[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                 BUDGETING FOR NUCLEAR WASTE MANAGEMENT 

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

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, JULY 16, 2009

                               __________

                           Serial No. 111-14

                               __________

           Printed for the use of the Committee on the Budget


                       Available on the Internet:
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                        COMMITTEE ON THE BUDGET

             JOHN M. SPRATT, Jr., South Carolina, Chairman
ALLYSON Y. SCHWARTZ, Pennsylvania    PAUL RYAN, Wisconsin,
MARCY KAPTUR, Ohio                     Ranking Minority Member
XAVIER BECERRA, California           JEB HENSARLING, Texas
LLOYD DOGGETT, Texas                 SCOTT GARRETT, New Jersey
EARL BLUMENAUER, Oregon              MARIO DIAZ-BALART, Florida
MARION BERRY, Arkansas               MICHAEL K. SIMPSON, Idaho
ALLEN BOYD, Florida                  PATRICK T. McHENRY, North Carolina
JAMES P. McGOVERN, Massachusetts     CONNIE MACK, Florida
NIKI TSONGAS, Massachusetts          JOHN CAMPBELL, California
BOB ETHERIDGE, North Carolina        JIM JORDAN, Ohio
BETTY McCOLLUM, Minnesota            CYNTHIA M. LUMMIS, Wyoming
CHARLIE MELANCON, Louisiana          STEVE AUSTRIA, Ohio
JOHN A. YARMUTH, Kentucky            ROBERT B. ADERHOLT, Alabama
ROBERT E. ANDREWS, New Jersey        DEVIN NUNES, California
ROSA L. DeLAURO, Connecticut,        GREGG HARPER, Mississippi
CHET EDWARDS, Texas                  ROBERT E. LATTA, Ohio
ROBERT C. ``BOBBY'' SCOTT, Virginia
JAMES R. LANGEVIN, Rhode Island
RICK LARSEN, Washington
TIMOTHY H. BISHOP, New York
GWEN MOORE, Wisconsin
GERALD E. CONNOLLY, Virginia
KURT SCHRADER, Oregon

                           Professional Staff

            Thomas S. Kahn, Staff Director and Chief Counsel
                 Austin Smythe, Minority Staff Director













                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, July 16, 2009....................     1

Statement of:
    Hon. John M. Spratt, Jr., Chairman, Committee on the Budget..     1
        Prepared statement of....................................     2
        Report, ``Managing Spent Fuel in the United States: The 
          Illogic of Reprocessing,'' by Frank von Hippel, dated 
          January 2007, Internet address to......................    48
    Hon. Michael K. Simpson, a Representative in Congress from 
      the State of Idaho.........................................     3
    Christopher A. Kouts, Acting Director of the Office of 
      Civilian Radioactive Waste Management, U.S. Department of 
      Energy.....................................................     5
        Prepared statement of....................................     6
    Hon. Michael F. Hertz, Deputy Assistant Attorney General, 
      Civil Division, U.S. Department of Justice.................     8
        Prepared statement of....................................    11
    Kim Cawley, Chief, Natural and Physical Resources, Cost 
      Estimates Unit, Congressional Budget Office................    13
        Prepared statement of....................................    14
    Hon. Gregg Harper, a Representative in Congress from the 
      State of Mississippi, letters submitted for the record:
        From the Nuclear Energy Institute, dated July 8, 2009....    30
        From the National Association of Regulatory Utility 
          Commissioners, dated July 8, 2009......................    33
    Hon. Betty McCollum, a Representative in Congress from the 
      State of Minnesota, newspaper article:
        ``Aid Cuts Spark Debate Over Prairie Island Nuclear 
          Plant,'' Star Tribune, July 13, 2009...................    35
    Hon. Paul Ryan, ranking minority member, Committee on the 
      Budget, prepared statement of..............................    48


                 BUDGETING FOR NUCLEAR WASTE MANAGEMENT

                              ----------                              


                        THURSDAY, JULY 16, 2009

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:04 a.m., in room 
210, Cannon House Office Building, Hon. John M. Spratt, Jr. 
[Chairman of the Committee] presiding.
    Present: Representatives Spratt, McCollum, Edwards, 
Langevin, Diaz-Balart, Simpson, Mack, Jordan, Aderholt, Harper, 
and Latta.
    Chairman Spratt. I call the hearing to order, and explain 
first of all to everyone, and particularly to our witnesses, 
that we have as we speak three different markups going, Energy 
and Commerce, Ways and Means, and as a consequence we will 
probably be lightly staffed today, lightly attended today. But 
you have two people here today who have a substantial interest 
in this subject matter and I am sure there will be others 
arriving later. In any event, we very much appreciate your 
coming and your being willing to testify.
    We have an excellent panel. I want to thank you once again 
for coming. First, from the Department of Energy we have 
Christopher Kouts. Mr. Kouts is the Acting Director of the 
Office of Civilian Radioactive Waste Management. Director 
Kouts, thank you for joining us today. Second, from the 
Department of Justice we have Michael Hertz. Mr. Hertz is the 
Deputy Assistant Attorney General in the Civil Division of the 
Commercial Litigation Branch. Mr. Hertz, we thank you also for 
coming. And third, from the Congressional Budget Office we are 
joined by Kim Cawley. Mr. Cawley is Chief of CBO's Natural and 
Physical Resources Cost Estimates Unit. Mr. Cawley, thank you 
for joining us.
    Our goal for this hearing is to gain a better understanding 
of the federal government's liabilities for everything, but 
particularly this morning for managing nuclear waste and the 
budget implications that are our responsibility. We first held 
a hearing on this topic two years ago and we would like to know 
what progress the federal government has made in addressing the 
problem over the last two years. Nuclear waste results from 
both civilian and defense activities. Nuclear energy supplies 
approximately 20 percent of our nation's electricity. Nuclear 
fuel and weapons are, obviously, an important part of our 
natural security and our economy. During this hearing we will 
focus on waste that comes from commercial nuclear energy 
production.
    Under the Nuclear Waste Policy Act of 1982 the United 
States government was to have begun in 1998, some years ago, to 
remove nuclear waste from commercial reactors and to dispose of 
it in a central national repository. Yucca Mountain in Nevada 
was chosen as the site for this repository. Since 1983 
commercial utilities have paid the federal government a fee for 
this service. These fee collections, which range from $750 
million to $800 million a year, are placed in a Nuclear Waste 
Trust Fund.
    After more than a decade, the federal government has now 
begun to take this waste from these sites. Nuclear waste and 
spent nuclear fuel is being stored currently at 121 sites in 
thirty-nine states. Even under the most optimistic time frame 
by the time the federal government opens a repository it is 
likely to face at least a twenty-year backlog of waste.
    Federal delays have resulted in additional cost. In 
addition to direct lifetime project costs for Yucca Mountain 
that are now estimated at $100 billion, many utilities have 
sued the federal government for breach of its responsibilities. 
They have been winning their lawsuits. Present estimates of the 
eventual total costs of the awards and settlements related to 
this litigation range from $12 billion to $50 billion. Each 
year of delay in meeting the federal responsibility has been 
estimated to add another $500 million to the federal 
government's liability. As I was explaining to our witnesses 
earlier, we are looking for things where we book an asset, the 
Nuclear Waste Trust Fund, with the receipt of funds coming into 
it. But because we run a big cash budget we do not necessarily 
book the liability that we accrue for waste disposal.
    I would readily acknowledge that we are the Budget 
Committee, not the Energy Committee. It is not our job or 
domain to write energy bills. But it is our job to develop 
fiscally responsible policies addressing significant cost 
drivers in the federal budget. And we are concerned that the 
federal government's failure so far to resolve the problem of 
nuclear waste disposal is costing the American people and the 
federal government large sums of money. For this reason, the 
issue merits our Committee's very careful attention this 
morning.
    We appreciate once again your coming today. We look forward 
to your testimony. But before I turn to you, let me turn to our 
Ranking Member, Mr. Simpson, for any statement he cares to 
make. Mr. Simpson?
    [The prepared statement of Mr. Spratt follows:]

       Prepared Statement of Hon. John M. Spratt, Jr., Chairman,
                        Committee on the Budget

    Good morning and welcome to the House Budget Committee's hearing on 
Budgeting for Nuclear Waste Management.
    We have an excellent panel of government witnesses before us, and I 
want to thank them for their participation in this hearing today. 
First, from the Department of Energy, we have Christopher Kouts (say 
``Coots ''). Mr. Kouts is Acting Director of the Office of Civilian 
Radioactive Waste Management. Director Kouts, thank you for joining us 
today. Second, from the Department of Justice, we have Michael Hertz. 
Mr. Hertz is Deputy Assistant Attorney General in the Civil Division, 
Commercial Litigation Branch. Mr. Hertz, we thank you for being here 
today as well. Third, from the Congressional Budget Office, we are 
joined by Kim Cawley. Mr. Cawley is Chief of CBO's Natural and Physical 
Resources Cost Estimates Unit. Mr. Cawley, thank you for joining us.
    Our goal for this hearing is to gain a better understanding of the 
federal government's responsibilities and liabilities for managing 
nuclear waste and the budget implications of that responsibility. We 
first held a hearing on this topic two years ago, and we would like to 
know what progress the federal government has made addressing the 
problem in the past two years.
    Nuclear waste results from both civilian and defense activities. 
Nuclear energy supplies approximately 20 percent of our nation's 
electricity, and nuclear fuel and weapons are an important part of 
national security. During this hearing, we will focus on waste that 
comes from commercial nuclear energy production.
    Under the Nuclear Waste Policy Act of 1982, the U.S. government was 
to have begun in 1998 to remove nuclear waste from commercial nuclear 
reactors and to dispose of it in a central national repository. Yucca 
Mountain in Nevada was chosen as the site for this repository. Since 
1983, commercial utilities have paid the federal government a fee for 
this service. These fee collections, which average from $750 to 800 
million a year, are placed in a Nuclear Waste Fund.
    More than a decade later, however, the federal government has not 
begun to take this waste from these sites. Nuclear waste and spent 
nuclear fuel is currently being stored at 121 sites in 39 states. Even 
under the most optimistic timeframe, by the time the federal government 
opens a repository, it is likely to face at least a 20-year waste 
backlog.
    Federal delays have resulted in additional costs. In addition to 
direct lifetime project costs for Yucca Mountain that are now estimated 
at about $100 billion, many utilities have sued the federal government 
for breach of its responsibilities. They have been winning their 
lawsuits. Present estimates of the eventual total costs of the awards 
and settlements related to this litigation range from $12 billion to 
$50 billion. Each year of delay in meeting the federal responsibility 
has been estimated to add another $500 million to the federal 
liability.
    We are the Budget Committee, not the Energy Committee, and it is 
not our job to draft energy bills. But it is our job to develop 
fiscally responsible policies addressing significant cost drivers to 
the federal budget. We are concerned that the federal government's 
failure so far to resolve the problem of nuclear waste disposal is 
costing the American people large sums. For that reason, this issue 
merits our committee's careful examination.
    We very much appreciate your joining us today. Before turning to 
you for your testimony, let me turn to our Ranking Member, Mr. Ryan, 
for any statement he cares to make.

    Mr. Simpson. Thank you, Mr. Chairman, and thanks for 
holding this hearing today. And thank you to the witnesses for 
being here today. First, Mr. Chairman, let me make a unanimous 
consent request to allow members one week to submit statements 
for the record.
    Chairman Spratt. Without objection, so ordered.
    Mr. Simpson. As you mentioned, both Mr. Edwards and I have 
an interest in this in that we sit on the Energy and Water 
Appropriations Committee and deal with how we are going to 
appropriate the funds for permanent disposal of this waste at 
some point in time, and it concerns us both greatly.
    Permanent disposal of high level nuclear waste has been an 
ongoing issue of this nation ever since World War II. Both 
Republican and Democratic administrations and Congresses have 
sought a solution to this vexing problem for over sixty years. 
We have conducted hundreds if not thousands of studies, and 
have spent billions of taxpayer dollars in the process. During 
this time scientific consensus and collective wisdom of every 
session of Congress since 1980 has been that, one, geological 
storage of nuclear waste is the safest, most economic, and most 
effective means of permanent nuclear waste storage. And two, 
Yucca Mountain is suitable, if not the best, location for 
geological storage.
    We have spent nearly $10 billion studying Yucca Mountain as 
a permanent site for nuclear waste storage. This is easily the 
most comprehensive and expensive environmental study ever 
undertaken by this country or any other. There are over 1.5 
million documents of evidence that have been prepared in 
analyzing Yucca Mountain. Yet, after only six weeks in office 
the Obama administration somehow came to the judgment that 
Yucca Mountain is not a workable option for the storage of 
nuclear waste. The administration's only alternative solution 
is ``we need more studies.''
    Abandoning Yucca Mountain is not a solution to nuclear 
waste disposal. It will only serve to delay a real permanent 
solution and will likely slow new growth in the nuclear power 
industry. Abandoning Yucca Mountain will also add to the 
government's bleak fiscal outlook due to the large liabilities 
it has already incurred by not accepting nuclear waste as 
promised. Already courts have awarded nearly $1 billion in 
damages to utility companies that have been forced to pay fees 
to the government for nuclear waste disposal. DOE currently 
estimates this liability to reach $12.3 billion and that is 
only if Yucca Mountain opens by 2020, which is optimistic. 
Every year that Yucca Mountain delays adds another $500 million 
to that liability, an estimated $500 million.
    My home State of Idaho has nearly 5,000 tons of nuclear 
waste related to Cold War defense activities for which the 
federal government has agreed to dispose of by 2035. Canceling 
the Yucca Mountain project seriously jeopardizes this time 
frame. And Idaho is not alone in this dilemma; over thirty 
other states face similar problems, including the Chairman's 
State of South Carolina. Abandoning Yucca Mountain would also 
seriously damage any effort to realistically control greenhouse 
gases as nuclear power currently accounts for 72 percent of all 
carbon-free energy production in this country. So without a 
permanent nuclear waste solution we will not be able to cut 
emissions to the level, as the administration has requested and 
this Congress has requested.
    Finding a permanent solution to disposal of our nuclear 
waste has to be a critical part of our long term energy 
strategy. Without it, we cannot expect to achieve a green 
energy economy because we simply cannot build enough windmills 
or solar panels to get there without nuclear power. And simply 
proposing to study the issue after years of similar studies, 
and billions of taxpayer dollars already spent, will not get us 
any closer to a final solution.
    I thank you, Mr. Chairman, and I yield back.
    Chairman Spratt. Thank you, Mr. Simpson. And in addition to 
our Republican members who have just joined us we have Chet 
Edwards who is the Chairman of the Energy and Water 
Subcommittee, and we are glad to have you here this morning.
    Gentlemen, the floor is yours and for purposes of moving 
along we will make, without objection, your statements part of 
the record. You can summarize as you see fit, but we encourage 
you to take all the time you need to get your statements fully 
before the Committee. And secondly, we will put questions to 
you as a panel when the three of you have completed all of your 
testimony. So thank you for coming and let me add as one 
further housekeeping detail that all members will be allowed to 
submit an opening statement for the record at this point unless 
there is objection. Hearing none, so ordered.
    Let us begin with Mr. Hertz. Or we will take it in whatever 
order you would like to take it. Is there any preference? Mr. 
Kouts?
    Mr. Kouts. Whatever is your pleasure, Mr. Chairman. I would 
be happy to start.
    Chairman Spratt. Why do you not lead off, then?

