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




          REMEDIATION OF URANIUM AND THORIUM PROCESSING SITES

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 of the

                         COMMITTEE ON COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                                   on

                               H.R. 2641

                               __________

                             APRIL 5, 2000

                               __________

                           Serial No. 106-124

                               __________

            Printed for the use of the Committee on Commerce


                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
64-034                     WASHINGTON : 2000



                         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                    TOM 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
                                     BILL LUTHER, Minnesota
                                     LOIS CAPPS, California

                   James E. Derderian, Chief of Staff

                   James D. Barnette, General Counsel

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

                                 ______

                    Subcommittee on Energy and Power

                      JOE BARTON, Texas, Chairman

MICHAEL BILIRAKIS, Florida           RICK BOUCHER, Virginia
CLIFF STEARNS, Florida               KAREN McCARTHY, Missouri
  Vice Chairman                      TOM SAWYER, Ohio
STEVE LARGENT, Oklahoma              EDWARD J. MARKEY, Massachusetts
RICHARD BURR, North Carolina         RALPH M. HALL, Texas
ED WHITFIELD, Kentucky               FRANK PALLONE, Jr., New Jersey
CHARLIE NORWOOD, Georgia             SHERROD BROWN, Ohio
TOM A. COBURN, Oklahoma              BART GORDON, Tennessee
JAMES E. ROGAN, California           BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ALBERT R. WYNN, Maryland
HEATHER WILSON, New Mexico           TED STRICKLAND, Ohio
JOHN B. SHADEGG, Arizona             PETER DEUTSCH, Florida
CHARLES W. ``CHIP'' PICKERING,       RON KLINK, Pennsylvania
Mississippi                          JOHN D. DINGELL, Michigan,
VITO FOSSELLA, New York                (Ex Officio)
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland
TOM BLILEY, Virginia,
  (Ex Officio)

                                  (ii)


                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Fiore, James, Deputy Assistant Secretary for Site Closure, 
      Office of Environmental Management, Department of Energy...     3
    McDaniel, Tom J., Vice Chairman, Kerr-McGee Chemical 
      Corporation................................................     8
    Morgan, Patrick, Consultant to UMETCO Minerals Corporation 
      and former General Counsel to UMETCO Minerals Corporation 
      appearing on behalf of Curtis O. Sealy.....................    13

                                 (iii)

  

 
          REMEDIATION OF URANIUM AND THORIUM PROCESSING SITES

                              ----------                              


                        WEDNESDAY, APRIL 5, 2000

                  House of Representatives,
                             Committee on Commerce,
                          Subcommittee on Energy and Power,
                                                    Washington, DC.

    The subcommittee met, pursuant to notice, at 10:05 a.m., in 
room 2322, Rayburn House Office Building, Hon. Joe Barton 
(chairman) presiding.
    Members present: Representatives Barton, Largent, Shimkus, 
Wilson, Bryant, Ehrlich, McCarthy, Sawyer, Markey, Boucher, 
Wynn, and Strickland.
    Also present: Representative Cubin.
    Staff present: Kevin Cook, science advisor; Joe Kelliher, 
majority counsel; Elizabeth Brennan, legislative clerk; Sue 
Sheridan, minority counsel; and Rick Kessler, professional 
staff member.
    Mr. Barton. The Subcommittee on Energy and Power hearing on 
H.R. 2641 will come to order. We are going to have two hearings 
today on two bills, the first one being H.R. 2641. This is 
legislation that was introduced last year by Mrs. Cubin, who is 
on her way, and is being cosponsored by a number of members of 
the subcommittee.
    It would change how the Federal Government reimburses 
private licensees for the government share of cleanup costs at 
uranium and thorium processing sites. The cleanup of these 
uranium and thorium sites is governed by the Uranium Mill 
Tailings Radiation Control Act of 1978. The reimbursement of 
the Federal Government's share of cleanup costs is governed by 
Title X of the Energy Policy Act of 1992.
    Title X establishes the overall schedule for the 
reimbursement of the program and sets some specific caps on 
reimbursements. Title X has already been amended twice, once in 
1996 and again in 1998. These changes were necessary because 
the real world costs of cleaning up the sites have exceeded the 
limitations contained in Title X. That trend continues. The 
actual costs of cleanup are again pushing past the caps 
established in Title X.
    H.R. 2641 proposes a number of changes to the caps and to 
the schedule for reimbursements so that the private licensees 
will receive timely reimbursement from the Federal Government. 
The changes also ensure that the Federal Government will pay 
its fair share of the costs of cleaning up Title II sites.
    I want to welcome our witnesses from the Department of 
Energy and Industry and look forward to the testimony. We also 
welcome Mrs. Cubin, who is a member of the full committee but 
not of the subcommittee, when she arrives. We would ask 
unanimous consent that she be allowed to join us today to make 
an opening statement and ask questions of our witnesses.
    The Chair would now recognize the distinguished ranking 
member from the great State of Virginia, Mr. Boucher, for an 
opening statement.
    Mr. Boucher. Thank you very much, Mr. Chairman. I will make 
comments only with regard to H.R. 380, the National Oil Heat 
Research Alliance Act. In the 105th Congress, this legislation 
passed the House by a unanimous vote but was not acted upon by 
the Senate prior to adjournment. In this Congress, the 
legislation enjoys broad bipartisan support and has 128 
cosponsors, including many of our colleagues on this committee, 
and in this Congress the legislation has, as of today, been 
approved by the Senate. The NORA legislation will permit the 
creation of a self-financing program for heating oil using a 
percentage of the price of the wholesale product. The program, 
which is designed to replicate other dedicated industry 
programs, such as those for propane and natural gas, would fund 
research and development, energy conservation safety and 
consumer educational activities.
    I am pleased, Mr. Chairman, that we are processing this 
legislation, moving forward with it. I hope that it will 
quickly move to markup in the subcommittee in view of the 
tangible benefits that the legislation will produce, both for 
the heating oil industry and for its consumers.
    I look forward to receiving the testimony this morning with 
respect to both of the items of legislation pending before the 
subcommittee, and I thank the Chair.
    Mr. Barton. I thank the gentleman from Virginia. I would 
recognize the distinguished gentleman from Tennessee, Mr. 
Bryant for an opening statement if he so wishes.
    Mr. Bryant. Mr. Chairman, I thank you holding for these 
hearings. I have no statement at this time. Thank you.
    Mr. Barton. We would recognize the gentleman from Illinois, 
Mr. Shimkus, for an opening statement.
    Mr. Shimkus. I would ask unanimous consent to have my 
opening statement submitted in the record.
    Mr. Barton. Without objection, so ordered.
    The gentlelady from New Mexico would be recognized for an 
opening statement.
    Mrs. Wilson. Thank you, Mr. Chairman. I would also like to 
ask unanimous consent that my statement be put in the record.
    Mr. Barton. Without objection.
    We are down to the gentleman from Oklahoma. Does he wish to 
make an opening statement?
    Mr. Largent. Yes, I do, Mr. Chairman. I want to thank you 
first of all and your staff for your assistance in scheduling 
this morning's hearing on H.R. 2641, a bill introduced last 
summer by Congresswoman Cubin and myself. Before I begin, I 
want to welcome one of our witnesses here this morning, Mr. Tom 
McDaniel, vice chairman of Kerr-McGee Corporation, also an 
Oklahoman. Welcome, Tom.
    H.R. 2641 proposes to amend Title X of the Energy Policy 
Act to ensure that the Federal Government continues to meet its 
commitment within the existing authorization to those companies 
which were called upon to assist the development of our 
country's nuclear defense program. The companies which produced 
uranium and thorium for the government during the cold war are 
now faced with the task of completing the remediation at the 
facilities used to produce those materials.
    At the time, uranium and thorium were being produced for 
the government. Neither the government nor the licensees were 
aware of the hazardous nature of uranium and thorium mill 
tailings. It was only after the passage of the Uranium Mill 
Tailings Radiation Control Act and its implementing regulations 
that the parties began to understand the extensive costs which 
would be associated with remediating their sites.
    To date the Title X program has worked extremely well and 
DOE has done an excellent job in administering the program.
    The amendments proposed by H.R. 2641 recognize the actual 
remediation experiences encountered by the participants and are 
designed to ensure that a workable framework for Title X 
continues to exist as uranium and thorium licensees move toward 
completing remediation of their sites. The participants in the 
program are to be commended for coming together to update this 
legislation to make it reflect the factors experienced since it 
was initially enacted.
    The government recognized its obligation to assist these 
companies in remediating their States in Title X of the Energy 
Policy Act of 1992. Title X followed a GAO report which found 
that the Government had a strong moral obligation to help those 
companies, which had helped the government during the most 
critical time in our country's history.
    I look forward to hearing from our witnesses this morning 
regarding the status of their cleanup and the need to amend 
Title X of the Energy Policy Act, and I yield back Mr. 
Chairman.
    Mr. Barton. We thank the gentleman from Oklahoma. The Chair 
will recognize Mr. Markey. Seeing no other members present, the 
Chair would ask unanimous consent that all members not present 
have the requisite number of days to put their opening 
statements in the record. Is there any objection? Hearing none, 
so ordered.
    Gentlemen, we want to welcome you to the subcommittee. We 
will recognize our distinguished gentleman from Department of 
Energy for 7 minutes, and then we will go to Mr. McDaniel and 
then we will go to Mr. Morgan. Your statement is in the record 
in its entirety and we would ask that you summarize in 7 
minutes.

  STATEMENT OF JAMES J. FIORE, DEPUTY ASSISTANT SECRETARY FOR 
SITE CLOSURE, OFFICE OF ENVIRONMENTAL MANAGEMENT, DEPARTMENT OF 
                             ENERGY

    Mr. Fiore. Thank you, Mr. Chairman. My name is Jim Fiore. I 
am the Deputy Assistant Secretary for Site Closure in the 
Office of Environmental Management within the Department of 
Energy. I appreciate this opportunity to appear before this 
committee to discuss the proposed amendments in Title X of the 
Energy Policy Act of 1992.
    Since 1994, we have reimbursed the Federal share of cleanup 
costs at the 14 sites with Federal-related tailings under the 
authority of Title X. In 1998 we asked the licensees for 
updated estimates of their costs to complete their cleanups. 
Based on the information, we have estimated the future 
financial liability of the program. Assuming the annual 
appropriations continue at $30 million a year, we project that 
we will be able to eliminate the backlog of $91 million in 
unpaid claims by fiscal year 2005.
    In terms of program liability, we estimate that $241 
million will be reimbursed to the uranium licensees and $149 
million to the thorium licensee for a total of $390 million in 
nondiscretionary liability. This would leave over $100 million 
in unused uranium reimbursement authority.
    The Secretary was given discretion to make a decision in 
2005 whether or not to reimburse any unused authority. We 
project that in 2005, there will be unused reimbursement 
authority that the Secretary could allocate to the uranium 
licensees whose unit costs exceed the dry short ton ceiling.
    I would now like to discuss some of the proposed amendments 
in H.R. 2641. We believe the dry short ton ceiling and the 
discretionary reimbursement provisions now in Title X were 
intended to recognize the shared responsibility between the 
industry and the Federal Government for addressing 
environmental contamination from these milling activities. 
Also, Title X provided DOE with flexibility to allocate 
resources to the most immediate safety and health risks. 
Therefore, we recommend that Congress continue the current 
authority of DOE to prioritize its resource needs by 
maintaining the discretionary provision in the current law.
    H.R. 2641 would increase the dry short ton ceiling for 
uranium licensees from $6.25 to $10 in several steps and would 
direct the Secretary in 2008 to make unused uranium authority 
available to any licensees that have costs in excess of the $10 
per dry short ton. Since more than $40 million in costs that 
are now discretionary would no longer be discretionary, we 
recommend that the dry short ton ceiling and the Secretary's 
discretion to reimburse costs in excess of that ceiling remain 
unchanged.
    The current law provides that for any cleanup work 
performed after calendar year 2002, a licensee must submit a 
``plan for subsequent remedial action,'' and this plan must be 
approved by DOE. Each plan would describe the work to be 
performed after 2002 and provide an estimated cost and schedule 
for the work. We do not see any significant management value in 
the preparation or approval of these plans. Therefore, we 
support the proposed amendment that would delay the requirement 
for the plans and, furthermore, would recommend the complete 
elimination of the requirement for these plans.
    Also, we support the amendment in H.R. 2641 that eliminates 
the escrow requirement because it would defer to later years 
some portions of the annual appropriations required for the 
Title X program.
    In summary, the new amendments would increase the 
Department's nondiscretionary reimbursements to the uranium 
licensees by at least $40 million. We recommend that Congress 
retain the current dry short ton ceiling for the uranium 
licensees and maintain the Secretary's discretion to reimburse 
any uranium costs within the available authority that exceeds 
the dry short ton ceiling. We do support the amendment that 
would delay the requirement for plans for subsequent remedial 
action and the amendment that would eliminate the escrow 
requirement.
    Finally, we believe that the proposed amendment should be 
considered within the overall scope of the environmental 
management program and the need to continue progress at all 
sites. I will be glad to answer any questions you have.
    [The prepared statement of James J. Fiore follows:]

 PREPARED STATEMENT OF JAMES J. FIORE, DEPUTY ASSISTANT SECRETARY FOR 
   SITE CLOSURE, ENVIRONMENTAL MANAGEMENT, U.S. DEPARTMENT OF ENERGY

    Mr. Chairman, I appreciate this opportunity to appear before this 
committee to discuss proposed amendments to Title X of the Energy 
Policy Act of 1992 (Title X), which authorizes the U.S. Department of 
Energy's (DOE) Uranium/Thorium Reimbursement Program. In July of 1998, 
the Department appeared before this committee and testified on then-
proposed amendments to Title X and other matters regarding the 
Department's various programs for uranium mill tailings cleanup. Today 
I will summarize the Department's position on H.R. 2641, which would 
amend Title X, and provide an update on the status of uranium mill site 
cleanup in the United States under Title I of the Uranium Mill Tailings 
Radiation Control Act of 1978 (UMTRCA).

