[Senate Hearing 108-377]
[From the U.S. Government Publishing Office]
S. Hrg. 108-377
PADUCAH GASEOUS DIFFUSION PLANT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ENERGY
of the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
on the
PADUCAH GASEOUS DIFFUSION PLANT
__________
DECEMBER 6, 2003
PADUCAH, KY
Printed for the use of the
Committee on Energy and Natural Resources
______
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WASHINGTON : 2003
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
PETE V. DOMENICI, New Mexico, Chairman
DON NICKLES, Oklahoma JEFF BINGAMAN, New Mexico
LARRY E. CRAIG, Idaho DANIEL K. AKAKA, Hawaii
BEN NIGHTHORSE CAMPBELL, Colorado BYRON L. DORGAN, North Dakota
CRAIG THOMAS, Wyoming BOB GRAHAM, Florida
LAMAR ALEXANDER, Tennessee RON WYDEN, Oregon
LISA MURKOWSKI, Alaska TIM JOHNSON, South Dakota
JAMES M. TALENT, Missouri MARY L. LANDRIEU, Louisiana
CONRAD BURNS, Montana EVAN BAYH, Indiana
GORDON SMITH, Oregon DIANNE FEINSTEIN, California
JIM BUNNING, Kentucky CHARLES E. SCHUMER, New York
JON KYL, Arizona MARIA CANTWELL, Washington
Alex Flint, Staff Director
Judith K. Pensabene, Chief Counsel
Robert M. Simon, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
------
Subcommittee on Energy
LAMAR ALEXANDER, Tennessee, Chairman
DON NICKLES, Oklahoma, Vice Chairman
JAMES M. TALENT, Missouri BOB GRAHAM, Florida
JIM BUNNING, Kentucky DANIEL K. AKAKA, Hawaii
CRAIG THOMAS, Wyoming TIM JOHNSON, South Dakota
LISA MURKOWSKI, Alaska MARY L. LANDRIEU, Louisiana
LARRY E. CRAIG, Idaho EVAN BAYH, Indiana
CONRAD BURNS, Montana CHARLES E. SCHUMER, New York
MARIA CANTWELL, Washington
Pete V. Domenici and Jeff Bingaman are Ex Officio Members of the
Subcommittee
Pete Lyons, Professional Staff Member
C O N T E N T S
----------
STATEMENTS
Page
Boyd, Gerald, Manager, Oak Ridge Operations Office, Department of
Energy......................................................... 4
Bunning, Hon. Jim, U.S. Senator from Kentucky.................... 1
Card, Robert G., Under Secretary, Department of Energy........... 30
Greathouse, Larry M., Commissioner, Kentucky Department of
Workers' Claims................................................ 38
Johnston, Jon, Environmental Protection Agency, Region 4, Federal
Facilities Manager............................................. 12
Liedle, Steve, President and General Manager, Bechtel Jacobs
Company, LLC................................................... 58
List, Hank, Secretary, Kentucky Natural Resources & Environmental
Protection Cabinet............................................. 8
Nazzaro, Robin, Director of Natural Resources and Environment,
General Accounting Office...................................... 3
Owens, Leon, President, Paducah, Kentucky Plant PACE Union....... 52
Paxton, Bill, Mayor, Paducah, Kentucky........................... 67
Robertson, Robert, Director, Education, Workforce, and Income
Security, General Accounting Office............................ 27
Rollow, Tom, Director, Office of Worker Advocacy, Department of
Energy......................................................... 29
Turcic, Pete, Director, Energy Employees Occupational Illness
Compensation Program, Department of Labor...................... 32
Wheeler, Kenneth, Chairman, Greater Paducah Economic Development
Council........................................................ 65
APPENDIX
Responses to additional questions................................ 73
PADUCAH GASEOUS DIFFUSION PLANT
----------
SATURDAY, DECEMBER 6, 2003
U.S. Senate,
Subcommittee on Energy,
Committee on Energy and Natural Resources,
Paducah, KY.
The subcommittee met, pursuant to notice, at 9 a.m., at
Paducah Information Age Park, 2000 McCracken Boulevard,
Paducah, Kentucky, Hon. Jim Bunning presiding.
OPENING STATEMENT OF HON. JIM BUNNING,
U.S. SENATOR FROM KENTUCKY
Senator Bunning. The committee will come to order. This is
a field hearing of the Subcommittee on Energy dealing with the
Paducah Gaseous Diffusion Plant and some of the problems in the
cleanup. And we are also going to include a few remarks on the
two programs for the employees and--present and past employees
of the gaseous diffusion plant as far as death benefits and
health care benefits. So that will be included at the end of
this hearing.
Let me make some opening remarks, and then we will get to
the first panel. Today's hearing focuses on the cleanup at the
Department of Energy's Paducah plant and on the Department's
role in the Energy Employee Occupational Illness Compensation
Program. We need solutions to the issues, and we need them
quickly.
At the Federal level, we can provide cleanup funding and
work compensation. However, we need the help from the States to
ensure a cooperative cleanup and an Illness Compensation
Program.
I'd like to thank the witnesses--and there are many of
them--for taking the time today to come to Paducah and testify
on these extremely important matters.
We have been dealing with contamination at the Paducah
plant for some time now. During the 106th Congress, I sat on
the Energy Committee that brought to light the actual extent of
the contamination at the Paducah plant. We discovered that
workers at the plant were exposed to hazardous and radioactive
materials.
Since the end of World War II, dedicated workers at the
Department of Energy's sites across this county helped keep our
Nation prepared to face threats from our adversaries by making
our Nation's nuclear weapons stockpiles. Many of these workers,
however, sacrificed their health and safety and were placed
unknowingly in harm's way in their work to preserve our
freedoms.
I am going to keep my remarks short today, because I am
very anxious to hear from all of our witnesses. But there are a
few facts from the GAO report that I think should be
highlighted from the outset.
First, the GAO reports point out that the Department of
Energy has spent close to a billion dollars on the Paducah
cleanup program, and billions more will be required to be spent
before final closure on the site. Further, about 10 billion
gallons of underground water remain contaminated with hazardous
and radioactive materials. Contaminated surface water pollutes
creeks and ditches leaving the site, and chemicals seep into
the Ohio River. About 160 storage areas contain hazardous
materials, and low-level waste continues to be stored here.
I hope this hearing will help make sure that the cleanup of
the site is complete in the most efficient and timely manner
possible. The folks in Paducah have waited too long for the
removal of the waste and need to be assured that squabbling
between government agencies will not hold up closure on this
contaminated area.
Second, subtitle D of the Energy Employees Occupational
Illness Compensation Programs is in shambles. Congress created
it in 2000 to compensate employees of DOE sites who developed
illnesses during their employment. Over 2,500 former Paducah
workers exposed to toxic substances are still waiting to have
their cases examined to receive illness compensation.
The GAO reports that even if the Department of Energy
eliminates its backlog of almost 20,000 claimants nationwide,
the claimants then face problems with slow physician panels and
eligibility under State workers' compensation laws. This does
not even account for the 50 percent of claimants nationwide who
will not have a willing payer even if they are found eligible
for State workers' compensation.
The GAO estimates that almost 1,000 claimants at Paducah
will not have a willing payer. This is wrong, and it needs to
be fixed. I am skeptical that the DOE has the capability to
administer this program because of its track record. I hope the
witnesses today will help us examine and find the answers to
this issue.
We have several panels of witnesses. The first panel, I'll
introduce them right now. Ms. Robin Nazzaro, Director of
Natural Resources and Environment with the General Accounting
Office; Mr. Gerald Boyd, Manager of the Department of Energy's
Oak Ridge Operations Office; Mr. William Murphie, Manager of
the Department of Energy's Portsmouth/Paducah Project office
will be answering questions, and now a Kentuckian in Lexington;
Mr. Hank List of the Kentucky Natural Resources and
Environmental Protection Cabinet; and Mr. Jon Johnston, Manager
of the Environmental Protection Agency Region 4 Federal
Facilities. And I'll introduce the second panel after that.
So Robin, if you are ready, you can start your testimony.
STATEMENT OF ROBIN NAZZARO, DIRECTOR OF NATURAL
RESOURCES AND ENVIRONMENT, GENERAL ACCOUNTING OFFICE
Ms. Nazzaro. Thank you, Senator Bunning. I am pleased to be
here today----
Senator Bunning. Pull the mikes up to you so we can all
hear. And here is the timer. We're going to time you. We're
going to give you five minutes. We've got lots of people to
talk to.
Ms. Nazzaro. I am pleased to be here today to discuss the
Department of Energy's efforts to clean up contamination and
waste at the Paducah uranium enrichment plant. As you know, the
plant enriches uranium for use by commercial nuclear
powerplants.
The DOE began a cleanup program at the site in 1988 after
contaminated ground water was found in nearby residents'
drinking water wells and contaminated surface water and soils
were identified within and outside the site.
In August 1999, in response to allegations that past plant
activities had endangered employees' health, DOE's Office of
Oversight conducted an independent investigation that
identified improper disposal of hazardous and radioactive
materials on- and off-site and the release of contaminated
water into streams and drainage ditches.
My statement today describes the preliminary results of our
ongoing work on DOE's cleanup efforts at the Paducah plant.
Specifically, my testimony will focus on how much DOE has spent
on the cleanup program and for what purposes, and the estimated
total future cost for the site; the status of DOE's efforts to
clean up the contamination at the site and the challenges DOE
faces, including completing the cleanup.
In summary, since 1988, DOE has spent over $800 million at
the Paducah site. As shown on our chart here, DOE has spent
about $375 million to pay for operation costs at the site. This
includes construction, security, general maintenance and
litigation costs. Almost $300 million was spent on actions to
clean up contamination and remove waste. And about $150 million
was spent for studies to assess the extent of the contamination
and to determine what cleanup actions were necessary. These
percentages are similar to those DOE's Office of Environmental
Management have for all of its cleanup programs.
In January 2000, DOE estimated that the cleanup would be
completed by 2010 and at a cost of $1.3 billion. However, DOE
now estimates that completing the cleanup will take until at
least 2019 and will cost almost $2 billion due to an expanded
project scope and the millions of dollars for site operations
for the nine additional years of cleanup. This estimate,
however, does not include the cost of other DOE activities
required to close the site.
In addition to the cleanup, DOE has planned to build and
operate a facility to convert the depleted uranium stored at
the site to a more stable form. The DOE will also have to carry
out final decontamination and decommissioning of the buildings,
equipment and materials once the plant ceases operation, and
DOE will have long-term environmental monitoring at the site.
This could bring the total cost of closing the plant to over
$13 billion through 2070.
Regarding the status of the contamination and cleanup, DOE
has made some progress since 1988, but much of the work remains
to be done. For example, to prevent contamination, DOE has
removed over 4,500 tons of scrap metal, but over 50,000 tons
remain. Similarly, although DOE has tested a new technology for
removing the hazardous chemical TCE from the ground water with
promising results, the test removed only about one percent of
the estimated 180,000 gallons that have leaked into the ground.
Further, this technology will not be fully implemented for over
a year.
DOE also plans to conduct a number of studies to determine
if other cleanup actions in addition to those already planned
are necessary. DOE will test the ground water near several
areas where waste is buried to determine if contamination is
leaking and if so, what corrective actions will be needed.
DOE's key challenge in completing the cleanup of Paducah is
achieving stakeholder agreement on the cleanup approach,
including the scope and the time frames. For almost 2 years,
from June 2001 to April 2003, DOE and its regulators--the U.S.
Environmental Protection Agency and the Commonwealth of
Kentucky--were unable to reach agreement on the cleanup scope
and time frames, significantly delaying the cleanup process.
The DOE, EPA and Kentucky are currently negotiating
approval of the 2004 cleanup plan; however, the success of this
plan will depend on the parties' ability to reach agreement on
the scope and time frames for individual projects as the
cleanup moves forward. DOE's proposed plan is only the latest
of several attempts to resolve the problems at the site since
1999.
Given the past difficulties in resolving disputes over
scope and time frames, and the number of decisions that remain
to be made, it is unclear whether DOE will be successful in
accelerating this cleanup.
We will continue to assess DOE's progress and the
challenges it faces in cleaning up the site, and we plan to
issue our final report in April 2004. Thank you, Senator
Bunning. This concludes my prepared statement.
Senator Bunning. Thank you. Mr. Boyd.
STATEMENT OF GERALD BOYD, MANAGER, OAK RIDGE OPERATIONS OFFICE,
DEPARTMENT OF ENERGY
Mr. Boyd. Thank you, Senator Bunning. On behalf of the
Department of Energy, I am pleased to be with you and offer
testimony on the environmental cleanup activities at the
Paducah Gaseous Diffusion Plant. I am here representing
Assistant Secretary for Environmental Management Jessie
Roberson, who was unable to be with us this morning. Joining me
today is Mr. William Murphie, who is the Manager of the
Paducah/Portsmouth Project Office.
My office in Oak Ridge has Federal management
responsibility for the Paducah site until the transition to the
newly created Portsmouth/Paducah office is completed. Mr.
Murphie, who reports to headquarters, leads the new office.
Senator, we wish to express our appreciation and
acknowledge your efforts to get the Lexington office
established. Although the physical office building has been
delayed in its opening, things are coming together in both the
build-out of the facility and in the arrival of the new staff.
Let me state for the record that my office in Oak Ridge is
fully supporting the ongoing transition of Paducah Federal
management from Oak Ridge to the new Lexington office. We
continue to work each day to make sure this transition is a
smooth one.
In January, the Department plans to invite you to the
anticipated formal ribbon cutting ceremony in Lexington to open
the new office.
Senator, during my opening remarks, I would like to
highlight some of the topics that have occurred over the past
couple of years at the site. Although challenges do exist at
Paducah, and I don't want to downplay those, we have some
visible and significant progress in three areas. These areas
include environmental cleanup, regulatory compliance and
community involvement. Your support has been instrumental in
achieving these accomplishments. Let me touch on each one of
those briefly.
First, we have completed some very important and visible
work in our cleanup activities. A large outside pile of crushed
drums known as ``Drum Mountain'' was removed in the year 2000.
Drum Mountain consisted of over 2,600 tons of rusting metal
drums and was a source for both soil and surface water
contamination at the site. Today, cleanup is complete, and the
source of contamination is gone.
In addition, we initiated removal last year of the 44,000
tons of scrap metal at the site, largely consisting of piles of
old gaseous diffusion plant equipment. We have removed over
6,000 tons already. The majority of this was accomplished in
just the last few months following our agreement with the
Commonwealth of Kentucky on the Letter of Intent.
We also have categorized the contents of more than half of
the 800,000 cubic feet of material in the DOE Material Storage
Areas. We are also aggressively disposing of this material.
We have made progress in controlling ground and surface
water contamination. The site has two large off-site ground
water plumes contaminated with trichloroethylene and
technetium-99. Through the use of ground water treatment
systems installed in the mid 1990's, we have successfully
treated approximately 1.3 billion gallons of contaminated
ground water.
Although, pump and treat is focused on plume containment,
additional success has been made toward short-term removal.
Field-testing of a new removal technology called six-phase
heating has successfully removed more than 22,000 pounds of
trichloroethylene near the maintenance facility considered to
be the likely source of the original contamination.
This study is critical to our efforts to reach a decision
on full-scale short-term removal as early as next year. We have
also agreed with Commonwealth on a strategy for investigating
the sources of the Southwest Plume, the other main plume of
contaminated ground water at the site.
We recently resolved the technical issues regarding the
cleanup of the North-South Diversion Ditch, a source of surface
water contamination at the site. And we are actively excavating
soil in this area. In addition, we are disposing of our legacy
low-level and mixed low-level waste at the approved off-site
disposal facilities.
In coordination with the Commonwealth of Kentucky, we have
an extensive environmental monitoring program to ensure the
protection of the public and the environment. We routinely
monitor over 150 ground water wells both on- and off-site. This
data is collected for our annual site environmental report,
which is placed in the Environmental Information Center. This
center was relocated from Kevil to a more convenient location
for the public in Paducah in 2001.
Overall, our environmental monitoring data shows a downward
trend in contamination in the environment around the plant
since 1996. In fact, the Agency for Toxic Substances and
Disease Registry noted in their 2001 Public Health Assessment
for the site that, ``According to the information reviewed by
ATDSR, under normal operating conditions, the Paducah Gaseous
Diffusion Plant currently possesses no apparent public health
hazard for the surrounding community from the exposure to
ground water, surface water, soil and sediment, biota or air.''
In addition, we continue to provide water to all residents
above the contaminated plume as part of our water policy
initiative to avoid any public consumption of contaminated
ground water.
Next, we have made considerable progress in our efforts to
resolve outstanding compliance issues at the site and towards a
comprehensive regulatory agreement supporting overall site
cleanup.
In April of this last year, the Department successfully
resolved a dispute regarding the Site Management Plan that had
been outstanding for almost 3 years. Working with environmental
regulators within the Commonwealth of Kentucky and the U.S.
Environmental Protection Agency, we have agreed to a set of
enforceable milestones under the Federal Facility Agreement.
Perhaps more significantly, a Letter of Intent was signed
with Kentucky in August, followed in October by an Agreed Order
signed by DOE and Kentucky that resolved all outstanding
environmental compliance issues pending against the Department.
This agreement resolved many of the outstanding issues
impacting progress at the site and establishes a foundation
upon which we believe significant progress will be achieved.
In addition to establishing out-year enforceable
milestones, it resulted in an accelerated cleanup schedule
calling for the initial phrase of cleanup projects to be
completed by the year 2019.
Finally, the third major area in which we have made good
progress is establishing ways to ensure community involvement
in the Department's activities. The Paducah Citizens Advisory
Board and the Paducah Area Community Reuse Organization, or
PACRO, are two organizations that we have worked carefully with
over the last number of years.
Public and worker safety remains our first priority. We
realize that significant work remains to be done and that this
work requires the cooperation of regulators, the community and
the Department. This is one of the reasons that we are pleased
to have Agreed Orders in place with Kentucky allowing us to
move forward and safely achieve tangible results over the next
several years.
The citizens of the Commonwealth deserve no less than
success at this site. The Department of Energy is committed to
delivering it to them.
Thank you very much for the opportunity to testify. We will
be glad to answer any questions.
[The prepared statement of Mr. Boyd follows:]
Prepared Statement of Gerald Boyd, Manager, Oak Ridge Operations
Office, Department of Energy
Good morning, Senator Bunning. My name is Gerald Boyd and I serve
as Manager of the Department's Oak Ridge Operations Office in Oak
Ridge, Tennessee. On behalf of the Department of Energy, I am pleased
to be with you, to offer testimony on environmental cleanup activities
at the Paducah Gaseous Diffusion Plant. I am here representing
Assistant Secretary for Environmental Management, Jessie Roberson, who
was unable to be with us this morning. Joining me today is Mr. William
Murphie, Manager of the Paducah/Portsmouth Project Office.
My office has federal management responsibility for the Paducah
Site until the transition to the newly created Portsmouth-Paducah
Office is completed. Mr. Murphie, who reports to Headquarters, leads
the new office. Senator, we wish to express our appreciation and
acknowledge your efforts to get the Lexington office established.
Although the physical office building has been delayed in its opening,
things are coming together in both the build-out of the facility in
Lexington and in the arrival of new staff. Let me state for the record
that my office is fully supporting the on-going transition of Paducah
federal management from Oak Ridge to the new Lexington office. We
continue to work each day to make sure this transition is a smooth one.
In January, the Department plans to invite you to the anticipated
formal ribbon cutting ceremony in Lexington to open the new office.
Senator, during my opening remarks, I would like to highlight some
of the accomplishments that have occurred over the past couple of years
at the site. Although challenges exist, and I don't want to downplay
those, we have some visible and significant progress in three areas.
These areas include environmental cleanup, regulatory compliance, and
community involvement. Your support has been instrumental in achieving
these accomplishments. Let me now touch on each of those areas.
First, we have completed some very important and visible work in
our cleanup activities. A large outside pile of crushed drums known as
``Drum Mountain'' was removed in 2000. Drum Mountain consisted of over
2,600 tons of rusting metal drums and was a source for both soil and
surface water contamination at the site. Today, cleanup is complete and
the source of contamination is gone. In addition, we initiated removal
last year of the 44,000 tons of scrap metal at the site, largely
consisting of piles of old gaseous diffusion plant equipment. We have
removed over 6,000 tons already. The majority of this was accomplished
in just the last few months following our agreement with the
Commonwealth of Kentucky on the Letter of Intent. We also have
characterized the contents of more than half of the 800,000 cubic feet
of material in the DOE Material Storage Areas. We are also aggressively
disposing of this material.
We have made progress in controlling ground and surface water
contamination. The site has two large off-site groundwater plumes
contaminated with trichloroethylene and technetium-99. Through the use
of groundwater treatment systems installed in the mid 1990s, we have
successfully treated approximately 1.3 billion gallons of contaminated
groundwater. Although pump and treat is focused on plume containment,
additional success has been made toward source term removal. Field
testing of a new removal technology called six-phase heating has
successfully removed more than 22,000 pounds of trichloroethylene near
the maintenance facility considered to be the likely source of the
original contamination.
This study is critical to our efforts to reach a decision on full
scale source term removal as early as next year. We have also agreed
with the Commonwealth on a strategy for investigating the sources of
the Southwest Plume, the other main plume of contaminated groundwater
at the site. We recently resolved the technical issues regarding the
cleanup of the North-South Diversion Ditch, a source of surface water
contamination at the site, and we are actively excavating soil in this
area. In addition, we are disposing of our legacy low-level and mixed
low-level waste at approved off-site disposal facilities.
In coordination with the Commonwealth of Kentucky, we have an
extensive environmental monitoring program to ensure the protection of
the public and the environment. We routinely monitor over 150
groundwater wells both on and off site. This data is collected for our
annual site environmental report, which is placed in the Environmental
Information Center. This center was relocated from Kevil to a more
convenient location for the public in Paducah in 2001. The Agency for
Toxic Substances and Disease Registry noted in their 2001 Public Health
Assessment for the site that ``According to the information reviewed by
ATDSR, under normal operating conditions, the Paducah Gaseous Diffusion
Plant currently possess no apparent public health hazard for the
surrounding community from the exposure to groundwater, surface water,
soil and sediment, biota, or air.'' In addition, we continue to provide
water to all residences above the contaminated plume as part of our
water policy initiative to avoid any public consumption of contaminated
groundwater.
Next, we have made considerable progress in our efforts to resolve
outstanding compliance issues at the site and towards a comprehensive
regulatory agreement supporting overall site cleanup. In April of this
last year, the Department successfully resolved a dispute regarding the
Site Management Plan that had been outstanding for almost three years.
Working with environmental regulators within the Commonwealth of
Kentucky and at the U.S. Environmental Protection Agency, we have
agreed to a set of enforceable milestones under the Federal Facility
Agreement.
Perhaps more significantly, a Letter of Intent was signed with
Kentucky in August, followed in October by an Agreed Order signed by
DOE and Kentucky that resolved all outstanding environmental compliance
issues pending against the Department. This agreement resolved many of
the outstanding issues impacting progress at the site and establishes a
foundation upon which we believe significant progress will be achieved.
In addition to establishing out-year enforceable milestones, it
resulted in an accelerated cleanup schedule calling for the initial
phase of cleanup projects to be completed by 2019.
Under DOE's proposed cleanup strategy, a second phase of site
cleanup is deferred to the comprehensive site-wide operable unit, which
DOE has proposed to start after plant shutdown. We believe that
additional acceleration is possible and we anticipate further
discussion with the regulators and the community to further accelerate
risk reduction.
Finally, the third major area in which we have made good progress
is establishing ways to ensure community involvement in the
Department's activities. We chartered the Paducah Citizens Advisory
Board in 1996. This Board meets monthly and has citizen volunteers who
advise DOE on our cleanup program. The Paducah Area Community Reuse
Organization, or PACRO, was formed in August 1997 by regional community
representatives in an effort to mitigate potential downsizing and
restructuring of the Paducah Plant workforce. The Department has been
supportive of PACRO as demonstrated by a $300,000 block grant provided
in May 2003 to create jobs and expand economic opportunities.
We understand that some community members have been frustrated by
the recent regulatory compliance discussions that resulted in the Site
Management Plan dispute resolution and most recently, the Agreed
Orders. However, we believe the process has been conducted in
everyone's best interest and the result is a major breakthrough for
this site and the community. More work is being accomplished now than
has been ongoing for a long time, and we believe the continued
demonstration of the cleanup actions will go a long way towards re-
establishing the trust of the community.
Our record shows that we have made progress in cleaning up the
environment at the Paducah Gaseous Diffusion Plant while concurrently
working to involve the community in cleanup activities. Public and
worker safety remains our first priority. We realize that significant
work remains to be done and that this work requires the cooperation of
the regulators, the community and the Department. This is one of the
reasons we are pleased to have Agreed Orders in place with Kentucky
allowing us to move forward and safely achieve tangible results over
the next several years. The citizens of the Commonwealth deserve no
less than success at this site. The Department of Energy is committed
to delivering it to them.
Thank you very much for the opportunity to testify. We would be
happy to answer any questions you may have.
Senator Bunning. Mr. Murphie. Hank List.
STATEMENT OF HANK LIST, SECRETARY, KENTUCKY NATURAL RESOURCES &
ENVIRONMENTAL PROTECTION CABINET
Mr. List. Thank you, Senator Bunning, and I also want to
thank you for your involvement in this very important
discussion and effort for cleanup of the Paducah Gaseous
Diffusion Plant. I have prepared a report which I will somewhat
refer to, but I am going to go somewhere that is very
dangerous, and I will make a few comments----
Senator Bunning. We'll submit your formal statement for the
record, and you go right ahead.
[Interruption.]
Senator Bunning. Does anybody else have a telephone? They
can turn it off now.
Mr. List. I've been involved with this for a year and a
half, so I don't have quite the history that the rest of the
people on this panel have. And when I got involved with the
process, one of the main problems that were present was there
were so many channels of communication between the State of
Kentucky and inside the Beltway, there was a huge amount of
confusion that was in existence as to what was going on and
what were the facts of the relationships involved with the EPA
and the DOE and the State of Kentucky.
So one of the first efforts was to decrease the amount of
people that were involved in talking to our delegation groups
and try to get some grasp of who was in charge as far as the
State of Kentucky was concerned.
Secretary Jim Vickford was very involved in trying to bring
this about. At the same time, I followed up, and we did finally
make a decision that the Cabinet of Natural Resources was to be
in charge of this effort in working with the EPA and DOE and
working towards resolving the impediments that were in place
that were preventing significant cleanup at Paducah.
The delegation represents our best means of communication,
because Kentucky is far removed from the Beltway, and we have
to rely on someone to help us in the communications that are so
necessary between all the parties present at this table. You
have played that role, Senator McConnell has and Congressman
Whitfield, all three have been involved in assisting us in our
endeavor to communicate with Federal agencies and bring about
an effective program.
I am not going to speak to the monies allocated and spent.
We have very little control of that. We, obviously, influence
that by our programmatic regulatory responsibilities and
obviously, that does have some bearing on how monies are spent
and how much, and that is a work in progress. And we feel like
we are now moving towards a more effective use of these monies,
and that the Congress has been really very generous in
allocating to Paducah.
One of the things that used to be in existence that is not
in place right now that must be put back into existence is what
is called a Core Team that needs to work together. It is a
collaborative effort between the EPA and DOE and the personnel
on the ground representing my cabinet and the State of
Kentucky.
This group, they were decision makers. They were there on-
site. They were there to talk about the science of what we were
dealing with, the physical characteristics that were involved
in dealing with some of these issues. That Core Team ceased to
function a while back, pretty much when this accelerated
cleanup plan was put on the table, and this new discussion of
the scope of work started.
Senator, I would encourage you and all parties present here
to make sure that we revisit the idea that a Core Team, a
collaborative team, be recreated and that this group be
empowered to make the site management plan and all the other
things that have been achieved by Agreed Orders recently
between the State of Kentucky and DOE, and this Core Team be
given the ability to work effectively towards a meaningful
action at Paducah. And that is what we're all here for. We're
here for a meaningful action. Again, a meaningful action
meaning characterization all the way to final disposition.
In my remarks, that is my number one request, Senator, of
you as a leader on this issue, you and your expectations of the
State of Kentucky and DOE and EPA in getting this accomplished.
Let's get back to work. Let's put a group of people together
back on-site at the plant and have them be empowered. The
Lexington office is a tremendous start towards that effort.
Let's continue that and just make this a more localized effort
like it used to be and not so much a paperwork effort and a
negotiation effort between Frankfort and Washington and all the
other things that seem to have gotten in the way. We do have
agreements in place now. There have been obstacles, and now it
is time to get back to work, and I think we have the ability to
get work done. Thank you, Senator.
[The prepared statement of Mr. List follows:]
Prepared Statement of Hank List, Secretary, Kentucky Natural Resources
& Environmental Protection Cabinet
Mr. Chairman and members of the committee my name is Henry C. List.
I am Secretary of the Kentucky Natural Resources and Environmental
Protection Cabinet (NREPC). I am here to speak before the Subcommittee
on Energy concerning the Paducah Gaseous Diffusion Plant (PGDP). The
PGDP is a large and complicated cleanup project with a long history,
and thus there is no end to the issues that could be discussed.
However, Senator Bunning has asked me to address three primary issues
regarding the PGDP that include 1) the cost of the cleanup, 2) the
progress of the cleanup since the 2000 GAO report, and 3) challenges
affecting the cleanup. With that request in mind I have prepared the
following testimony accordingly.
COST OF THE CLEANUP
Let me start by stating that the Commonwealth of Kentucky
(Kentucky) shares the concerns regarding the cost associated with this
cleanup, the amounts expended to date and projected future cost. With
regard to cost, I would like to briefly address both the cleanup costs
that have been incurred to date and the future cleanup cost. Kentucky
understands that characterization and investigation costs for a complex
site like the PGDP are significant and are loaded upfront. However, the
amount of cleanup that has been completed to date seems to be somewhat
sparse given that $823 million dollars have been expended to date.
Despite that, all stakeholders must work towards ensuring that future
expenditures are used more efficiently to clean up the site. It is my
hope that the Letter of Intent and recent Agreed Order will go a long
way toward increasing the efficiency in the expenditure of cleanup
dollars.
Also, I would like to address the issue raised by the GAO related
to the costs associated with the disputes that have arisen between DOE,
KY and EPA on this cleanup. Given the nature and complexity of the
cleanup of this site, it is inevitable that some disagreement and
disputes will occur. I do not think that the occurrence of disputes
between the agencies is necessarily indicative of a poor relationship.