STATEMENTS OF CHRISTOPHER A. KOUTS, ACTING DIRECTOR, OFFICE OF 
 CIVILIAN RADIOACTIVE WASTE MANAGEMENT, DEPARTMENT OF ENERGY; 
  MICHAEL F. HERTZ, DEPUTY ASSISTANT ATTORNEY GENERAL, CIVIL 
DIVISION, DEPARTMENT OF JUSTICE; AND KIM P. CAWLEY, UNIT CHIEF, 
      NATURAL AND PHYSICAL RESOURCES COST ESTIMATES UNIT, 
                  CONGRESSIONAL BUDGET OFFICE

               STATEMENT OF CHRISTOPHER A. KOUTS

    Mr. Kouts. All right, thank you. Thank you, Mr. Chairman, 
and members of the Committee. I am Christopher Kouts, Principal 
Deputy Director and currently Acting Director of the Office of 
Civilian Radioactive Waste Management within the Department of 
Energy. I appreciate the invitation to appear before the 
Committee to provide a brief status of our program and to 
discuss the government's liability due to the delay in meeting 
its obligation to begin the acceptance of commercial spent 
nuclear fuel by January 31, 1998.
    The Nuclear Waste Policy Act of 1982 as amended directs the 
Office of Civilian Radioactive Waste Management to undertake 
numerous activities. Among those are to provide for the 
development of one authorized geologic repository for the 
permanent disposal of waste. The Act also authorizes one 
commercial spent nuclear fuel interim storage facility under 
certain conditions.
    The Department's fiscal year 2010 budget request announced 
the administration's intended termination of the Yucca Mountain 
Repository Project and includes the funding needed to explore 
alternatives for nuclear waste disposal and to continue 
participation in the Nuclear Regulatory Commission license 
application process. However, the Department remains committed 
to meeting its obligations for managing and ultimately 
disposing of spent nuclear fuel and high level waste. To that 
end, the Secretary of Energy is convening a blue ribbon panel 
of experts to evaluate alternative approaches for meeting the 
federal government's responsibility.
    Regarding federal government liability, the Nuclear Waste 
Policy Act authorizes the Secretary of Energy to enter into 
contracts with commercial nuclear utilities and commercial 
research reactor operators that own and generate spent nuclear 
fuel. Under the terms of these contracts, in return for the 
payment of a fee of one mill per kilowatt hour, that is a tenth 
of a cent per kilowatt hour, the government was to begin 
disposing of the spent nuclear fuel starting in 1998. The fees 
collected under these contracts are deposited in the Nuclear 
Waste Fund. The Fund currently has a balance of approximately 
$23 billion, which is invested in U.S. Treasury instruments. 
The government receives over $750 million per year in revenues 
from ongoing nuclear generation and the Fund averages 
approximately $1 billion in annual return on its investments. 
To date, utility contract holders have paid approximately $17 
billion into the Fund.
    Beginning in 1998 most contract holders initiated lawsuits 
against the government due to the delay in beginning the 
acceptance of spent nuclear fuel as required by the contracts. 
Courts have determined the delay was a partial breach of 
contract by the government and numerous trials have been held 
to determine the amount of damages to be awarded. The 
Department of Justice, with the Department of Energy's 
assistance, has been able to settle several lawsuits 
representing approximately 36 percent of commercial nuclear 
power reactors that are covered by waste disposal contracts. To 
date, close to $600 billion in claims has been paid under these 
settlements. Payments are made from the Treasury Department's 
Judgment Fund.
    Of the remaining pending cases, judgments subject to post-
trial motions, appeals, or remands total approximately $800 
million. As the damages in each trial are limited to those 
costs incurred prior to the beginning of the trial, future 
lawsuits may be brought by utilities to recover alleged 
additional damages until the government has accepted their 
spent nuclear fuel. And I would like to state for the record 
with Mr. Hertz at my left here that having spent countless 
hours in depositions and in trial testimony that the Department 
of Justice does an outstanding job in defending the United 
States of America against plaintiffs' lawsuits and my kudos go 
to Mr. Hertz and his staff for their efforts in that regard.
    Last year the Department estimated the liabilities under 
current law resulting from delaying the beginning of waste 
acceptance from 1998 to 2020, which was the last date we had 
for the opening of Yucca Mountain, at $12.3 billion. We have 
not attempted to further update that estimate.
    In summary, the Department remains committed to meeting its 
obligations for managing and ultimately disposing of spent 
nuclear fuel and high level waste. The Secretary's blue ribbon 
panel will provide the opportunity for a dialogue on how best 
to address this challenging issue. And the panel's 
recommendations will provide a basis for working with Congress 
to revise the national policy. The Department looks forward to 
an ongoing dialogue with members of Congress, interested 
stakeholders, and others as alternative waste management 
approaches are reviewed. I want to thank you for the 
opportunity to discuss these issues and I would be pleased to 
answer any questions that the Chairman or the Committee members 
have.
    [The prepared statement of Mr. Kouts follows:]

  Prepared Statement of Christopher A. Kouts, Acting Director of the 
  Office of Civilian Radioactive Waste Management, U.S. Department of 
                                 Energy

    Mr. Chairman and Members of the Committee, I am Christopher A. 
Kouts, Acting Director of the Department of Energy's (DOE) Office of 
Civilian Radioactive Waste Management (OCRWM). I appreciate the 
invitation to appear before the Committee to provide a brief status of 
the Civilian Radioactive Waste Management Program and to discuss the 
Government's liability due to the delay in meeting its obligation to 
begin the acceptance of commercial spent nuclear fuel by January 31, 
1998.
    The mission of the Department of Energy's Office of Civilian 
Radioactive Waste Management is to manage and dispose of the Nation's 
commercial and defense high-level waste and spent nuclear fuel in a 
manner that protects public health, safety, and the environment. The 
Nuclear Waste Policy Act of 1982, as amended, directs the Office of 
Civilian Radioactive Waste Management to provide for the development of 
one authorized repository for the permanent disposal of waste through 
site characterization activities, a specific site approval process, and 
submittal of a license application, among other things. The Act 
authorizes one commercial spent nuclear fuel interim storage facility 
under certain conditions.
    The Department's FY 2010 budget request announces the 
Administration's intended termination of the Yucca Mountain repository 
project and includes the funding needed to explore alternatives for 
nuclear waste disposal and to continue participation in the Nuclear 
Regulatory Commission license application process. All funding for the 
development of the Yucca Mountain facility and related infrastructure--
such as further land acquisition, transportation access, and additional 
engineering--has been eliminated.
    The Department remains committed to meeting its obligations for 
managing and ultimately disposing of spent nuclear fuel and high-level 
radioactive waste. To that end, the Secretary is convening a Blue-
Ribbon Panel of experts to evaluate alternative approaches for meeting 
the Federal Government's responsibility.
                          government liability
    The Nuclear Waste Policy Act authorizes the Secretary to enter into 
contracts with commercial nuclear utilities and commercial research 
reactor operators that own and generate spent nuclear fuel. Under the 
terms of these contracts, in return for the payment of a fee of 1 mill 
per kilowatt-hour, the Government was to begin disposing of the spent 
nuclear fuel starting in 1998. The fees collected under these contracts 
are deposited in the Nuclear Waste Fund. The Fund currently has a 
balance of approximately $23 billion which is invested in U.S. Treasury 
instruments. The Government receives over $750 million per year in 
revenues from on-going nuclear generation and the Fund averages 
approximately $1 billion annual return on its investments. To date, 
utility contract holders have paid approximately $17 billion in fees.
    Beginning in 1998, most contract holders initiated lawsuits against 
the Government due to the delay in beginning the acceptance of spent 
nuclear fuel as required by the contracts. Courts have determined the 
delay was a partial breach of contract by the Government, and numerous 
trials have been held to determine the amount of damages to be awarded.
    As of May 2009, 71 lawsuits have been filed by utilities to recover 
damages resulting from the delay. The Department of Justice, with the 
Department of Energy's assistance, has been able to settle ten of the 
lawsuits. This represents approximately 36 percent of the commercial 
nuclear power reactors that are covered by waste disposal contracts. To 
date, close to $600 million in claims have been paid under these 
settlements. Payments are made from the Treasury Department's Judgment 
Fund. Under these settlements, contract holders will continue to submit 
annual claims for additional costs, and additional annual payments will 
be made until the Government ``catches up'' with its spent fuel 
acceptance obligations, as they are defined in the settlement 
agreements.
    Of the remaining 61 lawsuits, four judgments were affirmed 
resulting in $35 million paid. Six of the cases were dismissed. The 
other 51 cases remain pending. Of the 51 pending cases, 17 were tried 
with judgments subject to post-trial motions, appeals, or remands for a 
combined total of $790 million. As the damages in each trial are 
limited to those costs incurred prior to the beginning of trial, future 
lawsuits may be brought by the utilities to recover alleged additional 
damages until the Government has accepted their spent nuclear fuel.
    Last year, the Department estimated the liabilities under current 
law resulting from delaying the beginning of waste acceptance from 1998 
to 2020 at $12.3 billion. We have not attempted to further update that 
estimate.
                               conclusion
    The Department remains committed to meeting its obligations for 
managing and ultimately disposing of spent nuclear fuel and high-level 
radioactive waste. The Secretary's Blue-Ribbon Panel will provide the 
opportunity for a dialogue on how best to address this challenging 
issue, and the Panel's recommendations will provide a basis for working 
with Congress to revise the national policy. The Department looks 
forward to an ongoing dialogue with members of Congress, interested 
stakeholders, and others as alternative waste management approaches are 
reviewed.
    Thank you for this opportunity to discuss these issues, and I would 
be pleased to answer any questions the Committee may have at this time.

    Chairman Spratt. Before going to Mr. Hertz, the $12.3 
billion? I missed what that represents.
    Mr. Kouts. That was the latest estimate that we had, 
assuming that the government was going to start performing 
beginning in the year 2020. And that assumed that Yucca 
Mountain was going to be operational in the year 2020.
    Chairman Spratt. Well is there any prospect of that 
happening at this point in time?
    Mr. Kouts. Well, I believe the administration has made it 
clear that its intention is not to proceed with the deployment 
of the repository, sir.
    Chairman Spratt. Well, we will come back to that. Thank 
you, sir. Mr. Hertz?

                 STATEMENT OF MICHAEL F. HERTZ

    Mr. Hertz. Thank you, Mr. Chairman. Mr. Chairman and 
members of the Committee, I am Michael Hertz, Deputy Assistant 
Attorney General, Civil Division, Department of Justice. I 
would like to touch on three points this morning. First, the 
origins of the litigation that we are defending. Second, the 
current status of that litigation. And third, the liabilities 
that we are facing in that litigation and the funding of that 
litigation.
    Pursuant to the Nuclear Waste Policy Act DOE entered into 
seventy-six standard contracts with commercial utilities to 
pick up spent nuclear fuel. In return, the commercial utilities 
pay a fee on a quarterly basis. In May 1995 the Department of 
Energy announced that it would be unable to begin acceptance of 
spent nuclear fuel in January 1998 as was called for by those 
contracts. A number of utilities went to the United States 
Court of Appeals for the District of Columbia Circuit to seek 
an order that the Department of Energy was required to pick up 
that spent nuclear fuel notwithstanding that fact that a 
repository had not been built by 1998, and the Court agreed 
with them. But the Court ultimately decided not to order the 
Department of Energy to pick up that spent nuclear fuel because 
it determined that the utilities had an adequate remedy at law 
in the United States Court of Federal Claims to seek breach of 
contract damages. And as part of that ruling the United States 
Court of Appeals for the District of Columbia Circuit announced 
that the Department of Energy would not be allowed to rely on 
the unavoidable delay clause in the standard contracts as a 
defense to liability.
    Therefore, beginning after January 1998, after the breach 
occurred because spent nuclear fuel was not begun to be picked 
up, utilities began to file cases. They filed seventy-one cases 
in the Court of Federal Claims. To date, that is the number 
that has been filed. Collectively, those cases currently seek 
$5.7 billion in damages. The United States Court of Appeals for 
the Federal Circuit, which is the appeals court that the cases 
go to from the United States Court of Federal Claims, has 
determined that the Department of Energy is in breach of its 
obligations. But it has determined that it is only a partial 
breach. That is, the Department of Energy is still required to 
perform under the contracts, that is to eventually pick up the 
spent nuclear fuel, and the utilities can only seek damages up 
until the point of time that they file a complaint. So what 
that means is that at least every six years the utilities will 
have to go back to court to seek whatever increased damages 
they have for the preceding six-year period. And that means we 
are obviously facing litigation for many years to come.
    As was noted, the estimates of potential liability, the 
Department of Energy estimates it eventually at $12.3 billion 
assuming performance by 2020. The utility industry has 
estimated damages of up to $50 billion. Both of those estimates 
obviously were done before the administration announced that 
Yucca Mountain was not going to go forward.
    With regard to the current status of the litigation, of the 
seventy-one lawsuits filed fifty-one cases remain pending 
either in the Court of Federal Claims or in the Court of 
Appeals for the Federal Circuit. Ten cases have been settled, 
and as noted that represents about 36 percent of the reactors 
that are covered by standard contracts. Six have been 
voluntarily withdrawn, and four have been litigated through 
final, unappealable judgments.
    While the Department of Justice has asserted legitimate 
defenses to these cases, we also have made concerted efforts to 
settle these cases. As I noted, we have settled approximately 
ten cases. The settlement payments so far have been $565 
million. Of the fifty-one pending cases, the trial court has 
entered judgment in thirteen cases. Six of those cases are 
currently on remand to the trial court after appeals and seven 
are pending on appeal. Between judgments, most of which are not 
final because of appeals and remands, and settlements, the 
government's total liability currently stands at $1.3 billion. 
As I noted, this only covers a relatively short period of time, 
in some cases as short as from 1998 to 2001, depending on when 
the utility filed its case. Or in the case of some settlements 
it may go all the way from 1998 to 2006 or 2007. So, current 
liability stands at $1.3 billion.
    There are two significant issues that are still pending 
potentially on appeal that could affect the government's 
overall liability. One is the unavoidable delay clause that I 
mentioned earlier. Although the D.C. Circuit determined that 
the United States could not rely on the unavoidable delay 
clause, the judge of the Court of Federal Claims determined in 
his view the D.C. Circuit lacked jurisdiction to make that 
ruling. That ruling from the Court of Federal Claims is now 
pending in the Federal Circuit. And the case was actually 
argued some time ago, but more recently the Court decided it 
wanted to hear that case en banc. That is, rather than the 
normal three-judge panel all the judges of the Court would hear 
the case. And it has ordered a supplemental briefing which will 
be completed in August.
    The second major issue pending on appeal is the scope of 
the government's obligations under the contract, and 
principally at what rate did the government need to accept 
spent nuclear fuel? And the rate is a very significant issue 
because it actually is the driving force between what the 
government's damages are. Last summer the Federal Circuit 
entered a number of decisions setting a rate. This rate was 
lower than what the utilities had wanted, higher than what the 
government had asked for, and higher than the rate the 
government has used in the settlements it has entered to date. 
That decision is not necessarily final. The government still 
has options to ask the entire Federal Circuit to rehear the 
case, either those cases or subsequent cases coming to the 
Court, to set a definitive rate of acceptance.
    To date, all payments have been made out of the Judgment 
Fund that has been mentioned. The government's original 
position was that payments should be made out of the Nuclear 
Waste Fund. But the United States Court of Appeals for the 
Eleventh Circuit back in 2002 rejected that argument. And 
therefore, the only available funds to pay these judgments is 
the Judgment Fund.
    Now, a word about litigation costs. These costs to the 
government to litigate these cases are quite significant and 
they represent a significant burden on the Department of 
Justice, implicating our ability to defend other cases. I would 
note that the unit of the Justice Department that defends these 
cases spends anywhere from twelve to fifteen attorney hours per 
year defending cases, just the attorneys. And the total 
resources that are spent on the spent nuclear fuel cases 
represent 45 percent of that unit's budget, notwithstanding the 
fact that they are defending billions of dollars in cases in 
other fields. To date, the Department has expended $24 million 
in attorneys' costs, $91 million in expert funds, and $39 
million in litigation support costs and defenses, for a total 
of approximately $150 million. To date, the Department has 
funded these expenses exclusively. The Department of Energy has 
not provided funds but they have provided cooperation in other 
respects and as Mr. Kouts notes we have a very good working 
relationship in handling these cases.
    To give you some idea of what we face, so far this year we 
have had trials in four cases involving five utilities where 
the total amount of money claimed was $543 million. This month 
alone two more cases are going to trial with the total amount 
of claims of $64 million. In August another case is going to go 
to trial where the claim is $174 million. In the summer and the 
fall two more cases are going to go to trial where the amount 
requested is $100 million. And then in December another case is 
going to go to trial where the amount requested is $30 million. 
So far, there are already three cases set for trial in 2010 
where the total amount expected to be claimed is $335 million. 
And we are predicting that the total number of cases that will 
go to trial in fiscal year 2010 will be twelve, and fiscal year 
2011 thirteen cases.
    As I noted, these cases will continue to be filed and 
litigated into the foreseeable future because of the partial 
breach ruling. I would note recently, in addition to the 
contracts in which DOE has already been found to be in breach, 
DOE has entered into some new contracts with utilities who want 
to build some new nuclear power plants. We worked closely with 
DOE to try to come up with provisions and that that would 
ultimately, if DOE is unable to accept spent nuclear fuel, that 
would limit the government's potential liability.
    We understand that the administration is going to convene a 
blue ribbon panel of experts to make recommendations going 
forward and that might provide a basis for revising the 
statutory framework to govern the existing obligations. We 
would suggest that any legislative solution to these issues 
also include provisions to address the government's outstanding 
liability. A legislative solution would be preferable to the 
current drain on the resources of the courts and the Department 
of Justice caused by this seemingly endless litigation.
    In summary, the spent nuclear fuel litigation has already 
cost the government significant sums in terms of liability and 
litigation costs, likely to continue to do so into the 
foreseeable future. Thank you for your patience and I look 
forward to responding to your questions.
    [The prepared statement of Mr. Hertz follows:]

