
    \2\ These proposed rules also included a procedural rule setting up 
the process that DOE would use to investigate potential violations of 
nuclear safety rules, issue notices of violation to the contractor, and 
assess penalties based on the severity level of the violation. After 
receiving comments and making revisions, DOE issued this procedural 
rule as a final rule in August 1993.
---------------------------------------------------------------------------
    DOE received extensive comments from contractors and other 
interested parties on the remaining nine safety requirements proposed 
as rules. DOE's plan was to issue these remaining rules as final after 
it completed the analysis of the comments received. However, DOE has 
issued none of the remaining rules as final. DOE officials said two 
major factors contributed to the delay--work on other safety issues and 
discussions within DOE on how best to proceed with safety regulation.
    Although the Secretary concluded in a recent report to the Congress 
that the enforceable rules have been beneficial in improving 
contractors' safety performance,3 the system of enforceable 
nuclear safety rules originally envisioned by DOE has not been fully 
realized. DOE's inaction in converting the many other aspects of 
nuclear safety into final published rules has limited the overall 
effectiveness of the enforcement program. Although DOE officials have 
said that there is a renewed effort within DOE to address the need for 
additional enforceable rules, there is still no definite schedule for 
finalizing the remaining proposed rules.
---------------------------------------------------------------------------
    \3\ Department of Energy Report to Congress on the Price-Anderson 
Act (Mar. 1999).
---------------------------------------------------------------------------
    In our report, we recommended that the Secretary of Energy 
expeditiously complete the process of issuing enforceable rules 
covering important nuclear safety requirements. In commenting on a 
draft of our report, DOE agreed that it needed to complete this process 
and outlined its strategy for doing so.
Clarification Needed About Facilities to Which the Rules Apply
    Penalties for violating enforceable nuclear safety rules apply to 
any contractor, subcontractor, or supplier that has been indemnified 
from liability for possible damages caused by working with nuclear 
materials. However, the two rules issued to date--occupational 
radiation protection and quality assurance--have somewhat different 
criteria for determining which facilities should be subject to them, 
with the occupational radiation protection rule having broader 
coverage. Under the occupational radiation protection rule, DOE 
facilities are subject to its provisions if the activities conducted 
there have the potential to result in the occupational exposure of an 
individual to radiation or radioactive material. The quality assurance 
rule adds a second test--a facility must be defined as ``nuclear.'' To 
be a nuclear facility, a facility must have either a nuclear reactor or 
activities or operations that involve radioactive and/or fissionable 
materials in such a form and quantity that a nuclear hazard potentially 
exists to employees or the public.
    Although there are no apparent problems with the application of the 
occupational radiation protection rule, the number of facilities DOE 
field offices decided were subject to the quality assurance rule may be 
somewhat understated. According to the 1998 annual report of DOE's 
Office of Enforcement and Investigation,4 the office has 
identified a number of facilities that should have been included but 
were not. Our review of DOE's approach to identifying nuclear 
facilities confirmed that there are problems in this area. The nuclear 
reactors at DOE's Savannah River site in South Carolina and Hanford 
site in Washington State are an example. Both sites have reactors that 
produced nuclear weapons material between the 1940s and 1980s. Although 
none of the reactors are currently operating, radiation exposure 
remains a potential problem, because, for example, all have reactor 
blocks or vessels in place that contain residual radioactive material. 
Nevertheless, Savannah River categorized its reactors as nuclear 
facilities, while Hanford did not.
---------------------------------------------------------------------------
    \4\ 1998 Annual Report, Price-Anderson Nuclear Safety Enforcement 
Program (Jan. 1999).
---------------------------------------------------------------------------
    DOE does not know how widespread this problem of identifying 
nuclear facilities is so its significance is difficult to determine. 
However, incorrectly categorizing facilities could potentially affect 
the type of safety oversight being done by contractors and DOE field 
offices, as well as the enforcement activity undertaken by the Office 
of Enforcement and Investigation.
    In our report we recommended that the Secretary of Energy ensure 
that field locations are properly following DOE's guidance in 
determining which facilities must comply with the nuclear safety rule 
on quality assurance. In commenting on a draft of our report, DOE 
agreed that the scope of the quality assurance rule should be clarified 
and described the steps it has taken and will take to do so.
DOE's Enforcement of Nuclear Safety Rules Has Resulted in Penalties 
        Against Contractors
    DOE established the enforcement program in 1996, which relies 
primarily on a system of self-reporting and corrective actions by its 
contractors, and concentrates its enforcement actions on those 
violations of nuclear safety rules that are the most significant, and 
to situations where the contractor has not promptly identified, 
reported, and corrected the problem. DOE's enforcement process includes 
(1) identifying, evaluating, and investigating potential violations of 
the nuclear safety rules, (2) determining the severity level of the 
violation,5 (3) calculating the civil penalty,6 
and (4) notifying the contractors and public of the results of the 
enforcement action. As our report states, between 1996 and 1998, DOE 
took 33 enforcement actions with assessed penalties totaling $1.8 
million, with the highest penalty assessed--$165,000--in November 1998. 
There have been only two severity level I violations--one against EG&G 
Inc., at DOE's Mound, Ohio, site for deficiencies in its radiation 
dosage monitoring program, and the other against the University of 
California at Lawrence Livermore National Laboratory in California for 
exposing workers to unnecessary levels of radiation. So far in 1999, 
DOE has taken four enforcement actions with penalties totaling 
$357,500. These included a preliminary notice of violation in May 1999 
with an assessed penalty of $330,000, the largest to date in the 
program, against Fluor Daniel Hanford, Inc., for repeated violations of 
the quality assurance rule at its spent nuclear fuels 
project.7
---------------------------------------------------------------------------
    \5\ The severity levels are: level I, the most significant, are 
those violations that involve actual or high potential for an adverse 
impact on the safety of the public or workers at DOE facilities; level 
II are those violations that show a significant lack of attention or 
carelessness towards the responsibilities of DOE contractors for the 
protection of the public or worker safety and that could, if left 
uncorrected, lead to an adverse impact on public or worker safety; 
level III are violations that are less serious but of more than minor 
concern and, if left uncorrected, could lead to a more serious 
condition.
    \6\ DOE calculates the civil penalty based on the severity level of 
the violation, with severity level I penalties set at 100 percent of 
the base civil penalty (currently $110,000 per violation per day). DOE 
may also consider other factors, including how promptly the contractor 
reported a potential violation and initiated corrective action and 
whether a pattern of repeated violations exists.
    \7\ The May 1999 preliminary notice of violation also included 
DOE's first use of a compliance order in the program, which requires 
the contractor to complete specific corrective action steps within 
designated time periods.
---------------------------------------------------------------------------
    In its March 1999 report to the Congress on the Price-Anderson 
Act,8 DOE stated that its authority to impose civil 
penalties has proven to be a valuable tool for increasing the emphasis 
on nuclear safety and enhancing the accountability of its contractors. 
On the basis of our analysis, we agree that DOE's enforcement program 
appears to be a good mechanism for increasing both contractor awareness 
of and accountability for nuclear safety requirements and complements 
existing contract mechanisms. We believe the advantages of the 
enforcement program include its independence from the program and field 
office structure, the objectivity of its enforcement process, its 
emphasis on verifying that corrective action has been taken, and the 
visibility of its results.
---------------------------------------------------------------------------
    \8\ In the Price-Anderson Amendments Act of 1988, the Congress 
required DOE and the Nuclear Regulatory Commission to report by August 
1, 1998, on the need for continuing or modifying the provisions of the 
act.
---------------------------------------------------------------------------
Continuing to Exempt Nonprofit Contractors from Paying Civil Penalties 
        May Not be Warranted
    Of the $1.8 million in civil penalties assessed by DOE from 1996 
through 1998, certain nonprofit contractors exempted by statute or 
under administrative rule did not pay about $605,000, or 33 percent, of 
the total penalties assessed. One part of DOE's March 1999 report on 
the Price-Anderson Act reassessed the merits of the enforcement program 
and the need to continue exempting nonprofit educational institutions 
from civil penalties. Although DOE concluded that the authority to 
impose civil penalties has proven to be a valuable tool for increasing 
the emphasis on nuclear safety and for enhancing contractors' 
responsibility and accountability, DOE also concluded that the 
exemption from having to pay the penalties for nonprofit contractors 
should be continued. Our analysis of DOE's reasons raises several 
questions about the merits of continuing the exemption:

 DOE states that the exemption should be continued because 
        major universities and other nonprofit contractors would be 
        unwilling to put their assets at risk for contract-related 
        expenses such as civil penalties. However, under performance-
        based contracting,9 for fiscal year 1999, all but 
        one of the contractors, including the nonprofits, that manage 
        and operate DOE facilities have the opportunity to earn a 
        fee.10 This fee, which is in addition to reimbursed 
        costs, is used by the nonprofit contractors to cover certain 
        non-reimbursable contract costs, and to conduct laboratory-
        directed research activities. The fee could also be used to pay 
        any civil penalties imposed on the contractor. In addition, in 
        setting the amount of a civil penalty, the Secretary has the 
        authority to consider factors such as the contractor's ability 
        to pay and the effect of the penalty on the contractor's 
        ability to continue to do business. The Secretary could limit 
        the amount of the civil penalty assessed to no more than the 
        amount of the available fee.
---------------------------------------------------------------------------
    \9\ Performance-based contracting, part of DOE's contract reform 
efforts, links contractors' incentive fees to the satisfactory 
accomplishment of specific tasks and uses objective measures and 
criteria to measure contractor performance.
    \10\ Stanford University has a no-fee contract to operate the 
Stanford Linear Accelerator Center in California. According to DOE, the 
contractor wants no fee because a fee would be inconsistent with its 
role as a university research organization.
---------------------------------------------------------------------------
 DOE states that contract provisions are a better mechanism 
        than civil penalties for holding nonprofit contractors 
        accountable for safe nuclear practices. Although performance-
        based contracting can be an effective way to emphasize nuclear 
        safety, DOE has not taken full advantage of this mechanism. For 
        example, at the Lawrence Livermore National Laboratory in 
        California, DOE's main contractor--the University of 
        California--received 96 percent of its $6.4 million available 
        fee in fiscal year 1998, even though it had significant nuclear 
        safety deficiencies resulting in enforcement 
        actions.11 For fiscal year 1999, it will receive 
        about $1.1 billion to operate the facility and up to $6.4 
        million in fees for meeting or exceeding performance goals, 
        including compliance with health and safety requirements. If 
        the contractor does not perform satisfactorily in the safety 
        and health area, the most this fee could be reduced is 
        $252,000, according to the agreement with DOE, or only about 
        four percent of the fee.
---------------------------------------------------------------------------
    \11\ The University of California was assessed $313,125 in civil 
penalties in 1998 for severity level I and II violations of nuclear 
safety rules at the Lawrence Livermore National Laboratory in 
California. The University of California is statutorily exempt from 
paying the penalties assessed.
---------------------------------------------------------------------------
 DOE states that its current approach is consistent with the 
        Nuclear Regulatory Commission's treatment of nonprofit 
        organizations because DOE issues notices of violation to these 
        nonprofit organizations without collecting penalties but can 
        apply financial incentives or disincentives through the 
        contract. However, DOE's approach generally is not consistent 
        with that of the Commission or other regulatory agencies. The 
        Commission can and does impose penalties on any organization it 
        regulates for violating safety requirements without regard to 
        the profit-making status of the organization. In doing so, the 
        Commission sets lower penalty amounts for nonprofit 
        organizations than for the for-profit organizations. Although 
        this option is also available to the Secretary, DOE does not 
        currently take this approach. In addition, both the Commission 
        and other regulatory agencies have assessed and collected 
        penalties or additional administrative costs for violating 
        nuclear safety requirements from organizations that DOE exempts 
        from payment. For example, between 1989 and 1993, the 
        California State Department of Toxic Substances Control 
        assessed and collected $88,000 in ``administrative costs'' from 
        the University of California for violating state environmental 
        laws at two DOE national laboratories--Lawrence Livermore and 
        Lawrence Berkeley.
 In our report, we recommended that the Secretary of Energy 
        eliminate the administrative exemption from paying civil 
        penalties for violations of nuclear safety rules that DOE 
        granted to nonprofit educational institutions. In commenting on 
        a draft of our report, DOE said that the issue of exemption 
        from civil penalties is ultimately one for the Congress to 
        decide and that, if the Congress should eliminate the 
        exemption, the Department would assess penalties against the 
        nonprofit organizations in a manner similar to that used by the 
        Nuclear Regulatory Commission.
    Thank you, Mr. Chairman and members of the Subcommittee. That 
concludes my testimony, and I will be happy to respond to any questions 
you may have.
Contact and Acknowledgment
    For future contacts regarding this testimony, please contact (Ms.) 
Gary L. Jones at (202) 512-3841. Individuals making key contributions 
to this testimony included William R. Swick and Carole J. Blackwell.

    Mr. Upton. Thank you.
    Dr. Michaels.

                 TESTIMONY OF DAVID M. MICHAELS

    Mr. Michaels. Mr. Chairman and members of the subcommittee, 
I am pleased to be here today to discuss worker safety at the 
Department of Energy's nuclear facilities and in particular the 
findings of the GAO in its draft report on the DOE nuclear 
safety enforcement program.
    Let me say at the outset, we very much appreciate this 
committee's continued strong interest in worker health and 
safety at DOE. We all know that, with good reason, concerns 
with security have been very much on everyone's mind in the 
past several months. But it is vital to remember there are very 
real worker safety and environmental hazards at all DOE 
facilities.
    This committee certainly has a strong record in these 
issues and has been at the forefront of much of the progress we 
have seen over the past decade. I encourage you to maintain 
this interest in worker safety and environmental health as we 
address important issues over the next few months.
    I will submit my entire statement for the record and will 
summarize my remarks today.
    Joining me today is Mr. Keith Christopher, Director of the 
Office of Enforcement and Investigations who oversees the 
Department's Price-Anderson enforcement program. Mr. 
Christopher came to the Department from the Nuclear Regulatory 
Commission with a strong background in nuclear safety and 
regulatory issues, and he has been instrumental in developing 
this program at DOE. I'm sure his insights and experiences will 
be helpful to the committee.
    Mr. Chairman, the Department endorses the GAO's overall 
conclusion that DOE's nuclear safety enforcement program has 
been effective and should be strengthened further. Following a 
brief summary of the program, I will address the GAO's specific 
recommendations in detail.
    The Price-Anderson Amendments Act of 1988 continued 
indemnification of DOE contractors and increased the amount 
available in the case of any single nuclear accident to more 
than $9 billion. At the same time Congress recognized the need 
for enhanced accountability for nuclear safety and authorized 
DOE to issue civil penalties against contractors who failed to 
comply with DOE nuclear safety rules or orders.
    In establishing the program the Department adopted a policy 
of promulgating formal rules in accordance with the 
Administrative Procedures Act. This process meant substantial 
review within the Department, consultation with the Defense 
Nuclear Facilities Safety Board, and full opportunities for 
comment by members of the public including DOE contractors. To 
date we have final rules on quality assurance requirements and 
on occupational radiation protection.
    In 1993 the Department published its procedures and policy 
and notified DOE contractors about the upcoming regulatory 
program. By October 1995 the Department had completed the 
process of recruiting staff, building and organization and 
providing training to the complex.
    On April 3, 1996, the Office of Enforcement and 
Investigation issued its first enforcement action, and on July 
16 that year we issued its first civil penalty.
    The Enforcement Office is currently staffed by a director, 
Mr. Christopher, who reports directly to my office. There are 
four enforcement officers at headquarters and a legal counsel. 
The headquarters office is supported by a network of 
approximately 30 Price-Anderson coordinators who work in 
various field offices. These coordinators report to the 
Department's field office managers and have significant 
interaction with the headquarters enforcement staff.
    The Enforcement program was structured to closely resemble 
the regulatory process of the NRC. At the same time, DOE 
recognized that it needed an approach that reflected the 
complex and decentralized nature of DOE and its unique 
relationship with our contractors.
    Early on it was determined that the goal of the office 
would be to encourage behavior that would enhance nuclear 
safety across the complex; not to accumulate stacks of 
penalties to individual contractors that once paid would have 
no effect. It was also recognized that staff resources were and 
would continue to be limited.
    The Enforcement program was therefore structured to 
leverage its resources in two ways. First, we created strong 
incentives for contractors to act on their own initiative to 
identify problems, to report potential noncompliances, and 
initiate timely and effective corrective actions.
    On the other hand, any effort by the contractor to hide or 
avoid reporting serious problems is the basis for escalated 
penalties.
    The staff is also leveraged through the use of Price-
Anderson coordinators. Overall the coordinators have played a 
critical role in our success. We feel that it is very important 
that DOE field offices are active in the program. The 
Enforcement program needs to be a Department of Energy wide 
program, not a program of the Office of Environment Safety and 
Health.
    Frankly, we found this to be working better at some sites 
than others depending on the commitment of the individual field 
office management. And we will be taking some steps to address 
gaps where they exist. But we do not believe that we should 
have a large central headquarters-directed staff that primarily 
relies on numerous inspections to drive safety and issue civil 
penalties as a matter of course.
    In adopting the 1988 amendments to the Price-Anderson Act, 
Congress elected to exempt seven specifically named, not-for-
profit institutions from payment of civil penalties. The 
Department believes the reasons for this action in 1988 remain 
valid today and recently recommended to Congress the exclusion 
be extended to all not-for-profit contractors.
    In making this recommendation the Department reviewed the 
effectiveness of the current program on both for-profit and 
not-for-profit contractors. We also looked at the most likely 
impacts on the Department of subjecting not-for-profit 
institutions to civil penalties. In the end the Department's 
recommendation reflected the concern that universities who 
manage our laboratories would be unwilling to risk their 
educational endowments for civil penalties that potentially 
could be very substantial.
    It's important to keep in mind that even though not-for-
profits are exempt from civil penalties, they are not exempt 
from enforcement of the Department's nuclear safety rules. It's 
the Department's position that all of its contractors, for 
profit or not, who are subject to the rules are required to 
comply with them.
    In the case of a potential violation by an exempted 
laboratory, the full enforcement process is carried out. Civil 
penalties are calculated just as with for-profit contractors. 
In a public announcement that includes a national press release 
the contractor is told that, were it not for the statutory 
exemption, the full amount of the fine would have to be paid. 
And just as with our for-profit contractors corrective actions 
are required and monitored.
    It has been our experience that this process has been 
effective in assuring appropriate contractor response.
    The Department also believes that current safety-related 
contractual provisions can be effective tools in holding not-
for-profit contractors accountable for safety. These contract 
provisions have been substantially strengthened over the past 
decade. They include reduction or elimination of fee, stop work 
orders, and ultimately contract termination as was the case at 
Brookhaven National Laboratory.
    The Department also recently revised its policy to allow 
DOE to put the contractor's entire performance-based fee at 
risk where warranted by poor safety performance. In addition, 
Secretary Richardson has asked the recently-established Safety 
Council to report back by the end of September on further 
recommendations of contract mechanisms available to DOE to 
reinforce the priority he assigns to safety performance. Among 
the options the Safety Council is considering for not-for-
profit contractors are: reducing performance fee by the amount 
of any remitted penalty assessed through the enforcement 
process; taking safety performance into consideration in 
providing program funding to a DOE facility; and assuring the 
removal of personnel responsible for major safety deficiencies.
    The GAO recommends the Department act expeditiously to 
issue the remaining enforceable rules covering nuclear safety 
requirements. We agree it is now time to move forward and 
complete the rulemaking. I have directed my staff to work 
toward the goal of issuing the final rulemaking and we'll 
address all remaining issues by October 1.
    In its third recommendation the GAO points out that some 
DOE contractors have misinterpreted requirements about exactly 
which facilities and activities are subject to enforcement 
action under the Department's quality assurance rule.
    It has been the Department's clear and consistent view that 
the scope includes all reactor and non-reactor nuclear 
facilities. We are now confident that this issue has been made 
clear to the contractor community and appreciate GAO's interest 
in this matter.
    That completes my statement, Mr. Chairman. We will be 
pleased to answer the subcommittee's questions.
    [The prepared statement of David Michaels follows:]
Prepared Statement of David Michaels, Assistant Secretary, Environment 
                Safety and Health, Department of Energy
    Mr. Chairman, I am pleased to be here today to discuss the 
Department of Energy's enforcement of nuclear safety and our views of 
the General Accounting Office (GAO) draft report entitled DOE's Nuclear 
Safety Enforcement Program Should Be Strengthened.
    The Department endorses the overall conclusion of the GAO that 
DOE's nuclear safety enforcement program has been effective in 
protecting worker safety at DOE and that it should be strengthened 
further. The program has proven itself to be an extremely valuable tool 
for enhancing nuclear safety and contractor accountability throughout 
the Department. The Department also agrees with the two specific GAO 
recommendations that the Department should complete action on all 
proposed nuclear safety rules, and that there should be better clarity 
and agreement in the Department about which facilities must comply with 
Price-Anderson rules. We have already taken actions to address each of 
these areas.
    The Department does take exception with the GAO recommendation to 
Congress that, when the Congress considers the Price-Anderson Act 
reauthorization in two years, it should discontinue the current 
statutory exemption from civil penalties for not-for-profit entities 
contractors. In the recent report to Congress on the Price-Anderson Act 
reauthorization, the Department expressed its view that the current 
statutory exemption for not-for profit contractors should continue, and 
should be expanded to include all not-for-profit contractors.
    This past March, Secretary Richardson announced a series of steps 
to strengthen the Department's safety performance and increase 
accountability for safety. These actions included an increased emphasis 
on accountability and enforcement of nuclear safety through the 
enforcement program. We now have enough experience with the program to 
know where we are already effective and where we need to improve. We 
are also, at Secretary Richardson's request, exploring ways to link the 
enforcement program and other activities in the Office of Environment, 
Safety and Health to evaluations of contractor safety and health 
performance pursuant to both contracts and determinations of award and 
performance fees, as I will discuss later in my testimony.
     Following a brief overview of the evolution of the DOE enforcement 
program, I will address each of the GAO recommendations in more detail.
DOE Enforcement Program
    Congress passed the Price-Anderson Amendments Act in 1988. This Act 
continued indemnification of DOE contractors and increased the 
indemnification available in the case of a nuclear accident to more 
than $9 billion. At the same time, Congress authorized DOE to issue 
civil penalties against those contractors who violate DOE nuclear 
safety rules or orders. DOE pursues enforcement actions through the 
issuance of Notices of Violations and, where appropriate, civil 
monetary penalties of up to $110,000 per day for continuing and 
significant violations. At the time, DOE's nuclear safety requirements 
were established by DOE Orders, negotiated with its operating 
contractors, and enforced by DOE Field Offices through the contract 
evaluation process. In conjunction with establishing the Price-Anderson 
civil penalty enforcement program, the Department adopted a policy of 
promulgating formal rules in accordance with the Administrative 
Procedures Act. This process included substantial review within the 
Department, consultation with the Defense Nuclear Facilities Safety 
Board (DNFSB), and full opportunities for comment by members of the 
public including DOE contractors. To date, we have promulgated final 
rules on Quality Assurance Requirements (10 CFR 830.120) and on 
Occupational Radiation Protection (10 CFR 835). We have found that, 
over the past several years, these two rules have allowed for a wide 
scope for enforcement activities.
    In 1993 the Department published its enforcement procedural rules 
and policy to notify and educate contractors about the upcoming 
regulatory program. By October 1995, the Department had completed the 
process of recruiting staff, building an organizational infrastructure, 
and providing the training and formal guidance to the DOE complex 
needed to implement the enforcement program. On April 3, 1996, the 
Office of Enforcement and Investigation (Enforcement Office) issued its 
first enforcement action and on July 16, 1996 issued the first civil 
penalty.
    The Enforcement Office is currently staffed by a Director who 
reports directly to the Assistant Secretary for Environment Safety and 
Health, four enforcement officers, and a legal counsel. The 
headquarters office in turn is supported by a network of ``Price-
Anderson coordinators'' who work in the various field offices. Though 
not a part of the enforcement staff per se, these coordinators serve a 
critical role in the program. They report to the Department's field 
office managers, who are ultimately responsible for overseeing the work 
and safety performance of the contractors, and have significant 
interaction with the headquarters enforcement staff.
    The enforcement program was structured to closely resemble the 
regulatory process of the Nuclear Regulatory Commission. In structuring 
the enforcement program, however, DOE recognized that an approach was 
required that reflected the complex and decentralized nature of DOE and 
its unique relationship with its contractors. Early on, it was 
determined that the goal of the office would be to encourage behavior 
that would enhance nuclear safety across the complex, not to accumulate 
a stack of penalties to individual contractors that, once paid, would 
have no effect. It was also recognized that staff resources were and 
would continue to be limited.
    The enforcement office was therefore structured to leverage its 
staff resources in two ways. First, the program creates strong 
incentives for contractors to act on their own initiative to identify 
problems, report potential non-compliances, and initiate timely and 
effective corrective actions. Where we find that contractors have taken 
effective and timely action to identify problems, report them, and fix 
them, we generally do not take formal Enforcement Action. On the other 
hand, any effort on the contractor to hide or avoid reporting serious 
problems is the basis for escalated penalties. Penalties can also be 
partially or fully mitigated if the contractor demonstrates that it has 
aggressively moved to identify and effectively correct problems.
    The staff is also leveraged through the use of Price-Anderson 
coordinators in the field, as I mentioned before. Overall, these 
personnel have played a critical role in the program's success. The 
field office coordinators provide a bridge between the headquarters 
enforcement office--an independent office within the Office of 
Environment, Safety and Health--with the field offices, who are part of 
line management. We have felt that it is important to actively involve 
the field offices in the program because the enforcement program needs 
to be a Department of Energy-wide program, not a program of the Office 
of Environment, Safety and Health.
    Frankly, we've found this arrangement to be working better at some 
sites than in others, depending on the commitment of the individual 
field office management, and we will be taking some steps to address 
gaps. But we do not believe that we should have a large, central, 
Headquarters-directed staff that primarily relies on numerous 
inspections to drive safety and issues civil penalties as a matter of 
course. That kind of approach would not serve to improve safety at the 
Department, and it would not provide the right incentives for 
contractors to be primarily responsible for their own safety programs.
    The current enforcement and investigation process is clear and 
straightforward. DOE's process and regulatory authority for enforcement 
actions is embodied in a regulation (10 CFR Part 820), and supplemented 
by the Enforcement Policy (Appendix A to 10 CFR Part 820) and various 
guidance documents. The Office of Enforcement, in consultation with 
field and program office management, decides which potential reported 
or unreported noncompliances are significant enough to warrant 
enforcement action. The first step is generally an investigation. The 
investigation includes document review and on-site visits to gather 
facts and circumstances, conduct confidential interviews, and 
understand contractor actions already taken. The potential for 
mitigation of civil penalties in enforcement actions provides an 
incentive for contractors to improve safety performance.
    If necessary, an informal enforcement conference is held with 
senior contractor management and DOE field and program office 
management to review the circumstances of the noncompliance, mitigating 
factors, and the timeliness and adequacy of corrective actions. The 
primary consideration in determining whether to move ahead with an 
enforcement action is the actual or potential safety significance of a 
violation, coupled with a determination of how aggressively the 
contractor identified, reported and corrected the problem. DOE also 
classifies the violation as either Severity Level I (the most 
significant, with actual or potential significant consequences to 
workers or the public), Severity Level II, or Severity Level III 
(greater than minor significance and important to avoid a more 
significant condition). The results of the investigation are documented 
in an Investigation Summary report.
    Based on the facts and significance of the noncompliance, DOE can 
take any of the following enforcement actions:

 Enforcement letter, indicating that, based on the proper 
        actions having been taken by the contractor, the investigation 
        is being closed without further action.
 Notice of Violation with no civil penalty.
 Notice of Violation with civil penalty.
 Referral to the Department of Justice for criminal 
        prosecution.
    In response to a Notice of Violation, contractors are required to 
complete and document specific actions taken and planned to prevent 
recurrence of similar events. Field Office personnel verify that 
corrective actions are effective and complete before the case is 
closed, and failure to complete effective corrective actions is the 
basis for further enforcement action. Contractors have a wide variety 
of administrative and judicial procedures available to them to respond 
to a Notice of Violation. Information on the enforcement proceeding is 
available to the public once DOE issues the Preliminary Notice of 
Violation; prior to that point, material is confidential and considered 
pre-decisional. It is the Department's policy to issue a press releases 
with each issuance of a civil penalty.
Exclusion of Not-for Profit Laboratories From Civil Penalties.
    In adopting the 1988 amendments to the Price-Anderson Act, Congress 
elected to exempt seven specifically-named DOE not-for-profit 
institutions from payment of civil penalties. The Department believes 
that the reasons given for this action in 1988 remain valid today, and 
recently recommended to Congress that the exclusion be extended to all 
not-for-profit contractors. At the same time, the Department recommends 
that Congress eliminate the current provision that allows for-profit 
subcontractors of these institutions to avoid penalties.
    In making this recommendation, the Department reviewed the 
effectiveness of the current program on both for-profit and not-for-
profit contractors. It also looked at the most likely impacts on the 
Department of subjecting not-for-profit institutions to civil 
penalties. The views and experiences of each of the program offices 
were considered, and different views were expressed in the course of 
lengthy analysis and deliberation.
    The Department's recommendation reflected the concern that 
universities and other not-for-profit institutions who manage our 
laboratories are unwilling to put their educational endowments at risk 
for potential civil penalties that could be very substantial. Another 
concern that was expressed is that if these contractors were subject to 
penalties, DOE would have to increase the fees it pays to its nonprofit 
contractors to compensate for the additional risk. Thus, making not-
for-profit contractors subject to civil penalties could have the 
undesirable consequence of diverting funds away from DOE research with 
no apparent concomitant increase in safety.
    In judging this recommendation, it is important to keep in mind 
that even though not-for-profits are exempt from civil penalties, they 
are not exempt from enforcement of the Department's nuclear safety 
rules. It is the Department's position that all of its contractors who 
are subject to the rules--for-profit or not--are required to comply 
with them.
    In the case of a potential violation by one of the exempted 
laboratories, the full investigation and enforcement process as 
described above is carried out. That means the potential violations are 
investigated, an enforcement conference is held, a determination is 
made, and civil penalties are calculated just as with for-profit 
contractors. In a public announcement, the contractor is told that were 
it not for the statutory exemption, the full amount of the fine would 
have to be paid. And just as with for-profit contractors, corrective 
actions are required and monitored. It has been our experience that 
this process has been generally effective in ensuring appropriate 
contractor response.
    The Department also believes that current safety-related 
contractual provisions are an effective mechanism for holding not-for-
profit contractors accountable for safety. These contract provisions, 
as well as DOE's application of contract mechanisms for its for-profit 
and not-for-profit contractors, have been substantially strengthened 
over the past decade. They include fee reduction or elimination, stop 
work orders, and, ultimately, contract termination as was the case at 
Brookhaven National Laboratory. All DOE contracts also now include 
provisions on integrated safety management and clearly identify the 
environment, health and safety requirements applicable to activities 
under the contract. The Department also recently revised its fee policy 
to allow DOE to put the contractor's entire performance-based fee at 
risk where warranted by poor safety performance or failure to implement 
integrated Safety Management systems.
    In addition, Secretary Richardson has asked the recently-
established Safety Council to report back by the end of September on 
further recommendations of contract mechanisms available to DOE to 
reinforce the priority he assigns to safety performance. Among the 
options the Safety Council is considering for not-for-profit 
contractors are: reducing performance fee by the amount of any remitted 
penalty assessed through the enforcement process; taking safety 
performance into consideration in providing program funding to a DOE 
facility; and ensuring the removal of personnel responsible for major 
safety deficiencies.
Additional Nuclear Safety Rules
    The GAO recommends that the Department act expeditiously to issue 
the remaining enforceable rules covering nuclear safety requirements. I 
agree with the GAO recommendation that it is now time to move forward 
and complete the nuclear safety rulemaking. I have directed my staff to 
work toward the goal of issuing a final rulemaking that will address 
all the remaining issues by October 1. A major consideration is to 
ensure that DOE contractors (1) implement the requirements included in 
a contract pursuant to the ISM process in a manner that ensures 
adequate protection of workers, members of the public, and the 
environment and (2) evaluate the work and associated hazards 
sufficiently to define the safety basis and then perform work within 
that safety basis.
    Let me emphasize that we do not believe that nuclear safety has 
suffered because these rules have lagged behind. All the requirements 
in the un-issued rules are contained in the Department's directives, 
which are to be enforced through all the contracts.
Need to Clarify Applicability of Rules
    The GAO accurately pointed out that some DOE contractors have 
misinterpreted requirements about exactly which facilities and 
activities are subject to enforcement action under the Department's QA 
provisions in 10 CFR 830.120. The Department's clear and consistent 
view is that the scope of the provisions includes all reactor and 
nonreactor nuclear facilities. This was clear in the preamble to the QA 
rule issued in 1994 which was reiterated in the General Counsel 
interpretation, Ruling 1995-1, issued in 1996. We also expressed this 
position to the contractor community in the 1998 Annual Report for the 
Office of Enforcement. After the GAO finding, the Office of Enforcement 
developed and will soon issue a formal Enforcement Guidance Supplement 
to all field sites to further clarify the scope of Part 830. Finally, 
as noted previously, the nuclear safety final rule will reiterate the 
broad scope of the QA rules and other nuclear safety rules. The 
rulemaking effort mentioned above will provide additional clarity 
regarding the regulatory scope of all Part 830 provisions, including 
QA.
    That completes my testimony, Mr. Chairman. I would be pleased to 
answer the Subcommittee's questions.