               PROGRESS IN URANIUM MILL TAILINGS CLEANUP

    The cleanup of uranium mill tailings and mill sites was one of the 
first major cleanup programs authorized by Congress for the Department 
of Energy. Uranium mill tailings were one of the first environmental 
legacies of the cold war, and were found later to pose a significant 
risk to public health. Tailings were originally treated as a benign 
material, and as a result, the tailings were left at abandoned milling 
sites and used offsite at thousands of properties for construction and 
landscaping.
    In 1978, Congress passed the Uranium Mill Tailings Radiation 
Control Act which provided DOE the authority to remediate 22 inactive 
uranium milling sites. Title I of UMTRCA directed the Department to 
clean up the older, inactive sites that produced all of their uranium 
for sale to the Federal Government. Title II of UMTRCA directed the 
Nuclear Regulatory Commission (NRC) to require the owners of the newer, 
``active'' sites, that is, those that were still licensed by NRC in 
1978, to clean up their own sites. Of the 30 Title II milling sites, 14 
sold uranium or thorium to the Federal Government as well as to the 
private sector, and the 16 remaining sites sold their product 
exclusively to the private sector, primarily to electric utilities.
    Under Title I, the Department implemented the Uranium Mill Tailings 
Remedial Action (UMTRA) Project to clean up the surface mill tailings 
at the 22 inactive uranium processing sites. (Two sites in North Dakota 
were added to the Project in 1979, but these were deleted in 1998 at 
the request of the State because of the low risk posed by the sites and 
because the State decided not to fund its 10 percent cost share 
required by Title I.)
    The UMTRA Title I Project has been implemented in two separate 
phases--surface tailings cleanup and ground water compliance. In 1998, 
in cooperation with ten States and two Indian Tribes and with the 
concurrence of the NRC, cleanup and disposal of the surface tailings 
from the last two of the 22 UMTRA Title I sites was completed. This 
included the cleanup of more than 5,300 vicinity properties that were 
also contaminated with tailings. During 1999, NRC completed the 
certification and licensing of those final two processing sites, and 
all of the disposal sites are now under the custody of the Department's 
Long-Term Surveillance and Maintenance Program at DOE's Grand Junction 
Office in Colorado. Thus, phase one of our major cleanup programs has 
been brought to a successful conclusion with the disposal of 42 million 
cubic yards of contaminated material.
    We are now implementing the Uranium Mill Tailings Ground Water 
Project at the 22 inactive Title I processing sites. Our current 
planning assumes that compliance with the Environmental Protection 
Agency's groundwater standards requires active cleanup at only three of 
the 22 sites. The remaining 19 sites will only require monitoring to 
provide assurance that contaminant levels are diminishing or not 
spreading. To date, NRC has approved our cleanup or monitoring strategy 
at 8 sites, and strategies have been submitted for three other sites. 
Thus, we have completed or developed a compliance strategy for 11 of 
the 22 sites. We have initiated active cleanup at the Tuba City and 
Monument Valley sites in Arizona, and active cleanup at the Shiprock 
site in New Mexico is planned to begin in fiscal year 2001. All three 
of these active cleanup sites are on lands of the Navajo Nation.
    Title II sites are being cleaned up by the current licensees, 
including the 13 uranium and one thorium milling sites that are 
eligible for reimbursement under the Title X Program. Among these 14 
sites is the former Atlas Corporation mill site at Moab, Utah. This 
past January, the Secretary proposed that Congress provide authority 
for DOE to take over cleanup of the Moab site and move the tailings 
away from the Colorado River to a disposal site in Utah. The Department 
is preparing proposed legislation to authorize DOE to cleanup the Moab 
site, and our fiscal year 2001 Energy and Water Development 
Appropriations Act budget request includes $10 million to initiate work 
on Moab. This legislation would, among other provisions, amend UMTRCA 
by transferring authority for the Moab site from Title II to Title I.

              STATUS OF THE TITLE X REIMBURSEMENT PROGRAM

    I would now like to focus my discussion on DOE's responsibilities 
related to the 29 active uranium processing sites and one thorium site 
that are being cleaned up by their licensees under Title II of UMTRCA. 
While these cleanups are regulated by the NRC (or in some cases by the 
host Agreement State), DOE has two responsibilities for these sites 
under current law: (1) to take custody, in most cases, and long-term 
responsibility for stewardship of completed disposal sites, and (2) to 
reimburse the Federal share of cleanup costs at the 14 sites that sold 
uranium or thorium to the Federal Government. At two of the sites (TVA 
at Edgemont, South Dakota and ARCO Bluewater at Grants, New Mexico), 
the cleanup has been completed, the NRC licenses have been terminated, 
and custody has been transferred to the DOE for long-term stewardship. 
We expect that over the next decade most of the other Title II disposal 
sites will become the property and responsibility of DOE.
    Today, we are reimbursing the Federal share of cleanup costs at the 
14 sites with federal-related tailings under the authority of Title X 
of the Energy Policy Act of 1992. In several weeks we will make the 
fiscal year (FY) 2000 reimbursements. Through FY 2000 we will have made 
seven annual payments to the licensees totaling $257.6 million dollars, 
including $169.1 million to the 13 uranium site licensees and $88.5 
million to the thorium site licensee. DOE has approved an additional 
$91 million in licensee claims for the Federal share of cleanup costs 
that exceed the funds appropriated through FY 2000. Of that $91 
million, $17.7 million are amounts that exceed the per dry short ton 
reimbursement ceiling in Title X that applies only to the uranium 
licensees-- most of that is for one licensee.
    In 1998, we asked the licensees for updated estimates of their 
costs to complete cleanup at each of their sites. Based on that 
information, we have made projections of the future financial liability 
of the program. Assuming that annual appropriations continue at $30 
million a year, we project that we will eliminate the backlog of unpaid 
claim amounts by FY 2004 or FY 2005. In terms of program liability, we 
estimate that $241 million will be reimbursed to the uranium licensees, 
and $149 million to the thorium licensee, for a total of $390 million 
in non-discretionary liability. This would leave over $100 million in 
unused uranium reimbursement authority. The payments of $149 million to 
the thorium licensee would exhaust the total thorium authority.
    The $241 million estimated uranium reimbursement claims are within 
the current $6.25 per dry short ton ceiling authorized by Title X, 
adjusted for inflation. In addition, we project there will be at least 
$40 million in Federal-related costs at uranium sites that exceed the 
dry short ton ceiling. An existing provision of Title X states that 
costs exceeding the dry short ton ceiling may be reimbursed if there is 
unused uranium authority. The Secretary was given discretion to make a 
decision in the year 2005 whether or not to reimburse any unused 
authority. We project that in 2005 there will be unused reimbursement 
authority that the Secretary could allocate to uranium licensees whose 
unit costs exceed the dry short ton ceiling. In summary, it appears 
that the current uranium authority will be more than adequate to 
reimburse the total costs of cleanup for Federal-related uranium mill 
tailings, including the costs in excess of the current dry short ton 
ceiling. Of course, Congress would need to appropriate funds for the 
reimbursement of any excess costs.

              DISCUSSION OF PROPOSED AMENDMENTS TO TITLE X

    I would now like to discuss H.R. 2641. The Department would like to 
highlight some of the proposed amendments and would like to recommend 
that Congress evaluate H.R. 2641 in the context of the original intent 
of Title X.
    The proposed amendments would require the Department to reimburse 
$40 million, or more, of Federal-related costs that are now 
discretionary because they would exceed the current dry short ton 
ceiling. Since Title X was passed in 1992, Congress has amended Title X 
twice. The total authorization for the uranium licensees was increased 
by $70 million to $350 million, and the dry short ton ceiling for 
uranium licensees was increased from $5.50 to $6.25. As discussed 
previously, the uranium authority is expected to be more than adequate 
to reimburse all Federal-related costs at uranium sites, including both 
discretionary and non-discretionary reimbursements. The total 
authorization for the thorium licensee was increased twice for a total 
of 250 percent from $40 million to $140 million. We expect that the 
thorium authority will be fully utilized.
    We believe that the dry short ton ceiling and the discretionary 
reimbursement provisions now in Title X were intended to recognize the 
shared responsibility between industry and the Federal Government for 
addressing environmental contamination from these milling activities. 
Also, Title X provided DOE with the flexibility to allocate resources 
to the most immediate safety and health risks. Therefore, we recommend 
that Congress continue the current authority of DOE to prioritize its 
resource needs by maintaining the discretionary provision in the 
current law.
    H.R. 2641 would increase the per dry short ton ceiling for the 
uranium licensees from $6.25 to $10.00 in several steps, and would 
direct the Secretary in 2008 to make unused uranium authority available 
to any licensees that have costs in excess of $10.00 per dry short ton. 
These amendments would have two effects. First, there would be a small 
reallocation of annual payments to those with unit costs in excess of 
the current dry short ton ceiling from those with costs less than the 
current ceiling--in other words the licensees with higher unit costs 
would get a portion of their reimbursements quicker. Since the 
increases are phased in over several years, this impact would be 
gradual. More significantly, it would make the determination in 2008 
regarding the availability of unused uranium authority a moot point 
except for one or two licensees. This is because, once inflation 
adjustments are factored in, the proposed dry short ton ceiling would 
be greater than the estimated unit cost at all but one or two of the 
sites. Since reimbursements that are now discretionary would no longer 
be discretionary, we recommend that the dry short ton ceiling and the 
Secretary's discretion to reimburse costs in excess of the dry short 
ton ceiling remain unchanged.
    Current law provides that for any cleanup work performed after 
calendar year 2002, a licensee must submit a ``plan for subsequent 
remedial action,'' and this plan must be approved by DOE if that work 
is to be eligible for reimbursement. A plan for subsequent remedial 
action is a description of the work to be performed after 2002 and the 
estimated cost and schedule for that work. Current law also requires 
that the funds for any approved post-2002 work must be placed in escrow 
by the end of calendar year 2002. H.R. 2641 would delay by five years 
the requirement for licensees to submit plans for subsequent remedial 
action, and it would eliminate the requirement to set aside funds in 
escrow for work to be performed after calendar year 2002. Each of the 
12 sites still being cleaned up reported to us that they will have work 
that remains to be done past 2002. Therefore, each would have to submit 
a plan for subsequent remedial action if their costs past that date are 
to be eligible for reimbursement. If the requirement for submitting 
plans for subsequent remedial action is moved to 2007, it appears that 
only four sites would have to submit these plans to remain eligible for 
reimbursement of their post-2007 costs. Thus, this proposed amendment 
would reduce administrative requirements for DOE and the licensees. We 
do not see any significant management value in the preparation and 
approval of these plans. Therefore, we support the proposed amendment 
that would delay the requirement for plans for subsequent remedial 
action--and furthermore would recommend the complete elimination of the 
requirement for these plans.
    The elimination of the escrow requirement proposed in H.R. 2641 
would affect budget planning for FY 2002 and 2003. Under current law, 
the costs for work performed after December 31, 2002 need to be 
estimated by the licensee in a plan for subsequent remedial action no 
later than December 31, 2001, and must be approved by DOE and placed in 
escrow no later than December 31, 2002. Thus, funds for post-2002 work 
must be appropriated and placed in escrow no later than FY 2003. 
Current estimates are that the amount to be placed in escrow would be 
in excess of $40 million. This presents DOE with two options: (1) place 
portions of the annual Title X appropriations from FY 2002 and FY 2003 
into escrow and reduce the annual payments to licensees accordingly, or 
(2) request an increase to the appropriations for those years to cover 
the escrow amount and the normal reimbursements that are currently 
about $30 million annually. We do not believe the first option is 
appropriate given the large backlog in unpaid claims. The second option 
could require DOE to forgo allocating resources to more immediate 
environmental, safety, and health risks in order to meet the escrow 
requirements of Title X. Under the proposed amendments, annual 
appropriations after FY 2005 could be limited to the actual approved 
annual claims, which we believe will be less than the current annual 
appropriation of $30 million. Therefore, we support the elimination of 
the escrow requirement because it would defer some portions of the 
annual appropriations required for the Title X Program to later years.
    In summary, the new amendments would increase the Department's non-
discretionary reimbursements to uranium licensees by at least $40 
million. However, under current law the Department already has the 
discretion to reimburse all of those costs. We recommend that Congress 
retain the current dry short ton ceiling for the uranium licensees and 
maintain the Secretary's discretion regarding reimbursing any uranium 
costs within the available authority that exceeds the dry short ton 
ceiling. We do support the amendment that would delay the requirement 
for plans for subsequent remedial action and the amendment that would 
eliminate the escrow requirement. Finally, we believe that the proposed 
amendments should be considered within the overall scope of the 
Environmental Management program and the need to continue progress at 
all of its sites.
    I would be glad to answer any questions you may have.

    Mr. Barton. Thank you, Mr. Fiore.
    We would now like to hear the testimony of Mr. McDaniel. We 
will recognize you for 7 minutes and your statement is in the 
record in its entirety.