Prepared Statement of Hon. Michael F. Hertz, Deputy Assistant Attorney 
          General, Civil Division, U.S. Department of Justice

    Mr. Chairman, and members of the Committee, I am Michael F. Hertz, 
and I am a Deputy Assistant Attorney General of the Department of 
Justice, Civil Division. I am pleased to testify today regarding the 
status of litigation concerning the Department of Energy's (DOE) 
obligations under the Nuclear Waste Policy Act (NWPA) of 1982.
    Let me note at the outset that much of the litigation about which 
you have asked the Department of Justice to provide testimony is still 
pending in the Federal courts. As a result, the Department's pending 
matter policy applies to any discussion of those cases. Pursuant to 
that policy, I will be happy to discuss matters that are in the public 
record.
                               background
    In 1983, pursuant to the NWPA, the DOE entered into 76 standard 
contracts with entities, mostly commercial utilities,that were 
producing nuclear power. Through the standard contracts, DOE agreed 
that by January 31, 1998, it would begin accepting spent nuclear fuel 
and high-level radioactive waste (collectively, SNF) created by the 
utilities. In return, the utilities agreed to make quarterly payments 
into the Nuclear Waste Fund (NWF) created by the statute. The utilities 
began making payments into the NWF in 1983. In 1987, Congress 
designated Yucca Mountain in Nevada as the sole potential site for a 
Federal repository for disposal of the SNF. In May 1995, DOE published 
a notice in the Federal Register advising the utilities that held 
standard contracts and others that DOE would be unable to begin 
acceptance of SNF on January 31, 1998. The notice also explained that 
DOE's acceptance beginning on that date was conditioned upon the 
existence of an operational repository. 60 Fed. Reg. 21793 (May 3, 
1995).
    In response to this notice, several nuclear utilities filed suit in 
the United States Court of Appeals for the District of Columbia 
challenging DOE's understanding. The District of Columbia Circuit held 
that DOE was required to begin SNF acceptance in some type of facility 
by January 31, 1998. See Indiana Michigan Power Co. v. Department of 
Energy, 88 F.3d 1272, 1277 (D.C. Cir. 1996). After DOE continued to 
inform utilities that it would be unable to begin accepting SNF by 
January 31, 1998, the utilities again requested an order directing that 
DOE perform under the standard contracts. The District of Columbia 
Circuit denied the utilities' request and instead found that the 
utilities' remedy could be addressed through breach of contract claims. 
Northern States Power Co. v. United States, 128 F.3d 754, 759 (D.C. 
Cir. 1997), cert. denied, 525 U.S. 1015 & 1016 (1998). The court did, 
however, issue a mandamus order [added to accord with later reference 
to DC Cir mandamus writ] that barred DOE from asserting that its delays 
in performing the standard contract were ``unavoidable'' and, 
therefore, excused pursuant to the ``unavoidable delays'' provision of 
the standard contracts.
              status of court of federal claims litigation
    To date, utility companies have filed 71 cases in the United States 
Court of Federal Claims, alleging that DOE's delay in beginning SNF 
acceptance constituted a breach of contract. The Court of Appeals for 
the Federal Circuit, in Maine Yankee Atomic Power Co. v. United States, 
225 F.3d 1336 (Fed. Cir. 2000), has ruled that the delay constitutes 
such a breach.
    The utilities' damages claims largely are for the costs incurred to 
store SNF that they allege DOE would have accepted from them absent the 
breach--specifically, storage costs that utilities allege they would 
not have expended had DOE begun timely performance under the standard 
contracts. In addition, several utilities have alleged damages arising 
from the ``diminution-in-value'' of their plants as the result of DOE's 
delay, claiming that they realized these damages when they sold their 
plants to other utilities.
    Utility industry reports have estimated that the claims will total 
about $50 billion, which far exceeds the amount the utilities have paid 
into the NWF pursuant to the standard contracts. DOE's most recent 
estimate of potential liability is $12.3 billion, based upon a 
projected start date of 2020. These estimates do not fully take into 
account the Government's defenses or the possibility that plaintiffs 
will not be able to prove the full extent of their claims, and they 
were developed before the Administration's recent announcement about 
the general cessation of Yucca Mountain activities.
    In the first case to proceed to trial on the merits in March 2004, 
the trial court found that the utility had not incurred any damages as 
a result of the partial breach of contract through the date of trial 
and denied any monetary recovery, although it ruled that the utility 
may return to court if and when it incurs damage because of the delay 
in spent fuel acceptance. Indiana Michigan Power Co. v. United States, 
60 Fed. Cl. 639 (2004). In affirming this ruling on appeal, the 
appellate court held that all claims for breach of the standard 
contracts may only run through the date of the complaint and that 
utilities must file new complaints with the trial court seeking damages 
as they are incurred. Indiana Michigan Power Co. v. United States, 422 
F.3d 1369 (Fed. Cir. 2005).
    As a result of this ruling, utilities must file new cases with the 
trial court at least every six years to recover any costs incurred as 
the result of DOE's delay, and we expect to continue to litigate these 
claims until after DOE begins performance of the standard contracts. We 
have received a total of five complaints filed by utilities while their 
first claims were still pending before the trial or appellate courts.
    Of the 71 lawsuits filed, 51 cases remain pending either in the 
Court of Federal Claims or in the Court of Appeals for the Federal 
Circuit, 10 have been settled, six were voluntarily withdrawn, and four 
have been litigated through final unappealable judgment.
    While asserting legitimate defenses to plaintiffs' claims in 
litigation, we also have made concerted efforts to settle claims. The 
settlements resolving claims on 12 of the standard contracts in 10 of 
the cases involve five companies: Exelon Generation, LLC; South 
Carolina Electric & Gas Company; Omaha Public Power District; Duke 
Power Company; and, Florida Power & Light Company. These settlements 
provide for the periodic submission of claims to the contracting 
officer for costs incurred since the date of the last submission. In 
total, the Government has paid $565 million pursuant to these 
settlements and one trial court judgment that was not appealed.
    Of those 51 pending cases, the trial court has entered judgment in 
13 cases. Six of those cases are currently on remand to the trial court 
and seven are pending on appeal. Between judgments (most of which are 
not final because of appeals or remands) and settlements, the 
Government's liability currently stands at $1.3 billion. The time 
periods covered by these judgments vary, from as short a period as 
1998-2001 to as long a period as 1998-2006. The time period for the 
amounts paid in settlement is 1998-2007.
    The following chart summarizes the status of the 71 cases that have 
been filed:
------------------------------------------------------------------------
          Number of cases                      Status/Comments
------------------------------------------------------------------------
 6                                   Voluntarily withdrawn
10                                   Settled
 4                                   Final unappealable judgments
 7                                   Final judgments on appeal
44                                   Pending before the trial court
------------------------------------------------------------------------
71                                   Total
------------------------------------------------------------------------

                      significant issues on appeal
    There are two major issues that should be decided in the pending 
appeals which will have a significant effect upon the Government's 
continuing liability in these cases. The first issue concerns the 
Government's ability to present a defense based upon the ``unavoidable 
delays'' clause in the contracts. As noted, the District of Columbia 
Circuit, in Northern States, mandated that the Government could not 
rely upon such a defense in its litigation of delay claims arising from 
its breach. One of the trial court judges at the Court of Federal 
Claims found the District of Columbia Circuit's writ of mandamus to be 
void and that DOE is entitled to raise the ``unavoidable delays'' 
defense. Nebraska Public Power District v. United States, 73 Fed. Cl. 
650 (2006). On appeal, the Federal Circuit recently announced sua 
sponte that it would accept the case for en banc review. Supplemental 
briefing is due August 5, 2009. If the trial court ruling is affirmed, 
the Government may be able to pursue an absolute defense to the 
utilities' damages claims.
    The second major issue to be decided in the cases on appeal is the 
scope of the Government's obligation to utilities regarding the amount 
of SNF to be accepted. In decisions issued in August 2008, the Federal 
Circuit ruled that DOE's performance obligation is set forth in a 
document issued in 1987, prior to the passage of the 1987 amendments to 
the NWPA. Yankee Atomic Electric Co. v. United States, 536 F.3d 1268 
(Fed. Cir. 2008); Pacific Gas & Electric Co. v. United States, 536 F.3d 
1282 (Fed. Cir. 2008); Sacramento Municipal Utility District v. United 
States, Nos. 2007-5052, -5097, 2008 WL 3539880 (Fed. Cir. Aug. 7, 
2008). The rates set forth in this document are higher than the rates 
that the Government has sought to have the trial court apply in 
determining damages. These cases are currently on remand to the trial 
court. We may seek rehearing en banc of the appellate decisions if 
these cases are appealed again or may seek review in another spent 
nuclear fuel case.
                  payment of judgments and settlements
    To date, all payments to the utilities have come from the Judgment 
Fund. In Alabama Power Co. v. United States Department of Energy, 307 
F.3d 1300 (11th Cir. 2002), the Court of Appeals for the Eleventh 
Circuit ruled that the Government could not use the NWF to pay for any 
of the damages that the utilities incur as a result of DOE's delay. The 
only other available funding source that has been identified to date is 
the Judgment Fund. There is no statutory requirement that DOE be 
required to reimburse the Judgment Fund.
                            litigation costs
    The costs to the Government to litigate these cases are 
significant. The Department of Justice has expended approximately $24 
million in attorney costs, $91 million in expert funds, and $39 million 
in litigation support costs in defense of these suits. In addition, DOE 
and the Nuclear Regulatory Commission have expended thousands of hours 
to support this effort. To date, DOE has not provided any funding for 
the litigation effort. There is every reason to believe that these 
cases will continue to be filed and litigated into the foreseeable 
future, and these costs will continue to be incurred.
    Unless we are successful in being permitted to mount an 
``unavoidable delays'' defense in the near future, or there is some 
other resolution to the current and potential litigation, the liability 
associated with delays in DOE's ability to accept SNF will only 
increase.. Further, in addition to the contracts under which DOE is 
already in breach, we understand that, in Fall 2008, DOE executed 
several new contracts with entities that hope to open new commercial 
nuclear reactors in the future and that, in those new contracts, DOE 
agreed to accept and dispose of SNF from those new nuclear reactors at 
a certain point after they open. If DOE is unable to accept SNF, the 
United States may incur additional liabilities under these recently 
executed contracts unless a method of resolving utility delay claims 
can be developed through some type of legislative action.
    We understand that the Administration intends to convene a ``blue 
ribbon'' panel of experts to make recommendations for alternative 
options for the long-term storage and disposal of SNF that could 
provide a basis for revising the statutory framework that now governs 
these obligations. Any legislative solution to these issues should also 
consider provisions to address the Government's outstanding liability. 
A legislative solution would be preferable to the current drain on the 
resources of the courts and the Department of Justice caused by the 
seemingly endless litigation.
    In summary, the SNF litigation has already cost the Government 
significant sums in terms of liability and litigation costs and will 
most likely continue to do so into the foreseeable future.

    Chairman Spratt. Thank you, Mr. Hertz. Mr. Cawley?