That being said, I believe all the stakeholders should work together to
keep disputes and resulting expenditures to a minimum. Now I would like
to speak to the future costs of the cleanup. Since early 2002 Kentucky
has not been afforded opportunities to be significantly involved in the
scoping and budgeting process for the PGDP cleanup. Therefore, I cannot
speak in any detail with regards to DOE's cost estimate of 2 billion
dollars to implement the accelerated cleanup plan. Cost estimation for
much of the work that is currently planned for the next four or five
years (i.e., Scrap Metal project, North/South Diversion Ditch, DMSA's,
waste characterization and disposition) is fairly straightforward.
However, some future projects such as the Groundwater Operable Unit and
the Burial Grounds Operable Unit have yet to be scoped and therefore it
is difficult to estimate the costs of these future projects. I believe
it is critical that Kentucky, EPA and DOE resume the collaborative
process of scoping and budgeting these future projects.
PROGRESS OF THE CLEANUP SINCE THE 2000 GAO REPORT
The progress of the cleanup at the site since 2000 has been
disappointing to Kentucky. I say this because the parties had gained
some momentum that resulted from the October 1999 hearings before the
Senate Appropriations Subcommittee on Energy and Water. During the
course of those hearings, several areas at and around the PGDP were
identified as being of a primary concern with regards to human health
and the environment. It was determined by all parties that these areas
should be addressed in as expeditious a manner as possible. Based on
that directive, Kentucky, EPA and DOE developed and agreed upon a
September 29, 2000 Federal Facility Agreement, Site Management Plan
(SMP). The SMP was developed to address: Continuing off-site releases
first (groundwater, surface water, and the NSDD), Site Cleanup by 2010;
and Timely protection of public health and the environment.
The parties agreed to use a collaborative process to scope and
budget the cleanup work envisioned by the September 2000 SMP. To that
end, a Core Team consisting of Kentucky, EPA, DOE, and support agencies
was founded. The Core Team evaluated and identified projects for early
actions. The parties also identified remaining areas that required
evaluation, but could be addressed over longer timeframes. In early
2002, DOE withdrew from participation in the Core Team process, and
formulated an accelerated cleanup strategy without the participation of
Kentucky and EPA. Kentucky had major problems with DOE's March 2002
accelerated cleanup proposal. Our view of the proposal was that
acceleration was being achieved by means of reducing the scope of the
cleanup. Also, too much of the cleanup was deferred until after
shutdown of the Gaseous Diffusion Plant. Unfortunately, it took most of
2002 and 2003 to forge agreements. A Letter of Intent and two Agreed
Orders, between Kentucky and DOE, were signed in the early fall of this
year. Kentucky feels these agreements have resolved many of the issues
that DOE had raised as impediments, such as waste disposition issues,
that have slowed progress in the field in recent years and is hopeful
that fieldwork such as the removal of scrap metal, remediation of the
North-South Diversion Ditch, and the characterization and disposition
of legacy wastes will proceed without further dispute or delay. These
projects represent a large portion of the fieldwork at Paducah for the
next three years.
CHALLENGES AFFECTING THE CLEANUP
As I alluded to earlier, Kentucky recognizes the track record with
the number of disputes that have occurred between the parties. I want
to reiterate that the project disputes that occurred during the 2000-
2001 timeframe were not necessarily indicative of a poor relationship.
The process of scoping the cleanup for a site like the PGDP was a
monumental and complex task. To assume that multiple parties with
different roles could scope such a cleanup without any dispute is not
realistic. So I believe the Core Team process should not be
characterized as having been an effort characterized only as bad or
poor relationships. In fact, the projects that will be conducted over
the next 3 years at the site are a product of that collaborative
process. I believe the relationship between Kentucky, DOE and EPA
suffered when DOE withdrew from the Core Team process and unilaterally
changed the approach to the cleanup at the PGDP. The relationship
between the parties of the FFA can be greatly improved with the
restoration of a year-round collaborative process for scoping future
projects and the PGDP cleanup budget. The resolution the parties of the
FFA reached on April 14, 2003 formed a good basis for agreement on
projects and commitments for the next three years. The real scope of
future projects such as the Groundwater, Surface Water and Burial
Grounds Operable Units is largely undefined. Kentucky remains cautious
with regard to DOE's outyear commitments and is concerned that DOE
intends to defer much of the cleanup after the shutdown of the Gaseous
Diffusion Plant. The parties need to begin working together now to
scope these projects and to prepare for actions in 2007, 2008 and
beyond to follow the completion of scrap removal, the North-South Ditch
removal, legacy waste characterization and disposition. Restoring a
true collaborative process between DOE, EPA and KY, is the best plan to
minimize both the number of future disputes and the time required to
resolve them.
Senator Bunning. Thank you, Mr. List.
Jon Johnston.
STATEMENT OF JON JOHNSTON, ENVIRONMENTAL PROTECTION AGENCY,
REGION 4, FEDERAL FACILITIES MANAGER
Mr. Johnston. Good morning, Senator Bunning. Thank you for
the opportunity to represent the Environmental Protection
Agency in this hearing this morning. I'm Jon Johnston. I serve
as the Federal Facilities Branch Chief in our Region 4 office
in Atlanta, Georgia.
My branch is responsible for the oversight of Federal
agency hazardous substance cleanups, primarily at those sites
on the National Priorities List pursuant to the Super Fund
statute to work with primarily military installations and the
three Department of Energy facilities in this region that are
currently on the National Priorities List; that being the
Savannah River Site in South Carolina, the Oak Ridge
Reservation in Tennessee and, of course, the subject of today's
discussion, the Paducah Gaseous Diffusion Plant here in
Kentucky.
I point out that all three of the DOE facilities, as well
as most of your military facilities where we oversee cleanup,
have ongoing industrial operations, and we mold our cleanup
work around those operations. In general, while allowing for
site specific conditions, EPA works at DOE sites establishing
cleanup schedules and milestones that meet the CERCLA
requirement, the Super Fund requirement, for expeditious
completion of all necessary remedial action. My testimony is
available in its entirety. I am just going to summarize this.
Senator Bunning. We'll put it all in the record.
Mr. Johnston. Thank you, sir. I was in attendance at your
previous hearings. I can say without a doubt that our senior
managers met subsequently, representing EPA, the Commonwealth
and DOE, and agreed to fundamentally change our approach to
cleaning up this facility. Primarily with the Core Teams that
Secretary List just mentioned, but also to shift resources and
attention toward early cleanup actions in lieu of completing
characterization studies that were then underway in 1999 and
prior to that time.
The Core Team reviewed the true life cycle base line, what
will it take to get a complete cleanup done here at the Paducah
facility. We reached an agreement in 2000 on a site management
plan, set those milestones out. I would point out that they
included many of the projects now identified for acceleration.
That 2000 site management plan was not fully implemented.
And that did lead to formal dispute under the terms of the
Federal Facilities Agreement, which governs the cleanup for
this facility. All of the parties wanted work to continue
during this period, and that has been summarized adequately in
the GAO report.
I would point out, for example, that the parties during the
2001 to 2003 period of dispute managed to improve the scrap
metal removal project in 2001, the North-South Diversion Ditch
remedial action in 2002. It isn't what we had hoped to
complete, and it is certainly not enough to say that we are
done with this cleanup, but we have had some progress during
that period of time.
Recently, November 14 of this year, DOE submitted its most
recently revised site management plan for the facility. The
agency has that under review, so I cannot report to you our
official response, but I want to provide some preliminary
reactions.
Let's emphasize the positive aspect that the proposal
contains the projects that EPA and the Commonwealth and DOE
believe need to be accelerated. And it does appear that we
could agree with the proposed milestone commitments for the
next few fiscal years, and we continue to advocate, as we have
for these projects for the last several years, that we jointly
move on to implementation.
We do have some preliminary concerns with that draft site
management plan. The proposal would make implementation of the
accelerated projects contingent on an indefinite suspension in
the completion of cleanup work until after the Paducah facility
is closed. That is a unique proposal in our experience, and
certainly we will need a better understanding of the DOE's
rationale before we can reach an approval of that.
In the meantime, we continue to want to accelerate cleanup
and get these projects built. As Secretary Vickford said at one
time, ``We need to see diesel smoke and dirt moving.'' That is
what we want to aim for.
To that end, the EPA this week submitted to DOE a Letter of
Intent specifying projects for acceleration, indicating our
complete agreement that they need to be built now without
further delay so that we can move on. The issue of any phasing
of cleanup or agreement to suspend cleanup for some period of
time until plant closure continues to be negotiated. It is
going to take a lot of discussion as to whether or not it is
approved. But these projects, as far as the EPA is concerned,
are good to go.
Thank you for the opportunity to testify today, and I'll be
happy to respond to questions.
[The prepared statement of Mr. Johnston follows:]
Prepared Statement of Jon Johnston, Environment Protection Agency,
Region 4, Federal Facilities Manager
Good morning, Senator Bunning. On behalf of the Environmental
Protection Agency, I am pleased to be with you to offer testimony about
the environmental cleanup activities at the Paducah Gaseous Diffusion
Plant. My name is Jon Johnston and I serve as the Federal Facilities
Branch Chief, representing the Agency's Region 4 office in Atlanta,
Georgia. Joining me today is Winston Smith, Director of our Waste
Management Division. My Branch is responsible for oversight of Federal
agency hazardous substance cleanups, primarily at facilities on the
National Priorities List established under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), also
known as Superfund The Department of Energy (DOE) has three facilities
in this Region currently on the Superfund National Priorities List: the
Savannah River Site in South Carolina, the Oak Ridge Reservation in
Tennessee, and the Paducah Gaseous Diffusion Plant here in Kentucky.
All three facilities have ongoing operations, as do many of the
military NPL facilities conducting cleanup in the southeast. Our
approach to oversight activities is the same for all three DOE
facilities, and we have signed letters of intent, accelerated
enforceable agreements, and comprehensive cleanup schedules already in
implementation at both the South Carolina and Tennessee DOE sites.
Agreements reached for ORR and SRS establish comprehensive cleanup
strategies, including definitive dates for completion coordinated with
ongoing DOE missions, without interruption. Comprehensive cleanup of
these large DOE sites are planned for completion in 2016 at ORR and
2025 at SRS. At Paducah, we have made a start on a good acceleration
plan. We have DOE's three-year commitment in place for Paducah covering
the accelerated projects specified in the letter of intent between DOE
and the Commonwealth.
While our focus for this testimony is the Paducah facility, EPA
must be consistent here with its oversight of cleanups at the other DOE
sites, in Region 4 and Nationally. Establishing milestones and
schedules for completion of cleanup allows the agencies to coordinate
and maintain an effective, continuous, and comprehensive cleanup
program that is transparent to all stakeholders. Nationally, while
allowing for site-specific conditions, EPA works to have cleanup
schedules and milestones that are fair and equitable, supported by the
state and the public and that meet the CERCLA Sec. 120(e)(3)
requirement for ``expeditious completion'' of ``all necessary remedial
action'' at Federal facilities on the National Priorities List. To that
end, I believe that we are on the verge of agreement for the Paducah
facility that will put cleanup here on the same accelerated pace as the
other facilities.
As a result of your 1999 hearings about Paducah, senior managers
from EPA, the Commonwealth, and DOE agreed to fundamentally change our
approach to cleaning up this facility. We reached agreement to shift
resources towards early cleanup actions in lieu of completing
characterization studies then underway, and to use existing data and
our professional judgment to select appropriate cleanup actions. That
agreement was embodied in the enforceable milestones approved in the
2000 site management plan. Those milestones included the projects you
now find identified for acceleration in DOE's recently submitted draft
site management plan for fiscal years 2004-06.
The 2000 SMP, signed by all three parties, was not fully
implemented. This led to formal dispute under the terms of the Federal
Facilities Agreement, which governs the cleanup activities for the
facility. During this period of dispute (2000-2003) at Paducah, EPA
participated in the implementation of DOE's 2001 ``Top-to-Bottom
Review'' of its environmental programs, signed Letters of Intent (LOI)
with DOE and negotiated accelerated cleanup agreements with the
Tennessee and South Carolina facilities as requested by DOE. DOE has
indicated prior to today that the parties could not come to agreement
on an LOI for the Paducah facility based on a fundamental disagreement
on the scope of work for the out-years.
Wanting work to continue during this period, the parties approved
the Scrap Metal removal project in October 2001 and the North-South
Diversion Ditch remedial action in August 2002.
As required by the FFA, when the parties could not agree on a
cleanup plan, EPA and the Commonwealth published a site management plan
in September 2002, containing the projects for acceleration.
Thereafter, in April 2003, senior executives of all three parties
issued a site management plan for fiscal years 2003-05 and reached a
general agreement to continue negotiations to set out-year milestones
leading to completion of cleanup. The settlement also specified start
dates for investigations in order to set major projects on a path to
remedy selection and construction.
Until August 2003, all three parties were negotiating toward a
comprehensive cleanup plan per the April agreement. In August 2003,
when the Commonwealth took the initiative to resolve the compliance
action it had brought against DOE, DOE included its site cleanup
strategy in negotiations with the Commonwealth. These negotiations were
the result of a State enforcement action and did not involve EPA. EPA
wrote to the Commonwealth and to DOE (during their negotiations) that
settlement of the compliance actions was necessary and appropriate, but
agreement about a cleanup program should occur under the terms of the
FFA. The Commonwealth and DOE signed a letter of intent and an agreed
order on consent this summer. The settlement of enforcement actions and
DOE's return to compliance have EPA's full support.
DOE submitted its draft fiscal years 2004-2006 SMP to EPA and the
Commonwealth on November 14, 2003. Because the draft DOE Site
Management Plan (SMP) is still under Agency review I cannot report to
you our official response, but I can provide some preliminary
reactions. I want to first emphasize the positive aspect that DOE's
proposal contains the projects that EPA believes need to be
accelerated. Furthermore, it appears that we could agree with the DOE's
proposed milestone commitments for fiscal years 2004-2006. EPA
continues to advocate that DOE, EPA and the Commonwealth move on to
implementation.
We have identified some preliminary concerns with the draft SMP.
DOE's proposal makes implementation of accelerated projects contingent
on an indefinite suspension in the completion of cleanup work until the
Paducah facility is closed. EPA needs a better understanding of DOE's
rationale for this approach. In the meantime, in order to accelerate
cleanup, on Wednesday of this week EPA submitted a letter of intent to
DOE calling for the three parties to immediately implement the projects
proposed as milestones by DOE in the draft 2003 site management plan.
Although EPA does not agree that such an LOI is needed for DOE to
implement these projects, we are willing to sign an LOI because DOE has
stated that one is needed. The parties can subsequently work toward
agreement on out-year milestones.
In conclusion, we are in agreement with DOE and the Commonwealth on
the most immediate actions to be taken through fiscal years 2005 and
2006, and are working together to develop out-year plans for cleanup
that recognize the need to characterize and remediate the site in as
expeditious a manner as practicable.
Thank you for the opportunity to testify. We would be happy to
respond to questions.
Senator Bunning. Thank you very much. I am going to ask
some general questions and then a few specifics. The Department
of Energy has changed its completion date and cost estimations
for the cleanup at the Paducah site several times, several
times since I have been in the Senate. In 2000, the Department
estimated that it would cost $1.3 billion to cleanup the site
with a completion date of 2010. The Department now estimates
that the cleanup of the majority of the waste will cost an
additional $2 billion, with an estimated completion date of
2019. This figure does not include the additional 13 billion
GAO estimates it will cost to cleanup the remainder of the site
by 2070.
Here is the question. Why has the cost of the cleanup
increased so significantly since 2000? Anybody from the DOE or
EPA or anybody that would like to try to answer that. Mr.
Murphie, would you like to try to answer that?
Mr. Murphie. Thank you, Senator. The cost of the cleanup
has, in fact, changed as well as the date for completion as you
pointed to in this GAO report, in their report on multiple
occasions. Essentially, we have a compounding effect of two
things; one being the increase in scope and the assumptions
from one year to the other, and then the complications of
dealing with the funding assumptions. The primary increase from
the 1.3, 2010 date to the two billion, 2019 date is effectively
the compound of the significant increase in scope between the
two baselines that were developed back in the year 2000 versus
the current baseline.
As the GAO points out on their chart up on the wall there,
there is a certain carrying cost or certain cost for the site
independent of the cleanup. And every year that it takes
longer, it is a cost that is incurred by the Department. And
therefore, some of the increase is directly due to the schedule
extension itself.
Senator Bunning. Isn't it not true, though, that the
Congress of the United States has increased significantly,
specifically to Paducah, monies in addition to what was
requested by the administration, and you have gotten additional
money? What has happened to that money?
Mr. Murphie. Well, we thank you very much for the
additional funds, particularly in 2003 and the anticipated
funds that we will be getting in 2004. The ability for us to
make significant progress is very much a result of that
additional funding. As I just alluded to, the base program is
money that we have to spend regardless. So any additional funds
which you and Congress are able to provide to us does allow us
to allocate it directly to the acceleration of real work. We
would hope that you'll have a chance to get out there at some
point in the new term.
But I think in the last few months, you will see, and we
can show, that there is real work going on at the site. This is
largely a result of the fact that we have reached a deal with
Kentucky on the Agreed Order. We have made significant progress
with EPA on the resolution of the site management plan. And
real work is being done at the site. Those funds that you now
make available to us go directly to real work and the
acceleration of real work.
[The following was received for the record:]
BREAKDOWN OF COSTS ASSOCIATED WITH OPERATION COSTS
January 9, 2004
------------------------------------------------------------------------
*Cost to date
as reported to
Item description GAO (dollars
in
thousands)
------------------------------------------------------------------------
Surveillance and maintenance............................ $88,899
Management and legacy waste............................. 72,951
Program management (FY 92-98)........................... 50,662
Uranium program activities.............................. 35,173
Construction of remediation facilities to support 26,117
cleanup activities.....................................
Litigation expenses/support/records search (includes D&D 39,430
fund and UP funds).....................................
Post retirement medical and life/old worker compensation 12,744
Security................................................ 11,575
Authorization basis document revision................... 4,171
Severance (USEC employees).............................. 3,000
Agreement in principle/FFA grants*...................... 2,247
Investigative trenching (DOJ directive)................. 1,463
Misc activities......................................... 1,457
---------------
Total............................................... $349,889
------------------------------------------------------------------------
The cost to date reported in the GAO report was $373M. The cost to date
reported here is the actual cost incurred from 1988-2003. GAO adjusted
the actual cost to date to fiscal year 2002 dollars, which increased
the overall Operational Cost by $23 million.
* Does not include costs prior to FY2002 provided by ORO funding.
Senator Bunning. This is one of--the GAO estimated that 45
percent or $373 million of the $823 million already spent on
cleanup has gone to operational costs. How much has the
Department had to spend on litigation cost? How do these costs
effect the funding available for actual cleanup activities? How
much has been spent on paying regulatory violations that the
State has issued? How much has that delayed the cleanup?
Mr. Boyd. Senator Bunning, on the litigation issue, we note
that in the last number of years we have spent over $8 million
on litigation, and there is not at this point any way to tell
exactly what that may turn out to be in the long run.
On these other issues, I think we would have to try to get
you accurate numbers as to what our expenditures have been,
related to regulatory interface, working with stakeholders and
those kinds of things. We could get you the numbers related to
that. The $8 million in litigation in the last number of years,
I know is an accurate number, but the others we would probably
have to provide later. Bill, do you have any of those with you?
Senator Bunning. But that doesn't even come close to the
$373 million that GAO has estimated that goes to operational
cost. Where did the rest of the money go?
Mr. Murphie. Actually, the litigation cost is not just $8
million. The $8 million is per year. That is per year.
Senator Bunning. Okay. We'll give you $24 million then
since 2000.
Mr. Murphie. In addition, we have all the other activities
we talked about, the regulatory costs. We can break those down
for you.
[The information follows:]
*REGULATORY COSTS
[Dollars in thousands]
------------------------------------------------------------------------
Agreement in principle/FFA grants**..................... $2,247
------------------------------------------------------------------------
* Included in the operational costs provided in response to item from
page 28, line 4.
** Does not include costs prior to FY2002 provided by ORO funding.
Senator Bunning. How much have you been paying in fines to
the Commonwealth?
Mr. Murphie. The fine would be the Agreed Order that we
just settled, and we agreed to pay a million dollars to the
Commonwealth of Kentucky and a $200,000 supplemental program.
Beyond that, I don't believe we have had in any prior year
fines that we paid to the Commonwealth. I could stand to be
corrected.
Senator Bunning. Would you please furnish that for the
committee? If you don't have it today, I would like for you to
furnish it to the committee in writing.
Mr. Murphie. Yes, sir.
[The information follows:]
* AMOUNT OF PENALTIES
[Dollars in thousands]
------------------------------------------------------------------------
Agreed Order penalty **................................. $1,000
Agreed Order environmental project...................... $200
------------------------------------------------------------------------
* No additional penalties or fines have been paid to the Commonwealth
other than the ones mentioned above that were part of the settlement
reached in the Agreed Order (October 3, 2003).
** The Agreed Order allows penalty to be paid to the Comonwealth in
installments.
Senator Bunning. How much has been spent on paying
regulatory violations? How much has it delayed the cleanup? In
other words, the direct money that we send and make a line item
for in the budget that says it is for the cleanup of the mess
that is here. Now, it doesn't say it is to pay fines. It
doesn't say it is to do this or do that. It is for cleanup. How
much money are we getting into the cleanup on a yearly basis in
Paducah?
Mr. Murphie. I would refer to the GAO's accurate depiction
over there. I think, as you can tell, probably about a third of
the money actually goes to the real cleanup. The rest of the
money does go to either the infrastructure, the overhead, the
DOE direct cost, the litigation and all the other things that
are basically accurately identified on that chart.
Senator Bunning. In other words, if we allocate $118
million, one-third of that is actually getting into cleanup?
Mr. Murphie. In terms of physical work, probably a third.
We have a lot of assessments, a lot of studies. As Gerald
mentioned, we have all the monitoring programs and paperwork.
As Hank mentioned earlier, we have a lot of investigations that
are ongoing. There is a lot of paperwork. We are still in a lot
of the decision making processes for some of these very large
decisions to be made. And the investigation, mediation
feasibility studies are fairly extensive right now. The
physical work is a much smaller fraction than we would like to
see.
Senator Bunning. I don't want to be contentious with you,
but this plant has been here 50-plus years or very close, and
we have known about these problems here for a long time. And it
wasn't until much more recently that we started to allocate
what we thought was going to be enough dollars due to the
initial 2000 plan.
In other words, we were going to do a $1.3 billion, and it
was going to be cleaned up by 2010. Now, you keep moving the
goal post down. And the cost by moving the goal post is an
additional $2 billion and another 9 years. We'd like some
finality. We would like to know what the finality is going to
eventually look like.
You can't keep coming to the Congress of the United States
and saying, ``Oh, by the way, we weren't right last year. This
year we think it is going to cost an additional $500 million.''
I want to know what the accelerated plan that you and the DOE
and the EPA and the Commonwealth have come to a collusion on
and why it took so long for EPA to sign off on it. What is in
that that we should know about?
Mr. Murphie. We actually don't have an agreement on the
full accelerated cleanup plan at this point, Senator.
Senator Bunning. I thought it was signed.
Mr. Murphie. We have an agreement with the Commonwealth of
Kentucky, the Agreed Order and a Letter of Intent, and we are
working with EPA on getting the final----
Senator Bunning. EPA did not sign off yet?
Mr. Johnston. The Letter of Intent that was signed didn't
involved EPA. The Department and the Commonwealth were
negotiating an Agreed Order, and they do that separately
because it is a State environmental action--enforcement action.
Senator Bunning. In other words, you have not signed off on
it.
Mr. Johnston. No. It was just presented to us on November
14.
Senator Bunning. Maybe the two people, one from the
Commonwealth and one from the Department, can give me some kind
of very strong estimate of what we are looking at, because I am
going to have to fund it.
Mr. Murphie. If you would like us to lay out the----
Senator Bunning. At least the preliminary of what you have
agreed on.
Mr. Murphie. We could submit for the record the site
management plan, which has been provided to EPA and the
Commonwealth of Kentucky for review. And this is what Jon was
just referring to that is under review. It does lay out very
explicitly the strategic approach and the cost that ties to the
2019 schedule and the $2 billion.
Senator Bunning. In other words, GAO's estimate is in that
report?
Mr. Murphie. Yes, sir.
Senator Bunning. I would like to have that submitted for
the record, so we could include that also.
Mr. Murphie. We will.*
---------------------------------------------------------------------------
* Retained in subcommittee files.
---------------------------------------------------------------------------
Senator Bunning. Ms. Nazzaro, the GAO 2000 report
identified uncertainties about funding as a challenge that
could affect the Paducah cleanup but did not mention funding as
an additional challenge today. Is funding no longer a
challenge?
Ms. Nazzaro. Correct, in that we did identify three
uncertainties in the 2000 plan, the technical, the funding and
the regulatory. At this point in time, we feel that the funding
issue has been addressed thanks to the increased
appropriations. In fact, DOE has experienced 40 million in
carry-over funds in the last couple of years, so they are not
even spending all of the money that has been appropriated to
them.
Senator Bunning. They are not spending it on the cleanup
that is----
Ms. Nazzaro. They are not spending it at all. It is carry-
over funds that are carried over from one fiscal year to the
next.
Senator Bunning. They couldn't----
Ms. Nazzaro. They didn't spend everything that was
appropriated to them, yes.
Senator Bunning. That is very rare, by the way. In the
testimony, the GAO stated that much of the cleanup remains to
be done. Why has the Department of Energy made so little
progress in cleaning up contamination and waste since 1988?
Mr. Boyd. Senator, there is no question that Ms. Nazzaro's
comments about the complexity in dealing with this has been a
problem for the Department. Reaching agreement in what the
cleanup standards are, getting acceptance by the regulators,
acceptance by the community, the stakeholders has been a very
difficult problem.
I think also there has been difficulty in dealing with the
problems here at Paducah partly because there had not been any
site appropriated budgets until the year 2000. That is when
Congress started appropriating funds by site to assure that the
funds that were necessary for the individual site cleanup was
made available. So in the year 2000, that was done.
I believe another issue has been that there had been lack
of focus on having the adequate management attention to the
Paducah site, as well as the Portsmouth site. One of the things
that you have insisted on, Senator, is that focus be there.
Assistant Secretary Jessie Robertson, we have in office right
today, has agreed with your assessment with that and has set up
the office in Lexington to get a focus on Paducah and
Portsmouth.
With site budgets being established in 2000, which has
assured that the funding goes to the site that they are
allocated for, with a focus of a Lexington office to make sure
there is adequate management attention, it is bound to be
helpful in the future in dealing with this. But there are a
number of issues that are outlined in the GAO report that we
would not argue with as being the problems that have existed
over the years. We think the way things are set up now, if we
can get full agreement with the Commonwealth of Kentucky and
with the EPA, that we could move this forward in a much more
successful path than what you've seen in the past.
Senator Bunning. Let me ask this to the gentleman from the
EPA. What is it going to take for you to sign up on the--in
other words, what is missing?
Mr. Johnston. It is something that is in addition. It is
not so much what is missing. The accelerated cleanup projects
and the plan to get to 2019, I think we have indicated we
agreed with those. They are in the site management plan that is
on the table now linked to a decision that we are not yet in
agreement with. That is the cessation of cleanup activities
after 2019 until some indefinite point in the future when the
plant is closed. That is unique in any proposal and any
agreement we've ever reached on cleanup of a Federal or private
facility.
So delinking or taking that requirement out--we can debate
it further. We can decide if it is agreeable or not, and get
these projects built now. That would make it agreeable. We put
that in writing as of Wednesday of this week, proposing to the
Department of Energy that we are willing to sign up to the
projects, to the work that needs to be done. But the question
of ceasing operation of cleanup is unique, and that is
something that----
Senator Bunning. Are you familiar with Maxie Flats?
Mr. Johnston. Somewhat.
Senator Bunning. Well, I hope we do better--the EPA and the
Department of Energy does better in the cleanup with this
facility than we did with Maxie Flats where the--those who
contributed the nuclear hazardous waste were penalized only for
a period of 25 years, and then the Commonwealth of Kentucky
gets stuck with the bill from 25 years to eternity, and I don't
want that to happen here in Paducah.
So we did get at least $50 or $60 million, I'm not quite
sure. I think it was 60, because I was in on the original
estimates when I was in the State senate and finally got it
solved when we worked in the House of Representatives and then
signed up.
And unfortunately, the Commonwealth signed off with the
responsibility, and I surely don't want the Commonwealth to
sign off on this and then be stuck with the tab for the rest
after 25 years.
Mr. Johnston. That consideration is not on the table in
Paducah.
Senator Bunning. I just want to make sure that is not in
the agreement.
Mr. Johnston. Not at all.
Mr. List. If I might add--and EPA doesn't need me to say
anything in their defense--however, focusing back on the recent
Agreed Orders that are entered into, and the Letter of Intent
that was agreed to, the State of Kentucky has felt that it was
under such pressure throughout this process, first of all, by
the confusion and questioning of the delegation inside the
Beltway, for example, on what is wrong here.
The Paducah community that basically was concerned about
what has taken place and what was going on and asking the same
question, you know, ``What is the matter here?'' ``What is
wrong here?'' The desire of the Governor of the State and the
desire of the delegation in Washington to see something
positive take place out of their efforts to this point,
basically, put us into a position to abandon, to some extent,
the tri-party relationship that we had with EPA to go and try
to negotiate on behalf of the community and the State of
Kentucky an agreement with DOE that could get the diesel smoke
and the dust moving again.
Therefore, we did not in so much unfairness hold the hands
of EPA like we had for so many years prior to this year when we
went to Washington and met with DOE and negotiated the
agreement that resulted from our physically going up to
Washington, sitting down on an all day meeting, working through
the issues and coming up with what we thought were the
solutions that did away with the obstacles that created the
Agreed Order, that created the Letter of Intent that would
bring about the ability to use these funds again on-site and
get away from the status quo.
The status quo is unacceptable. That is that nothing was
happening. So there are still some questions by EPA, and they
are rightfully entitled to ask the questions of why did you all
decide to do it this way, and they still have their right to
question some of the provisions of this agreement. Therefore,
they are playing their role as they see their role to be
played.
I played my role as a chief policy maker in representing
the State, trying to get an agreement, trying to get some
resolution in place. And the nature of the FFA, the nature of
the site management plan and that all of the things that are in
place that were supposed to bring about meaningful activity at
Paducah, they are there. They have been there. It just got
complicated when the accelerated cleanup issue came along.
The FFA, the Federal agreement was there, and everything
just kind of progressed along, and then additional money came
in. And then going back to the Core Team that I mentioned
earlier. All of a sudden that ceased to function. Therefore, to
that extent, the everyday communication between all of the
parties stopped.
Then we started talking about money. And then that is
getting more complicated, how do we use it, where is it, what
do we have to do to get it, and how best to use it. So
basically, we ended up with more questions. Other than more
action, we actually ended up with a whole lot more questions.