    Mr. Upton. Thank you. Thank you, Dr. Michaels, and a I 
apologize to Mr. Christopher, it's ``doctor''; correct? It is 
not--oh, Dr. Michaels, oh, I'm sorry.
    Dr. Michaels, I don't know whether you've seen the letter 
which I'm going to put into the record and we'll address to 
Chairman Bliley from an individual by the name of David Lappa.
    Mr. Michaels. No, sir.
    Mr. Upton. It just was faxed to us in the last couple of 
days. But Secretary Richardson advocated a zero tolerance 
policy for reprisals taken against whistle-blowers who raise 
safety concerns. And according to this record--this letter 
which I'm going to enter into the record, and maybe we can walk 
that down.
    Mr. David Lappa was an employee at Lawrence Livermore Lab. 
He was apparently retaliated against for raising safety 
concerns at the plutonium facility at Lawrence Livermore, and 
in a letter sent in 1998, last year, exactly a year ago, excuse 
me, a letter from OSHA to the director at Lawrence Livermore 
confirmed that retaliation was taken into account by University 
of California against Mr. Lappa for raising the safety concerns 
that he indicates in this letter.
    As you know DOE fined the University of California for 
safety violations at the plutonium facility; however, according 
to Mr. Lappa safety problems at the facility are more serious 
than were expected. I'm just curious to know about the 
University of California's documented retaliation against Mr. 
Lappa to see if they are consistent with the Secretary's zero 
tolerance policy and what might we see in the future for 
similar cases?
    [The letters follow:]
                                     David A. Lappa
                                        Livermore, CA 94550
                                                      June 27, 1999
Hon. Tom Bliley, Chairman
House Committee on Commerce
2409 Rayburn House Office Building
Washington, DC 20515

FAX: 202-226-2447

    Dear Congressman Bliley, Your staff recently contacted me about my 
experiences relevant to upcoming hearings on DOE's Price-Anderson 
compliance. They subsequently asked me to write you to describe those 
experiences. I believe your interest in this subject is important and 
timely, and I am hereby responding to your staff's request.
    Since obtaining my MS in nuclear engineering from the University of 
Michigan in 1979, I have been employed full-time at Lawrence Livermore 
National laboratory (LLNL). Like Los Alamos National Laboratory (LANL), 
LLNL has always been operated by the University of California (UC) 
under contract to the federal government.
    In the summer of 1997, I served on a committee investigating 
criticality safety infractions in LLNL's Plutonium Facility. Because 
the committee's report failed to include important evidence about a 
serious, potential root cause of the infractions, I declined to approve 
the report. In return, I was reprised by UC management.
    Initially, I made internal complaints; first to my department 
supervisor and subsequently to LLNL's Staff Relations manager. Lacking 
an adequate response, and having no recourse for further appeal within 
UC, in 1997 December I filed a complaint with DOE under 10 CFR 708. 
(You may want to examine that regulation's implementation by DOE. In 
practice, it affords little protection to contract employees. Note 
especially that complaints are now investigated by DOE-OIG.)
    For the first two months, I engaged in what DOE termed ``informal 
resolution'' discussions. By 1998 mid-February, informal resolution had 
collapsed, and I had lost confidence in DOE-OIG's willingness and 
ability to investigate my complaint. I believed DOE-OIG would not soon 
investigate my complaint, nor that it would have adequate resources for 
a serious investigation. I therefore filed a complaint under 42 USC 
5851 with the US Department of Labor, effectively terminating my 10 CFR 
708 complaint.
    The DOL immediately began a serious investigation into my 
allegations. By 1998 May, the DOL investigator had determined there was 
merit in my complaint. On 1998 June 29, DOL issued a finding of 
reprisal against UC, which UC did not appeal.
    Unfortunately, UC spokesmen were quoted in the press as saying UC 
``had done nothing wrong to Mr. Lappa'', and that UC did not appeal the 
DOL decision in order to ``save taxpayer dollars.'' Moreover, on my 
first day at work following the DOL decision, my department head 
advised me that, ``It doesn't matter who's right or wrong.'' Worst of 
all, the reprisals did not end.
    Consequently, in 1998 September, I filed suit in California 
superior court under California Government Code 8547.10 and other 
statutes. That civil suit is in the discovery phase, in which we are 
continuing to gather evidence of UC wrongdoing. In the course of that 
discovery, we may uncover additional, significant evidence about UC's 
willingness and ability to comply with Price-Anderson.
    In assessing DOE's compliance under Price-Anderson, I hope your 
committee carefully will examine UC's record of compliance. The 
overwhelming majority of employees at LLNL are UC employees, subject to 
UC policy and management. LLNL's activities covered under Price-
Anderson are greatly affected by UC management's attitude toward 
compliance.
    By virtue of its non-profit status, UC is not subject to paying the 
fines levied against it under Price-Anderson. Moreover, when I asked 
DOE management if they intended to act on the DOL finding of UC's 
reprisal against me, I was told DOE does not want to ``micromanage'' 
LLNL.
    I wish you success in your examination of DOE's Price-Anderson 
compliance, and I again ask you to examine thoroughly UC's compliance 
under that law. I regret that my civil suit complicates my 
communications with your staff. UC policy strictly prohibits certain 
types of communication with Congress, and my attorneys therefore have 
instructed me to proceed cautiously in that regard.
            Respectfully,
                                             David A. Lappa
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[GRAPHIC] [TIFF OMITTED] T8494.002

    Mr. Michaels. Thank you for sharing this with me. I've 
heard of this case, I had not seen this letter. But obviously 
this is of great concern to us and I'm certainly concerned 
about the safety, alleged safety violations that are continuing 
at the Livermore Laboratory and also greatly concerned about 
the possibility that there are reprisals around whistle-
blowing, around safety at the facility. And certainly we'll 
pursue that.
    My understanding of the Secretary's policy is, he will 
permit no reprisals or any negative activity against whistle-
blowers on safety issues or other issues. And this certainly 
would be--a reprisal against him would obviously be 
inconsistent with the Secretary's and DOE's policy.
    Mr. Burr. Mr. Chairman, could I ask you to yield?
    Mr. Upton. Sure.
    Mr. Burr. I just want a clarification. Dr. Michaels, you 
said you heard of the case?
    Mr. Michaels. Yes.
    Mr. Burr. Did you hear of the case, or did you know of the 
action?
    Mr. Michaels. I'm not sure, could you----
    Mr. Burr. Could you describe for us how you heard about 
this case? Was it in passing when you had a meal with somebody, 
or was it official notification?
    Mr. Michaels. No, there was no official notification.
    Mr. Burr. Was there a conversation with the University of 
California where they spelled this out?
    Mr. Michaels. No, in discussing with Mr. Christopher the 
various activities at Livermore, I heard about it.
    Mr. Burr. Did you ever follow up to see whether there was 
any credibility to what you heard?
    Mr. Michaels. No, sir.
    Mr. Burr. I thank the chairman for letting me clarify that.
    Mr. Upton. Dr. Michaels, there seems to be some resistance 
from the contractor community, including several contractors on 
the second panel today, to your plans to promulgate additional 
enforceable nuclear safety rules. And there have been claims 
that it would cost millions of dollars for contractors to 
comply with the new rules without adding a lot of new safety. 
Do you believe more nuclear safety rules will improve safety 
performance by the contractors?
    Mr. Michaels. Yes, sir. Though I believe that our current 
nuclear safety rules cover virtually everything that we need to 
cover. What we found is that the quality assurance rule has 
been very effective because it's a broad rule that applies to 
virtually everything we need to get to in addition to the 
radiation protection.
    The additional rules that we think need to be promulgated 
are not the entire list of nine that were in the original list 
referred to, but the safety authorization basis rules we think 
need to be put into what is called ``rule space''. They are 
currently in our orders. And we think having them in rules will 
be important. We would like to have the opportunity to use them 
if we need them. I'm not sure that they would actually have a 
direct impact, and I don't think there's a hazard out there 
which we will address as a result of having that rule, but we 
think having that rule will be one more implement that we can 
use to protect people.
    Mr. Upton. And just to follow up with your testimony you 
thought that the remaining nine would be done and out the door 
by October 1?
    Mr. Michaels. No, sir. What we plan to do is issue rules 
that cover the areas that we think are not covered by our 
current rules. We don't need to issue all nine. We've looked 
very carefully at the effect of our two rules currently. And we 
think the quality assurance rule actually covers many of the 
areas that are listed in the original nine that weren't 
covered. We think there are three, the unanswered--there are 
three of them in here--unreviewed safety questions, safety 
analysis reports and technical safety requirements--that 
require some rulemaking. The others are really covered in our 
current rules.
    The original list is essentially a duplication of our--a 
mimicking of some of the NRC rules. What we found, and this, 
again, was before I came here, but the complexity of the DOE 
mission and primarily the DOE mission around decommissioning 
and decontamination rather than building new facilities doesn't 
require this set of rules. And we think we can do just as well 
with new rules on those three areas as well as clarifying this 
question of facilities versus activities which is another area 
that GAO brought up.
    Mr. Upton. Thank you. Mr. Klink.
    Mr. Klink. Thank you, Mr. Chairman.
    First, I would offer for the record a memorandum to the 
Department Secretary from Mary Anne Sullivan dated September 
25, 1998, and would ask that it be passed out to the members 
and to the witnesses.
    [The memorandum follows:]
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    [GRAPHIC] [TIFF OMITTED] T8494.008
    
    Mr. Klink. I would like to say that one of the issues here 
is whether or not the nonprofit education institutions should 
be exempted from civil penalties. Dr. Michaels, your office 
recommended that they be subject to civil penalties, I believe; 
is that correct?
    Mr. Michaels. That's correct.
    Mr. Klink. And you lost that argument?
    Mr. Michaels. My office, but I wasn't present at the time.
    Mr. Klink. Oh, our office made it, you weren't there at the 
time?
    Mr. Michaels. Right.
    Mr. Klink. But your office made that?
    Mr. Michaels. It predates me. There was a--well, I wouldn't 
say that we lost the argument, there was a decision made, a 
number of different offices within DOE registered their 
opinions and the Secretary made a decision. We didn't concur--
--
    Mr. Klink. You made an argument and it didn't stand up?
    Mr. Michaels. Yes, sir.
    Mr. Klink. Mr. Christopher said that he believes that he 
gets a better response from the private contractors than from 
the nonprofits. In fact, he told us that in 1996 Los Alamos and 
Lawrence Livermore labs were in total denial. Your Price-
Anderson report to Congress says that civil fines work very 
well. Can you explain to me why fines inspire better behavior 
for profit contractors than for nonprofits?
    Mr. Michaels. I think the theory the Department uses in 
this case is looking how the contract and the relationship with 
not-for-profits would work if we put in civil penalties that 
were collectible. Given these are educational institutions 
which have endowments on the line, it was felt that the 
contract--the negotiation of the contracts--would be such that 
the additional fees we would be required to pay them to cover 
their liability would be far greater than the amount we would 
collect in the fines. It would have relatively little 
additional impact on safety because we believe safety is 
quite--is protected very well with our current practice with 
the nonprofits which is to go through the whole process, issue 
the phantom fine, have the press release go out and essentially 
raise the issue to the public and the university. And 
universities obviously are very concerned about public 
appearance.
    Mr. Klink. Ms. Jones, does that argument hold water to you?
    Ms. Jones. No, sir, I don't believe so. Just the last point 
that Dr. Michaels was making that the not-for-profits are 
really concerned about that publicity. I would also think the 
for-profits would also be concerned about the publicity, so why 
fine them?
    The other issue is that for the nonprofits, maybe back in 
1988 when they weren't getting a fee you could say that the 
endowments of the university were at risk. But today there are 
only two non-profit contractors that manage and operate DOE 
facilities that have a fee less than $1 million, and those 
annual fees go up to $8 million. Those fees are used for lab-
directed research and to pay administrative costs. GAO sees no 
reason why these same fees could not be used to pay fines and 
penalties.
    Mr. Klink. Well, Dr. Michaels, the universities have 
already said that they're afraid that their entire endowment 
will be put at risk, and you, I think, mentioned this in your 
opening statement. Is there any way we could work something out 
where they would be liable only for the amount of their fee?
    Mr. Michaels. Absolutely. And, in fact, what we are now 
considering through the Safety Council is actually exactly 
that, to have the--and we could do this administratively 
without changing legislation. We could subtract the amount of 
the fine up to the level of the fee. And I mentioned that in my 
testimony, that is one of the things we are considering.
    Mr. Klink. I want to make sure that we're talking about the 
same thing. We're not talking performance management, we're 
talking actually fines. You're talking about a--we're talking 
about actually fining them.
    Mr. Michaels. Well, we give the contractor, the not-for-
profit contractors, what you could call a ``fee'' essentially 
that they can use and Ms. Jones talked about this in her 
testimony, for various activities, they can't pocket the money, 
they can use it for research. We could actually subtract the 
amount of the fine or any other amount from that fee.
    Mr. Klink. But the for-profits, if I'm not mistaken, and 
then I'll ask Ms. Jones to step in here, they also get a 
reduction in their fee, but they also can be fined in addition 
to that. And I think that's--I'm talking about, can't we work 
out the same thing with the nonprofits that they would be 
fined. But, again, you're not risking the entire endowment, but 
you're risking at least the amount up to the total of the fee 
and fines?
    Ms. Jones. You're correct, and the Secretary of Energy does 
have the flexibility to base the amount of fines on the 
contractor's ability to pay. So that would give him wide 
latitude in terms of the amounts of fines that were assessed 
against nonprofit contractors.
    Mr. Klink. Just one final thing if you will bear with me, 
Mr. Chairman, I'll pass out to the members and the witnesses, 
we have an e-mail communication here from the University of 
California and it lists all of the fines that it has paid to 
various State and Federal agencies that do not exempt 
universities when they violate the law. Without objection, I 
would like to put that is in the record, Mr. Chairman.
    Mr. Upton. So done.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T8494.009
    
    Mr. Klink. It lists a total of $941,489 in fines from 1992 
to date. And I would like to note that all but $60,000 of these 
fines were assessed against Los Alamos National Laboratory. The 
university was not shut down because of this liability in 
fines; why should they be exempt from Price-Anderson fines when 
they are liable for these other fines? And I would like to hear 
from Dr. Michaels and Ms. Jones.
    Mr. Michaels. I think they speak for themselves. That they 
are----
    Mr. Klink. You agree that they should not be exempted.
    Mr. Michaels. I think the Department has taken the position 
that they should be exempted.
    Mr. Klink. If they are not exempted in these other fines, 
why should they be exempted in DOE fines? Should there be a 
different rule for DOE versus any other kind of fines?
    Mr. Michaels. Well, I think the Department and the 
Secretary have essentially weighed these issues and we think we 
can be as effective exempting them from the fines, but also 
going through the regular process and using the contractual 
mechanism.
    Mr. Klink. Mr. Christopher, do you think they're as 
effective? I mean, just your opinion and I'm not--you are under 
oath, I just want to know--do you think it's--just to remind 
you, I want to know if you think it's as effective.
    Mr. Christopher. I think the sometimes virulent reaction 
I've gotten from the contractors, the not-for-profits to the 
press releases suggests that not having to pay the fines does 
not make it as less noticed as you would think, but I think the 
payment of fines would have some degree of effect particularly 
with the--when you come to the equities, there are very 
hazardous facilities at the University of California and others 
as there are at the for-profits.
    Mr. Klink. I was going to say, if it weren't true, I think 
maybe what we would try to do, we would eliminate traffic 
tickets and we would just publish everybody's name that speeds 
an runs a stop sign. To heck with fines, if the publicity is 
bad enough.
    You make a very good point the fines are obviously 
detrimental to the operation and probably would seem to me, 
just as much to the nonprofits as the for-profits, and Ms. 
Jones, I ask you--my time is up, I ask if you have any 
comments?
    Ms. Jones. I agree with the point that you're making, Mr. 
Klink. Our report makes the same point--others have been fining 
these nonprofits, they've been paying the fines, we think it's 
an equity issue, and certainly the nonprofits should be paying 
the fines just like the for-profits.
    Mr. Klink. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Whitfield.
    Mr. Whitfield. Thank you, Mr. Chairman.
    Dr. Michaels, in your answer to the chairman and Mr. Burr's 
brief discussion about Mr. Lappa and the alleged reprisal 
against him, I had the opinion that you were really not aware 
of that or it was not an issue that you had followed up on. In 
reading the letter from Mr. Lappa and then also reading the 
decision by the Department of Labor that in their opinion 
reprisal action had been taken against him and he was demoted, 
they required that certain actions be taken to compensate him 
like $15,000 for compensatory damages, $16,000 for attorney 
fees, expungement of all negative references, so forth and so 
forth. Would you, in keeping with the Secretary's policy of not 
reprising against any individual that brought up a safety 
issue, report back to the committee the action that DOE has 
taken in relationship to the University of California on this 
specific case?
    Mr. Michaels. I would be very pleased to.
    [The following was received for the record:]

    In March 1999, Secretary Richardson issued a policy statement on 
``Safety Accountability and Performance.'' In this directive, he said 
that ``there must be open communication between management and 
employees and a zero tolerance policy for reprisals against those who 
raise safety concerns. Free and open expression of employee concerns is 
essential to safe and efficient accomplishment of the Department's 
missions.''
    The Secretary relies on DOE line and program management to enforce 
this policy. Our office has worked with DOE field offices and 
contractors on an ongoing basis for more than ten years to develop the 
tools to prevent retaliation of any type. We have generally been 
successful. When there are cases where retaliation has been determined 
to have occurred, Secretary Richardson counts on his line managers to 
take appropriate actions. DOE's contract with the University of 
California prohibits the University from retaliating against employees 
for whistleblowing. The University's final evaluation plan will be 
reviewed to determine whether the fee can be reduced in response to a 
finding of employee retaliation, or whether some other action will be 
required under the contract.
    Separately, through the enforcement process, DOE has the 
discretionary authority to issue a Notice of Violation, when 
appropriate, to a not for-profit contractor who is determined to have 
retaliated against a contractor employee for raising a nuclear safety 
concern.
    In the case of Mr. Lappa, the Department of Labor issued an opinion 
that Mr. Lappa was subject to reprisal. DOE is awaiting information 
from the Department of Labor to determine whether there is a sufficient 
basis upon which to issue a Notice of Violation under DOE's nuclear 
safety enforcement program.