    STATEMENT OF TOM J. McDANIEL, VICE CHAIRMAN, KERR-McGEE 
                      CHEMICAL CORPORATION

    Mr. McDaniel. Mr. Chairman and members of the subcommittee, 
my name is Tom McDaniel. I am vice chairman of Kerr-McGee 
Chemical Corporation. I have provided a formal statement for 
the record which describes what I believe is the significant 
progress Kerr-McGee has made at its West Chicago thorium site, 
and contains our current estimate as to what we expect to spend 
completing remediation at that site. I am pleased to join you 
this morning and would like to discuss the need to amend the 
Energy Policy Act as proposed by H.R. 2641.
    The Energy Policy Act recognizes the contribution to 
national defense made by companies that had produced uranium 
and thorium for the government during the years our country was 
developing its nuclear defense program. The Act followed a 1979 
GAO report that concluded that these are tailings for which the 
government has a strong moral responsibility. That moral 
responsibility became a commitment in 1992 when the Congress 
passed the Energy Policy Act under which the Federal Government 
agreed to pay its portion of the costs associated with 
stabilizing and decommissioning the mills which were used to 
produce uranium and thorium.
    Kerr-McGee is the licensee at the West Chicago rare earth 
facility in West Chicago, Illinois. It is among the mills 
covered by the Act. DOE has determined that more than 55 
percent of that facility's thorium production was provided to 
the Federal Government in support of the Nation's nuclear 
defense programs. Through the end of 1999, Kerr-McGee, I say 
Kerr-McGee, had spent $345 million in the West Chicago 
remediation costs and had received approximately $69 million in 
reimbursements through Title X. I point this out to underscore 
that at this level of financial exposure, you can be assured 
that our company is doing all it can to contain the costs of 
this project.
    Before addressing the need to amend Title X, I do want to 
commend the job that DOE has done in administering the claims 
process and the reimbursement programs. At least for us it is 
working well. However, in order to ensure that a suitable 
framework continues to exist for this program, as remediation 
of Title X sites moves toward completion, several amendments to 
Title X are necessary, I believe. The amendments do not seek to 
increase the existing Title X authorization, but they do 
propose to extend the date from 2002 to 2007, through which the 
current claims process and reimbursement procedure would remain 
in place.
    Extending the date to 2007 will ensure that many licensees 
such as Kerr-McGee are not unintentionally precluded from 
recovering the Federal share of remediation costs, which they 
will incur subsequent to December 31, 2002.
    Currently in order to be eligible to recover those costs, 
licensees must describe and quantify all costs expected to be 
incurred through the remainder of the sites cleanup in a plan 
for subsequent remedial action. This plan must be submitted to 
DOE before December 31, 2001, and approved prior to December 
31, 2002. Receiving reimbursement of the Federal share of post-
2002 costs would then be contingent upon those costs having 
been adequately described in the licensee's plans.
    In 1992, when Title X was enacted, it was anticipated that 
remediation at most Title X sites would be approaching 
completion, thereby enabling the licensees to submit their 
plans for subsequent remedial action. However, the need for 
substantial groundwater remediation and the continuing 
identification and evaluation of additional vicinity properties 
have extended significantly the time necessary to remediate 
many Title X sites like our West Chicago site. Because of this, 
it will be very difficult to identify, with the required 
specificity, post-2002 remediation activities and the 
associated costs and the required plan under the current 
deadline.
    Kerr-McGee's remediation of the factory site where deep 
excavation of contamination is underway is expected to continue 
through 2003, and this provides a good example of the hardships 
current law will create. Excavation of the factory site will 
extend well below the water table and will remove most of the 
source of the groundwater contamination.
    However, until the excavation is complete, actual 
groundwater conditions are determined, a treatment system is 
operating and actual results are available, which we estimate 
to be likely in 2004, we will not know what will actually be 
required for complete groundwater remediation. Extending the 
date on which a plan for subsequent remedial action must be 
approved from 2002 to 2007 will provide the time necessary to 
prepare the plans on a more informed basis and avoid the 
hardship which will likely result from the 2002 deadline.
    The second important change proposed by H.R. 2641 relates 
to the Secretary of Energy's calculation and disbursement of 
excess funds under the existing authorizations. The proposed 
amounts would extend the date on which the excess is calculated 
from July 31, 2005 to December 31, 2008, and would require the 
Secretary of Energy to permit all Title X licensees to be 
reimbursed the Federal share of remediation costs on a pro rata 
basis, should an excess of the authorization exist on that 
date.
    These changes are supported by the licensees, including 
Kerr-McGee, and we believe are consistent with the purpose of 
the Energy Policy Act to ensure that cleanup is completed at 
all these Title X sites and that the Federal Government bears 
its appropriate share of those costs.
    I appreciate the opportunity to share these views with you 
and will be glad to respond to any question.
    [The prepared statement of Tom J. McDaniel follows:]

   PREPARED STATEMENT OF TOM J. MCDANIEL, VICE CHAIRMAN, KERR-MCGEE 
                              CHEMICAL LLC

    My name is Tom J. McDaniel. I am Vice Chairman of Kerr-McGee 
Chemical LLC (``Kerr-McGee''). I am pleased to join you today to 
discuss the progress at the West Chicago thorium mill tailings 
remediation site and the need for the amendments proposed by H.R. 2641 
to Title X of the Energy Policy Act of 1992. See 42 U.S.C. Sec. 2296a.
    The Energy Policy Act recognizes the contribution to national 
defense made by companies that had produced uranium and thorium for the 
Government during the years our country was developing its nuclear 
defense program. The Act followed a 1979 GAO report that concluded: 
``the most significant factor in favor of providing federal assistance 
in cleaning up tailings pertains to the federal government's role in 
creating the mill tailings situation. These are tailings for which the 
government has a strong moral responsibility.'' That moral 
responsibility became a commitment in 1992 when Congress passed the 
Energy Policy Act. Under the Act, the federal government agreed to pay 
its portion of the costs associated with stabilizing and 
decommissioning the mills which were used to produce uranium and 
thorium.
    Kerr-McGee is the licensee at the West Chicago Rare Earths Facility 
in West Chicago, Illinois, which is among the mills covered by the Act. 
More than 55% of that Facility's thorium production was dedicated by 
contract to the federal government in support of the Nation's nuclear 
defense programs. Through the end of 1999, Kerr-McGee had spent 
approximately $345 million in West Chicago remediation costs and had 
received approximately $69 million in reimbursements through Title X. I 
point this out to make you aware that at this level of financial 
exposure, you can be assured that our company is doing all it can to 
contain the cost of this project.
    I testified before this Subcommittee just over 1\1/2\ years ago, on 
July 27, 1998, when the Subcommittee was considering an increase in the 
reimbursement ceiling. At that hearing, I testified that remediation 
costs would be substantially more than initially anticipated and that 
we expected costs to escalate even further as additional cleanup 
requirements were developed and implemented. I also provided testimony 
which detailed a number of steps we were taking to prevent costs from 
escalating unnecessarily.
    My testimony today will focus on the significant progress we have 
made since I last testified. In addition, my testimony will provide an 
example of the difficulties many licensees will encounter in accurately 
estimating their costs when submitting ``plans for subsequent 
decontamination, decommissioning, reclamation, and other remedial 
action'' to DOE. Under current law, such plans must be approved by DOE 
by December 31, 2002 in order for the uranium and thorium licensees to 
be eligible to recover the federal share of remediation costs incurred 
subsequent to that date. Simply stated, many licensees will have 
insufficient information available at the time such plans are to be 
submitted to DOE to accurately predict the timing and extent of work 
that will be necessary to complete remediation of their sites.
    First, however, I will provide some background.

                             I. BACKGROUND

    Operations. The West Chicago Facility began operations in 1932 and 
was shut down in 1973. Various owners operated the Facility until it 
was acquired by Kerr-McGee in 1967. Kerr-McGee operated the Facility, 
on a limited basis, for only the final six of the 41 years the Facility 
was open. The Facility produced a variety of chemical compounds 
containing rare earth elements and thorium, a naturally occurring 
radioactive element, from ores and ore concentrates.
    The milling process produced a substantial volume of sand-like 
materials and sludges, called ``tailings'', which are mildly 
radioactive. The government contracts included specifications 
addressing physical characteristics, grade and impurities. However, the 
contracts did not include provisions for mill decommissioning, long-
term management of the tailings, or stabilization of tailings piles. 
The reason for this omission is that the potential hazards of tailings 
were not appreciated at the time the contracts were executed.
    After several decades of operations, the Facility was contaminated 
with tailings generated by the milling activities. Also, as happened 
with similar sites across the country, local residents and others 
apparently used the sand-like tailings as fill which resulted in low-
level contamination of surrounding areas.
    After closing the Facility in 1973, Kerr-McGee began working with 
the U.S. Nuclear Regulatory Commission (``NRC'') to decommission the 
Facility and remediate the surrounding areas. In 1989, the NRC staff 
issued an environmental impact study in which the NRC staff 
preliminarily endorsed a plan by Kerr-McGee to bury the tailings on the 
Facility in an appropriately secured disposal cell. On-site 
encapsulation was estimated to cost approximately $26 million.
    In 1990, at the request of the State of Illinois, the NRC 
transferred jurisdiction to the State, which is requiring off-site 
disposal. At that time (and until as recently as late summer 1994), 
there was no disposal facility anywhere in the United States licensed 
to accept the tailings for disposal. Kerr-McGee ultimately contracted 
with a disposal facility located in the state of Utah (i.e., Envirocare 
of Utah) and, in late 1994, began shipping contaminated soils from the 
West Chicago site to the Utah facility. The requirement by the 
regulatory agencies to move the tailings offsite has dramatically 
increased decommissioning costs.
    Energy Policy Act. The Energy Policy Act of 1992 recognized the 
obligation of the United States to reimburse those who produced uranium 
and thorium for the Government for a portion of the costs of 
stabilizing and decommissioning the mills. The Act specifically 
authorized the Department of Energy to reimburse licensees for the 
federal government's share of decommissioning and reclamation costs.
    Under the Act, Congress required off-site disposal in a manner 
consistent with requirements imposed by the state regulatory agency in 
order to obtain reimbursement for the government's share of cleanup 
costs. The Act initially set a limit on reimbursement at the West 
Chicago thorium site of $40 million, plus inflation adjustments. At 
that time, however, Congress did not know the actual dollar amount of 
the federal government's share of West Chicago cleanup costs (because 
the Department of Energy had not yet determined the federal 
government's percentage share, and the scope of the contamination at 
the Facility and at the vicinity properties, and the full financial 
impact of shipping contaminated soils across the country to the Utah 
disposal facility was not known.)
    As more information became available, Congress increased the 
federal government's authorized share for thorium reimbursement to $65 
million in 1996, and to $140 million in 1998, plus adjustments for 
inflation. Even then, however, the full financial impact of the 
remediation effort was uncertain, as cleanup standards and other 
closure requirements imposed by the regulatory agencies were not fully 
in place and the clean up of surrounding areas was still far from 
complete.

                  II. REMEDIATION ACTIVITIES--PROGRESS

    Kerr-McGee began shipping material to Utah in 1994. Significant 
progress has been made since and, all told, we have now shipped more 
than 725,000 tons of material to Utah, including 235,000 tons from the 
vicinity properties.
    At the factory site, we are continuing with deep excavations and 
remain on schedule to complete the cleanup in 2004. Significantly, we 
recently passed the halfway point with respect to material expected to 
be shipped to Utah from the factory site.
    Excavation and removal of contaminated material at the Reed-Keppler 
Park vicinity property was completed during 1999. Approximately 115,000 
cubic yards of material were shipped from this area. Restoration is 
currently underway.
    In addition, significant progress has been made remediating 
residential properties in the vicinity of the factory site. These 
vicinity properties have been identified as being contaminated with 
materials which originated at the factory site. Through March 22, we 
had remediated 488 of the 610 identified vicinity residential sites. 
This represents an increase of more than 150 sites since I last 
testified. The number of remaining sites, currently 122, will increase 
as a result of EPA's continuing investigations. The cleanup orders 
issued by EPA for the vicinity properties are based upon EPA 
regulations promulgated to implement the Uranium Mill Tailings 
Radiation Control Act (``UMTRCA'') and the agreement state's source 
material milling facility regulations. License authorizations issued by 
the state regulatory agency provide for contaminated materials 
excavated from the vicinity properties to be returned to the West 
Chicago Facility for processing and shipment to the Utah disposal 
facility.
    Two additional items are also indicative of the progress we have 
made since I last testified. The first is the treatment of water 
through a water treatment plant. The water treatment plant has enabled 
us to handle water generated from the deep excavations at the factory 
site and also will be used during groundwater remediation. Since I last 
testified, over 43 million gallons of water have been treated at the 
water treatment plant.
    The second is the successful use of a physical separation facility 
(PSF), which was designed to separate thorium tailings from native 
soils, thereby reducing the volume (and cost) of material that must be 
shipped to the Utah disposal facility. When I last testified, the 
facility was in the testing stage. Today, it is in operation and more 
than 188,000 tons of material have been processed through the PSF. It 
has produced 99,000 tons of material that are being backfilled at the 
site instead of being shipped to Utah. We are now projecting that we 
will save $10-$15 million through use of PSF, up from our earlier 
estimate of $5-$10 million.