                   STATEMENT OF KIM P. CAWLEY

    Mr. Cawley. Good morning, Mr. Chairman, members of the 
Committee. Thanks for the opportunity to be here this morning 
to talk about the nuclear waste program with you. Since CBO 
last testified on this subject in 2007 there have been some 
important developments that I would like to briefly summarize 
from my prepared statement.
    First, the administration has announced that it intends to 
terminate the Yucca Mountain project and explore other 
alternatives for disposing of nuclear waste. Despite that 
change in policy, the government remains responsible for 
handling this waste from nuclear power plants. And regardless 
of how we meet that responsibility this job will require some 
significant federal spending over many decades.
    Over the past twenty-five years or so nuclear utilities 
have paid nearly $17 billion to the Department of Energy for 
waste disposal services that they have not yet begun to 
receive. Currently the Department has no identifiable plan for 
handling the waste. Meanwhile, operators of nuclear utilities 
continue to pay $750 million to $800 million a year to cover 
the cost of the waste that they are generating.
    The government is now more than ten years behind in its 
schedule to fulfill its contractual obligation to dispose of 
waste. So far the U.S. government from the Claims and Judgments 
Fund has paid utilities $565 million in compensation because it 
has failed to meet that schedule. The Department has estimated 
that if it could begin disposing of waste ten years from now, 
in 2020, it would still need to continue making these 
compensation payments of around $12 billion before it could 
catch up and start disposing of waste on schedule. How the 
administration's decision to terminate the Yucca Mountain 
project will affect these liabilities is unclear. But if the 
schedule slips beyond 2020 compensation payments from the 
Treasury's Judgment Fund can be expected to increase beyond $12 
billion.
    Finally, I would like to mention that nuclear waste remains 
a growing issue. The amount of civilian and defense waste 
waiting for disposal at Yucca Mountain is now about equal to 
the legal capacity, 70,000 metric tons, of the repository that 
was authorized in the Nuclear Waste Policy Act. The Nuclear 
Regulatory Commission has extended the licenses of many of the 
nation's nuclear power plants and has received applications to 
build twenty-six more new plants. Of course, we do not know how 
many of these plants will be built, or how long any of these 
plants will continue to operate, but all of them could add to 
the growing stockpile of waste that must be handled. And 
without a change in law to expand the capacity of the nuclear 
waste system taxpayers will continue to compensate utilities to 
store substantial amounts of waste in the future.
    Thanks again for the opportunity to be here and I would be 
happy to answer any of your questions about the budgetary 
aspects of the program.
    [The prepared statement of Mr. Cawley follows:]

     Prepared Statement of Kim Cawley, Chief, Natural and Physical 
      Resources, Cost Estimates Unit, Congressional Budget Office

    Mr. Chairman, Congressman Ryan, and Members of the Committee, I am 
pleased to appear before you today to discuss the federal government's 
responsibilities and liabilities under the Nuclear Waste Policy Act of 
1982 (NWPA). Since I last testified on this subject in 2007, there have 
been a number of important developments that I would like to highlight 
in my testimony:
     The Administration has announced that it intends to 
terminate the Yucca Mountain project and explore other alternatives for 
disposing of nuclear waste. Despite that change in policy, however, the 
federal government remains responsible for permanently disposing of 
spent nuclear fuel generated by civilian facilities, which pay fees for 
that service. Regardless of how the government meets that 
responsibility, discharging those liabilities will require significant 
federal spending over many decades.
     The Department of Energy (DOE) has not yet disposed of any 
civilian nuclear waste and currently has no identifiable plan for 
handling that responsibility. Nevertheless, the operators of nuclear 
utilities continue to pay fees--of about $750 million annually--to 
cover the costs of disposing of the nuclear waste they generate. Over 
the past 25 years, those firms have paid a total of $16.3 billion for 
waste disposal services that they have not yet begun to receive.
     The federal government is more than 10 years behind 
schedule in its contractual obligations to remove and dispose of such 
waste, and the government has paid nuclear utilities $565 million in 
compensation for costs incurred because of its failure to meet that 
schedule. DOE currently estimates that liabilities to electric 
utilities for such damages will total more than $12 billion if the 
department begins to accept nuclear waste by 2020. How the 
Administration's decision to terminate the Yucca Mountain project will 
affect the federal government's liabilities is unclear, but the 
estimate will climb if the department's schedule slips beyond 2020. 
Regardless of whether or when the government opens a repository, such 
payments (which come from the Department of the Treasury's Judgment 
Fund) will probably continue for several decades.
     The Nuclear Regulatory Commission (NRC) has now extended 
the operating licenses of more than half of the nation's nuclear power 
plants for another 20 years beyond the span of their initial operating 
licenses. Meanwhile, the amount of existing waste may already exceed 
the amount authorized to be disposed of at the repository envisioned 
under NWPA. Ultimately, a change in law will be required to authorize 
DOE to permanently dispose of all of the waste anticipated to be 
generated by existing nuclear power plants at a site other than Yucca 
Mountain. Without such a change and steps toward that end, taxpayers 
will continue to pay utilities--through settlements and claims awards--
to keep storing substantial amounts of waste.
          the federal government's responsibilities under the
                        nuclear waste policy act
    The Nuclear Waste Policy Act established statutory responsibility 
for federal actions to take possession of and permanently dispose of 
spent nuclear fuel generated at civilian nuclear reactors, as well as 
to dispose of radioactive waste resulting from federal activities in 
manufacturing nuclear weapons. Under current law, the only solution 
that the government is authorized to pursue involves permanent disposal 
of waste at a geologic repository, and Yucca Mountain in Nevada is the 
only place where such a repository may be located.
    Under NWPA, the federal government, through DOE, faces substantial 
costs to establish a repository for the nation's nuclear waste. It has 
also incurred contractual obligations to remove waste from civilian 
nuclear facilities. Under the legislation, the federal government will 
have to spend tens of billions of dollars over many decades to fulfill 
its obligations to dispose of waste from the current generation of 
civilian nuclear reactors. The government will also be responsible for 
waste from any new facilities built in the future. However, because of 
statutory constraints on the amount of waste that the repository 
envisioned under NWPA can store, waste from any such new facilities 
cannot be accommodated without a change to the law.
    NWPA authorized DOE to build a geologic repository to permanently 
store up to 70,000 metric tons of spent nuclear fuel generated by 
civilian nuclear power plants and high-level radioactive waste 
generated by federal facilities. The total amount of commercial and 
defense-related waste that has already been generated may exceed that 
capacity.
           financing the costs of disposing of nuclear waste
    The Nuclear Waste Policy Act also addressed how the disposal of 
spent nuclear fuel and defense-related waste was to be paid for. Under 
NWPA, the costs are to be borne by the parties that generate it, and 
the law authorizes DOE to levy fees on the nuclear power industry to 
cover the costs for the waste it generates. The law also authorizes 
appropriations from the Treasury's general fund to pay for disposing of 
high-level radioactive waste generated by the nation's defense 
programs.
       financing the costs associated with civilian nuclear waste
    Starting in 1983, NWPA authorized DOE to charge electric utilities 
fees to cover the costs of disposing of the nuclear waste they 
generate. Utilities today pay annual fees at a rate of 1 mil (0.1 cent) 
per kilowatt-hour of electricity generated and sold by nuclear power 
plants. The fees, which are recorded in the budget as offsetting 
receipts (a credit against direct spending), are deposited into the 
Treasury's Nuclear Waste Fund. Amounts in that fund are available for 
spending only to the extent provided in annual appropriation acts. 
Under NWPA, DOE is required to periodically review and, if necessary, 
adjust the level of fees to ensure that the fund has sufficient 
resources to pay for disposing of the utility industry's nuclear waste. 
The department has not increased that annual charge since 1983.
    In addition to the ongoing yearly fees, NWPA established one-time 
fees to cover the costs of disposing of waste that was generated before 
the law was enacted. DOE provided utilities with several options for 
paying that one-time charge, but several utilities have not yet paid 
the fee, and a significant amount remains uncollected.
    NWPA authorized appropriations from the Nuclear Waste Fund to cover 
the costs of the civilian nuclear waste program and also permitted DOE 
to borrow from the Treasury (subject to approval in advance in 
appropriation acts) if balances in the fund were insufficient to cover 
the program's immediate costs. (The law stipulated that amounts 
borrowed from the Treasury be repaid from future fee collections.) In 
addition, the law authorized the Secretary of the Treasury to invest 
the fund's unspent balances in nonmarketable Treasury securities, which 
are credited with interest.
    From 1983 through the end of fiscal year 2008, $29.1 billion was 
credited to the fund (see Table 1). That amount includes fees paid by 
the nuclear industry totaling $16.3 billion, as well as $12.8 billion 
from intragovernmental transfers of interest earnings. Cumulative 
expenditures from the fund during that period totaled about $7.1 
billion, mostly for analyses related to the waste disposal program and 
for appropriations to DOE for initial design work on the Yucca Mountain 
facility. The NRC and other federal entities also received modest 
appropriations from the fund for work related to the program, leaving 
an unspent balance of $22.0 billion at the end of fiscal year 2008. The 
Congressional Budget Office (CBO) estimates that in 2009, another $2.0 
billion will be credited to the fund--nearly $800 million from fees and 
the rest from interest. Expenditures in 2009 will total $0.2 billion, 
bringing the fund's end-ofyear balance to $23.8 billion, CBO estimates.
    If all of today's 104 licensed nuclear reactors continue to 
generate electricity, future annual receipts from industry fees are 
likely to average between $750 million and $800 million for at least 
the next decade. Most U.S. nuclear power plants began operating in the 
mid-1970s or during the 1980s under 40-year licenses. The NRC has 
approved 20-year extensions to the licenses of more than half of the 
plants in operation today, and it anticipates that many of the others 
will apply for such extensions. When those plants reach the end of 
their license extensions (or their economically useful lives) and cease 
operations--probably in the 2030s and 2040s--they will no longer pay 
fees to the Nuclear Waste Fund to dispose of their waste.

         TABLE 1.--FEDERAL CASH FLOWS FOR NUCLEAR WASTE DISPOSAL
                          [Billions of dollars]
------------------------------------------------------------------------
                                 Cumulative totals,    CBO's estimates,
                                 1983 through 2008           2009
------------------------------------------------------------------------
Nuclear Waste Fund (for
 civilian nuclear waste):
  Deposits:
    Annual fees...............                14.8                  0.8
    One-time fees.............                 1.5                    0
                               -----------------------------------------
      Subtotal................                16.3                  0.8
    Interest credited\a\......                12.8                  1.2
                               -----------------------------------------
      Total...................                29.1                  2.0
  Disbursements...............                 7.1                  0.2
  End-of-Year Balance.........                22.0                 23.8
General Fund (for defense-
 related activities):
  Appropriations                               3.6                  0.1
------------------------------------------------------------------------
Sources: Congressional Budget Office and Department of Energy.
Note: Amounts are in nominal dollars.a. Components may not add up to totals because of rounding.

    Receipts from the one-time fees that remain unpaid and become due 
once the federal repository is opened currently amount to about $3.2 
billion, DOE estimates.\1\ Interest accrues on the balances due from 
those one-time fees until the utilities pay them to the government; 
therefore, eventual deposits of such fees will probably be 
significantly greater than the current balances due. Also accruing and 
adding significantly to the fund's balances are credits of interest on 
the fund's unspent dollars. Those amounts are intragovernmental 
transfers and do not create net receipts to the federal government, but 
they do add to the resources that are authorized to be used for the 
waste disposal program.
   financing the costs associated with defense-related nuclear waste
    In addition to the amounts appropriated from the fees and interest 
credited to the Nuclear Waste Fund, the Congress has made annual 
appropriations to the nuclear waste program to cover the costs that DOE 
estimates are related to the disposal of nuclear waste generated by 
federal defense programs. In 2008, DOE determined that about one-fifth 
of the total costs of the waste disposal program was attributable to 
that endeavor and that this share of the program's total costs should 
be paid for with appropriations from the general fund of the 
Treasury.\2\ Since 1993, the Congress has provided about $3.7 billion 
from the general fund for such costs.
                  estimates of total life-cycle costs
    In 2008, DOE published an estimate of the total costs--including 
those for transportation and project management--associated with the 
planned underground nuclear waste disposal facility. In DOE's 
estimation, the project would cost about $96 billion in 2007 dollars 
over an operating period of more than 100 years.\3\
    DOE also reported on the adequacy of the annual fee charged for 
nuclear waste disposal.\4\ In its study, DOE evaluated several 
scenarios in which the costs attributable to civilian nuclear waste 
ranged from 70 percent to 85 percent of total costs. In nearly all 
cases, DOE determined that the annual fee, along with accrued interest, 
was likely to generate sufficient balances to cover the estimated 
costs. The agency also noted, however, that under certain conditions, a 
future increase in the fee might become necessary.
    Judgments about whether the fee is adequate are highly sensitive to 
estimates of certain key variables, such as the costs for the 
envisioned method of disposal and inflation. Such determinations are 
also sensitive to estimates of the interest credited to the fund--
estimates that are a function of interest rates and fund balances, 
which in turn depend on projections of appropriated spending from the 
fund. In light of the Administration's policy to terminate the Yucca 
Mountain project and pursue an alternative means of waste disposal, 
there is no current basis to judge the adequacy of the fee to cover 
future costs because the method of disposal and its life-cycle costs 
are unknown.
   federal contractual obligations and liabilities for nuclear waste
    Under contracts signed with electric utilities pursuant to the 
Nuclear Waste Policy Act, DOE was scheduled to start removing waste 
from storage sites at individual power plants for transport to a 
federal storage or disposal facility by 1998. After the federal 
government missed its 1998 contractual deadline to start collecting 
waste, electric utilities began--successfully--to sue the government 
for resulting damages. In seeking to resolve the initial lawsuits, DOE 
anticipated that it would pay court-awarded damages to individual 
utilities from amounts appropriated from the Nuclear Waste Fund or by 
issuing credits to those utilities (to reduce their future payments to 
the fund) in the amount of the damages that had been awarded.
    In 2002, however, the U.S. Court of Appeals for the Eleventh 
Circuit held that DOE could not use the Nuclear Waste Fund to pay the 
damages resulting from the government's partial breach of its 
contracts.\5\ According to the court, payment of the costs of interim 
storage incurred by the utilities because of the partial breach was not 
within the uses of the fund that were permitted under NWPA. Also, the 
court pointed out, because the department would inevitably raise future 
fees to compensate for any such payments, the injured utilities would 
be the ones to ultimately bear the costs of the partial breach of the 
contracts if they were paid from the fund. In addition, utilities that 
did not litigate their claims would end up paying larger fees to cover 
the costs of damage claims made by other utilities. Agreeing with the 
parties that brought the lawsuit, the court stated that making 
utilities contribute to a fund that disproportionately paid the storage 
costs of other utilities would raise a serious constitutional question 
about whether the action constituted a ``taking.'' Following the 
court's decision, the government subsequently paid damages to the 
utilities from the Treasury's Judgment Fund.
                           the judgment fund
    The Judgment Fund is a permanent, indefinite appropriation from the 
Treasury that is available to pay final judgments and awards against 
the United States that cannot legally be paid from any other existing 
appropriation.\6\ (The fund has no fiscal year limitations, and there 
is no need for the Congress to appropriate money to replenish it.) The 
fund provides the authority for the government to pay for most court 
judgments and settlement agreements entered into by the Department of 
Justice to resolve actual or imminent lawsuits against the federal 
government. Generally, agencies are not required to reimburse the 
Judgment Fund for payments made on their behalf unless the Congress 
appropriates money specifically for that purpose.
           judgments awarded and paid to utilities under the
                        nuclear waste policy act
    Under the Department of Justice's settlements with electric 
utilities, utilities have been reimbursed for the actual costs they 
incurred because of DOE's partial breach of its contracts. Such costs 
are unique to each nuclear power plant and depend partly on the age and 
operating status of the plant and the size and configuration of the 
plant's available space for nuclear waste storage.
    According to the Department of Justice, as of May 2009 electric 
utilities had filed 71 lawsuits seeking compensation for costs they 
incurred because the federal government could not begin to accept 
nuclear waste for disposal in 1998. Of those lawsuits, 10 have been 
settled, 6 were voluntarily withdrawn, and 4 have been litigated to a 
final judgment that cannot be appealed. Of the 51 pending cases, 13 
have been decided, but some are under appeal. In total, if those 
decisions stand, the federal government's liabilities under judgments 
and settlements currently total $1.3 billion. That amount includes $565 
million that has already been paid to five electric utilities pursuant 
to settlements (including a payment of $35 million to the federally 
owned Tennessee Valley Authority.) \7\ Because judicial claims for 
damages are made retrospectively, many more cases can be expected in 
the coming decades as utilities seek to recover their ongoing costs for 
storing nuclear waste long after they expected it to be removed and 
sent to a permanent disposal site.
         future settlements under the nuclear waste policy act
    Litigation is ongoing regarding how to calculate damages for DOE's 
partial breach of its contractual commitments. The department currently 
estimates that if it begins to accept waste in 2020, taxpayers' total 
liabilities to electric utilities will total $12.3 billion (in today's 
dollars).\8\ Further, DOE anticipates that payments from the Judgment 
Fund will span a number of decades after 2020.
    DOE's estimate of future damages is uncertain and is predicated on 
the department's views of the types of additional business and storage 
expenses that the courts will determine are appropriate and reasonable 
and should be paid by the department. Those determinations will depend 
on such factors as the estimated rate at which DOE would have removed 
waste from a particular facility if the department had been able to 
accept waste in 1998. If utilities successfully argue that the waste-
acceptance rate used for the purpose of calculating damages should 
exceed the rate used in DOE's projections of liabilities, costs will 
probably surpass $12.3 billion.
    Similarly, costs may be greater if the courts take a broader view 
of the expenses for which utilities should be compensated. Although the 
federal government is responsible for the permanent disposal of nuclear 
waste, individual utilities are responsible for storing the waste until 
it can be delivered to a permanent storage facility. Because the 
characteristics of utilities' sites vary, the determination of 
incremental expenses incurred at particular sites must be made on a 
case-by-case basis and will ultimately depend on the courts' views, 
which could differ from DOE's.
    DOE has previously estimated that liabilities will increase--by 
roughly $500 million annually--if the schedule for completing the 
planned repository slips further and waste continues to accumulate at 
utilities' storage sites.\9\ And even once the department begins to 
accept waste, it will face a backlog that, at best, will take more than 
20 years to eliminate. As long as the department remains behind 
schedule, taxpayers will continue to incur liabilities.
    Finally, it is not clear how the Administration's decision to 
terminate the Yucca Mountain repository will affect the federal 
government's liabilities to electric utilities. If DOE is found at some 
point to have fully breached its contractual commitments, the federal 
government's liabilities could increase considerably.
          the outlook for the federal government's liabilities
    Ultimately, a change in law will be required to authorize DOE to 
permanently dispose of all of the waste anticipated to be generated by 
existing nuclear facilities at a site other than Yucca Mountain. 
Otherwise, taxpayers will continue to pay utilities, through 
settlements and claims awards, to keep storing substantial amounts of 
waste.
    The Nuclear Waste Policy Act sets the storage capacity of the Yucca 
Mountain site at no more than 70,000 metric tons. DOE estimates that it 
is responsible for disposing of nearly that many tons of existing spent 
nuclear fuel and high-level waste. The nation's existing nuclear power 
plants are producing another 2,000 metric tons of waste per year. In 
other words, the total volume of waste may already exceed the statutory 
capacity of the repository envisioned under NWPA.
    Moreover, the NRC has received 26 applications for licenses to 
build new nuclear power plants in the next few years. If constructed, 
each of those plants would produce around 20 metric tons of waste per 
year, or about 1,000 metric tons over a 40- to 60-year operating 
period. Such plants would also pay fees to the Nuclear Waste Fund, and 
their waste would become a federal liability because, under NWPA, 
nuclear plants are required to sign waste disposal agreements with DOE. 
Without additional storage capacity, the cost of storing that waste 
would probably become an additional liability of the Judgment Fund.
    In any case, even if legislation is enacted to authorize DOE to 
pursue a repository at an alternative site with sufficient capacity to 
store all anticipated nuclear waste, federal liabilities will remain 
substantial, and payments from the Judgment Fund to compensate 
utilities for storing waste will continue for many years.
                                endnotes
    \1\ Data supplied to the Congressional Budget Office in July 2009 
by the Department of Energy's Office of Civilian Radioactive Waste 
Management.
    \2\ Department of Energy, Office of Civilian Radioactive Waste 
Management, Analysis of the Total System Life Cycle Cost of the 
Civilian Radioactive Waste Management Program, DOE/RW-0591 (July 2008).
    \3\ Ibid.
    \4\ Department of Energy, Office of Civilian Radioactive Waste 
Management, Fiscal Year 2007 Civilian Radioactive Waste Management Fee 
Adequacy Assessment Report, DOE-RW-0593 (July 2008).
    \5\ Alabama Power Co. v. United States, 307 F.3d 1300 (2002).
    \6\ In 2008, several thousand individual payments from the Judgment 
Fund amounted to nearly $0.8 billion; over the past 10 years, such 
payments have averaged around $1.2 billion annually. Most of the 
payments are made to settle claims related to federal employment, 
torts, property loss, discrimination, medical malpractice, and contract 
disputes.
    \7\ Information supplied to CBO in July 2009 by the Department of 
Justice.
    \8\ Information provided to CBO in July 2009 by the Department of 
Energy's Office of Civilian Radioactive Waste Management.
    \9\ Statement of Edward F. Sproat III, Director, Office of Civilian 
Radioactive Waste Management, Department of Energy, before the 
Subcommittee on Energy and Water Development of the House Committee on 
Appropriations (March 28, 2007).