    Mr. Whitfield. Thank you. Now, you're familiar with the 
uranium enrichment plants at Paducah, Kentucky and Portsmouth, 
Ohio. They've been privatized and now are operated by a private 
company called USEC. But does the nuclear safety program of DOE 
apply to the uranium enrichment plants?
    Mr. Michaels. Only to the--what we call the ``legacy'' 
parts of the plant, not the actual uranium enrichment part. The 
NRC is the regulatory agency for those. There are some areas, 
though, around the facilities which DOE maintains its 
responsibilities for. Essentially in the waste areas.
    Mr. Whitfield. Okay.
    Mr. Michaels. It's a limited--quite a limited part of those 
facilities and involving far fewer workers than the USEC 
facilities.
    Mr. Whitfield. So it's included as one of the 34 sites in 
the 13 States that are in your response bill----
    Mr. Michaels. Yes, sir.
    Mr. Whitfield. What relief would be available to a worker 
who suffered an illness from exposure to some material in the 
area that you're responsible for? Actually, what are they able 
to do?
    Mr. Michaels. Well, if an illness has already occurred, 
that would be a very unfortunate outcome because that's already 
beyond the enforcement issues, that's already someone is sick. 
The current relief would be the State Workers' Compensation 
System in either Kentucky or Ohio.
    Mr. Whitfield. Right. Okay.
    Mr. Michaels. The Secretary, as you may know, is working on 
a proposal to develop additional mechanisms for relief for our 
contractor employees at places like Paducah and Portsmouth. In 
those cases where the State Workers' compensation system are 
not adequate because the nature of the diseases are--you know, 
they're often based on exposure to esoteric chemicals or to 
radiation, state programs often don't deal with those programs 
very well. And if at some point you would like additional 
information on that we would be happy to provide it.
    Mr. Whitfield. Now, it's my understanding that Bechtel 
Jacobs is the contractor for environmental issues of that 
plant, are you----
    Mr. Michaels. Which plant are we speaking of? Of Paducah?
    Mr. Whitfield. Paducah.
    Mr. Michaels. Are they?
    Mr. Whitfield. I'm not sure. Okay.
    Mr. Michaels. Yes, but for the environmental--for the 
legacy component of it, not for the use of----
    Mr. Whitfield. For the legacy component, okay. But are you 
aware if they've been fined for any non-compliance with safety 
issues at all?
    Mr. Michaels. No, sir, they have not.
    Mr. Whitfield. Okay. All right. Mr. Chairman, I'll yield 
back the balance of my time.
    Mr. Upton. Thank you. Mr. Burr.
    Mr. Burr. Thank you, Mr. Chairman.
    Dr. Michaels, let me ask you, you've heard about 
retaliation; did you follow up on it at all?
    Mr. Michaels. No, I recently heard that in the overall 
briefing on Lawrence Livermore and the situation there.
    Mr. Burr. Were you aware that it was against DOE policy for 
the DOE or any contractor to retaliate against whistle-blowers?
    Mr. Michaels. I certainly--yes, I'm aware of that.
    Mr. Burr. Given that you heard it, do you wish now you had 
followed up on it?
    Mr. Michaels. Well, no, I--I said, you know, in discussing 
with Mr. Christopher recently around this particular Livermore 
and he raised it and said, this is, you know, one of the issues 
coming up. I said, ``Well, let's make sure we deal with this.''
    Mr. Burr. Mr. Christopher, do you know of anybody at the 
Department of Energy that's looked into this retaliation rumor?
    Mr. Christopher. I can add a little bit more--more to that. 
When the DOL finding--when we learned of the DOL finding, and 
I'm not sure exactly how we learned of it through the process, 
my staff has on several occasions requested the DOL report of 
investigation so that we could review the facts of the case and 
make some kind of recommendations to Dr. Michaels. We have not 
received that yet, and I haven't pursued it since my last 
request to the Department of Labor in lieu of other issues.
    Now, I can explain to you what our options are, once a 
finding--a retaliatory finding has been made by the Department 
under Section 708 of the Atomic Act, which is what we would 
first have to do. I could then issue a notice of violation to 
the contractor--in this case the University of California--for 
the act of retaliation itself and could then issue an 
appropriate phantom find in this case for the act of 
retaliation similar to the way we conducted the program in the 
Nuclear Regulatory Commission once the finding and the 
appellate process through the Department of Labor has concluded 
to their investigatory and appeal process that retaliation did 
occur.
    Mr. Burr. And I didn't have a chance to read Mr. Lappa's 
letter, but let me go down to the fifth paragraph, first page. 
It says, ``For 2 months, I engaged in what DOE termed `informal 
resolution' discussions. By 1998, mid-February, informal 
resolution had collapsed, and I had lost confidence in DOE-
OIG's willingness and ability to investigate my complaint.''
    Let me ask you Mr.--is it Christiansen?
    Mr. Christopher. Christopher.
    Mr. Burr. [continuing] Christopher. This was not a rumor at 
DOE.
    Mr. Christopher. Union
    Mr. Burr. Mr. Lappa actually filed a formal complaint.
    Mr. Christopher. Correct. Correct.
    Mr. Burr. Now, there is, or there was, or there was a 
request for it to be investigated. Is it currently being 
investigated by the Department of Energy?
    Mr. Christopher. No. To my knowledge it is not. Although 
the entity that there is an Office of Employee concerns that 
actively is responsible for the investigation of----
    Mr. Burr. Now, this is a policy that the Secretary has 
referred to frequently with some of the issues that surround 
DOE labs that there is a zero tolerance for retaliation. This 
complaint was made, as I read it, 1997 in December. How long do 
you think that a complaint of this nature should take for a 
resolution?
    Mr. Michaels. Again, I'm going to have to say, I don't 
really know because the--we don't do the--have the 
responsibility for the investigatory process. And there is a 
process within the Office of Inspector General.
    Mr. Burr. Is there a policy within EH as it relates to your 
responsibility over contractors that there not be retaliation? 
Is there anywhere in the contract that it says that a 
contractor cannot retaliate on a whistle-blower?
    Mr. Michaels. I don't know the answer to that.
    Mr. Burr. Let me ask you about the contract, if I could, 
specifically Los Alamos. As I read the contract, correct me if 
I'm wrong, that contract calls for University of California to 
receive a $7 million performance fee of which a program 
performance fee of $4.9 million shall be at risk in accordance 
with paragraph [b] below. Paragraph [b] below reads, fee at 
risk, ``if the contractor's performance in any administrative 
operational function area fails to achieve a good rating the 
contractor's performance--program performance fee shall be 
reduced by $245,000 for each administrative and operational 
function area in which a good rating is not achieved.''
    Let me ask you how many times since 1997 and for the 
beginning of this current contract have in fact the University 
of California lost 245 for--245,000 for a rating that did not 
reach good?
    Mr. Michaels. I don't know. We would have to ask the 
contract administrators.
    Mr. Burr. Again, in clause 5.4, special assessment 
sections, it says that ``the DOE shall conduct special 
assessments of the laboratories. The purpose of the reviews is 
to determine whether the overall level of performance achieved 
is satisfactory with regard to the performance objectives in 
Appendix F and whether substantial progress has been made in 
meeting the requirements of this clause.'' Can you give me any 
indication as to the performance of the University of 
California as it relates to the Los Alamos contract?
    Mr. Michaels. I can't give you specifics. It's only very 
recently that in discussions with the Secretary that this issue 
has come up in terms of contract--our involvement, the Agency's 
direct involvement in contracts and he's in discussions around 
this particular issue. He has said, I want----
    Mr. Burr. You shared with us your personal belief, I 
believe.
    Mr. Michaels. Excuse me?
    Mr. Burr. You shared with us that it was now EH's position 
that nonprofits should be exempt.
    Mr. Michaels. It's the Department's position.
    Mr. Burr. I'm asking you about EH. EH had a recommendation 
that they should not be exempt, you said, ``I wasn't there 
then''; what is your position on it? Should they or shouldn't 
they be exempt?
    Mr. Michaels. I have no personal position on this.
    Mr. Burr. You as the head of EH, what is your position?
    Mr. Michaels. If the same discussion arose again, the 
positions would be unchanged. EH would hold the position that 
contractors should not be exempt.
    Mr. Burr. So the argument that--or the position that I 
heard stated by you and by the Department of Energy is that we 
would put at risk the endowments of these institutions. Let me 
ask you if the structure of this contract puts at risk the 
endowment of these nonprofits?
    Mr. Michaels. Oh, I don't know----
    Mr. Burr. Performance-based fees?
    Mr. Michaels. The piece of the contract you read doesn't, 
but I certainly can't comment on the whole contract.
    Mr. Burr. Clearly if they didn't receive a good rating or 
above, they lost money. They were fined. I mean, in the 
technical terms they lost part of their performance fee. Does 
that put their endowment at risk?
    Mr. Michaels. That piece of it doesn't, no.
    Mr. Burr. If it did, do you think they would sign the 
contract?
    Mr. Michaels. I suspect not.
    Mr. Burr. What do you see that's different in this 
performance-based incentive that they go through and the fine 
that they might be subjected to if we did not reauthorize the 
Price-Anderson Act?
    Mr. Michaels. The fines that they could be subjected to are 
theoretically quite a bit larger than the amount of money 
you're speaking about.
    Mr. Burr. Consistent with the charts that I've seen 
relative to what you have fined them.
    Mr. Michaels. Well, the amounts we have fined them----
    Mr. Burr. They have $4.9 million at stake on an annual 
basis.
    Mr. Michaels. In their fee, correct.
    Mr. Burr. Two-thirds of their contract amount is in 
jeopardy if your rating is below good.
    Mr. Michaels. If the environmental health rating and 
safety, correct.
    Mr. Burr. Let me ask you, what was there--since the 
contract calls for an annual DOE review, one of the areas is 
safeguards and safety, what was their rating in the last 
review?
    Mr. Michaels. Oh, I couldn't tell you that. I would be 
happy to get back to you with that. But we don't conduct that 
review.
    Mr. Burr. But would that review affect in any way, shape, 
or form your decision relative to the extension of the Price-
Anderson Act?
    Mr. Michaels. I'm not following your question.
    Mr. Burr. I mean, is it something that you looked at as you 
determined EH's position on whether Price-Anderson should be 
reauthorized--extended? To see what the performance, what the 
rating was that they currently had to see whether there was a 
profit?
    Mr. Michaels. I would think----
    Mr. Burr. And isn't an annual rating going to be an 
indication as to what you're going to see next year, and----
    Mr. Michaels. Sure.
    Mr. Burr. [continuing] the year after, and the year after?
    Mr. Michaels. It's one of the piece we take into account, 
yes.
    Mr. Burr. So what was their rating?
    Mr. Michaels. I don't know. This decision--I can't 
personally tell you, these decisions were all made before I 
arrived.
    Mr. Burr. You're in an enviable position of denial.
    The chairman has been lenient so let me take this 
opportunity to yield back.
    Mr. Upton. Thank you. Mr. Bilbray?
    Mr. Bilbray. Mr. Chairman, I'll just try to be real short. 
I just wanted to make sure that we did not make assumptions 
based on a single model without looking at other aspects. And I 
guess I'd like to drop this between the Doctor and Ms. Jones, 
and I know you guys are sort of dominating the field here. But 
the issue of fining nonprofits, making an assumption that they 
would be more accountable; Ms. Jones, would you say they would 
be more accountable if their endowments were susceptible to 
fining?
    Ms. Jones. I think DOE has reached the conclusion that the 
fines and penalties in their enforcement program have certainly 
enhanced safety for the for-profits. I think that same fine and 
penalty would help enhance safety at the not-for-profits as 
well, but we are not suggesting that the endowments be placed 
at risk.
    Mr. Bilbray. Now, in certain other fields such as 
enforcement of hazardous substances and other stuff from the 
State fining they've gone in there, has there been any 
indication though under those fines that the nonprofits have 
become, let's say, more sensitive or more efficient in 
addressing those problems because they were fined by the State 
agencies?
    Ms. Jones. I'm not sure we have the direct evidence that 
would show that, Mr. Bilbray. I think that inherent value of a 
fine or penalty is in a sense to hurt somebody's pocketbook.
    Mr. Bilbray. Okay. And, Doctor, you can jump in on this, 
but here's the thing I want to get to, and I'll say this as 
somebody who spent 20 years in local and State Government 
agencies, the for-profit does not have the inherent large 
bureaucracy and I want to make sure we separate small, not-for-
profit organizations that are very cost effective and very 
responsive as opposed to larger nonprofit agencies especially 
educational institutions that are very insulated bureaucracies. 
Now, when someone in the for-profit gets a fine, you know 
there's going to be heads rolling. I think that's a pretty--
pretty, you know, hard fact. But in a large bureaucracy, when 
you have civil service protection, when you have tenure, I just 
got to ask you very fairly, can we really say that we're going 
to compare apples to apples and oranges to oranges? Do we think 
we'll ever get the efficiencies and the responsiveness and the 
sensitivity out of these large bureaucracies with their built 
in insensitivities; cant fire somebody, can't demote them, and 
whatever to the level.
    Will you admit that we're not going to--basically we do 
have limits to the ability to make those large, not-for-profit 
organizations as responsive as a for-profit organization? And 
Doctor, jump in, either one.
    Mr. Michaels. We certainly think so. That's why we think 
actually in terms of the not-for-profits, the whole mechanism 
of safety enforcement including essentially, you know, what we 
hope is some public humiliation will have at least some major 
impact, but we know we have to be ever vigilant because we know 
that in fact the dynamics of organisms that are not-for-profit 
are different than for-profits. And it's a hard challenge and 
one we always have to deal with. And certainly that's one of 
the issues, I think it's come up not just in safety, but in 
security.
    Mr. Bilbray. Ms. Jones.
    Ms. Jones. Yes, I think there are two issues here. One is 
that fining for-profits, is going to hurt their profit, it's 
going to hurt the money that they want to make. But if we're 
going to be fining, for example, the University of California, 
where it's going to hurt them is that they won't be able to do 
as much lab-directed research. The second issue is that we're 
talking about accountability here, Mr. Bilbray, and I'm not 
sure that it's fair to say that because they have a larger 
bureaucracy that they shouldn't be held equally as accountable 
as a private for-profit company.
    Mr. Bilbray. Okay. Well, when we get into these issues and 
we talking about these organizations or groups, the fact is 
accountability to really be effective in an you management team 
is for the accountability to finally trickle down to the 
individuals who have actually made the decisions within those 
organizations.
    I'm just saying that working with traditional bureaucracies 
with all the civil service protection, all the tenure 
protection, especially when you get into the larger educational 
institutions. The ability to hold any one individual 
accountable is quite different than what we have in the private 
sector. You know, there's so many firewalls built to stop 
abuses in the public sector that it's created basically 
fireproof situations where it's really hard to finally get into 
the individual who is responsible. That's why we have lateral 
transfers, people being moved from one department to the other, 
basically because you can't do what you can do with the private 
sector. And I just want us to just accept the nature of the 
creature that for-profits have a sensitivity that it's going to 
be really tough for us to make the major institutions address.
    Thank you, Mr. Chairman.
    Mr. Upton. Mr. Stupak?
    Mr. Stupak. Well, thank you, Mr. Chairman, and I apologize 
for being late. My plane was over an hour late getting in. But 
I do have some questions, if I may of Mr. Christopher, if I 
will.
    Is it your practice to issue press releases when you have 
assessed a fine against a contractor?
    Mr. Christopher. The process that's been--yes; the process 
that's been established is that once we complete the 
deliberative investigatory process, make a determination, 
prepare the necessary documentation that working with the 
communication staff that they then prepare a press release boil 
the issue down to more understandable, less technical terms and 
then a press release is issued as for cases that involve civil 
penalties.
    We don't now issue civil penalties for what we call the 
``routine notice of violation'' without a civil penalty.
    Mr. Stupak. And for nonprofits?
    Mr. Christopher. We treat them the same.
    Mr. Stupak. Treat them the same?
    Mr. Christopher. Yes.
    Mr. Stupak. And is that--I guess you would call it bad 
publicity, is that about the only club you have on the 
nonprofits?
    Mr. Christopher. Well, it's clearly the reason that we 
developed the concept of the phantom fine is in the absence of 
the ability to do something, it seemed to be the best to treat 
them the same as the for-profits and go through the entire 
process including the press release because it would appear to 
be at least somewhat effective in raising the sensitivity to 
the issues.
    Mr. Stupak. Sure. So you call that the phantom fine?
    Mr. Christopher. Yes.
    Mr. Stupak. In the non-profits, they realize that you're 
going to issue a press release including the phantom fine in 
that press release?
    Mr. Christopher. Yes, as the process has evolved over the 
last 2 years, it's become apparent that that's how we do 
business; yes.
    Mr. Stupak. What happened to the press release that your 
office drafted for the second Livermore fine?
    Mr. Christopher. I'll tell you what I know. The action was 
issued as a normal--the enforcement action itself was issued as 
a normal course of business, and in the process I just 
described, a press release was prepared and the communications 
folks, I did validate it's technical accuracy, and from there 
it is forwarded to the front office through the public affairs 
and congressional affairs, and from there I don't know what 
happened to it.
    Mr. Stupak. So somewhere between public affairs and 
congressional affairs it never was put out publicly?
    Mr. Christopher. It was not issued publicly; that's 
correct.
    Mr. Stupak. Mr. Chairman, I would like to place in the 
record a set of e-mails concerning the press release. Jeff 
Garberson from Livermore's public affairs office complains that 
he can't understand, ``how DOE management can claim to want to 
form and promote a cohesive organization, some kind of happy 
family in which contractors rush eagerly to Washington to be 
part of the ``good news'' machine, with this practice of no 
notice, `gotcha' publicity.''
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    Mr. Stupak. Now, Mr. Garberson seems to think that DOE 
cannot say anything about his lab. What do you think? The labs 
don't want fines, you have the phantom fine; they don't want 
the publicity. So how are we going to change their behavior? 
Where is the accountability of these labs?
    Mr. Christopher. Well, I think in terms of--from my 
perspective as a regulator in the isolate filed of Price-
Anderson, you know, our function is to try to raise the 
sensitivity of, you know, of accountability to assign 
responsibility to the University in an appropriate public way 
so that there is some public--one you want the public to know 
that there is some reasonably credible resolution to an issue 
to bring an issue to closure. I think it's very, very 
important, and in cases where we've operated properly at many 
sites, that press release which has demonstrated to the public 
that something of a serious nature happened at one of their 
sites which it inevitably will because of the difficulty--the 
inherent difficulty with our sites that if the Department can 
illustrate that it demonstrates that it had its act together, 
that it's had an appropriate measured response being my case 
from an enforcement perspective requiring certain things to be 
done and specific accountabilities if that fails to be done, 
then I think--and we've communicated that through the press 
release, I think our experience has shown that the public has 
said that's what we expect DOE to do, to take care of business. 
So----
    Mr. Stupak. But if you're going to bring this to closure, 
if we take the second Livermore fine and if it got up to, as 
far as you know, public affairs, we understand, or we've been 
told that the Acting Secretary has sort of put an end to that 
one, how do you bring that one to closure then?
    Mr. Christopher. From a regulator's standpoint I'd stay in 
regulatory space and I ensure that the commitments that they've 
made to correct the situation are adhered to and if they're 
not, then pursue them--pursue them again. That's about as far 
as I can go----
    Mr. Stupak. That's as far as----
    Mr. Christopher. [continuing] Yes, sir.
    Mr. Stupak. Mr. Chairman, I've got one more question, if I 
may?
    Mr. Upton. Go ahead.
    Mr. Stupak. Dr. Michaels, this did not happen on your 
watch, did it? And can you explain it or are you going to allow 
this to happen again?
    Mr. Michaels. No, sir. In fact, when I heard about this 
after I took office in the initial Price-Anderson notice of 
violation that came out of Mr. Christopher's office, you know, 
I inquired about this history and it was made very clear to me 
that that would never happen again, or at least not on my 
watch. In fact, I'm quite impressed that the Secretary is--you 
know, to the contrary, is eager to get these out and to play a 
role to make sure that the maximum impact can be had.
    It also is worth noting, though, that the mechanism for 
getting the press release and the information about notice of 
violations out is not merely sending a press release. The 
information goes on our web site automatically, and, in fact, 
the second Livermore notice of violations actually did get out 
to the media and was widely disseminated because it was up on 
our web site and the reports at this point know to look for it. 
So even though there was some problem in getting it out, it 
actually did get out quite widely and I was, you know, 
certainly pleased that that did happen. But it would--I would 
like to be able to tell you that that's never going to happen 
on my watch. Obviously I can't guarantee it, but----
    Mr. Stupak. Thank you. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Bryant.
    Mr. Bryant. Thank you, Mr. Chairman and I thank you for 
holding this hearing. Likewise, I had the airplane flying in 
too. I don't think we were on the same plane, but I apologize 
to the panel. I would like to ask Ms. Jones a question and I'm 
sure you've answered this already in my absence. But I would 
ask you the GAO apparently now is recommending something 
different than perhaps it recommended earlier this year, March 
maybe of 1999 regarding this issue. Would you again sort of 
boil it down for me as to why that change has occurred with GAO 
in its review of this issue?
    Ms. Jones. I think the basic reason for that change, Mr. 
Bryant would be because things have changed since 1988 
particularly in terms of the argument that DOE and it's non-
profit contractors have been making that their assets would be 
at risk, university assets, for example, would be at risk if, 
in fact, they had to pay the monetary fines.
    Our position is that almost all of these nonprofit 
contractors, all but one, in fact, are getting fees and that 
the monetary penalties could be paid from those fees. So that's 
one of the basic reasons why we believe that the Congress 
should consider changing the law.
    Mr. Bryant. Mr. Chairman, I will yield back my time.
    Mr. Upton. Thank you. There may be some members with 
additional questions. I guess I just want to follow up on Mr. 
Whitfield's question. Would you then say that you believe that 
the assets need to be somewhat at risk beyond otherwise the 
penalties that might be there?
    Ms. Jones. I'm sorry, Mr. Upton, I'm not sure I understand 
the thrust of the question.
    Mr. Upton. The contract mechanisms that are there, the 
fines, the phantom fines, do you think we need to go beyond 
that and actually have some of the assets at risk?
    Ms. Jones. Oh, no, sir, I didn't mean to imply that. No, I 
believe that back in 1988 when these exemptions were granted, 
the nonprofits were not getting fees. Maybe a small 
administrative fee, but they were not getting the kind of fees 
that they get now. As I said earlier, there's only two 
contractors that are getting below $1 million in available 
fees. So what I was saying is that any penalty or fine could 
come from those fees and therefore the assets, the actual 
assets of the nonprofit universities would not have to be at 
risk. It would just be the fee that would be at risk.
    Mr. Upton. Okay. Got it.
    Mr. Stupak, do you have additional questions?
    Mr. Stupak. No.
    Mr. Upton. Mr. Whitfield?
    Mr. Whitfield. No, thank you.
    Mr. Upton. Mr. Burr?
    Mr. Burr. Yes, sir. Thank you, Mr. Chairman.
    Let me ask you, Dr. Michaels, you said, I believe, that 
other departments had the ability to comment on the decision 
that DOE had relative to Price-Anderson Act extension through 
other offices.
    Mr. Michaels. Yes.
    Mr. Burr. Tell me which offices those were?
    Mr. Michaels. I assume, now, again, I wasn't here for this, 
but I assume that all of the program offices would have some 
role if you ask for comment; defense programs, the Offices of 
Science, perhaps environmental management.
    Mr. Burr. Let me ask Mr. Christopher, were you here?
    Mr. Christopher. Yes, I was.
    Mr. Burr. Okay. Were there any other departments that 
expressed the same concern that E&H did at the time?
    Mr. Christopher. My recollection is that I'm gone off in my 
memory now. There were several field office elements--field 
office organizations that expressed, and I don't remember which 
ones to be frank, support for the original EH proposal. My 
recollection is also that most of the major program offices 
were in opposition to that proposal.
    Mr. Burr. Were in opposition to?
    Mr. Christopher. To the proposal to eliminate the exemption 
of civil penalties.
    Mr. Burr. So E&H for sure and others expressed----
    Mr. Christopher. It is my recollection that several, at 
least two field offices communicated their belief that the 
civil penalty exemption for laboratories should be removed. The 
majority or the remainder opposed----
    Mr. Burr. How do you think that your contractors are going 
to respond to your stated belief that maybe we ought the take 
these fines out of the fees? This is something new; right?
    Mr. Christopher. It is, yes.
    Mr. Burr. Are they going to be supportive of that?
    Mr. Christopher. I wouldn't doubt it.
    Mr. Burr. As a matter of fact, in Mr.--I believe in Mr. 
Stupak's e-mail copy----
    Mr. Stupak. It's not on my e-mail.
    Mr. Burr. The one that he submitted, I thank you, I think 
from Jeff Garberson, public affairs office, I would take at the 
University of California, he said that Washington strongly 
criticizes Lawrence Livermore for safety violations in our 
plutonium operations and levying a $157,000 fine which can't 
actually be collected because of the terms of our contract.
    Mr. Christopher. Well, actually it's not--it's true, it's 
not the terms of the contract, it's the statutory exemption the 
contract----
    Mr. Burr. Don't the terms of the contract allow you to 
penalize them for performance less than exceptional?
    Mr. Christopher. I don't--in terms of the--when it comes to 
the contract performance measures, as a regulator I don't fee--
--
    Mr. Burr. Let me go to Ms. Jones.
    Mr. Christopher. [continuing] so I can't answer your 
question.
    Ms. Jones. Mr. Burr, yes it does.
    Mr. Burr. Do we have a huge disconnect between different 
arms of the Department of Energy where regulators, and I don't 
say this to be critical, regulators have no clue as to what's 
in the contract for the contractor that they're trying the 
manage for safety and for security.
    Ms. Jones. Yes. I would also say that we support 
performance-based contracting that. We think it's a good 
mechanism for safety.
    Mr. Burr. Could you define your understanding of 
performance fees?
    Ms. Jones. Performance fees are something where you would 
say to the contractor, you need to operate the his facility 
within the safety rules promulgated by the Department of 
Energy. And then there's a judgment on the Department of 
Energy's side of how well they did in terms of meeting that 
goal.
    Mr. Burr. Under the criteria that you would use to evaluate 
if somebody had a plutonium explosion. Now, I'm not going to 
profess to know the magnitude of something like that. I believe 
you might. Would that receive, in that given year, a good, 
satisfactory, excellent, what type of rating?
    Ms. Jones. The problem, Mr. Burr, is that unfortunately 
that's one event. And the way DOE determines if it's good, 
excellent, fair, or poor----
    Mr. Burr. It's under a point system----
    Ms. Jones. [continuing] in terms of safety,----
    Mr. Burr. [continuing] it's a point system, isn't it?
    Ms. Jones. [continuing] is lots of different events. So 
they might take away a little bit of money for that one thing, 
but they could give them an overall good or excellent rating.
    Mr. Burr. So under the contract method that we're currently 
in, a contractor could have a serious violation but because of 
the points methods that they use, they might never be penalized 
based upon the performance fee?
    Ms. Jones. That's correct. Our report points out that we 
don't think DOE has had a really good track record of using 
these contract mechanisms to penalize the contractor whether 
you're talking about safety, security, or other things. I think 
we used the example of Lawrence Livermore last year. They got 
96 percent of the fee that they were able to get, and yet they 
had a number of very significant safety problems.
    Mr. Burr. Let me ask you, either Dr. Michaels or Mr. 
Christopher, now, that's a site profile for Lawrence Livermore, 
this is one for Los Alamos. I would take for granted that an 
annual site profile is done on all facilities; is that an 
accurate----
    Mr. Michaels. I don't know if they're done. That document 
was done by the Office of Oversight, is that----
    Mr. Burr. The office of Oversight and Environmental Safety 
in Health.
    Mr. Michaels. Well, we tried to visit one. We try to visit 
each site, it's a little more than every year at this point, 
unfortunately, so I don't know that we produce a new one every 
year on an annual basis.
    Mr. Burr. But that's under your area; isn't it?
    Mr. Michaels. Yes, sir.
    Mr. Burr. And tell me what the latest site profile of 
Lawrence Livermore suggested?
    Mr. Michaels. I couldn't tell you that off-hand. If you 
have it in front of me, perhaps you could share that with me.
    Mr. Burr. I would be happy to.
    Mr. Michaels. Yes.
    Mr. Burr. Have you ever seen it?
    Mr. Michaels. No, I have seen it, but, you know, we have 
quite a few sites and I'm not up-to-date on all of them.
    Mr. Burr. It's not very complimentary. And it's your area.
    Mr. Michaels. No, I'm not surprised. We tend to--when we go 
out to some of these sites, some of them we think we are doing 
well, we know that Livermore is not doing that well.
    Mr. Burr. And yet what I hear you saying today is we want 
to continue what we're doing because it's working. And what I 
hear over here is no matter how much they continue to do what 
they're currently doing, it ain't going to work.
    Mr. Michaels. No, you don't hear that from me. What you 
hear from me is the Department has made a decision which 
actually, and you asked my personal opinion, I think a good 
argument could be made on the other side that fines will not 
necessarily improve that performance. I think we have to think 
about ways to improve the performance, but if the issues is 
merely on fines, I frankly think that's not going to have a 
major impact. If we collected $200,000 from the University of 
California last year, I'm not sure we would have that much 
better of a safety performance, sir.
    Mr. Burr. You and I found something to agree on. I'm less 
concerned with the question of Price-Anderson which I 
understand is your expertise. And I'm more concerned with how 
we get the safety of these facilities to where our friends on 
the other side of the table can look at it and say, my gosh, 
it's working.
    Mr. Michaels. No, I agree with you, and we are trying to 
look at the contract to say, are there are things we can do, 
are there other mechanisms we can use? And frankly, that's a 
great concern of mine that I would, you know, look for 
assistance from----
    Mr. Burr. Let me in conclusion suggest to you that I think 
the Department of Energy has a great deal of work to do, if for 
no more understanding what's going on with their contractors. I 
don't think that there's a good understanding of, one, what the 
relationship is. I think that was expressed in one of the 
documents entered for the record. I think that the belief that 
there is this fear under the current system or potentially 
under some modification of the Price-Anderson Act, that fear 
doesn't exist, Dr. Michaels. I think that it's time you sit 
down and figure out with the recommendations of GAO what gives 
it teeth, what assures the safety, and clearly these are 
institutions that are going to be under assault from the 
standpoint of security as well, and I expect to be as tough if 
not tougher on that side than I am on the safeguard side.
    With that, Mr. Chairman, I yield back.
    Mr. Whitfield. Mr. Chairman, I would like to ask one 
additional question.
    Mr. Upton. Go ahead then.
    Mr. Whitfield. The Price-Anderson Act was adopted in 1988, 
so in those 11 years the Department of Energy has evidently 
promulgated only 2 of 11 rules. Do you have a date in the 
future that you are expecting to complete the other nine rules?
    Mr. Michaels. Yes, sir. Well, we don't expect the complete 
the other nine rules because what we've determined is that 
original projection of 11 rules is not what we need. What we--
as you know, we promulgated two rules, radiation protection and 
quality assurance. The quality assurance rule is a very broad 
rule. Essentially what it says is, contractors will be held 
accountable for the procedures that they state that they will 
follow. And they state that they will follow good procedures 
because they have to in every area. And when we go and we 
simply say, did you follow this procedure, and virtually 
everything we need to do is covered by that rule. There are 
some areas which we think are not covered by that rule, 3 of 
the 9, and we hope to get them out by the end of this year and 
my staff is working hard on that.
    Mr. Whitfield. So basically you're saying you think you 
need 5 rules rather than 11?
    Mr. Michaels. Yes, or you could count them. We could put 
one rule out that will cover those three. It's an arbitrary 
distinction.
    Mr. Whitfield. Okay.
    Mr. Michaels. But the distinction really is arbitrary We 
think we can have a complete set of rules by the end of the 
year.
    Mr. Whitfield. And that's the plan by the end of the year?
    Mr. Michaels. That's the plan, absolutely, sir.
    Mr. Whitfield. I yield back the balance of my time.
    Mr. Upton. Mr. Bilbray, do you have any additional 
questions?
    Mr. Bilbray. No, I don't.
    Mr. Upton. Mr. Whitfield?
    Mr. Whitfield. No.
    Mr. Upton. Okay. Thank you very much for coming out.
    This panel is excused.
    The second panel will consist of Mr. Richard Miller from 
PACE; Mr. Robert Van Ness, Assistant Vice President, University 
of California; Mr. Arthur Sussman, Vice President of Argonne 
National Labs in Chicago; Mr. Robert Card, President of Kaiser-
Hill; and Mr. Lincoln Hall, Vice President for Operations, 
Energy and Environment Sector, Lockheed Martin.
    Gentlemen, welcome. As you saw with our first panel, we 
have a long-standing tradition of taking testimony under oath. 
Do any of you have objection to that?
    [No response.]
    Mr. Upton. If not, can you get ready, do any of you need 
counsel? With that, if you would stand and raise your right 
hand. Do you swear to tell the truth, the whole truth, and 
nothing but the truth so help you God?
    Mr. Miller. I do.
    Mr. Van Ness. I do.
    Mr. Sussman. I do.
    Mr. Card. I do.
    Mr. Hall. I do.
    Mr. Upton. Thank you, you're now under oath, and as you 
know, some of you based on experience would try to limit your 
opening remarks to 5 minutes.
    We'll start with Mr. Miller. Thank you for coming.

 TESTIMONY OF RICHARD D. MILLER, POLICY ANALYST, PAPER, ALLIED-
 INDUSTRIAL, CHEMICAL AND ENERGY WORKERS UNION; ROBERT L. VAN 
 NESS, SENIOR VICE PRESIDENT, UNIVERSITY OF CALIFORNIA; ARTHUR 
   M. SUSSMAN, VICE PRESIDENT, ARGONNE NATIONAL LABORATORY, 
 UNIVERSITY OF CHICAGO; ROBERT G. CARD, PRESIDENT, KAISER-HILL 
 COMPANY, L.L.C., ROCKY FLATS ENVIRONMENT TECHNOLOGY SITE; AND 
   LINCOLN E. HALL, VICE PRESIDENT FOR OPERATIONS, ENERGY & 
        ENVIRONMENT SECTOR, LOCKHEED MARTIN CORPORATION

    Mr. Miller. Thank you, Mr. Chairman.
    I would like to thank the committee for inviting us to 
testify today. My name is Richard Miller, I'm a policy analyst 
for the Paper, Allied Industrial Chemical and Energy Workers 
Union. We represent workers at 11 DOE sites within the nuclear 
complex. These include Hanford, the Idaho National Engineering 
Labs, Grand Junction, the waste isolation pilot project, 
Oakridge, Portsmouth, Mound, Brookhaven, Argonne East and West, 
and the Paducah Gas Use Diffusion plant. And I'm pleased to see 
Mr. Whitfield is here today. He's been a very vigilant ally in 
overseeing activities at that facility.
    The Price-Anderson civil enforcement authority is 
established in a context for DOE indemnified contractors up to 
$9.43 billion per nuclear incident. Thus it should be seen that 
not only do nuclear workers, but tax payers have a distinct 
interest in assuring complete and unflinching compliance by its 
contractors with nuclear safety rules.
    Second, today's hearing we believe should be viewed in 
another context, and that is that over the past several years 
DOE has permitted its site representative program to virtually 
wither on the vine from staff reductions and reductions in 
diminished responsibilities.
    We also understand that DOE is planning to abolish this 
formerly valuable site oversight program and so we're losing a 
measure of accountability.
    Second, the Secretary of Energy announced earlier this year 
that the Department no longer intends to pursue external safety 
regulation. Thereby reversing the path it had been following 
for the past 4 years. Thus, despite the rhetoric about 
increasing accountability for safety the Department has 
proposed no alternatives to save discussions about adjusting 
contractor award fees for safety performance.
    These are blunt and largely unworkable policy devices which 
come into effect only after failure which are in competition 
with other incentive fees to expedite completion of work 
activities and are viewed quite skeptically by the workers who 
are ostensibly the beneficiaries of these policy devices. In 
light of this vacuum, we believe this hearing is timely and 
quite welcomed.
    As noted earlier DOE has promulgated only 2 of the 11 
nuclear safety rules in 11 years. We think this is wholly 
inadequate. Second, we believe that there's a reason that has 
not been adequately explored in the earlier testimony about why 
the rules have not gone out the door. The reason is, is that 
within the Department there are forcing mechanisms whether they 
be the senior field management counsel that's been established, 
or other devices where anybody who wants to block a rule can 
say, I object. And at that point the Assistant Secretary of 
Energy for Environment, Safety, and Health is deprived of the 
tools he or she needs to do their job.
    In fact, the Assistant Secretary has to seek permission 
from the regulated entities in order to regulate them. And that 
is the root cause of the problem. The pattern of bureaucratic 
undermining of accountability for safety we note is strikingly 
similar to the undermining of security controls identified by 
Senator Rudman and the special panel of the President's Foreign 
Intelligence Advisory Board. That panel found that, and I 
quote, ``The DOE and weapons laboratories have a deeply rooted 
culture of low regard for, and at times, hostility to security 
issues which has continually frustrated the efforts of its 
internal and external critics, notably the GAO and the House 
Energy and Commerce Committee. Thus, even when there's been 
leadership within DOE that supported contractor accountability 
measures for safety the bureaucracy has advantages which the 
FAIB also noted. And these are namely time and proven skills 
and artful dodging and passive intransigence. These advantages 
have given the bureaucracy the upper hand to ward our efforts 
to get these rules out the door over the past 11 years.
    And we heard today how the DOE is discussing an October 
1999 deadline to make a decision on rules and issue them by 
January 2000. We would like to encourage this committee to pass 
legislation to take DOE up on its January 2000 commitment and 
legislate that as a hammer date, and further to provide the 
public with the right to sue the Department if they don't live 
up to that hammer date.
    Given the obstacles that have to be overcome and the 
endless delaying tactics, we think it's time for Congress to 
solve the problem for the Energy Department.
    Second, DOE as noted earlier relies on five people to cover 
34 nuclear sites in 13 states. Let me point out, that's over 
2,000 nuclear facilities and you've got five people to cover 
it. We believe DOE has staff resources from the former site 
oversight representative program that it could move. It could 
move 14 to 17 people into enforcement right away because 
they're not doing anything. They've got the staff slots and you 
don't have to appropriate another nickel. We would urge you to 
push the Department of Energy to take that internal reform.
    We agree that nonprofits should be fully fined and 
penalized up to the limit of 3 years retroactive of their award 
fees and finally we believe that the DOE should provide workers 
and the public with access to it's noncompliance tracking 
system. This is the computer system where the self reports by 
the contractor go to the Energy Department. Apparently workers 
have no idea if violations are even reported to the DOE 
voluntarily. We think that the workers have a right to know.
    We thank you for holding this hearing.
    [The prepared statement of Richard D. Miller follows:]
Prepared Statement of Richard D. Miller, Policy Analyst, Paper, Allied-
             Industrial, Chemical and Energy Workers Union
    As part of the 1988 Price Anderson Act Amendments (``PAAA''), 
Congress authorized the Department of Energy (``DOE'') to impose civil 
penalties against contractors to deter nuclear releases and injuries. 
Eleven years later, DOE has promulgated only 2 of 11 nuclear safety 
rules, and manages its enforcement program of 34 nuclear production, 
research and environmental cleanup sites in 13 states with an 
enforcement staff of only 5 people.
    Over the past several years, DOE has permitted its safety and 
health ``Site Representative'' oversight program to wither on the vine 
through staff reductions and diminished responsibilities. During this 
fiscal year, we understand that DOE is planning to abolish this 
formerly valuable safety accountability program. Also this year, the 
Secretary of Energy indicated that the DOE no longer intends to pursue 
external health and safety regulation, thereby reversing the path it 
had been following after receiving recommendations in favor of external 
regulation from both the Advisory Committee on External Regulation 
(December 1995) and the National Academy of Public Administration 
(January 1997). The Department has proposed no alternatives to assure 
contractor accountability for worker safety. Given this vacuum, the 
Subcommittee's investigation into the effectiveness of DOE's nuclear 
safety program is timely.
    In the absence of external regulation from NRC and OSHA, and DOE's 
increasing emphasis on privatization and fixed price contracting, my 
testimony will raise these points:

 The DOE's Price Anderson Act Amendments (``PAAA'') enforcement 
        program, to which DOE nuclear workers turn for assuring 
        contractor compliance with radiation protection rules, is NOT 
        sufficiently robust at present to protect worker health and 
        safety.
 Non-profit contractors should be subjected to the payment of 
        penalties in the same manner as for-profit contractors, up to 
        the limit of their earned fees.
 DOE's promulgation of nuclear safety rules has been stifled by 
        bureaucratic foot dragging and lack of leadership, all to the 
        detriment of worker safety.
 Congress should pass legislation to compel DOE to vigorously 
        implement Price Anderson, by setting milestones for its 
        rulemaking and permitting citizen suits.
 To strengthen the enforcement program, the Secretary should 
        immediately transfer the DOE-EH Site Representative Program 
        staff slots over to Office of Enforcement.
    The Paper, Allied-Industrial, Chemical and Energy Workers 
International Union represents 320,000 workers in the manufacture of 
pulp, paper, chemicals, pharmaceuticals, gasoline, and motorcycles, as 
well as many of those engaged in the production and cleanup activities 
at 11 DOE nuclear sites. These DOE sites include Hanford, INEEL, 
Argonne West, Argonne East, Grand Junction, WIPP, Oak Ridge K-25, 
Paducah, Portsmouth, Mound and Brookhaven Labs. PACE was formed from 
the merger of the Oil, Chemical & Atomic Workers Union (``OCAW'') and 
the United Paperworkers International Union in January 1999.
 1) is the doe's price anderson act amendments (``paaa'') enforcement 
    scheme sufficiently robust to protect worker health and safety?
A. Why nuclear workers value the PAAA program as the primary means to 
        force contractors to implement radiation protection rules in 
        the DOE complex: the Mound facility as a case study.
    DOE has taken enforcement actions at many of the sites where PACE 
represents workers, including 2 at the Mound facility in Miamisburg, 
Ohio. The Mound facility provides a case study on why a viable PAAA 
Enforcement program is so essential.
    Between 1991 and 1994 DOE's former contractor at the Mound 
facility, EG&G, allowed bioassay samples for workers, who were 
performing decontamination work involving actinium-227, to sit on a 
shelf for three years unanalyzed. Workers were also directed to perform 
work without knowing what isotopes they were likely to encounter or if 
protections were adequate. Without timely bioassay, workers could 
exceed the annual radiation exposure limits established by DOE Orders. 
A large backlog of bioassay samples (>100) accumulated because reliable 
laboratory services were not procured by the contractor. Ultimately, a 
large percentage of one group of workers tested positive for actinium-
227 (15 of 31); however, the contractor withheld this information from 
the DOE for 9 months. An assessment team was assembled in 1994 and 
found that the contractor did not have a functioning dosimetry program, 
was out of compliance with DOE's laboratory accreditation program, 
radiation worker training was out of compliance with DOE's radiation 
control manual and PAAA regulations, radiation control technician 
training was out of compliance, and individual exposure reports were 
not provided to workers for 3 years. Alarmed by a contractor whose rad 
program had veered out of control, twelve Mound workers and OCAW filed 
a class action suit seeking to: (1) enjoin the contractor from 
violating rad protection rules, (2) bring in an expert to assess the 
root cause of problems at the site, (3) provide health care and (4) 
compensate workers for harms.
    After implementing a ``recovery plan'', the contractor, EG&G, self-
assessed its rad program in December 1996 and opined that it had 
established a sound rad protection program. However, in May 1997, DOE 
HQ conducted a review after a worker questioned why the contractor 
waited 7 months to obtain a bioassay sample to determine whether she 
received internal doses of high fired oxides of plutonium-238. This 
DOE-HQ team found that the Mound contractor had been woefully 
undercounting doses of radiation by failing to set the proper Minimum 
Detectable Activity Levels (MDA), and improperly calculating worker 
uptakes in a way that concluded no uptake had occurred when in fact 
many results were positive. The contractor was not ensuring that 
workers were participating in the bioassay program, thus resulting in 
situations where workers could have an uptake of radionuclides and not 
be identified. In turn, this could lead to a failure to remove over-
exposed workers from further workplace exposures of radiation. At the 
same time, the contractor was not requiring respiratory protection--
despite worker protests--where it was needed to prevent the ingestion 
of high fired oxides of plutonium. Assistant Secretary of Energy Al Alm 
visited the site and urged the DOE, management and workers to jointly 
develop a reliable bioassay program. Finally, DOE's PAAA enforcement 
office investigated and proposed penalties for 2 sets of violations 
against EG&G Applied Technologies totaling $112,500--at the time the 
largest PAAA penalty ever assessed.
    Later in 1997, DOE brought in a new site contractor, Babcock and 
Wilcox. However, events discovered in early 1998 compelled our local 
union leaders to once again write the PAAA Enforcement staff with. PACE 
learned that 1,440 bioassay samples were improperly analyzed because 
background levels had been deducted twice, and 409 americium bioassay 
samples dating back to July 1997 had yet to be assessed. On May 1, 1998 
the site manager, Leah Dever, ordered the second radiation ``stand 
down'' related to these breakdowns in the rad protection program. The 
PAAA Enforcement Program subsequently fined Babcock & Wilcox $165,000 
for 2 sets of violations in 1988. Subsequently, the site discovered it 
lacks an adequate bioassay program for metal tritites (metallic forms 
of tritium) and the Defense Nuclear Facilities Safety Board (DNFSB) is 
providing technical assistance.
B. Award fees incentives, while a plausibly helpful tool, are a weak 
        mechanism to protect workers on the front line who need 
        immediate intervention and a strong hand to alter contractor 
        misconduct.
    The civil penalty metered out by the PAAA Office of Enforcement 
combined with the Mound contractor's award fee reduction totaled over 
$400,000 in 1997. This monetary disincentive was not sufficient to 
alter the conduct of the Mound contractor in 1998, as the subsequent 
enforcement action illustrates. Incentive fees do not change a 
bureaucratic culture saturated with cynicism and disregard for 
authority. Only persistent accountability actions that punish bad 
behavior can alter that culture.
C. DOE-EH has persistently failed to build an adequate staff or request 
        adequate funding for the PAAA program, due to the push-back by 
        the contractor and Field Organizations to accountability 
        measures.
    DOE has nuclear operations at 34 sites in 13 states. Nuclear safety 
regulations are enforced by a staff of 5 PAAA investigators nationwide 
who rely, almost exclusively, on the self reporting of non-compliance 
events by their contractors. Contractors employ almost 100,000 workers.
    In addition, DOE relies upon 50 or so non-dedicated Price-Anderson 
``coordinators'' who, in general, serve as points of contact within the 
various field offices, but do not act as independent oversight and 
enforcement officials. These ``coordinators'' are not accountable to 
the Office of Enforcement, but serve under the direction of DOE's Field 
Offices.
    The PAAA program relies upon taking a few high impact enforcement 
actions intended to send a signal that the Enforcement Program means 
business. This is a reasonable approach for a small program take in 
order to leverage its limited resources.
    The problem, of course, is that the contractors are not intimidated 
unless there are repeated citations or, where there is a high degree of 
public concern in a locale, intense adverse publicity. Contractors also 
know that the DOE's entire budget for the PAAA program is approximately 
$600,000 per year, and efforts to increase this amount have been 
defeated. This sends a second signal that DOE's enforcement program 
will be exceptionally modest, and that the probability of detection for 
not self-reporting most violations is very low. Moreover, DOE's 
increased reliance on ``privatization'' and subcontracting means that 
there are a gaggle of contractors coming and going at any given time 
who are operating under fixed price contracts that often place safety 
in competition with productivity and profits. Unfortunately these fixed 
price contractors are largely left to self-regulate this conflict, 
undeterred by a nearly invisible Price Anderson enforcement program.
    Today, the PAAA program is more like the mouse that roared, than 
the daunting enforcer that DOE contractors would have you believe.
    Prior to the passage of PAAA in 1988, DOE's nuclear safety 
requirements were embodied in ``Orders'', which were legally 
unenforceable. After the PAAA was signed into law, DOE announced it 
would convert its 11 nuclear safety orders into rules so that they 
could be clarified and rendered enforceable. As DOE admits, it has only 
promulgated only 2 of 11 rules in the past 11 years.
    However, if and when these 9 other rules are promulgated, it is 
likely contractors will be obligated to self report added non-
compliance events that now go unreported. This will add to the burdens 
already imposed on the five person program staff. Likewise, the 
Costello Amendment to the FY 2000 Defense Authorization Act requires 
the PAAA program to impose civil monetary penalties against for-profit 
and non-profit contractors for violations of the Department of Energy 
rules and regulations regarding security of classified or sensitive 
information or data. If incorporated into law, this provision will add 
further responsibilities to the five person enforcement program.
    As part of the settlement of the Mound lawsuit, DOE had begun 
funding a $250,000 contract for a jointly-selected health physicist to 
assess the Mound's rad protection program (press release attached). The 
expert reports non compliance to the PAAA Enforcement Office. The 
expert has been so beneficial that the DOE's Ohio Field Office Manager 
Leah Dever has agreed to extend the expert's tenure after his initial 
contract expires at the end of this year. DOE has effectively 
privatized its PAAA oversight function because it lacks the staff to 
police the Mound facility. The PAAA ``coordinator'' does not, and 
cannot, fulfill this function.
    All of these factors point to the need for a more robust program 
which can conduct regular wall-to-wall inspections, and respond readily 
to concerns of workers. The PAAA could be substantially bolstered 
without additional appropriations by redeploying existing underutilized 
staff resources. Currently 14-17 FTE's who have been serving as site 
reps are going to be cut loose from the Office of Environment Safety 
and Health when the Program is formally terminated. These slots could 
and should be made immediately available to the PAAA program.
  2) should the non-profit contractors be subjected to the payment of 
    fines in penalties in the same manner as for-profit contractors?
    There is no reason to exempt non-profit contractors from paying 
fines and penalties for nuclear safety violations. To the extent that 
Universities are concerned about the financial exposure of their 
institution, we believe that fines and penalties can be capped by the 
maximum total fees that have been paid by the DOE over the past three 
years to that non-profit institution. Alternatively, the contractor's 
fees can be reduced by the dollar amount of civil penalties.
    We find it ironic that a several non-profits were participating in 
DOE sponsored pilot programs for external regulation under NRC and 
OSHA, but at no time was this shift to external regulation predicated 
on an exemption from fines and penalties.
 3) what obstacles have impaired doe's promulgation of nuclear safety 
                                 rules?
    As noted above, DOE has only promulgated 2 of 11 rules in the 11 
years since Congress passed PAAA. These 2 rules, Quality Assurance and 
Radiation Protection for Occupational Exposure, are not sufficient to 
protect workers at DOE sites, especially where there is no other 
oversight mechanism in place. DOE has failed to promulgate rules for 
Training and Certification, Unreviewed Safety Questions, Conduct of 
Operations, Radiation Protection of the Public and Environment, 
Technical Safety Requirements, Maintenance Management, and Conduct of 
Operations.
    GAO has noted several causes for the 11 year delay: a decision to 
work on other safety issues, internal disagreement about the 
desirability of having an enforcement program, and preference for an 
integrated safety management approach over enforceable regulations.
    A related reason for delay is that DOE won't finalize a regulation 
unless there has been consensus from all program offices. In other 
words, objections from any corner of DOE can kill the issuance of a 
final rule. Consequently, the Office of Environment, Safety and Health 
has been deprived of the tools to hold contractors accountable for 
safety by internal bureaucratic obstructionism and lowest common 
denominator decision making. When it comes to protecting health and 
safety, the DOE Assistant Secretary of Energy for Environment Safety & 
Health has traditionally had to seek permission from the system to 
impose accountability--a system that fiercely resists accountability.
    This pattern of bureaucratic undermining of accountability for 
safety is strikingly similar to the undermining of security controls 
identified by the Special Panel of the President's Foreign Intelligence 
Advisory Board (``FIAB'') Report.1 The FIAB panel found that 
the ``DOE and weapons laboratories have a deeply rooted culture of low 
regard for and, at times, hostility to security issues, which has 
continually frustrated the efforts of its internal and external 
critics, notably the GAO and the House Energy and Commerce 
Committee.2''
---------------------------------------------------------------------------
    \1\ Science at its Best, Security at its Worst, June 1999
    \2\ Foreword to the Report Science at its Best, Security at its 
Worst, pp iii
---------------------------------------------------------------------------
    Even when there has been leadership that supported accountability 
measures, the bureaucracy has advantages--time and proven skills at 
artful dodging and passive intransigence 3--that has given 
them the upper hand to ward off efforts to get rules out of the door 
over the past 11 years. It can be summarized as ``bureaucratic 
insolence to dispute, delay and resist implementation.'' These same 
words were used by the FIAB to describe why nuclear security measures 
were never implemented, despite Presidential directives.
---------------------------------------------------------------------------
    \3\ Ibid, pp.5
---------------------------------------------------------------------------
    In its May 17, 1999 response to the GAO's draft report DOE's 
Nuclear Safety Enforcement Program Should be Strengthened (June 1999), 
DOE builds in the option for backing out of any hard commitments to 
issuing the 9 overdue nuclear safety rules. The DOE states:
          The Department agrees that it needs to complete the process 
        of issuing enforceable rules covering fundamental nuclear 
        safety requirements. As the report mentions there is a renewed 
        effort within DOE to do this. This effort will consider ongoing 
        efforts to implement Integrated Safety Management to ensure 
        that the rulemaking does not hinder or impede ISM development. 
        Further rulemaking will need to ensure the compatibility of 
        enforceable rules with the Department's efforts on ISM. The 
        Department expects to make a final decision on the rules by 
        October 1999 and issue them by January 2000.
    DOE does not need to ``consider ongoing efforts to implement 
Integrated Safety Management'' in deciding when and whether to issue 
rules. Integrated Safety Management is simply a work planning process 
which includes the front line workers and managers. What DOE does with 
ISM should not affect the promulgation of enforceable rules.
4) should congress pass legislation to improve doe's implementation and 
             contractor performance under the paaa program?
    We recommend that the Commerce Committee accept DOE's commitment to 
have all of its nuclear safety rules issued and enforceable by January 
2000. However, to assure that there is no slippage, we recommend that 
the Committee pass legislation which sets this January 2000 date into 
law, and provide the public with a right of action to sue the 
Department in federal court if it doesn't meet this deadline. It is 
time for Congress to hold the DOE accountable.
    We recommend that Congress provide citizens and workers with a 
self-help provision to enforce the PAAA rules. This would allow workers 
and the public to bring legal actions to enjoin violations of Price 
Anderson Act violations actions--not seek fines or penalties--when the 
Department of Energy fails or is unable to investigate violations of 
its rules.
    Precedent for allowing third parties to seek enforcement was 
established in the settlement of the suit brought by the workers at the 
Mound facility. Under this settlement, the DOE agreed that in those 
cases where the contractor failed to correct a violation of Price 
Anderson rules and the DOE Assistant Secretary of ES&H , after notice, 
declined to investigate or make a finding, PACE members at Mound could 
seek enforcement through an arbitrator.
    Where DOE's program lacks enough staff investigators, and DOE is 
refusing to bring in external regulation, self-help mechanisms such as 
a citizen suit remedy is in order.
  5) what commitments are needed from doe to render the paaa program 
                               credible?
    DOE should commit to shift the qualified personnel from the Site 
Rep Program (that it is abolishing) over to the PAAA enforcement 
program. This will allow DOE to immediately assign 14-17 added 
investigators to the field to conduct investigations of nuclear 
facilities and follow up on the contractors' reports to the DOE's 
Noncompliance Tracking System. While this shift of 14-17 staff slots 
will not result in a robust program staff, it is an incremental step 
towards strengthening the program and protecting workers. Given the 
absence of external regulation, anything less should be considered a 
lost opportunity and an abrogation of DOE's responsibility to its 
workforce.
    DOE should also provide workers and the public with access to the 
Noncompliance Tracking System (NTS), which is the computerized system 
into which contractors file non-compliance reports. Contractors should 
be required to post these reports on bulletin boards at the DOE sites. 
If workers are kept in the dark about nuclear safety reports under the 
PAAA program, they are unable to take proactive steps to assure that 
these problems have been corrected.
                                summary
    The DOE must strengthen the Price Anderson Enforcement Program by 
transferring staff slots from the soon-to-be disbanded Site 
Representative program, requiring non profits to pay fines and 
penalties up to the limits of their fees, providing workers with the 
tools to take enforcement actions against DOE when it fails to protect 
their safety, and promulgating the 9 overdue regulations no later than 
January 2000.

    Mr. Upton. Thank you. Mr. Van Ness.