And it has taken us, frankly, from spring of 2002 to October to
get to the point where we had finally gotten these things
decided and out of the way and got back to work.
Senator Bunning. A question for DOE. Why has the Department
changed its cleanup plans so often? Does the Department expect
that this accelerated cleanup plan will be the last plan it
will use, or should we continue to see more plans on the
horizon?
Mr. Murphie. Two questions there. Why has the plan changed
so often? I think it is a fair representation of the fact that
the dynamics of the decision-making process, the Core Team that
Secretary List referred to, these were real-time decision-
making activities. And every time a decision was made to change
the scope of work, we basically had to modify our plan. We have
a large life-cycle baseline that is from the beginning to the
end. And any time we make a change to it, we have to adjust it.
So it is continuously changing or at least we refer to it as a
living document.
Will this be the last plan? Absolutely not. We are going to
have to continue to revise the plan to reflect the final
agreements that we achieve with the Commonwealth of Kentucky
and the EPA. And the baseline of these estimates, and I will
refer to the GAO to confirm this position, but the baseline is
a living document.
It is a crystal ball, the best we can determine today,
given what we known, given the basis of the general
understanding we have with the regulators and the technical
engineering approach that we have today. It is not a decision-
making document in the sense that what we've assumed with
regard to the burial grounds, with regard to the ground water,
with regard to the surface water, those decisions have not yet
been made, Senator. And I would be remiss to imply to you that
those decisions have been made.
The GAO report accurately reflects the fact that we have
fairly optimistic assumptions as to the ability to reach those
agreements with the regulators and the State boards, because
there are some very tough decisions still to be made at this
site. As a decision is made--and this is in agreement with the
regulators. As we go through the process and a decision is
made, that decision will be reflected in the life cycle
baseline, and it will be modified either up or down depending
on what the actual decision is. And therefore, this will not be
the last baseline.
Senator Bunning. In other words, you don't know?
Mr. Murphie. That is correct.
Senator Bunning. The Department of Energy's efforts in
Paducah include seven--I am assuming this is correct--seven
cleanup categories, each with an expected completion date. A,
has the Department established interim milestones for each
cleanup category that it can use to track its progress towards
achieving the estimated completion date?
Mr. Murphie. The Department has milestones in the life-
cycle baseline to tie to each of those----
Senator Bunning. Each of the seven categories?
Mr. Murphie. Yes, sir. We do not have--I'm not sure if this
is your question. They are not necessarily enforceable
milestones with the EPA and the stakeholders. But in terms of
the same document I just referred to, the life-cycle baseline,
each one of those has a prescribed starting point, ending
point, and the assumptions under which the start, end
activities has been made.
Senator Bunning. How does the Department of Energy keep the
EPA and Kentucky informed on the actual progress being made?
Does the EPA and Kentucky believe that the Department does
enough to keep them informed? You are all free to answer.
Mr. Murphie. The progress or the process of keeping
Kentucky and EPA informed is one that I would frankly admit
that, over the last year or so, has diminished significantly
because of the lack of communication overshadowed by the
disputes and actually, in all frankness, the lack of action at
the site. We clearly did get tied up in an administrative
dispute process that brought everything to a stop at the site,
and there was very little action or progress to report to
anybody.
As I said a few minutes ago, we are quite happy with the
fact that that has changed. Your question that you clearly are
looking for is how we will be doing that? The process of
providing monthly progress reports, senior management meetings,
informal and direct communication with both EPA and Kentucky is
one that I believe we have in the past demonstrated.
We are more than happy to work with EPA and Kentucky to try
and define and improve that communication, to improve the
availability of our documents that we use for internally
planning and monitoring the progress of our projects. We've
volunteered and suggested that we meet on a routine basis. We
meet with Under Secretary Card on a quarterly basis, so we have
some fairly high visibility in the Department of our progress.
We talked with EPA and Kentucky about establishing a similar
high-level senior management type of progress review to deal
with the kinds of issues that are not getting resolved.
So I think the tools are there. I will not try to imply
that those tools have been used as effectively and efficiently
as they should have been over the last couple of years because
of the reality. The progress wasn't there to support it, but
we're committed to making this work. The agreement we have with
the Commonwealth, we're very proud of. We think it is a
significant achievement, and we're committed to working with
EPA to get to that same point so that we are only talking about
progress and not talking about disputes.
Senator Bunning. Well, if you are going to come to us and
have an accelerated cleanup plan and ask for a half a billion
dollars a year to implement, you better be darn sure that you
are going to spend the money for cleanup, not for litigation
and paying fines, because we will be willing to work with you
as far as getting the dollars for the cleanup. You know they
are limited, what goes into the Department of Energy's budget
for cleanup is limited. But if you sign up for an accelerated
cleanup plan, you know that money is available. You know that
Kentucky is the 22nd site of 22 to sign and not quite sign up
yet, but they are the last of 22 sites.
And my question is, once operations cease at the Paducah
plant, the Department of Energy would evaluate the site-wide
risk and identify further actions necessary to close the site.
When will DOE begin the decommissioning and decontamination of
the plant?
Mr. Murphie. Unfortunately, Senator, as the EPA referred
to----
Senator Bunning. 2019? 2025?
Mr. Murphie. 2019 is the scope of work with what we
currently know. And as far as that which we can clean up, what
we've said is that the operations of the use of the enrichment
plant are processes which are beyond our control. It is a
commercial enrichment operation, and the Department of Energy
will not and does not have any authority to make the decision
on when that plant will shut down.
All we're saying is we're going to clean up everything--we
are going clean up everything that is decided through this
decision-making and tri-party agreement process between now and
2019. And there will be very little left at that point, with
the exception of the D&D of the gaseous diffusion plant, and
those pieces of the work which were essentially unavailable
because of the operation of the decommissioning of the plant--
I'm sorry. The operation of the plant--underneath the buildings
and those kinds of things. It is not as though we're planning
to leave behind massive unfinished work----
Senator Bunning. We are not going to let you do that
anyway, even if you would like to.
Mr. Murphie. And that is not our plan, sir.
Senator Bunning. The site out there may or may not get
another shot at enriching uranium in a new manner. It is a
contest between Paducah and Portsmouth right now. But there is
going to be built on the site a cleanup facility for the drums,
and there has been, I think, $18 million allocated to build the
building for that in this last budget, if I am not mistaken.
Mr. Murphie. You are referring to the '04 allocation?
Senator Bunning. Yes.
Mr. Murphie. Yes, sir.
Senator Bunning. So there is going to be a lot of activity
for the next 25 years for that site.
Mr. Murphie. Absolutely.
Senator Bunning. So I just want you to know that you are
going to have to continue monitoring that site for a long, long
time. Because even if we clean up everything that we know that
is there now, in the use of that site for the next 25 years, we
may contaminate more. So it is still a possibility that
additional dollars besides what the GAO has already estimated
will be needed.
Mr. Murphie. The Department and the Government is making no
attempt to abandon the site and is not walking away from that
site. I tried to make that clear to the stakeholders at our
citizens advisory board meetings and in our discussions with
the regulators. We fully understand and appreciate exactly what
you are saying, which is we have a large cleanup mission to be
undertaken today. We have a large cleanup mission when USEC
decides to shut that plant down. And we have the DUF6
conversion project that will go on for many years, and we will
continue to have a legacy long-term stewardship mission at that
site for whatever period of time is necessary, and it may well
be indefinitely.
Mr. List. Senator, one of the main concerns that the State
of Kentucky and EPA have always had in their sole discussion is
the final disposition of waste, and that still remains one of
our big concerns, and I would also represent one of the
potentially huge costs of remediating and cleaning up and
finally closing out the problems that we've had at the site. I
could encourage you and the staff to not forget--and you have
not--but I just want to say that one of the important things is
that just recognizing that the stuff exists is not enough.
The effort should be focused much, much more on the final
disposition of these materials, whether they be on-site or off-
site, and that the actual cleanup kind of gets lost in a lot of
the discussions about appropriations and work and all these
other things.
This is not to say that DOE does not intend to do this. It
is just a constant frustration for us to go through all of
these disputes and all of these negotiations, and ask, ``Okay.
We've gotten there. When is some of this stuff going to start
being disposed of?''
Senator Bunning. Well, as you might know, we have that
problem not only here and on storage in many other places in
the United States, but as you know what we did at Maxie Flats
with the waste there. We concentrated it in containers, and now
we find out that underneath the containers we're having a
bigger problem. We forgot to put a lining in it, and we are
having problems with that. But you realize that we are working
on a national site for disposing of or storing a lot of this
waste.
Mr. List. Yes.
Senator Bunning. I want to ask about the Lexington office,
Mr. Murphie, because I want the people here to understand why I
insisted upon the Lexington office. I put a provision in the
fiscal year to the Energy and Water Appropriation Bill to
require that the Department of Energy provide direct funding
and communication from its headquarters to the Paducah plant.
In response two years later, the Department finally has or is
about to open in the next month its Lexington office to handle
funding and oversight cleanup.
Mr. Boyd, in a meeting I had a couple of years ago with the
Department, they said they believed that Oak Ridge had, in
fact, skimmed money from the Paducah appropriation funds. Did
Oak Ridge do this, and why did they skim funds? How much money
do you estimate Oak Ridge took from the Paducah earmarked
funds?
Mr. Boyd. Senator, I know that you had this concern. I have
been in Oak Ridge on this job for about a year now, and I took
a hard look at this, because it was brought to my attention
that you were concerned about that.
In reviewing the budgets, starting in the year 2000 through
2004, which is a 5-year budget cycle, there are allocations or
appropriations by the committees and allocations directly to
the Paducah site. Prior to that, there were no site budgets.
But starting in 2000, Congress appropriated money by site, and
Paducah was called out in that budget.
In my review of that since 2000 through 2004, the Paducah
site has gotten all of the money that the Congress appropriated
for the Paducah site. Prior to that, the budgets were based on
programs, not on site basis, and the way those decisions were
made were by prioritizing program activity. And that was a
combination of Oak Ridge program people, Paducah program people
and Washington program people to decide where does waste
management money go, where does restoration money go, and
decisions were based upon those kinds of prioritizations and
not on a site basis.
That naturally led to some concerns that money could have
gone to one place versus another, but the Department had
priorities, whatever drove those priorities in those days is
how the monies got allocated. I assure you that I looked into
the legality issues to make sure that funds that were either
added to or taken away from Oak Ridge or Paducah or Portsmouth,
which are the sites, at question that that was all done
according to legal financial procedures. And what I have found
in that review is that it was done legally.
It might have been of concern to you and others that
programmatically the Department may not have done it the way it
should have from a prioritization standpoint. But I am assured
that everything has been done legally. There is an annual
financial statement review of the Department of Energy to
assure that movement of funds is done properly.
Since 2000, and all the way through this fiscal year, I can
assure you that monies that you have appropriated for Paducah,
those monies have gone to Paducah. And there is a new financial
accounting responsibility for Paducah, as you well know. An
accounting center in Washington is allocating funds directly to
Paducah, not through the Oak Ridge office any longer.
Senator Bunning. Mr. Murphie, can you explain what you
expect the Lexington office to handle? Why has it taken the
Department over 2 years to provide direct funding to the
Paducah plant?
Mr. Murphie. The establishment of the new field office by
the Department of Energy is something that obviously takes a
fairly extensive amount of both resources and time. It requires
coordination with the money, different parts of the Federal
DOE. I can't defend why it should have taken this long,
Senator. I believe we could have and should have been able to
get a little faster than this. I am not sitting here trying to
tell you I'm happy with the duration. Personally, it has
affected my life. I would have liked to have this set up
earlier, myself. And even something as simple as getting the
build-out of my space in Lexington itself is two months behind
schedule. The contractor committed to me that--not the
contractor, but the building owner committed to have that space
available for us.
It is just a process that has involved a significant--
everything that involves the transfer of Federal employees from
one site to the other, it has just taken us longer than I'm
sure seems reasonable, but I'm not sure it is significantly
longer than might be the case in other major changes of a line
management program like this.
Senator Bunning. We are going to hold you specifically
responsible for seeing that every dollar sent to Paducah and to
Portsmouth is directly appropriated to those areas, because
we're going to put it in the bill as it comes out of the Senate
and the House. Because if we eventually get an accelerated
plan, we want to make sure that that money goes and we do get
accelerated cleanup.
If the old plan was going to be 2010 and now we have an
accelerated plan, and we can do it by 2019, according to the
GAO, we want to make sure that that happens, and that we don't
have you here two years from now explaining why it is not
happening.
Mr. Murphie. I understand.
Ms. Nazzaro. The 2019 estimate, Senator, is DOE's estimate.
We still have some concerns that that is a pretty soft number.
In the seven categories that you mentioned as far as cleanup,
there are some very soft numbers in there.
For example, for the North-South Conversion Ditch, that is
only talking about cleaning up two of the five areas of the
ditch. Also, with the burial grounds, that is only talking
about monitoring with the idea of capping. Should they find
that there has been further contamination and that there would
then need to be excavation, that is not included in the cost
as----
Senator Bunning. Will your final report finalize what you
think is going to really be the total time expenditure on those
things?
Ms. Nazzaro. It will be given the optimistic assumptions
that DOE is making as to what they plan to do and how much that
is going to cost and how much time. But like I say, these are
very optimistic assumptions, and they are not complete as far
as the plans. So I don't----
Senator Bunning. What will your final report say about it?
Ms. Nazzaro. It will talk about DOE's estimates and what--
--
Senator Bunning. Just the estimates?
Ms. Nazzaro. What we will then do is say what the
challenges are, what is not included in those estimates, so you
will be able to know how soft those numbers are.
Senator Bunning. Would anyone else like to comment before I
allow the panel to go and do whatever they want to do?
Mr. List. If you want any more comments, Senator. Again,
going back, the money has been allocated, the problems have
been recognized as being significant problems. There should be
significant action going on out there, and I think that all
parties intend for that to happen. We think the Lexington
office does present the opportunity for this communication
again, this relationship that should be in place, that should
make this happen. So I think we have already put in motion the
mechanism. What is important now is the follow through, whether
it be by staff or whether it be by communications with the new
administration in the State of Kentucky to work together with
the Beltway or whomever they have to to make sure that we have
been trying to create as a better working atmosphere actually
is followed through on and does actually get the results that
you want.
Senator Bunning. Thank you, Mr. List.
Anyone else?
Mr. Murphie. We just like to thank you for having us here,
and we believe that there has been a significant amount of
accomplishment in the last year as a result of your involvement
in bringing us together and forcing us to work together. This
is a difficult challenge for us. And the monies you are
providing that have been above the DOE request will be used for
accelerated cleanup.
Senator Bunning. Thank you very much. If the second panel
would mind coming forward. Robert Robertson, Director,
Education, Workforce and Income Security, General Accounting
Office; Tom Rollow, Director, Office of Worker Advocacy,
Department of Energy; Pete Turcic, Director, Department of
Labor Energy Employees, Occupational Illness Compensation
Program; Larry Greathouse--where is Larry? Good to see you--
Commissioner, Kentucky Department of Workers' Claims.
Mr. Robertson, you go right ahead.
STATEMENT OF ROBERT ROBERTSON, DIRECTOR, EDUCATION, WORKFORCE,
AND INCOME SECURITY, GENERAL ACCOUNTING OFFICE
Mr. Robertson. Thank you, Senator. It's great to escape the
snows of Washington to be here in Paducah under clear blue
skies to discuss----
Senator Bunning. If you are going to have a meeting, have
one right off of the floor. Thank you very much.
Mr. Robertson. Thank you, Senator. I am going to be talking
a little bit this morning about our work under the subtitle D
of the Energy Employees Occupational Illness Compensation Act
of 2000. And as you know, Senator, under this particular law,
Energy is responsible for assisting contractor employees to
obtain compensation for the occupational illnesses through
State worker compensation programs.
My testimony today is based on an ongoing review of these
matters. Before I go too much further, I need to put on my
glasses to make sure I don't say anything I don't want to. I am
going to get into three points this morning. And the first
point is simply that Energy has gotten off to a slow start.
As of June 30, 2003, 2 years after the law took effect,
Energy has not begun processing more than half of the 19,000
cases received and fully processed only about 6 percent of the
cases. The majority of these fully processed cases were found
to be ineligible for benefits through either a lack of
employment at an eligible facility or the absence of illness
related to toxic exposure.
Forty-two of the fully processed cases, which is less than
one percent of all 19,000 cases, have received a final
determination from a physician panel on whether the reported
illnesses were caused by exposure to toxic substances while
working at an Energy facility.
My second point is that there have been two bottlenecks in
the Energy's claims process that have contributed to delays in
assisting claims and filing claims for the workers'
compensation benefits. One bottleneck has been at the front end
of the process, the case development part of the process, where
case workers collect medical, employment and exposure records.
In short, Energy was slow in this part of the process.
More specifically, when Energy first began developing cases
in the fall of 2002, case development process had a staff of
about 14 case managers and assistants. Energy officials
subsequently acknowledged the need for substantially more
staff. However, hiring was delayed by lack of office space
until August 2003, at which time Energy more than tripled the
number of staff dedicated to case development.
Energy officials now report that they are reaching their
goal of completing the development of 100 cases per week, and
that was a recent development.
The other more severe bottleneck is at the back end of the
process where a panel of physicians makes a final determination
of whether an illness is related to employment at an Energy
facility. The problem in a nutshell is that Energy has had
difficulty in finding enough qualified individuals to serve on
physician panels.
Currently, about 100 physicians are assigned to panels each
consisting of three physicians. Energy has requested that the
National Institute for Occupational Safety and Health appoint
an additional 500 physicians to staff the panels. However,
NIOSH has indicated that the pool of physicians with the
appropriate credentials and experience, including those that
are already appointed, may be limited to about 200.
Even if Energy were able to double the number of physicians
currently serving on panels, it could take seven years to
process all cases. And that is the thought I'd like to leave
you with on that point.
My third and final point is our analysis indicates that
most cases are likely to have a willing payer of benefits, that
is an insurer who by agreement with Energy will not contest
these workers' compensation claims.
More specially, our analysis indicates that 86 percent of
the cases in the nine States that account for more than three
quarters of the claims filed nationwide will potentially have a
willing payer of benefits. And I want to be clear here that
this is not an estimate of the number of cases that are likely
to receive compensation. It is not an estimate of the number of
cases that are likely to receive compensation. In fact, no
claims have been finally resolved under the State workers'
compensation programs.
Rather, our analysis is based on examining different types
of worker compensation coverage used by the Energy facilities.
More specifically, most of the facilities in these nine States
have current contractors that are self-insured, which means
that Energy can order them not to contest State worker
compensation claims.
Furthermore, our estimate assumes all cases will receive
positive determinations from the physician panel. We had to
make this assumption, because efficient data was not available
to project the outcomes in the physician panel process.
Senator, that about wraps up my prepared comments, and I
will answer questions.
Senator Bunning. Mr. Rollow.
STATEMENT OF TOM ROLLOW, DIRECTOR, OFFICE OF WORKER ADVOCACY,
DEPARTMENT OF ENERGY
Mr. Rollow. My name is Tom Rollow. I'm the Director of the
DOE Office of Worker Advocacy. Under Secretary Robert G. Card
testified before the committee in Washington approximately 2
weeks ago on the Energy Employees Occupational Illness
Compensation Program Act. I'd like to submit his written
testimony of November 21 for the record.
Senator Bunning. I was there, so we'll submit it.
Mr. Rollow. The DOE has heard loud and clear that Congress
is frustrated with the pace at which we are processing part D
applications. We too are greatly concerned. When Secretary
Abraham spoke of this program last spring, we were processing
less than 20 cases for physician panels per week. We have
recently exceeded 100 cases per week. However, even with these
improvements, DOE simply has not processed cases with the speed
or efficiency desired by the Congress or by Secretary Abraham.
As a result, the DOE has taken the following actions.
First, as I noted above, we have already started significant
action to improve productivity and added resources to address
this program, and we believe that such improvements will
continue to bear fruit.
Second, we continue to have improvement with performing an
accelerated top-to-bottom review. This review will identify
those elements of the findings of the GAO, the Hays report and
the in-house assessment that should be implemented if not
already done.
In addition, we will examine every aspect of the program's
policies, procedures and rules to further increase production
both at the case development stage and at the physicians review
panel. Nothing is off of the table in this review, and we
believe we will have this plan available for review shortly.
Lastly, we have elevated this office to report directly to
the Under Secretary in order to provide the visibility, the
oversight and the resources that this program needs.
Again, Mr. Chairman, the Department hears your concerns and
agrees that our performance to date has been inadequate, and we
are taking steps that we can to improve the situation quickly,
I am prepared to answer your questions.
[The prepared statement of Mr. Card follows:]
Prepared Statement of Robert G. Card, Under Secretary,
Department of Energy
Thank you for the opportunity to testify about the Department of
Energy's implementation of the Energy Employees Occupation Illness
Compensation Program Act of 2000 (EEOICPA). Broadly speaking, DOE has
two areas of responsibility under EEOICPA: (1) gathering employment and
workplace information to assist the Department of Labor (DOL) and the
Department of Health and Human Services (HHS) with their work in
carrying out the EEOICPA Part B compensation program; and (2)
implementation of EEOICPA Part D, which focuses on providing assistance
to DOE contractor workers in their efforts to obtain State workers'
compensation benefits. My testimony today will primarily focus on DOE's
activities under Part D.
DOE has heard loud and clear that Congress is frustrated with the
pace at which we are processing Part D applications. We too are greatly
concerned. Progress has been made in gathering records and processing
cases. When Secretary Abraham spoke of this program last spring, we
were processing less than 20 cases for physician panels a week. We have
now exceeded 20 cases per day. However, in spite of these significant
improvements, DOE simply has not processed cases with the speed or
efficiency desired by the Congress or by Secretary Abraham. Therefore,
I want to be very specific in my remarks to you today. The Department
did not react quickly enough when it became apparent that the EEOICPA
was a much larger program that originally anticipated. More resources
are required. Therefore, we will be providing a request for approval of
another transfer of funds to the appropriate Congressional committees
very shortly. I ask for your timely support of this transfer of funds.
Also, I am asking that the Committee support changes to the statute
that would assist us in expediting the physician panel process even
further.
I have included an Attachment * to my testimony that provides more
detail concerning the issues I will discuss today, including some of
the original expectations of the program, processes used by DOE and DOL
to implement EEOICPA, our progress to date, and what we have learned
from outside reviews of our work. I have also included information
about the current safety record of DOE for your information.
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* The attachment has been retained in subcommittee files.
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Part D of EEOICPA sets up a somewhat cumbersome and complicated
process that DOE's contractor workers must navigate if they are to
benefit from Part D of the program. If a DOE contractor worker believes
they may have an illness caused by exposure to a toxic substance while
working at a DOE facility, the law allows the worker to file an
application with DOE for assistance in filing a state workers'
compensation claim. After determining that the applicant is eligible
for the Part D program, DOE gathers records from around the country
relating to the workers' occupational histories and their health
conditions, and then refers the application to a panel of doctors. The
physician panel then determines whether the worker's illness arose from
exposure to a toxic substance while working at a DOE facility.
If the panel finds in the affirmative and DOE finalizes the
finding, the workers are notified of the favorable finding. The workers
may choose to file a State workers' compensation claim. Of course, the
workers are free to file with their State workers' compensation office
at any time, but hopefully the case file put together for the worker by
DOE plus the positive physician panel finding will provide the worker a
better chance of receiving benefits through their State workers'
compensation agency. The statute then allows DOE, to the extent
permitted by law, to direct the contractor who employed these workers
not to contest State workers' compensation benefits for workers that
have received a positive finding. Individual States' workers'
compensation laws and rules determine benefits for that particular
state. The EEOICPA statute does not provide for direct monetary
benefits to Part D applicants from the Federal government.
At the present time, DOE has received more than 20,000 Part D
applications with applications continuing to be filed at approximately
150 per week. In addition, there are currently more that 40,000
applications filed under Part B, the DOL Federal entitlement portion of
the program, for which DOE provides information.
This is in stark contrast to some of DOE's original expectations
for EEOICPA. Secretary of Energy Richardson, in an April 2000 press
release, stated ``The Administration's proposal, if enacted into law by
Congress, would compensate more than 3,000 workers with a broad range
of work-related illnesses throughout the Energy Department's nuclear
weapons complex.'' This was prior to the enactment of EEOICPA, but the
release did discuss a program that was very similar to the current law,
including lump sum benefits and help in obtaining State workers'
compensation benefits.
The press release further identified the total program costs for
all agencies, including administrative costs and worker benefits, to be
about $120 million annually over the first three years the program was
fully operational, declining to about $80 million per year after the
backlog of claims was reduced. The basis for these estimates is not
clear, but the implication is that it would take at least three years
to clear a 3,000-claim backlog, and then several years beyond that to
complete all claims. In fact, expected expenses for all of EEOICPA for
all agencies just through fiscal year 2004 is expected to be $1.5
billion.
DOE's budget projections for Part D in 2001, after the statute was
passed, are based on a projection of about 7,500 applications to DOE
under Part D and 10 years to complete the program. Clearly, DOE
expected significantly fewer applications to this program than we are
currently receiving, and consequently fewer resources were requested.
In fact, we have received nearly three times as many applications as
originally projected when budgets profiles were developed.
Despite the fact that thousands more applications have been filed
than were expected and despite the cumbersome processes established for
Part D, DOE has worked very hard to carry out its Part D
responsibilities. This work has occurred while we have also been
obtaining and providing to the DOL and HHS the records for thousands of
employees who have submitted Part B applications. The Department has
continuously worked to improve our processes. First, because the number
of applications was far exceeding our original estimates, we sought in
July 2003 and the Congress approved in October the transfer of an
additional $9.7 million in FY-03 money to be used for the DOE's
activities in gathering records and processing Part D applications.
As we already have discussed with many of you, we soon plan to seek
approval for the transfer of more than $30 million in additional funds
in FY-04 to be used for this same purpose. These additional funds will
go a long way towards allowing DOE to work off the large backlog of
applications for which we are currently gathering records for physician
panel review. In fact, we are now averaging 100 cases per week up to
physician panel review. I have included statistics on our progress in
the Attachment, and you can also see our weekly progress on the DOE
Office of Worker Advocacy web site.
Second, several months ago DOE retained the Hays Group, Inc. to
critically evaluate our Part D activities and suggest improvements and
enhancements that would allow us to more effectively implement the Part
D program. The Hays report is final, and is available on the Office of
Worker Advocacy web site. I promise that we will work diligently to
address the improvements identified in the report. We are also
interested in the suggestions of the General Accounting Office (GAO)
after it completes its critical review of the Part D program.
Third, the Secretary has directed that I personally take charge of
DOE's implementation of its EEOICPA duties. I have recently made
changes so that the Office of Worker Advocacy, the office that
administers this program within DOE, will report to me directly.
We believe these funding and programmatic initiatives will go far
towards expediting the processing of Part D applications that have been
filed with DOE. We believe that these approaches are preferable to
moving the administration of some parts of the Part D processing work
to another agency, as was recently proposed as an amendment to the
Energy and Water Appropriations bill. DOE and its contractors possess
the employment and exposure records for Part D applicants, and DOE has
spent almost three years carrying out Congress's directive to DOE to
develop the processes and procedures to gather records and implement
the Part D program. Moving portions of the program will not accelerate
the processing of applications, and will, in my opinion, counteract the
progress we have made to date.
While we believe that our recent efforts to speed the processing of
Part D cases puts us on the right path to accommodate the large number
of backlogged claims, we believe more can be done. Additional resources
are certainly required. However, we are also evaluating DOE's Federal
Rule that implements Part D to determine whether it might be
appropriate to propose changes that could expedite the processing of
Part D applications, especially in the area of physician panel reviews.
Finally, and as I noted earlier, the EEOICPA statute itself places
a number of constraints and limitations on the Part D process that
serve to slow down the pace at which DOE can process applications. A
good example is the physician panels. Current statutory requirements
may limit the population of physicians below a tenable level for the
sufficiently speedy processing of applications through the panels, a
problem which may be exacerbated by the Department's Rule requiring
three physicians on every panel. We are exploring with other Executive
agencies legislative changes that may be needed to make more physicians
available for panels, as well as developing possible changes to DOE
Rules to best utilize the physicians we have. The statute also caps the
level of pay for physician panel members at a level well below the
market rate for such services. An initial description of those barriers
that may benefit from legislative changes is included in the
Attachment.
The statute contains other limitations that have been barriers to
the processing of Part D applications. A table listing many of the
barriers and possible changes is provided in the Attachment. I am
looking for support from this committee as we evaluate the
effectiveness of making these changes to deal with these barriers.
I also look forward to hearing any suggestions the next panel may
have for improving DOE's implementation of Part D, within the existing
statutory constraints and requirements. Various parties sometimes
present recommendations to DOE about how its Part D processes might be
changed, but often those recommendations ignore the limitations placed
on us by the statute itself. In addition, some of these recommendations
seem unaware of where the Department's responsibilities lay, a
misperception that I believe is widespread throughout the community of
former workers and those interested in their cases.
The fact of the matter is that the Department of Energy's
responsibilities end, by statute, when the Department provides the
Physician Review Panel findings to the worker, and where allowed,
direct the contract employer to not contest the findings or claim with
State workers' compensation agencies. No benefit is tied to this
program, only the advocacy services of the Department. All benefits are
determined in accordance with an individual State's workers'
compensation rules. We appreciate any suggestions and recommendations
from any party that respects the boundaries as set by the Congress.
DOE is committed to carrying out its responsibilities under EEOICPA
Part D. We are committed to providing DOE contractor workers with the
assistance they deserve under Part D as established by the Congress. In
addition, we are committed to working with the Congress, to keep you
informed about our progress and to address improvements in DOE's
processes and in the statute itself.
I also want to assure all members of this committee that the
Department of Energy as an agency and I personally as the Under
Secretary of Energy believe that the safety of our workers is our most
important responsibility. We do not want to leave an additional trail
of injured and ill workers with legacy costs for the taxpayers. This is
why I have included some of the safety statistics regarding our current
operations in the Attachment. The DOE injury and illness rates have
declined to a historic low in 2003. Our rates are less than half of
private industry. DOE is one the safest places to work in the country.
We fully intend to continue this performance while striving to improve
our methods of protecting our workers, the public and the environment.
At this time, I would be glad to answer any questions you may have.
Senator Bunning. Thank you, Mr. Rollow.
Mr. Turcic.
STATEMENT OF PETE TURCIC, DIRECTOR, ENERGY EMPLOYEES
OCCUPATIONAL ILLNESS COMPENSATION PROGRAM, DEPARTMENT OF LABOR
Mr. Turcic. Thank you, Senator. I have submitted a full
statement for the record.