                           III. PROJECT COSTS

    The progress made over the past year and a half allows us to better 
estimate the cost of completing the decommissioning and cleanup work. 
Our estimate of total project costs eligible for reimbursement under 
Title X from inception of the project through project completion now 
totals $441 million, which reflects an increase of $81 million over the 
$360 million estimated in July 1998. This equates to a federal share of 
$243 million, based on the 0.552 federal ratio determined by DOE. The 
cleanup of the Kress Creek vicinity property is not included in this 
estimate, as Kerr-McGee currently is studying that site to determine 
closure requirements.
    The $81 million increase in estimated costs is attributable to the 
following:

 $40 million for the cleanup of vicinity properties.
 $23 million for oversight costs, additional infrastructure 
        (including PSF expenditures), excavation work and associated 
        site operations.
 $18 million for groundwater remediation.

            IV. H.R. 2641--TECHNICAL CORRECTIONS TO TITLE X

    The reimbursement program under Title X has worked very well and 
the DOE has done a commendable job in its administration of the claims 
process. However, in order to ensure that a workable framework 
continues to exist as remediation of Title X sites moves toward 
completion, several amendments to Title X are necessary. The amendments 
do not seek to increase the existing authorization. However, the 
amendments do seek to extend the date--from 2002 to 2007--through which 
the current claims process and reimbursement procedure remain in place. 
Extending the date to 2007 will ensure that the licensees are not 
unintentionally precluded from recovering the federal share of 
remediation costs incurred subsequent to December 31, 2002. Currently, 
in order to be eligible to recover those costs, licensees must describe 
and quantify all costs expected to be incurred throughout the remainder 
of the site's cleanup in a ``plan for subsequent decontamination, 
decommissioning, reclamation and other remedial action.'' Such plans 
must be submitted to DOE before December 31, 2001 and approved prior to 
December 31, 2002.
    Unanticipated developments since the time Title X was enacted will 
likely cause this provision (and its implementing regulations) to work 
an unintended hardship upon many licensees, including Kerr-McGee. In 
1992, when Title X was enacted, it was anticipated that remediation at 
most Title X sites would be approaching completion thereby enabling the 
licensees to submit their plans for subsequent remedial action. 
However, the need for substantial groundwater remediation and the 
continuing identification and evaluation of additional vicinity 
properties have extended significantly the time necessary to remediate 
many Title X sites, including Kerr-McGee's West Chicago site. Because 
of this, it will be virtually impossible to identify, with the required 
specificity, post 2002 remediation activities and the costs associated 
therewith in a ``plan for subsequent remedial action'' under the 
current deadline.
    Kerr-McGee's remediation of the factory site, where deep excavation 
of contamination is underway and is expected to continue through 2003 
provides a good example of how the current law will likely work an 
unintended hardship. Excavation at the factory site will extend well 
below the water table and will remove most of the ``source'' of the 
groundwater contamination. Although we have budgeted approximately $18 
million for groundwater remediation, until the excavation is complete, 
actual groundwater conditions are determined, a treatment system is 
operating, and actual results are available (likely sometime in 2004), 
we will not actually know what will be required. Extending the date on 
which a plan for subsequent remedial action must be approved, from 2002 
to 2007, will provide the time necessary to prepare the plans on a more 
informed basis and avoid an unintended hardship which would result from 
the 2002 deadline.
    The second significant change proposed by H.R. 2641 relates to the 
Secretary of Energy's calculation and disbursement of excess funds 
under the existing authorizations. Under the current law, the Secretary 
is required to determine whether excess funds are available in the 
uranium authorization on July 31, 2005. Should an excess exist on that 
date, the Secretary of Energy, at his discretion, may then reimburse, 
on a pro-rata basis, the uranium licensees' additional remediation 
costs from the excess. The proposed amendments would extend the date on 
which the excess is calculated to December 31, 2008, and would require 
the Secretary of Energy to permit all Title X licensees to be 
reimbursed the federal share of remediation costs, on a pro-rata basis, 
should an excess in the authorization exist on that date. These changes 
are supported by the licensees and are consistent with the purpose of 
the Energy Policy Act to ensure that cleanup is completed at all Title 
X sites and that the federal government bears its appropriate share of 
the costs.
    I appreciate the opportunity to share these views with you and 
welcome your questions.

    Mr. Barton. Thank you, Mr. McDaniel.
    We would now like to hear from Mr. Morgan. Again, your 
statement is in the record. We ask that you summarize it in 7 
minutes.

   STATEMENT OF PATRICK MORGAN, CONSULTANT TO UMETCO MINERALS 
   CORPORATION AND FORMER GENERAL COUNSEL TO UMETCO MINERALS 
       CORPORATION APPEARING ON BEHALF OF CURTIS O. SEALY

    Mr. Morgan. My name is Patrick Morgan. I am a consultant to 
Umetco minerals corporation and formerly served as general 
counsel to the company. I am appearing here today in place of 
Curt Sealy, our general manager, who had a last minute conflict 
in his schedule.
    In 1996, Congress passed H.R. 2967, which increased the per 
ton reimbursement rate at the uranium sites from $5.60 to 
$6.25. At page 9 of its report on that legislation, this 
committee said that even this increased rate will not be 
sufficient to fully reimburse the cost of remediation at some 
mining sites as the cost of remediation varies widely due to 
various environmental factors. That statement was very 
prescient.
    Umetco and other uranium companies are facing substantially 
higher remediation costs. For example, while DOE, Title I and 
private uranium mill sites must comply with EPA groundwater 
standards, the EPA has been allowed to use practical and 
economic solutions to remediate groundwater at the Federal 
sites. The Title II licensees have not been afforded this 
privilege. Specifically, the DOE sites are allowed to use the 
natural flushing concept to remediate aquifers. Natural 
flushing allows the natural groundwater movement and 
geochemical processes to decrease the contaminant 
concentrations to levels within regulatory limits given a given 
time period.
    This technique is applied at sites where groundwater 
compliance will be achieved within 100 years, where effective 
monitoring and institutional controls could be maintained, and 
the groundwater is not currently and is not projected to be a 
drinking water source.
    The vast majority of Title II sites, which is the subject 
of today's legislative discussion, fall into this category 
where natural flushing and attenuation is a viable alternative. 
Natural flushing has been demonstrated with the Title I program 
as being protective of human health and the environment.
    It is interesting to note that in DOE's submitted 
testimony, they state at page 3 that our current planning 
assumes that compliance with EPA groundwater standards requires 
active cleanup at only three of the 22 sites. The remaining 19 
sites will only require monitoring to provide assurance that 
contaminant levels are diminishing or not spreading.
    This is one of the key reason these groundwater costs have 
a provision in 2641 for a gradual increase in the per ton 
reimbursement ceiling from $6.25 to $10 over a 5-year period. 
The cleanup program at the uranium sites is also taking longer 
than originally contemplated. Once again, the Title II sites 
are the victim of the unrealistic groundwater compliance 
regimen that I just described. That is why H.R. 2641 provides 
for an extension of the reimbursement program from 2003 through 
2007.
    In conclusion, I believe that since DOE concludes in its 
testimony that there would be at least a $100 million in unused 
uranium reimbursement authority, it should not be left to the 
discretion of DOE whether a portion of that unused authority 
should be paid to the higher cost uranium sites. The original 
$5.50-per-ton ceiling was put in the law in 1992 to assure that 
higher cost sites would not disadvantage lower cost sites. 
Given the projected excess in the uranium authorization 
increasing the ceiling to $10 over a 5-year period no longer 
poses that concern.
    Thank you very much. I am prepared to take questions.
    [The prepared statement of Curtis O. Sealy follows:]

PREPARED STATEMENT OF CURTIS O. SEALY, GENERAL MANAGER, UMETCO MINERALS 
                              CORPORATION

    Mr. Chairman and distinguished Members of the Commerce Committee's 
Subcommittee on Energy and Power, my name is Curt Sealy. I am General 
Manager of UMETCO Minerals Corporation. I am here today to present 
testimony in support of proposed amendments to Title X of the National 
Policy Act of 1992 (P.L. 102-486). These amendments will not affect the 
amounts authorized for reimbursements to the Title X licensees. They 
will extend the period for reimbursement under the program from 2002 to 
2007 and will provide relief from the per ton cap limitations in Title 
X to licensees that have incurred higher costs in remediating their 
sites.
    When Title X was enacted in 1992, it provided reimbursement for 
thirteen commingled uranium sites, such as UMETCO. These sites varied 
greatly in size and the time of remediation also varied at each site. 
In order to assure a fair and equitable distribution of reimbursement 
payments to the uranium sites, a per ton cap was included in the 
legislation. The $5.50 per ton cap assured that the $270,000,000 
Congress designated to reimburse the uranium sites would be spread 
equitably among the eligible licensees. In 1996, Congress passed HR2967 
which increased the per ton cap $5.50 to $6.25 per ton and increased 
the authorization for uranium site licensees from $270,000,000 to 
$350,000,000. In its report on HR2967, the House Commerce Committee 
recognized that the increase in per ton reimbursement from $5.50 to 
$6.25 would not be enough to fully reimburse the cost of remediation at 
some active mining sites while other sites could be fully reimbursed at 
this level. At page 9 of its report, the Committee said that: ``Even 
this increased rate will not be sufficient to fully reimburse the cost 
of remediation at some mining sites, as the cost of remediation varies 
widely due to various environmental factors''.
    In 1999, the uranium licensees, working with the Department of 
Energy, determined that the $6.25 per ton cap could be increased as 
total estimated total costs at the various sites had become more 
concrete. DOE surveyed the uranium licensees and determined that the 
$350,000,000 authorization is sufficient to cover the Federal 
Government's share to reclaim the uranium sites. The survey also 
indicated that a gradual increase of the per ton cap from $6.25 per ton 
to $10.00 per ton would allow the higher cost sites to receive more 
timely reimbursement, while assuring adequate funds for the lesser cost 
sites. The proposed amendment would put a gradual increase of the caps 
into place. The increase of the cap from $6.25 to $10.00 per ton will 
not increase the aggregate amount authorized by Title X to cover the 
Federal share of this remediation.
    The second major change of the proposed amendment will extend the 
period for uranium and thorium licensees to obtain reimbursement for 
work done from 2003 through 2007. Currently these licensees can make 
their claims for the costs of remediated work done through 2002. At 
this time, licensees whose sites are not fully remediated can file a 
plan with DOE that contains an estimate of future claims for 
reimbursement. The proposed extension from 2003 through 2007 recognizes 
the fact that the remediation of the Title X sites has experienced 
unexpected complications, particularly in the area of groundwater 
decontamination. Significant remediation has been accomplished 
especially in the surface reclamation at the sites. However, by 
extending the period during which remediation work is done, the 
guesswork of future costs will be eliminated, and the reimbursement 
program can continue to work as designed.
    The Title X reimbursement program has worked very well. DOE has 
done an outstanding job administering the claims process. DOE and the 
licensees have developed excellent procedures in submitting and 
processing the claims.
    While this committee is very aware of the background of Title X, I 
believe it is worth mentioning the genesis of Title X. In 1979, in 
response to a request from the Committee on Energy and Natural 
Resources, the General Accounting Office (``GAO'') issued a report 
entitled ``Cleanup of Commingled Uranium Mill Tailings: Is Federal 
Assistance Necessary?'' (DMD79-29), in which GAO recommended that 
Congress provide assistance to the active site owners for the 
reclamation of tailings generated under federal contracts. This 
recommendation was based on several factors, including the Federal 
Government's role as buyer of the uranium, the fact that possible 
hazards from tailings were not recognized at the time they were 
produced, and the fact that government procurement contracts did not 
require reclamation of tailings. The GAO concluded that the mill owners 
had acted in good faith and should not bear subsequent costs of 
reclamation by themselves.
    In that report, the GAO concluded that: ``In order to assure that 
the uranium (and thorium) mill tailings are controlled in a safe and 
environmentally sound manner, we recommend that the Congress provide 
assistance to the active mill owners to share in the cost of cleaning 
up that portion of the mill tailings that were generated under Federal 
contracts. These are the tailings for which the Federal Government has 
a strong moral responsibility.'' (Emphasis supplied.)
    I am here today requesting amendments to Title X to allow the 
program to work better. These proposals have been thoroughly reviewed 
by the eligible licensees.
    I would like to also briefly detail the remediation program we have 
conducted at the UMETCO sites.
    UMETCO has two sites that qualify for reimbursement under Title X. 
They are located at Uravan, Colorado and Gas Hills, Wyoming. The Uravan 
site has 10.2 million tons of mill tailings. Of this amount, 5.7 
million tons or 55% relate to government purchases. The Gas Hills site 
has 11.1 million tons, of which 2.1 million tons relate to government 
purchases.
    The reclamation plan at Uravan consists of stabilization of the 
tailings, removal of process wastes to an on-site repository, 
decommissioning of the mill and ground water restoration. At Uravan we 
have been able to reclaim our tailings in place. While this saved the 
expense of moving the tailings to another site, it has made it 
necessary to quarry and move a half million cubic yards of rock for the 
erosion protection cover. In addition, we have placed 2.8 million cubic 
yards of clay and random fill on the piles to serve as a radon barrier.
    We had produced nearly 1.5 million cubic yards of process wastes, 
primarily from the treatment of waste process solutions, that had to be 
moved from various ponds to an on-site repository. We used the rock 
quarry as a below grade repository.
    Our ground water remediation system is in place and functioning. We 
are annually pumping thirty million gallons of contaminated ground 
water to evaporation ponds. The ponds, covering an area of over thirty 
acres, about two to three times the size of the reflecting pool at the 
Washington Monument, have double liners and leak detection systems. The 
removal of ground water will continue beyond 2002.
    Mill decommissioning includes the removal of all buildings, except 
a few of historical interest, and all process equipment. We will bury 
all contaminated materials and will dig up and bury an estimated 
250,000 cubic yards of contaminated soils. Our radiation based cleanup 
standards for soils are the EPA standards. Heavy metal cleanup 
standards for the site are background based standards.
    Because of the nature of the reclamation work at Uravan, our costs 
there are significantly higher than at our Gas Hills site. In fact, 
these costs now exceed the $6.25 per ton reimbursement level and are 
expected to average over $10.00 per ton. Our reclamation costs at Gas 
Hills have also increased dramatically and are expected to average over 
$8.25 per ton. We understand that the per ton reclamation costs at some 
of the other uranium sites will also exceed $10.00 per ton. These costs 
are appreciably higher now and in prospect than contemplated at the 
time that Title X was passed into law in 1992. This is due to a number 
of factors such as more rigorous state and federal cleanup standards, 
EPA's ground water standards and long term surveillance costs. In fact, 
these cost factors are cited in GAO's December 1995 report entitled 
``Uranium Mill Tailings--Cleanup Continues, but Future Costs are 
Uncertain'' (RCED 96-37) as contributions to the escalating cost of 
cleanup at the Title I sites by the Department of Energy. The Title I 
sites are those that were inactive at the time that the Uranium Mill 
Tailings Radiation Control Act of 1978 (``UMTRCA'') was enacted into 
law. The purpose of the GAO report was to provide Congress with 
information on (1) the status and cost of DOE's surface and ground 
water cleanups and (2) factors that could affect the Federal 
Government's costs and liabilities in the future in anticipation of 
congressional deliberations on reauthorizing the DOE program for 
cleaning up the Title I sites under UMTRCA which was scheduled to 
expire on September 30, 1996.
    In summary, the proposed amendments to Title X recognize what has 
occurred at the sites since the enactment of this reimbursement program 
in 1992. Because of numerous cost factors, including economy of scale, 
the cost per ton to remediate the sites varies greatly. Based upon 
DOE's survey of the uranium licensees, these licensees are agreeable to 
expanding the per ton cap limitations in order to allow higher cost 
sites to receive additional reimbursement now rather than waiting to 
submit these claims at the end of the reimbursement program. Actual 
remediation factors, such as the ground water remediation regimes, 
imposed on the licensees have significantly protracted the time horizon 
for completion of remediation. The licensees are confident that 
extending the Title X program from 2003 through 2007 will sufficiently 
allow the site remediation to be completed within this time and allow 
the reimbursement program to work as designed.

