[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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               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.
---------------------------------------------------------------------------
    * The attachment has been retained in subcommittee files.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    * The attachments were not received from the field hearing.
---------------------------------------------------------------------------
    [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.*
---------------------------------------------------------------------------
    * 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.

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