    Chairman Spratt. Let me get something clear. There are a 
hundred and three operating nuclear reactors, commercial 
reactors in operation generating spent fuel waste. Is that a 
correct number? A correct approximation?
    Mr. Kouts. I have 104 operating reactors, sir.
    Chairman Spratt. All of these have contracts for ultimate 
waste disposal with the federal government?
    Mr. Kouts. Yes, they do, sir.
    Chairman Spratt. And the numbers you are speaking of 
encompass only a limited number of those, I take it? What 
percentage of the 104 have contracts that have been declared in 
breach?
    Mr. Kouts. Virtually all of them, sir.
    Chairman Spratt. Virtually all of them?
    Mr. Kouts. Yes. And in addition to the operating reactors 
there are also fourteen shut down reactors. And those shut 
downs are also covered by the standard contracts. So all the 
operating and shut down reactors, the 104 operating and the 
fourteen shut downs, are covered by the standard contracts that 
were signed back in the 1980's.
    Chairman Spratt. We have a fund of about $20 billion at 
this point in time for----
    Mr. Kouts. The latest estimate we have, sir--and we keep a 
running total of it--it is approximately $23 billion. Yes, sir.
    Chairman Spratt. It takes in about $1 billion to $1.5 
billion annually?
    Mr. Kouts. Approximately between $750 million to $1 
billion, and we make about $1 billion in interest every year 
based on the Treasury instruments that we invest in.
    Chairman Spratt. So this fund, based on the numbers you 
gave us, is still growing then? You have settled about $500 
million or $600 million worth of cases. And by the way, do 
these settlements, does the number you gave us in settlement 
amounts reflect the government's liability through a certain 
date but not through the completion of the full performance of 
full waste disposal? In other words, are they saying that we 
can establish as of this point in time we are entitled to, and 
you are liable for, waste clean up, waste disposal, but beyond 
this date in time you have still got further responsibilities 
to go?
    Mr. Kouts. Well, let me start and then maybe Mr. Hertz can 
fill in. The settlement agreements, sir, basically, set up a 
continuous process whereas a utility who has a settlement with 
the government incurs costs that are covered by the settlement. 
They come in----
    Chairman Spratt. Those actual costs, are you settling cases 
prospectively based upon the likelihood that the breach will be 
continuing? Or you simply take it to a date certain where they 
can demonstrate that the actual cost has been incurred and they 
sue for that judgment?
    Mr. Kouts. The settlements are essentially open ended. And 
they will continue to come to the government with the costs 
that they have incurred due to the government's delay. And 
those payments will stop when the government has performed, and 
caught up, and picked up all the backlog that we have incurred 
due to the fact that we didn't start to begin waste acceptance 
in 1998. So basically under the settlement agreements they come 
in every year with whatever costs, or every two years depending 
on when they incurred them, it is evaluated, the Department of 
Justice makes a judgment, and then there is a payment made from 
the Judgment Fund.
    Chairman Spratt. Mr. Cawley, you had in your report an 
estimate that in 2007 dollars the cost of meeting all of the 
liabilities of the federal government would be about $98 
billion, to do all of the waste acceptance and disposal?
    Mr. Cawley. I think the most recent life cycle cost 
estimate that was prepared by the Department for the entire 
waste facility over its lifetime was about $98 billion, nearly 
$100 billion, to pay for everything in the waste project.
    Mr. Kouts. If I could just supplement that comment? The $96 
billion figure are the total costs of the program that we 
issued last year with the assumption that Yucca Mountain was 
going to be built, and all the costs to move the fuel there and 
dispose of it are incorporated into that number. That number 
also includes past costs of the program. So roughly, it is 
about $85 billion more to complete Yucca Mountain.
    Chairman Spratt. But that assumes that you start accepting 
waste in 2020, does it not?
    Mr. Kouts. Yes it does, sir.
    Chairman Spratt. And if it is later it will be more? The 
liability, the costs will be greater?
    Mr. Kouts. Potentially yes, sir.
    Chairman Spratt. What is the plan of DOE for Yucca Mountain 
while it explores other alternatives?
    Mr. Kouts. My guidance, sir, is to continue the licensing 
process through fiscal year 2010 and to support the Secretary's 
blue ribbon panel which is going to be looking at those issues 
in terms of what the new policy alternatives are going to be. 
So that is the, we will continue the licensing process and 
provide support to that panel.
    Chairman Spratt. And for that purpose your budget request 
this year was about $34 million for 2010?
    Mr. Kouts. The administration's request was approximately 
$197 million to fund the continuation of the licensing 
proceeding and also to support the blue ribbon panel.
    Chairman Spratt. Why does the licensing procedure cost that 
much money, close to $200 million? Is there a lot of R and D, 
or experimentation, science, engineering connected with it?
    Mr. Kouts. There are a lot of people, a lot of scientists, 
a lot of engineers that we need in order to answer the 
questions of the Nuclear Regulatory Commission and to prepare 
for the adjudicatory hearings that the NRC will hold in that 
process. So we need that core support, our federal support and 
our contractor support, in order to be an active participant in 
that proceeding.
    Chairman Spratt. And does this keep your basic core 
competencies, your basic team, together for Yucca Mountain?
    Mr. Kouts. Yes, it does, sir.
    Chairman Spratt. Are there any significant job terminations 
because of the limited amount you are seeking for next year?
    Mr. Kouts. No, sir. We have gone through substantial 
reductions in the past but into fiscal year 2010 we do not 
anticipate a substantial reduction. There may be some minor 
reductions but no substantial reductions, sir.
    Chairman Spratt. Thank you very much. Mr. Simpson?
    Mr. Simpson. Thank you, Mr. Chairman. Let me start off by 
saying I am not here advocating for Yucca Mountain. What I am 
advocating for is a permanent geological repository. The 
decision to do Yucca Mountain was made years before I came into 
Congress. And what I am frustrated by is the amount of money we 
continue to spend on a project, get it to a license application 
point, and then in a matter of six weeks decide, ``Ah, we will 
focus on something else.'' It seems rather like it is made on 
the political decision rather than based on science. Can you 
tell me what the science was behind the decision, the science, 
to not proceed with Yucca Mountain?
    Mr. Kouts. I will take that question for the record, sir. I 
was not involved in that decision. I do not make policy, I 
implement it. But if you like, I will take that question for 
the record and get an answer for you.
    Mr. Simpson. I would love to have an answer for it because 
so far nobody has given one. The, I think all three of you have 
mentioned the administration's decision to terminate Yucca 
Mountain. What does the law require? The 2002 law passed by 
Congress? What does that require? Because I do not know that 
this is just the administration's decision. I think Congress 
has a role to play in this also. Can anybody tell me what that 
2002 law requires?
    Mr. Kouts. Well, I can tell you that the process that the 
Department went through, since I was intimately involved with 
it. There was a, in Section 114 of the Nuclear Waste Policy Act 
the Secretary of Energy made a recommendation to the President, 
and the President forwarded that recommendation to Congress in 
terms of siting Yucca Mountain for proceeding with the license, 
and to develop a license, and to develop the site. Under the 
statute there was an opportunity for the Governor of Nevada to 
submit a notice of disapproval, which he did. And that 
subsequently required a congressional resolution by both houses 
to be signed by the President to override that objection. That 
all occurred in the 2002 time frame.
    In terms of the legal issue about abandoning the site, 
again, although I have spent a lot of time with attorneys, I am 
not an attorney. You can see from my background I am an 
engineer. I will take that question for the record and get you 
an answer as to what, you know, whether a statute is required 
for that decision.
    Mr. Simpson. I would think--and I do not know this. I am 
not an attorney either, thank God. But I would think that it 
would be more than just a presidential decision not to do it. 
Which brings up the question of if we are terminating, if the 
administration says, ``Let us terminate Yucca Mountain,'' why 
the heck should I spend $197 million to proceed with a license 
application for something we are going to terminate? This seems 
just a little bit bass ackwards, especially when a lot of 
people, in fact almost everyone I have talked to, says the $197 
million is insufficient to meet the demands of the NRC and the 
request that they are going to be asked for to proceed with the 
license. It was down last year, the Yucca Mountain budget was 
down $100 million or so last year. They laid off 500 people. 
Down $100 million again this year to $197 million, it makes me 
wonder, and I do not want to be a cynic as you can tell by my 
questions, is the reason the administration is pursuing the 
license application is so that we will not fall into full 
breach? Could you answer that, Mr. Hertz?
    Mr. Hertz. The question of full breach is really, in part, 
up to the parties. None of the plaintiffs to date have argued 
that the government is in full breach and have asked the Court 
for the relief. And the government's position is that in fact 
it intends to fully perform its obligations under the contract 
and the statute to ultimately take the nuclear waste. So I am 
not sure the question of the licensing going forward or not, 
you know, it might affect the plaintiffs' decision about 
whether to seek a full breach. But in theory it is really up to 
the parties to present that to the Court and none of them have 
done that to date.
    Mr. Simpson. That is because we have not, we are still 
funding it. If we zero funded the license application I suspect 
that would be one of the first things, because it would appear, 
and would in fact be a reality, that we were not proceeding 
with this.
    Mr. Hertz. The Department of Energy still has the 
obligation under the contract to accept spent nuclear fuel. The 
contract does not say it has to be Yucca Mountain.
    Mr. Simpson. But we have no alternative out there. The 
alternative is more studies. And let me also say that if more 
studies are the answer----
    Mr. Hertz. Right. And the government has already been found 
in breach because it has not accepted, starting in 1998, any 
spent nuclear fuel. And damages, damages are basically the 
costs that the utilities incur over and above what they would 
have incurred had the government performed under the contract.
    Mr. Simpson. Right.
    Mr. Hertz. And as long as we do not perform under the 
contract, and they can demonstrate that they are incurring 
costs that they would not have incurred, they are entitled to 
that payment from the government. And that will be true whether 
the Energy Department goes through the licensing proceeding or 
not, and it will be true until the government accepts the spent 
nuclear fuel that we are required to accept under the contract 
barring some other legislative change, you know, some other way 
to deal with this, you know, the parameters are essentially set 
for the litigation.
    Mr. Simpson. Could Congress, let me just----
    Chairman Spratt. I want one question just for 
clarification.
    Mr. Simpson. Okay, sure. Go ahead.
    Chairman Spratt. Does that mean if a nuclear utility 
reactor site has a pool of water on the premises built as part 
of the reactor, is there any attribution of cost of that? Does 
it have to be over and above that cost, or is any cost assigned 
to that?
    Mr. Hertz. Well, I mean, that is what the litigation is 
essentially about. That is, even if the government had fully 
performed under the contract, in many cases utilities would 
have had to build some sort of storage because not all the 
spent nuclear fuel was going to be picked up from day one. 
There was always going to be some rate that the government was 
going to accept it. And so what the litigation is about is what 
are the expenses over and above what the utility would have had 
to expend even if the government had performed under the 
contract.
    Chairman Spratt. Thank you. Excuse me.
    Mr. Hertz. And the question often turns on the rate. So if 
you have a lower rate, then the utilities arguably would have 
had to build more storage because the government, you know, 
lawfully could have picked up at a lower rate. If you come up 
with a larger rate utilities can then argue, ``We did not need 
as much storage but we had to build it because you did not pick 
up at the rate you were required to.
    Mr. Simpson. Is DOE paying currently for the storage in 
those pools at those sites?
    Mr. Kouts. No sir, we are not.
    Mr. Simpson. At none of the sites? Even those that would 
suit us?
    Mr. Hertz. Correct.
    Mr. Kouts. That is correct. The Nuclear Waste Policy Act 
basically directs that the owners of the waste will essentially 
pay for the cost of its storage until the government comes. The 
assumption was that we were going to be there on January 31, 
1998. We were not. The lawsuits are about the difference 
between what they were paying already to what the government 
should have done. So we are looking at the difference.
    Mr. Simpson. So we are paying some storage cost, 
essentially. What they figure we would have picked up?
    Mr. Hertz. The Judgment Fund is paying for it.
    Mr. Kouts. The Judgment Fund.
    Mr. Simpson. The Judgment Fund is paying? Excuse me.
    Mr. Hertz. Correct.
    Mr. Simpson. Should DOE be paying that instead of the 
Judgment Fund?
    Mr. Hertz. Well, as I said, the government's initial 
position was that those, it had come up in the context of a 
settlement, one of the early settlements, whether the 
settlement could be paid out of the Nuclear Waste Fund. And the 
theory being, one way to look at it is the Nuclear Waste fund 
is in part to build the facility to deal with the storage. If 
you are paying for the storage in another way, could you pay it 
out of the Nuclear Waste Fund? The utilities went to court and 
say, ``No, you cannot use the Nuclear Waste Fund for that 
purpose.'' And the United States Court of Appeals for the 
Eleventh Circuit agreed. They could not pay the settlement out 
of the Fund and that meant only the Judgment Fund was 
available. And that is based on an interpretation of the 
Nuclear Waste Fund.
    Mr. Simpson. Okay. The blue ribbon panel. The Secretary 
said in our hearing in Energy and Water Committee that a 
permanent geological repository will still be necessary?
    Mr. Kouts. Yes, sir.
    Mr. Simpson. And that we will look at other sites. The 
commission will look at other sites. The one site the 
commission will not look at is Yucca Mountain, the most studied 
piece of earth on the planet?
    Mr. Kouts. That is correct, sir.
    Mr. Simpson. Are you aware that Congress has in their 
appropriation bill on Energy and Water, it has not become law 
yet, but it is in the appropriation bill language which says 
the $5 million to the blue ribbon commission only goes to the 
blue ribbon commission if Yucca Mountain is also an alternative 
in that location?
    Mr. Kouts. Yes, sir. I am aware of that language.
    Mr. Simpson. Does that mean every site that had, that was 
considered for a permanent repository prior to the decision to 
select Yucca Mountain will now be reconsidered? Could you put 
up that slide? Number two, I think it is?
    [Slide]
    Mr. Simpson. All the sites in those states will now be 
considered?
    Mr. Kouts. Potentially yes, sir.
    Mr. Simpson. Except Yucca Mountain.
    Mr. Kouts. That is correct, sir.
    Mr. Simpson. Is any site in Nevada to be considered?
    Mr. Kouts. I really cannot answer that. That would be, 
again, you are speculating as to where the panel may come out.
    Mr. Simpson. I am speculating on where they might be able 
to look.
    Mr. Kouts. I really cannot say.
    Mr. Simpson. Because I find it strange that we have taken 
just one state--and again, I am not advocating for Yucca 
Mountain. I am advocating for a solution.
    Mr. Kouts. I understand, sir.
    Mr. Simpson. And it just seems that that decision was made 
a long time ago. I am going to hold off on the rest of my 
questions for a minute, and let everybody else get a round. But 
I will have a second round.
    Chairman Spratt. Thank you, Mr. Simpson. Mr. Edwards?
    Mr. Edwards. Thank you, Mr. Chairman. Mr. Kouts--is that 
the correct pronunciation?
    Mr. Kouts. It is Kouts, sir.
    Mr. Edwards. Mr. Kouts, okay.
    Mr. Kouts. Thank you.
    Mr. Edwards. Thank you. I am concerned about the speed with 