[GRAPHIC] [TIFF OMITTED] T4034.001

[GRAPHIC] [TIFF OMITTED] T4034.002

    Mr. Barton. Thank you. The Chair would recognize himself 
for 5 minutes. My question is not specifically on the pending 
legislation, but it is related and it is directed to the Deputy 
Secretary.
    Last fall, Secretary Richardson went out to Utah and 
proposed a transfer of a Naval Oil Shale Reserve to the Ute 
Indians. The Ute Indians would then take the uranium tailings 
pile at Moab, Utah, and pay to relocate it and the cost of that 
was expected to be about $300 million. Secretary Richardson 
indicated the Department of Energy would support that. The 
committee is a little bit puzzled by this proposal.
    So we would ask you what technical basis does the Secretary 
of Energy have for making that proposal and also ask you to 
comment on the fact that the Nuclear Regulatory Commission has 
completed a final environmental impact statement in which they 
determined that the most cost effective and sensible thing to 
do was to cap the pile in place where it is currently located.
    Mr. Fiore. When the Secretary made his decision, he based 
it not only on technical considerations, but also stakeholder 
concerns, the proximity to the park, what technical assurances 
you would have if you did relocate the piles. So all of those 
things were considered in the decision. We are not critiquing 
the NRC decision, but the Secretary is reflecting a number of 
other factors in his position.
    Mr. Barton. What legal authority does he have to make that 
recommendation? That is the main concern that we have. We have 
got concerns about the quality of the recommendation, but our 
primary concern is we don't see under law that he has the 
authority to make that proposal.
    Mr. Fiore. In order for the Department to implement actions 
at that site, it would require additional legislation to do 
that, and without that additional legislation we do not have 
the authority to proceed at that site. So the Secretary 
announced he would develop and propose legislation. You are 
correct--we do not currently have the authority.
    Mr. Barton. That is really the only question that I have. 
Gentleman from Virginia is recognized for 5 minutes.
    Mr. Boucher. Thank you, Mr. Chairman. I have a series of 
questions here and I will propound these to the extent of the 
time I have allotted, and those that I don't have an 
opportunity to ask this morning I will submit with the 
chairman's permission for the record.
    Mr. Fiore, at page 6 of your testimony, you recommend that 
Congress evaluate H.R. 2641 in the context of the original 
intent of Title X, and I think that is a wise suggestion since 
the costs of some of these cleanup efforts have more than 
doubled. If we go back to the last enactment of Title X, in the 
report of the House Commerce Committee on the Energy Policy Act 
of 1992, I note a passage in that report with respect to the 
Federal Government's share of the cleanup costs that reads as 
follows, and this is a quote: ``total payments for the thorium 
site would not exceed $40 million'' and then from the 
corresponding Senate report in that same year: ``the proposed 
limit on the Federal Government's share for thorium cleanup is 
placed at $30 million'' and the report stipulated that the 
provision does not constitute an entitlement.
    Of course as of now, we have an authorization for total 
cleanup costs in the Federal share at $140 million, and one 
could read the legislation pending before us as carrying the 
authorization even beyond that amount. I make this point not 
because I am hostile to the need to clean up the site or 
unsympathetic to the fact that taking waste to a Utah disposal 
site would be an expensive proposition. On the other hand, the 
costs for this cleanup have multiplied several times over the 
original estimates, and the clear congressional intent as 
announced in 1992, and it's important for us to take a close 
look at all of the equities that are involved since taxpayer 
monies, and I think also utility rate payer funds, are 
involved.
    So the first question that I have for you is related to the 
involvement of State and local governments and their regulatory 
regimes as part of the reason that the costs have gone well 
beyond the original congressional intent, and do you believe 
that State and local government regulations have been 
responsible in some significant part to the increase in these 
costs beyond the amount that we originally expected?
    Mr. Fiore. I don't think I am in a position to really 
estimate the impact that State and local requirements would 
have on the claims. I think the determination that the 
Department is expected to make is whether or not the claims 
that are being submitted to us reasonably reflect the costs 
that are being spent. My understanding is we are not passing 
judgment on whether or not those costs themselves are driven 
appropriately or inappropriately by any factors.
    Mr. Boucher. Do you believe that State and local government 
regulations have had an effect in this area?
    Mr. Fiore. I just have no basis for saying that.
    Mr. Boucher. Mr. McDaniel, would you care to comment on 
that?
    Mr. McDaniel. I would be glad to. The answer to your 
question is yes, I do think the State and local regulations 
have had a dramatic impact. Our original proposal to clean up 
the site included encapsulation of the material onsite. That 
proposal was later rejected, and when Illinois became an 
agreement State, they required us to bury the material offsite. 
At that time, when we began this process, there was no site 
available in the United States to which to move the material. 
Enviracaire of Utah then was licensed, and we have now been 
moving the material there since 1994. I might just say that yes 
it increased the costs of course significantly to handle the 
material, to load the material, to put it on trains and to move 
it to Utah and to pay a disposal fee. That increased the costs 
by an order of magnitude.
    In addition to that, as I mentioned in my testimony, as we 
learned more, the first material we sent there of course was 
from the surface cleanup, and as we have now gotten in the 
groundwater cleanup, we have discovered more about this that we 
don't know over these many decades of operation of this plant. 
And then, in addition to that, we have continued each year to 
have more vicinity properties added to this. All of those 
things have contributed.
    Mr. Boucher. Do you think, Mr. McDaniel, that it might be 
appropriate for us to consider suggesting to the State and 
local governments that have contributed through their 
regulatory burdens to the cost of this program that perhaps 
they bear some of the cost of this cleanup so as to offset the 
added burden to the Federal Government?
    Mr. McDaniel. Well, I would not think so, but certainly--.
    Mr. Boucher. You would or you would not?
    Mr. McDaniel. I would not. I think that is something 
certainly you all might consider, but the benefits of this to 
the taxpayers came from the contribution that this made to the 
national defense, and it is my view that the requirements that 
have been made, while some of them have been the subject of 
much discussion and much debate, I think they are legitimate 
concerns that when you have a facility that is located within 
city limits, I think the city has a legitimate interest in 
determining how that should be cleaned up.
    Mr. Boucher. All right. Thank you, Mr. McDaniel. Mr. 
Chairman, I ask unanimous consent that the balance of these 
questions be submitted to the witnesses and that their written 
responses be included in the record.
    Mr. Barton. Well, this subcommittee is generally known as a 
States' rights subcommittee, so we would assume the States have 
the right to help clean it up if they want to include the 
additional charges. Let us see who was first here, I think Mr. 
Shimkus of the members. Mrs. Cubin is prepared, if we want to 
recognize Mrs. Cubin, who is one of the cosponsors or chief 
sponsors of the legislation. Welcome to the subcommittee.
    Mrs. Cubin. Well, thank you, Mr. Chairman, for the 
hospitality of allowing me to sit at the dais and also forgive 
my tardiness this morning. Imagine my surprise when I went to 
my car and someone had tried to steal it and jimmied a wire 
into the ignition. So that is why I was late getting here.
    I have only three questions that I would like to directly 
address to the panel, and so I hope I have time to do it, but I 
do feel, and I will also obviously submit my opening statement 
for the record, but there are a few points that I want to make 
that will be shorter than going through the question and answer 
process.
    During World War II, the government tapped U.S. producers 
of thorium and uranium to have their mines and mills available 
for any government needs, and I think it is only fair--I think 
it is fair to suggest that since the Federal Government was the 
only customer, that had there been other customers, prices 
might have been higher, there might very well have been other 
things built into the contracts that wouldn't have left these 
companies in a situation where they are now with the cleanup, 
and the thrust that I would like to make today because I know 
my colleagues are going to question it is why should the 
government be ``bailing out'' the uranium companies at this 
point in time.
    And these elements were used, as was mentioned by Mr. 
McDaniel, for national defense purposes, and so at that time 
all of the taxpayers benefited. We continued to benefit from 
that production, and while reclamation of the mill tailings 
from uranium and thorium that was produced was not recognized 
as hazardous, now that they are hazardous and now that we have 
to deal with cleaning up the groundwater as well, it is a much 
larger, huge expense than it was in the beginning.
    The energy policy that was enacted in 1992 recognized the 
equity of the Federal Government in cleaning up these mill 
sites as well, and Title X of the Act established a program for 
reimbursement for the remediation costs incurred by the uranium 
active uranium and thorium sites. So I just want that on the 
record that this is not a bailout for the industry.
    I don't recall which Secretary it was that said it is our 
moral obligation to help clean up these sites. So now I will 
just go to the questions.
    Mr. McDaniel, would you please explain to me the wide range 
of the various costs at the sites that are eligible for 
reimbursement under Title X.
    Mr. McDaniel. Well, of course, the one with which I am most 
familiar is the one that our company is involved in the 
cleanup. So I can't speak to all of the other sites, but I 
think that, at least it would be my view, the wide range 
relates to the location, the cleanup standards, and how many 
vicinity properties are impacted from the facility side itself. 
We happen to have all of those factors at our site located 
within the city limit. Also, we have more than six hundred 
vicinity properties which were impacted, which we did not know 
going into this process, and then we have more stringent 
cleanup standards, what I will call a residential cleanup 
standard, which you might not have in a more remote location. 
Those would be the principle things I think, Mrs. Cubin.
    Mrs. Cubin. And that would be the main reason then maybe 
for needing to extend the date?
    Mr. McDaniel. Yes. I think now at least our experience at 
our site is that the more that we have gotten involved in the 
cleanup, the more we have learned about the needs of the 
cleanup and particularly with the additional vicinity 
properties which we continue to have designated for cleanup, 
and in addition to that, the groundwater contamination which 
seems to be something that you only know about as you get into 
the excavation process and where we are still involved in that 
process.
    Mrs. Cubin. Thank you. I think it is important to note, 
too, that the government's contribution to the reclamation of 
the commingled sites does come from a self-contained fund which 
is comprised of government contributions and utility 
contributions. It does not come from the general budget. I 
would ask any of the witnesses why do you think it is necessary 
that we amend Title X in this regard? And could you just 
briefly say what the benefit is to the American taxpayer, to 
justify their payment into this.
    Mr. Fiore. Again, is your question commenting on the 
appropriateness of the current Title X provisions or the 
proposed ones in 2641?
    Mrs. Cubin. The proposed.
    Mr. Fiore. The proposed ones. In my testimony, I commented 
there are a few things that I think are improvements to the 
current process, which I think is already working very well. I 
agree with what my industry counterparts have said, that we 
seem to have hit a rhythm on processing claims. But the 
requirement to produce a plan for subsequent remedial action of 
forces industry to make estimates of what might be required, 
and as the gentleman next to me said, it is difficult often to 
estimate those changes--some of the cleanups are taking longer 
than we thought they would.
    So we think it is reasonable to have an amendment that 
extends the reimbursement period and also we would encourage 
the requirement to submit these plans to be pushed out in time 
so that we all have greater certainty on what the costs would 
be. So I think those are improvements that can result from some 
of the provisions in the proposed bill.
    Mrs. Cubin. Mr. Chairman, I would ask unanimous consent to 
ask one more question.
    Mr. Barton. Without objection.
    Mrs. Cubin. I would like to ask Mr. McDaniel, will you 
please explain why the Title X part of the Energy Policy Act of 
1992 is not a bailout for the uranium and thorium industries?
    Mr. McDaniel. Well, yes. From the viewpoint of our company, 
we acquired a company called American Pot Ash in the late 
1960's, and one of the throw-ins was this very small thorium 
processing plant in West Chicago, Illinois. We operated the 
plant a very short period of time and now have been charged 
with responsibility under the law to discharge the cleanup. As 
I mentioned in my testimony, we have spent $345 million to 
date, and we expect to spend another $100 million, and the DOE 
has determined that the government's share of that cleanup cost 
is 55 percent.
    To date, we have been reimbursed $69 million, which is 
about 20 percent. In addition to that, all the money has to be 
paid when the cleanup is done. The reimbursement process, 
although it is working well for us, does not take into account 
the time value of the money. So I guess I am supposed to stop.
    Mrs. Cubin. No, that was her beeper. You can go ahead.
    Mr. McDaniel. So we not only are we having to spend--we 
have spent 80 percent of the money to clean this up for a 
problem we did not cause. We also have to pay all the bills as 
they come due and wait for the reimbursement process subject to 
this cap. We certainly don't look at this as a bailout. We 
think the taxpayers received the benefit of this through the 
development of our national defense, through the nuclear 
defense programs, and we think that the taxpayers are also 
benefiting by the cleanup of these tailings in getting them 
moved to a remote site in Utah.
    Mrs. Cubin. Thank you, and thank you, Mr. Chairman, for 
your courtesy.
    Mr. Barton. Thank you, Congresswoman Cubin. Does the 
gentlelady from Missouri, Congresswoman McCarthy, wish to be 
recognized for questions?
    Ms. McCarthy. Very briefly, Mr. Chairman.
    Mr. Barton. Recognized for 5 minutes.
    Ms. McCarthy. Thank you, Mr. Chairman. I just wondered how 
realistic the date is that is being proposed in this 
legislation as far as completion of the task. Please 
understand, I am supportive of doing what we have to do to get 
it completed, but I just want to be sure that we address it, we 
are doing it responsibly with a date we can all meet.
    Anyone.
    Mr. Morgan. Well, as far as Umetco is concerned, we have 
two of the higher cost sites, and I can assure you that our 
management will be former management if they don't complete 
these remediation efforts within the time period we are 
projecting at present time.
    Ms. McCarthy. Does that go along with the sponsors of this 
bill, former members?
    Mr. Morgan. No. I don't comment on those.
    Ms. McCarthy. I wanted that assurance.
    Mr. McDaniel. Well, I might comment on that as well. We 
believe it is in our company's best interest to get this 
problem solved as soon as we can. So we are doing everything we 
can to expedite this process. It is of course a slower process 
than any of us would have anticipated when we began. But we 
believe it is in our interest. We believe it is in the 
country's interest to get these tailings stabilized, and we are 
making every effort to do that. We do believe that the 
provisions proposed by this bill are reasonable from our 
viewpoint, and we do believe that we could complete the work 
within the time allotted.
    Mr. Morgan. Could I make one additional comment?
    Ms. McCarthy. Yes.
    Mr. Morgan. It is important to recognize this is a partial 
reimbursement statute covering only the government's portion of 
the responsibility. It is not in the interest, certainly of our 
company or any--at our company we have two sites. There are 
about 55 percent government, what we call government tailings 
at our Uravan site in Colorado and about 26.2 percent site of 
the tailings in Gas Hills, Wyoming, are government tailings. 
Given the partial reimbursement nature of the statute, it is 
not in our interest to spend any more money or any more time 
than we have to to do the cleanup.
    Ms. McCarthy. Thank you.
    Mr. Fiore. And let me just echo that in terms of the other 
sites not covered by these gentlemen. I think because the 
companies are sharing the cost of the cleanup, they are driven 
to try to get that done as quickly and as safely as possible. 
So I think it is reasonable to expect that the cleanups will be 
done in the time period proposed.
    Ms. McCarthy. Do you have any other impediments that are 
unanticipated? I know groundwater contamination has been a real 
issue in the delay, but it is a critical issue to address. Are 
there other things out there we cannot anticipate that might be 
coming up in this final time period we are addressing today?
    Mr. McDaniel. At least at our site the identification of 
additional vicinity properties, these would be properties where 
the material was either taken by local homeowners, or in other 
ways taken offsite from the factory site, and at least our 
experience is that we have continued to identify those sites 
and we would expect there will be some additional vicinity 
properties added, and that of course would take more time.
    Ms. McCarthy. Well, Mr. Chairman, I thank you for this 
opportunity and commend the sponsors for this bill. I hope we 
do have a realistic date to determine otherwise in the course 
of its passage, please make that adjustment.
    Mr. Barton. I thank the gentlelady. Does Mr. Shimkus now 
wish to be recognized?
    Mr. Shimkus. Thank you, Mr. Chairman.
    Mr. Barton. Five minutes.
    Mr. Shimkus. I also want to welcome Mr. McDaniel. He has 
appeared before the committee before in July 1998 on this same 
issue. Obviously Kerr-McGee's representation in West Chicago 
has the great interest of Illinois members, and really former 
committee member and now Speaker Dennis Hastert has worked very 
closely on this issue, and Congresswoman Cubin mentioned a 
point that I was going to bring up, and just for the record, 
your company was not the processor of thorium, but in essence, 
purchased the site and then was required to do the remediation 
by the Federal Government, and then the State of Illinois, EPA, 
got involved; is that correct?
    Mr. McDaniel. That is correct, Congressman, yes.
    Mr. Shimkus. So in being good public stewards in trying to 
do the cleanup, instead of trying to drag this out in the court 
process, trying to reassess liability, I just think that is a 
point that needs to be addressed.
    Deputy Secretary Fiore, one effect of the language of H.R. 
2641 is to make the single thorium licensee eligible for 
distribution of that unused reimbursement authority which is 
presently restricted only to the uranium licensees.
    Mr. McDaniel has testified that Kerr-McGee has already 
spent $345 million on the West Chicago site and estimates a 
total cost of $441 million. The Federal share is supposed to be 
55 percent, but the current statutory ceiling for thorium is 
only $140 million. What is the Department's position on this 
particular provision that would allow Kerr-McGee to claim a 
portion of the unused uranium ceiling?
    Mr. Fiore. My understanding of the legislation is that it 
does not increase the thorium authority. It does?
    Mr. Barton. You answered correctly, I believe. Let me ask 
the counsel. It is a complicated answer. If the gentleman will 
continue, we will try to get a correct answer for the record. 
It is very complicated.
    Mr. Shimkus. I would like to yield to my colleague, Mrs. 
Cubin, if she would like to add to this question or discussion.
    Mr. Barton. Sure.
    Mrs. Cubin. I am not sure what is complicated about it, 
because the intent is not complicated. The intent is that after 
the uranium sites are cleaned up, if there is money that is 
left, that it goes to the thorium site in West Chicago. Now, if 
the language doesn't reflect that we need the address it.
    Mr. Largent. Well, let me see if I can bring a little light 
to the subject. First of all, you are correct, Mr. Fiore, it 
does not increase the overall authority that is currently in 
effect, but it does two things. One, it is raising the dry 
short tonnage ceiling from $6.25 to $10, and it also says that 
if there is any money left over at the end of the program, that 
it would be disbursed not just to uranium sites, but to uranium 
and thorium sites, the additional funds left over at the end of 
the program. So it does not increase the overall authority, 
which is what your response was and that is correct.
    Mr. Barton. The counsel indicates that those answers were 
correct, but to me that seemed complicated but I am from Texas. 
Mr. Morgan, yes, sir.
    Mr. Morgan. If I heard that DOE's testimony correctly, they 
want to maintain discretion as to whether they will or will not 
distribute that excess.
    Mr. Barton. That is correct.
    Mr. Morgan. To the uranium and thorium site licensees.
    Mr. Barton. That is correct.
    Mr. Morgan. And I think it is the view of the industrial 
members of the panel that that is not appropriate. We think 
they should be mandated to do that, and there is a provision in 
the 2641 that would require DOE to distribute the excess.
    Mr. Shimkus. Reclaiming my time, if that is the case, the 
question then goes back to Mr. Fiore, would it be your intent 
to help refund the thorium facilities with this given Mr. 
Morgan's statement, that it is up to your discretion? What 
would be the DOE's position?
    Mr. Fiore. What I would like to do is give you a short 
answer right now and then respond to that in writing. The short 
answer right now is I don't want to try to prejudge what the 
Secretary of Energy in 2005 will choose to do with that 
particular time in terms of how he or she might exercise their 
discretion, but we will give you an answer in writing on that.
    [The following was received for the record:]