Senator Bunning. It will be entered.
Mr. Turcic. My name is Pete Turcic. I'm the Director of the
Energy Employees Occupational Illness Compensation Program with
the Department of Labor. I am pleased to have the opportunity
to appear before you today to discuss the progress that the
Department of Labor has made in implementing part B of the
Energy Employees Occupational Illness Compensation Program Act.
It is appropriate, 3 years after its enactment, that we
review the progress to date in meeting this challenge.
Under the Executive Order, DOL was assigned primary
responsibility for administering and adjudicating claims for
compensation under subpart B of the Act. Briefly, subpart B, as
administered by DOL, provides compensation of $150,000 lump-sum
payment and payment of medical benefits for current and former
DOE employees, contractors and subcontractors, employees of
atomic weapons employers and beryllium vendors. Qualified
survivors of deceased employees may also be eligible for the
lump-sum compensation payments.
The illnesses covered under subpart B are radiogenic
cancers, beryllium diseases and chronic silicosis. DOL's
initial responsibility was to insure that the program was fully
operational by July 31, 2001. Since funding for the program was
not available until January 2001, DOL faced a major challenge
at the onset just to meet the congressionally mandated
implementation date.
We succeeded in meeting that goal by accomplishing the
following: We issued interim final regulations in May 2001. We
established joint DOL-DOE resource centers to assist claims in
areas where the most potential claimants resided. We
established four Department of Labor district offices where to
receive and adjudicate the claims. We established a national
office infrastructure to develop policies and procedures that
were necessary for the implementation and operation of the
program throughout the organization, and we also established
very high performance standards focusing on moving claims
rapidly through the initial and secondary adjudication stages,
and those standards were put in place and measured.
As a result of our success in completing these initial
steps, Secretary Child presented a first payment under the
program here in Paducah on August 9, 2001, just 10 days after
the date of implementation of the Act.
Since then, DOL has taken in over 49,000 claims. We've
conducted some 575 public meetings to inform potential
claimants of the program and to help them to file claims, and
we've issued decisions in over 36,000 cases and awarded in
excess of $720 million in compensation and medical benefits
with over $130 million of that in compensation benefits being
awarded to workers from the Paducah Gaseous Diffusion Plant for
their survivors.
Allow me to just briefly explain how claims filed with the
DOL are processed. When a claim is filed, it is assigned to one
of our district offices, either in Jacksonville, Florida;
Cleveland, Ohio; Denver, Colorado; or Seattle, Washington, and
it is based on the geographical location of the covered workers
last employment.
It is then assigned to a claims examiner who will review
the documentation and determine if the criteria established by
the Act for covered employment and covered illness is met. The
claims examiner will work with the claimant, with the
Department of Energy and/or the private employer or employers
involved to fully develop that case file as thoroughly and
completely as possible.
There are different types of claims under part B of the
Act, which require different processing steps. For example,
Claims for $50,000 RECA--Radiation Exposure Compensation Act--
supplemental benefits are the least complex, only requiring
verification from the Department of Justice that a RECA award
has been made.
And for claims involving specified cancers for workers at a
Special Exposure Cohort facility, such as the Paducah Gaseous
Diffusion Plant, the Act provides a presumption that any of
these are a result of the radiation exposure. And once the
required documentation is submitted that establishes that the
individual has suffered a specified cancer, then these claims
can move fairly expediently and as can those involving
beryllium disease and chronic silicosis.
For claims involving a cancer that is not covered by the
Special Exposure Cohort Provisions, there is an intervening
step in the process which requires a referral of the claim to
the National Institute for Occupational Safety and Health. So
the worker's radiation dose--the total amount and character of
radiation to which that worker was exposed as a result of their
employment--can be estimated.
After NIOSH completes those reconstruction processes, DOL
then applies the estimated range of exposures to a probability
of causation process to determine whether that individual
worker's cancer was at least as likely as not, or 50 percent
probable, that it could have been related to his or her covered
employment.
Upon completion of the determinations involved in each of
the processes, DOL will then issue a recommended decision
regarding the claimant's eligibility for benefits. The claimant
then has the right to accept that recommended decision or to
further appeal that decision. After all appeals or waivers on
appeal are resolved, a final decision is issued by the
independent review body within our organization either awarding
or denying benefits. I am pleased to report that all aspects of
the EEOICPA subpart B program are fully operational.
Since the program's inception, we have accomplished the
following: We have increased the timeliness of our initial
decisions of either a recommended decision or a referral to
NIOSH from 48 percent in the fiscal year 2002 to over 79
percent in 2003, and that means 79 percent of the cases that we
received, received an initial decision within either 120 days,
if it was a DOE facility, or 180 days of receipt of that claim.
We increased the timeliness of the final decisions to 77
percent. And again, if there is a no contest or a waiver, we'd
issue a final decision within 75 days. We established an
accountability review system of our process to ensure that the
process is operational and where necessary in the adjudication
process.
And of the over 49,000 claims received--and those were
based on 37,192 individual cases or workers--DOL has issued
more than 24,000 financial decisions, and we've paid more than
$700 million in compensation payments to over 9,400 claimants
and also paid over $21 million in medical benefits. In the
coming year, we are prepared to adjudicate the thousands of
cases that will be returned from NIOSH with the completed dose
reconstructions. We have established a performance goal--which
I might add that we have been meeting--is to issue a
recommended decision within 21 days of receiving a dose
reconstruction back from NIOSH.
And although, we have received more than 49,000 claims
nationwide, we believe that this represents only a relatively
small number of potential claimants who may be eligible for
this program. And in this regard, we are committed to conduct,
and have been conducting, significant outreach efforts to try
to reach as many potential claimants as possible within the
next two years.
And let me just briefly discuss the claim statistics for
Paducah. As of November 27, 2003, we have received 4,515 claims
from Paducah based on 3,479 individual cases or workers, and
we've approved 942 cases. And we've paid in excess of $130
million in compensation to over 1,239 claimants from Paducah,
and we have referred 769 cases to NIOSH for dose
reconstruction.
Mr. Chairman, this completes my statement. And in addition
to the programs, this needs to be provided. There is the
attachment.* That completes my statement, and I will answer
questions.
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* The attachments were not received from the field hearing.
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[The prepared statement of Mr. Turcic follows:]
Prepared Statement of Pete Turcic, Director, Energy Employees
Occupational Illness Compensation Program, Department of Labor
Mr. Chairman, my name is Pete Turcic, Director, Division of Energy
Employees Occupational Illness Compensation Program (EEOICP), the
Office of Workers' Compensation Programs (OWCP), Employment Standards
Administration (ESA), within the Department of Labor (DOL).
I am pleased to have an opportunity to appear before the
Subcommittee today to discuss the progress DOL has made in implementing
Part B of the Energy Employees Occupational Illness Compensation
Program Act (EEOICPA). It is appropriate, three years after its
enactment, that we review our progress to date in meeting this
challenge.
As you know, under Executive Order 13179, DOL was assigned primary
responsibility for administering and adjudicating claims for
compensation for cancer caused by radiation, beryllium disease and
silicosis under Part B of the Act, and for ensuring that the program
was up and running by July 31, 2001. Since funding for the new program
was not received until January 2001, DOL faced a major initial
challenge just to meet the congressionally mandated start date. We
succeeded in issuing interim final regulations in May of that year and
established a fully functioning program on schedule. The first payment
was presented by Secretary Chao on August 9, 2001. Since then, DOL has
taken in over 49,000 claims, conducted about 575 public meetings to
inform potential claimants of the program and help them file claims,
established 10 permanent resource centers in the locations where most
potential claimants reside, established four DOL district offices and
the infrastructure to support them, issued decisions in over 36,000
cases and awarded in excess of $720 million in compensation and medical
benefits, with over $130 million in benefits awarded to workers from
the Paducah Gaseous Diffusion Plant or their survivors.
Employees who worked for the Department of Energy (DOE), one of its
contractors or subcontractors at a DOE facility, or at a facility
operated by a private company designated as an Atomic Weapons Employer
or a beryllium vendor, may be eligible for a lump-sum award and future
medical benefits under Part B of the Act. Survivors of these workers
may also be eligible for benefits. Part D of the Act established a
system under which employees whose occupational diseases are determined
by a panel of independent physicians to have been connected to work-
related exposure to toxic substance receive assistance in obtaining
state workers compensation benefits.
Under the Executive Order, four agencies have responsibility for
administering the Act: DOL, DOE, the Department of Health and Human
Services (HHS), and the Department of Justice (DOJ). The DOL, as the
lead agency, determines eligibility for compensation and medical
expenses for those conditions covered by Part B of the Act. The DOE
provides employment verification to DOL relevant to claims under Part
B, provides worker exposure information to the HHS for its use in
making estimates of the radiation received by a covered worker,
administers Part D of the Act, and designates private companies as
atomic weapons employers and additional beryllium vendors. DOL and DOE
jointly manage the ten outreach centers aimed at informing potentially
eligible workers or their survivors about the EEOICPA programs.
HHS has established procedures for estimating radiation doses, and
has developed guidelines to determine the probability that a cancer was
caused by the exposure to radiation; it estimates radiation doses (dose
reconstruction), determines additions to the Special Exposure Cohort,
and provides support for the Advisory Board established by the Act. And
finally, DOJ notifies uranium workers eligible for benefits under the
Radiation Exposure Compensation Act (RECA) that they may also receive
compensation from DOL and provides DOL with documentation concerning
those claims.
Several requirements must be met for a claimant to be eligible for
compensation under the EEOICPA. For a worker (or eligible survivor) to
qualify for benefits under Part B, the employee must have worked at a
covered DOE, Atomic Weapons Employer, or beryllium vendor facility
during a covered time period and developed one of the specified
illnesses as a result of their exposure to radiation, beryllium or
silica. Covered medical conditions include radiation-induced cancer,
beryllium disease, or chronic silicosis (chronic silicosis is only
covered for individuals who worked in nuclear test tunnels in Nevada
and Alaska). Covered workers receive a one time lump-sum payment of
$150,000 as well as medical treatment for the covered condition
(medical services and evaluations only for beryllium sensitivity). The
EEOICPA also provides compensation in the amount of $50,000 to
individuals (or their eligible survivors) awarded benefits by the DOJ
under Section 5 of RECA.
Allow me to briefly explain how claims filed with DOL are
processed. When a claim is filed, it is assigned to one of our four
District Offices Jacksonville, FL; Cleveland, OH; Denver, CO; or
Seattle, WA based upon geographical location of the covered worker's
last place of employment. It is assigned to a claims examiner who will
review the documentation and determine if the criteria established by
the Act for covered employment and covered illness are met. The claims
examiner will work with the claimant, DOE and/or the private employer
or employers involved to develop the case file as thoroughly and
completely as possible.
There are several different types of claims under Part B of the
Act, which require different processing steps. Claims for the $50,000
RECA supplement are the least complex, involving verification via the
DOJ that a RECA award has been made, and documentation of the identity
of the claimant (including survivor relationship issues). For claims
involving beryllium disease, silicosis, or a ``specified cancer'' for
workers at a Special Exposure Cohort (SEC) facility such as the Paducah
GDP, the employment and illness documentation is evaluated in
accordance with the criteria in the EEOICPA. The DOL district office
will then issue a recommended decision to the claimant. The claimant
may agree with the recommended decision, or may object and request
either a review of the written record or an oral hearing (the latter
will normally be held at a location near the claimant's residence). In
either case, the Final Adjudication Branch (a separate entity within
the DOL's OWCP) will review the recommended decision and any evidence/
testimony submitted by the claimant and will issue a final decision,
either awarding or denying benefits (or the Branch may remand to the
district office if further development of the case is necessary). A
Final Decision can then be appealed to the U.S. District Courts.
DOL can move directly to a decision on cases involving a
``specified cancer'' at a SEC facility because the Act provided a
presumption that any of the listed cancers incurred by an SEC worker
was caused by radiation exposure. For cases involving a claimed cancer
not covered by the SEC provisions (that is, either a cancer incurred at
a non-SEC facility, or a cancer incurred at an SEC facility that is not
one of the specified cancers listed in the Act), there is an
intervening step to determine causation, called ``dose
reconstruction.'' In these instances, once DOL determines a worker was
a covered employee and that he or she had a diagnosis of cancer, the
case is referred to the National Institute for Occupational Safety and
Health (NIOSH), part of the Centers for Disease Control and Prevention
(CDC) within HHS, so that the individual's radiation dose the total
amount and character of radiation to which the individual was exposed
related to his or her employment in the nuclear weapons complex can be
estimated.
After NIOSH completes the dose reconstruction and calculates their
dose estimate for the worker, DOL takes this estimate and applies
methodology prescribed by HHS, in its ``probability of causation''
regulations, to determine if the statutory causality test is met--that
is, whether the individual's cancer was at least as likely as not (at
least 50 percent probability) related to covered employment. DOL's
district office then issues a recommended decision on eligibility for
EEOICPA benefits, which is subject to the same subsequent
administrative procedures and appeal rights described above with regard
to other claims.
DOL is committed to measuring the accomplishment of outcomes and
holding ourselves accountable for achieving the fundamental goals of
all the programs we administer. With respect to the Energy Compensation
program, we established high performance standards focused on moving
claims rapidly through the initial and secondary adjudication stages.
Our Government Performance Results Act (GPRA) goals, even for the first
full year (FY 2002), were challenging in light of the large number of
first year claims and program start-up activities.
Our goal for initial processing was to make initial decisions in 75
percent of the cases within 120 days for cases from DOE facilities and
in RECA claims, and within 180 days for AWE, beryllium vendor, and
subcontractor cases (for which employment and other critical
information is generally more difficult to obtain). Because we had
nearly 30,000 cases on hand to start with, we knew in advance we would
not meet those goals, which were conceptualized in terms of a normal,
steady-state flow of incoming claims. However, we knew that the
customers of this program had been waiting for years for their
illnesses to be addressed, and establishing rigorous performance goals
signaled to our own staff and to those potentially eligible for
benefits that we were committed to efficiently and promptly processing
claims. In fact, we took timely initial actions (either recommended
decisions or referral to NIOSH for dose reconstruction) in about 48
percent of the cases during that first year of operation (FY 2002),
despite the backlog of aged cases that we brought into the year. The
smaller number of final decisions completed in FY 2002 met our GPRA
timeliness goals in 76 percent of cases.
Although we had received over 47,000 Part B claims by the end of FY
2003, we have made recommended decisions or referred to NIOSH for dose
reconstructions all of our backlogged cases and currently have a
working inventory of only 2000 cases. Further, we met our GPRA goals in
FY 2003. Through the efforts of our district office and Final
Adjudication Branch staff, we made timely initial decisions in 79
percent of the cases processed, in excess of the 75 percent goal. With
regard to final decisions, 77 percent of the decisions were within the
program standards, also in excess of the goal of 75 percent.
Accomplishment of these goals took the persistent, case-by-case effort
of the entire staff of our Division of Energy Employees Occupational
Illness Compensation Program, as well as the continuing support of our
Solicitor's Office.
DOL has also focused on achieving quality decisions, and on
providing clear and effective communications to our customers and
stakeholders. The program instituted an intensive Accountability Review
process to ensure that samples of case work are scrutinized by
objective reviewers, and where quality issues are identified in these
samples, to take strong and immediate corrective action. The
headquarters staff has developed effective and comprehensive procedural
and policy guidance, a difficult task in the context of a new and still
evolving compensation program. Although no workers' compensation
program is without conflict, the level of appeals has been relatively
low.
Since the effective date of the Act, DOL has received 49,113 claims
which were filed based on 37,192 individual cases or workers. As of
December 2, 2003, we have made recommended decisions or referred the
case to NIOSH for dose reconstruction in 95 percent of these cases.
There have been over 24,000 Final Decisions issued and over $700
million in compensation payments made to over 9400 claimants.
Additionally, over $21 million in medical benefits has been paid. A
detailed listing of current program statistics is displayed in the
attached Program Status Report.
In the coming year DOL is prepared to adjudicate the thousands of
cases that will be returned by NIOSH with completed dose
reconstructions. We have established a performance goal to issue a
recommended decision within 21 days of receiving a dose reconstruction
report from NIOSH. We have been exceeding this goal so far. We also
have made a commitment to conduct significant outreach efforts to reach
as many potential claimants as possible and inform them of the program.
These efforts will include a significant number of strategically
located traveling resource centers to provide assistance to potential
claimants, as well as coordination with pension funds, unions, and
other groups which may be able to extend our message about the program
to retirees and workers or their survivors who no longer live in
proximity to a DOE facility.
Let me briefly discuss the claim statistics for the Paducah GDP. We
have received 4,515 claims based on 3479 cases or workers from the
Paducah GDP. In these cases, we have issued Final Decisions in 2364
cases with 904 approvals for $130,800,000 in compensation benefits
awarded to 1239 claimants. In addition, we have referred 769 cases to
NIOSH for dose reconstructions.
In summary, I'm pleased to report that all aspects of the EEOICPA
Part B program are fully operational. We believe that we have
established a credible program and forged effective working
relationships with our partner agencies DOE, HHS, and DOJ as well as
with the DOE contractors and labor unions. For example, DOL and DOE
have worked cooperatively to improve the employment verification
process and have instituted a number of efficiency measures. These
efforts have resulted in the average time for completion of employment
verification at DOE facilities to be reduced from nearly 90 days at the
beginning of FY 2002 to a current average of less than 45 days.
Similarly, the time for corporate verifiers to respond to employment
verification has been reduced from about 75 days to the current average
of 24 days. DOL and HHS also work in cooperation to improve the
efficiency and effectiveness of the transfer of cases and case
information of referrals for dose reconstruction. These efforts have
resulted in processes that ensure that recommended decisions are issued
within 21 days of receipt of the dose reconstruction report from NIOSH.
I'll be pleased to answer any questions you may have.
Senator Bunning. Thank you very much.
Mr. Greathouse.
STATEMENT OF LARRY M. GREATHOUSE, COMMISSIONER,
KENTUCKY DEPARTMENT OF WORKERS' CLAIMS
Mr. Greathouse. I thank you very much for the invitation to
appear here today. In preparation of this, let me say that my
statement will be submitted into evidence with the attachments,
and we would move that that be submitted.*
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* The attachments were not received from the field hearing.
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Senator Bunning. It will be part of the record.
Mr. Greathouse. In preparing these statements, I had the
opportunity to look at the GAO testimony of November 21 as well
as the testimony from Leon Owens about the program, which was
also rendered that day, in thinking through these statements
from the Department of Workers' Claims. I am the commissioner
of that department, and I am going to make some conclusions
that are in the 20 pages of the statement for a brief overview
and then be able to go into more detail with the questioning.
First of all, at the encouragement of the Department of
Energy last October 2002 or last September, the Commonwealth of
Kentucky entered into an agreement with the Department of
Energy with respect to the subtitle D claims of wherein the
Department of Workers' claims would receive a claim filed by an
eligible worker who had been identified by a Federal panel of
physicians at the Department of Energy level and then give some
direction and assistance to that claimant of how to file their
claim within the State workers' compensation system. The
Governor entered that agreement with a representative of the
Department of Energy in September, and that is attached as
attachment 1.
One of the reasons for recommending that the State enter
into that agreement was the Department of Energy's being able
to encourage or induce or direct certain employer contractors
at the Paducah facility site over the years to not contest the
merits or the things like technical defenses, statute of
limitations, which are in our State law with respect to
workers' comp, occupational disease claims. Because we have, I
think? With 16 law judges and three workers' comp board members
and then with the direct appeal to the Court of Appeals and the
Supreme Court of Kentucky, we have the capability to process
all of these claims in the Department of Workers' Claims. And
there is an estimated 2,000 potential claimants, either
claimants or their surviving spouses.
One of the problems that we have with respect, however, to
any employer since the 1950's at this Paducah site--and we have
given the committee on Attachment 3 a timeline of every
employer that was here since the 1950's up until the present
day and whether or not that employer was a self-insured
employer of had commercial insurance, workers' comp coverage.
And I think the GAO report is probably correct, from my
analysis of it, that about one-half to 900-some of the
potential claimants were under a self-insured employer. About
900-plus were under a carrier, a workers' comp carrier, during
that period. So I think that is right.
I think it is also a good conclusion of the GAO that we are
going to have a self-insured employer as we had on this site,
whether it was USEC or others previously to that, that an
agreement between DOE and that contractor could be enforceable
so that they would not contest, either on the merits or the
technical things like statute of limitations, in order that our
law judges can then deal with that claim immediately.
And I think if that were the case, we're talking about a
turnaround time of about 3 to 4 months working towards an
adjudicated plan in our law judge system.
On the other hand--and that would be a filing of a notice
of non-resistance by that employer who is identified as an
employer at the time that employee was last exposed to the
hazards of the occupational disease.
There is a clear case of the problems that are entailed
with Kentucky's statutory scheme in making application to that,
and Clara Harding, in her case, is the one, and she filed a
case on behalf of her husband in 1983. Mr. Harding had worked
for over 18 years, beginning with Union Carbide in the 1950's,
up until 1971. In 1972, he filed a claim. It was withdrawn at
some point, probably because of the statute of limitations
problem. They withdrew it without prejudice. He died in March
1980, and 3 years to the date later, Ms. Harding filed a claim
on behalf of herself and his exposure under State law.
That case took 14 years to get to the court of appeals in
Kentucky in 1997. The bottom line of it is that it was denied.
It was denied, because we had a statute of limitations that
could not be properly applied to her claim. There was a
settlement, which was of little monetary value to her, of
$12,500 after an appeal to the Supreme Court was withdrawn.
Union Carbide's two insurance carriers, Aetna and
Travelers, paid $7,500 in that settlement, and the Special Fund
paid an additional 5,000, which is the 60 percent/40 percent
arrangement under the law appropriate on the date of his last
exposure in 1971.
So all of those claims have to be viewed from the date of
last exposure and appropriate law at that time has to be
applied to the claim. Other than with respect to self-insured
employers at this site, any employer's insurance company,
unless the Department of Energy--and I don't know--no one has
indicated to us that they have an agreement with Travelers or
Aetna or any of these other numbers of companies to not contest
these claims--in addition to those that they will contest and
will be in long periods of adjudication possibly with little
ability for any conclusion to an award on behalf of the family.
There is one other problem in Kentucky. You have to bring
in something called the Special Fund. The Special Fund was
Kentucky's second interview fund created after World War II to
help employers and to encourage them to hire disabled people.
And if they got hurt on the job, their prior situations they
had physically would be paid by a Special Fund with special
assessments against all employers in Kentucky, and like other
States, to help take care of that.
Our program is also based on the coal industry in Kentucky
with respect to occupational disease. So that if an employee
like Mr. Harding, who worked for one employer for 18 years, if
he should have received benefits, 60 percent of the award would
have gone against Union Carbide back at that time, 40 percent
by the Special Fund. And that was about the arrangement of that
settlement in 1997.
If an employee who is eligible to file a State occupational
disease claim has multiple employers--and there is about seven
designated multiple employers since the 1950's, and employers
change and they are different entities and they are either
self-insured or they have other workers' comp insurance--in
that situation, if an award was made, 75 percent of the award
comes from the Special Fund. The fund paid into by all
employees. 25 percent only against company who was the employer
at the time of last exposure.
I might say one other thing as to the Special Fund's
problem. In 1987, it was determined that mainly because of coal
employee claims to coal employers, that fund was about $1.7
billion in debt. A 30-year prearrangement for all employers to
pay that debt off was undertaken by the General Assembly.
In 1996, that fund was $2.2 billion in debt. And in a
pretty tough reform, the Special Fund was abolished for any
future claims by employees. The date set for the payment of
that debt by employers in Kentucky is December 2018 to pay off
this debt. So what that means today for someone who was last
exposed to a disease for which they would have a proper claim
to file in Kentucky after December 1996, which was the
effective date of that law, there would be no Special Fund
liability. There would be no 75 percent award to be paid, even
if it was a self-insured employer who agreed to waive all these
defenses that are there.
But those are the kind of problems we have to deal with in
terms of processing through a State workers' compensation
system. I am convinced that our 16 judges can handle these
claims. Two thousand claims would be only about another 25
percent increase in the workload currently which our judges do
each year. We probably couldn't handle them all in one year.
But you would have to understand that the Special Fund, which
still exists to pay off claims of the past--there is only about
10 people left in that fund. But they would have to defend with
their attorneys every claim aggressively.
They are fiduciaries of all assessments against all
employers of Kentucky that pay into that fund. They cannot
agree to a notice of non-resistance to pay. So you have to
think with every claim--they'll be involved in every claim from
1954--that they would have to defend those with everything that
the remedies would allow them to do under the due process of
constitutional issues that they had. For all of those 900 or so
employees who worked for a self-insured employer when they were
last exposed, we could enter into an adjudication model if the
claimant understood with that award that was granted, they may
not have that Special Fund part. And if, at least, the employer
on site at the time would agree to pay their share, whichever
was appropriate at the time, that could be done.
With an occupational disease claim, there is only one
thing. Our law judges could not use the Federal panel of
physicians report as a presumption of weight for that claim,
but it can be submitted to support the claim like any claim is.
Under law on every OD claim, occupational disease claim, the
commissioners are required to refer that claim to one of our
medical schools at either the University of Kentucky or the
University of Louisville where a specialist, like the Federal
specialist, will be asked to evaluate that claim as well. The
employer who was last on the hook for last exposure will have
to pay for that evaluation under law. The ALJs can use that
report as presumptive weight for a claim.
So if those things--it is less than what we all have
available for claimants, but we have a part of the process that
can be utilized under which we have some manner of control in
terms of time limits. We have judges who are at circuit court
judge capability qualified, board members have to have the
qualification to the court of appeals judges. The supreme court
amended their rules to allow direct appeal to the judiciary for
this workers' comp board. So we can move that system pretty
well.
In addition, we have workers' comp specialists overseen by
lawyers on staff in-house. Claimants without attorneys could
process this with our agency without any litigation
requirements, particularly if the employer who was there at
last exposure is going to not defend the claim and file with us
a notice of non-resistance so that we can deal directly with
the merits of the claim.
So with that and with those concerns and with the testimony
I've submitted to you, I have also given you an attachment
which shows every claim that has ever been filed by any
employee here in this facility since the 1950's in a report to
you showing the nature of the injury with the employer, whether
it was an insurance carrier at that time or whether self-
insured, which will help from the GAO's concerned, how does the
employer figure out how much liability we've got for these
claims. I've given you a benefits schedule showing the amounts
that would be paid through those years so that it can now be
put together in form at someone's level to give you a potential
estimated cost of what would be expected if they all won an
award. Thank you.
[The prepared statement of Mr. Greathouse follows:]
Prepared Statement of Larry M. Greathouse, Commissioner,
Kentucky Department of Workers' Claims
Mr. Chairman and members of the committee, my name is Larry M.
Greathouse. I am the Commissioner of the Kentucky Department of
Workers' Claims (DWC) located in the Frankfort, Kentucky office. This
agency of state government processes work-related traumatic injury and
occupational disease claims, under the statutory provisions of Chapter
342 of the Kentucky Revised Statute (KRS), through both an informal
process, if early resolution of disputes are possible, and adjudicates
claims before sixteen (16) administrative law judges (ALJs), at hearing
sites located throughout Kentucky, including a hearing site in Paducah,
Kentucky.
Right of appeal is granted, to either the employee, employer or
other party in a claim who is aggrieved by an ALJ decision, to a three
(3) member Workers' Compensation Board. Further appeal may be taken to
the Kentucky Court of Appeals and Supreme Court of Kentucky under
special rules adopted by the Supreme Court.
Kentucky's adjudication model includes ALJs and Board members who
are appointed by the Governor for four (4) year terms. The Governor
must select an individual candidate from a list submitted by a Workers'
Compensation Nominating Commission.
Further, an appointment to an ALJ or Board position is subject to
confirmation proceedings before the Kentucky State Senate. Professional
standards for ALJs and Workers' Compensation Board members are based on
comparable judicial standards of Circuit judges and Court of Appeals
judges. Canons of Judicial Ethics govern the performance of these
officials.
DWC CAPACITY TO PROCESS SUBTITLE D CLAIMS
This brief overview of Kentucky's workers' compensation
adjudicative system is significant. It was a basis, in part, for my
recommendation to the Governor in September 2002, that the Commonwealth
of Kentucky enter into a Memorandum of Understanding with the United
States Department of Energy (DOE) to facilitate coordination and
cooperation under Subtitle D of the Energy Employees Occupational
Illness Compensation Program Act of 2000 (Act) (Pub.L. 106-398).
(``Attachment 1''). The state official responsible for implementation
of this agreement is the Commissioner, Kentucky Department of Workers'
Claims. Should the DWC process an estimated two thousand (2,000)
potential occupational disease claims under Subtitle D of the Act, this
would represent an additional 25% increase in claims before the
department, utilizing current resources.
An important aspect of this agreement was DOE's procedure of
physician panels to screen claimants as to presence of a disease
attributable to the work environment at the Paducah facility. However,
a more important basis, in my judgment, for undertaking this federal/
state collaborative effort, was the inducement on the part of DOE in
providing a mechanism to ``direct'' or ``encourage'' a DOE contractor-
employer from contesting the merits of a claim or raising technical
defenses, such as statute of limitations, which would, in many
instances, require dismissal and early rejection of the claims at the
state level.
This concern is best illustrated by the saga of Clara Harding. She
filed a claim as the widow and on behalf of her deceased husband, Joe
T. Harding, who died on March 1, 1980 as a result of cancer of the
gastrointestinal tract caused by his exposure to radiation while
working for Union Carbide for over eighteen (18) years at the Paducah
Gaseous Diffusion Plant. Mr. Harding's last date of exposure was
February 26, 1971 when he ceased working at the plant.
The last day of exposure to the hazards of an occupational disease
in a claim for state disability benefits is paramount. Under Kentucky
law, that date triggers all of the appropriate law in effect at that
time to be applied to a claim by an ALJ, including statute of
limitations and benefit levels that may be awarded.
Workers' compensation is a creature of statute in state
jurisdictions. Changes to the law governing benefit structure and
standards by which claims are decided occur historically at almost each
Regular Session of the Kentucky General Assembly. Major ``reform''
occurs less often. Most observers, however, would view the
comprehensive amendments to Kentucky's workers' compensation statutes
and regulations, as ``major reform'' during ``Extraordinary'' Sessions
of the General Assembly in October 1987 and December 1996, and, during
Regular Sessions held in 1990, 1994, 2000 and 2002. This is one of the
reasons for problems others, in previous testimony before this
Committee, have noted in determining potential contractor-employer
liability for employees who were last exposed to hazards of the disease
at the Paducah facility over previous years.