which the Obama administration made the decision to rule out 
Yucca as a repository. You said in response to Mr. Simpson's 
question that you did not make that decision, your 
responsibility is to implement the decisions. But as your 
position as Deputy Director of DOE's Office of Civilian 
Radioactive Waste Management, I assume you have some knowledge 
as to who was involved in making that decision. Who were the 
two or three principal players in making that decision in such 
a short period of time?
    Mr. Kouts. I would, basically it was a secretarial 
decision. It was his decision. And----
    Mr. Edwards. The Secretary of Energy?
    Mr. Kouts. Yes, sir.
    Mr. Edwards. Who would he have depended on for information?
    Mr. Kouts. I think that is a question for the Secretary, 
sir.
    Mr. Edwards. Are there other offices other than yours that 
have responsibility for Civilian Radioactive Waste Management 
in the Department of Energy?
    Mr. Kouts. No sir, there are not.
    Mr. Edwards. So your, it is your office that has the 
responsibility for overseeing that program? Did the Secretary 
come to you or your office to ask for information to help him 
make that decision?
    Mr. Kouts. I did have several meetings with the Secretary. 
However, I was not involved in his decision-making process in 
that regard.
    Mr. Edwards. Okay. My goal here is not to put you on the 
spot but to get the facts on the table. What has the 
administration said publicly in the press as to why it made the 
decision so quickly to end Yucca as a repository?
    Mr. Kouts. Well, the Secretary has stated on many occasions 
that he believes that there is a better solution, that 
technology can provide a better solution, that there are 
alternatives. And that is why he is setting up a blue ribbon 
panel to look at those alternatives.
    Mr. Edwards. He said there are better solutions. He also 
told me before our Energy and Water appropriations hearing 
several weeks ago that he believes the United States needs more 
nuclear power plants. Did he say publicly what was wrong with 
the present solution? Was it cost? Was it a particular safety 
question that he had? Has he said publicly there was a safety 
issue involved at Yucca?
    Mr. Kouts. Not to my knowledge, sir.
    Mr. Edwards. Okay. Did he ask you any information about the 
safety of Yucca?
    Mr. Kouts. We had wide-ranging discussions, sir. I, you 
know, most of them were policy related but, you know, and 
budget related and so forth. But again, that was a secretarial 
decision. I think the person to really answer that question is 
the Secretary, sir, not me.
    Mr. Edwards. Okay. There are principled people in Congress 
and the country who believe we should not build any more 
nuclear power plants. I respect their principled position. I 
happen to disagree with it. We just passed a bill to try to 
address global warming. I am one of those who believes that 
building more nuclear power plants is a safe way to provide 
energy and power for our country without contributing to global 
warming. For those of us who believe, as the Secretary said in 
answer to my question a few weeks ago, that we do need more 
nuclear power plants given, I guess at present it is about 20 
percent of our utility power supply. Is that correct?
    Mr. Kouts. That is correct, sir.
    Mr. Edwards. Those of us who believe we need more nuclear 
power plants, and I assume the Secretary, I take him on his 
word in his answer to my question, at what point do we have a 
train wreck here in terms of the Yucca problem, the repository 
problem, causing the commercial sector to just say, ``We have 
got to shut down our plants, new nuclear power plants.'' Does 
the train wreck occur this year? Next year? Five years from 
now? At what point do the companies start canceling their 
requests, or applications, for permitting?
    Mr. Kouts. Well, that is an interesting question. 
Eventually you need a nuclear waste repository of some type in 
order to take these materials. The timing of that, does it have 
to be next year or the year after? No. My sense is there needs 
to be clearly a path to getting the nation there. The time 
frame in which that is absolutely needed, the materials that 
are at the utility sites right now, they are handled safely. 
The NRC, Nuclear Regulatory Commission, makes sure that it is 
safe and it is safe. The question is, when are we going to 
fulfill the government's obligation to take these materials 
away? And that is really the purpose of this hearing. The 
Secretary has indicated that he wants to go on a different 
policy path than the one the nation has been on. The blue 
ribbon panel is going to review that and we will look for those 
policy alternatives as that body is formed and as those 
deliberations----
    Mr. Edwards. In your extensive experience in this arena, if 
the present sites at the nuclear power plants are safe why is 
it necessary to have a central repository? At what point does 
it not become safe to keep the spent rods, and the radioactive 
material, at the site of the plants?
    Mr. Kouts. Well, they can be kept there indefinitely. The 
question is, none of those plants were designed to be a 
repository, to protect these materials for hundreds of 
thousands of years into the future and make sure that the 
radionuclides do not get into the environment. So, yes, near 
term, next hundred years, even beyond, they can stay at the 
sites where they are. But eventually there has to be a facility 
that takes these materials and puts them away to protect them 
from the environment. And that facility has to be, you know, 
historically the National Academy of Sciences, and 
internationally, the best solution that people have come up 
with is a geologic repository. And that takes a long time to 
develop, and study, and to satisfy all the safety issues. So 
the simple answer to your question is, there is no real time 
frame. We need one eventually but certainly the materials are 
safe where they are now.
    Mr. Edwards. Okay. Thank you, Mr. Kouts.
    Ms. McCollum. Mr. Chair? Mr. Chair? A point of personal 
privilege. Could we ask the engineer here to describe the 
difference between reracking--because when you are talking 
about this for members who have not been involved in it, and 
you are lumping all the storage together, it is not a very 
clear picture. So Mr. Chair, for the Committee's information, 
could you describe reracking versus temporary storage?
    Mr. Kouts. Sure. When a, basically nuclear reactors are, to 
put a simple word on it, kind of a teakettle. It produces 
steam, and the steam is produced by the heat from the nuclear 
reaction that occurs in the reactor core. And fuel assemblies 
reside in the core for several years and then they have to be 
taken out because their fissile materials basically get 
depleted and they are not effective in sustaining a change 
reaction. So those materials, those assemblies, have to be 
taken out. And they are cooled in a spent fuel pool that the 
reactors have. Those pools were never designed to take the 
waste over the life of the reactor. It was an expectation that 
the government was going to come and take these materials. Or, 
back in the days when many of these reactors were built, there 
was a reprocessing concept. And you would take these materials 
out and remove the uranium that can be reused, and so forth.
    Nonetheless, since we are not in that world what happens is 
as the pools begin to fill up what the utilities have done is 
they have reracked and basically put these together as closely 
as they can be in the pool. But still, we have now reached a 
point where those pools can no longer hold any more fuel. And 
what has to happen is those assemblies have to be taken out and 
put in dry storage on the reactor sites, in the back forty, if 
you will. And there are roughly forty-four sites in thirty 
states where we currently have dry storage. There is 
approximately 12,000 tons in dry storage. Overall, there are 
about 60,000 tons of commercial spent nuclear fuel that reside 
at commercial reactors, about 12,000 of which is sitting in dry 
storage. So as the pools become full basically the utilities 
have to take that fuel out and put it in dry storage.
    So the reracking that the Congresswoman was talking about 
is basically the reracking of the pool to maximize the capacity 
of the pool. And that has pretty much been done throughout the 
industry. And now basically what has to happen is the fuel has 
to be put in dry storage. And many of the costs that Mr. Hertz 
talks about are the costs the utilities are incurring for 
putting the fuel in dry storage in these large, massive storage 
devices. And those are the costs that are basically part of the 
litigation settlements and also part of the trials that the 
Department of Justice is so ably defending us in.
    Does that explain the issue? Okay.
    Chairman Spratt. I believe Mr. Latta has left. Mr. Aderholt 
is also not here. Mr. Harper?
    Mr. Harper. Thank you, Mr. Chair. Mr. Kouts, I would like 
to follow up on something that Congressman Edwards mentioned a 
minute ago and just take that a little further. What impact do 
you think that the decision to terminate Yucca Mountain will 
have on future expansion of additional commercial nuclear power 
plants?
    Mr. Kouts. The simple answer to your question, sir, is 
until we have clarity, what the blue ribbon panel comes up 
with, and what new policy path the Department and the nation is 
on. And of course, the Congress has to participate in that 
discussion. I am unable to assess, and I do not think anybody 
is able to assess, what the impact of this decision is. So 
until we have more clarity, until the blue ribbon panel meets, 
we have a new policy path, and we know what the implications of 
that policy path are, again, we just cannot evaluate that.
    Mr. Harper. And obviously I do not want to put you in a 
box. But it is not good, is it? I mean, you cannot say that 
this is a good decision for the expansion of safe nuclear 
power.
    Mr. Kouts. Let me go back to my earlier statement. Which 
is, we really do not know. Perhaps the blue ribbon panel will 
come up with a policy recommendation, and maybe we will begin 
to move fuel and take it away from sites faster than maybe 
2020. And in that case it would have been good for reducing the 
obligation and also been good for moving on with the management 
of these materials. Without knowing the recommendations of the 
commission there is really no way of commenting on that.
    Mr. Harper. Can you tell me how your Department determined 
that $196 million was an adequate amount to continue the Yucca 
Mountain licensing process?
    Mr. Kouts. Well let me first of all tell you over the past 
several years we have had a much larger budget and that larger 
budget was to continue with the design of the repository, it 
was to continue with the design of the 300-mile rail spur that 
was to be built to take the materials to Yucca Mountain within 
the State of Nevada. It was also to prepare the site for 
construction. All those activities have been terminated. So as 
a result the needs of the program to simply sustain the 
licensing process are substantially reduced. So on that basis 
the administration's request is certainly adequate for us to 
continue participating in the licensing process.
    Mr. Harper. Thank you. Mr. Hertz, when the Obama 
administration announced the decision to terminate the Yucca 
Mountain program, was the Civil Division consulted prior to 
that decision?
    Mr. Hertz. I do not believe so.
    Mr. Harper. Okay. Can you tell me what the probable impact 
will be on the potential liability of the federal government 
for damages to the standard contract litigation resulting from 
the administration's decision to terminate the program?
    Mr. Hertz. Well, I think as Mr. Kouts suggested, we know 
what the parameters of the litigation look like now. And we 
know what the, in other words, how damages are going to be 
calculated. And so, and we know the settlements that we have 
entered into. And, you know, I think the simple answer is, if 
the decision pushes the date beyond 2020 then our liability is 
going to be more. And if the decision, as he suggests, you 
know, that we can start taking nuclear fuel before 2020 then 
our liabilities may be less. In other words, it is really, as 
far as the litigation is concerned, it is the timing.
    Mr. Harper. Okay. Mr. Hertz, can you tell me what advice 
you have given DOE or the administration concerning steps it 
needs to take to mitigate the potential impacts of the delays 
in accepting the used nuclear fuel?
    Mr. Hertz. Well, I mean, one of the things that we did do 
during the last administration is when a number of utilities 
wanted to make applications for potentially new reactors, the 
question became, the utilities need to have a contract to deal 
with spent nuclear fuel as part of the process to get a 
license. And we consulted very closely with the Department of 
Energy based on the experience that we had in this litigation 
to try to come up with contract terms that would make sense 
recognizing, you know, that there could be delays in accepting 
spent nuclear fuel. And so the new contract has substantially 
different terms than the contracts that we have been litigating 
in the courts so far. And that is not to say, you know, there 
still comes a time when the government is responsible for 
picking up spent nuclear fuel. But it is laid out much more 
clearly in these contracts. And the utilities know what their 
responsibilities are going to be to store spent nuclear fuel 
for periods of time before the government is obligated to do it 
under the new contracts.
    Mr. Harper. It sounds like it would be appropriate to 
suspend payments into the waste fund until there is a decision 
made on a place to put the fuel.
    Mr. Hertz. Well, I mean, that is really a policy call. It 
does not really affect the litigation one way or another.
    Mr. Harper. Thank you, Mr. Hertz. I appreciate it. Mr. 
Chairman, I would ask for unanimous consent to insert into the 
record letters from the Nuclear Energy Institute dated July 8, 
2009, and from the National Association of Regulatory Utility 
Commissioners dated the same day, calling for the suspension of 
those annual fees.
    Chairman Spratt. Is there objection? Hearing none, so 
ordered.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
    Chairman Spratt. Ms. McCollum?
    Ms. McCollum. Thank you, Mr. Chairman. And thank you so 
much for holding this hearing. This Budget Committee's job is 
to think about the long term. But the time frame we are talking 
about with nuclear waste is tens of thousands of years. And I 
do not believe it is within the capacity of this Budget 
Committee. We have great staff on both sides of the aisle. But 
I do not think it is within the capacity of this Budget 
Committee, even with our very able Chairman and staff, to make 
a ten thousand-year budget projection on what it is going to 
cost to store this waste when we do not even know if we are 
going to be able to store it in the near future. Measuring the 
financial, legal, and environmental costs of creating a 
permanent storage solution over this length of time is not just 
difficult, it is impossible.
    My concern, Mr. Chairman, is that the federal government is 
not serious about creating a long term solution to the nuclear 
waste storage problem. After spending twenty years and billions 
of dollars on Yucca Mountain, and the transportation plans that 
take it from, for example, Minnesota to Yucca Mountain, the 
federal government is about to walk away and start from 
scratch. And there is a real cost to that decision. While we 
wait, temporary solutions are becoming unacceptable permanent 
solutions.
    In my State, Minnesota has two nuclear power plants. Both 
plants have recently been relicensed. Both are storing their 
waste inside in reracked pools, something the utility company, 
when I was in the Minnesota House, said that they could never 
do, but they managed to do it somehow. And outside, in dry cask 
storage. And I think the word cask has a lot to say about how I 
feel about the storage. It is dead, dry storage.
    Now, it is unacceptable and these plants are continuing to 
produce more waste. Prairie Island Nuclear Facility, for 
example, in Southwestern Minnesota, has twenty-four of these 
temporary storage casks. They look like thermoses. Large, four 
or five, six-story thermoses with concrete over the top of 
them. And guess what folks? It is on the banks of the 
Mississippi River in a flood plain.
    While people in Nevada talk about not wanting their 
constituents living within 100 miles of Yucca, where nuclear 
waste would be buried under a mountain, families in Red Wing, 
Minnesota, and as the gentleman pointed out where there is 
other dry cask storage, and especially the Prairie Island 
Tribal Community, live with it right next to them, within clear 
view of swing sets. And now, because the State of Minnesota has 
budget cuts the city near the nuclear power plant is cutting 
back on its first responder preparedness. The city of Red Wing 
can no longer guarantee public safety in the event of a nuclear 
incident at or near the power plant. And I have an article, Mr. 
Chair, I would like to submit for the record from the Star 
Tribune.
    [The information follows:]