    Title X of the Energy Policy Act of 1992 provided for several 
limitations on reimbursements. It limited the total authorized 
reimbursements to a specified dollar amount for the uranium licensees 
as a group, and to a different specified dollar amount for the thorium 
licensee, and it also imposed limits on the dollars per short ton of 
tailings that could be reimbursed to the individual uranium licensees. 
It provided authority to the Secretary of Energy to make a decision in 
2005 whether or not to make reimbursements under any still-unused 
uranium reimbursement authority to uranium licensees who had costs that 
exceeded the short ton limit. DOE believes this discretion now provides 
the Secretary the option to evaluate other needs in future years as 
well as the needs of the uranium licensees.
    In his testimony on April 5, 2000, Mr. McDaniel of Kerr-McGee 
provided estimates for the West Chicago thorium site cleanup that were 
higher than the Department had heard before. Specifically, he testified 
that the total Federal share is now estimated by Kerr-McGee to be $243 
million, and he also testified that this estimate does not include 
other potential increases in scope. This compares to the $149 million, 
including inflation adjustments, that the Department had assumed 
previously. Current overall total Title X program authority is $490 
million ($350 million for uranium licensees and $140 million for 
thorium licensees) plus adjustments for inflation. Previous estimates 
by DOE were that $390 million would be reimbursed to all licensees 
under existing authority and that up to $40 million could be reimbursed 
to the uranium licensees at the discretion of the Secretary after 2005, 
With the required adjustments for inflation, there is likely to be 
approximately $100 million in total program authority remaining after 
these reimbursements are made.
    If the proposed amendments are enacted, the Department would be 
directed to reimburse all or most of the estimated Federal share of 
uranium and thorium costs. This includes the $40 million in uranium 
licensee costs that are estimated to exceed the current dry short ton 
limitation as well as the nearly $100 million in thorium site costs for 
which there is no current reimbursement authority. Thus, the net effect 
of this legislation would be to increase the estimated liability of the 
Title X program by up to $140 million, including approximately $100 
million that is not reimbursable under current law. This could require 
approximately $100 million or more in total appropriations from the 
Uranium Enrichment Decontamination and Decommissioning (D&D) Fund 
during the second half of this decade than DOE currently anticipates; 
and, if annual appropriations from the D&D Fund do not increase, it 
means that approximately $100 million in planned cleanup at gaseous 
diffusion plants may have to be deferred.
    The Department does not question the cost effectiveness of the 
Title X cleanups. The licensees are doing the cleanup work with their 
own funds, and the Title X program provides only a partial 
reimbursement of their costs. However, the Department supports 
providing discretion in Title X because it gives the Department the 
option in later years to evaluate the overall program needs and those 
of the licensees. We do not support changes to Title X that would make 
additional reimbursements to the thorium licensee above the amount 
currently authorized non-discretionary.