Clara Harding's claim was impacted by statute of limitations
amendments of the 1972 Session of the General Assembly. While there was
disagreement on Clara Harding's claim at the Court of Appeals as
evidenced by a dissenting opinion, the result of her claim, filed for
death benefits on March 1, 1983 was not concluded until fourteen (14)
years later by an appellate court decision which became final in
September 1997. Her claim was barred by a statute of limitations. And,
though one final appeal was made to the Kentucky Supreme Court in her
claim, an ALJ approved a settlement requested by all parties in the
amount of $12,500. Union Carbide's workers' compensation insurance
carriers, during Mr. Harding's last exposure in 1971, Aetna Casualty
and Surety Company, and Travelers Property & Casualty Insurance
Company, paid the sum of $7,500. The Special Fund, a state agency whose
budget is appropriated from special assessments from all employers in
Kentucky, paid the sum of $5,000. (``Attachment 2'').
And so, I must say to this Committee that without the inducement of
agreement between DOE and its contractor-employers to file notices of
non-resistance to claims, including technical defenses of limitations,
I could not have, in good faith, recommended the signing of this
agreement by the Governor on behalf of the Commonwealth of Kentucky
with DOE.
Moreover, during the interim of time since the Memorandum of
Understanding was entered, the DWC has undertaken steps in the training
sessions of ALJs and the WCB to make certain our adjudicative staff
anticipate the filing of Subtitle D claims.
Kate Kimpan, Senior Policy Advisor, Office of Worker Advocacy, US
DOE was instrumental in coordinating the agreement between DOE and the
Commonwealth, agreed to make a presentation of the program at our
Adjudicator Fall Training Seminar held this past October, 2003 at
General Butler State Park. The audience for her presentation included
all sixteen (16) ALJs, three (3) WCB members, the Commissioner's staff,
Workers' Compensation Specialists staff from the Frankfort and Paducah
offices, and claims processing staff.
Accordingly, the DWC has the capability of processing and
adjudicating Subtitle D claims.
DWC HAS PROCESSED WORKERS' COMPENSATION CLAIMS BY WORKERS AT THE
PADUCAH FACILITY SINCE THE 1950S
1. Coverage Issues Every employer in Kentucky is required by state
law to provide workers' compensation coverage for their employees. The
DWC, or its predecessor, has been the responsible state agency with
enforcement of this provision since 1916. Employers produce evidence of
this coverage through the voluntary market of commercial insurance or
through self-insurance, if the DWC certifies that the employer has the
financial ability to cover its own employees.
Employers at the Paducah Gaseous Diffusion Plant, since the 1950s
have, at times, covered their employees through voluntary market
insurance carriers and at other times, by self-insuring their own
workers' compensation liabilities. With self-insurance certification,
the department requires surety to be posted with the department in an
amount determined after reviewing losses and expected losses for the
future.
``Attachment 3'' is a timeline from 1950 to the present, indicating
the contractor-employer and how the employers covered their employees
with workers' compensation coverage.
Until May of 1986, Union Carbide Corporation and subsequently,
Martin Marietta Energy utilized voluntary market commercial insurance
coverage. Beginning May 1, 1986, Martin Marietta was certified as a
self-insured employer. Following policy initiatives in 1992 at the
federal energy level, United States Enrichment Corporation (USEC) was
created to take over the government's uranium enterprise.
Thereafter, the timeline attachment indicates USEC contracting with
Martin Marietta Utility Services for operations on July 1, 1993
continuing with self-insurance coverage. Lockheed-Martin Corporation,
following merger in March 1995 continued operations with self-insurance
coverage.
In July 1998, USEC Inc. was established as a private entity and
filed a separate policy of insurance as proof of coverage for five (5)
employees working off-site, with Ace American Insurance Company.
In February 1999, Bechtel Jacobs filed proof of coverage for
workers' compensation for cleanup projects by an insurance policy from
American International South Insurance Company. This policy also covers
employees of forty-five (45) listed subcontractors which are identified
in ``Attachment 3''.
Finally, on May 18, 1999 and continuing to the present time, USEC
assumes operations of the plant and all past and future self-insured
workers' compensation obligations. USEC still retains self-insurance
status with DWC. All, then current, employees of Lockheed-Martin became
employees of USEC for self-insurance compensation purposes.
U.S. Enrichment Corporation submitted a continuous liability bond
covering all past and future self-insured periods. This surety is bond
in favor of the DWC is in the amount of $1,046,863.00. The bond's
surety is National Union Fire Insurance Company of Pittsburg, PA, dated
July 24, 2000. Should USEC or any self-insured employer at the Paducah
Gaseous Diffusion Plant ever default on an award to a claimant, the
Commissioner, DWC, is empowered to make a default finding and make
demand of the bond proceeds. Under law enacted in 1996, the proceeds
would be transferred to the Kentucky Individual Self-Insurers Guaranty
Fund for payment of claims under provisions of KRS 342.900 through KRS
342.912.
2. Claims processed through DWC and/or its predecessor by Union
Carbide and all subsequent contractor-employers.
``Attachment 4'' illustrates detail claim information within the
records of the DWC as to all claims filed by injured employees while
employed for contractor-employers at the Paducah Gaseous Diffusion
Plant. These records provide the claim number assigned to any first
report of injury. If a formal claim was filed following injury the
disposition of the claim is noted in ``Disp. Code.'' The nature of each
claim is given. The date of injury or date of last exposure is noted.
The contractor/employer is identified and the insurance carrier is
identified. If the employer was self-insured on the date of injury or
last exposure that is also identified.
FILING THE OCCUPATIONAL DISEASE CLAIM
Since January 1, 1973, a claim for occupational disease benefits by
an employee must be filed ``within three (3) years after the last
injurious exposure to the occupational hazard or after the employee
first experiences a distinct manifestation of an occupational disease
in the form of symptoms reasonably sufficient to apprise him that he
has contracted the disease, whichever shall last occur . . .'' KRS
342.316. Moreover, the statute of repose for radiation disease is
twenty (20) years from the date of last exposure. Prior to January 1,
1973, this was a ten (10) year statute.
This statute has been interpreted by the courts to mean that a
worker must file his claim within three (3) years of last exposure or
within three (3) years of the first time the worker experiences a
distinct manifestation of the disease, whichever is later. If the
worker relies on the date of distinct manifestation (such as a
physician's diagnosis), it still must be filed within twenty (20) years
of last exposure.
More importantly, if death results from the disease during the
twenty (20) year limitation period, the claim by the surviving widow
and/or dependent children, must be filed within three (3) years of the
date of death.
If the claim is not barred by limitations or the limitation's
defense is waived (as contemplated here in Subtitle D claims) by
certain DOE contractor-employers, the claim would be instituted with
the filing of a Form 102, Application for Adjustment of Occupational
Disease Claim.
The application must be accompanied by at least one medical report
(including x-rays and pulmonary tests, if applicable). It would be my
judgment that the report of the federal panel could serve for this
requirement. The federal physicians panel report, however, could not be
afforded any presumptive weight in the evidence before an ALJ.
With the claim filed before the DWC, the employer or insurance
carrier on the risk on the last day of the claimant's exposure would be
served. That employer or carrier would have forty-five (45) days in
which to accept or deny the claim.
The worker would then be referred by statutory requirement (KRS
342.315) to one of the university medical schools (University of
Louisville or University of Kentucky) for an evaluation of the
condition. The employer or carrier is required to pay the cost of the
university medical school physician evaluation and to pay travel
expenses for the claimant in advance. Under law, the report from the
university medical school evaluation is to be afforded presumptive
weight by the ALJ.
Where the worker is now deceased, the medical records and the
federal physician panel report would probably be forwarded to the
university medical school for evaluation and report.
If the date of last exposure was prior to December 12, 1996?, and
there had been at least five (5) years of exposure by the claimant at
the Paducah Gaseous Diffusion facility, the Special Fund (now a part of
the Division of Workers' Compensation Funds) should be named as a party
defendant pursuant to KRS 342.316 and KRS 342.120.
For a single exposure to the hazards of the disease with one
employer, the contractor-employer would be liable for 60% of the total
dollars awarded as benefits. The Special Fund would be liable for the
remaining 40%.
In cases of multiple exposure, where for example, a claimant has
worked for several contractor-employers over time, and with a last
exposure after January 1, 1973, the employer would be liable for 25% of
the total dollars awarded as benefits and the Special Fund would be
liable for the remaining 75%. For multiple exposures with the last
exposure prior to January 1, 1973, all liability would rest with the
Special Fund.
The statutes in Kentucky also impose interest on past due benefits
to the prior date of last exposure. For some awards this could be
substantial.
BENEFITS FOR WIDOWS/CHILDREN
Special provision is made in calculating benefits for widows and/or
children of workers who died from exposure at the workplace.
Except for after-born children from a marriage that existed at the
time of disability, the relationship with the deceased must have been
in existence at the time the disability began. KRS 342.316(8). Thus, if
the marriage took place subsequent to the date of last exposure or the
first distinct manifestation of the disease, the widow would be
precluded from recovering benefits. Surviving widow or widower would
receive 50% of the average weekly wage (AWW) of the deceased, but no
more than 50% of the statutory maximum for permanent total disability.
KRS 342.750. (See ``Attachment 5'' Schedule of Maximum Benefit Levels).
Weekly benefits cease upon remarriage, but widow or widower is entitled
to a lump sum equaling two years of indemnity benefits. Duration of
benefits to widow or widower who has not remarried is based upon the
life expectancy of the worker who is deceased. Also, KRS 342.730(4) now
provides that ``all income benefits payable . . . to spouses and
dependents shall terminate when such spouses and dependents qualify for
benefits under the United States Social Security Act by reason of the
fact that the worker upon whose earnings entitlement is based would
have qualified for normal old-age Social Security retirement benefits.
``This provision became effective on 12/12/96. If one (1) child living
with widow or widower, then widow receives 45% of AWW but not more than
50% of the statutory maximum for total disability and the child
receives 15%. If there are two (2) or more children, the widow or
widower receives 40% and the children split 30% equally. If there are
children, but no surviving spouse, the statute provides:
One (1) child receives 50% of the AWW, but no more than 50%
of the statutory maximum; and
15% is added for each additional child (with benefits
divided equally between each child).
Under these circumstances, the maximum income benefit for all
beneficiaries shall not exceed 75% of the statutory maximum for total
disability. Unless a child is physically or mentally incapable of self-
support, benefits to children cease upon death, marriage, at age
eighteen (18) (if not a full-time student), or at twenty-two (22) (if a
full-time student). Parents and siblings may also receive benefits if
they were actually dependent on the deceased worker.
WILLING PAYER CONCERNS
1. The DWC is precluded from directing an insurance carrier or the
Special Fund to not defend claims on procedural technical grounds or on
the merits.
From the GAO testimony before the Committee on Energy and Natural
Resources, U.S. Senate, on November 21, 2003, it is noted that about
1,957 cases for Kentucky were identified in Figure 3, page 7 of the
report.
The GAO report notes that those contractor-employers who were self-
insured should be considered as probable willing payers since they will
have an order from, or agreement with, Energy to not context claims.
id. at page 9.
The GAO report further notes that ``In such situations where there
is a willing payer, the contractor's action to pay the compensation
consistent with Energy's Order to not context a claim will override
state workers' compensation provisions that might otherwise result in
denial of a claim, such as failure to file a claim within a specified
period of time . . .'' id. page 10.
The GAO report noted that about 14% of cases in the nine (9) states
analyzed may not have a willing payer. Specifically, the report
identified the cases that lack willing payers involve contractors that
(1) have a commercial insurance policy, (2) use a state fund to pay
workers' compensation claims, or (3) do not have a current contract
with Energy. id. page 10.
In Table 1. on page 11 of the GAO report it was noted that about
978 cases as reported in Energy data at the Paducah facility were
covered through self-insurance thus potentially a willing payer. But,
that another 977 cases, as reported in Energy data at the Paducah
facility, were cases where commercial insurance policies were utilized
by contractors for workers' compensation coverage, or had no agreement
with Energy to not contest the claims, or simply leased Energy's
facilities.
From the analysis provided by the GAO report, we would request that
several concerns remain from the state's jurisdiction perspective.
a. Where the contractor was self-insured, the DWC would anticipate
that the employer, with these cases would file notice of non-
resistances to these claims within forty-five (45) days of being
notified of the filing of the claim.
b. In this circumstance, the ALJ as fact-finder could make
determination of the claim under evidence submitted from the federal
physician panel and the university medical school evaluation provided
in KRS 342.315.
c. The applicable law as to contractor-employer liability would be
based upon the benefits available as of the last date of exposure of
the worker at Paducah's Gaseous Diffusion Plant.
d. The award made by the ALJ is enforceable in the Circuit Court of
McCracken County.
However, even in circumstances of those employees who were last
exposed while in the employ of a self-insured contractor, if the
requirements of KRS 342.316 and KRS 342.120 were met, the claim would
bring in the Special Fund as a party defendant.
The DWC is precluded from directing the Special Fund to waive any
defenses it might have under law. The Special Fund is a fiduciary for a
state insurance fund. If there is potential liability, the Special Fund
is not in a position to waive such defenses as notice, exposure, or
limitations.
It would be possible where the contractor was self-insured, that
the claimant, contractor and DOE could waive Special Fund liability.
That would limit the amount of any award to 60% in total dollars if the
employee was exposed only under the employment of one employer. The
award would be further limited to 25% in total dollars where the
employee had worked at the Paducah facility for multiple employers.
In essence, where an employee was last exposed to the hazards of
this occupational disease when the employer was in a self-insured
status, and was a willing payer by order or agreement with Energy, and
where the claimant and contractor-employer both agree to waive
liability against the Special Fund, the adjudication of these type
claims before an ALJ of the DWC should be processed and concluded
within a reasonable time of three (3) to four (4) months.
2. In about 50% of the potential claims identified in the GAO
report, commercial insurance was utilized by the contractor-employer in
covering its worker's compensation liability.
In these claims, both the workers' compensation insurance carrier
and the Special Fund will contest all aspects of the claim. There will
simply be no willing payer to prevent formal adjudication of claims.
However, should the issues of proper notice and statute of
limitations be overcome, each of these claims will have the opportunity
to be adjudicated before an ALJ. The parties will have right of appeal
to the Workers' Compensation Board, and direct appellate review by the
Court of Appeals and Supreme Court of Kentucky.
3. Special concern of potential liability of Special Fund must be
noted if additional liability should result from Subtitle D awards at
the state jurisdiction.
BENEFIT RESERVE FUND
A Special Session of the General Assembly in 1987 created the
Kentucky Workers' Compensation Funding Commission and the Benefit
Reserve Fund. Liabilities of the Special Fund, Kentucky's second injury
fund, was actuarially determined to have past losses estimated at $1.7
billion dollars. The Special Fund, created in the 1950s as incentive
for employers to employ disabled workers, paid for prior occupational
disability of injured workers and, in the 1960s, began paying 75% of
coal workers' pneumoconiosis (black lung) claims. In the 1987
enactment, assessments were paid by all employers. In addition, add-on
assessments from coal companies were required. These assessments paid
for operating liabilities of the Special Fund. Excess assessments
collected were invested with the intention of funding past losses and
pre-funding future incurred losses. A thirty (30) year funding plan was
adopted and implemented. By 1996, however, statutory benefit levels
were such that the deficit had grown to $2.6 billion with only $350
million in assets for the debt payment methodology.
The reforms contained in House Bill 1, enacted December 12, 1996,
closed the Special Fund to any new liability for future claims. A new
occupational disease fund was created for coal workers' pneumoconiosis
(CWP Fund), supported by the insurance premium assessments paid by coal
employers and an assessment on every ton of coal severed. The funding
plan was restructured to pay down the $2.6 billion deficit by
continuing assessments through the year 2018. KRS 342.122.
The legislation also adjusted the manner of collecting assessments
for the obligations to be paid by coal employers. Instead of direct
payment, these assessments were to be paid through the coal severance
tax. KRS 342.122(1)(c); KRS 143.020; KRS 342.1223; KRS 342.1224; KRS
342.1227.
Because, the policy of the Kentucky General Assembly requires
Kentucky employers to pay out this funding plan by December, 2018, and
has ended the second injury fund from any future liability after
December 12, 1996, the Special Fund will be required to aggressively
defend any claim for liability against it. Accordingly, the Special
Fund will not be a vehicle for fulfilling a role of ``willing payer.''
At this time, I would be glad to answer any questions you may have.
Senator Bunning. Thank you, sir. I am going to ask a few
questions just to shore up some of the things that is stated
here. As of November 10, the Department of Energy has completed
.03 percent each of the over 2,400 Kentucky cases filed under
subtitle D, and so far zero claimants have received
compensation. In contrast, the Department of Labor, as Mr.
Turcic has stated, has completed 68 percent of over 4,515
Kentucky cases filed under subtitle B and has paid over $130
million in compensation.
At the hearing on November 21, it was suggested--and
believe me, the committee really felt very strongly about
this--it was suggested that the Department of Labor should take
over most of subtitle D to serve the sick workers better. What
would you, Mr. Robertson, Mr. Rollow, Mr. Turcic, think of this
suggestion?
Mr. Robertson. A couple of things to remember. Number one,
DOL has been in the business of doing this type of work,
processing claims----
Senator Bunning. That has been brought to our attention
very clearly.
Mr. Robertson [continuing]. A lot longer than DOE, so it
has some experiences in that area. And again, that is a benefit
to having this type of a process in the DOL's area. What would
make that decision particularly tough right now would be a
couple things.
No. 1, the DOE has--again, in just the last month--speeded
up the front end processes, the case development part of this
process, and that is a good thing. The question, of course, is
whether or not they are going to be able to sustain that higher
level of productivity. So to the fact that in recent times the
DOE has improved its speed in processing these claims is a good
thing and would make that decision about shifting more
difficult.
The other thing that I am not real clear about is how that
shift would affect the physician panel problem that I spoke
about earlier. That still could be a point----
Senator Bunning. We understand that, but that will be
handled by some kind of legislation to correct it to get a
bigger pool.
Mr. Robertson. Right. Exactly. Those would be my thoughts
on the pluses and minuses of shifting.
Senator Bunning. Mr. Rollow.
Mr. Rollow. Mr. Chairman, first of all, the Department of
Energy's objective here is to move forward and carry out the
law as described right now, which is under the responsibility
of the Department of Energy, to the best of our ability and to
a much improved production rate than you've seen in the past.
We are also working on, as we shared with you at the hearing 2
weeks ago, changes to our policies and our rules to fix the
physicians panel problems.
With that said, I think the Department and actually, the
administration through the Office of Management and Budget took
a position, and it was--my words, not exactly their words--
disruptive at this point in time to transfer from one agency to
another. But our aim is really to focus on the production and
move it forward, until if and when you make a decision on the
transfer from one agency to another.
Senator Bunning. How does the Department of Labor feel?
Mr. Turcic. Mr. Chairman, we've been focusing our efforts
on adjudicating part B, and as you know, part B in the Act gave
the president the option of where to put it, whereas it spelled
out for several reasons that DOE would operate the Part D. We
know that DOE is working real hard to try to improve the
processing, and that, again, we have--Department of Labor has
been in this type of business for quite some time, and we may
have some ideas, and we do share them with Mr. Rollow and his
group. And we would be willing to do whatever we possibly could
to assist them. Mr. Rollow said that the administration
position is that----
Senator Bunning. We know the administration's position. Mr.
Card testified as to the administration's position. That
doesn't make any difference to us. What makes a difference is
making sure that the people that need to be compensated have
been taken care of in a reasonable way. They are not being
compensated right now in a reasonable fashion, like the
Department of Labor is taking on subtitle B. The Department of
Energy has not fulfilled its obligation under subtitle D.
Undersecretary Bob Card testified at our November 21
hearing that the Department was not examining how to solve the
lack of a willing payer in many States, including Kentucky. Mr.
Greathouse, does the Kentucky compensation system have the
capability to insure that all claims approved by the Department
of Energy's physician panels for an illness suffered at the
Paducah plant will be paid? I know you just explained an awful
lot about----
Mr. Greathouse. The answer is no.
Senator Bunning. The answer is no. Are there any
limitations, and has the Department of Energy discussed those
limitations with you?
Mr. Greathouse. Kate Kimpan, who is the senior policy
analyst with DOE and who helped put some of this act together
with the States last summer and helped with these agreements,
we invited her to come to an ALJ training seminar in October
here in Kentucky. And she came and spent a whole afternoon
screening our staff about things that they are doing. No. The
best recognition that she could give to that, they don't have a
way to force anyone to pay other than those contractors who
were self-insured, that they can have an agreement about that
for reimbursement. Otherwise, there are no silver answers to
that.
Senator Bunning. And there is no Special Fund right now to
handle any part of the payment.
Mr. Greathouse. There would be no Special Fund to handle
any claim that was brought by an employee today who was last
exposed after December 1996. The problem is the Special Fund
could be a payer under the law, but because they will have to
as fiduciary for employees of all----
Senator Bunning. They would have to fight.
Mr. Greathouse. They would have to fight every case until
conclusion to the Supreme Court. That is the problem.
Senator Bunning. Mr. Greathouse, what will happen to the
claimants when the Department of Energy cannot direct--for
example, USEC or an insurance company in Kentucky--not to
contest claims approved by physician panels? Will those
companies be able to assert affirmative defenses such as
statute of limitations when they are not a willing payer?
Mr. Greathouse. Yes. With respect to USEC, who was
certified by our Department as a self-insured employer, the
bond that we have, the surety to back up that particular self-
insurance status--and I've noted that in the testimony before
you--is a million dollar $45,000 bond from an insurance
carrier. Now, when they were self-insured--so that the point
would be they can raise the issues. They were directed not to
do that as a self-insured. They ought to follow that.
If they are unwilling to pay or if they default on that
payment of a claim, I have the authority as commissioner to
seek demand of that surety bond and have that insurance company
send the entire amount to the Department, which I'll transfer
to the guarantee fund for payment of those claims. So if USEC
doesn't agree to pay the award--they still may be able to
assert their defenses and due process rights if the Department
of Energy and USEC cannot agree with each other about
reimbursing for those claims--but we would still process to a
conclusion of an award. And if they did not pay, we would,
first of all, seek demand on the bond, call them into default,
and pay out of a fund of at least a million dollars. It is for
all our self-insured employers, so that doesn't go very far.
With the total disability for a spouse, for a husband or
for dependent children, that won't go very far. Three, four,
five claims, that will evaporate that bond, and that will be
all we have from that perspective to do with the payer.
Senator Bunning. Will the GAO in its final report be making
recommendations on how to solve this problem?
Mr. Robertson. We're going to be working hard on coming up
with recommendations on how to address the DOE subtitle D
problems. Yes, we will. Can I say one other thing?
Senator Bunning. Certainly.
Mr. Robertson. I am really pleased that you had Mr.
Greathouse here today, because I think he adds a perspective
that we haven't heard in hearings before. And that is simply
that once you get past the front end, the DOE part of the
process, and perhaps you've gone through the physician panels
and even got a positive determination, that doesn't mean you
are going to be compensated. You've got another State system to
go through to determine that. And every State system is
different. So----
Senator Bunning. We are just worried about the Kentucky
system right now. According to the memorandum of understanding
signed between Kentucky and the Department of Energy, the
Department will provide assistance to DOE contractor employees
in filing claims under the Kentucky workers' compensation
system. What kind of assistance does the Department of Energy
intend to provide to employees, or does it expect the workers
to simply fend for themselves?
Mr. Rollow. Mr. Chairman, I know this was discussed briefly
in the hearing 2 weeks ago in Washington. I just want to
clarify. We have in Paducah, Kentucky, here, what we call a
resource center, and that resource center is staffed by people
that work for my office. And we provide assistance not only in
filling out the form, but in clarifying for those people some
of these requirements. So we will be providing the service
after the sale, so to speak.
We do need to be careful that there is the sovereignty of
the State process that we as the Feds are not allowed to get
into. We will not cross that boundary. But at the same time, a
lot of these people come in confused and need to have some of
these issues clarified for them, and we can provide that advice
to them.
Senator Bunning. Mr. Greathouse and Mr. Robertson, what do
you see as the largest obstacle for Kentucky's workers'
compensation system in dealing with the current setup in
subtitle D?
Mr. Greathouse. The biggest would be that there would be an
unreasonable expectation for these families to file claims at
the State level when we know there will be no award monies
available. So without a willing payer, it is going to be a lot
more tragedy. The saga of Clara Harding will be repeated over
and over again in the State system. So without a willing payer
to process--we can handle the claims, but----
Senator Bunning. And determine whether they are eligible
for a claim and still not have any money coming to that person.
Mr. Greathouse. That is correct.
Senator Bunning. I think that is the worst----
Mr. Greathouse. I think that is the worst thing to place on
these families, yes.
Senator Bunning. The Department of Energy at the November
21 hearing stated that it had examined all 20,965 cases filed
and found only 1,038 cases ineligible for consideration by the
physician panels. Does this figure mean that the remaining 99.5
percent of the cases are eligible for examination by the
physician panels?
Mr. Rollow. Within the limits of approximations, Mr.
Chairman, yes. In other words, we screen through cases as they
come in the front door, and we look to see if people are of a
class that is eligible for this program, and that class means
they either have an illness that could be caused by working at
DOE, and they worked at a facility that is covered by the
program.
As we get into the cases in more detail--and we've only
been into about 25 percent of the cases. When we get into them
with more detail, we may find additional reasons that they
cannot qualify for the program, and they will may be determined
ineligible at that time. But roughly 1,000 out of 20,000 is the
percentage we would expect to see of ineligible cases.
Senator Bunning. Mr. Robertson, when the GAO examined this
issue, did it appear that the Department had been able to
examine all the cases filed to make a final determination on
which cases were ineligible?
Mr. Robertson. The work that we did was based on statistics
as of June 2003, and there was a good portion of those--there
were 50 percent that hadn't been processed at all.
Senator Bunning. Completely had not been touched?
Mr. Robertson. Right.
Senator Bunning. Mr. Rollow, how many Federal staff in the
office of Workers Advocacy have ever worked with a workers'
compensation program?
Mr. Rollow. I have one staffer who is extremely experienced
and has spent their whole career in workers' compensation, and
then the remainder of my staff has been involved in this
program for at least 3 years.
Senator Bunning. Do you believe that Bechtel Jacobs could
serve as a willing payer for cases presently here?
Mr. Rollow. It is my understanding that Bechtel owns what
is called the tail end of the responsibility for paying
workers' compensation cases from employees of the Paducah
Gaseous Diffusion Plant prior to the USEC takeover in 1998.
Now, there will be some time periods--and Mr. Greathouse has
illustrated that for us--where a commercial insurance will come
into play. And so the Bechtel Jacobs--the U.S. Department of
Energy may not have a contract with Bechtel Jacobs to not
contest those claims. If the liability is actually with some of
the commercial insurance, then we have no legal reach to those
commercial insurance companies.
Senator Bunning. You have no legal reach?
Mr. Rollow. No legal reach if the risk liability was
accepted by an insurance carrier sometime in the past.
Senator Bunning. Until May 2003, the Department of Energy
told Congress that it did not need additional funds to
implement subtitle D. That is you. Recently, the Department
announced that one of the reasons it has a backlog of claims is
a lack of funds to implement the program and requested an
additional $33 million for fiscal year 2004, reprogramming
request. What caused the Department to change its position and
ask for more funds?
Mr. Rollow. Mr. Chairman, we flatly underestimated the
efforts. Originally, we had planned to accomplish this task
over a 10-year period, and that was quickly recognized as
unreasonable. We have people waiting for these claims. We need
to process them more quickly.
Senator Bunning. By the time 10 years is up, a lot of these
people might not be here.
Mr. Rollow. Yes, sir. Absolutely. And secondly, we also
underestimated the number of claims. We originally estimated
about 7,500 claims. We've got over 20,000 in.
Senator Bunning. And that is why you made the reprogramming
request for----
Mr. Rollow. Yes, sir. Mainly for the acceleration. And I've
been on board this project for about 9 months now, and I was
brought on board just for that purpose.
Senator Bunning. I am not going to tell you what the major
full committee of the Department of Energy is going to do, but
I can assure you that this program of subtitle D is being
looked at very thoroughly, and the Department of Energy, unless
they get themselves in gear, is go to be stripped of subtitle
D, and it is going to be placed in some other place. I don't
care how much you have geared up. You are still not getting the
results that we as a Congress expected of you when you first
were given the job of doing this. We expected something like
the Department of Labor has done. It is that important to us as
a committee. So I appreciate you all testifying today. Thank
you very much.
If the third panel will come forward, we would appreciate
it. Leon Owens, president, Paducah, Kentucky Plant PACE Union;
Steve Liedle, president and general manager of Bechtel Jacobs;
Ken Wheeler, chairman, Greater Paducah Economic Development
Council; and Bill Paxton, the great mayor of Paducah.
I also would like to acknowledge the County Judge Executive
Orazine, who is with us today, and he has been right on the
ball with this Paducah Gaseous Diffusion Plant from the day I
got involved with it, and I appreciate you being here, too,
Judge.
All right. Leon, if you want to start, go ahead.
STATEMENT OF LEON OWENS, PRESIDENT,
PADUCAH, KENTUCKY PLANT PACE UNION
Mr. Owens. Good morning, Senator Bunning.
Senator Bunning. Good morning.
Mr. Owens. Good morning.
Senator Bunning. Thank you very much. My name is Leon
Owens. I am employed as a cascade operator at the Paducah
Gaseous Diffusion Plant, and I'm presently employed by USEC,
the U.S. Enrichment Corporation, and I also serve as president
of the Paper, Allied-Industrial, Chemical and Energy Workers
Local 5-0550 at the Paducah plant.
In addition, I serve on the advisory board of Radiation and
Worker Health, which advises the Secretary of Health and Human
Services on the implementation of NIOSH's responsibilities
under the Energy Employees Occupational Illness Compensation
Program Act. However, I am here today in my official capacity
as president of the local union.
Our members appreciate that Senator Bunning held a Senate
Energy Committee Field Hearing here in Paducah on September 20,
1999, to investigate how and why workers at the Paducah Gaseous
Diffusion Plant were exposed to highly radiotoxic substances,
particularly plutonium and neptunium, for years without
knowing, being monitored or protected. I want to take note of
his leadership to strengthen worker safety by enacting new
legislation.
Current and former workers of the Paducah plant thank
Senator Bunning for his leadership in securing a GAO
investigation on the effectiveness of DOE's implementation of
subtitle D, and spearheading an oversight hearing before the
full Senate Energy Committee on November 21, 2003, which
directed a spotlight on problems with DOE's implementation.
Valued leadership has been provided by Senator Bunning and
Congressman Whitfield in proposing reforms to EEOICPA, and we
look forward to working with their offices, interested members
of Congress and the committees of jurisdiction to enact
meaningful reforms.