                TESTIMONY OF ROBERT L. VAN NESS

    Mr. Van Ness. Mr. Chairman and members of the committee, I 
appreciate the opportunity to come before the subcommittee to 
discuss implementation of nuclear safety regulations at the 
University of California to operate a Department of Energy 
Laboratories and the exemption of nonprofit institutions from 
civil fines and penalties for Price-Anderson Act violations.
    The University of California has enjoyed an outstanding 
record of accomplishment in science, education, and technology. 
That reputation of excellence is the single most valuable asset 
that the University possesses, both at our campuses and at the 
national laboratories that we operate for Department of Energy. 
It is that reputation that continues to draw outstanding 
scientists to our doors and retains them to carry out world 
class research.
    Today's student does not typically set as his or her goal 
to become a nuclear weapons scientist. But the intellectual 
challenges--theoretical, mathematical, chemical, metallurgical, 
and engineering--inherent in nuclear weapons and other ``big 
science'' projects at the Department of Energy laboratories 
will continue to attract the finest minds if the opportunity 
remains to work with colleagues of national and international 
repute. The University has that reputation because of the 
quality of staff we attract and retain.
    Having recruited this outstanding workforce we are 
committed to providing them with a safe workplace. Because our 
work includes nuclear hazards not only must our workers be 
safe, but we must assure the public that they too will not be 
harmed. The University is committed to this standard of safety.
    In my written statement I have outlined the integrated 
safety management programs at our laboratories, our record of 
overall performance improvement including safety performance 
accomplished through the effective use of performance-based 
management methodologies. Our work smart standards program and 
our practice of encouraging employees to report safety problems 
and to stop work if it cannot be safely done.
    In spit of our commitment and the excellence of our overall 
safety record there have been three instances in which nuclear 
safety violations were deemed serious enough for DOE 
enforcement action under the Price-Anderson Amendments Act.
    I have included in the written statement information on 
those enforcement actions and other noncompliances. The 
violations were self-reported and our laboratories have 
responded aggressively to correct deficiencies and to 
discipline employees who violated procedures.
    The University supports continuing the exemption for 
nonprofit contractors and in support of that I offer five 
points. First, academic institutions and other nonprofit 
organizations have created environments at the national 
laboratories that attract the finest scientific talent to work 
on problems of significance to a Nation. It is important to 
retain these environments to maintain the quality of science 
being accomplished by the national laboratories.
    Second, obtaining better performance from academic 
institutions and other nonprofit organizations is an important 
objective including high performance in the areas of 
environment, safety and health. But the mechanisms that 
encourage improvements should not undermine the nonprofit and 
the public service nature and motivations.
    Third, financial rewards and punishments are inconsistent 
with the fundamental character of these institutions and are a 
serious challenge to their public service orientation. At some 
point the level of financial risks inherent in DOE contracts 
may drive nonprofits from the ranks of Government contractors.
    My written statement includes the efforts the University 
has made to cover risks without undermining our public service 
orientation.
    Fourth, because of the trend over the last 15 years to 
impose more operating risks on contractors, nonprofits have 
begun to take fees. Fees are another cost of doing business 
that must be born by funds appropriated to conduct scientific 
research. You increase the need for fee, you reduce the amount 
of science that can be produced for any given amount of 
funding. This cost may be justified if it motivates and 
improves safety. But as I have indicated fines and penalties 
are neither the only means nor the most effective means of 
motivating improvement for nonprofit organizations.
    Finally, there are an abundant set of contract management 
tools already available to DOE to ensure contractor compliance 
and performance improvement. These include performance 
assessments, adjustable fees, fee at risk under zero tolerance 
policies, reduction in programmatic funding, and partial or 
complete contract terminations. These are reinforced in the 
National Laboratories by the commitment to excellence of the 
scientific staff and the management practices that hold 
individuals accountable for their performance.
    To ensure the continued vitality of our not-for-profit 
research environments these existing DOE and laboratory 
management tools should be used in lieu of Price-Anderson Act 
fines and penalties. Thank you for your attention to this 
matter and I will answer any questions.
    [The prepared statement of Robert L. Van Ness follows:]
Prepared Statement of Robert L. Van Ness, Assistant Vice President for 
          Laboratory Administration, University of California
    Mr. Chairman and Members of the Committee, I am Robert L. Van Ness, 
Assistant Vice President for Laboratory Administration for the 
University of California (UC). The University operates three DOE 
laboratories--the Los Alamos National Laboratory (LANL), the Lawrence 
Livermore National Laboratory (LLNL), and the Lawrence Berkeley 
National Laboratory (LBNL). My responsibilities include administering 
the performance-based management aspects of our contracts with the 
Department of Energy (DOE) and conducting oversight of the 
administrative and operational activities of the laboratories.
    The University is indemnified against public liability under the 
Price-Anderson Amendments Act (PAAA), and, as such, is subject to DOE 
nuclear safety regulations at the three laboratories. The University is 
also one of the entities exempt from the civil fines and penalties 
under Section 234A (d) of the Act.
    Thank you for the opportunity to appear before you today to address 
the Committee's concerns regarding the implementation of nuclear safety 
rules at our laboratories and consideration of extending the statutory 
exemption from civil fines and penalties under the Act.
     seeking excellence and maintaining a reputation for excellence
    The University of California is an institution that has enjoyed an 
outstanding record of accomplishment in science, education, and 
technology. Our faculty and staff have produced an enviable body of 
work that is reflected through numerous awards and honors. That 
reputation of excellence is the single most valuable asset that the 
University possesses, both at our campuses and at the national 
laboratories we operate for DOE. It is that reputation that continues 
to draw outstanding scientists to our doors and retains them to carry 
out world class research. A student does not typically set as his or 
her goal to become a nuclear weapons designer. But the intellectual 
challenges--theoretical, mathematical, chemical, metallurgical, and 
engineering--inherent in nuclear weapons and other ``big science'' 
projects at the DOE laboratories will continue to attract the finest 
minds if the opportunity remains to work with colleagues of national 
and international repute. The University has that reputation because of 
the quality of staff we attract and retain.
    The future of the University depends on its ability to obtain 
excellence in all endeavors. This objective is as true for the 
administration and operations in support of science as it is for the 
scientific programs themselves. When our competence is challenged, in 
any field, it has a significant adverse effect on the reputation of the 
people involved and the University. We compete in the marketplace for 
the best minds and talent. We want and need our employees to be proud 
of their institution and to feel that there is no better institution 
with which to be associated. When we make a mistake, we respond by 
taking aggressive corrective action, immediately addressing 
deficiencies, modifying systems to anticipate and avoid future 
problems, and better communicating with our stakeholders about what we 
are doing.
    The University conducts significant nuclear operations at our two 
DOE national security laboratories. We well appreciate that nuclear 
hazards are a mystery to many Americans; that mystery requires that we 
not only be safe, but be seen to be safe. Our reputation for nuclear 
safety is as important to the University as is our record for 
outstanding scientific research. We are fully committed to the safety 
of the public and our workers. Our commitment to the DOE is a public 
service. Our commitment to the safety of the public and our workers is 
a public trust. Our future depends on maintaining that public trust.
                    implementation of nuclear safety
University-operated facilities are safe
    The University is fully committed to protecting the health and 
safety of its employees and the public as our first priority. This 
commitment is embodied in our contract with DOE in a number of ways. We 
have the standard contract clause that requires compliance with all 
applicable laws and regulations. We commit to performing the work in a 
manner that ensures protection of the employees and the public and to 
being accountable for the safe performance of work. The performance 
evaluation and management plans in our contracts measure our results in 
worker safety, waste minimization, and environmental compliance.
    The University follows through on its ES&H commitments through its 
performance-based management system and has demonstrated success over 
the past six years. Our results show the laboratories' success in 
maintaining radiation exposures to workers far below regulatory 
standards and consistent with ALARA (As Low As Reasonably Achievable) 
goals. Public exposure to radiation from our laboratories is far below 
National Emission Standards for Hazardous Air Pollutants (NESHAPS) set 
by the US Environmental Protection Agency and below DOE standards for 
radiation exposure from all pathways. Occupational illness and injury 
rates show a declining trend approaching ``best-in-class'' performance 
as determined through benchmarking with the private sector.
Performance-based management
    The University's performance-based management system as expressed 
in our contracts with DOE is designed to provide assurance that our 
employees and the public are being protected and to drive improvement 
of the performance of our laboratories over time. It relies on 
establishing and maintaining effective working relationships with DOE 
and the public and on a robust self-assessment program that includes 
reviews by line and support organizations within the laboratories. 
Since the University's implementation of performance-based management 
in 1993, there has been a trend of continuous improvement in all 
administration and operations areas of the DOE laboratories, with DOE 
ratings moving from barely satisfactory to excellent overall.
    Performance metrics are negotiated annually between the University, 
the DOE and the laboratories. These metrics describe what is to be 
measured and contain target performance levels that are used to rate 
performance as part of an annual contract appraisal process. All three 
parties monitor performance during the year and performance is 
evaluated at the end of the year by the University and DOE. The ES&H 
performance metrics are designed to evaluate both the ES&H outcomes as 
discussed above and the management systems that produce those outcomes. 
The DOE, the laboratories and the University have been working to 
understand the ES&H performance metrics used by the best performing 
organizations in both the public and private sectors and have adopted 
or adapted their methods and their performance measures where 
applicable. Overall ES&H performance has improved substantially over 
the past 6 years using performance-based contracting techniques.
    The University-operated DOE laboratories are, of course, also 
subject to the PAAA rules. Each DOE laboratory maintains an independent 
office reporting at the highest levels of laboratory management to 
provide independent review and reporting of potential violations of the 
requirements in these rules, and to track corrective actions when 
deficiencies are identified. The PAAA requirements are of the utmost 
importance to both the University and the laboratories, and violations 
of these requirements are treated very seriously. We have taken 
aggressive corrective actions to address the deficiencies that led to 
those events with the intent of avoiding similar safety incidents in 
the future.
Integrated Safety Management
    The University is fully committed to Integrated Safety Management 
(ISM) as a method for integrating ES&H into our work. This means that: 
line management is responsible for the protection of employees, the 
public and the environment; there are clear and unambiguous lines of 
authority and responsibility for ES&H our personnel possess the 
experience, knowledge, skills and abilities that are necessary to 
discharge our responsibilities; resources are effectively allocated to 
address ES&H, programmatic and operational considerations; before work 
is performed, the associated hazards are evaluated and an agreed-upon 
set of ES&H standards and requirements are established; administrative 
and engineering controls to prevent and mitigate hazards are tailored 
to the work being performed and its associated hazards; and the 
conditions and requirements to be satisfied for operations to be 
initiated and conducted are established and agreed-upon by DOE and the 
University.
    The ISM systems at our laboratories generally describe how the work 
scope is defined, how hazards associated with the work are identified 
and analyzed, how the hazards are controlled, how work is performed 
within the controls, and how information is fed back to improve safety 
management. This approach applies to all work at the laboratories, 
including that subject to compliance with PAAA.
    The worker plays a key role in this framework and is responsible 
for doing the work safely. If the worker notices an unsafe situation or 
a situation that could cause harm to the public or the environment, he 
or she has the authority to stop the work.
    The PAAA compliance program at the laboratories is fully aligned 
with ISM at the laboratories. It relies on self-assessment/reporting 
and a mechanism for feedback to both the DOE and the University and is 
part of the continuous improvement cycle that is at the core of ISM.
    The controls that are identified and implemented through ISM are 
drawn from a set of external and DOE derived standards that have been 
incorporated into our contract. These standards come from external 
regulatory agencies, industry standard setting organizations and the 
DOE. For those operations subject to PAAA compliance, the standards 
that have been selected are those developed by DOE in the area of 
nuclear safety. The University believes that these standards (Work 
Smart Standards) are effective for managing nuclear safety at our 
laboratories.
Management, Oversight and Accountability for PAAA Compliance
    The University takes PAAA compliance very seriously. At the 
laboratories, management and employees in nuclear facilities are 
trained in procedures for safe operations and for reporting violations 
of procedures or other incidents to the PAAA Coordinator who reports to 
the Deputy Director for Operations. The PAAA Coordinator also 
independently reviews other sources of information about ES&H matters 
in the area of nuclear safety, such as external audit reports and 
Defense Nuclear Facility Safety Board (DNFSB) staff issue reports. The 
PAAA Coordinator evaluates self-reported incidents to determine if a 
noncompliance with DOE nuclear safety rules has occurred. If an 
incident is determined to be a noncompliance, it is reported either to 
DOE's Noncompliance Tracking System (NTS) or to an internal tracking 
system maintained by each laboratory, following guidance provided by 
the DOE Office of Enforcement and Investigation in its Operational 
Procedures. The noncompliance report, whether internal or to the NTS, 
describes associated corrective actions including a schedule of their 
completion. The PAAA Coordinator routinely does analysis and trending 
of violations to see if there are systemic concerns or programmatic 
weaknesses that need to be addressed. In the course of identifying, 
categorizing, and tracking PAAA noncompliances, the PAAA Coordinator at 
each laboratory works closely with his or her respective DOE PAAA 
Coordinator. The laboratory PAAA Coordinators periodically meet with 
other DOE contractors and the DOE PAAA enforcement staff to review 
complex-wide information on nuclear safety. The laboratories also 
conduct independent assessments to determine if the self-reporting 
system needs improvement. The laboratories use a combination of line 
management safety evaluations, independent laboratory safety 
evaluations, DOE evaluations and management reviews as part of the 
overall safety program at the laboratories.
    The University has established two additional safety review and 
improvement mechanisms called the Laboratory Operations Management 
Committee (LOMC) and the ES&H Panel of the President's Council on the 
National Laboratories. The LOMC includes the three Deputy Directors for 
Operations from the three laboratories and the Assistant Vice President 
and Executive Director for Operations from the UC Laboratory 
Administration Office, and is staffed by the ES&H specialists at the 
University and at the laboratories. The LOMC works to ensure that the 
best practices in government and industry are being applied to safety 
at the laboratories and that the three laboratories work in concert to 
improve operations. The ES&H Panel consists of experts in environmental 
protection, safety and health from industry and academia who 
independently review ES&H performance at the laboratories and advise 
the President's Council on the National Laboratories on the quality of 
those programs.
    As part of the system for ensuring accountability for safety 
performance, laboratory managers and workers are assessed annually on 
their personal performance as part of the laboratory management system. 
Performance in safety is an important component of this assessment. The 
University holds managers and workers accountable as part of the review 
of safety events. In the case of the three FY1998 PAAA violations and a 
safety incident in FY1999, disciplinary actions were taken against 
managers and workers.
Account of PAAA Nuclear Safety Incidents
    Since the beginning of the PAAA enforcement program, there have 
been 45 nuclear safety noncompliance events reportable under the DOE 
Noncompliance Tracking System (NTS) at the three DOE laboratories 
operated by the University of California. Three of these incidents have 
resulted in a Notice of Violation (NOV) being issued by DOE. Another 
event is currently under investigation to determine whether a NOV is 
appropriate.
    All three NOVs were issued during calendar year 1998 for violations 
that occurred in 1997. One NOV involved a shredding incident in which 
five workers were exposed to levels of airborne radioactive material 
(curium-244) at the Hazardous Waste Management Facility at LLNL. One of 
the workers received a dose in excess of federal limits, and he is not 
expected to have any long term health consequences. No radioactive 
material left the laboratory and no members of the general public were 
affected by this event. A second NOV involved multiple infractions of 
criticality safety controls in the Plutonium Handling Facility at LLNL. 
These infractions demonstrated a lack of rigor in the handling of 
special nuclear material that could not assure criticality safety to 
the level required by either the laboratory or the DOE. There was a 
voluntary and complete multi-month stand-down of operations at the 
plutonium facility and a retraining of the staff; full operations were 
gradually restored only after a comprehensive Activity Resumption Plan, 
developed under DOE oversight and incorporating extensive corrective 
actions, was implemented. The third involved a fire and explosion at 
the LANL Chemistry and Metallurgy Research Building that involved 
radioactive material and other related events in that facility that 
demonstrated a lack of adequate work planning and work controls to 
manage the facility safely. No individuals were injured or 
contaminated, but there was the potential for serious harm. The 
facility stood down for a number of months during which a significant 
number of upgrades to the facility were made and all employees working 
in the building were retrained.
    All three of these violations resulted in disciplinary actions 
taken against the individuals who did not comply with safety 
requirements--including workers, their supervisors, and more senior 
personnel. The prompt actions by the laboratories and the 
implementation of a comprehensive set of corrective actions resulted in 
DOE determining that substantial mitigation existed in the assessment 
of each of the enforcement actions.
    A fourth incident involved a LANL worker being exposed to radiation 
in the Chemistry and Metallurgy Research Building in November 1998. 
Additional retraining has been specified for the individuals involved, 
and disciplinary action has been taken against individuals who ignored 
procedures. Discussions are ongoing to determine if DOE enforcement 
action is appropriate.
    All of the above incidents and the subsequent Price-Anderson Act 
implications were self-reported by the laboratories and immediate 
actions were taken to review the incidents and develop corrective 
actions while the PAAA implications were unfolding. The laboratories 
have systems in place to respond to any radiological or nuclear-related 
event in an expeditious manner to determine the consequences and 
develop corrective actions.
                statutory exemption from civil penalties
    The University concurs in DOE's recommendation that the statutory 
exemption from civil fines and penalties be retained and consideration 
be given to extending the exemption to all non-profit contractors and 
subcontractors.
    The University has operated three DOE laboratories from their 
inception as a public service without the desire for financial gain. 
The University, as a non-profit entity, has consistently opposed 
federal contract policies that have at their base a financial reward or 
punishment purpose. We believe this approach blurs the important line 
between for-profit and non-profit motivations and is fundamentally 
inconsistent with the nature and character of the University. The non-
profit nature of the University is an essential element of our makeup 
and is critical to providing the extraordinarily successful environment 
for the conduct of outstanding science at the University and its 
laboratories. That environment is often cited as the principal 
attraction in the recruitment and retention of the world's leading 
scientists.
    At the time of the Price-Anderson Amendments Act, the University 
and a number of other DOE laboratory operators performed contract work 
solely on a cost-reimbursable basis. In the 1980's there was a series 
of investigations conducted by the federal government that revealed 
serious abuses of cost-reimbursement contracts in the defense industry. 
These investigations led to legislation affecting defense contracts 
that were later extended government-wide. The legislation failed to 
distinguish between for-profit and non-profit contractors, particularly 
where those contractors were engaged in large cost reimbursable 
contracts of the type that DOE uses at its federally-funded research 
and development centers (the DOE laboratories). As a consequence, 
nearly all non-profit contractors have entered into some form of fee 
arrangement in the last decade. They did so not to enrich themselves, 
but to make it possible to continue their public service to the nation 
given these new risks and the inappropriateness of applying funds from 
their endowments to the costs of operating DOE laboratories. Non-profit 
contractors, such as the University, have a track record of attracting 
scientific talent to the DOE laboratories that would be lost should 
non-profit organizations become unable to manage the laboratories 
because of financial risk.
    Fees are paid as part of the cost of performing scientific programs 
funded by the Congress. The greater the fee, the lesser the funds are 
available to perform scientific research for any given amount of 
federal appropriation. Non-financial rewards and punishments are 
important alternatives to fines in order to maximize the amount of 
science produced at the national laboratories. (It should be noted that 
fees to non-profit contractors average less than 1% of budgets at the 
facilities they operate as compared to about 6% of budget at facilities 
operated by for-profit contractors.)
    The University accepted a fee starting in 1992 that enabled us to 
continue performing a public service for the nation in the face of 
increasing risks of non-reimbursement for laboratory operating costs 
and assessment of penalties. (To do otherwise would be inconsistent 
with our fiduciary obligation to the State of California, its citizens, 
and our students and donors.) That does not confer immunity to the 
University from any consequences associated with poor management. As 
mentioned above, our most important asset is our reputation for 
excellence that enables us to attract and retain outstanding workers. 
Laboratories with poor records run the risk of adverse contract 
actions, having their facilities shut down, funding from sponsors 
decreased, loss of confidence in the surrounding communities, and loss 
of employee morale. Avoiding these consequences is a strong motivation 
for the University. On the other hand, being known as one of the 
``best-in-class'' managers creates an environment where reputation is 
enhanced, additional work is funded, communities are highly supportive, 
and employees thrive and attract more quality workers.
    The DOE submitted a report in March recommending that the statutory 
exemption be continued and expanded to include all non-profit 
contractors and subcontractors. Others have made arguments against the 
statutory exemption, citing the current practice of fees being paid to 
non-profits, the practice of regulatory agencies, and the need for 
stronger enforcement tools. In response, it is important to note, 
again, that the fee paid to the University is not for the generation of 
a profit which would inure to the financial benefit of the University, 
but is solely to meet our fiduciary obligation to the State of 
California, its citizens, and our students and donors. This is a very 
different circumstance than that of a for-profit contractor. In our 
current contract the fee has been structured to be adjustable based on 
our performance in accordance with the DOE's contract reform 
initiatives. Consistent with our non-profit character and our desire to 
maximize the conduct of scientific programs, we use every dollar not 
required to meet our fiduciary obligations to the conduct of research 
at or for the DOE laboratories. We understand that the DOE has the 
ability to tailor fines to minimize the impact on science, but that 
impact would still be greater than it is now. With regard to the fact 
that regulatory agencies fine non-profits, we believe it is important 
to note that such agencies do not have the contract mechanisms 
currently available to the DOE such as adjustable fees, changes in the 
amount of programmatic work, annual performance ratings, fee at risk in 
special circumstances and partial or complete terminations. The 
potential loss of the contract is much more significant than any fine 
that would be assessed. Similarly, poor DOE contract ratings have a 
profound adverse effect on the reputation of the University and the 
laboratory staff, and may reduce the opportunity for future assignment 
of programmatic work. In addition there is the capacity in the DOE's 
various fee mechanisms for significant financial impact. The DOE's 
contract management tools are supplemented and reinforced at the 
laboratories in their strong culture of excellence in all endeavors and 
in the reflection of safety performance in individual performance 
assessments. We do not believe that adding fines would be a useful 
addition to this existing set of mechanisms.
    The University believes that the DOE's Performance-Based Management 
initiative has proven to be a highly effective management improvement 
program. At the University of California-operated DOE laboratories we 
have seen substantial improvements in the management of our 
administrative and operational functions, including safety. Our record 
of improvement over the past six years is exemplary. In the past six 
years the DOE rating of our performance in these areas has gone from 
barely satisfactory to excellent while at the same time we have reduced 
the annual cost of these operations by well over $100 million. Our 
procurement and property operations, once seen as unsatisfactory, are 
now at the level of the best in the DOE complex. The performance-based 
management system in our contract with the DOE promotes the commitment 
of laboratory management and employees to safety and ensures that there 
is an active driver for ongoing improvement in all aspects of 
laboratory operations.
                                summary
    The future success of the University at both its campuses and the 
DOE laboratories requires that we have and maintain a reputation for 
excellence in all endeavors, including nuclear safety. The University 
employs a performance-based management system in conjunction with the 
DOE that conveys expectations, measures results and encourages everyone 
to identify problems and make corrections. The University-operated DOE 
laboratories have made tangible improvements in administration and 
operations, including environment, safety and health and are committed 
to make excellence a reality in all management aspects of the 
laboratories.
    Improvement is not perfection. We have learned from these incidents 
and are taking aggressive measures to prevent similar problems from 
arising in the future.
    The University concurs with the DOE's recommendation that Congress 
retain the statutory exemption and consider expanding it to all non-
profit contractors and subcontractors. This recommendation is 
consistent with the public service nature of non-profit management of 
the DOE laboratories and the objective to keep costs of scientific 
research as low as practicable. Fees paid to DOE laboratory non-profit 
contractors are driven by statutory and policy changes over the last 
fifteen years. Non-profit organizations face the dilemma of either 
obtaining a fee or declining to operate national laboratories. Fees are 
paid for out of the funds appropriated by Congress for the conduct of 
scientific programs. The need for fee must be minimized to maintain the 
lowest practicable cost of conducting scientific research. There are an 
abundant set of contract management tools already available to the DOE 
to ensure contractor compliance and performance improvement. This is 
reinforced within the laboratories through the commitment to 
maintaining a reputation for excellence and individual safety 
performance assessments. These existing DOE and laboratory management 
tools should be used in lieu of PAAA fines and penalties.

    Mr. Upton. Thank you. Mr. Sussman.

                 TESTIMONY OF ARTHUR M. SUSSMAN

    Mr. Sussman. I thought I could start before you----
    Mr. Upton. Yes----
    Mr. Sussman. Thank you very much for inviting me to speak 
with you today regarding the important issues of worker safety 
at DOE nuclear facilities.
    The University of Chicago, is a private, not-for-profit 
educational institution. They managed Argonne National 
Laboratory, a multipurpose basic research and development 
laboratory whose mission includes nuclear research activities 
since its inception, in fact, prior to its inception dating 
back to the Manhattan project which had its origins underneath 
the stands of the University's football stadium where Enrico 
Fermi and his colleagues performed the first sustained chain 
reaction.
    From it's beginnings to the present time the University has 
successfully managed this national enterprise which controls 
nuclear hazards where control of nuclear hazards was and 
remains a primary responsibility.
    Why has the University remained as a contractor for Argonne 
National Laboratory? The University's commitment to Argonne is 
a commitment to the national laboratory system and the 
importance of research university involvement in this vital 
segment of our national research infrastructure. We agree with 
the Calvin Commission--Calvin Commission that the national 
laboratories are important. The Department of Energy and it's 
predecessors have contracted with different entities for the 
governance of the national laboratories, including a consortia 
of universities for-profit entities and individual 
universities.
    We believe it is important in this mix of contractors that 
the major research universities of this country remain linked 
to the national laboratories. We believe we can bring to the 
laboratories the values of inquiry and excellence that define 
our institution; values which can, in addition to other things, 
be of assistance to the laboratories in recruiting some of the 
best scientists and engineers.
    The University of Chicago is therefore part of the 
laboratory system not out of seeking financial gain, but 
because we believe it is part of the public service mission of 
the University. This is not about profit.
    In 1988 and again in 1998 the University stated on the 
record that Price-Anderson indemnification which protects the 
public against nuclear risk is also vital to the University's 
ability to continue as a contractor. The trustees of the 
University of Chicago have an obligation under law to protect 
the University's endowment and to use it for the purposes for 
which it was donated, that is to support the core educational 
and research missions of the University. The contractual 
obligations the University undertakes with the Department of 
Energy as contractor for Argonne are ones that the University 
may not put its endowment at risk for.
    Having said this, I want to now say with this testimony 
that this testimony is not about a refusal to be accountable. 
Nor is this nor should this be a question of safety and 
adversarial matter. The University takes its responsibilities 
for the safety of its workers seriously and believes that it 
should be and is held accountable for its stewardship of 
Argonne in a number of significant ways.
    First and foremost, we put at risk our reputation, not a 
trivial matter to our community and not a trivial matter to our 
trustees.
    Second, the University is contractually obligated to 
fulfill many safety and environmental responsibilities 
including full compliance with DOE's nuclear safety 
requirements under Price-Anderson.
    As part of these obligations, the University has agreed to 
put its entire performance fee on the line. In addition the 
University is already, as has been pointed out earlier, subject 
to exposures beyond the fee. Removal of the exemption from 
civil penalties for violation of nuclear safety requirements 
under Price-Anderson would greatly add to these exposures 
without adequate protection for the University endowment.
    So let me say again, this is not about a commitment to 
safety, or about accountability for the university's actions. 
Through it's board of Governors for Argonne National Laboratory 
and in particular the safety committee as well as through the 
University's contract with DOE and procedures for implementing 
its requirements, the University clearly states and performs 
its commitment to worker and environmental safety.
    What we want understood is that we believe that our ability 
to remain as a contractor for this laboratory is dependent up 
on the willingness of the Government to understand both the 
value that not-for-profit educational institutions can bring to 
the management of the labs as well as the fact that a not-for-
profit can only take risks consistent with its trustees 
fiduciary obligations to its donor and to the management of its 
endowment.
    Thank you very much and I'll be happy to answer any 
questions.
    [The prepared statement of Arthur M. Sussman follows:]
  Prepared Statement of Arthur M. Sussman, Vice-President for Argonne 
             National Laboratory, The University of Chicago
    Mr. Chairman and members of the Committee, thank you for the 
invitation to come before you to discuss the important issues of worker 
safety at the Department of Energy (DOE) nuclear facilities and DOE's 
enforcement of its nuclear safety requirements under the Price-Anderson 
Amendments Act of 1988.
    The University of Chicago is the management and operating 
contractor for the Department of Energy's Argonne National Laboratory 
(Argonne). Argonne is a multiprogram basic research and development 
laboratory, whose mission includes certain research and development 
activities in the field of nuclear energy; approximately 5000 people 
work at Argonne, in locations in Illinois and Idaho. The University of 
Chicago, a not-for-profit educational institution, is directly 
responsible and liable for performance under the contract with the 
United States government, through DOE, for the management and operation 
of Argonne.
    The University of Chicago has been the contractor for Argonne from 
its inception in 1946, and before that was the contractor with the 
Manhattan District for the project at the University campus during 
World War II that included the Fermi experiment, under the stands of 
our football field, that ushered in the nuclear age. Throughout this 
period, the University has acted in the belief that its stewardship of 
Argonne is a public service. The Laboratory has made and continues to 
make outstanding contributions to the nation's programs in many areas 
of science and technology.
    Argonne's work encompasses a broad array of research, ranging from 
studies of the atomic nucleus to global climate change research to 
innovative ways to detect disease and develop medicines to treat 
them.1 Argonne research has led to important discoveries and 
inventions, such as a new biological microchip technology that could 
dramatically speed the discovery of the genetic causes of disease, 
identification of infectious diseases and presence of biological 
warfare agents, and one day may help doctors diagnose illness and offer 
customized treatments based on an individual's genetic makeup. Other 
Argonne research has led to the development of an ultrahard coating 
that is many times slicker than Teflon, and that may have the lowest 
coefficient of friction of any carbon-based material in the world; 
promising applications include automobile and engine parts such as fuel 
injector components, oilless bearings, and spacecraft mechanisms. 
Another important recent invention, which arose out of research in the 
area of nuclear reactor safety, is an early warning expert system for 
monitoring the performance of sensors, equipment and plant processes 
that detects the smallest developing faults at the earliest possible 
time, thereby substantially enhancing system safety, availability, and 
operating efficiency for a wide range of applications in utilities, 
manufacturing, aerospace, telecommunications and other 
industries.2
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    \1\ Argonne's research encompasses four major categories: Basic 
Science, which seeks solutions to a wide variety of scientific 
challenges. This includes experimental and theoretical work in 
materials science, physics, chemistry, biology, high-energy physics, 
mathematics and computer science, including high-performance computing; 
Scientific Facilities, which are sophisticated research facilities, 
such as Argonne's Advanced Photon Source, designed, built and operated 
by the laboratory that would be too expensive or impractical for a 
single company or university to build and operate. They are used by 
scientists from Argonne, industry, academia, other national 
laboratories and agencies, as well as by scientists from other nations. 
The laboratory is also home to the Intense Pulsed Neutron Source and 
the Argonne Tandem Linear Accelerator System, among other facilities; 
Energy Resources programs, which help insure a reliable supply of 
efficient and clean energy for the future. Argonne scientists and 
engineers are developing advanced batteries and fuel cells, as well as 
advanced electric power generation and storage systems. They also are 
working to improve the safety and longevity of both American and 
Soviet-designed nuclear reactors; and, Environmental Management, which 
includes work on managing and solving the nation's environmental 
problems and promoting environmental stewardship. Research in this area 
includes alternative energy systems, environmental risk and economic 
impact assessments, hazardous waste site analysis and remediation 
planning, electrometallurgical treatment to prepare spent nuclear fuel 
for disposal, and new technologies for decontaminating and 
decommissioning aging nuclear reactors.
    \2\ This, as well as the near-frictionless-carbon coating, 
inventions were each recipients of an 1998 ``R&D 100'' Award.
---------------------------------------------------------------------------
    In addition, visiting researchers working at Argonne's renowned 
User Facilities such as the Advanced Photon Source (APS) have made 
``breakthrough'' discoveries in their fields; research demonstrating 
that x-ray analysis of human hair could become an early-warning test 
for the incidence of, and predisposition for, breast cancer recently 
was performed at the APS. Since 1990, Argonne researchers have worked 
with more than 600 companies, numerous federal agencies and other 
institutions in pursuit of broad-based scientific and technological 
objectives.
    The University's commitment to Argonne is a commitment to the 
national laboratory system and the importance of research-university 
involvement in this vital segment of the national science 
infrastructure; as noted in the Galvin Report, ``the laboratories'' 
research role is a part of an essential, fundamental cornerstone for 
continuing [scientific] leadership by the United States.'' 3 
The University believes that it is important that the major research 
institutions of this country remain linked to the national 
laboratories. We bring to the laboratories the research and educational 
values of our institutions. We assist the laboratories in recruiting 
some of the best scientists and engineers to work at the national 
laboratories. We, therefore, are part of the laboratory system because 
we believe that it is a part of the public service mission of the 
University.
---------------------------------------------------------------------------
    \3\ See ``Alternative Futures for the Department of Energy National 
Laboratories,'' Prepared by the Secretary of Energy Advisory Board Task 
Force on Alternative Futures for the Department of Energy National 
Laboratories, February, 1995, commonly referred to as ``the Galvin 
Report''.
---------------------------------------------------------------------------
    A cornerstone of the University's stewardship of Argonne always has 
been to fulfill Argonne's scientific mission in a manner that preserves 
and enhances the safety, health and environment of Argonne's employees 
and the public in all areas. The University remains committed to being 
directly accountable for these important responsibilities. To this end, 
given the unique safety and environmental challenges presented by 
scientific work involving nuclear activities, throughout the history of 
our management of Argonne we have been especially sensitive to 
addressing safety and environmental issues presented by such work. We 
firmly support the specific focus on nuclear safety issues provided by 
the Price-Anderson Act and DOE's accompanying nuclear safety 
requirements and rules under Price-Anderson. Under our contract with 
DOE, we are formally obligated to adhere to these requirements and 
rules, and follow specific policies and procedures for implementing 
them.
    In addition, we have established a track record of implementing 
detailed policies, procedures (including those related to self-
reporting of deficiencies or incidents), and independent oversight, 
audit and governance mechanisms by which risk of harm from nuclear and 
other activities is minimized, and errors or potential faults in our 
safety system are identified and remedied. The University's Board of 
Governors for Argonne, through its Safety and Environment Committee, 
performs special responsibilities in this regard; the Board's official 
policy statement proclaims that ``worker and public safety is given the 
highest priority in the conduct of Laboratory activities including the 
safety of nuclear operations, and the protection of the environment.''
    Also, our performance-based contract with the Government for the 
management and operation of Argonne, which has been in place since 
1995, requires us to meet a variety of detailed safety measures, rules 
and regulations; specifically included are the DOE's nuclear safety 
rules and requirements under the Price-Anderson Act. Failure to meet 
these, as well as other requirements, can result in significant adverse 
impact to the University's reputation (e.g., through the occurrence of 
an accident, and/or imposition of an Enforcement Action/Notice of 
Violation), the loss of all of the performance fee provided in the 
contract, and even the University's removal as the contractor for 
Argonne. While the University strives for continuous improvement in 
important areas of performance such as environment, safety and health, 
as well as science and technology, to date Argonne has performed very 
highly overall in these critical areas.
    The Price-Anderson Act provides ample and prompt means with which 
to protect the public against nuclear risks, which in general are 
uninsurable, through its mandate that DOE provide complete 
indemnification in its contracts that involve the risk of a nuclear 
incident (Indemnification). The Indemnification allows Argonne to 
fulfill its mission involving nuclear activities, and allows the 
University to continue to serve as the steward for Argonne. In addition 
to protecting the public from nuclear risks, the University, as a not-
for-profit educational institution whose assets are dedicated to its 
mission of education and research, is thus able to protect its 
endowment and other assets from the special and distinct risks of the 
nuclear field. Indeed, such indemnification has been a fundamental 
condition of the University's undertaking nuclear activities at Argonne 
because the University's Trustees have a fiduciary obligation to 
protect the University's endowment and to use the endowment for the 
support of the educational and research missions of the University; the 
contractual obligations the University undertakes with DOE as 
contractor for Argonne are obligations for which the University may not 
put its endowment at risk.
    When Congress extended Price-Anderson's Indemnification in 1988, it 
again recognized that DOE's ability to attract and retain high-quality 
not-for-profit educational institutions to serve as contractors for its 
research laboratories is fundamental to DOE's ability to fulfill its 
mission. It did this by exempting certain named not-for-profit 
educational institutions from civil penalties for violations of nuclear 
safety requirements for as long as these entities served as contractors 
of these facilities,4 because it recognized that such 
entities do not undertake to manage DOE facilities for profit, do not 
receive fees on the basis of risk-taking analysis, and cannot risk 
their endowments for undertaking the special risks inherent in the 
nuclear field.
---------------------------------------------------------------------------
    \4\ See Senate Report No. 100-70, p.23.
---------------------------------------------------------------------------
    We recently have completed negotiations with DOE for a five-year 
extension to the contract for the management and operation of Argonne, 
to begin on October 1, 1999. Under the contract, the University will 
continue to be responsible for specific performance requirements in 
many areas, including the implementation of, and adherence to, a system 
of integrated safety management, nuclear safety requirements under 
Price-Anderson, and the exposure to penalties (including placing all 
fee at risk) and liabilities. We believe that the contract's terms and 
the University's record of running Argonne demonstrate that adequate 
and appropriate mechanisms are in place to ensure the highest possible 
level of worker and public safety, and to minimize risks, with respect 
to nuclear and other activities carried out at Argonne.
    The new contract and its predecessor already have significantly 
increased the financial risk facing the University due to the 
imposition of certain statutory, regulatory, and contractual liability 
provisions; in fact, at present the University's fees received from the 
operation of Argonne already are less than the costs and risks 
undertaken by the University in operating Argonne. This contract 
assumes continuation of the Price-Anderson Indemnification and the 
continuation of an exemption from civil penalties. Any change in the 
rules in this regard would cause the University to reconsider whether 
it can continue its stewardship of the contract for the management and 
operation of Argonne.
    The University of Chicago continues to strongly support the 
implementation and enforcement by DOE of its nuclear safety 
requirements under the Price-Anderson Act; we believe that the most 
effective means by which to do so are through mechanisms currently 
available to, and utilized by, the Department. In addition, the 
University supports extension of the Price-Anderson Indemnification, 
and continuation of the exemption of not-for-profit educational 
institutions from civil penalties (See January 30, 1998 The University 
of Chicago Comments on DOE Notice of Inquiry Concerning Preparation of 
Report to Congress on the Price-Anderson Act, attached). The University 
believes that the nation's vital science and technology mission 
continues to benefit from having not-for-profit educational 
institutions such as the University serve as stewards of its national 
laboratories: Any changes to the rules with respect to Price-Anderson 
should not act to discourage nonprofit educational entities from 
operating these laboratories.
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    Mr. Upton. Thank you. Mr. Card, welcome.