    Mr. Barton. Gentleman, do you have one more question? Your 
time is expired.
    Mr. Shimkus. No. I will finish by saying you understand the 
importance of trying to get some DOE intent on the record so 
that we can use that in the next administration to see some 
consistency in a position, and I yield back.
    Mr. Barton. The gentleman from Ohio, Mr. Sawyer, is 
recognized for 5 minutes.
    Mr. Sawyer. Thank you, Mr. Chairman. First of all, let me 
apologize for not being here to hear the testimony. So if my 
questions seem redundant of materials that have already been 
covered, I apologize.
    Let me just begin with the premise that I think I 
understand the conceptual linkage between the D&D funds that 
are set to clean up the uranium enrichment plants under EPAct. 
I don't understand the conceptual linkage between those funds 
and the thorium cleanup. Can you illuminate that for me?
    Mr. McDaniel. Mr. Chairman, would you permit me to start on 
an answer to that while Mr. Fiore--.
    Mr. Fiore. I need to get you an answer on that. I don't 
have one.
    Mr. Barton. Mr. McDaniel might want to try.
    Mr. McDaniel. I am willing to try. It is our facility. It 
is our belief that the linkage is that, just like uranium, 
thorium was used in, for example, the Manhattan Project, and 
the production from this plant at West Chicago was dedicated to 
the Department of Defense for the development of our nuclear 
program. In the early days of that program, it was not known 
whether they would use thorium, uranium or plutonium in support 
of the national defense, and so as it progressed they used the 
product from our plant just as they did from the uranium 
plants, and so that is why we believe we are included in Title 
X of the Energy Policy Act.
    Mr. Sawyer. I don't disagree with the ultimate need. I 
guess I am trying to get at the question of who pays. Utilities 
contribute directly to the cleanup of the uranium sites; is 
that not correct?
    Mr. Fiore. They make a contribution to the D&D fund from 
which the reimbursements are made.
    Mr. Sawyer. And I am assuming that is an allowable cost of 
doing business under the regulatory structures of the States in 
which they operate.
    Mr. Fiore. I believe that is the case, sir.
    Mr. Sawyer. My question, in trying to get at the conceptual 
linkage, is not one simply of need but rather of the 
appropriateness of ratepayer paying for the thorium cleanup, 
even if those are dollars that are left over and whether that 
is an appropriate revenue stream for an obvious need that I 
don't disagree with, but whether or not we are sending the 
proper dollars to the proper places. Does that question make 
sense to you?
    Mr. Fiore. I believe I understand the question which is 
whether or not such a cost is appropriate.
    Mr. Sawyer. Whether it is appropriately borne under rate of 
return price structures for utilities when the cost is going to 
an equally important, but nonetheless, purpose, that is, not 
directly beneficial to rate payers as they support the cost of 
their generation.
    Mr. Fiore. I understand the question, but I think I 
personally, and the Department, are not in a position to 
comment on whether or not that is an appropriate charge that 
would be passed on to ratepayers.
    Mr. Sawyer. Someone in the Department of Energy, I would 
hope, would have a thought about that again.
    Mr. Fiore. Again, we don't pretend to be experts on State 
regulations for what is reimbursable or not to the utilities or 
what utilities can put in their rates.
    Mr. Sawyer. I guess I am getting at the question of whether 
or not there is a limit to how much ratepayers who presumably 
are benefiting directly from at least a portion of this, how 
much they need--they ought to be paying for what essentially a 
government purpose that ought to be borne more generally by 
taxpayers of the United States whose defense was benefited. I 
think that is an important question to ask, particularly as we 
move from an era of rate of return regulation to a competitive, 
restructured situation where the utilities will be more or less 
competitive depending on the amount of burden they have to bear 
in this.
    Mr. Fiore. If I interpret your question right as to whether 
or not that is a reasonable charge that the utilities are 
paying now or whether that is a ceiling that would go up or 
not, I think the best I can say is that Congress, when it 
passed the legislation that enabled or required the utilities 
to make the contribution into the D&D fund, evaluated what 
those costs were, and the reasonableness and the 
appropriateness of it at that time, and we don't have any 
disagreement with that legislation that was enacted.
    Mr. Sawyer. Nor do I. It is whether or not the funding 
stream that results from the legislation that we are thinking 
about is driving dollars to an appropriate place from an 
appropriate source, and by extension, whether or not the 
uranium sites will have sufficient funds to achieve the cleanup 
they envision and, at the same time, whether the thorium site, 
third in line or 40 in line or wherever they are, will have 
sufficient funds to do an equally important job without 
overburdening ratepayers. I grant you, it is not the Federal 
Department of Energy's role to be responsible for State rate of 
return regulation, but it is, I think, enormously important to 
understand the consequences of these kinds of funding streams 
on the rates that are paid by people.
    Mr. Barton. Gentleman's time is unfortunately expired.
    Mr. Sawyer. I appreciate the chairman's latitude.
    Mr. Barton. Gentlelady from New Mexico is recognized for 5 
minutes.
    Mrs. Wilson. Thank you, Mr. Chairman, and now that my 
colleague from Wyoming is here, with or without her car, and I 
want to thank her for bringing this legislation forward, and my 
friend from Oklahoma for his work on this. I really only have a 
couple of questions that haven't have been asked by other 
members thus far but may have been asked and I stepped out of 
the room.
    I wanted to ask the Department of Energy, in your 
testimony, you said that all the work would be done on these 
sites by 2007 except for four, and I am wondering if you could 
tell us which four sites those would be that won't have work 
completed by 2007.
    Mr. Fiore. Let me just check. I don't know. Maybe if you 
want we can, while my colleague looks for that answer, I will 
try to deal with the next question.
    Mrs. Wilson. Okay. My other question is actually for Mr. 
Morgan, although Mr. McDaniel may also have a comment on this. 
Are any of the Title II sites also Superfund sites and does 
that add to the cleanup costs?
    Mr. Morgan. It happens that two of the very high cost sites 
are CERCLA or Superfund sites, and both happen to be in 
Colorado, Uravan which is the oldest site, Uravan, Colorado, 
and also the Cotter site in Colorado. It just more than 
coincidentally both of those happen to be at the very high end 
of the cost spectrum in terms of cleanup.
    Mrs. Wilson. Is there a marginal increase in cost because 
they have to comply with the Superfund regulations as well as 
this cleanup under Title X? Is it more expensive to do this 
under Superfund?
    Mr. Morgan. I would say yes, because of the more rigorous 
regulatory regime that they must adhere to.
    Mrs. Wilson. Mr. McDaniel, do you have any further 
additions to that?
    Mr. McDaniel. Well, I just say that at our West Chicago 
site, some of the offsites are subject to EPA Superfund 
regulation. Our experience is not that they have been more 
expensive than the cleanup that we are doing under Title X, 
under our license from the Nuclear Regulatory Commission.
    Mr. Fiore. I do have that answer. The four sites are the 
Dawn site, the Home Stake site.
    Mrs. Wilson. Dawn Site where?
    Mr. Fiore. Washington, and the Cotter facility in Cannon 
City, the Home Stake site and--.
    Mrs. Wilson. The Home Stake site in?
    Mr. Fiore. New Mexico and the Quivira site at Ambrosia 
Lake, which is--.
    Mrs. Wilson. That is more than four. What were the four 
again?
    Mr. Fiore. The Quivira-Ambrosia Lake is one site. So that 
is one, Dawn is two, Cotter is three, and Home Stake is four.
    Mrs. Wilson. And Cotter is in?
    Mr. Morgan. It is Colorado. That is one of the CERCLA sites 
that I just mentioned.
    Mrs. Wilson. And Ambrosia Lake?
    Mr. Fiore. New Mexico.
    Mrs. Wilson. So 2 of the 4 sites that won't be cleaned up 
by 2007 are in New Mexico?
    Mr. Fiore. Yes.
    Mrs. Wilson. I had the opportunity to go out to the Grants 
area, which is actually outside of my District--of course, the 
whole northwest corner of New Mexico has a long history of 
mining, and I had the opportunity to go out and spend a day 
there, and one of the things that I would like you to comment 
on is there are a number of tailings piles out there; some of 
them that were done exclusively by the Federal Government and 
some that were done by private industry with some 
reimbursement. I wonder if you can give us a cost comparison of 
how much it cost the Federal Government to do this themselves 
as opposed to under these cooperative or reimbursement 
arrangements.
    Mr. Fiore. What I would like to do is answer that for the 
record because I think it would involve a fair amount of 
explanation with all the different sites and all the different 
characteristics to be sure we did a fair comparison because as 
one of my colleagues said, every site is different, has 
different characteristics. So we would have to try to, in a 
sense, normalize those costs to make a valid comparison for 
you. I think that is better done in writing.
    [The following was received for the record:]

    In general, uranium milling site cleanups under the Department's 
Title I Uranium Mill Tailings Remedial Action Project were more costly 
than the Energy Policy Act Title X site cleanups by the licensees on a 
per ton basis. There are several reasons for this. First, under Title 
I, the Department had to clean up essentially abandoned sites that were 
no longer licensed. This meant that site access or title to each site 
had to be acquired, the site had to be characterized without the 
benefit of previous knowledge, and the contractors had to be mobilized 
for each individual site, often in remote locations. In contrast, the 
Title X sites have been licensed and operated continuously for several 
decades by the licensees. Cleanup was an extension of their production 
operations and benefitted from the use of existing resources including 
previous knowledge, staff that had operated the plant, and existing 
production equipment that could be used for cleanup. In some cases, the 
licensees operated for at least some period with the knowledge that 
they would also have to clean up their sites.
    On average, the Title I sites cleaned up by DOE were smaller than 
the Title X sites, which means that there are greater economies of 
scale in cleaning up many of the Title X sites. Also, of the 13 uranium 
milling sites in the Title X program, the only one at which uranium 
mill tailings were relocated was the Tennessee Valley Authority (TVA) 
site at Edgemont, South Dakota. Uranium mill tailings at 12 of the 22 
Title I sites were relocated by DOE, which increased costs 
significantly. DOE also cleaned up more than 5,300 vicinity properties 
as part of the Title I project. These generally were private properties 
near the milling sites that had used tailings for construction fill or 
landscaping. We do not believe that vicinity properties have been a 
significant problem at Title X uranium sites because the sites have 
been continuously licensed and, in general, the off-site use of 
tailings was controlled. The TVA site is an exception, with more than 
100 vicinity properties. Since the Title I sites were part of a Federal 
program, there were additional requirements for worker health and 
safety; and public stakeholder involvement was also greater. The latter 
was a significant factor at many sites because it resulted in the 
disposal of uranium mill tailings off site and changes in the way 
tailings were transported (i.e, train versus truck).
    There are three Title X sites in the Grants, New Mexico, area, and, 
in addition, DOE cleaned up another site, Ambrosia Lake, in the same 
area under Title I. The Title I Ambrosia Lake disposal cell contains 
about 9.7 million short tons of tailings. DOE's total costs for the 
Title I site were $33.8 million, or about $4.10 per short ton. The 
Title X sites are the Bluewater Mill (23.9 million short tons), the 
Homestake Mining Company site (22.3 million short tons), and the 
Quivira Mining Company Site (33.2 million short tons). The estimated 
total costs for the three Title X sites are about $3.70, $4.50, and 
$1.70 per short ton, respectively.
    Currently, the licensees' total estimated costs for the Title X 
uranium sites run from about $1.20 to $15.50 per short ton of tailings, 
and the average cost is about $5.00 per short ton. By comparison, the 
costs for the Title I sites ranged from about $4.10 for Ambrosia Lake 
(the largest site) to about $112.20 per short ton for Canonsburg, 
Pennsylvania (the second smallest site). The cost for Title I sites 
averaged about $21.30 per short ton. However, the 10 sites where the 
tailings were disposed of on site averaged about $9.90 per short ton, 
compared to $33.60 per short ton for the 12 sites where the tailings 
were relocated to more remote disposal sites.