My testimony today addresses three key points. Point one,
DOE workforce transition to new contractors. On November 26,
the Department of Energy issued a Request for Proposals to
solicit bids for a cost-plus contract for site infrastructure
services at Paducah and Portsmouth without workforce transition
protections. After calls from congressional offices and press
attention, the DOE released a set of workforce transition
provisions on December 4, a mere 36 hours before the hearing,
and unfortunately, after our testimony was electronically
submitted to the Energy Committee.
Our testimony shifts focus to the defects in the workforce
transition provisions and the flawed process by which DOE
developed them.
Under DOE's workforce transition provisions, the
replacement contractor will not be required to honor the terms
and conditions of the existing collective-bargaining agreement
for hourly workers employed by Bechtel Jacobs and some
contractors--Weskem and Swift and Staley. It is disturbing that
DOE is seeking to use its Request for Proposals to invalidate a
contractual successorship provision requiring new contractors
and subcontractors to adhere to the existing labor agreements.
It is even more disturbing, because DOE had reviewed and
approved this important successorship provision before allowing
Bechtel Jacobs to execute the labor contract in 2001.
Mr. Chairman, this is the first time in Paducah or
Portsmouth that DOE has failed to assure a seamless transition
for workers. Indeed, when DOE awarded contracts for the DUF6
plant, when it awarded the M&I contract for Bechtel Jacobs, and
when USEC was privatized, the protections embodied in the labor
agreements were always retained. Why may I ask in this case has
the DOE chosen to turn its back on the workers?
Although the RFP provides incumbent workers with a ``right
of first refusal'' to their current jobs--and this is required
by section 3161 of the fiscal year '93 Defense Authorization
Act--and the Service Contract Act imposes limited wage/benefit
protections, DOE has made a conscious decision to allow the new
contractor to reneg on previously approved benefits.
Moreover, the RFP prohibits USEC workers from participating
in the sites' Multiple Employer Pension Plan if they are laid
off and subsequently hired by the new infrastructure contract.
Today, workers have that right at Paducah and at Portsmouth.
Bechtel Jacobs manages workforce transition between
multiple contractor employers at both sides in a way that
maintains stability while allowing ample flexibility for small
business subcontracting. This useful function is absent in the
DOE's infrastructure RFP. Since the Remediation RFP has not
been issued, DOE has not disclosed if this function will be
retained. The Department should combine the Infrastructure and
Remediation activities under a single prime contract. It would
be far less disruptive to the workforce for DOE to meet its
small business set aside quotas through a subcontract.
Despite requests from workers in Paducah and Portsmouth,
and communications from members of Congress, DOE has never
consulted with the affected workers or their elected
representatives.
It is imperative that DOE stop stonewalling and work with
the affected workforce representatives and the relevant
Kentucky and Ohio congressional offices to promptly resolve
workforce transition issues for the Infrastructure and
Remediation RFP's.
Point two, DOE safety rules. On December 2, 2003, Assistant
Secretary of Energy Beverly Cook posted draft regulations to
implement the Bunning-Kennedy Amendment that calls for
improving health and safety protections at DOE facilities by
making DOE's worker safety orders enforceable through fines and
penalties.
I am disappointed to note that DOE's draft rule has gutted
this provision--which was included in the fiscal year 2003
Defense Authorization Act--by failing to establish minimum
enforceable standards for all DOE workplaces.
At Paducah, USEC is required to comply with OSHA standards,
but DOE is refusing--despite the directives contained in this
legislation--to impose the same enforceable requirements on its
contractors at Paducah and elsewhere. DOE needs to go back to
the drawing board, and failing that, Congress may need to
provide further direction.
Point three, the Energy Employees Occupational Illness
Compensation Program Act. DOE has failed by every conceivable
measure to honor congressional intent in its implementation of
subtitle D. As of December 2, DOE reports that zero claims out
of 2,260 filed by Paducah workers have been processed in the
physician panels in 3-plus years. And DOE has identified no
willing payer for at least 50 percent of these claims.
Testimony provided to the Senate Energy Committee
recommends that Congress move the three key DOE
responsibilities to the Department of Labor: Claims processing,
physicians panel and establishing benefit levels and issuing
payments. Only records retrieval should remain with the
Department of Energy. We do not support DOE's request for $33
million in additional funds until structural reforms have been
made by shifting this program to the Department of Labor. Thank
you very much, Senator Bunning.
[The prepared statement of Mr. Owens follows:]
Prepared Statement of Leon Owens, President,
Paducah, Kentucky Plant PACE Union
My name is Leon Owens. I am employed as a ``cascade operator'' at
the Paducah Gaseous Diffusion Plant (PGDP) in Paducah, Kentucky. I am
presently employed by USEC, Inc., and serve as President of Local 5-550
of the Paper, Allied-Industrial, Chemical & Energy Workers Union
(PACE), which represents hourly maintenance, production and
environmental cleanup workers at the Paducah plant. My address is 315
Palisades Circle, Paducah, KY 42001. Phone: 270-554-7818 (h).
I also serve on the Advisory Board on Radiation and Worker Health
(ABRWH), which advises the Secretary of Health and Human Services on
the implementation of NIOSH's responsibilities under the Energy
Employees Occupational Illness Compensation Program Act (EEOICPA).
However, I am appearing here today in my capacity as President of the
PACE Local Union.
Our members appreciate that Senator Bunning held a Senate Energy
Committee Field Hearing in Paducah on September 20, 1999 to investigate
how and why workers at the Paducah Gaseous Diffusion Plant (``PGDP'')
were exposed to highly radiotoxic substances, particular plutonium and
neptunium, for over 40 years without knowing, being monitored or
protected. I also want to thank Senator Bunning for his leadership in
securing a GAO investigation on the effectiveness of the DOE's
implementation of Subtitle D of EEOICPA, and spearheading a probative
oversight hearing before the full Senate Energy Committee on November
21, 2003. Further, I want to note that Senator Bunning and
Representative Whitfield have taken leadership roles in proposing
reforms to EEOICPA and we look forward to working with their offices,
interested members of Congress and the committees of jurisdiction to
enact meaningful reforms.
My testimony today addresses three key points:
1. On November 26, the Department of Energy issued a Request for
Proposals to solicit bids for a cost-plus contract for site
infrastructure services at Paducah and Portsmouth without providing any
requirements for workforce transition. Despite the absence of well
defined requirements, DOE is rushing forward with a bidders conference
48 hours from now on December 8. Workers employed by Bechtel Jacobs, or
subcontractors such as Weskem and Swift & Staley, are left wondering
whether or not they will have a right of first refusal, whether the new
contractor will participate in the Bechtel Jacob's Multiple Employer
Pension Plan or whether they will lose pension continuity and years of
service credit, and whether the successful offeror will honor the terms
and conditions of the existing collective bargaining agreement for
hourly workers. Despite requests from workers in Portsmouth and
Paducah, and communications from U.S. Representatives Ed Whitfield and
Rob Portman, DOE has never consulted with the affected workers or their
representatives. We urge that DOE withdraw this RFP, reissue it as a
draft RFP with workforce transition provisions that maintains workforce
stability, and solicit public comment for 30 days. Further, we urge DOE
to combine the Infrastructure and Remediation RFPs into a single M&I
contract.
2. On December 2, 2003 Assistant Secretary of Energy Beverly Cook
issued draft regulations to implement the Bunning-Kennedy amendment
that calls for improving health and safety protections at DOE
facilities by making DOE's worker safety Orders enforceable through
fines and penalties. I am disappointed to note that DOE's draft rule
has gutted this provision which was included in the FY 2003 Defense
Authorization Act--by failing to establish minimum enforceable safety
standards for all DOE workplaces. Such safety standards already apply
to all private sector workplaces. Workers in DOE facilities should not
be required to work under conditions which have lower standards of
safety that those in the private sector. Indeed, USEC is required to
comply with OSHA standards at Paducah, but DOE is refusing, despite the
directives contained in this legislation, to impose the same
enforceable requirements on its contractors at Paducah and elsewhere.
Assistant Secretary Cook should go back to the drawing board, and
failing that, Congress may need to provide even more prescriptive
direction to DOE.
3. DOE has failed by every conceivable measure to honor
Congressional intent in its implementation of Subtitle D the Energy
Employees Occupational Illness Compensation Program Act of 2000. As of
mid-November, DOE reports that only 1 claim out of 2228 field by
Paducah workers had been processed through the physicians panels in
three years. DOE has identified no willing payor for at least 50% of
the claims at Paducah. Testimony provided to the Senate Energy
Committee by an array of experts points to a simple reform: move the
three key responsibilities for claims involving exposures to toxic
substances from DOE to the DOL, including: (1) claims processing, (2)
physicians panels, and (3) establishing benefit levels and issuing
payments. Only records retrieval should remain with DOE. We do not
support DOE's request for $33 million in additional funds to the DOE
for Subtitle D until structural reforms have been made to this program
to make it functional.
DOE'S INFRASTRUCTURE PROCUREMENT AT PADUCAH/PORTSMOUTH FAILS TO PROTECT
SALARIED AND HOURLY WORKERS WHEN THE CONTRACTORS CHANGEOVER
On November 26, 2003, DOE issued a Request for Proposals for direct
procurement of infrastructure services (No. DE-RP24-04OH20178) at the
Paducah and Portsmouth Plants. DOE's Ohio Field Office is requesting
responsible small business concerns to submit proposals to perform
these services. DOE intends to award two cost-plus-award-fee (CPAF)
contracts resulting from this infrastructure solicitation for work
scope that is presently performed by workers under Bechtel-Jacobs
(``BJC'') and its many subcontractors. The deadline for bidders to
submit their proposals is January 28. In addition, DOE intends to
compete out a separate remediation contract, but the RFP is not issued
at this time. The RFP is silent on all key matters involving workforce
transition for hourly and salaried (non management) personnel, despite
Congressional and union inquiries to the DOE over the past year. The
PACE Local at Paducah sent a letter by overnite mail to DOE-HQ a month
ago, urging that it incorporate provisions in the contract to protect
workers, their pensions and their hard earned seniority. It also urged
DOE issue a draft RFP before issuing a final RFP, so that the public
would have an opportunity to comment on DOE's proposed procurement
strategy. The Portsmouth PACE Local in Ohio faxed a letter to Mike
Owen, DOE's Director of the Office of Worker and Community Transition
in June 2003. No reply has been received to either letter.
Instead, Section H.20 of the RFP states:
``H.20 Work Force Transition and Human Resources Management
[Text to be provided at a later date]''
We question why DOE is breaking out the infrastructure work from
the rest of the remediation work at these sites, when this $23 million
worth of scope is intimately woven into the cleanup work at both sites.
Is DOE doing this simply to meet a quota for a small business set
aside? If so, why not roll this infrastructure support contract into
the remediation contract, and award it to a small business that way? If
the goal is to meet a quota, we believe it may be time re-examine the
Craig amendment dealing with small business set asides within DOE.
By breaking this work out into two separate prime contracts, it is
imperative that DOE describe how it will assume work force transition
responsibilities now carried out by Bechtel Jacobs. We question whether
DOE has the federal staff and the capacity to manage transitions
between the two prime contractors and their many subcontractors. Today,
BJC manages 300 employees at Paducah performing work for itself and 2
subcontractors, and 350 employees and 10 subcontractors at Portsmouth,
and BJC coordinates workforce transition amongst the prime and
subcontractors in a way that maximizes potential stability and
minimizes social and economic impacts.
For example, if work is finished by one subcontractor and layoffs
are impending, advance notice is given to BJC who arranges for
displaced workers to move to another subcontractor or into a BJC self-
performed project, based on a matching of skills requirements and
seniority. Despite the constant ebb and flow of workforce changes, all
workers remain participants in a site wide pension plan, and BJC
oversees a common set of human resources policies that flow down to its
subcontractors. We are at a loss to understand why DOE has discarded
its past practice of addressing human resource issues up front and in a
prescriptive manner before RFPs are on the street. This is the least it
can do as a good neighbor. For example, in the Paducah/Portsmouth
depleted uranium hexaflouride conversion contracts (DUF6) and the
Management & Integrating (M&I) contracts at Oak Ridge, Portsmouth and
Paducah, a draft RFP was issued prior to a final RFP. In 1997, the DOE
worked with Congress and the affected workforce to assure a seamless
transition when DOE replaced Lockheed Martin Energy Systems, which used
a Management & Operating contracting model, with Bechtel Jacobs, which
brought in numerous subcontractors under an M&I contracting model.
In both of these cases, there was extensive dialogue between the
DOE and workforce representatives over the conditions incorporated in
the final RFPs. There appears to be a disconnect in this instance,
because Assistant Secretary of Energy Jesse Roberson specifically
committed to ``take into consideration'' concerns of workforce ``as
part of the process to procure services for the Portsmouth and Paducah
Sites'' in a May 13, 2003 letter to Congressman Rob Portman. Given the
absence workforce protections, we have the following questions: Will
all workers be provided a right of first refusal (excluding senior
management)? Will all workers be assured that the new contractor will
participate in the Multiple Employer Pension Plan, and maintain the
retiree health care benefit program? Will the same medical benefit
plans be offered at the same cost? Will the workers' wages and benefits
be continued at the same levels? Will the new contractor have to honor
the terms of the existing PACE collective bargaining agreements and
recognize PACE as the representative of the workforce? What will happen
to workers who are laid off from the infrastructure contractor? Will
they have a right to come to work for the remediation contractor or
subcontractors? Who will coordinate these workforce transitions?
Workers and the bidders both need to understand the rules of
workforce transition up front. We recommend:
1. That the DOE withdraw the Infrastructure RFP and reissue it as a
draft, and solicit comments for 30 days. Further, the Remediation RFP
should be issued at the same time as the Infrastructure RFP to assure
continuity between the two.
2. That the DOE set up a meeting within the next ten days with the
affected workforce representatives and the relevant Congressional
offices to promptly resolve all workforce transition issues for
inclusion in both the Infrastructure and the Remediation RFPs.
3. That DOE reconsider its approach and simply combine the
Remediation RFP from the Infrastructure RFP. DOE should meet its small
business set aside quotas through a subcontract for infrastructure
services.
In sum, DOE should not be allowed to steamroll the workforce at
Paducah or Piketon. Our local union supported the establishment of the
Portsmouth/ Paducah regional office because we thought it would be more
responsive to the unique concerns at the GDPs. Let's hope this idea was
not misplaced. DOE's Draft Rules to Enhance Worker Health and Safety
Undermines the Congressional Intent Behind the Bunning-Kennedy
Amendment to the FY 03 Defense Authorization Act
Unlike the private sector, DOE's nuclear sites are self-regulating
with respect to worker health and safety. At Paducah, USEC is regulated
by NRC and OSHA, whereas DOE self-regulates its contractor's safety
compliance. While DOE's nuclear safety rules are enforceable, and fines
may be assessed by DOE's Office of Enforcement against contractors, the
DOE's industrial and construction health and safety Orders are not
legally enforceable.
To enhance worker health and safety protections and increase
contractor accountability, Congress authorized the Secretary of Energy
to assess civil penalties against Department of Energy (DOE)
contractors for violation of any regulation relating to industrial or
construction health and safety promulgated by DOE. Section 3173 of the
FY 03 Defense Authorization Act directed the Secretary to promulgate
industrial and construction health safety regulations in one year, and
these should be based on DOE Order No. 440.1A (1998). Rules would go
into effect one year after the date of promulgation of the regulations.
DOE Order 440.1A encompasses the health and safety standards developed
by OSHA for all private sector facilities for industrial and
construction safety, including worker protections related to toxic
chemical exposures, electrical safety and hazardous waste operations.
It is the baseline set of requirements for industrial safety in the DOE
complex today. Fines are capped at $70,000 per violation in the act.
This approach, if implemented in good faith, was intended as a
middle ground between DOE self-regulation and external regulation by
OSHA/NRC. One added factor that drove this legislation was a concern
that DOE was actively working eliminate Order 440.1A and convert it
into mere ``guidance.'' This prospect raised alarms at the Defense
Nuclear Facility Safety Board, which cautioned DOE against downgrading
the content and legal significance of its most important worker health
and safety order.
DOE released its draft regulations on its web site on Tuesday,
December 2, 2003. These draft regulations, I am sorry to report, do not
establish a set of enforceable health and safety standards embodied in
DOE Order 440.1A, as intended by Congress. Rather, the draft
regulations merely require contractors to develop health and safety
plans, and DOE will, after reviewing these plans, enforce self-reported
non-compliance with these plans. In utter defiance of the law, DOE's
draft regulations downgrade Order 440.1A to mere guidance and
specifically prohibit the enforcement of any OSHA health and safety
standards incorporated in DOE Order 440.1A. The bottom line: these
draft regulations do not provide for a minimum enforceable safety
standards that are at least equivalent to OSHA regulations (except for
beryllium). Workers in the DOE complex deserve the same safety
standards of safety with which DOE contractors must comply in the
private sector. These regulations must be withdrawn and revised, and
failing this, Congress may need to provide additional legislative
clarity.
DOE'S PROGRAM FOR COMPENSATING SICK NUCLEAR WORKERS IS IN NEED OF
REFORM
My testimony at the November 21, 2003 hearing covered the following
points: After a whistleblower lawsuit and well-publicized
investigations by the Washington Post and Kentucky newspapers, DOE
confirmed that workers were placed in ultra- hazardous working
conditions without their knowledge or consent for over 40 years.
An AEC memo uncovered in that investigation indicated that the
government chose not to test hundreds of workers for uptakes to
neptunium-237, an extremely radiotoxic transuranic element, for fear
that the union would use this as a justification for hazardous duty
pay.
The medical screening programs at Paducah have identified an
occupational contribution to lung disease in 24% of the nearly 2000
workers who have been screened.
DOE performance in processing claims is abysmal. Only 1 out of
2,215 claims that were filed at Paducah under Subtitle D was decided by
the DOE physicians panel as of 11/11/03. Not a single claim has been
paid through DOE's Subtitle D program at Paducah. With <1% of its
claims processed through physicians panels in the past three years,
DOE's overall performance is simply inexcusable.
By contrast, the Department of Labor has issued 2,511 recommended
decisions out of 3,469 cases filed by Paducah plant claimants, with 941
recommended approvals and 1,570 recommended denials. Most of these
payments are to members of the Special Exposure Cohort.
Besides the glacial pace of claims processing, GAO's November 21st
testimony to Congress states at approximately 50% of the Paducah
claimants will not have a ``willing payor.'' GAO's final conclusions
may indicate that the percentage is even higher once they have access
to more complete data. Paducah workers lack a ``willing payor''
because:
DOE cannot direct USEC, Inc., which was privatized and leases the
Paducah Gaseous Diffusion Plant, to serve as a ``willing payor.''
DOE cannot direct Aetna or other insurance companies to pay claims
on insurance policies they issued decades ago for Paducah contractors
like Union Carbide. DOE has not clarified if Bechtel Jacobs, which is
self-insured, will assume responsibility at Paducah for all claims that
were ``owned'' by Aetna or others.
Many of Paducah's subcontractors used private worker compensation
insurance carriers to provide worker compensation insurance. Private
insurers are not bound by DOE physician panel determinations.
When EEOICPA was finalized as part of the FY 01 Defense
Authorization Act in October 2000, many important implementation issues
were left unresolved. Congress directed DOE to propose legislative
reforms to assure appropriate agencies, benefit levels and coverage for
hazardous substances were addressed
However, Under Secretary of Energy Bob Card's testimony at the
November 21, 2003 hearing before the Senate Energy Committee stated:
Although DOE believes the current process is awkward, DOE does not
intend to propose legislation affecting the basic structure of Part D.
DOE may, however, propose legislation leading to process improvements.
The incremental legislative changes proposed by DOE will help them
hire more physicians, but will not bring in a competent agency that can
run this program effectively, nor does it address the imperative to
assure a ``willing payor'' for all valid claims. If DOE won't step up
to the plate and propose structural reforms, which they concede are
needed, we urge Congress to fill the vacuum.
DOE has also suggested it will amend its regulations to expedite
claims processing. There was a strenuous effort made to bring these
regulations to fruition with the help of a bipartisan group of Members
of Congress, and we view with deep concern any significant changes to
these regulations at this time.
DOE'S REQUEST FOR ADDITIONAL FUNDING
In the meantime, we do not support providing DOE with the
additional $33 million for claims processing which they are requesting.
This request is above and beyond the $25 million Congress already
provided for FY 04. We do not support the notion of rewarding failure
by giving DOE more money for this program. Rather, we firmly believe
the best way to spend federal resources is to move deliberately towards
legislative reforms which moves three key responsibilities from DOE to
the DOL (1) claims processing, (2) physicians panels, and (3) payment
responsibilities. Records retrieval will remain with DOE.
Summary It has become clear over the past three years, that DOE and
its contractor lack the skills and capacity to carry out the basic
claims development and management of physicians panels. So far the only
winner in this program is SEA, DOE's support service contractor, who
has made over $16 million so far and stands to double that in FY 04 no
matter how badly workers fare in this system. And they are lobbying to
keep it this way. Three years is plenty long enough for DOE to get the
program operational.
Claimants are ill and dying and don't have time for DOE to learn on
the job. One Senator noted at the November 21st hearing that the costs
of programs like EEOICPA and Veterans benefits programs tend to decline
as people die off. DOE's consultants have warned that EEOICPA Subtitle
D may generate unanticipated costs for DOE's Environmental Management
Program. Thus, the logic of delay may ultimately explain the lack of
urgency with which DOE has pursued its mission.
Senator Bunning. Thank you.
Mr. Liedle.
STATEMENT OF STEVE LIEDLE, PRESIDENT AND GENERAL MANAGER,
BECHTEL JACOBS COMPANY, LLC
Mr. Liedle. Yes. Good morning, Senator.
Senator Bunning. Good morning.
Mr. Liedle. I am Steve Liedle, president and general
manager of Bechtel Jacobs, the management and integration
contractor for the Department of Energy's management work in
Oak Ridge, Paducah and Portsmouth, Ohio. Our work at Paducah
includes environmental monitoring and remediation, maintenance
of the depleted uranium hexafluoride inventory and
infrastructure support. We've been working under a contract at
Paducah since 1998.
I wanted to thank you, Senator, and the subcommittee, for
the opportunity to testify today. I will present a brief
overview of our progress since early in the year 2000 when the
GAO team initially assessed the status of the cleanup effort.
Since the initial visit by the GAO to Paducah in January of
1999, a great deal of cleanup work has been accomplished at the
site. These accomplishments include the cleanup of ground water
and surface water contamination, scrap metal removal,
decontamination and decommissioning of the inactive facilities
and waste treatment disposal. Let me briefly review our
accomplishments in these areas.
To address ground water contamination, we have cleaned more
than 700 million gallons of ground water with pump and treat
systems, treating the most contaminated water from the two main
plumes and returning drinkable water to the natural ground
water recharge system. We have conducted just recently the
first ground water remediation using new technologies called
Lasagna and Six-phase heating. That is making me hungry for
lunch.
In tests on-site, the technology has proven to be more than
99 percent effective in removing the contamination. And after
review by the regulatories, we're looking to employ one of
these technologies this fiscal year, fiscal year 2004.
To address surface water contamination concerns, we have
permanently prevented the spread of contamination to areas
outside of the plant fence by installing nearly one-half mile
of piping which diverts water around the North-South Diversion
Ditch, which was mentioned earlier this morning. We are now
cleaning up the most contaminated portion of the ditch, the
portion within the plant fence where we have excavated some
1,500 cubic yards of soil for final categorization and ultimate
disposal, and we are completing a detention base to capture
surface water runoff into the ditch within the plant.
In 2002, we completed a large sedimentation control system
surrounding the outdoor scrap metal piles ensuring the removal
of the scrap does not create a new environmental hazard by
scattering contaminated scrap.
It is in the scrap metal removal that we have had our most
visible accomplishments. Drum Mountain, which was mentioned
earlier, again, this morning, was removed and shipped for
disposal in 2000. Removal of this 35-foot high pile
contaminated scrap eliminated the potential source of surface
water contamination and was the first readily visible change in
the skyline of the Paducah plant in many years.
We have also disposed of the entire inventory of
contaminated aluminum ingots, totaling nearly 2,000 tons, and
are in the process of removing another 29,000 tons of
miscellaneous scrap. In the decontamination and decommissioning
area, we have initiated action in the largest inactive facility
on site, the feed plant, reducing fire hazards and stripping
out interior piping and wiring.
We have removed waste and reduced fire hazards in the
second-largest inactive facility, the metals plant. We have
begun renovation of a portion of the feed plant to support
decontamination of fluorine cells to be transferred to the
Paducah Area Community Reuse Organization.
The DOE materials storage areas are numerous and diverse.
We have assessed all 160 areas to insure that any nuclear
criticality concerns have been addressed. We have also
completed detailed examination of nearly 60 percent of the
total contents, or over 480,000 cubic feet, and found only one
one-hundredth of one percent of that material to be hazardous.
We completely eliminated the contents of eight of these
areas in fiscal year 2003 and plan to clean out four more in
fiscal year 2004, totaling nearly 100,000 cubic feet of
material which will be removed from the site.
Waste treatment and disposition has been an especially
active part of our work. We have placed special attention on
reducing the site inventory of PCBs. More than 6,250 55-gallon
drums of old waste, better than half the legacy waste stored
outside at the site, have been repackaged for disposition off
site. We have shipped and disposed of enough waste to fill
7,100 55-gallon drums since October 2000.
Renewed operation of the on-site landfill has also helped
to accelerate site cleanup. Both the scrap metal removal
project and the North-South Diversion Ditch excavation
generates substantial volumes of waste that need the disposal
criteria for this landfill, saving funds for off-site disposal
of waste which present the potential of hazards. In addition,
more than 6,600 tons of non-hazardous waste has been disposed
of in the landfill in the last 15 months.
In 2002, we completed an upgrade to the last gravel bed
cylinder yards with concrete pads. Doing this gets all the
cylinders over concrete and improves the drainage below the
cylinders, reduces corrosion and the potential for leakage.
In all of our work, safety is our first concern. Our
employees and our subcontractor team have achieved a safety
record of only one accident resulting in time lost away from
work in more than 4.5 million job hours. Bechtel Jacobs Company
employees on the Paducah project did not have a lost time
accident since the initiation of our contract with DOE in April
1998, covering over 1.5 million hours of work. According to
OSHA statistics, firms performing our type of work average more
than 50 lost-time accidents over similar periods of time.
Extensive environmental monitoring is the cornerstone in
environmental protection. In a given year, we collect and
analyze more than 4,500 environmental samples from more than
1,000 locations. Our monitoring shows that some of the
contaminates of concern, like PCPs, have declined over the last
several years while others have remained at low levels. These
contaminates do not pose a current health risk to the public.
We need many partners to succeed. I personally want to
express my appreciation to our PACE employees, whose commitment
to safety, training, adherence to proper procedure and getting
the job done right, helps keep us safe on a daily basis.
In recent years, the public in the Paducah area has
expressed considerable interest in cleanup of the plant. Their
interest has brought us opportunities to hear and learn from
their concerns and to discuss our work in a variety of forms.
The involvement of the Paducah Citizens Advisory Board and
support of areas local-elected officials, business executives
and community leaders have been invaluable to the progress we
have made today.
Significant progress has been made in the cleanup of the
Paducah Gaseous Diffusion Plant since early 2000. The signing
of the new agreements between DOE and Kentucky has already
brought about acceleration of our work. We anticipate this
acceleration will continue.
Bechtel Jacobs strongly supports DOE's risk-based approach
to cleanup. The risk-based approach directs effort to projects
that present the greatest potential risk first. We find the
schedule negotiated by DOE and Kentucky realistic, given our
best current information, and the proposed funding appears well
matched to the work plan. I'd be happy to take any questions.
[The prepared statement of Mr. Liedle follows:]
Prepared Statement of Steve Liedle, President & General Manager,
Bechtel Jacobs Company, LLC
Good morning. I am Steven D. Liedle, President and General Manager
of the Bechtel Jacobs Company LLC, the management and integration (M&I)
contractor for the Department of Energy's environmental management work
at Paducah, Kentucky and Portsmouth, Ohio. We perform similar work for
DOE at Oak Ridge, Tennessee under an accelerated closure contract. Our
work at Paducah includes environmental monitoring and remediation,
maintenance of the depleted uranium hexafluoride inventory, and
infrastructure support. We are not involved in the ongoing enrichment
operations, nor in the effort to design and construct conversion
facilities for depleted uranium hexafluoride.
Bechtel Jacobs' primary mission as DOE's M&I contractor is to
effectively execute the Department's cleanup program. Although we
perform some of this work directly, most is performed through
integration of the work of our 33 subcontractors.
Our first concern in the performance of our work is the safety of
our workers and the public. Second only to our focus on worker and
public safety is the protection of the environment, which is the very
reason for our presence at the Paducah site.
In order to complete our mission, we have established excellent
relationships with the Paper, Allied-Industrial, Chemical and Energy
Workers (PACE) Local 5-550, our subcontractors, and the local
community. We take these relationships seriously and work hard to
maintain them through trust and communication.
ACCOMPLISHMENTS SINCE EARLY 2000
Since the initial visit by the General Accounting Office to the
Paducah Gaseous Diffusion Plant in January 2000 and their subsequent
April 2000 report, a great deal has been accomplished in the cleanup of
the Paducah site. These accomplishments include cleanup of groundwater
contamination and surface water contamination, scrap metal removal,
decontamination and decommissioning of inactive facilities, waste
treatment and disposal, contaminated soil cleanup and more.
Groundwater
The primary contributor to health risk at the Paducah site is
groundwater contamination. Bechtel Jacobs administers the DOE Water
Policy, paying the water bills of residents north of the plant on
behalf of the Department to ensure that there is no need to use well
water contaminated by past plant operations. We also operate the Pump
and Treat system, which has removed contaminants from approximately 710
million gallons of highly contaminated groundwater and returned that
water to the environment at drinking water quality.
At the end of 2001, we deployed a new technology called Lasagna.
The technology utilizes electro-osmosis, sending electric currents
through buried electrodes. The electricity moves water particles
containing the groundwater contaminant, trichloroethylene (TCE),
through treatment zones of iron filings where the solvent is captured
and broken down into harmless components. Lasagna proved surprisingly
effective. TCE concentrations in the soil were as high as 1,760 parts
per million (ppm). The goal of the project was to reduce TCE to less
than 5.6 ppm. Final results show that TCE in the target area was down
to 0.33 ppm after the initial two years of operation. An optional third
operating year was clearly unnecessary and the project was concluded.
Lasagna was designed to remove contamination from shallow soils
before they can reach groundwater aquifers, where it becomes more
difficult and less efficient to remove. At the Paducah Gaseous
Diffusion Plant, the technology was deployed at a location where the
downward movement of contaminants was slowed by a relatively shallow
layer of clay. Demonstration of the Lasagna technology at Paducah has
shown its applicability at other sites across the country.