                  TESTIMONY OF ROBERT G. CARD

    Mr. Card. Thank you. Mr. Chairman and members of the 
subcommittee, my name is Bob Card, President and CEO of Kaiser-
Hill Company. We operate the Rocky Flats Environmental 
Technology Site.
    Kaiser-Hill's mission at Rocky Flats is to safely close the 
site the year 2006. Accomplishing this mission will: No. 1, 
eliminate worker and public risks from the sites many hazards; 
No. 2, make over 6,000 acres of prime suburban Denver property 
available for other uses; No. 3, save taxpayers over $400 
million per year of basic future operating costs; No. 4, 
increase the nation's safeguards and security posture by moving 
weapons components and weapons grade material to more suitable 
long-term storage; and No. 5, reduce the Government's safety, 
environmental and natural resources liability.
    Safety is a core component of Kaiser-Hill's strategy for 
closing Rocky Flats. It's part of our business strategy to 
position for other nuclear work in a very safety-conscious 
industry. Additionally because we have a stop work for any 
safety condition culture at Rocky Flats coupled with aging 
facilities and safety infrastructure, safety is the key enabler 
to allow us to accomplish our 2006 closure date an maximize or 
incentive fee.
    Through our contract DOE can retain part or all of our 
incentive fee, even terminate our contract for safety 
shortcomings, many of which do not have to result in actual 
injuries. And they actually have implemented that portion of 
our contract to Rocky Flats.
    The Defense Nuclear Facility Safety Board, another--we view 
them as a regulator, although I guess technically they are not, 
can refuse startup permission for key activities and issue 
embarrassing letters pointing out safety concerns. And by the 
way, if we can't startup, then we don't earn any fee.
    Last, but not least, DOE can embarrass and fine us through 
enforcement of Price-Anderson rules. I believe that the results 
of our safety first strategy have been very impressive. We 
dramatically reduce public and worker risks and exposure by 
eliminating more than 80 percent from the clean up schedule and 
work effort. After delivering more than 30 million work hours, 
Kaiser-Hill has never experienced a single debilitating injury 
or radiological or chemical exposure above regulatory limits. 
We made significant improvements in key safety performance 
measures while making step change increases in productivity and 
I included some of those in my written testimony.
    DOE headquarters assessments before and after Kaiser-Hill's 
takeover validate improvements in the safety culture and 
infrastructure. Price-Anderson has been a useful component in 
our safety improvement. It provides a structured approach to 
identify and address safety issues and their deep underlying 
causes well before they can become a significant event.
    It's financial and image impact is sufficient to cause 
senior executive management to personally engage in important 
safety issues. And importantly we believe that Price-Anderson 
along with the Defense Board provides our community and 
stakeholders comfort that a tough regulator is watching. This 
in turn helps build support for us engaging in the high-risk, 
non-routine work required to close the site.
    And at Rocky Flats, I want to comment that we believe 
Price-Anderson has been administered fairly a politically. Form 
our perspective we would recommend that the Price-Anderson 
status quo be continued with two caveats. One, while we're 
impressed with the management of the program to date, there is 
a lot of flexibility in there for the program to become 
politicized and bureaucratized under different future 
leadership and we would like to see that tightened up.
    Second, we believe that QA rule provides all the 
enforcement leverage needed and no further rules are 
necessarily unless they are designed to streamline work and 
make it safer.
    As Dr. Michaels testified, DOE orders already contain all 
the necessarily language. Although we wouldn't be opposed to 
rules and in fact, streamline the work. We find that safety and 
complexity are inversely related and the more targeting concise 
regulations the better.
    Thank you.
    [The prepared statement of Robert G. Card follows:]
 Prepared Statement of Robert G. Card, President and CEO, Kaiser-Hill 
                              Company, LLC
    Mr. Chairman and Members of the Subcommittee, my name is Bob Card, 
and I am the President and Chief Executive Officer of Kaiser-Hill 
Company, the management and integration (M&I) contractor at the Rocky 
Flats Environmental Technology Site (RFETS, or ``the site'') near 
Denver, Colorado. Kaiser-Hill has managed Rocky Flats since 1995, when 
it was awarded one of the Department of Energy's (DOE's) first 
significant performance-based contracts.
    Kaiser-Hill's efforts at Rocky Flats are familiar to the 
Subcommittee. As you know, when we first arrived at the site, it was 
estimated that the cleanup effort would not be completed until the year 
2060 at a cost of over $37 billion. With an aggressive project planning 
and management approach, we are in the process of slashing that 
estimate and transitioning the site to a planned 2006 closure at a cost 
of under $7 billion. This will save U.S. taxpayers more than $30 
billion dollars, and will result in a more timely and responsible 
cleanup for the communities surrounding Rocky Flats. As you will see 
from my later testimony, it also provides a safer cleanup of the 
facility.
    The matter before the Subcommittee today is worker safety at DOE 
facilities, and the impact of Price-Anderson Act requirements on our 
safety culture. In order to fully understand how Price-Anderson fits 
into our regulatory framework, it is important to have some background 
on Kaiser-Hill's approach to safety at Rocky Flats.
Kaiser-Hill's Business Philosophy
    First of all, we have not just a legal responsibility, but a moral 
and ethical responsibility to provide a safe environment for our 
workers. RFETS has some of the most hazardous environmental problems in 
the United States. Even in the midst of these dangers, however, I can 
confidently say that we do not have the most hazardous working 
conditions in the nation. Our record is the proof of this: it shows 
that we are safe, and we are getting safer. For our workers, the price 
of failure can be a high one. For that reason, it is the 
responsibility--the obligation, even--of each individual employee to 
stop any work activity he or she feels is unsafe. While this does 
produce a higher-than-average number of work stoppages, it is far 
easier to rethink the work logic of an activity at the front end than 
to undo the damage of a job gone wrong.
    Safety is also a core business value of Kaiser-Hill. The structure 
of our contract with DOE--its emphasis on performance and production--
demands a strong commitment to safety. Nuclear and radiological safety 
issues account for a significant percentage of down time at Rocky 
Flats. If our safety program is not operating properly, we do not work. 
If we are not working, we cannot perform. If we cannot perform, we are 
not earning the contract incentives needed to make Rocky Flats a viable 
business enterprise. I am pleased to be able to tell you that our 
commitment to safety is paying off. We are accomplishing much at Rocky 
Flats, and taxpayers are saving a lot of money because of it.
    Kaiser-Hill also needs a strong safety posture to maintain its role 
in the nuclear industry. If we are not operating safely, we will not 
attract the type of high-quality, qualified people we need to make our 
business work at Rocky Flats. As we hope to finish our cleanup of the 
site by 2006, we need an impeccable safety record if we are to have any 
hope of succeeding with other projects and ensuring our business 
viability in the future.
    In short, it's pretty simple. Safety is one of the most important 
keys to productivity at Rocky Flats and Kaiser-Hill's success as a 
business. If we don't operate safely, we don't operate at all.
The Challenge at Rocky Flats
    The Subcommittee is already familiar with the magnitude of what we 
are trying to accomplish at Rocky Flats. As I testified last month, we 
are fairly fortunate not to have technological hurdles of the 
proportions seen at some other DOE sites. However, this should not 
detract from the challenges we face at RFETS. When we started the 
Closure Project, Rocky Flats had more bulk plutonium than any other 
site in the DOE complex. We have over 500,000 square feet of 
contaminated building space in production buildings, about 80 
contaminated soil sites, and about three million total square feet of 
office and industrial space.
    Accomplishing a 2006 closure requires us to properly execute an 
immense amount of work over the next seven years. We have to 
decontaminate and decommission the site's nuclear facilities--an 
enormous undertaking that requires us, among other things, to drain and 
stabilize a total of 26,500 liters of plutonium and highly enriched 
uranium solutions, stabilize and repackage a total of 106,000 kilograms 
of plutonium residues, and ship all of the site's inventory of special 
nuclear materials to other locations in the DOE complex. We must 
demolish all of RFETS's 700 buildings, and conduct environmental 
restoration of the site's contaminated areas. And we must conduct every 
one of these activities safely. I could go on about the challenges we 
face in shutting down Rocky Flats, but I think this rough sketch is 
sufficient to put the importance of our safety strategy into context.
Kaiser-Hill's Safety Strategy
    Kaiser-Hill takes a preventative approach to safety, attempting to 
anticipate problems before they become problems. One of the most 
important elements of this is the implementation of Integrated Safety 
Management (ISM) at the site. It involves five steps that seem like 
simple common sense--and they are--but which still require a conscious 
commitment to execute properly. First, we define the scope of work to 
be completed, whether it is the entire Rocky Flats Closure Project or 
an individual work activity. Second, we identify and analyze the 
hazards we expect to encounter during the work. Third, we identify and 
implement controls to mitigate those hazards. Only at that point do we 
move to step four: actually performing the work. Fifth, and very 
important from an efficiency and productivity standpoint, we provide 
feedback to apply to future activities.
    With ISM, we are hopefully identifying problems and hazards before 
they have a chance to negatively impact our work at the site. When 
problems do arise, we can take those lessons learned, incorporate them 
into our future efforts, and avoid complications and contingencies with 
our remaining work.
    Kaiser-Hill also takes an honest approach to safety. We need an 
open, truthful, blunt, and communicative process from bottom to top--
from the radiation worker on the floor through every management level--
in order to accurately assess the work we are doing and whether these 
activities are being conducted safely. Again, we operate this way for 
two reasons: first, because our workers deserve it, and, second, 
because it just makes good business sense.
    Ultimately, Kaiser-Hill is responsible for all aspects of site 
safety. We are the ones responsible for maintaining a safe operating 
environment, both for our workers and the surrounding communities. We 
expect to be held accountable for our safety performance. On the one 
side of the coin, we recognize that we should be negatively affected 
when our safety performance does not match regulatory and statutory 
requirements. On the other side, we also expect to be rewarded when our 
safety performance exceeds expectations and allows the site's cleanup 
work to progress more quickly than anticipated.
The Results at Rocky Flats
    Kaiser-Hill has made significant strides in safety at Rocky Flats 
since we began managing the site in 1995. I can sum up these 
improvements with the help of a few of our safety statistics. Figure 1 
shows the Rocky Flats total recordable case rate, which is a standard 
Occupational Safety and Health Administration (OSHA) measurement. This 
measures the number of recordable injuries per 200,000 hours of work. 
As you can see, we have reduced our recordable case rate from about 
five in 1995 to just over three today--well below the national 
construction industry average of almost ten. Another OSHA indicator, 
the lost workday case rate, is shown in Figure 2. This measurement is a 
subset of the recordable case rate, and indicates the number of cases 
resulting in lost workdays per 200,000 hours. Again, we have shown a 
steady reduction since 1995, and we are well below the construction 
industry average in lost workdays.
    We also track a number of safety indicators on our own at Rocky 
Flats. The next three figures are self-assessments Kaiser-Hill uses to 
track the health of its safety regime. Figure 3 shows the number of 
radiological infractions at the site by month. A radiological 
infraction as charted here can be as simple as forgetting to properly 
sign into a controlled area, or failing to wear a dosimeter in a 
radiological area. It still reflects an improper procedure and a failed 
attention to detail. We view these infractions as precursors to the 
potential for more serious incidents--our canary in the coal mine.
    Figure 4 is another self-assessment we have at Rocky Flats, and 
measures our nuclear licensing infractions. These point to possible 
actions that would violate the safety requirements of our authorization 
basis--DOE's version of the Nuclear Regulatory Commission operating 
license. From a Kaiser-Hill standpoint, these are the most troubling 
violations we have at the site, and the ones we hope to keep to a 
minimum.
    Finally, Figure 5 measures our criticality safety infractions. 
Again, this is another self-assessment Kaiser-Hill tracks at Rocky 
Flats. It does not indicate that a criticality occurred--in fact, 
during Rocky Flats' entire existence, there has never been an actual 
criticality event at the site. Instead, this tracks the precursor 
events and conditions that, if left unchecked and combined with other 
failures, could have eventually led to a criticality event.
    All in all, each of these major indicators shows a steady trend of 
improvement. These gains are even more impressive because the level of 
work, and the possibility of exposures to workers, has increased 
dramatically during that time. Our work activity has been increasing, 
and our incident rate per work unit has been decreasing steadily. As 
the Subcommittee knows, Kaiser-Hill recently submitted its proposal to 
achieve a 2006 closure at the site. From a safety standpoint, this 
impressive schedule compression would provide major reductions of total 
risk for both our workers and the surrounding communities, as shown in 
Figure 6.
    These improvements have been validated by DOE's Office of 
Environment, Safety and Health (EH), in its assessments of safety at 
Rocky Flats. EH conducted comprehensive evaluations of the site just 
before our takeover in March 1995 and again in May of this year. In its 
May 1999 report, Focused Safety Management Evaluation of the Rocky 
Flats Environmental Technology Site, EH found that ``[t]he improvements 
in the RFETS safety management program since the 1995 Oversight 
evaluation is notable . . . Much of the progress in the past four years 
can be attributed to the attention and leadership by managers at all 
levels . . .'' Three of the noteworthy practices it identified were our 
strong subcontractor accountability mechanisms, our site-wide work 
planning and control approach, and our lessons-learned database. These 
tools, along with others, are important components of achieving 
continued improvement in our safety management efforts.
Price-Anderson and Kaiser-Hill
    The Department of Energy's judicious application of Price-Anderson 
enforcement, as set forth in 10 CFR 820 Appendix A, has been an 
important ingredient in safety improvement at Rocky Flats. At the site, 
Price-Anderson is viewed not as a regulatory burden, but as a problem 
detection and process improvement program. We view the self-
identification, reporting, and corrective action program of Price-
Anderson as an important tool in maintaining a safe work place at Rocky 
Flats. As such, the message of Price-Anderson enforcement has been well 
received at Rocky Flats.
    This is primarily due to the manner in which the policy is applied 
at Rocky Flats. It is not a dogmatic or control-oriented regulatory 
hammer, but is truly aimed at safety improvement. Price-Anderson's 
basis in sound nuclear safety principles promotes a fair process 
designed to maximize a safe working environment. If I am presenting a 
picture of Price-Anderson as a toothless tiger, however, let me quickly 
eliminate that impression. We take the requirements of Price-Anderson 
very seriously, and recognize that it has the ability to quickly shut 
down operations at Rocky Flats and result in substantial financial 
penalties for Kaiser-Hill. If the positive incentives of our 
performance-based contract are the carrot to accomplishing the safe 
closure of the site, Price-Anderson is certainly one of the sticks 
which requires us to conduct a safe and responsible cleanup.
    The Price-Anderson enforcement process is very comprehensive 
compared to other enforcement mechanisms. It looks at underlying 
factors in its enforcement investigations. The enforcement focus of 
Price-Anderson is the identification and correction of programmatic 
failures, and no credit is given for responding to individual incidents 
which collectively indicate larger programmatic issues. This has helped 
to focus our senior management on important issues that were not 
receiving appropriate priority. As a result, Kaiser-Hill has instituted 
major overhauls in our safety approach. For example, problem management 
does not simply examine the event of the moment, but expands beyond 
those borders to investigate deep causal factors that could have 
contributed to the condition. As a result, ensuring the effectiveness 
of our corrective actions has become much more significant, and we have 
heightened the accountability of our organization--especially the lower 
tier--to be responsible for identifying and exposing safety problems.
    Throughout Rocky Flats, I can say that we have experienced little 
unjustified cost due to the Price-Anderson enforcement process. The 
process has identified real gaps in our safety approach, and the cost 
of rectifying these problems was a necessary expense not just from a 
regulatory standpoint, but from an operational standpoint. Since taking 
over the Rocky Flats site in 1995, Kaiser-Hill has received three 
enforcement actions under Price-Anderson--including two fines--and in 
each case, unfortunately, the action was well deserved.
    For Kaiser-Hill, a regulatory enforcement action--even with no 
fine--is a major concern as it cuts to the core of our ethical and 
moral responsibility to our workers and to our competitive strategy: 
the ability to efficiently, responsibly, and safely accelerate the 
cleanup of RFETS. We go to great lengths to attempt to stay out of 
compliance space, a concept we call ``regulatory margin.'' Regulatory 
margin requires us to go above and beyond the call of duty in matters 
of regulatory compliance. Rather than skirting right at the edge of 
compliance, we would prefer to operate with some breathing space 
between our actual performance and the requirements of our regulators. 
Price-Anderson requirements help us establish the thresholds for events 
and trends from a regulatory standpoint, providing a real-time screen 
for nuclear and radiological safety performance. This, in turn, allows 
Kaiser-Hill to establish bounds for its own expectations of 
performance, which then translates into the regulatory margin we hope 
to accomplish.
    One important component of this effort is the timely self-reporting 
of violations and declining trends in safety. Self-reports show that we 
understand the facts and conditions at the site and are willing to face 
up to them--a necessary first step in correcting problems. Timely 
reporting may not prevent violations, but it does ensure that we and 
our regulators are aware of problem situations and taking steps to fix 
them.
Price-Anderson's Quality Assurance Role
    Price-Anderson has a dual purpose in ensuring confidence in the 
activities we are undertaking at Rocky Flats. First, and most 
important, is the validation Price-Anderson provides for the safety of 
our work logic and execution. This has required Kaiser-Hill to 
translate best-in-class commercial practices to the DOE environment. It 
includes an aggressive implementation of ALARA (As Low As Reasonably 
Achievable) principles to reduce worker exposure to radioactivity to 
the greatest extent possible, and a concerted effort to bring private 
sector expertise in safety systems and decontamination and 
decommissioning licensing to Rocky Flats.
    Implementation of Price-Anderson at the site establishes a very 
clear line of responsibility for actions and problems. Deniability is 
not an option, as there is full disclosure of information and a full, 
prompt investigation of any possible safety shortcoming. Kaiser-Hill 
views the primary importance of Price-Anderson not as a regulatory 
enforcement regime, but as a mechanism to help the site establish and 
maintain a safe and efficient operating environment. Often, an event 
investigation into one condition will reveal other conditions adverse 
to proper safety management, giving us an opportunity to correct a 
deficiency before it can lead to a consequential event. With the 
emphasis of Price-Anderson on preventing repeat events or events that 
follow obvious precursors, Kaiser-Hill has begun to treat non-
consequential ``near-misses'' just like real, consequential events. The 
actions we have taken to mitigate these precursor conditions have quite 
likely prevented consequential events.
    Price-Anderson has also helped build confidence with our 
stakeholders. The public needs to know that a strong, committed, and 
capable regulator is present at Rocky Flats. Lack of regulation is 
generally not a problem at the site: we have multiple layers of 
oversight, including the Department of Energy, the Environmental 
Protection Agency, the Defense Nuclear Facilities Safety Board, the 
State of Colorado, and local governments. Effective oversight and 
regulation helps establish the comfort level among stakeholders that 
Kaiser-Hill needs to execute the more complicated activities we have to 
accomplish to achieve an accelerated closure of the site. If they do 
not trust the regulatory framework to ensure a safe working 
environment, achieving stakeholder acceptance for the work is much more 
difficult.
Price-Anderson at Rocky Flats
    While Price-Anderson has been a positive force at Rocky Flats, it 
is important to recognize that it is only one of the tools DOE has at 
its disposal to enforce regulatory compliance. The structure of our 
performance-based contract with DOE is also a major compliance driver. 
The fact that we are only rewarded for performance is a significant 
inducement to remain in compliance with applicable regulations. These 
provisions are highly positive aspects of the contract and ensure a 
high priority for safety. On the other hand, our contract also provides 
DOE several tools to penalize unsafe behaviors.
    For example, one quarter of our annual fee is at risk should a 
fatality occur at the site--an event we will hopefully avoid at Rocky 
Flats. However, under construction industry standard measurements, 
statistics indicate that several fatalities would be expected at a 
comparable commercial site of this magnitude. It has nothing to do with 
the radiological dangers involved at Rocky Flats, but simply reflects 
the fact that the site is a very large industrial area with a major 
demolition effort underway. What it means for Kaiser-Hill is that we 
must strive to operate significantly more safely than best-in-class 
industry standards for our business to succeed at RFETS.
    Another significant contract matter is Kaiser-Hill's liability for 
problems at the site. In essence, Kaiser-Hill has the full 
responsibility for anything that goes wrong. We have unlimited 
liability for fines and penalties incurred for site operations. We have 
liability for claims from third parties, for any lost or damaged 
property at Rocky Flats, and management liability for business 
judgments that result in an improper use of taxpayer monies, all as 
defined by our contract.
    We view these elements--at-risk fee and liability--as end-of-
process penalties. If Kaiser-Hill is doing its job responsibly and 
properly from the beginning, we will hopefully never be subject to 
these penalties. This is why Price-Anderson has an important role at 
Rocky Flats. We view Price-Anderson as one of the primary ways in which 
we guarantee quality assurance from start to finish in the work at the 
site.
Observations and Recommendations
    One of our primary concerns with Price-Anderson is its uncertainty. 
At Rocky Flats, at least, we strongly support the manner in which 
Price-Anderson has been interpreted and implemented by DOE. Our fear, 
however, is that the program may be too dependent upon personality. 
Used by judicious and intelligent management, as is our current 
experience, Price-Anderson is a highly valuable tool to help DOE sites 
raise the bar on nuclear safety. In less capable hands, there are few 
safeguards to prevent Price-Anderson from becoming a meddlesome, 
bureaucratic, and political monster that could severely hamper the 
effort to get work accomplished at Rocky Flats and other DOE sites, and 
could, in fact, actually undermine safety at sites. Under such 
circumstances, obviously, our support for the Price-Anderson structure 
would quickly evaporate.
    As you look forward to the reauthorization of Price-Anderson in the 
next Congress, I do have a couple of recommendations how to ensure the 
effectiveness of the enforcement policy. At this point, given the 
responsible manner in which it is being implemented, Kaiser-Hill does 
support maintaining the enforcement policy and program as it is 
currently functioning. The most helpful actions you could take would be 
those designed to institutionalize DOE's current management of the 
program, removing the potential for improper or subjective 
interpretation of the statute.
    The other recommendation is that no further rulemaking is necessary 
or desired to ensure the effectiveness of Price-Anderson. The 
radiological control rule, as set forth in 10 CFR 835, and the quality 
assurance rule, as found in 10 CFR 830.120, are sufficient. The quality 
assurance rule currently provides all the regulatory enforcement 
leverage DOE will ever need. It is akin to the Nuclear Regulatory 
Commission's 10 CFR 50 Appendix B, which has been the basis for the 
majority of enforcement actions against commercial nuclear facilities.
Conclusion
    Price-Anderson, as it is currently being implemented, has been a 
very helpful and positive influence at Rocky Flats. It has prompted 
significant changes in the safety culture of the site, and its strong 
emphasis on catching problems early has provided our local communities 
in Colorado with an additional sense of security in the work Kaiser-
Hill is managing at RFETS. Our goal of a 2006 closure at Rocky Flats 
will be a difficult endeavor, and we hope the requirements of Price-
Anderson will continue to assist our efforts to accomplish the closure 
safer, better, cheaper, and faster.
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    Mr. Upton. Thank you. Mr. Hall.

                  TESTIMONY OF LINCOLN E. HALL

    Mr. Hall. Thank you, Mr. Chairman and members of the 
subcommittee. I represent Lockheed Martin. We operate the Y-12 
plant in East Tennessee, Oakridge National Lab--excuse me--in 
East Tennessee, Sandia National Lab in New Mexico which has an 
extension in California. Currently we operate the Idaho 
National Lab in Idaho. We have major subcontracts to Fluor 
Daniel at Hanford, we operate the tank farm and the retrieval 
there. And we also have a major subcontract with Bechtel in the 
Nevada test site.
    As a corporation we work very diligently to define the 
requirements in such a way that verbatim compliance is a given 
in the work that we do. We fully applaud any attempt on the 
part of the Department to increase rigor and discipline in the 
implementation of the work and the work processes as they 
pertain to all of the DOE site, not just what would be 
classified as a nuclear facility.
    Recently the DOE has in fact stepped up its Price-Anderson 
enforcement and oversight activity. I would like to applaud 
that because this--I am seeing evidence that this increased 
activity is having a significant and a very positive impact on 
our DOE sites. It is in fact contributing to and helping the 
create a compliance-based culture; it is improving DOE and 
contractor leadership toward achieving compliance; it is 
stressing senior management involvement in and participation in 
the line activities out in the field; and it is helping to 
create an environment of managing and corrective actions in a 
very timely manner. And we believe in and support these 
principles.
    We would like to point out also though that those 
activities are largely driven by a multiple set of DOE orders 
that are in effect and are in fact incorporated in our 
contracts. On balance, I believe these orders are effective, we 
have experienced in our facilities few nuclear exposures and no 
fusel events in such form and quality that would threaten the 
public or workers or the environment.
    We believe that the Price-Anderson enforcement and 
oversight has a specific mission to assure that operations of 
nuclear facilities meets the public law. And what is relevant 
in my discussion is what constitutes a nuclear facility as 
opposed to what constitutes all of the facilities on a DOE 
site.
    Toward that end, contractors from the promulgative roles in 
1994 and 1995 developed and they performed to develop 
implementation plans and they have subsequently operated to the 
implementation plans. Although there was no real specific 
guidance in terms of the standard of what constitutes a 
facility that is within Price-Anderson enforcement space, the 
DOE did provide provisions that would allow contractors to take 
a graded approach to their facilities and those facilities that 
fell within a category 1, 2, or 3 classification was defined 
under DOD MIL Standard 1027 where in fact put into the 
implementation plans and defined as and operated as a Price-
Anderson enforcement facility.
    Recently and as recent here in the beginning of the year, 
initiatives by DOE have been to expand the Price-Anderson 
enforcement provisions under the 10 CFR 831.20 quality 
assurance rule that in my opinion would effectively expand 
enforcement activities over the entire site.
    DOE already has at its disposal remedies that are 
substantially punitive such as zeroing out our fee, that has 
occurred. Putting these site-wide management issues into 
enforcement space, we believe, would be onerous. We believe 
that it would not be apparent to us that putting site-wide 
management issues into enforcement space would increase either 
the operating health or safety to our workers or to the public.
    Thank you very much.
    [The prepared statement of Lincoln E. Hall follows:]
   Prepared Statement of Lincoln E. Hall, Vice President Operations, 
       Energy and Environment Sector, Lockheed Martin Corporation
    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to testify before you today on Worker Safety at DOE Nuclear 
Facilities with focus on a review of the department of Energy's 
enforcement of the Price-Anderson Act nuclear safety requirements. By 
way of background, I have been a businessman for 38 years, managing 
both commercial and government lines of business. I began my career 
with the Glenn L. Martin Company. I spent 30 years holding various 
positions in DOD Aerospace programs. In 1993, I assumed the Martin 
Marietta Corporation position of vice president of Environmental 
Management in Oak Ridge. In 1996, I became president of Lockheed Martin 
Hanford Corporation with responsibility for the Tank Waste Remediation 
System in Hanford, Washington. In January 1999, I assumed the position 
of vice president of Operations for the Lockheed Martin Energy and 
Environment Sector.
                              introduction
    Lockheed Martin Corporation appreciates the opportunity to provide 
testimony to this Committee regarding DOE's enforcement of Price-
Anderson Act nuclear safety requirements. This testimony represents the 
collective thinking of those Lockheed Martin Corporation operating 
entities in which we are pleased to hold contracts with the DOE. These 
include the Oak Ridge National Laboratory and the Y-12 plant in 
Tennessee, the Sandia National Laboratories in New Mexico and 
California, and the Idaho National Engineering and Environmental 
Laboratory. We also hold major subcontracts to Bechtel at the Nevada 
Test Site and to Fluor Daniel at the Hanford, Washington Site.
    The Price-Anderson legislation and the DOE rules created for its 
implementation, and their enforcement, are very important parts of the 
safety management framework established by congress and DOE for nuclear 
facilities. DOE's Price-Anderson rules are consistent with established 
U.S. Industry and International safety standards. Other safety 
requirements for nuclear facilities are prescribed in DOE directives 
made applicable through contract terms. These requirements include 
federal occupational safety and environmental regulations as well as 
DOE orders. Contractors recognize their responsibility to effectively 
implement DOE's Price-Anderson rules and other requirements to assure 
compliant and safe operation. Implementation plans are submitted to and 
approved by DOE.
    Lockheed Martin has placed great emphasis on rigorous compliance 
with the actions specified in these plans. We appreciate that 
requirements and standards must be succinct, unambiguous and 
implementable.
    importance of price-anderson to safe operation of doe facilities
    The Price-Anderson Act which was enacted in 1957 as an amendment to 
the 1954 Atomic Energy Act (AEA) Act established provisions under which 
financial protection is provided for public liability associated with a 
nuclear incident. DOE is required to include that indemnification 
provision in each of its contracts that involves the risk of a nuclear 
incident.
    The Price-Anderson Amendments Act (PAAA) of 1988 made changes to 
the 1957 PAA, one of which established a system of civil penalties for 
indemnified DOE contractors, subcontractors and suppliers for violation 
of any rule, regulation, or order, related to nuclear safety.
    This enforcement authority is a necessary and valuable tool for DOE 
to assure effective implementation of nuclear safety requirement by 
contractors, and Lockheed Martin fully supports DOE in this enforcement 
authority.
        contractor implementation of nuclear safety requirements
    The DOE Price-Anderson nuclear safety requirements as published for 
comment were applicable to reactor and non-reactor nuclear facilities. 
There were several comments during the Public comment period on 10 CFR 
830 stating that the term ``nonreactor nuclear facility'' was too 
vague. In the preamble to the final 10 CFR 830.120 Quality Assurance 
rule, the DOE disagreed with these comments because:
        The proposed definition was intended to cover all situations 
        (other than nuclear reactors) with the potential to cause 
        radiological harm. The reference to the graded approach was 
        included to take into account the differences that exist 
        between facilities and, thus, to avoid a rigid application of 
        nuclear safety requirements to divergent facilities and to 
        encourage the taking of actions appropriate for particular 
        facilities. [emphasis added]
    Consequently, contractors prepared and submitted Implementation 
Plans to the 10 CFR 830.120 Quality Assurance rule in late fall 1994. 
These Implementation Plans are the basis used to determine compliance 
with the relevant nuclear safety requirements. Although the regulations 
did not provide guidance as to the required scope of the Implementation 
Plans, in September of 1994, the Director of the Office of Nuclear 
Safety Enforcement, Mr. Richard Black issued a memorandum recommending 
that:
        The nuclear facility threshold for direct applicability of Part 
        830 shall be those facilities that are Category 3 and above per 
        DOE-STD-1027.
    In 1995, the DOE Office of the General Counsel issued Price-
Anderson ruling 1995-1 concerning 10 CFR Parts 830 (Nuclear Safety 
Management) and 10 CFR 835 (Occupational Radiation Protection). The 
ruling defines a nonreactor nuclear facility under 830 to mean those 
activities or operations that involve radioactive and/or fissionable 
materials in such form and quantity that a nuclear hazard potentially 
exists to the employees or the general public. Incidental use and 
generating of radioactive materials in a facility operation (e.g., 
check and calibration sources, use of radioactive sources in research 
and experimental and analytical laboratory activities, electron 
microscopes, and x-ray machines) would not ordinarily require the 
facility to be included in this definition.
    Thus, the initial contractor implementation plans submitted to DOE 
were constructed such that they were applicable to Category 1, 2, or 3 
nuclear facilities as defined by DOE-STD-1027. After a series of 
reviews, the Implementation Plans were approved by DOE.
    Through 1998, contractors annually submitted updated implementation 
plans that only addressed category 1, 2, and 3 nuclear facilities and 
these plans were subsequently approved by DOE.
                           current situation
    In the 1998 Annual Report by DOE's Office of Enforcement and 
Investigation, DOE stated in part:
         Contractor organizations have incorrectly assumed that the 
        Quality Assurance Rule (10 CFR 830.120) did not apply to a 
        facility, area, or activity if it was classified as less than 
        Hazard Category 3 under DOE Standard 1027-92 (Hazard 
        Categorization and Accident Analysis Techniques for compliance 
        with DOE Order 5480.23, Nuclear Safety Analysis Reports). 
        Standard 1027 provides guidance for determining whether a 
        facility, activity or area requires a SAR based on inventory. 
        However, it does not provide a basis for exclusion from the 
        provisions of 10 CFR 830.120. [emphasis added]
    This DOE position was further formalized in a letter dated February 
4, 1999 from the EH-10 division of DOE addressed to our Lockheed Martin 
Contractor Operating Presidents. The subject of the letter was 
``Request for Updated Implementation Plans for your Quality Assurance 
and Radiation Protection Programs.'' This letter, notes that the 
requested updates provided the contractors the opportunity ``to correct 
inappropriate classification of what constitutes a nuclear facility 
under the Quality Assurance Rule.''
    In summary, we are currently in a period of transition and 
uncertainty that is based on the following:
    1). We believe the Act(s) were clearly intended to address the 
contractors' management of nuclear and non-nuclear facilities that 
involve radioactive and fissionable material in such form and quantity 
that a nuclear hazard potentially exists to workers safety, the public, 
or the environment.
    2). Contractors have responded to the requirements of the QA rule 
using DOE-STD-1027 as the guide for determining which facilities fall 
under the provisions of the QA rule. Implementation plans written, 
based on this interpretation, have been submitted to DOE. These have 
been approved by DOE and budgets constructed accordingly (although the 
DOE disagreed with the limitation of the rule in its preamble to the 
final rule, the DOE's application of the rule has been consistent with 
DOE-STD-1027 until now).
    3) The DOE now wishes to modify application of the QA rule pursuant 
to the OGC ruling 1995-1 such that virtually the entirety of a DOE site 
would be subject to PAAA regulation under the QA rule with little 
correlation between the risk of a nuclear incident and the 
requirements.
                   doe enforcement of price-anderson
    It is clear in the DOE language that has been promulgated through 
its correspondence to its contractors, that verbatim compliance is 
expected, and if such compliance is lacking for those activities 
regulated under Price-Anderson then the contractors are subject to 
fines and penalties. We at Lockheed Martin expect to be held 
accountable for compliance. However, ``verbatim compliance'' can only 
be derived from ``verbatim requirements.'' Implicit in the concept of 
``verbatim compliance'' and ``verbatim requirements'' is the 
fundamental principle that regulations should provide precise and 
unambiguous clarity regarding the types of activities that are covered.
    We believe Congress has exercised its fiduciary responsibility to 
the public to not only minimize the public's risk resulting from the 
management of nuclear and non-nuclear facilities, but to also minimize 
the cost to the public in carrying out this mandate. One sure way of 
minimizing costs is to minimize and streamline regulatory requirements 
such that compliance with these requirements can be straightforward and 
unambiguous. Currently, DOE facilities are operating under a multiple 
set of requirements--many of which are subject to interpretation.
    For those facilities that are currently not covered by PAAA, we 
believe that DOE has put in place an effective oversight program, 
executed under its contract authority, for those contractors' health 
and safety activities. We therefore question the need for PAAA to be 
expanded to cover what could become all of these facilities that are 
under this oversight program. Although an expansion of Price-Anderson's 
space is likely to increase administrative cost, it is not apparent to 
us that such increased Price-Anderson expansion would measurably 
increase the operating health and safety to the workers and the public.
                               conclusion
    The full implications of expanding PAAA are not yet fully 
understood and are related to the actual results of the ``graded 
approach'' for each DOE facility. The term ``graded approach'' is 
interpretative and therefore subject to re-interpretation and 
therefore, runs counter to the concept of unambiguous requirements.
    With regard to the DOE enforcement of Price-Anderson nuclear safety 
requirements, it has helped create a Compliance Based culture that is 
improving. We applaud the increased Price-Anderson support and 
attention to contractor leadership needed to achieve a total quality 
compliance culture in DOE's facilities.
    Safety requirements established in DOE's directives are effective 
for facilities not currently in implementation plans for Price-Anderson 
rules. Broadened applicability of the rule is not necessary to assure 
safety.
    Mr. Chairman, the Members of this Subcommittee, we look forward to 
working with you and the DOE to help protect this nation as we manage 
the nuclear and non-nuclear facilities under our control.
    Thank you!