    Mrs. Wilson. I would appreciate that, and when you do that, 
a very good site to do it at, I think would be in New Mexico 
where there is one pile on one side of the road and another 
pile on the other side of the road, and came from pretty much 
the same ground with the same stuff, and that would be probably 
a pretty good comparison to start with.
    Thank you, Mr. Chairman.
    Mr. Barton. The other distinguished gentleman from Ohio, 
Mr. Strickland, is recognized for 5 minutes.
    Mr. Strickland. Thank you, sir. Mr. Deputy Assistant 
Secretary, if this bill were to pass, in your judgment, would 
the Department ask for an increased appropriations for the work 
that is to be done under this bill?
    Mr. Fiore. My expectation is no, we would not.
    Mr. Strickland. That being the case, is it your opinion 
that as a result of this the D&D work at the gaseous diffusion 
plants in Piketon, Paducah and Oak Ridge could be affected in 
terms of rate of cleanup or time lines for cleanup?
    Mr. Fiore. No, there would be no intent to delay any of 
that work. The work at these particular sites, as you are well 
aware, is very, very important and a high priority for the 
departments. So no, we would not delay those.
    Mr. Strickland. How can we increase costs without--when 
there is a limited amount of money to be appropriated, how can 
we increase the costs of that cleanup, which will occur under 
this legislation, and the timetable of the work not be 
affected?
    Mr. Fiore. I think it gets back to actually how much is 
appropriated specifically each year by Congress for the 
disbursement of the claims. It has to do with the rate that the 
claims are paid out. Even if there is added total costs over 
many, many years, if the reimbursement amount stays at $30 
million level as it has for the last few years, there would be 
no impact on the other activities such as the gaseous diffusion 
plants.
    Mr. Strickland. My understanding is that this bill would 
increase the reimbursement rate per ton and require the 
Department to reimburse an estimated $40 million or more of 
federally related costs that are now discretionary funds. And I 
guess what I am having a difficult time understanding is how 
can you increase costs and have a limited appropriation without 
that affecting work at the gaseous diffusion plants? If you can 
just help me understand how--it seems to be there ought to be a 
relationship between appropriated funds and work to be done if 
there is a limit on those funds that are appropriated.
    Mr. Fiore. I think, again, it really gets to the number of 
years you would make the payments. Right now we already have 
claims that we have received that exceed the appropriations 
that we have been provided by Congress. So we have built up a 
backlog. Again, if there were a total increase in the cost of 
the program, that just builds up the backlog of claims, and 
perhaps rather than for 8 years we would need to pay $30 
million a year for 9 years, something like that. It does not 
have an effect in the near term. Ultimately you would need to 
disburse those funds, but it is not a current issue. It is more 
an issue at the end of the project.
    Mr. Strickland. I have a question I would like to direct to 
all three of you. Ratepayers, as my colleague from Ohio said, 
pay into this fund. Do you think it is appropriate to use these 
resources from ratepayers for the purpose of cleaning up 
thorium when the ratepayers apparently are receiving no more 
benefit than every other taxpayer in this country? I guess my 
question is, this needed work that needs to be done, ought not 
the resources to carry out this work come from some other 
source rather than ratepayers who are receiving no particular 
benefit over any other American citizen? Is it fair--I guess 
better, simply, is it fair to use ratepayer funds to carry out 
this work when those ratepayers have received no special or 
particular benefit? I am just asking, I guess, for your opinion 
as to whether or not this is a fair thing that we are doing 
here, not whether or not the work needs to be done, because I 
think we all think it needs to be done, but maybe we should 
just consider a different revenue source for getting that work 
done.
    Mr. Fiore. Let me take the first shot at it. I think when 
the various Acts were passed by Congress that authorized the 
reimbursement of these funds, it was the judgment of the 
Congress at that point that it was a reasonable approach. I 
have no basis for disagreeing with that. As my colleagues have 
said, there is a link to the former activities for the Federal 
Government, and again, the payment into the fund isn't solely 
for this particular cleanup. Dollars are paid into the D&D 
fund, and then they are used for the cleanup of the gaseous 
diffusion plants, and those facilities clearly provided 
material that the utilities used as a reasonable expense.
    Mr. Strickland. But, see, I don't have any problem with 
that. The issue is the thorium site. Obviously, these 
ratepayers, there is a connection between the benefits they 
receive and the GDP facilities and the work that is being done 
there, but I do not see a connection between the thorium site 
and the ratepayers, and that is what I am asking for your 
opinion in terms of fairness and appropriateness.
    Mr. Fiore. Let me try to deal with that.
    Mr. Barton. Answer that question and then we are going to 
go to Mr. Largent. I want the panel to have an opportunity.
    Mr. Fiore. I think a very quick answer is there are two 
sources of revenue into the fund. The Federal Government makes 
a contribution, and the utilities do, and then there are 
disbursements out of the fund for gaseous diffusion plants and 
this. I think what you are doing is trying to make a link 
between some of the dollars going in, saying those are 
earmarked specifically for one thing. I think all the dollars 
go into the fund and all the dollars come back out. So an equal 
case can be made that it is the Federal dollars that are being 
contributed into the fund that are going toward the uranium 
thorium reimbursement, with the link to the weapons activities 
that is appropriate.
    Mr. McDaniel. I would only add this. I certainly do not 
think that I would want to try to make a case for the 
ratepayers having to pay for the thorium cleanup. I do want--.
    Mr. Barton. You would or would not?
    Mr. McDaniel. Would not. I understand that this is a 
multisource fund, that about six times the amount comes from 
the Department of Defense as comes from the ratepayers, and so 
I think it is a fair source of funding from our viewpoint for 
the thorium cleanup.
    Mr. Barton. Mr. Morgan, did you want to comment on the 
question?
    Mr. Morgan. I would just echo the comments that Mr. 
McDaniel made.
    Mr. Barton. We would recognize one of the sponsors of the 
pending bill, Mr. Largent of Oklahoma.
    Mr. Largent. Thank you, Mr. Chairman. I would like to 
address some of the questions that my friend from Ohio raised 
as well. First of all, again to point out that this is a joint 
participation. In other words, as we heard testimony from Mr. 
McDaniel, Kerr-McGee is paying 80 percent of the cost of 
cleanup right now. DOE is paying 20 percent, even though the 
commitment the Federal Government made, this committee made was 
55 percent. They are paying 80 when they should only be paying 
45. So, I mean, you are talking about alternative sources, they 
are already 80 percent of the source today, and that is one of 
the problems that we are trying to address in this particular 
bill.
    The second thing that I would say is that you can 
substitute ratepayer for taxpayer. It is all the same.
    Mr. Sawyer. No, it is not.
    Mr. Largent. Absolutely it is the same. Show me a ratepayer 
that is not a taxpayer or a taxpayer that is not a ratepayer; 
they are interchangeable.
    Mr. Sawyer. Will the gentleman yield?
    Mr. Largent. Let me go ahead and finish my question, and 
then I will be glad to yield if I have time at the end.
    Mr. Barton. We are supposed to be directing questions to 
the panel.
    Mr. Largent. Right and I want to do that. Mr. Morgan, I 
want to ask you a question. We heard testimony from Mr. 
McDaniel that said that the Federal Government's commitment to 
the thorium site in West Chicago is 55 percent. The Federal 
Government has come in with a whopping 20 percent. You said in 
your testimony that the Federal Government's responsibility in 
some of your sites was around 25, 26, 27 percent; is that 
correct?
    Mr. Morgan. We have two sites. One is at Uravan, Colorado. 
That is an older site and, therefore, more government tailings. 
That is at about 55 percent government tailings. The site in 
Gas Hills, Wyoming is about 26.2 percent.
    Mr. Largent. Okay. What percent of the Federal Government 
have they actually contributed to the site cleanup? Do you have 
that statistic? Have they met the requirement of the Federal 
Government? Have they paid 55 percent at one site and 27 
percent at another?
    Mr. Morgan. No. We are currently--they have not--because of 
the backlog they have not--because we are now over the cap at 
least at the Uravan site by some significant margin, we are not 
being reimbursed at anywhere near the percentage that provided 
for.
    Mr. Largent. That brings me to a question to you, Mr. 
Fiore, and that is, we have heard testimony from all the panel, 
frankly it is a little bit surprising, is that the 
reimbursement process is working. Maybe they are talking about 
the actual process of getting a check, even though I understand 
there is some delay in that and there is a cost--when you don't 
pay the IRS in time they charge you interest. I am assuming you 
don't pay interest to these guys when you don't get the check 
out on time. It is sort of a one-way street and I recognize 
that, even though I don't think it is fair. I don't understand 
why we would say that the reimbursement rate is working when 
you are reimbursing 20 percent to Kerr-McGee and less than the 
amount to this gentleman's company. The Federal Government is 
not meeting its obligation. So how can we say that the 
reimbursement rate is working?
    Mr. Fiore. When Congress does the appropriation each year 
they make a determination as to how much money will be 
appropriated from the D&D fund, and each year typically the 
number, at least the last 3 years I believe has been about $30 
million. I think there is recognition on both the part of the 
Members of Congress and ourselves that this does create a 
backlog.
    But the tradeoff is if you pay out those things quicker, do 
you need to either, as the Congressman said, increase the total 
appropriation or spend less at some other active cleanup sites. 
I think that is a tradeoff decision that we have to make and 
that Congress has to make, and at least for the last 3 years, 
spending at $30 million does make some progress. It does 
provide a backlog right now but in balance compared with the 
active cleanup activities we have what we think is a reasonable 
balance.
    Mr. Largent. But didn't the President in his budget that he 
submitted this year actually decrease this fund by $5 million 
himself?
    Mr. Fiore. Yes, he did. Again, as I said--.
    Mr. Largent. So we can talk about Congress doing the 
appropriations bills, and I can understand that because all 
spending bills originate in the House of Representatives, I am 
familiar with that, but the fact is the administration has kind 
of been out to lunch on this as well in terms of funding this 
at an appropriate level. I think there are really two issues 
that we are trying to address in this bill, and it really is to 
try to create some fairness in this in terms of meeting the 
obligation of the Federal Government.
    There are two issues. One is the current cost 
reimbursement, which is why we are increasing it from $6.25 per 
dry short ton to $10 per ton, because everybody recognizes that 
the costs have increased dramatically in the last 10 years, and 
so this legislation is trying to increase that, still not going 
outside of the authority that this committee passed. Yes, it 
will increase the amount of the appropriation necessary, but it 
won't even come close to the necessary authority that this 
committee has given to this issue. That is one issue that we 
are trying to address by increasing the short ton limit which 
you are opposed to which I want to find out why.
    The second is future liabilities. So this bill does two 
things in terms of addressing future liabilities. One is it 
extends the time from 2002 to 2007, because frankly the costs 
are greater and the problems are bigger. We didn't know about 
the water table issues that are going to have to be addressed 
that increase the cost dramatically, the fact that they now 
have to take the materials from West Chicago to Utah.
    Finally, there is a place since 1994 to take the materials, 
but prior to that, they didn't even have any place to go with 
them. So we are extending the timetable from 2002 to 2007, 
which you think is a good idea, but we are also saying that if 
there is excess funds left over which the DOE says there will 
be excess funds, there also probably will be excess liability. 
In other words, at the end of 2007, there is going to be more 
problems that still are left on the table that have been 
unaddressed, and we are saying that money should be 
appropriated to address these future liabilities that everybody 
is in agreement that there will be.
    So why would the DOE be against, A, raising the short ton 
amount, and why would you be against saying that this money 
will be disbursed for its intended purpose?
    Mr. Barton. This will have to be the last question.
    Mr. Largent. Okay.
    Mr. Fiore. I think our position right now is not that 
ultimately the money will not get appropriated for the right 
purpose. I think it is simply whether or not we are doing it by 
a prescribed formula as established right now in the 
legislation, or whether or not the Secretary has the authority 
or the discretion at that time to make the reimbursements in a 
way that he or she sees fit.
    Mr. Barton. Does the Department object to the change in the 
reimbursement rate for the short ton? Is the gentleman from 
Oklahoma correct that you oppose that, your Department opposes 
that?
    Mr. Fiore. What we are saying is that we would prefer if 
the Department--the Secretary--not be required as proposed in 
the bill to make those reimbursements for anything over the 
short ton limit which the bill would increase from $6.25 to 
$10. But let me say, we do not have a strong overwhelming 
objection to that. We recognize our liability and the 
requirement to ultimately pay reasonable costs. I think the 
Department is just trying to preserve as best it can the 
discretion that the Secretary was given when the Act was 
passed.
    Mr. Largent. I yield back, Mr. Chairman.
    Mr. Barton. We are well represented by Ohio and Maryland 
today. We have two gentleman from Maryland, the distinguished 
ranking minority member from Maryland, Mr. Wynn, is recognized 
for 5 minutes.
    Mr. Wynn. Thank you, Mr. Chairman. Having come in late, I 
will forego questions at this time and perhaps come back later.
    Mr. Barton. We appreciate the discretion. The distinguished 
gentleman from Maryland on the majority side, Mr. Ehrlich, is 
recognized for 5 minutes.
    Mr. Ehrlich. Mr. McDaniel, after listening to your 
testimony, I will be glad to yield after some brief questions 
to Mr. Largent or Mrs. Cubin or whoever. I have some sympathy 
for your corporate history. In my private law practice, I 
represented a company who got, a very successful company in the 
United States who decided in the 1960's to purchase a small 
asbestos manufacturer. 50,000 lawsuits later, that great idea 
has cost a lot of money.
    You had talked about, with respect to cleanup, the $345 
million spent. Can you break that down in the context also of--
you had cited 600 impacted properties, and you had cited one 
primary factor, I guess leaching with respect to water tables, 
and can you give me, as someone who did practice in this area, 
kind of a breakdown of your cleanup and how those properties 
have been identified over the years, those additional 
properties, and the process you follow with respect to adding 
properties?
    Mr. McDaniel. I am going to ask you for permission to 
submit in writing the breakdown. I perhaps could give you a 
general idea, but I will just say that the bulk of the cost to 
this point has been cleaning up the factory site, and the 
increased costs that we discussed there is as we are doing deep 
excavation.
    We started--for example, there were tailings on the 
surface, and so we started cleaning up the tailings and we sent 
those out to Utah, starting in 1994. If I didn't say this I 
should have. Our original plan was to encapsulate the material 
onsite, but when that plan was not approved, we were required 
to find another disposal site, and so the principal thing that 
has increased the cost would be the transportation which I 
would estimate to be more than $100 million to move the 
material to Utah and to pay the disposal fee. So of the $345 
million spent to date, probably $100 million has been that.
    And so far as your question is concerned about the vicinity 
properties, I think we started with the flyovers to try to 
identify these, and I am not a scientist, so I may not be 
saying this exactly right, but then as those properties were 
identified, then more specific testing was done on the ground 
itself, and then as we would find some material, excavate it, 
clean it up, and perhaps as we got deeper in the excavation, 
that would show that it had spread farther on to someone else's 
property.
    And so I think--I don't recall the exact number, but I 
think we started out thinking that we had maybe 150 or 200 
properties, and I think we have now cleaned up more than 450, 
and we are thinking that we have as many as 600 yet to clean 
up, and probably there will be more identified as that 
excavation goes forward.
    Mr. Ehrlich. With respect to process, obviously there has 
to be notice, and I guess your attorneys call the other 
attorneys or whatever, or what happens with respect to 
notification? How does that occur?
    Mr. McDaniel. Well, when we are able to identify property, 
we notify the property owner. If they have an attorney, of 
course we meet with them and we try to work out a process by 
agreement to excavate, and actually, I would just say that on 
the vicinity cleanup, there haven't been that many instances of 
individual property owners hiring lawyers. We have gone out and 
volunteered to do it, and we have had to get necessary permits, 
zoning and that sort of thing from the city, but it has mainly 
been done by agreement.
    Mr. Ehrlich. What about lawsuits?
    Mr. McDaniel. Over the course of this project, which we 
began the decommissioning process with the Nuclear Regulatory 
Commission in 1973, we have had a number of lawsuits for a 
variety of reasons, maintaining a nuisance, diminution of 
property value, that sort of thing. Virtually all of those have 
been resolved by agreement. To my knowledge we have not gone to 
trial on any of those private citizen lawsuits.
    Mr. Ehrlich. Thank you, sir. I will yield to Mr. Largent or 
Mrs. Cubin. I yield back, Mr. Chairman.
    Mr. Barton. Gentleman yields back the balance of his time. 
That concludes the hearing on this bill. The Chair wants to 
announce to the Department of Energy representative, this is a 
bill that is possible for markup, I say possible, not probable, 
next week.
    There have been a number of questions raised both on the 
minority and majority side, so staff will be in touch with 
representatives of DOE to see if we can reach some compromises. 
I would say, based on the hearing, that it is unlikely this 
bill will be put on the markup calendar next week, but it still 
is a possibility. So I would encourage you to instruct your 
staff to be available on a time-sensitive basis to see if we 
can reach agreement. We are going to adjourn this hearing, and 
then 1 second later we are going to reconvene to start the next 
hearing on the next bill. This hearing is adjourned.
    [Whereupon, at 11:30 a.m., the subcommittee was adjourned.]

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