Another technology, called Six-phase Heating, uses electrical
resistance heat to vaporize groundwater and contaminants in the
groundwater aquifer. Six-phase Heating proved to be very effective
during the Treatability Study field testing completed this Fall, as it
removed more contamination from the groundwater aquifer than had been
expected. Final groundwater samples showed that 99 percent of the TCE
in the target area had been removed. Removing this contamination at the
source, thereby preventing further spread of contaminated groundwater,
is now the cornerstone of DOE's approach to groundwater remediation at
Paducah. Plans are being developed to deploy this technology at the
Paducah site in 2005.
The combined application of the conventional Pump and Treat system
with new technologies such as Lasagna and Six-phase Heating is
effectively addressing the groundwater contamination problem at the
site.
Surface Water
In 2003 the North-South Diversion Ditch, a prominent feature of the
site, was eliminated as a path for the spread of surface water
contamination from within the plant to areas outside the plant fence.
This was accomplished by installing 2600 feet of hard piping, which
carries water away from the ditch into a water treatment system. We are
now completing a detention basin to capture runoff into the ditch, and
have excavated approximately 1500 cubic yards of soil for disposal.
In 2002 we completed construction of a sedimentation control
system, including a large sedimentation basin, to ensure that
contamination which might be mobilized during removal of scrap metal
from the site does not move outside the present scrap metal area.
We have also upgraded signage and controls on outfalls and creeks.
This ensures that areas presenting an increased risk of exposure to
contaminants are more readily recognized by plant neighbors and users
of the recreational areas north of the plant. In 2001 we also removed
several piles of slightly contaminated concrete rubble totaling
approximately 4000 cubic yards of material--from DOE property outside
the plant fence, eliminating the public concern that accompanied
posting of these piles.
Scrap Metal Removal
It is in scrap metal removal that we have made our most visible
cleanup progress. Drum Mountain was removed by the end of September
2000 and shipped for disposal by the end of that calendar year.
Elimination of the 35-foot high, 2647 ton pile of contaminated scrap
removed a source of surface water contamination and was the first
readily visible change in the skyline of the Paducah Gaseous Diffusion
Plant in many years.
We are in the process of removing another 29,000 tons of
miscellaneous scrap, which will eliminate the remainder of the outdoor
scrap piles. To date, we have processed another 2850 tons of the
outdoor scrap.
In 2003, we also completed disposition of the inventory of
contaminated aluminum ingots from Paducah. This waste stream totaled
nearly 2000 tons. We continue to monitor 9700 tons of contaminated
nickel ingots for DOE pending a determination of the feasibility of
recycling this resource.
Decontamination and Decommissioning
In 2002, we initiated fieldwork on the 250,000-sq. ft. feed plant
complex, removing and disposing of piping, process equipment, and
stored materials. This is the largest of the 17 inactive facilities on
the site.
Removal of the hydrofluoric acid tank farm outside the feed plant
is nearly complete. All piping, stairways and protective structures
have been removed, and we are proceeding to disposition the tanks.
A new criticality alarm system is now being installed in the feed
plant to support the safety of future D&D work inside the facility. We
are also preparing a portion of the feed plant for use in
decontaminating several fluorine cells prior to transfer of the cells
to the Paducah Area Community Reuse Organization.
We continue surveillance and maintenance of all 17 inactive
facilities to ensure that they do not become safety or environmental
hazards.
DOE Material Storage Areas
The DOE Material Storage Areas (DMSAs) have presented challenges
both because of their number and because of the diversity of the
contents of the indoor and outdoor areas. To date, we have completed
criticality assessments of all 160 DMSAs to ensure that any possibility
of nuclear criticality was fully recognized and addressed, and
characterized nearly 60 percent of the total contents. Only one one-
hundredth of one percent of the material characterized has been
discovered to be hazardous.
The contents of eight DMSAs were eliminated in Fiscal Year 2003. We
are aggressively disposing of waste from the outdoor DMSAs at this time
and plan to eliminate four more DMSA's, currently containing nearly
97,000 cubic feet of material by the end of Fiscal Year 2004.
Waste Treatment and Disposition
Waste disposition has been an especially active area of our cleanup
work. We have shipped and disposed of approximately 7100 55-gallon drum
equivalents of waste at permitted off-site disposal facilities since FY
2000. This includes a special focus on disposal of PCB-contaminated
transformers and the shipment of 913 lead-acid batteries for recycling.
Since mid-2000, 1250 cubic meters of low-level waste stored outside
has been repackaged. This is approximately 6250 55-gallon drum
equivalents, more than half of the inventory of 12,000 55-gallon drum
equivalents cited in the April 2000 GAO report. Characterization and
repackaging of remaining legacy waste is continuing, as are the waste
treatment and disposal activities specified in the Site Treatment Plan
for Mixed Waste.
Since 2000 we have also treated and shipped 6.5 cubic meters of
pyrophoric uranium chips for disposal, and treated 80,000 gallons of
contaminated wastewater from the feed plant complex.
We have installed and continue to inspect and maintain a PCB
collection and containment system for the operating plant, consisting
of over 16,000 troughs. Collection of this waste helps prevent the
contamination of operating facilities, thereby reducing the complexity
and cost of future decontamination and decommissioning.
On-Site Landfill
Operation of the active on-site landfill and maintenance of the two
closed landfills is another part of Bechtel Jacobs' work for DOE.
Operation of the active landfill helps to accelerate progress of other
site work, particularly the Scrap Metal Removal Project and the North-
South Diversion Ditch excavation.
More than 6600 tons of non-hazardous waste has been disposed in the
landfill in Fiscal Years 2003 and 2004. To ensure continued safe
operation of the landfill, Bechtel Jacobs performed a seismic study of
the landfill in 2003 and we are currently designing and installing an
upgraded leachate treatment system. We use a system of 35 groundwater
monitoring wells to ensure that the landfills are functioning as
intended, and that they do not contribute to groundwater contamination.
Soils
In 2003, Bechtel Jacobs removed 600 cubic yards of petroleum-
contaminated soil from an area of new cylinder yard construction for
disposal in an appropriately licensed off-site facility. We also took
quick action to address three old underground storage tanks found in
the cylinder yard area and to prevent movement of the contamination to
groundwater and surface water.
Cylinders and Cylinder Yards
In 2002, Bechtel Jacobs completed construction of a new 10.8-acre
cylinder yard. Also in 2002, the last DOE gravel bed cylinder yard was
upgraded to a concrete pad, improving drainage and reducing cylinder
corrosion.
Along with the construction and management of the DOE cylinder
storage yards, Bechtel Jacobs conducts surveillance and maintenance of
more than 38,000 depleted uranium hexafluoride cylinders at the Paducah
Gaseous Diffusion Plant.
PROTECTING WORKERS AND THE PUBLIC
Worker Safety
As mentioned at the outset of this testimony, safety is our first
concern. We have consistently communicated this priority to our
employees and our subcontractor team. The results are apparent. Over
the term of our contract at Paducah, since April 1998, we have
experienced only one accident resulting in time lost away from work in
more than 4.5 million labor-hours. Bechtel Jacobs employees have worked
1.5 million hours of that total without a single lost-time accident.
Firms performing similar work could expect more than 50 lost-time
accidents over a similar period, according to statistics of the
Occupational Safety and Health Administration. This record is a tribute
to the focus and commitment of our workforce, and is evidence of the
value of an integrated safety management approach that incorporates
employees in their own day-to-day safety decisions. We continue to
involve our workforce in safety decisions as an integral part of work
planning every single day. Our unwavering goal is zero safety
incidents.
Public Safety
Protection of the public is the fundamental reason for our work. By
identifying and reducing or eliminating risk, we protect the public in
both the near- and long-term.
As stated earlier, groundwater contamination is the primary
contributor to health risk at the Paducah site. Thus, we have focused
on this risk by providing alternative sources of drinking water,
treating groundwater to remove contamination and removing sources of
contamination from the soil and aquifer. Removal of the groundwater
contamination sources will substantially reduce risk in the future.
Every action to remove contaminants from the site, and every action
to better control the contaminants that remain on-site, reduces risk to
the public. We do recognize, however, that our actions to maintain and
clean up the site sometimes have the potential for unexpected threats
to the environment, such as spill of contaminated water from a
filtering system or a release of dust into the air during scrap metal
removal. We work hard to prevent, minimize and mitigate such an
outcome. We appreciate the essential role of the Environmental
Protection Agency and the Cabinets of the Commonwealth of Kentucky in
helping to ensure that actions intended to increase public safety do
not have unintended consequences.
Protecting the Environment
Extensive environmental monitoring is the cornerstone of
environmental protection. In a given year, we collect and analyze more
than 4500 environmental samples. Routine samples are collected from 850
locations in and around the plant site. Additional sampling in support
of particular projects pushes the total sampling locations to more than
1000.
Sampled soil, water and other substances are analyzed for more than
100 different metals, radionuclides and chemicals. We frequently split
our samples for analysis in separate accredited laboratories as one of
several verifications of the accuracy of our data. Samples are also
routinely split with Kentucky regulatory agencies for their independent
analysis, and these agencies maintain their own independent sampling
programs.
Our monitoring shows that some of the contaminants of concern in
the environment near the plant, such as PCBs, have declined over the
last several years, while others have been essentially unchanged. The
levels of contaminants are generally low, and do not present a current
health risk to the public. Our Partnership with PACE
In 2001, Bechtel Jacobs signed a five-year labor agreement with
PACE Local 5-550. This agreement confirmed our recognition of PACE as
an essential partner in our cleanup mission. Our positive relationship
has been and will continue to be critical to our progress in cleanup.
I personally want to express my appreciation to our PACE employees
for their commitment to safety, training, adherence to proper
procedure, and getting the job done right. Their participation in our
work is one of our key assets.
Involving the community
Over the last few years, the public in the Paducah area has
expressed considerable interest in cleanup activities at the Paducah
plant. This interest has given us more opportunities to hear concerns
and to assist DOE in gathering input to cleanup plans.
This interest has also brought us opportunities to discuss our work
with community leaders and with the general public in a variety of
forums. We appreciate both their support and their recommendations. Our
cleanup efforts are better as a result.
It has been our pleasure to provide staff support to the Paducah
Gaseous Diffusion Plant Citizens Advisory Board, and to respond to
their inquiries on various projects. We have seen the quality of the
Board's input increase over time as these dedicated volunteers strive
to provide valuable early input to DOE's environmental management
decisions.
In particular, I want to thank the Paducah area's local elected
officials, business executives, and community leaders, who have come
together to support this cleanup effort in a united and productive
fashion. Without their participation, we would not have made the
progress we have achieved to date.
I also must thank you, Senator Bunning, and your fellow members of
the Kentucky delegation, particularly Senator McConnell and
Representative Whitfield, for your continued support of the funding
that makes this cleanup possible.
CONCLUSION
Significant progress has been made in the cleanup of the Paducah
Gaseous Diffusion Plant site since early-2000. We have ensured supplies
of clean water for residents near the plant, treated more than 700
million gallons of groundwater, applied a new technology to remove
contamination from shallow soil, and shown the feasibility of using a
developing technology to remove the groundwater contamination source
from the aquifer. We have prevented surface water contamination from
scrap removal operations and eliminated the possibility of future
contamination via the North-South Diversion Ditch. We have removed more
than 7500 tons of scrap metal and ingots, initiated decontamination and
decommissioning activities, characterized and removed waste from DOE
Material Storage Areas, disposed of more than 7000 drums of waste and
repackaged more than 6000 drums, eliminating these materials as
potential sources of future contamination. We have improved depleted
uranium hexafluoride cylinder storage and removed contaminated soils.
We have carefully monitored the environment. We have protected our
workers and the public.
With the signing of the April 2003 agreement on near-term
milestones, the Letter of Intent and the Agreed Order between the
Department of Energy and the Commonwealth of Kentucky, has come a
welcome acceleration of the cleanup effort. We anticipate this
accelerated pace will continue.
Bechtel Jacobs strongly supports DOE's approach to accelerating
site cleanup. The risk-based approach directs effort to those projects
that present the greatest potential impact on the public and the
environment. We find the schedules negotiated by DOE and Kentucky
realistic given our best current information, and the proposed funding
appears well matched to the work planned.
The Department of Energy's Office of Oversight Phase I
Investigation Team stated in their October 1999 report on the Paducah
plant that ``current operations do not present an immediate risk to
workers or the public.'' In April 2000, the Report of the Commonwealth
of Kentucky's Task Force Examining State Regulatory Issues at the
Paducah Gaseous Diffusion Plant found ``no immediate threat to public
health that had not been previously disclosed and posted.'' The Agency
for Toxic Substances and Disease Registry, in the Paducah Public Health
Assessment released in May 2002, said the Paducah Gaseous Diffusion
Plant ``poses no apparent public health hazard for the surrounding
community from current exposure to groundwater surface water, soils and
sediment, biota, or air.'' We concur in these assessments.
We will continue to work for the protection of the environment
through thoughtful planning and execution of our work, as directed by
DOE, supported by the skill of our subcontractors and assisted by the
guidance of the regulatory community. First and last, we will not lose
sight of the real bottom line our first concern will always be the
safety of our workers and the public.
Senator Bunning. Thank you, sir.
Mr. Wheeler.
STATEMENT OF KENNETH WHEELER, CHAIRMAN,
GREATER PADUCAH ECONOMIC DEVELOPMENT COUNCIL
Mr. Wheeler. Thank you, Senator. My name is Kenneth
Wheeler, and I am testifying today in my capacity as chair of
the Greater Paducah Economic Development Council. I have not
been employed at any site activities during my tenure at
Paducah, but my prior career includes some 25 years in the
nuclear power industry, including direction of site remediation
and decontamination activities. I appreciate the opportunity to
testify today to you.
My remarks will focus upon the impact of the Paducah
Gaseous Diffusion Plant upon the community's efforts to enhance
economic opportunities for its citizens. But first, Senator, I
would like to express our appreciation to you for your efforts
in our behalf to move the site cleanup effort forward. Without
your continued involvement, I doubt that the recently
consummated accelerated cleanup agreement would ever have been
completed.
I would also like to take this opportunity to thank
Secretary List, Governor Patton and Assistant Secretary
Roberson for their personal efforts in finalizing the
agreement.
However, having an agreement on paper is just the first
step. Unless there is sincere, dedicated effort on the part of
DOE, the Commonwealth of Kentucky and the EPA to improve
working relationships in the future, the progress towards
cleanup of the site will continue to lag as it has in the past.
One might ask at this point why the community should care
about getting the site cleaned up. Cleanup activities are
currently providing some 600 jobs to the community and can be
expected to do so for many years to come. Why then should the
community be concerned about delays in effecting cleanup? In
fact, if viewed purely from the standpoint of jobs, it might
appear that it is in the community's best interest to string
out the cleanup activities as long as possible, thereby
generating more employment and income for our citizens.
Senator, let me state emphatically that this is not the case.
In a nutshell, we are tired of having the national
reputation as a contaminated community. When it became apparent
some two years ago that Paducah and western Kentucky might no
longer be able to rely upon the site as a major source of
employment, we embarked upon an aggressive campaign to develop
new job opportunities in the region.
Since then, we have started development of a large regional
industrial park, raised several million dollars in local
industrial development funds, hired a world-class economic
development executive and greatly increased marketing efforts
for the region to attract new industry.
After having relied upon the PGDP for many years as a
primary source of employment, Paducah and the Purchase region
are now aggressively seeking new opportunities for growth.
But in order to be successful in our efforts, we need to
shed the national image that Paducah has of being a
contaminated community. Perhaps the best evidence of the
challenge we face is contained in a recently published National
Geographic article. We're tired of being displayed as a
centerfold for nuclear waste sites. We need the site cleaned up
so this community can move on to other things.
While nuclear-related activities, such as the DUF6 plant,
will continue to be welcome, we simply must not rely on cleanup
activities, with their limited horizon, as the backbone of our
economic development efforts.
Therefore, Senator, we must urge you to continue your role
of oversight for the cleanup and to continue to demand better
performance of all involved parties. With the completion of the
accelerated cleanup agreement, the door is open for significant
progress. We have assurance from Secretary Roberson, as well as
Governor-elect Fletcher, that DOE and the State will work
cooperatively to minimize regulatory and administrative issues
that have so delayed physical progress in the work.
We have been here before. Already, we hear talk of missed
schedules. Just one example, the selection progress for a new
cleanup contractor at the site has already been rescheduled
several times and may take as much as another year to be fully
implemented. No matter how talented and dedicated the new
contractor is, he will face heavy weather if the regulatory and
administrative roadblocks that have plagued this project are
not resolved.
In this regard, DOE is determined that a qualified small
business can best handle the site cleanup at the PGDP. We take
no issue with this decision, but we have identified to DOE
several areas where we feel that this action may effect the
community, and have been assured that our concerns will be
recognized during the award process. I can assure you that we
will be watching the process closely, along with your office.
Senator, let me close by reiterating the pride that
Paducah, McCracken County and the entire Purchase region feel
in being a vital part of the nation's nuclear capability. This
pride was amply demonstrated during our 50th anniversary
celebration of the PGDP last year, which you attended. We have
a dedicated workforce that wants to do a good job of cleaning
up the site. All they need to make a success of cleanup at the
site is the willingness of all parties to let them do their
job. Thank you again for your efforts in making this possible.
Senator Bunning. Thank you.
Mayor Paxton.
STATEMENT OF BILL PAXTON, MAYOR, PADUCAH, KENTUCKY
Mr. Paxton. Good morning, Senator Bunning. Welcome back to
Paducah, Kentucky. It's good to have you here this morning. My
name is William F. Paxton. I am testifying today in my capacity
as mayor of the city of Paducah. My political career began when
I was elected city commissioner in December 1998 and served a
2-year term. I was elected as mayor of the city of Paducah in
January 2001, and I very much appreciate this opportunity to
testify.
I want to make it clear, Senator, as you said earlier that
I'm up here making this presentation, but it is important that
everyone knows that this is a team effort between the city and
the county. Judge Orazine and I have worked extremely close on
both the new generation centrifuge plant coming to Paducah, or
not coming to Paducah, and also the cleanup effort. So Judge
Orazine and I cooperate on a city/county basis, and the remarks
I will make today will be from both of us.
I want to focus on the cleanup of the Paducah Gaseous Plant
and the surrounding area. I also want to express my
appreciation to you, Senator Bunning, for your efforts on our
behalf to move the site cleanup efforts forward. As Mr. Wheeler
said, without your involvement I doubt the recent accelerated
cleanup agreement would have ever been completed. I also want
to thank Secretary List, Governor Patton, Assistant Secretary
Roberson for all of their efforts in finalizing this agreement.
When Paducah and McCracken County realized that the Paducah
Gaseous Diffusion Plant might not be in McCracken County in the
foreseeable future, this area started an aggressive campaign to
go after new industry for this area. As of the date of this
testimony, we still do not know for sure whether the plant will
be located in Paducah, Kentucky, or Portsmouth, Ohio.
This community, the city, the county, the Chamber of
Commerce, Greater Paducah Economic Development have worked
extremely hard to help USEC to make the decision to locate the
plant in Paducah, Kentucky. I have no second thoughts about
anything we have done in this regard, but I am now ready for
the decision to be made so this community can move forward.
Some of the things that we have done as a community is the
city and county working together, along with the other cities
and counties in the Jackson Purchase Area, to build a regional
park in northern Graves County that will be roughly 2,500 acres
in size. We have also hired a top-notch Economic Development
Director named Wayne Sterling, and we are currently marketing
Paducah, McCracken County both nationally and internationally.
This community is not sitting still, Senator. We are
working hard to be successful in diversification if in fact the
plant does move to Ohio. This community needs to be successful
in cleaning up the site at the plant. This community is going
to do everything it can to get the existing area cleaned up so
it can be used in the future for economic development.
The Paducah Gaseous Diffusion location is a wonderful
location for future economic development, and we, the city and
county, are determined to do everything we can as a community
to concentrate on working with our contractors, our officials
in Frankfort, our Federal delegation in trying to get this area
cleaned up as quickly as possible.
We understand that DOE has determined that a qualified
small business can handle the cleanup in the Paducah Gaseous
Diffusion Plant. We are fine with this decision and have been
meeting over the past month with perspective companies that
will be bidding on the cleanup.
As mayor, I am prepared to work closely with our Federal
Delegation, Bill Murphie, Secretary Roberson, Governor Fletcher
and the entire staff at the plant to hopefully make better
progress over the next 5 years than we have over the past 5
years. I have told the contractors that Judge Orazine and I
would very much like tours on a regular basis, quarterly or at
least semiannually, to make us feel comfortable with the new
progress that is going to be made out there. As mayor, I want
to be very involved, as does the county judge, in making sure
that we are on the right track and that we are cleaning up this
area as quickly as possible.
Thank you, Senator, for your efforts in making all this
possible, and I look forward to working with you in the future.
Senator Bunning. Thank you, mayor. We've got a few
questions that we would like to ask this panel. Mr. Owens, what
do you think about the Department of Labor taking over subtitle
B of the compensation program? Do you know of any problems that
the Department of Labor is having with subtitle B of the
compensation program?
Mr. Owens. Senator Bunning, in regard to the first part of
your question, we feel that it is critical for any progress to
be made for the Department of Labor to take over the
responsibilities of subtitle D, with the exception of what we
stated in our earlier testimony, which would be the claims
retrieval or the records retrieval information. In regard to
the Department of Labor, as it has been noted, the Department
of Labor has the infrastructure. They have the capacity since
they have worked through their backlog of claims to move
forward with the subtitle M claims. The only unfinished
business is the willing payer issue, which we are hopeful that
we will be working on next session to address some type of
legislative fix.
Senator Bunning. In bringing that up, the previous panel
suggested that Bechtel Jacobs may serve as a willing payer, but
DOE is planning to switch to small business contractors to
replace Bechtel Jacobs. Who is a willing payer if DOE proceeds
with this action? Who do you think a willing payer would be?
We've heard how many USEC can handle. It seems like they can
handle about five people.
Mr. Owens. Yes, sir. It would be very difficult for a small
business to be able to serve as a willing payer. We think there
are tremendous challenges, even with the infrastructure
contract as it has been put out in RSP form, for a small
business to be successful. So even with this willing payer
issue, we do not feel that they would be able to be successful.
Senator Bunning. Mr. Liedle, has the Department of Energy
requested Bechtel Jacobs to serve as a willing payer? If so,
which contractors and subcontractors and over which period of
time is the company designated to serve as a willing payer?
Mr. Liedle. BJC has had some discussions with DOE, but has
not yet been specifically requested to pay an EEOICPA claim.
BJC is prepared to follow DOE direction under its contract to
pay such claims, in accordance with Kentucky workers
compensation law, filed by employees of BJC or its
subcontractors. BJC is prepared to discuss, and is also
awaiting DOE direction with regard to certain other claims that
may be filed by former employees of prior site prime
contractors.
Senator Bunning. What if I asked you?
Mr. Liedle. We would have to evaluate it, and if consistent
with the testimony that we heard this morning, we would have to
figure out how we would do that most effectively and be
consistent with State law.
Senator Bunning. What do each of you think are the biggest
obstacles facing the cleanup at the plant? Anybody?
Mr. Liedle. I can take a shot at it. I believe the most
significant obstacle is getting the strategy on the table,
getting input from the communities and getting our customer,
the Department of Energy, and the regulators to agree on how
that strategy is going to be used. The actual execution of the
work that needs to be done at the site, while it may sound
complicated, in actuality is not that complicated. And once a
very clear road map is laid out for what needs to be done at
that site, any reasonably experienced contractor could execute
that work.
Mr. Paxton. In my experience, and Judge Orazine's
experience over the past several years, I think it's imperative
that there is communication and cooperation between the State
and the Federal DOE. There has not been a whole lot of
communication between those two areas in the past, and I feel
like--like the gentleman said, it is not terribly complicated,
but the right hand needs to know what the left hand is doing.
And so I'm looking forward to Governor-elect Fletcher's
administration, working with you and the Federal people in
trying to keep those lines of communication open.
Senator Bunning. I sincerely believe that the Lexington
office and its proximity to Frankfort and the direct line of
funding that is supposed to be in line for Paducah and for
Portsmouth will implement a faster facilitating of this
cleanup. At least, that is my thought right now. I may 3 years
from now think differently if we don't get the results we're
hoping for. But right now, I am pretty optimistic that they are
going to be able to at least accomplish a heck of a lot better
job of doing it than sending it through Tennessee, then to
Paducah, Kentucky. So we hope that is the case.
Mr. Owens. May I respond to that question? I think often
times when we talk about the ability to cleanup the site, we
talk in terms of State and of course, in terms of DOE, but we
often leave out major stakeholders. And the actual work at the
site is accomplished by the workers in conjunction with the
contractor. And so the workers have an institutional knowledge
of the site. They have knowledge of the jobs that are to be
performed and oftentimes, when they are asked, they have
knowledge of ways in which we can work safer and smarter.
So any discussion relative to the cleanup and ways for it
to be more efficiently and safely must include a major
stakeholder, which is the workers. I'd like to further state
that there has been an inability, and there has been an
inability on the part of the Department of Energy, to include
not only the local union in Paducah, but the local union in
Portsmouth, in any discussion. And we think that is
unacceptable, and we stand ready at any time to meet with Mr.
Murphie, Secretary Roberson, to address these issues so that
everyone can be on the same page. And the major stakeholder,
which is the workers, they can add value to discussions.
Senator Bunning. Thank you, Mr. Owens.
Mr. Liedle, early on sensitivity has been found in a number
of Paducah numbers, with at least 42 workers having at least
one positive blood test so far and one case of chronic
beryllium disease. Is this in Bechtel Jacobs' work scope?
Mr. Liedle. Bechtel Jacobs doesn't deal directly with
beryllium on-site. The beryllium on-site came from past
activities, primarily work for others, and most of that was
associated with weapons-related work at the site. However, the
potential exposure to our employees is of critical concern to
us.
Senator Bunning. I wanted to follow-up and ask this. What
is the plan for monitoring beryllium contamination in the
buildings by the Department of Energy to USEC and getting it
cleaned up so that we are not making anymore workers sick? What
is the expected cost to monitor that? What would that be
presently for Bechtel Jacobs?
Mr. Liedle. We have already completed a study, and the
results came in, I believe, a couple of months ago. And we
completed that study. The first step was to look at the past
history of the site and give us an indication whether any of
the areas on-site, facilities or external areas, could be
reasonably expected to have an inventory or to have beryllium
present.
Based upon that information, we then conducted sampling and
analysis. It is primarily air sampling, but also did what is
called a swipe sampling, to determine if beryllium was present.
The vast majority of the locations, beryllium was not present,
and if it was present, it as present in very low
concentrations.
However, there was a number of locations where beryllium
was found, and we have made an inventory of that. And when the
work would be done in these individual areas, it would be a
requirement that appropriate personal protective equipment be
used for the protection of beryllium. The actual cost of the
beryllium analysis to date, Senator, I don't have the exact
number, but it is fairly small, fairly low.
Mr. Owens. Senator Bunning, might I add? In respect to Mr.
Liedle's comments, one of the problems that we have experienced
at Paducah during the work for others program and some of the
other Department of Defense programs, a lot of that information
still remains classified, and it is contained in the classified
vaults in Oak Ridge, Tennessee. We have had our Environmental
Safety and Health representative to view that information. But
due to the classified nature in the classified areas, samples
have not been performed in some of those particular areas.
So although the sampling has been performed to date has not
shown as large of a presence of what we initially thought, we
are very concerned that some of these other areas that continue
to be classified and have not been stated could possibly pose
continuing beryllium contamination.
Senator Bunning. Thank you, Mr. Owens. I have no more
questions. And I want to thank, first of all, all of our
witnesses who have testified today. I have some additional
questions that I will submit for the record, that I would like
for you and other witnesses who have testified today to respond
to in writing.
For those of you who have additional statements or
questions to submit for the record, please submit them to the
Senate Energy Committee by Monday, the 15th of December by 5
p.m. on Monday the 15th. The hearing is adjourned.
[Whereupon, at 11:46 a.m., the hearing was adjourned.]
APPENDIX
Responses to Additional Questions
----------
Bechtel Jacobs Company, LLC,
Oak Ridge, TN, January 15, 2004.
Mr. Richard L. Smit,
Committee on Energy and Natural Resources, Dirksen Senate Office
Building, Washington, DC.
Dear Mr. Smit: In reviewing my testimony, I noted one remark which
I would like to clarify.
Senator Bunning asked me whether the Department of Energy (DOE) had
asked Bechtel Jacobs Company LLC (BJC) to serve as a willing payer for
exposure claims filed by workers at the Paducah Gaseous Diffusion
Plant. While DOE has not yet provided us a written request or contract
direction regarding payment of these claims, BJC has had some verbal
discussions with DOE on this subject.
I would like to clarify that BJC is prepared to follow DOE
direction under its contract to pay claims, in accordance with Kentucky
workers compensation law, filed by employees of BJC or its
subcontractors. BJC is prepared to discuss, and is also awaiting DOE
direction with regard to certain other claims that may be filed by
former employees of prior site prime contractors.
I appreciate the opportunity to review the transcript and to
provide further clarification.
Sincerely,
Steven D. Liedle,
President and General Manager.
______
U.S. General Accounting Office,
Washington, DC, January 27, 2004.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate.
Dear Mr. Chairman: On December 6, 2003, I testified before your
committee at a field hearing on DOE's cleanup of its Paducah, Kentucky,
Uranium Enrichment Plant.\1\ This letter responds to your request that
we provide answers to posthearing questions submitted for the record.
The questions and responses follow.
---------------------------------------------------------------------------
\1\ U.S. General Accounting Office, Nuclear Waste Cleanup:
Preliminary Observations on DOE's Cleanup of the Paducah Uranium
Enrichment Plant, GAO-04-278T (Washington, D.C.: Dec. 6, 2003).
---------------------------------------------------------------------------
Our responses to these questions are based on ongoing work. We
expect to issue our final report on the Paducah cleanup in April 2004.
For additional information on our work on the Paducah cleanup, please
contact me on (202) 512-3841.
Sincerely,
Robin M. Nazzaro, Director,
Natural Resources and Environment.
Responses to Questions From the Committee
Question 1. Congress has increased its appropriated funding for
cleanup at the Paducah plant over the last several years. For each
fiscal year from fiscal year 2000 through the current fiscal year, how
much of the annual funding that Congress appropriated for the cleanup
at the Paducah plant has DOE spent on cleanup?
Answer. As I testified on December 6, 2003, from 1988 through 2003,
DOE spent $823 million, adjusted to 2002 constant dollars, on the
Paducah cleanup. Of this total, DOE spent $372 million (45 percent) for
a host of operations activities, including general maintenance and
security; $298 million (36 percent) for actions to clean up
contamination and waste; and almost $153 million (19 percent) for
studies to assess the extent of contamination and determine what
cleanup actions were needed.