        Aid Cuts Spark Debate Over Prairie Island Nuclear Plant

              By Mike Kaszuba, Star Tribune, July 13, 2009

    As Xcel Energy pushes plans to extend the life of the Prairie 
Island nuclear plant, Red Wing officials say that Gov. Tim Pawlenty's 
state aid cuts have made them less confident in their longterm ability 
to protect it.
    City officials, in an unusual step, have intervened in Xcel's 
proposal before the state public utilities commission--a sign that 
Pawlenty's budget cuts may have unintended consequences.
    In a newsletter to residents, Red Wing officials said they have 
``concerns regarding [the city's] diminishing ability to adequately 
address the unique obligations we have as a host city to a nuclear 
power plant.''
    Red Wing's capacity to provide emergency response staffing and 
training has been lessened, they said, by ``significant'' reductions in 
state aid--including an estimated $898,590 next year--along with state 
law changes that allowed Xcel to reduce its property tax payments.
    The city's stance has drawn Red Wing into the political debate 
surrounding Pawlenty's use of the unallotment process to make state 
budget reductions, after the Republican governor resisted the DFL-
controlled Legislature's push during the session for tax increases to 
help erase a $4.6 billion deficit.
    Pawlenty has cited cities and counties in defending his actions, 
arguing that they often complain about state aid cuts even though some 
harbor large budget reserves and are unwilling to slash spending. Many 
have responded, as Red Wing has, that their budget reserves ebb and 
flow as the money is used to run the city.
    Pawlenty spokeman Alex Carey said that tying state aid cuts to the 
city's ability to provide adequate public safety ``seemingly blurs the 
issue, given [that] the power plant hires and pays for its own 
security.''
    He added: ``I still don't see where public safety comes in, nor is 
it clear to us what those `unique obligations' are [that] the city 
cites.''
                         `the game is changing'
    Red Wing is one of two Minnesota cities with a nuclear power plant. 
The Prairie Island plant, which opened in the early 1970s, has two 538-
megawatt nuclear reactors.
    Xcel Energy officials said the company has spent more than $20 
million to show that the plant can ``perform safely'' should its life 
be extended by 20 years beyond 2014, and that ``Our [proposal] will 
have little to no incremental impact on emergency services beyond what 
is currently provided,'' said Mary Sandok, an Xcel spokesperson.
    Red Wing officials disagree.
    ``It's going to be extremely difficult to provide these public 
safety services that I think are critical and necessary,'' said 
Marshall Hallock, the city's finance director.
    Although officials said that no one funding cut was responsible for 
the city's predicament, they said the combined effect of the state cuts 
and Xcel's reduced property tax payments had left the city with 15 
percent less revenue since 2002.
    Hallock said the drop in Xcel's annual city property tax payments, 
which stood at $5.9 million in 1995, would by itself leave the city 
with an estimated $2.3 million less next year.
    By next year, he added, state aid payments to the city will have 
dropped by $1.07 million annually since 2006.
    ``The game is changing,'' said City Council Member Lisa Bayley. She 
joined her colleagues in signing an open letter to Red Wing's residents 
that, while generally supportive of the company's proposal, asked that 
Xcel provide ``some type of additional assurance to protect the 
community's interests.''
    In making its case before the state public utilities commission, 
Xcel has asked that the generating capacity of each reactor be 
increased by 80 megawatts. More important, it is also seeking to have 
the number of spent nuclear fuel casks at an adjacent 5.5-acre storage 
facility increased to about 60 casks from a current total of 24. The 
city says that Xcel's proposed expansion would ultimately result in 
even more.
    With the case scheduled to come before the commission this fall, 
Bob Cupit, the manager of the commission's permitting unit, said Red 
Wing's request that its budgetary issues be formally considered has 
raised eyebrows.
    ``This is a unique argument that's being made,'' he said.
                          a legitimate issue?
    Red Wing officials, in pressing their case, said the city remains 
the first responder to an incident at the nuclear plant.
    While Xcel Energy has its own Prairie Island fire brigade, the city 
is responsible for helping control incidents and responding to anything 
that extends beyond the plant's physical boundaries--a role that could 
include evacuation, decontaminating emergency workers and sealing off 
roadways.
    ``[Xcel's] fire brigade is nothing more than a stop-gap measure,'' 
said Roger Hand, Red Wing's emergency management director.
    Hand said city officials did not alert the governor's office 
regarding the issue because Pawlenty ``went through the unallotment 
process and, really, he wasn't looking for any input from anybody at 
that point.''
    Although Red Wing officials are stressing that the city's ability 
to provide adequate public safety isn't now being jeopardized, they 
have drawn criticism even from DFLers.
    Sen. Steve Murphy, DFL-Red Wing, a retired Xcel employee who once 
worked at the plant, said city officials had not proven that their 
ability to provide public safety for the Prairie Island plant might be 
jeopardized. He added that the city had adopted an anti-nuclear 
strategy that was troubling.
    The public utilities commission ``is not the body--they don't have 
jurisdiction over [a city's] economic concerns,'' said Murphy, who 
added that his history with Xcel had not colored his views.
    But Wadena Mayor Wayne Wolden, the president of the Coalition of 
Greater Minnesota Cities--a group that has been critical of Pawlenty's 
state aid cuts to local governments--said Red Wing was raising a 
legitimate issue.
    ``How can Minnesota ask a city to host a nuclear power plant and 
then cut the critical aid that helps protect that city in the event of 
a nuclear incident?'' Wolden asked.
    Xcel's Sandok said that, should its request to extend the plant's 
life be approved, its property tax payments to Red Wing will actually 
begin rising and will reach $9.2 million by 2017.
    In addition, she said, Xcel continues to pay Red Wing an estimated 
$60,000 annually to recover funds spent on emergency preparedness. She 
said that the city also will get $750,000 this year from the state 
through a special utility valuation transition aid program to help 
offset Xcel's property tax reductions.
    ``Xcel Energy supports the changes in the law and [in state] 
rules'' that led to the company's reduced property tax payments, Sandok 
said. ``But we were not the primary proponent of either.''