    Mr. Upton. Thank you, Mr. Hall.
    Mr. Van Ness, I noticed in your testimony you said a number 
of things. You were obviously concerned about the University of 
California's reputation and you wanted to do--you're right, you 
had a commitment to performing well and yet as I look at some 
of the comments particularly with regard to some of the fines 
this past year, 1998, I see these things.
    I see a nuclear facility appraisal conducted by LLNL 
identified significant and potentially widespread problems with 
workers not adhering to nuclear safety procedures.
    I see that five workers were contaminated with 
radioactivity at building 513 during waste processing 
activities that were in fact the radioactivity alarm in the 
building had been turned off.
    I see that Lawrence Livermore was fined $160,000 of one of 
those phantom penalties for unnecessarily exposing the workers 
to radioactivity and DOE noted numerous failures by University 
of California to implement the established protection 
requirements and quality controls.
    I see that DOE issued a criticality safety appraisal that 
identified significant problems with building 332.
    I see that DOE found multiple and reoccurring failures to 
follow criticality safety requirements in that same building 
May through December 1997. I see that another $155,000 phantom 
penalty was waived because of inadequate oversight in 
assessment over the criticality safety program over a number of 
years.
    I saw a fire and explosion in the chemistry and metallurgy 
research facility in 1996. I saw an enforcement letter that 
went out, but it refused to penalize Los Alamos correcting work 
planning and work control programs. I saw Los Alamos refuse to 
implement radiation protection requirements that they had 
agreed to in July and September 1997, and multiple failures 
were identified at the same case for including failure to 
ensure systems prevent release of contamination. And I saw that 
the DOE found or fined Los Alamos $112,000 for nuclear safety 
violations but, again, in fact that penalty was waived in 
September 1998.
    And I see this letter that you--I think you were here to 
see the Dr. Lappa letter, and it was referred to by a number of 
members on this panel, and I listened to Dr. Michaels at the 
end when he testified in response to a question from Mr. Burr 
where he said that simply alone the fines merely alone won't 
improve the safety performance and it was of a great concern. 
When I look at all these different violations, when I listen to 
your report, your testimony, and I see that a number of--most 
of these, I think--the penalties were waived, what is it that 
we can do to in fact make sure that your testimony is accurate?
    Is your concern about the reputation and workers and what 
is it that DOE can do and the Congress can do to make sure that 
these types of violations don't happen again?
    Mr. Van Ness. Well, we have taken strong corrective actions 
in response to each of those failures. We regarded them as 
extremely serious. We regret that they happened, and we have 
taken actions to ensure accountability with the individuals who 
failed to follow appropriate procedures.
    I do want to say that those violations are serious and have 
our direct attention and have been aggressively responded to. 
They do not characterize the overall safety performance at 
those laboratories. When you look at things like radiation 
exposure to workers, we are far below the a ALARA goals at each 
of our laboratories. When we look at public exposures we are 
far below the NESHAP goals, the National Emission Standards for 
Hazardous Air Pollution, and when you look at occupational 
illness and injury rates, we have shown a significant 
improvement at each of these laboratories and in fact are 
moving toward benchmark best in class levels.
    We are working hard to improve safety at each of our 
laboratories. We have not reached the point where obviously we 
can avoid the kinds of incidents that happened. We are trying 
to limit that.
    Mr. Upton. Would you say that the case involving Mr. Lappa 
is an aberration?
    Mr. Van Ness. Yes, I--actually I believe that to be the 
case. Mr. Lappa's case is one where he was a member of a team 
reviewing one of the Livermore events that resulted in a notice 
of violation. He had an opinion with regard to whether there 
was some deliberate activity on the part of some of the workers 
that was not concurred in by all of the members of the team. He 
refused to sign the report which did not indicate his belief 
that there had been some deliberate activity, and subsequently 
felt that he was retaliated against for taking that position.
    He did file a complaint with the Department of Energy and 
the Department of Labor. The Department of Labor took 
jurisdiction and there was a review made and in the course of 
those deliberations there was a settlement reached with Mr. 
Lappa and since then he has again indicated that he feels there 
has been retaliation and has filed suit in a State court. That 
matter is now approaching litigation.
    Mr. Upton. Mr. Whitfield?
    Mr. Whitfield. Mr. Chairman, I'm going to allow Mr. Burr to 
take my time because he has another appointment and then I'll 
ask questions after he finishes.
    Mr. Burr. I thank my colleague.
    Mr. Sussman, let me ask you, does the University of Chicago 
have to compete for the contract for the Argonne Labs?
    Mr. Sussman. The University of Chicago in the current 
renewal of the contract did not compete. The department 
determined----
    Mr. Burr. Have they ever?
    Mr. Sussman. No. The answer is no.
    Mr. Burr. Under the contract that you're currently under, 
and I haven't had an opportunity to read it, is there--are 
there performance fees?
    Mr. Sussman. Yes, sir.
    Mr. Burr. And are those performance fees at risk if you 
don't get an adequate rating----
    Mr. Sussman. Yes, sir.
    Mr. Burr. [continuing] from the Department of Energy?
    Mr. Sussman. Yes, sir.
    Mr. Burr. The State of Illinois has regulatory authority 
over the University of Chicago as it relates to the NRC license 
and clearly has the ability of civil fines; am I correct?
    Mr. Sussman. Yes, sir.
    Mr. Burr. Have they ever exercised that?
    Mr. Sussman. I have a list--in terms of the University 
now----
    Mr. Burr. Correct.
    Mr. Sussman. [continuing] or in terms of Argonne, I'm 
sorry?
    Mr. Burr. In terms of the University.
    Mr. Sussman. I am not as I sit here aware of that, sir.
    Mr. Burr. What are the trustees of the University's 
position as it relates to the State's ability to institute 
civil fines on you?
    Mr. Sussman. In terms of the activities conducted on the 
University campus there are very minimal nuclear activities on 
the campus and they are part of the basic and overall 
research----
    Mr. Burr. But they have--the State has authority over civil 
fines; am I correct?
    Mr. Sussman. Yes, sir. Yes, sir.
    Mr. Burr. Okay. So the trustees don't hold the same concern 
that the State might fine you for the limited amount of----
    Mr. Sussman. If the question--if I understand the question 
correctly, sir, if the question is regarding the assets of the 
University and concern, it is part of the cost reviewed of 
doing the academic and research business of the University.
    If the question is whether the trustees have the same 
reputational concerns that I expressed in my testimony, my 
answer would be, yes, they would have those reputational 
concerns.
    Mr. Burr. Let me ask you, you expressed your concern with 
finance being extended to nonprofit entities.
    Mr. Sussman. Yes.
    Mr. Burr. Yet you said there has to be some structure, we 
need--we need to fulfill our safety obligations?
    Mr. Sussman. Yes, sir.
    Mr. Burr. Let me ask you, if we modified Price-Anderson to 
extend it but to suggest that the Department of Energy has the 
ability to place civil fines not to exceed the performance fees 
of the contract, what would be the University of Chicago's 
position?
    Mr. Sussman. As I indicated, Mr. Burr, in my testimony, the 
University at present has its entire performance fee at risk by 
virtue of the Department. And that if that performance fee was 
at risk as a result of Price-Anderson liability as against the 
Department, that would be, in my judgment, a pretty similar 
situation.
    Mr. Burr. So you see----
    Mr. Sussman. As long as, if I might add, sir, as long as 
we're not subject to double penalties. In other words, Price-
Anderson and the Department of Energy----
    Mr. Burr. You know the Federal Government well?
    Mr. Sussman. We have experience with it, as you do, sir.
    Mr. Burr. Mr. Van Ness, let me ask you a similar question. 
Would the University of California be supportive of a modified 
Price-Anderson where civil fines could be placed by the 
Department of Energy not to exceed the amount of the 
performance fee?
    Mr. Van Ness. I believe we could work with that situation.
    Mr. Burr. Has the University of California ever had to 
compete for the Los Alamos or the Lawrence Livermore contracts?
    Mr. Van Ness. No, it has not.
    Mr. Burr. Did you negotiate the latest contracts?
    Mr. Van Ness. Yes, I did.
    Mr. Burr. You did?
    Mr. Upton. You might just pull that mic a little bit 
closer.
    Mr. Burr. Let me ask you, Mr. Van Ness, does the University 
of California have a policy that limits or prohibits certain 
types of communication with Congress by its employees?
    Mr. Van Ness. Not that I'm aware of, no, sir.
    Mr. Burr. Mr. Lappa stated in his letter that--in the last 
paragraph--``that I regret that my civil suit complicates my 
communications with your staff. UC policy strictly prohibits 
certain types of communication with Congress and my attorneys 
therefore have instructed me to proceed cautiously in that 
regard.'' You're not aware of anything at the University of 
California that would have led his attorneys to make that 
caveat to his letter?
    Mr. Van Ness. No, I'm not.
    Mr. Burr. With the Chair's indulgence, I would ask for 2 
additional minutes?
    Mr. Upton. Go ahead.
    Mr. Burr. Let me ask you what the procedure is at the 
University of California for handling a safety complaint?
    Mr. Van Ness. The safety complaints would be--depending on 
what area it's in, it may or may not include the involvement of 
the Price-Anderson Act coordinator, but certainly the folks in 
the environmental, safety, and health organization at the 
laboratory would investigate that question or that allegation. 
And depending on circumstances personnel from my staff might be 
involved in that----
    Mr. Burr. Was your staff involved in any way, shape, or 
form in the concerns raised by Mr. Lappa?
    Mr. Van Ness. I believe we had discussions with the 
laboratory on the essence of the allegations.
    Mr. Burr. Are you aware of any investigation that the 
laboratory took on based upon the claims that Mr. Lappa made?
    Mr. Van Ness. I'm not directly aware, but I do believe that 
was the case.
    Mr. Burr. Would you share with this committee in writing 
what procedures in fact took place at your directive or based 
upon the procedures in place at the University of California 
relative to his complaint?
    Mr. Van Ness. Yes.
    Mr. Burr. Let me ask you if you believe that the University 
of California is bound to adhere to DOE zero tolerance policy 
on employees that are whistle-blowers?
    Mr. Van Ness. Yes, I do.
    Mr. Burr. You believe that any contractor is bound to that 
policy?
    Mr. Van Ness. Yes, I do.
    Mr. Burr. Okay. Let me ask you just a couple more questions 
relative to the contracts. To your knowledge has the University 
of California in the last 5 years received anything below a 
good rating for safety or security?
    Mr. Van Ness. Not in the contract ratings. We have received 
below good in reviews made by headquarters review teams.
    Mr. Burr. Does the headquarters review teams affect your 
performance fee?
    Mr. Van Ness. It can.
    Mr. Burr. Does it?
    Mr. Van Ness. It is taken into account, yes.
    Mr. Burr. Has the University of California ever been cited 
for security violations?
    Mr. Van Ness. Well, we've had security lapses.
    Mr. Burr. Have you ever been penalized based upon your 
performance fee for lapses in security?
    Mr. Van Ness. We have not been penalized. We have not 
achieved incentive fees that would have been available to us 
had our performance been of higher--at a higher standard in 
that area.
    Mr. Burr. Do you know what that rating was that you 
received that affected your performance?
    Mr. Van Ness. I believe it was good.
    Mr. Burr. Based upon the contract, anything that received a 
good rating, the DOE would be unable to cut your performance 
fee?
    Mr. Van Ness. That's correct.
    Mr. Burr. So the likelihood is that you did not have your 
performance fee cut based upon security violations?
    Mr. Van Ness. No, we did not have it cut. As I said, what 
we didn't have was we didn't get any additional dollars because 
we did not perform at a high enough standard.
    Mr. Burr. So does that pertain to the million dollars 
additional fee in the contract that was awarded for exemplary--
--
    Mr. Van Ness. Yes.
    Mr. Burr. [continuing] performance?
    Mr. Van Ness. Yes.
    Mr. Burr. But the standard $4.9 million, if I'm correct, of 
performance fees that there was an annual evaluation on, there 
was never a reduction in that based upon security lapses?
    Mr. Van Ness. That's correct.
    Mr. Burr. And to your knowledge, in the last 5 years the 
University of California has never received anything lower than 
a good rating on security; am I correct?
    Mr. Van Ness. In contract ratings that is correct.
    Mr. Burr. Thanks. Mr. Chairman, I thank you for your 
indulgence and for the indulgence of my colleagues and would 
yield back.
    Mr. Upton. I have a slow watch.
    Mr. Whitfield?
    Mr. Whitfield. Thank you, Mr. Chairman.
    Mr. Miller, Dr. Michaels testified that the Department 
intended to finish the promulgation of three additional nuclear 
safety rules by the end of the year and originally there were 
going to be nine additional rules. Do you have any thoughts on 
their intentions to do three rules instead of nine?
    Mr. Miller. Well, Mr. Whitfield, the number of rules 
probably is less important than the content of them. DOE as was 
earlier discussed has a number of orders which govern areas 
which include training and certification, unreviewed safety 
questions, conduct of operations, radiation protection of the 
public and the environment, technical safety requirements, 
maintenance management, and defect identification. If all of 
those matters were consolidated into one rule, that would be 
fine; if they want to do separate rules for each of those 
areas, that would be fine. But it's very important particularly 
where this is a system which relies on contractor self-
identification of deficiencies and reporting through a computer 
system that all of these areas be tracked and self-reported so 
that there is some signaling and a red flag that goes up when 
there's a problem.
    If you don't have a rule for each of these areas, no red 
flag goes up, there's no Price-Anderson investigation. And so 
from our point of view, we think that Dr. Michaels, depending 
on what he meant by three rules may be either was or was not 
sufficient, but in our view everything that was initially 
contemplated needs to be there. We do not agree that the 
quality assurance rule is a sufficiently broad catch-all rule 
because it is too vague.
    Mr. Whitfield. But if he does cover these areas that you 
mentioned in a very clear way, then you really do not have any 
problem on his approach?
    Mr. Miller. His approach would be fine as long as he 
actually gets it done by January of 2000. As I probably said 
earlier, we are a little bit troubled that we've waited 11 
years and I don't know at this rate would we get two more rules 
in another 11 years? And I guess I would just encourage you all 
to think about perhaps holding the Department's feet to the 
fire on that.
    Mr. Whitfield. Okay. Thank you.
    Mr. Card, it's my understanding that the Price-Anderson Act 
indemnifies DOE contractors for all legal liability even in the 
case of gross negligence or willful conduct. And in reading 
your testimony, and I think that you're company should 
certainly be commended because evidently originally Rocky Flats 
was supposed to be completed in 2060 at a cost of $37 billion 
and you all are thinking you can do it by 2006 for $7 billion, 
so that's a considerable difference. But in your testimony you 
say, ``another significant contract matter is Kaiser-Hill's 
liability for problems at the site. In essence Kaiser-Hill has 
the full responsibility for anything that goes wrong, we have 
unlimited liability for fines and penalties incurred for the 
site, we have liability for claims from third parties for any 
lost or damaged property at Rocky Flats.'' Why are you liable 
under your contract where evidently other DOE contractors have 
an indemnification from the Department?
    Mr. Card. Okay. Well, there's two kinds there. First of 
all, we don't have any contract limits on our liabilities. If 
there's protection outside of our contract Price-Anderson is 
one case. In exchange for the a hammer you get the protection. 
So that exists outside of our contract. But our contract was 
the first contract that included all of the elements of 
contract reform, and one of those was to remove, before you 
would get fined, and I don't know if this occurs in other DOE 
contracts or not, and you would simply pass the bill on the DOE 
for that. And I think this committee and others had problems 
with that. Our contract has no pass the bill along. So anything 
that we get fined for or we lose judgments on, we're 
responsible for it just like we would be for a commercial 
customer. So it's really no different than that.
    Mr. Whitfield. I see.
    Mr. Card. I think it would be the same as a supplier for a 
commercial nuclear facility that gets some of the benefits of 
Price-Anderson but are subject to NRC regulation in exchange 
for that.
    Mr. Whitfield. Okay. Thank you, Mr. Chairman.
    Mr. Upton. Thank you.
    Have all of you been able to look at this report? I know it 
just sort of came out this week. Have you all had a chance to 
look at it?
    [Chorus of yeas.]
    Mr. Upton. I have a question as it relates to the nine 
requirements. This is a report that DOE indicated they do by 
October 1. The nine requirements that are proposed, but rules 
have not been issued in this. I look in scanning and go very 
briefly through these safety analysis report, unreviewed safety 
questions, defect identification reporting, conduct of 
operations at DOE nuclear facilities, technical safety 
requirements which establish in documents that the facility's 
operating limits and other requirements are in place, training 
and certification, ensuring that employees whose performance is 
vital to the safe operation of DOE nuclear facilities are 
trained to conduct duties in a safe and effective manner, 
maintenance management, radiation protection, et cetera.
    Are there any of these that you currently are not doing now 
at your facilities? I mean, Mr. Card?
    Mr. Card. I'll just respond the that, we have--those are 
well incorporated in our contract. They contain full 
enforcement provisions otherwise, and I can't think of a single 
case where we've had any issue with those that aren't also 
Price-Anderson issues. In fact, we have included the list and 
it's, by the way, publicly on our web site all of our NTS 
filings. So, Rocky Flats, I am bothered a bit because I have a 
lot of respect for Mr. Miller why we seem to have a difference 
here and it may be the types of sites, because our site is a 
full nuclear site. There is no question what's in or out at 
Rocky Flats. And perhaps that's the basis why we have a 
different opinion than others.
    Mr. Upton. Mr. Hall, do you have any comment on these nine?
    Mr. Hall. I was just looking at the list to make sure 
that----
    Mr. Upton. I mean, I would imagine----
    Mr. Hall. [continuing] if my statement is accurate.
    Mr. Upton. [continuing] as I look at all of these, it seems 
like most companies, universities would already have something 
in place already in all these nine, am I not correct?
    Mr. Hall. In each of our sites where we have either a 
radiological facility or any categorization of a nuclear 
facility, each and every one of these requirements are an 
integral part of what we do.
    Mr. Upton. Mr. Sussman?
    Mr. Sussman. You know, I have not looked at this list, but 
I would concur with the answer that it is part of our general 
activities. We do take a very broad view under the quality 
assurance of what is covered and what our responsibilities are. 
So as I look at the list very quickly, Mr. Chairman, it appears 
to be covered.
    Mr. Upton. Mr. Van Ness, the same?
    Mr. Van Ness. The same.
    Mr. Upton. Mr. Miller?
    Mr. Miller. Well, I don't have----
    Mr. Upton. I know, you don't have your own, maybe you don't 
want one.
    Mr. Miller. But at this point right now, our concern is 
that when there is noncompliance events with this, there is no 
trigger for the contractor to self-identify and report this. 
There is no enforcement capacity an what it does is it sort of 
gets, and there's no site representatives onsite which could be 
able to, quote ``tap people on the shoulder'' and say, you have 
untrained people operating at facility X, how come, and what 
are you doing to fix it?
    Mr. Upton. Has DOE contacted you at all in terms of the 
best way that you all may think that they might want to 
approach these nine, as whether they incorporated it as two 
rules or three, or four, or whatever it might be? Has there 
been any interaction between DOE and your group?
    Mr. Hall. DOE has not approached us with the question of 
what would be our reaction to incorporating these under Price-
Anderson enforcement space. However, each and every one of 
these requirements are integral to our contracts, flow down to 
us from the orders and are very enforceable. The authority that 
is given to the field office manager to approve a safety 
authorization basis under which we can do work and the 
precision under which we address an unreviewed safety question 
is very strictly enforced on all of our sites. So each and 
every one of these are applicable to the site.
    With regard to self-identification, a great deal of 
emphasis has been given by us and I believe every contractor 
that we know of to flow safety down such that each and every 
worker feels responsible for the identification of any safety 
issue and we are encouraging each and every worker to, under no 
circumstances proceed with work if you perceive or believe or 
know that there's a safety issue associated with it. 
Furthermore, each and every worker has the authority to stop 
work if they perceive that there is a problem. Each and every 
one of those self-identified occurrences as they do occur are 
in fact reported into the DOE reporting system. Each and every 
one of them is in fact screened as to whether or not it screens 
into Price-Anderson enforcement space and therefore is reported 
into the NTS or not.
    Mr. Upton. Thank you. Thank you.
    Anybody else want to comment?
    Mr. Card. Yes, I just want to clarify for the committee 
that our reticence to endorse all of these new rules has 
nothing to do with liability. We believe there would be zero 
effect on exposure--liability exposure for us by adopting them.
    It costs us up to $2 million per rule to change all of our 
procedures simply to change the name and other things in there. 
So--and then retrain the people on minor differences in it so 
that we don't have a slip up. So our main concern is the 
administrative cost of making the change from the DOE order to 
the rule. If the rule is rewritten to simplify the procedure, 
then it would be a benefit and we would support it.
    Mr. Upton. I know that--I think Mr. Stupak was intending to 
come back, but I would ask that all members may have a chance 
perhaps to respond with written questions and I'll take a 
moment to recognize Mr. Strickland with a question if he----
    [Pause.]
    Mr. Strickland. Thank you, sir. Let me catch my breath.
    I understand that there have been comments here that the 
fines and loss of performance fees do not order contractor 
misconduct. I think Mr. Miller, did you make such a statement?
    Mr. Miller. Yes. Yes, Mr. Strickland.
    Mr. Strickland. And you said that only persistent 
accountability actions can change the culture. And I was 
wondering if you could explain to me what you had perceived 
those actions to be or what they should be?
    Mr. Miller. Thank you, Mr. Strickland. In our view we have 
encountered what we would view to be substantially--substantial 
noncompliance over protracted periods of time within certain 
DOE facilities. Let me give an example. In your home State of 
Ohio, at the Miamisburg facility we have had a situation where 
workers have endured almost a decade of questionable radiation 
protection.
    We have had bioassay samples sitting on shelves for 3 
years, over half of which came back hot. We have had workers 
who have had their dosages of plutonium undercounted and so 
they don't know how hot they are or whether they should even be 
sent back into a hot area again.
    We have had workers who were pressured not to use 
respirators because they were criticized for being excessively 
conservative and in effect slowing down the work process.
    We have had situations, as we've heard here in the panel 
today, and at facilities where we represent workers where 
radiation monitors are turned off. Perhaps under the mistaken 
notion that the hazards were not as real or didn't merit 
further investigation.
    We have had two extended work stand downs at the Miamisburg 
facility which cost the Government a good sum simply because no 
radiation work could proceed forward during those protracted 
stand downs. And so in that particular circumstance, as we have 
seen there and elsewhere, we are concerned that award fees--
reducing award fees have not had a beneficial effect in 
improving contractor performance. We had over $400,000 
reduction to that contractor, but problems continued to 
persist.
    At the Idaho National Engineering labs, just if I may point 
out, we had a major fatality there where--shall we say--
inadequate work planning took place, and that was in a site 
where we had extensive incentive fee provisions written into 
the contract. The reality is there is no substitute for close 
policing of the work because there are contradictory incentive 
fees that DOE has set up. They have said work faster, work 
faster, we need to get out of these sites quicker.
    Mr. Card is under tremendous pressure at Rocky Flats to get 
out by 2006 and he's taking tremendous efforts to get there. 
But with all of those pressures incentive on one side, on the 
other side there were also incentivizing contractors to operate 
more safely. The problem is that they often wind up in 
competition with each other.
    Mr. Strickland. So if I take the implications of your 
statement as I perceive them to be, you're saying that human 
beings are being injured and perhaps even losing their lives 
because of inappropriate pressures being placed upon 
contractors to get work done more quickly? Is that a fair----
    Mr. Miller. Well, I would say that those pressures exist. I 
would also say that the Department, in fairness, has only 
requested $600,000 per year in its budget request for the 
Price-Anderson program. It has five people to enforce nuclear 
safety at 2,000 facilities nationwide, and we believe that the 
Department needs to step up to the plate with a more staffed 
program. I don't believe we've ever had a Price-Anderson 
investigator come to the Portsmouth gaseous diffusion plant, 
and, yet, we know of substantial problems at that facility 
including inadequate monitoring of neutron exposures to the 
workers at that facility.
    So our view is that we need a more beefed up program, and 
frankly we think the Department should allocate its resources 
accordingly and we would appreciate some leadership, I guess, 
from the Department in coming forward with somebody more than--
with something more than five people to police an entire 
nationwide nuclear complex.
    Mr. Strickland. So when you say ``persistent accountability 
actions'' those actions would be possible in your judgment if 
there were greater resources available?
    Mr. Miller. That's correct, Mr. Strickland.
    Mr. Strickland. Thank you, Mr. Miller.
    Thank you, Mr. Chairman.
    Mr. Upton. Thank you. Appreciate your testimony. It will 
certainly help us in the days ahead, and we are now excused.
    [Whereupon, at 1:23 p.m., the hearing was adjourned.]
    [Additional material submitted for the record follows:]
Responses for the Record of David M. Michaels, Assistant Secretary for 
          Environment, Safety and Health, Department of Energy
             questions from the house committee on commerce
    Question 1: In your written testimony, you note that field office 
coordinators serve a critical role in the enforcement program, but, 
``we've found this arrangement to be working better at some sites than 
in others, depending on the commitment of the individual field office 
management.'' In this regard, please identify which three offices need 
to place greater emphasis on enforcement. Please also identify what 
specific steps you will take to address these gaps.
    Answer 1: The success of the nuclear safety enforcement program 
depends on contractors taking a positive and proactive approach that 
identifies and resolves problems, negative trends and precursor events 
before a serious event occurs. In the several years that the program 
has been in operation, we have worked closely with field offices to 
encourage such a proactive approach. Examples of the criteria we would 
use to defining a successful field office would include the following:

 The Field Office Coordinator is qualified and knowledgeable of 
        enforcement policy and process, has a good general knowledge of 
        nuclear safety requirements, and has a demonstrated supportive 
        senior management.
 The Field office is proactive and has a questioning attitude 
        regarding issues and their significance, and uses enforcement 
        as an integral part of the sites' overall safety management 
        program.
 The Field Office demonstrates knowledge of thresholds for 
        reporting regarding programmatic issues, negative trends, 
        precursor events and repetitive violations
 The Field Office performs objective evaluations of the safety 
        significance of violations.
 The Field Office Coordinator and site management routinely 
        engage in open and candid communication with the Office of 
        Enforcement & Investigation.
 The Field Office supports and participates in investigations, 
        reviews, and inquiries related to potential noncompliances and 
        PAAA program weaknesses.
 The Field Office encourages rigorous determination of 
        underlying causes and comprehensive corrective actions by their 
        contractor, and perform timely confirmation of corrective 
        action completion and verification of effectiveness. Few 
        violations are disclosed by events, with most being identified 
        through contractor self-assessment or DOE oversight.
    Based on these criteria, we are working with several sites that we 
believe could further improve their role in the enforcement process 
through a more proactive approach, including DOE Oakland, DOE Chicago 
and DOE Savannah River. At the same time, sites such as DOE Richland, 
DOE Rocky Flats and DOE Idaho have generally taken a more proactive 
approach to the regulatory enforcement process.
    We are undertaking several steps to improve the overall 
effectiveness of the field offices in the enforcement program. First, I 
am communicating directly to the field office managers those attributes 
that are necessary to improve their integration into the program. 
Second, the Office of Enforcement is also increasing the number of site 
visits to those sites that have been less proactive. Finally, the 
Office of Enforcement has initiated discussions with the Office of 
Oversight to increase their role in the regulatory arena with a 
particular focus on those sites that need to be more actively engaged 
in the enforcement program.
                   question from representative upton
    Question 2: In your written testimony, you note that non-profit 
contractors would require an increase in base, incentive, and award 
fees if they were subject to civil penalties for nuclear safety 
violations. For each of your major site management contracts with non-
profit educational institutions, what portion of the base, incentive, 
and /or award fees are associated with the risk of civil penalty 
pursuant to the Resource Conservation and Recovery Act?
    Answer 2: We cannot quantify the portion of fees attributable to 
RCRA penalty risks. Based on a survey of the Department's Operations 
offices, the responders indicated that the cost risks associated with 
civil penalties under RCRA normally were not specifically addressed as 
part of the fee negotiations.
                   question from representative upton
    Question 3: For each of DOE's major contracts with non-profit 
educational institutions, please explain how performance-based 
contracting has been used for improved safety performance. For each 
contract, please list each safety-related objective, and the total fees 
tied to each objective for fiscal years 1996-1999. Please also provide 
the total fee earned for each safety related objective for fiscal years 
1996-1998.
    Answer 3: One of the underlying reasons for the Department's 
Contract Reform Initiative was to deal more effectively with 
environmental, health, and safety (ES&H) issues. This was accomplished 
through the use of a number of interrelated contract mechanisms:

(a) a new ES&H clause, which requires the contractor to develop and 
        implement an integrated safety management system;
(b) a revised directives system clause that provides for the 
        implementation of new ES&H standards as appropriate during the 
        term of the contract;
(c) performance objectives related to ES&H matters; and
(d) a conditional payment of fee provision which permits DOE to 
        withhold some or all of an otherwise earned fee for safety and 
        health infractions;
    These mechanisms have strengthened contractor accountability for 
ES&H performance by requiring the integration of ES&H into business 
systems and work management processes. They also delineate basic safety 
system requirements for all DOE operating contractors in order to help 
ensure work is conducted safely. One of the key features is that the 
contractor must submit documentation of its ES&H management system for 
DOE for review and approval, and the contractor is contractually bound 
to operate in the manner described.
    Submitted for the record is a detailed response to this question 
for each DOE management and operating contract with an educational 
institution. (The information follows:)
     specific management and operating contracts with educational 
                              institutions
    UNIVERSITY OF CHICAGO at Argonne National Laboratory: Fees are not 
tied directly to specific ES&H objectives; however, performance-based 
contracting that considers ES&H objectives is one reason for improved 
safety performance.
    For 1996, the maximum performance fee was $4.7 million, of which 
$4.2 million was earned. The earned fee was based upon a combination of 
approximately equal weightings of science/technology and operations. 
ES&H was evaluated within the operations area as one of several 
functional areas, but specific weights were not assigned. The safety 
related performance measures for the 1996 contract were: contractor to 
improve environmental quality; contractor to provide safe work 
environment; contractor to maintain continuous improvement; contractor 
to protect environment, public and workers.
    For 1997, the maximum performance fee was $4.7 million, of which 
$4.2 million was earned. The fee was earned based upon a combination of 
equal weights for the science/technology area and operations. Within 
operations, ES&H was 16%, or 8% of the total value. The safety related 
performance measures for the 1997 contract year were: contractor to 
provide safe work environment and contractor to maintain continuous 
improvement
    For 1998, the maximum performance fee available was $3.5 million of 
which the University earned $3.425 million. Of the $3.425 million, $3 
million was earned for an overall excellent rating. Additional fee was 
earned for outstanding ratings in science/technology and projects and 
infrastructure. ES&H was rated as excellent. The safety related 
performance measures for the1998 contract year were: contractor to 
provide safe work environment; contractor to implement ISM; and 
contractor to maintain continuous improvement.
    For 1999, the same method is being employed as was used in 1998. 
The safety related performance measures for the 1999 contract year 
were: contractor to provide safe work environment; contractor to 
implement ISM; and contractor to protect the environment.
    BROOKHAVEN SCIENCES ASSOCIATES at Brookhaven National Laboratory: 
Fees are not directly tied to specific ES&H objectives; however, 
performance-based contracting that considers ES&H objectives is one 
reason for improved safety performance.
    For 1996, there was a fixed fee of $3.8 million paid to Associated 
Universities, Inc. (AUI), the predecessor contractor for management and 
operation of BNL. This fee was not tied directly to any performance 
activity. The safety related performance measures for the 1996 contract 
were: contractor to improve environmental quality; contractor to 
provide safe work environment; contractor to maintain continuous 
improvement; contractor to protect environment, public and workers. Due 
to poor ES&H practices by AUI and the disintegration of public trust in 
the laboratory, the AUI contract was terminated and a competitive 
solicitation was issued to select a successor contractor to operate 
BNL.
    During 1997 a new contractor was being competitively selected. The 
existing contract with AUI did not contain any specific performance 
measures. A fixed fee for 1997 of $4.1 million was negotiated. In 
addition, a $1.7 million fixed fee was negotiated with AUI for a 
portion of FY98 to cover the last period of AUI involvement at BNL.
    For the balance of 1998, Brookhaven Science Associates (BSA) was 
selected to operate and manage BNL. The company received a fixed fee of 
$3.574 million. The only areas in which performance measures were 
established were ES&H (30%), science (50%), and community involvement 
(20%). The performance measures did not have direct fee amounts 
associated with them. The safety related performance measures for the 
1998 contract year were: contractor to develop safe work environment 
and contractor to implement ISM.
    For 1999, a maximum performance fee of $7.0 million was negotiated 
with ES&H weighted 15% of the total, science and technology weighted 
60%, communications and trust weighted 10%, and environmental 
stewardship weighted 15%. The final determination of fee will be in 
FY00. The safety related performance measures for the 1999 contract 
year were: contractor to perform in ES&H compliant manner; contractor 
to implement ES&H management systems; and contractor to designate 
quality managers and leaders.
    IOWA STATE UNIVERSITY at Ames Laboratory: Fees are not tied to 
specific ES&H objectives. However, for 1997 a total fee of $60,000 was 
available for all contract activity subject to performance based fees 
(50% was allocated to non-science activity and 50% to science 
activity). ES&H measures represented 20% of the fee associated with 
non-science activities (amounting to 10% of the total available). The 
contractor earned $54,000 of the $60,000 available, $24,000 for non-
science activities and $30,000 for science activities. Safety related 
performance measures were: contractor to acknowledge employee concerns 
within two business days of receipt; contractor to allow time to 
address employees' concerns; and contractor to minimize reportable 
injury/illness rate and lost workday case rate.
    For 1998 a total fee of $75,000 was available for all contract 
activity (20% was allocated to nonscience activity and 80% was 
allocated to science activity). ES&H measures represented 60% of the 
fee associated with non-science activity (amounting to 12% of the total 
available). The contractor earned $70,000 of the $75,000 available, 
$10,000 for non-science activities and $60,000 for science activities. 
Safety related performance measures were: contractor to conduct 
activity reviews of laboratory work; contractor to conduct activity 
review of all work involving lasers, x-rays, radiological materials, 
hot work, working in confined space, or activities involving Facility 
Services Group operating machinery and not previously subjected to an 
activity review during 1998 contract year; contractor to prevent 
fatalities, injuries, incidents of illness, exposures and releases (in 
excess of established limits); contractor to minimize total recordable 
case rate and lost workday case rate; and contractor to achieve the 
waste minimization/pollution prevention goals delineated in the Ames 
Laboratory Pollution Prevention Program Plan.
    For 1999 a total fee of $100,000 was available for all contract 
activity (40% is allocated to nonscience activity and 60% is allocated 
to science activity). ES&H measures represented 62.5% of the fee 
associated with non-science activity (amounting to 25% of the total 
available). The fee determination for this year has not yet been made. 
Safety related performance measures were: contractor to implement 
agreed to corrective actions to address ISMS gaps; contractor to notify 
Ames Group that laboratory is ready for Phase I and Phase H 
Verification Review; contractor will apply activity review process to 
all research and support activities not reviewed in 1998 contract year; 
contractor to minimize total recordable case rate and lost workday case 
rate; and contractor to achieve the waste minimization/pollution 
prevention goals delineated in the Ames Laboratory Pollution Prevention 
Program Plan.
    PRINCETON UNIVERSITY at Princeton Plasma Physics Laboratory: 
Princeton University received a $10,000 fixed fee for contract years 
1997, 1998, and 1999. As a result, fees are not tied to specific ES&H 
objectives; however, performance-based contracting that considers ES&H 
objectives is one reason for improved safety performance. There were no 
safety related performance measures for the 1996 contract year because 
the contract had not been converted to a performance-based management 
contract.
    The safety related performance measures for the 1997 contract were: 
contractor to maintain environmental quality and contractor to provide 
safe working environment.
    The safety related performance measures for the 1998 contract were: 
contractor to provide safe working environment; contractor to measure 
environmental performance; and contractor to implement ISM.
    The safety related performance measures for the 1999 contract were: 
contractor to provide safe working environment; contractor to measure 
environmental performance; and contractor to implement ISM.
    UNIVERSITIES RESEARCH ASSOCIATES at Fermi National Accelerator 
Laboratory: Universities Research Associates received a fixed fee. As a 
result, fees are not tied to specific ES&H objectives; however, 
performance-based contracting that considers ES&H objectives is one 
reason for improved safety performance. There were no safety related 
performance measures for the 1996 contract year since the contract had 
not been converted to a performance-based management contract.
    For 1997, URA received a fixed fee of $3.2 million. ES&H related 
performance measures for the 1997 contract year were: empowerment and 
training of workers, institution of a work related injury reduction 
program, minimization of wastes and promotion of recycling.
    For 1998 URA received a fixed fee of $2.75 million. The safety 
related performance measures for the 1998 contract year were: 
contractor to provide safe working environment; contractor to minimize 
waste and promote recycling; and contractor to implement ISM.
    For 1999, URA received a fixed fee of $2.88 million. The safety 
related performance measures for the 1999 contract year were: 
contractor to provide safe working environment; contractor to minimize 
waste and promote recycling; and contractor to implement ISM.
    UNIVERSITY OF CALIFORNIA at Los Alamos National Laboratory: There 
was no fee arrangement for FY93-FY97. During that period a management 
allowance of $14 million was paid to the University of California for 
operation of LANL, LLNL, and LLBL.
    For the period FY98-02, there is an annual program performance fee 
range of $4.9 million to $8 million, the target being $7 million. Fee 
amounts in excess of the $7 million target would be earned for 
exceptional performance in science and technology as well as ten 
operational and administrative areas, one of which is environment, 
health, and safety (ES&H). For FY98 the University earned $7.65 million 
as a program performance fee. During that period, its ES&H rating was 
``good.'' None of the $650,000 exceptional performance fee resulted 
from ES&H performance.
    UNIVERSITY OF CALIFORNIA at Lawrence Livermore National Laboratory: 
There was no fee arrangement for FY93-FY97. During that period a 
management allowance of $14 million was paid to the University of 
California for operation of LANL, LLNL, and LLBL.
    For the period FY98-02, there is a maximum annual performance-based 
fee of $6.4 million. The fee consists of an ``at risk'' amount and an 
amount for exceptional performance. The fee is allocated for science 
and technology and ten operational and administrative areas, one of 
which is environment, health, and safety (ES&H). For FY98 the 
University earned $6.162 million as a program performance fee. During 
that period, its ES&H rating was ``good.'' None of the exceptional 
performance fee resulted from ES&H performance.
    UNIVERSITY OF CALIFORNIA at Lawrence Berkeley National Laboratory: 
There was no fee arrangement for FY93-FY97. During that period a 
management allowance of $14 million was paid to the University of 
California for operation of LANL, LLNL, and LLBL.
    For the period FY98-02, there is a maximum annual performance-based 
fee of $1.6 million. The fee consists of an ``at risk'' amount and an 
amount for exceptional performance. The fee is allocated for science 
and technology and nine operational and administrative areas, one of 
which is environment, health, and safety (ES&H). For FY98 the 
University earned $1.484 million as a program performance fee. During 
that period, its ES&H rating was ``excellent,'' giving rise to the 
award of $3,889 in exceptional performance fee attributable to ES&H 
performance.
    OAK RIDGE RESEARCH ASSOCIATED UNIVERSITIES at Oak Ridge National 
Laboratory: For fiscal years 1996-1999, there were no specific safety-
related objectives with fees tied to those objectives; however, safety 
performance, along with other facets of performance, was considered and 
evaluated in the determination of final fee amounts
    BATTELLE MEMORIAL INSTITUTE at Pacific Northwest Laboratory: Fees 
are generally not directly tied to specific ES&H objectives.
    For 1996, of the total $13,800,000 available fee, $2,000,000 was 
available for safety-related objectives and conduct of operations. The 
total earned fee for 1996 for safety related objectives and conduct of 
operations was $1,300,000.
    For 1997, the laboratory received a fixed fee of $6,000,000 with no 
assignment to specific critical outcome or objective.
    For 1998, the laboratory received a fixed fee of $5,600,000 with no 
assignment to specific critical outcome or objective.
    For 1999, the laboratory's total available performance fee is 
$7,100,000, of which approximately $280,000 is directly associated with 
ES&H performance measures.
    STANFORD UNIVERSITY at Stanford Linear Accelerator Center: Stanford 
University is paid no fee for the period of FY87 to FY02. The 
contractor's ES&H performance is evaluated against established 
performance measures.
    SOUTHWEST UNIVERSITIES RESEARCH ASSOCIATES at Thomas Jefferson 
National Accelerator Facility: Environmental, Health, and Safety is one 
of seven major categories of performance measures in this contract. Fee 
is not tied directly to performance.
    The contractor was paid a fixed management fee of $2.2 million for 
contract year 1996.
    The contractor was paid a fixed management fee of $1.9 million for 
contract year 1997.
    The contractor was paid a fixed management fee of $1.8 million for 
contract year 1998.
    The contractor will be paid a fixed management fee of $1.9 million 
for contract year 1999.
                   question from representative upton
    Question 4: For each of DOE's major non-profit educational 
institution contractors that have received an enforcement letter or 
notice of violation from the Office of Enforcement, please describe 
what base, incentive or award fee was reduced or eliminated as a result 
of the enforcement action.
    Answer 4: The information follows:
    UNIVERSITY OF CHICAGO at Argonne National Laboratory: Has 
occasionally received enforcement letters; however, fees have not been 
affected. The contract provides DOE with the ability to withhold some 
or all of the fee, should a significant ES&H event occur.
    BROOKHAVEN SCIENCES ASSOCIATES at Brookhaven National Laboratory: 
Has occasionally received notices of violation. One event, under the 
site's previous contractor Associated Universities, led to a reduction 
in fee and ultimately to the termination of the contract. The new 
contract provides DOE with the ability to withhold some or all of the 
fee, should a significant ES&H event occur.
    IOWA STATE UNIVERSITY at Ames Laboratory: Has not received such 
letters or notices. The contract provides DOE with the ability to 
withhold some or all of the fee, should a significant ES&H event occur.
    PRINCETON UNIVERSITY at Princeton Plasma Physics Laboratory: Has 
not received such letters or notices. The contract provides DOE with 
the ability to withhold some or all of the fee, should a significant 
ES&H event occur.
    UNIVERSITIES RESEARCH ASSOCIATES at Fermi National Accelerator 
Laboratory: Has not received such letters or notices. The contract 
provides DOE with the ability to withhold some or all of the fee, 
should a significant ES&H event occur.
    UNIVERSITY OF CALIFORNIA at Los Alamos National Laboratory: The 
FY98 Annual Appraisal Report for LANL noted that it received 5 EPA 
``notices of excedances'' for National Pollutant Discharge Elimination 
System parameter requirements and three Resource Conservation Recovery 
Act compliance orders from the State of New Mexico. The fee paid is a 
culmination of all performance under the contract. The ES&H rating was 
``Good'' for contract year 1998, and the overall fee paid considered 
this incident.
    UNIVERSITY OF CALIFORNIA at Lawrence Livermore National Laboratory: 
On March 9, 1998, a DOE Notice of Violation was issued for a HEPA 
filter shredding accident which had occurred in July of 1997. The 
incident was addressed in the 1997 Annual Appraisal Report and rating. 
There was no fee arrangement in effect at that time.
    On September 17, 1998, a DOE Final Notice of Violation was issued 
for exceeding administrative mass control in Building 332. This 
incident was addressed in the 1998 Annual Appraisal Report and rating. 
The fee paid is a culmination of all performance under the contract. 
The ES&H rating was ``Good'' for contract year 1998, and the overall 
fee paid considered this incident.
    UNIVERSITY OF CALIFORNIA at Lawrence Berkeley National Laboratory: 
One enforcement letter was issued in 1998 for the spread of beryllium 
in the 88-inch cyclotron. This incident will be reflected in the 1999 
Annual Appraisal Report and rating and should affect the program 
performance fee for ES&H performance.
    OAK RIDGE RESEARCH ASSOCIATED UNIVERSITIES at Oak Ridge National 
Laboratory: The contractor has not received any enforcement letters or 
notices of violations. A significant event in ES&H or other performance 
areas could result in a reduction of the fee pool available.
    BATTELLE MEMORIAL INSTITUTE at Pacific Northwest Laboratory: One 
enforcement action was issued in 1996 for collectively significant 
related occurrences in the Building 325 laboratory vacuum system. The 
action resulted in a Preliminary Notice of Violation, but no Final 
Notice of Violation was ever issued. No reduction of fee resulted from 
the Preliminary Notice of Violation. The contract provides DOE with the 
ability to withhold some or all of the fee, should a significant ES&H 
event occur.
    STANFORD UNIVERSITY at Stanford Linear Accelerator Center: Stanford 
University has not received any enforcement letters or notices of 
violation. Such incidents would be addressed in the Annual Appraisal 
Report. There is no fee in this contract.
    SOUTHWEST UNIVERSITIES RESEARCH ASSOCIATES at Thomas Jefferson 
National Accelerator Facility: The contractor has received no such 
letters or notices. The current contract provides DOE with the ability 
to lower the contractor's year end performance evaluation rating should 
such letters or notices be issued. The follow-on contract, which will 
be effective on October 1, 1999, provides the Department the ability to 
withhold some or all of the fee should a significant ES&H event occur, 
in addition to lowering the contractor's year end performance 
evaluation rating.
                   question from representative upton
Estimate of Lost Productivity from Nuclear Safety Violations
    Question 5: Please list and estimate the total direct-and indirect-
cost overruns that have resulted from stop work orders and/or facility 
stand downs that have occurred due to nuclear safety violations at DOE 
facilities managed by the University of California.
    Answer 5: In the last two years, there have been a total of five 
stand downs at the Los Alamos National Laboratory (LANL) and the 
Lawrence Livermore National Laboratory (LLNL). The ``cost overrun'' 
estimates provided below reflect estimates of the ``cost'' of lost 
productivity (the amount spent during the stand down that otherwise 
could have been spent on operations).

 Chemistry and Metallurgy Research (CMR) Facility at LANL--From 
        September 1997 to April 1998, normal operations at the CMR 
        facility were suspended due to a series of recurring problems 
        with work control, work authorization, and safety issues. The 
        CMR facility is the only laboratory facility with full 
        capability for performing analytical chemistry and materials 
        science for special nuclear materials--plutonium and highly 
        enriched uranium--in support of the Department's nuclear 
        programs. The estimated cost was $9 million.
 Technical Area 18 (TA-18) Facility at LANL--From August 1998 
        to April 1999, the TA-18 Facility, which handles special 
        nuclear materials and is involved in nuclear detection 
        development, criticality safety experiments and other nuclear 
        related functions, was placed in a stand down following a 
        criticality safety infraction. The estimated cost in lost 
        productivity was $6 million.
 Los Alamos Neutron Science Center (LANSCE) experimental 
        facility at LANL--From February 1999 to June 30, 1999, 
        Technical Area 53 was placed in stand-down mode by the facility 
        landlord in response to several relatively minor safety 
        incidents. These incidents were not nuclear safety violations 
        and there were no injuries to workers or the public. A few of 
        these incidents involved very low levels of radioactive 
        contamination. The objectives of the stand down were to review 
        the conduct of operations at the facility, train staff, 
        demonstrate management commitment to safety and preclude 
        further and possibly more serious incidents. The estimated cost 
        in lost productivity is $6 million. Extensive training and 
        procedure reviews were conducted during the shutdown.
    Building 332 at LLNL--From July 1997 to April 1999, Building 332, a 
plutonium processing facility, was placed in a stand-down mode in order 
to address the cause of a series of safety incidences and then upgrade 
the facility to meet the new DOE Integrated Safety Management 
standards. This action was precipitated by a plutonium glovebox 
procedural error relating to criticality safety. The facility went 
through an extended resumption plan that was monitored by the DOE and 
the Defense Nuclear Facility Safety Board. The facility has resumed 
operations with significantly improved conduct of operations and is 
about to undergo a Integrated Safety Management verification. The 
estimated cost in lost productivity was $2.7 million.
 Building 513 at LLNL--From July 1997 to October 1997, Building 
        513, a mixed waste processing facility, was placed in a stand-
        down mode as the result of an accident involving the uptake of 
        curium while shredding high efficiency particulate air filters 
        prior to disposal. The shredder process area involved in the 
        incident is being decommissioned. All other activities in the 
        facility were resumed, however. The estimated cost in lost 
        productivity was $2 million.
    Question 6: In response to questions at the hearing, Mr. Keith 
Christopher indicated that his staff made several unsuccessful 
information requests to the Department of Labor (DOL) regarding their 
investigation and June 29, 1998 finding of retaliation taken by the 
University of California against Mr. David Lappa at Lawrence Livermore. 
Why is the Office of Enforcement unable to obtain this information in a 
timely manner?
    Answer 6: On or about October 1, 1998, the Office of Enforcement 
contacted DOL and requested a copy of its decision in the Lappa 
discrimination case. DOL provided the document in a timely manner. The 
Office of Enforcement reviewed this document and determined that it 
would be necessary to obtain any investigative reports prepared by DOL 
to legally support any Notice of Violation that the Department was to 
issue to LLNL. Therefore, Enforcement staff made several telephone 
requests for the report, followed by a formal written request to DOL 
dated March 19, 1999. DOL has recently indicated that the documents 
cannot be made available because the Department of Energy does not have 
a Memorandum of Understanding with the Department of Labor to 
facilitate access to such information.
    Question 7: When was the Office of Enforcement made aware of the 
allegation that UC had retaliated against Mr. Lappa?
    Answer 7: In January 1998, the Office of Enforcement learned of 
reports in newspaper articles that David Lappa, an employee at LLNL, 
had raised nuclear safety concerns to his employer pertaining to 
plutonium operations. According to the articles, Mr. Lappa filed a 
formal complaint with another office in the Department alleging that 
LLNL retaliated against him for raising these concerns.
    In response to these newspaper articles, the Office of Enforcement 
contacted Mr. Lappa, and asked him to cooperate with enforcement office 
personnel in exploring the underlying nuclear safety concerns that 
ultimately led to his complaint of reprisal. Mr. Lappa agreed and on 
February 19, 1998, he provided sworn testimony to the Office of 
Enforcement staff regarding the technical aspects of his nuclear safety 
concerns.
    Question 8: Did the Office of Enforcement interview Mr. David Lappa 
in the course of its investigation into criticality safety infractions 
in building 332 at Lawrence Livermore? If so, did Mr. Lappa identify 
alleged acts of retaliation taken against him by UC? Please provide the 
committee with a transcript of any interview.
    Answer 8: On February 19, 1998, the Office of Enforcement took 
sworn testimony from Mr. David Lappa concerning criticality safety 
infractions at building 332 at Lawrence Livermore. Mr. Lappa testified 
that when he made his concerns regarding the plutonium facility known, 
he began to experience intimidation, coercive, discriminatory and 
retaliatory treatment from his management.
    Section 5.3.3, General Guidelines for Processing Whistleblower 
Complaints Involving Nuclear Safety Issues, of the Operational 
Procedures for Enforcement, provides for the following:

 Without regard to the status of any related whistleblower 
        reprisal complaint, the Director will conduct all necessary 
        investigations and take appropriate enforcement action with 
        respect to the underlying nuclear safety concerns(s). In that 
        regard . . . review of the underlying nuclear safety concern(s) 
        would not include review of the reprisal aspect of a case.
 . . . the director will await the completion of the IG 
        investigation of the whistleblower complaint. Additionally, DOE 
        would wait for the results of any subsequent adjudication by 
        the Office of Hearings and Appeal, before deciding whether to 
        initiate PAAA enforcement action against a contractor for 
        alleged acts of reprisal against contractor employees in 
        violation of the Part 708 Whistleblower Rule.
    Since Mr. Lappa testified that he was working with the IG in 
resolving the reprisal aspect of his concerns, in accordance with the 
above procedures, the Office of Enforcement did not pursue a line of 
questioning with Mr. Lappa regarding specific acts of retaliation that 
would provide a sufficient informational basis to investigate these 
allegations.
    Question 9: What is the appropriate or required administrative 
response by DOE or the Office of Enforcement when it learns of 
potential acts of retaliation?
    Answer 9: In general, the Office of Enforcement has the 
discretionary authority to issue a Notice of Violation and civil 
penalties to a DOE contractor who is determined to have retaliated 
against a contractor employee for raising a nuclear safety concern. In 
cases involving non-profit contractors, the DOE is authorized to issue 
a Notice of Violation, as appropriate, but not civil penalties. When a 
finding of retaliation is made by either DOE or the Department of 
Labor, the Office of Enforcement evaluates the evidence gathered by 
decision making body in order to develop sufficient factual information 
to determine whether a Notice of Violation and civil penalties can be 
issued. The purpose for issuing such an enforcement action is to deter 
retaliatory action by the contractor that would have a chilling effect 
on the willingness of other employees to openly and freely express 
safety concerns without fear of retaliation. In the Lappa case, such 
information has been requested from the Department of Labor.
      question from house commerce subcommittee on oversight and 
                             investigations
    Question 10: In Mr. Lappa's case, what is the appropriate or 
required administrative response by DOE once DOL had concluded the 
retaliation had occurred?
    Answer 10: In March 1999, Secretary Richardson issued a policy 
statement on ``Safety Accountability and Performance.'' In this 
directive, he said that ``there must be open communication between 
management and employees and a zero tolerance policy for reprisals 
against those who raise safety concerns. Free and open expression of 
employee concerns is essential to safe and efficient accomplishment of 
the Department's missions.''
    The Secretary relies on DOE line and program management to enforce 
this policy. Our office has worked with DOE field offices and 
contractors on an ongoing basis for more than ten years to develop the 
tools to prevent retaliation of any type. We have generally been 
successful. When there are cases where retaliation has been determined 
to have occurred, Secretary Richardson counts on his line managers to 
take appropriate actions. DOE's contract with the University of 
California prohibits the University from retaliating against employees 
for whistleblowing. Accordingly, the University's fee evaluation plan 
will be reviewed to determine whether the fee can be reduced in 
response to a finding of employee retaliation.
    Separately, through the enforcement process of 10 CFR Part 820, DOE 
has the discretionary authority to issue a Notice of Violation, when 
appropriate, to a contractor who is determined to have retaliated 
against a contractor employee for raising a nuclear safety concern. In 
the case of Mr. Lappa, the Department of Labor issued an opinion that 
Mr. Lappa was subject to reprisal. DOE is awaiting information from the 
Department of Labor to determine whether there is a sufficient basis 
upon which to issue a Notice of Violation.
    Question 11: Now that DOE is aware DOL concluded that Mr. Lappa 
suffered retaliation, what is DOE doing to rectify this specific case 
and ensure that similar acts of retaliation are not repeated at DOE 
facilities operated by the University of California?
    Answer 11: Secretary Richardson has indicated directly to his line 
management that he will hold them personally accountable for failure to 
implement the ``zero tolerance'' policy for retaliation against 
whistleblowers. As indicated, in its contract with DOE, the University 
of California is prohibited from retaliating against employees for 
whistleblowing. Accordingly, the University's fee evaluation plan will 
be reviewed to determine whether the fee can be reduced in response to 
a finding of employee retaliation.
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