As indicated in the table below, appropriations to Paducah have
ranged from $62.2 million to $113.1 million, and DOE has spent amounts
ranging from $17.7 million to $61.6 million on actions to cleanup the
contamination and waste at the site since fiscal year 2000.
Table 1: APPROPRIATIONS AND EXPENDITURES AT PADUCAH, IN ACTUAL DOLLARS,
FISCAL YEARS 2000-2003
[Dollars in Millions]
------------------------------------------------------------------------
Percent of
Amount Amount spent expenditures spent
Year appropriated * on cleanup on cleanup actions
actions ** ***
------------------------------------------------------------------------
2000 $ 62.2 $17.7 33%
2001 104.0 39.4 49%
2002 111.0 61.6 53%
2003 113.1 55.2 48%
------------------------------------------------------------------------
Source: GAO analysis of DOE data.
Note: Fiscal year 2003 is the last year for which complete expenditure
data is available. Appropriations from the Uranium Enrichment
Decontamination and Decommissioning Fund to Paducah for fiscal year
2004 are $120.2 million.
* Starting in fiscal year 2001, these figures include appropriations to
Paducah for uranium activities and safeguards and security.
** Includes expenditures on remedial and removal actions, and waste
treatment and disposal at Paducah.
*** Percent of annual expenditures does not equal percent of
appropriations because DOE had carryover funds available at Paducah
during these years.
Question 2. Has the GAO uncovered any indication that DOE has
misused any of the appropriated funds for the Paducah plant?
Answer. During the course of our investigation we have not found
any indication that DOE has misused any of the funds appropriated to
Paducah. In addition, our analysis of the percentage of funds expended
for cleanup activities at Paducah indicates that they are similar to
those DOE's Office of Environmental Management found for all of its
cleanup programs: only about one-third of the environmental management
program budget goes toward actual cleanup and risk reduction work, with
the remainder going to maintenance, fixed costs, and miscellaneous
activities.\2\
---------------------------------------------------------------------------
\2\ Department of Energy, A Review of the Environmental Management
Program, (Washington, D.C., Feb. 4, 2002).
---------------------------------------------------------------------------
______
Department of Energy,
Congressional and Intergovernmental Affairs,
Washington, DC, February 20, 2004.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: On December 6, 2003, Gerald Boyd, Manager, Oak
Ridge Operations Office, accompanied by William Murphie, Manager of the
Paducah and Portsmouth Project Office, testified regarding cleanup at
the Department of Energy's Paducah plant in Paducah, Kentucky. Mr. Tom
Rollow, Director, Office of Worker Advocacy, also participated in the
hearing.
Enclosed are the answers to eleven questions submitted by Senator
Bunning directed to Mr. Boyd and Mr. Murphie, and eight questions
directed to Mr. Rollow. The answer to Mr. Rollow's question number five
is being prepared and will be forwarded to you as soon as possible.
If we can be of further assistance, please have your staff contact
our Congressional Hearing Coordinator, Lillian Owen, at (202) 586-2031.
Sincerely,
Rick A. Dearborn,
Assistant Secretary.
[Enclosure]
Responses of Gerald Boyd, Manager, Oak Ridge Operations Office, and
William Murphie, Manager, Portsmouth/Paducah Project Office to
Questions From Senator Bunning
PAYMENT OF REGULATORY VIOLATIONS
Question 1. How much has the DOE spent on paying regulatory
violations that the state has issued? How has this delayed the cleanup
at the Paducah plant?
Answer. The Department has agreed to pay the Commonwealth of
Kentucky a $1 million penalty [and to perform an Environmental Project
valued at $200,000 in order] to settle outstanding regulatory
violations alleged by the Commonwealth.
The magnitude of the penalties has not caused any separately
identified delay to the project. The process to resolve the regulatory
issues which resulted in the agreed upon penalty, and lengthy period
involved for resolving other outstanding disputes that have been
sources of delay to the project.
CARRYOVER FUNDS
Question 2. The G.A.O. stated that the DOE has had carryover funds
for the past several years at the Paducah plant. Why has the Department
not been able to spend all of the funds available for cleanup?
Answer. For any given year, the Department anticipates a certain
amount of carryover funding for various reasons, including continuity
of operations, Departmental grants or awards that have not been fully
expended, and funds for fixed price multi-year contracts. Additional
project carryover funding is tied to activities that were delayed. The
actual amount of carryover funding due to schedule delay for Paducah at
the end of FY 2003 was about $20 million. The delay in spending these
funds was due primarily to the unavailability of waste disposal, both
on-site and off-site, and the contractor's suspension of waste
shipments resulting from an off-site shipment that did not meet the
Nevada Test Site disposal criteria upon receipt. On-site disposal was
primarily delayed by the dispute with the regulators and approval of a
permit modification.
Some activities were delayed due to disagreement with the
regulators, but the Department attempted to offset these delays where
it could with ``work- arounds.'' Unfortunately, our inability to
dispose of waste reduced our ability to adequately find alternative
activities to offset the delays and the Department was not able to
spend all the funds it anticipated to spend in FY 2003. The Department
anticipates the carryover at the end of this calendar year to be
significantly less as a result of the increased work currently ongoing
at the site.
PADUCAH PROJECTED CLEANUP DATE
Question 3. Prior to the Letter of Intent and the proposed site
management plan, the Department of Energy's projected completion date
for the Paducah cleanup was 2030. What changes did the Department make
in its cleanup scope and approach to achieve the 2019 accelerated
completion date given in the November 15, 2003, Site Management Plan?
What assurances can the Department provide that it will be successful
in implementing the accelerated cleanup plan and complete the cleanup
as scheduled?
Answer. There is no significant change in scope between the 2030
and 2019 baselines. The principle schedule acceleration results from
the Administration's commitment to increase the funding targets from
the previous baseline. Additional schedule acceleration is available
pending agreement with the regulators on future cleanup decisions.
The Paducah cleanup is still in its early stages of decision-making
and subject to compliance with the Federal Facility Agreement, the
Agreed Order, and future environmental regulatory decisions. Without
the necessary Records of Decision that some other cleanup sites have
already completed, Paducah's cleanup plan is subject to uncertainties
and unknowns that will impact the current schedule. The Department
believes additional acceleration is available and that the recently
signed Agreed Order with Kentucky will reduce the frequency of delays
and disagreements. The Letter of Intent also provides for an approach
that should support accelerated cleanup.
At the same time, beryllium, classified materials, nuclear safety,
and unexpected contamination arising in areas not previously expected,
will tend to off-set project acceleration. In response to Congressional
and stakeholder expectations, the Department has implemented a new
Project Office in Lexington to increase the direct management
communication and the project has been put on the Deputy Secretary's
Quarterly Review list. We will continue to keep Congress informed in
the event of any changes as soon as possible.
CLEANUP AGREEMENT
The G.A.O. in its recent investigation has found the main challenge
in completing the cleanup is achieving agreement among the
stakeholders--the Department, the state, and the E.P.A.
Question 4a. Can you explain why you have had problems coming to an
agreement with the other parties on the plans for the cleanup and what
you see as the biggest challenges to coming to an agreement in the
future?
Answer. It has been difficult to reach agreements with the other
parties for many reasons. There were disagreements at the staff level,
including technical disagreements on risk reduction that remained at
the staff level for too long before senior management could bring the
relative policy perspectives to the dispute. There were also some
disagreements about financial and funding issues.
We have now moved beyond the point of formal dispute and are
working cooperatively to get the project back on track. Our biggest
challenge in coming to agreement in the future will likely revolve
around risk-based decision making. In this regard, the Department has
initiated a major effort with our stakeholders across all the sites to
develop Risk-Based End State documents. We will be working to reach
consensus on this issue and believe our approach will significantly
reduce the potential for disagreement later when preparing the final
decision documents at Paducah.
Question 4b. What obstacles is the DOE currently facing with the
accelerated cleanup agreement and how are these challenges affecting
cleanup at the site?
Answer. The Department is still working with the regulators on the
proposed FY 2004 Site Management Plan. This document formalizes the
concepts of the Agreement with the Commonwealth and will formalize the
tri-party agreement on the path forward. At this time, nothing has been
identified that would warrant notification that the Plan will not be
agreed upon. In the interim, the full implementation of the concepts in
the recently signed Letter of Intent with Kentucky remains to be fully
implemented within the tri-party Federal Facility Agreement. In
addition, the Agreed Order has been challenged in court by a limited
number of stakeholders. This continues to cloud the finality of the
settlement and creates uncertainty with its implementation. These
issues are not directly impacting the cleanup at this time.
DUTIES OF LEXINGTON OFFICE
Question 5. Can you explain the expected duties of the Lexington
Office?
Answer. The Lexington Office will combine the responsibilities
previously held by Oak Ridge Operations in Tennessee and the Paducah
and Portsmouth site offices. The Lexington Manager will have direct
responsibility for the sites and report directly to the Assistant
Secretary for Environmental Management in Washington, D.C. The scope of
these responsibilities includes all the environmental cleanup actions,
including the Depleted Uranium Conversion Project, the continuing Cold-
Standby Operations at Portsmouth, and the transfer of the former
centrifuge facilities to USEC, Inc. Activities performed with
Environmental Management funding will be managed by the Lexington
Office with staff at each site. Oak Ridge Operations will continue to
administer the lease held by the USEC, Inc., for its commercial
operations at both sites.
NEW CONTRACTS AT PADUCAH
Question 6. Can the Department of Energy explain its plans for the
new contracts at the Paducah plant?
Answer. The Department is competing the scope of the current
Bechtel Jacobs Company (BJC) contract to perform environmental
remediation and infrastructure services at DOE's Portsmouth and Paducah
sites. BJC's contract to perform environmental cleanup at Portsmouth
and Paducah was separated from the Oak Ridge contract in 2003 as part
of the establishment of the new Portsmouth/Paducah Project Office in
Lexington, Kentucky.
In November 2003 and January 2004, DOE issued two solicitations,
one for infrastructure services and the other for environmental
remediation services at both sites. These new procurements are part of
the Department's initiative to increase the number of small business
prime contracts awarded by DOE. It is anticipated that two separate
contracts will be awarded for each site; i.e., each site will have a
contract for the environmental cleanup and another for maintaining the
site infrastructure.
As noted, these activities are both part of the current BJC
contract, and have been split to both allow the remediation contractor
to focus on cleanup and to increase the amount of work available to
small business. DOE intends to award the contracts this summer and
provide for a transition period with BJC for work under each contract
before the end of the fiscal year.
SMALL BUSINESS CONTRACTS AT PADUCAH
Question 7. The Department of Energy is considering issuing two new
contracts to small business contractors at the Paducah site. Why is the
DOE considering issuing a small business contract at the Paducah site?
Does the DOE believe that a small business contract will be an
efficient way to achieve cleanup given all the complexities at the
Paducah site? Does the Department believe that the new contracts will
delay cleanup at the plant? Has the DOE issued small business contracts
at any other DOE site for similar size work that is expected at the
Paducah site?
Answer. The DOE Environmental Management (EM) strategy for the
Paducah site includes issuing two new small business contracts, one for
infrastructure services and one for environmental remediation services.
These anticipated contracts are part of a DOE commitment to increase
the number of prime Federal government contracts awarded to small
businesses in accordance with its Small Business Policy that supports
the Administration's Small Business Agenda.
It is anticipated that two separate contracts will be awarded to
small businesses for work at the Paducah site. The scope of the
infrastructure contract must be in accordance with NAICS Code 561210
(Small Business size standard $30M gross annual receipts) and the scope
of the environmental remediation contract must be in accordance with
NAICS Code 562910 (Small Business size standard 500 employees). The
anticipated contract types are cost-plus-award-fee (CPAF) and cost plus
incentive fee (CPIF), respectively.
The Contracting Officer is required by FAR 19.502(b) to set aside
any acquisition in which there is a reasonable expectation that the
solicitation will result in offers from at least two or more
responsible small business concerns and award will be made at fair
market prices.
Additional market survey analysis was conducted in December to
validate the small business set-aside decision before release of the
Request for Proposal (RFP) for environmental remediation services. DOE
concluded that it is likely that it will receive offers to this RFP
from at least two responsible small business concerns at fair market
prices. Small businesses interested in these solicitations have
responded to the Department's Sources Sought Announcements with
capability statements, attended Department-sponsored Small Business
Conferences, and attended Pre-Proposal Conferences/Tours. Teams have
been formed to propose on these solicitations and appear to possess the
capabilities required to accomplish the complex scope.
Therefore, the Department believes this contracting approach to be
efficient with the potential for significant innovation without
delaying cleanup of the Paducah site. We anticipate that the
competitive environment will help to re-focus and accelerate cleanup
activities.
Recently, the Department set aside other work for small business,
including the decontamination and decommissioning work at the Fast Flux
Test Facility in Washington State and the Columbus Closure Project
awarded in November 2003. However, the Portsmouth/Paducah environmental
remediation solicitation is the largest set-aside for small businesses
by estimated cost to date for the Environmental Management Program.
NEW INFRASTRUCTURE RFP
Question 8. Can the DOE explain its new Infrastructure RFP? Why
does the DOE believe that the RFP will continue to provide adequate
protection for all employees as previous contracts provided? Why did
the DOE change the definition of ``Grandfathered Employee'' and what
effect will this have on existing grandfathered employees? Will the DOE
issue a draft RFP for the Remediation Contract?
Answer. DOE intends that the new infrastructure contractors, at the
Portsmouth and Paducah sites, will provide work needed to maintain the
sites. The scope is essentially the same as that currently being
performed by Bechtel Jacobs Company (BJC). This work includes, but is
not limited to, surveillance and maintenance of facilities, janitorial
services, grounds maintenance, site security, environment, safety and
health, and real and personnel property management.
The anticipated infrastructure service contracts require that the
infrastructure contractors' human resource actions meet the following
objectives: achieve an orderly transition; be fair to incumbent
employees and maintain a productive and flexible work force; minimize
the cost of transition and its impact on other DOE programs; and
promote those practices that will result in stable collective
bargaining relationships.
DOE believes adequate protection will continue to be provided for
employees. The solicitation requires the contractors to comply with
specific and stringent hiring preferences. Credit for years of service
will be protected for BJC employees and employees of BJC's first- and
second-tier subcontractors. Pension benefits of employees (BJC, and
first and second tier subcontractors) who are vested in the BJC
Multiple Employer Pension Plan (MEPP) will be protected, as well as
their other health and welfare benefits under the BJC Multiple Employer
Welfare Arrangement (MEWA). The new contractors will be required to
comply with the terms and conditions of these plans. This also means an
individual who may not currently be an employee of BJC, but has the
right to participate in the MEPP, may still participate in the MEPP, if
hired by a participating employer (e.g., the new contractors or BJC).
DOE has ensured adequate protection for the individuals, other than
those identified above, by requiring that the contractor provide
market-based retirement and medical benefits, which are competitive for
the industry. The contractor cannot provide less than what the
competitive market is providing for employees in the same industry. A
reduction in the benefits the employees are currently receiving will
only occur if the employees are receiving more than what is currently
provided in the competitive marketplace. The non-pension benefits will
be maintained at a level that is substantially equal in the aggregate
for the first year. After that time, the contractor will be required to
provide these benefits based upon what the market is providing and
competitive for the industry. The solicitations comply with all
applicable laws and guidance regarding continuity and benefits. The
Department believes that reasonable protection has been provided for
the workforce.
Terms and conditions of employment, including salary and benefits
of employees of the new contractor, BJC, and first- and second-tier
subcontractors who are members of Paper, Allied-Industrial, Chemical &
Energy Workers (PACE), or any other bargaining unit will be governed by
the applicable collective bargaining agreements.
The definition of ``Grandfathered'' as contained in the
solicitation is interpreted by DOE as being more protective than the
definition of the term currently being used in other contexts. All
persons, including those employed by USEC, retain their interests and/
or rights under the MEPP, including the right to participate if they
return to employment with BJC or the new contractor, consistent with
the terms and conditions of the MEPP. Although there has been some
confirmation on this matter, additional clarification was provided by
the procurement's website on January 30, 2004.
The solicitation for environmental remediation services at the
Portsmouth and Paducah sites was issued on January 16, 2004. Proposals
are due March 16, 2004. No draft solicitation was issued.
USE OF UNPROVEN TECHNOLOGIES
Question 9. The G.A.O. in its 2000 report on the cleanup at the
Paducah site found that one challenge to the cleanup was the
Department's use of unproven technologies, such as its experimenting
with technology to eliminate high concentration levels of T.C.E.
contamination. The Department has said its analysis of the data from
its latest experiment to clean up T.C.E. will be available soon. How
much has the Department spent on trying to cleanup the T.C.E.
contamination at the site? Why has the Department not just dug up the
area instead of spending so much money on unproven technologies?
Answer. The Department has spent approximately $55 million on
groundwater cleanup at Paducah to date. This includes: the ``lasagna''
technology; six-phase heating; permeable treatment zone technology;
``C-sparge'' technology; and the pump and treat systems for the
northwest and northeast plumes. Annual operation of the pump and treat
systems cost approximately $2 million per year.
Digging up the contaminated area would involve exhuming material in
both the shallow vadose zone and the groundwater. The plumes extend
some 150 feet deep and to the river mixing zone area. Also, the extent
of the excavation would encroach ongoing USEC enrichment operations and
adversely impact its commercial enrichment process. In addition, any
such clean up would be subject to the cleanup decision process under
the Federal Facility Agreement.
The path proposed by the Department for groundwater remediation is
being pursued in accordance with the Federal Facility Agreement and
will involve stakeholder and regulatory agreement. The results of the
six-phase treatability study indicate that our path forward will remove
the most significant source of TCE at the site without impact to
ongoing USEC enrichment operations.
BERYLLIUM CONTAMINATION
Question 10. Beryllium sensitivity has been found in a number of
Paducah workers with at least 42 workers having at least one positive
blood test so far and one case of chronic beryllium disease. What is
the plan for monitoring beryllium contamination in buildings leased by
Department of Energy to USEC and getting it cleaned up so we are not
making any more workers sick? What is the expected cost of the
monitoring and cleanup, and what is the schedule?
Answer. A substantial sampling campaign was undertaken in May-June
2003. All of the results from the nearly 700 samples taken have been
shared with the USEC, Inc., and the union. Only a very limited number
of samples have been found to contain trace levels of beryllium.
Administrative controls have been implemented to prevent exposure and
the spread of contamination to site workers. Additional samples will be
taken to increase our database and to collect samples in some
additional areas that have subsequently been identified as potentially
contaminated. Total sampling costs are estimated to be about $400,000.
Once sampling is complete, decisions regarding the need for
decontamination prior to the final plant decommissioning will be made
based upon current use and contamination levels. Only at that time will
we be able to estimate the cost, if any. Based on the very low levels
of beryllium detected to date, it is our expectation that the current
monitoring program will be sufficient and any incremental monitoring
cost will be nominal. In addition, the incremental cost for cleanup is
not expected to be significant given the current requirements for
ensuring radiological safety when decommissioning the plants.
SCHEDULE FOR DUF6 PLANT
Question 11. What is the schedule for groundbreaking, construction,
and operations for the DUF6 plant? Are there any expected
delays in meeting statutory and contractor schedules for the
DUF6 plants?
Answer. The current plan for groundbreaking is July 31, 2004.
Groundbreaking is expected to include limited work for contractor
mobilization, ground clearing, and some site preparation leading to
full construction following approval of the final design. This schedule
is subject to completion of the appropriate National Environmental
Policy Act (NEPA) documentation. The schedule for completing the
remaining NEPA process is very tight. The Department will perform
parallel reviews and work extremely hard to make this schedule; it is a
high priority and has senior management's personal attention. The
schedule for full construction following final design approval will be
Fall 2004. The schedule for operations is subject to completion of the
final design and preparation of a completed baseline by the contractor.
A revised construction data sheet is provided in the FY 2005 Budget
Request and reflects the Department's most recent estimate for the
start of operations, the 2nd Quarter of 2008.
______
Responses of Tom Rollow, Director, Office of Worker Advocacy,
DOE to Questions From Senator Bunning
Question 1. Why does the DOE believe that the Department of Labor
has been able to complete more cases under Subtitle B of EEOICPA
program than what the Department of Energy has completed under Subtitle
D?
Answer. The EEOICPA Part D program administered by DOE, and the
Part B program administered by DOL, utilize fundamentally different
adjudication schemes. The statute established two completely different
programs covering a different (though sometimes overlapping) range of
illnesses and involving different procedures and structures.
Part D of EEOICPA involves work-related exposures to a wide variety
of toxic substances that may involve a very wide range of associated
illnesses or conditions. Establishing and documenting these exposures
requires document searches, including related employment, medical,
exposure, and industrial health records, as well as relevant facility
industrial health data.
In accordance with EEOICPA, Part D claims are also considered under
different procedures. EEOICPA also mandates a ``physician panel''
review process for Part D applications. The law has complicated the
administration of these panels. Part D establishes a cap on the rate of
pay for physician panel doctors, which severely limits the number and
availability of physicians that are qualified and willing to commit
significant hours to working on a physician panel. As a result, even
once cases are processed up to the physician panels, applications have
been further delayed because there have been insufficient numbers of
physicians willing to work on the cases.
Moreover, and as the preamble to DOE's final EEOICPA Part D rules
makes clear, ``a State Agreement with a particular State is necessary
before [DOE] can refer to a Physician Panel a claim by an applicant who
will file his/her worker's compensation claim in that State. Part D is
clear that any action by DOE must be in accordance with the terms and
conditions of the relevant State agreement. Currently, there are cases
that are being held from moving forward to Physicians Panels because
DOE and the relevant States have not yet reached closure on a State
Agreement. Further, at the onset of this program, no State Agreements
could be signed until the notice and comment rulemaking was completed
and the Final Rule was issued, which occurred in August 2002.
In addition, the current Physician Panel rule may not allow for
processing of applications in the fastest and most efficient way
possible. The procedures set forth in the rule were developed based on
the input of many commentators including organizations representing DOE
contractor employees. Yet, the pace at which the Physician Panel rule
has allowed DOE to process applications has not met DOE's expectations
or, it appears, the expectations of Congress and the worker community.
This is exacerbated by the lack of sufficient physicians willing and
qualified to work on the Panels, as discussed above, and the fact that
almost all of them are working part-time, requiring extensive
coordination between the physicians, coordination which initial data
indicates doubles the time to make the determination. DOE is working to
streamline the Physicians Panel process.
Furthermore, the number of claims filed under Part D have almost
tripled expectations, which has contributed to the backlog of cases.
DOE continues to work to address the EEOICPA Part D issues that are
within its control, and has improved case processing up to the
physician panels more than seven fold over the last nine months.
Question 2. Has the DOE asked any contractor at the Paducah plant
to act as willing payers under Subtitle D?
Answer. In accordance with the Bechtel Jacobs Company (BJC) current
contract at Paducah, BJC will handle workers' compensation claims for
BJC employees' injuries or exposures as well as workers' compensation
claims from workers of some predecessor contractors [Lockheed-Martin
Energy Systems (LMES), Martin-Marietta Energy Systems (MMES), and Union
Carbide]. For positive physician panel findings associated with the
Paducah cases, which involve injury or exposure due to work at BJC or
one of the predecessor contractors (LMES, MMES and Union Carbide), the
DOE will direct BJC not to contest these cases. This does not include
subcontractors.
Question 3. Can Bechtel Jacobs serve as a ``tail'' for Paducah
employees of all previous contractors and subcontractors at the Paducah
plant and serve as their willing payer? For which previous contractors
and subcontractors do you believe that Bechtel Jacobs can serve as a
willing payer?
Answer. The BJC current contract provides that BJC will handle
workers compensation claims of some predecessor contractors (LMES, MMES
and Union Carbide). Other contractors are not covered under the current
contract, nor are subcontractors.
DOE has undertaken to review and identify at the major DOE sites
which contractors fall within the parameters set in EEOICPA and DOE's
regulations whereby DOE ``may to the extent permitted by law, direct
the DOE contractor who employed the applicant not to contest such claim
or such award.'' However, only with sufficient numbers of positive
determinations of causation (as defined in 10 C.F.R. 852) and the
results of subsequent State workers compensation proceedings will the
true extent of any ``willing payer'' issues be ascertainable. Workers
for which DOE cannot order a contractor to not contest may in fact be
paid by insurance proceeds, former DOE contractors, or various state
funds. On the other hand, some contractor employees for whom DOE can
issue an order not to contest may receive no payment because they are
entitled to no benefits under state law and/or for some other reason.
EEOICPA Part D does not authorize DOE to initiate a legal
relationship between BJC and other private companies such as
subcontractors for the purpose of providing for a so-called ``willing
payer''. Part D simply states that ``the Secretary . . . may, to the
extent permitted by law, direct the Department of Energy contractor who
employed the applicant not to contest such claim or such award.'' Part
D also does not authorize DOE to give directives to persons who are not
DOE contractors. In the preamble that accompanied DOE's final EEOICPA
regulations, DOE stated that it believes the regulations provide for
the maximum level of assistance to claimants seeking workers
compensation. For example, section 852.19(e) states: ``All workers'
compensation costs incurred as a result of a workers' compensation
award on a claim based on the same health condition that was the
subject of a positive Physician Panel determination are allowable,
reimbursable contract costs to the full extent permitted under the DOE
contractor's contract with DOE.''
Question 4. If the DOE rebids the contract at the Paducah plant,
will the new contractor be able to serve as a willing payer ``tail''
for employees? For which previous contractors and subcontractors do you
believe that the new contractor could serve as a willing payer?
Answer. The new contractors will be responsible for their own
employees in accordance with applicable state law and the terms and
conditions of their contracts. DOE is currently considering various
options with respect to how new contracts should deal with any
responsibility for workers compensation claims asserted against
previous contractors at Paducah. With regards to any new contractor's
workers compensation liabilities for the previous employer's contract
employees, such liability is determined in the negotiations between the
incumbent and the incoming contractor during the turnover, if there is
one. Therefore, it would be impossible to determine such relationships
prior to a new contractor assuming the contract for a DOE facility.
As noted above, the issue of where DOE can and cannot issue
directives to not contest workers compensation claims is not clear cut,
and is affected by years of contractor relationships and turnovers.
Therefore, DOE has undertaken to review and identify at the major DOE
sites which contractors fall within the parameters set in EEOICPA and
DOE's regulations whereby DOE ``may to the extent permitted by law,
direct the DOE contractor who employed the applicant not to contest
such claim or such award.'' However, only with sufficient numbers of
positive determinations of causation (as defined in 10 C.F.R. 852) and
the results of subsequent State workers compensation proceedings will
the true extent of any ``willing payer'' issues be ascertainable.
Workers for which DOE cannot order a contractor to not contest may in
fact be paid by insurance proceeds, former DOE contractors, or various
state funds. On the other hand, some contractor employees for whom DOE
can issue an order not to contest may receive no payment because they
are entitled to no benefits under state law and/or for some other
reason.
Question 5. What arrangements has the DOE made with USEC to serve
as a willing payer for claims, including subcontractor claims, at the
Paducah site?
Answer. The Administration is continuing to develop the response to
this question and DOE will provide an update as soon as possible.
Question 6. What percentage of claims does DOE believe it will have
a willing payer for Paducah claims under Subtitle D of EEOICPA?
Answer. At this time, DOE does not have a reliable estimate of the
percentage of Part D applications with respect to which the applicants
can submit State workers compensation claims and for which there will
be a contractor to which DOE can issue a directive not to contest the
claim. DOE does believe, however, that a significant percentage of the
claims will be covered by a ``willing payer.''
As noted above, the issue of where DOE can and cannot issue
directives to not contest workers compensation claims is not clear cut,
and is affected by years of contractor relationships and turnovers.
Therefore, DOE has undertaken to review and identify at the major DOE
sites which contractors fall within the parameters set in EEOICPA and
DOE's regulations whereby DOE ``may to the extent permitted by law,
direct the DOE contractor who employed the applicant not to contest
such claim or such award.'' However, only with sufficient numbers of
positive determinations of causation (as defined in 10 C.F.R. 852) and
the results of subsequent State workers compensation proceedings will
the true extent of any ``willing payer'' issues be ascertainable.
Workers for which DOE cannot order a contractor to not contest may in
fact be paid by insurance proceeds, former DOE contractors, or various
state funds. On the other hand, some contractor employees for whom DOE
can issue an order not to contest may receive no payment because they
are entitled to no benefits under state law and/or for some other
reason.
Question 7. Mr. Greathouse testified that self-insurance at Paducah
did not extend beyond 1984 for DOE/USEC prime contractors. What happens
to illnesses that arose prior to that time?
Answer. Workers compensation claims from employees of BJC at
Paducah (and LMES, MMES, and Union Carbide) will be processed by BJC
through September 2004. This includes illnesses that are due to
employment at Union Carbide prior to 1984.
Question 8. Will there be a willing payer for claims owned by
private insurers?
Answer. Private workers' compensation insurers will pay claims as
dictated by state law and the terms of their policy. DOE cannot
forecast those outcomes. However, DOE is not aware of any private
workers compensation insurers who are also DOE contractors subject to
do not contest directives for state workers compensation claims arising
from Part D positive determinations.
Question 9. What happens to claims for those employed by
subcontractors, and will there be a willing payer for these claims?
Answer. Employees of subcontractors are covered by the workers
compensation arrangements of the companies for which they worked.
Employees of DOE subcontractors may submit Part D applications to DOE,
and DOE will provide assistance to those workers. Among other
assistance, the workers can receive a physician panel ruling. Whether
subcontractors can be ``willing payers'' of workers compensation claims
filed by Part D applicants, and whether DOE can issue a do not contest
order to that subcontractor, depends upon their contractual
relationships with their prime contractors and those contractors'
relationships with DOE.
As noted above, the issue of where DOE can and cannot issue
directives to not contest workers compensation claims is not clear cut,
and is affected by years of contractor relationships and turnovers.
Therefore, DOE has undertaken to review and identify at the major DOE
sites which contractors fall within the parameters set in EEOICPA and
DOE's regulations whereby DOE ``may to the extent permitted by law,
direct the DOE contractor who employed the applicant not to contest
such claim or such award.'' However, only with sufficient numbers of
positive determinations of causation (as defined in 10 C.F.R. 852) and
the results of subsequent State workers compensation proceedings will
the true extent of any ``willing payer'' issues be ascertainable.
Workers for which DOE cannot order a contractor to not contest may, in
fact, be paid by insurance proceeds, former DOE contractors, or various
state funds. On the other hand, some contractor employees for whom DOE
can issue an order not to contest may receive no payment because they
are entitled to no benefits under state law and/or for some other
reason.