    Chairman Spratt. So ordered.
    Ms. McCollum. So I want to talk about permanent storage 
solutions because finding a real solution is the federal 
government's responsibility and I believe that is part of my 
responsibility here. So I have some questions and you can, as 
time permits, take a stab at them or get back to us.
    How long do you really think it is going to take the blue 
ribbon commission to produce these recommendations? And if it 
does not recommend moving ahead with Yucca Mountain, and we 
start all over again, how long is it really going to take to 
select a new waste site, prepare that site, get a new 
transportation plan, and then transfer the existing material? 
So my question in a nutshell is, are we looking at 2020? 2025? 
2030? Are we looking out further, in your best guesstimate?
    In the meantime, and this has been discussed, is there a 
plan to compensate not only ratepayers but local property 
taxpayers for the storage of this waste? And at the end of all 
that work, why would we not expect a different political result 
than the one we saw in the current Yucca Mountain debate? Would 
the reprocessing--so my question is, how long do you think it 
is going to take this power storage to happen? And then why are 
we not seriously looking as a nation on how to safely reprocess 
and cut the half-life of this material? Thank you, Mr. Chair.
    Mr. Kouts. If I could, could I take those questions for the 
record?
    Chairman Spratt. If the panel would, you may as well. And 
particularly I was going to ask you about reprocessing also, if 
you wanted to address that.
    Mr. Kouts. Certainly reprocessing has been looked at for 
many, many years. And basically the Secretary is committed to 
funding research to essentially make sure that any reprocessing 
technologies that are deployed are proliferation resistant.
    Chairman Spratt. The reprocessing would still require 
ultimately a geological disposal?
    Mr. Kouts. Absolutely, sir. It will somewhat reduce the 
volume of the materials that need to be permanently disposed 
of. But it does not obviate the need for----
    Chairman Spratt. Is not size also a function of heat, in 
that the heat emitted is still the same as the radioactive----
    Mr. Kouts. Heat is less of a concern for us. Volume is a 
bigger issue with us in the repository world. But yes, heat is 
an issue but not as driving an issue as the volume of the 
material that you have to dispose of.
    Chairman Spratt. Do you have further observations about 
reprocessing?
    Mr. Kouts. Again, the Secretary is committed to doing that. 
I think that from personal experience you have to have a good 
business case for going to reprocessing. And, you know, that 
certainly needs to be developed along with the technology 
associated with making sure it is proliferation resistant.
    Chairman Spratt. The capital cost is substantial.
    Mr. Kouts. It is very expensive, sir.
    Chairman Spratt. Mr. Mack?
    Mr. Mack. Thank you, Mr. Chairman. And I also want to thank 
the panel for being here today. As we all know, the Nuclear 
Waste Policy Act of 1982 required the federal government to 
implement a policy to deal with the disposal of nuclear waste. 
In addition to incorporating a disposal policy a Nuclear Waste 
Fund was created to pay for research and for carrying out 
future projects. In 2002 Congress approved President Bush's 
recommendation of the Yucca Mountain site and since then 
Congress has continued to fund its research. However, the 
current administration has said the Yucca Mountain project, 
``is not a workable option,'' for nuclear waste storage and has 
halted all Yucca Mountain activities.
    In light of the administration's decision to terminate this 
project I asked the administration to stop forcing our 
taxpayers to pay into a Nuclear Waste Fund until the Department 
of Energy devises a new nuclear management strategy. We should 
not be asking our constituents to contribute to a fund that is 
not being utilized. To date, our constituents have paid or are 
obligated more than $30 billion into the Fund. Floridians alone 
have contributed over $766 million into the Fund, and the 
government has no plan for long term storage which, by law, is 
its responsibility. In addition, the Fund has a current balance 
of $22 billion and it generates an annual interest of over $1 
billion.
    In 2009 Congress appropriated only $145 million to the 
Civilian Radioactive Waste Management program. Clearly, there 
is enough money generated in interest alone from this Fund to 
finance these current programs.
    As members of the Budget Committee we deal with figures and 
numbers all the time, Mr. Chairman. These tax figures tell a 
frustrating story. A story about taxpayers once again footing 
the bill for an expensive government program. It is time that 
we stand up for the taxpayers and demand better.
    I have just got a few questions. Does the Secretary say why 
we need a new policy direction?
    Mr. Kouts. The Secretary has made numerous statements. He 
feels that there is a better path, that technology can provide 
us a better answer. And basically I will let the Secretary's 
statements stand on----
    Mr. Mack. But does the Secretary have any evidence of that? 
Or is this just something that he has created on his own, you 
know, that he just does not like the direction we are heading 
so, ``I need a new policy direction.''
    I mean this is, if you think about it, it is pretty and, 
you know, it must be a horrible position to be in, to defend 
something that is pretty much indefensible. Because we are so 
far along down the path. And to now decide we want a new policy 
direction, without giving any reasons why we need a new policy 
direction, I think it is--Mr. Chairman, with all due respect to 
everyone, I think it is a bit irresponsible to at least 
articulate to the American people, to the Congress, why you 
think we need a new policy direction. Has the Secretary said 
why?
    Mr. Kouts. He has made certain statements on it. Again, he 
believes that there are, that technology can give us a better 
path. I really think your question is better asked to the 
Secretary than myself.
    Mr. Mack. Yes, and I recognize it must be a very difficult 
position for you to have to try to answer for a decision that 
someone has made that is not defensible.
    Mr. Kouts. Well, I am sure it is defensible, sir. I just do 
not know----
    Mr. Mack. Well, I do not know that it is. I mean, I do not 
know that it is. You know, I know we are here, and it is, we 
are kind of chuckling because you are having to defend 
something that you cannot really defend because for a long time 
this Congress has worked on a policy on how to store this 
nuclear waste. We have taxed people in a Fund to generate the 
revenue, and the ability to do this. And now all of a sudden we 
want a new policy direction? I mean, could we continue with the 
current policy direction and then let the Secretary build a 
case for why the Secretary believes that we need a new 
direction? I mean, does that not seem more responsible?
    Mr. Kouts. Well, again, that is a question for the 
Secretary, sir. And he is the senior policy maker in the 
Department. And I will certainly take that for the record if 
you want me to have that answered.
    Mr. Mack. Yes, please. And do you think it is good policy 
to continue to tax the American people for a program that, I 
guess, will not continue to exist?
    Mr. Kouts. I----
    Mr. Mack. Do you think they should continue to pay into 
that Fund?
    Mr. Kouts. I will also that take that for the record.
    Mr. Mack. Thank you.
    Chairman Spratt. Thank you, Mr. Mack. Mr. Langevin?
    Mr. Langevin. Thank you, Mr. Chairman. I want to first of 
all thank you for holding this hearing, and I want to thank our 
witnesses for their testimony today. My question, first one, is 
since obviously the United States is not the only country that 
has nuclear power plants and has to deal with this issue of 
spent nuclear fuel and storage, which nation in the world could 
be looked at as the gold standard of how they deal with spent 
nuclear fuel and storage? And what are their costs compared to 
the alternatives that we are considering? And I would assume 
that the blue ribbon panel will consider this in their analysis 
of alternatives. But I think that is an important question for 
us to talk about. Which nation in the world would be considered 
the gold standard, and what is that method?
    Mr. Kouts. Well, I think there is international consensus, 
sir, that the best disposition path for these materials is in a 
geologic repository. And internationally there are programs, 
and there is actually an international group that meets on a 
regular basis, that talks about their individual programs. Many 
of them have storage, most of them have long term repository 
programs, and up until recently, you know, this nation was 
looked at as a leader in the development of repositories. So, 
but the simple answer to your question is that there is 
international consensus that a repository needs to be 
developed. The size of the repositories and the scale of them 
are much less. We have more operating reactors than anybody 
else in the world. We have more spent fuel than anybody else in 
the world. So the geologic repositories that need to be built 
by other countries are much smaller and deal with much 
different geologic media than we do.
    Mr. Langevin. Well I know for example that France gets much 
of its power, I guess 75 percent to 80 percent of its power 
from nuclear power plants. What does France do with its spent 
nuclear fuel?
    Mr. Kouts. Well, they have a reprocessing system in place 
where they reprocess the fuel from their reactors. And they 
have had a repository, a long term repository program, but they 
have not identified a site yet for that repository. So the long 
term plan of the French is to have a repository but, again, 
they are reprocessing their fuel, they are storing the residual 
components that need to be permanently disposed of in storage 
facilities.
    Mr. Langevin. Okay. And let me ask this. While we are 
clearly focusing on the civilian aspects of this issue, I also 
chair the Strategic Forces Subcommittee on the Armed Services 
Committee. And I feel it is important to underscore the 
challenges associated with nuclear waste management having 
important implications, both the civilian public safety and our 
national defense. So my question is, can you please clarify the 
distinction between the requirements for storage and disposal 
of civilian nuclear waste versus defense nuclear waste? And are 
these sites dual purpose? Are any of these sites dual purpose?
    Mr. Kouts. Well, the high level waste from the defense 
complex that the Department manages is substantially different 
than spent fuel. The materials that sit in tanks at Savannah 
River, at Hanford Reservations, and so forth, that will be 
solidified into a vitrified material, into a glass that will be 
put into a repository in the long term. And until a repository 
is available those will have to be stored where they are until, 
again, we have a facility to move those materials to for 
permanent disposition.
    Mr. Langevin. All right. Now, defense related nuclear waste 
management is not subject to the same fee charged to commercial 
entities. So then can you please explain how that affects the 
process in terms of budgeting and federal liability?
    Mr. Kouts. Thank you for that question. And the answer to 
it is, essentially, that there are two components of the budget 
for this program. One is the Nuclear Waste Fund and the other 
is we have a Defense 050 account which pays the defense portion 
for the disposition of those materials. So actually, and there 
was a presidential decision made back in President Reagan's 
administration, where he made a decision to co-locate defense 
materials with civilian materials so we did not have a defense 
repository and a civilian repository. So there is a component 
of our budget that is dedicated, that comes out of the defense 
appropriations, that essentially pays for the disposal of those 
materials.
    Mr. Langevin. What is that amount of money?
    Mr. Kouts. That varies from year to year. I think it has 
been pretty much a fifty-fifty split over the past several 
years. But the defense materials make up a smaller component of 
the overall amount of materials that have to go into a 
repository.
    Mr. Langevin. Okay. Thank you. Mr. Cawley?
    Mr. Cawley. Cumulatively, I was going to say, there has 
been about $11 billion in spending. Just over $7 billion on the 
civilian side and $3 billion, $3.5 billion on the defense side.
    Mr. Kouts. That is correct.
    Mr. Cawley. Since the beginning of the program.
    Mr. Langevin. Okay. Thank you. Well, I see my time is 
expired. I will have perhaps some questions for the record. But 
gentlemen, thank you for your testimony today and I yield back.
    Chairman Spratt. I would just add to the gentleman's 
questions and the answer that Savannah River stores nuclear 
waste before processing it in the K-Reactor, a place which was 
not intended for this kind of storage. So the sooner out the 
better.
    Mr. Kouts. Yes, sir.
    Chairman Spratt. Secondly, while there is a procedure at 
the defense waste processing facility called vitrifying this 
waste, and there is also interim storage provided in 
anticipation that there would be some back up like this, but it 
too has limits. So if taking up the output is not adequate then 
you have to slow down the input. And you have got waste storage 
in many cases in places for which it was not specifically 
designed, like the K-Reactor. So that has to be a concern for 
Savannah River. And I think generally speaking Hanford is 
behind Savannah River when it comes to waste processing.
    Mr. Kouts. Yes, it is. That is correct.
    Mr. Mack. Mr. Chairman?
    Chairman Spratt. Mr. Mack?
    Mr. Mack. May I real quick just ask unanimous consent to 
insert two letters into the record? I forgot to do that during 
my time.
    Chairman Spratt. Could you identify the letters?
    Mr. Mack. Yes. One is from the NEI and the other one is 
from the National Association of Regulatory Utilities.
    Chairman Spratt. I think the NEI letter was put in the 
record.
    Mr. Mack. I think they may be different.
    Chairman Spratt. Okay. Without objection, we will put it in 
the record.
    Mr. Mack. Thank you.
    Chairman Spratt. Mrs. Lummis?
    Mrs. Lummis. Thank you, Mr. Chairman. Mr. Kouts, first of 
all, I feel for you. You are between a rock and a hard place. I 
think you were asked today to go throw yourself under the bus 
in front of a congressional committee that is frustrated with 
the approach that the new administration is taking with regard 
to addressing nuclear waste issues.
    Let me first ask, do you personally believe the 
administration's climate and emission reduction goals can be 
met without nuclear power being part of the solution?
    Mr. Kouts. Well, first of all, it is not my judgment. But 
the Secretary has been very forthright on this, that he feels 
that the nuclear option is very critical to meeting climate 
change goals. And he has stated that publicly on numerous 
occasions. So I think the Secretary has been very clear on 
that.
    Mrs. Lummis. Okay, thank you. Setting aside for a moment 
the non-meritorious decision to abandon Yucca Mountain, even if 
the blue ribbon panel is able to find an alternative to Yucca 
Mountain that can absorb its statutory 70,000 metric ton 
capacity, is this tonnage sufficient for our long term disposal 
needs at the current rate at which waste is being produced?
    Mr. Kouts. No, it is not. And if I can just add a little 
bit to that, early on in the program we had a second repository 
program. And we were identifying a site for a second 
repository. And Congress in the 1987 amendments terminated that 
second repository program and required the Secretary of Energy 
to submit to Congress a report on the need for a second 
repository. And that report was submitted to Congress last 
December. And basically what that report indicates is that 
unless--at that point we had Yucca Mountain on the table. 
Unless you raise the statutory limit then you needed a second 
repository. And it also made some judgments about how much 
Yucca Mountain could hold. And basically, Yucca Mountain's 
capability is probably three to four times the statutory limit. 
So all that information is contained in that report and I would 
commend that to you if you have a, you know, substantial 
interest in that subject.
    Mrs. Lummis. Thank you.
    Mr. Kouts. It also identifies the second repository sites 
that we looked at, and all the different repository sites that 
we looked at early in the year, and the states in which those 
sites reside.
    Mrs. Lummis. Okay. And this report was dated December?
    Mr. Kouts. 2008.
    Mrs. Lummis. 2008, thank you very much. Will the blue 
ribbon panel consider spent fuel recycling to limit the volume 
of nuclear waste as part of a long term solution?
    Mr. Kouts. Again, that panel has not been charted. But my 
expectation would be that they would look at all different 
alternatives, including reprocessing and reduction of volume, 
yes.
    Mrs. Lummis. And don't the advantages of fuel recycling 
warrant further study, including ways to make it more cost 
effective and proliferation resistant?
    Mr. Kouts. I think the Secretary is committed to that and I 
think, you know, we will see what the blue ribbon panel thinks 
about that.
    Mrs. Lummis. Why do other countries use recycling more than 
we do? Why has it been our nation's policy to limit that 
option?
    Mr. Kouts. I think that has been, there has been a flip-
flop of policy over the years. I think ultimately the driver 
has been economics. I think if there was a strong business case 
for it I think it would be implemented, and I think the 
challenge here is not so much the technology, although that is 
somewhat of a challenge, to make it as proliferation resistant 
as possible, but also making it as, you know, and a reasonable 
cost standpoint is certainly something that needs to be looked 
at.
    Mrs. Lummis. So you are telling me it is exponentially more 
cost, more expensive than storage?
    Mr. Kouts. Well again, you have to look at the different 
scenarios. Most of the scenarios that I have seen with 
recycling in them, basically the cost to the overall system 
goes up but it does have other advantages. You get to reuse the 
uranium, you do not have to do as much mining of uranium, it 
extends the use of our uranium resources, and so forth. So 
there are pluses and minuses and that has to be evaluated.
    Mrs. Lummis. And are you aware of any effective studies 
that makes those kind of cost comparisons now?
    Mr. Kouts. Well, I know our Office of Nuclear Energy is 
looking into that issue, and doing those kinds of analyses and 
that is really a question for them to look at. They have the 
expertise in the Department in that regard.
    Mrs. Lummis. Thank you. Mr. Cawley, can you estimate the 
amount of additional financial liability that may be incurred 
by the administration's decision to eliminate all funding 
except for that needed to continue licensing processes?
    Mr. Cawley. I think it has been stated that until we know 
where the policy is going it is pretty hard to say if we will 
be disposing of waste at 2020, or after 2020, or before 2020. 
So no, we do not have a good estimate of that.
    Mrs. Lummis. Okay, thanks. And Mr. Hertz, in your testimony 
you stated that because of the government's failure to live up 
to its contractual nuclear waste disposal obligations seventy-
one lawsuits have been filed. And of those, ten have been 
settled and fifty-one remain pending. Of the cases that are 
settled, how often can the claimant resubmit claims for ongoing 
liabilities as the government continues to fail to live up to 
its obligations? And you may have answered this already, but 
I----
    Mr. Hertz. No. Under the settlements they, I think they can 
come back every year with regard to the costs that they have 
incurred. The settlement sets out a scheme and a rate, and sets 
out what costs they can claim. So we initially settled the 
original lawsuit and we set out a formula going forward. And on 
a yearly basis they can go to the contracting officer at the 
Department of Energy and make a claim. That is reviewed, and 
then sent over to the Department for approval.
    Mrs. Lummis. Okay. And one more quick question, Mr. 
Chairman? Thank you so much. Do settlements have set formulas 
for determining new damages for the same claimant? Or could 
additional damages be incurred?
    Mr. Hertz. The settlements have a formula for what damages 
can be claimed.
    Mrs. Lummis. Okay. Mr. Chairman, thank you so much for 
holding this hearing.
    Chairman Spratt. Thank you. Mr. Diaz-Balart?
    Mr. Diaz-Balart. Thank you, Mr. Chairman. Thank you, 
gentlemen, for being here. I am a little bit, let me just make 
sure that I understood the question to my colleague's, the 
answer to my colleague's question when she just asked, in 
essence I am going to paraphrase what you asked but I kind of 
wrote down, about the estimated amount of additional financial 
liability because of the administration's decision to delay or 
end Yucca. And the answer was, ``No, we do not know.''
    Mr. Cawley. Yes----
    Mr. Diaz-Balart. Let me just make sure, am I hearing then 
that this decision was made with no consideration of what the 
price to the taxpayer could be?
    Mr. Cawley. The only estimate I am aware of is the one 
prepared by the Department of the $12.3 billion in liabilities, 
assuming they could handle waste starting in 2020. I think 
under the new policy there is uncertainty about when waste 
handling could commence. So there are no new estimates that I 
am aware of of how much the liability could be.
    Mr. Diaz-Balart. Do you not understand that that could be a 
little troubling? That a decision is made that could have 
potentially a serious financial implication? And that does not 
seem to be a priority? Is that not a little troubling to you? I 
mean, I tell you what, I just got, that was not my question. I 
was just flabbergasted that a decision that could mean, 
potentially, serious implications to the taxpayers and that is 
not something that has been, obviously it is not on the front 
burner? So these decisions are being made in a vacuum, in 
theory, without even, I guess as a, it is not a big priority, 
it is not a real important issue, how much it could cost to the 
taxpayer? Is that not a little troubling?
    Mr. Cawley. I imagine the blue ribbon panel that examines 
alternatives will be looking at costs.
    Mr. Diaz-Balart. Is that in the charge? Is that one of the 
main charges of the blue ribbon panel, to look at the cost? 
Could you let us know if it is? And if it is not, why not? If 
you would? I mean, I do not expect you to know exactly what 
necessarily is in the charge of that blue ribbon panel, even 
though you might. Is that part of the charge, to determine, to 
know how much it could cost potentially to the taxpayer, short 
term, long term? And where that is weighted in their decision?
    Mr. Kouts. If I could----
    Mr. Cawley. Once they have a charter we will certainly try 
to help you with----
    Mr. Diaz-Balart. All right.
    Mr. Kouts. The charter for the panel has not been----
    Mr. Diaz-Balart. Has not been established?
    Mr. Kouts [continuing]. Has not been established.
    Mr. Diaz-Balart. All right. Well I would just hope then 
that that is part of the charge.
    Mr. Kouts. I understand, sir.
    Mr. Diaz-Balart. Great, thank you. Now, so my question is, 
I learned recently that, I did not know this, that I guess 
those whose utility companies use nuclear, I guess there is a 
small surcharge charged and it is, let me see, it is one-tenth 
of 1 percent per kilowatt hour. Now I know that does not seem 
like a lot of money, but it is $22 billion out of which $766 
million comes from Floridians alone. Now here is the question. 
If in fact it looks like, you know, Yucca Mountain is going to 
be closed, and nuclear power does not seem to be a huge 
priority, is the administration going to come forward with a 
proposal to eliminate that fee that people are paying? Or at 
least to lower it?
    Mr. Kouts. Well, the Fund was set up to provide a fund for 
the Department to use to implement the disposal of these 
materials. The Department is still committed to meeting its 
obligations, it is just going to take a different policy path. 
And the Fund would be used to fund that policy path. And until 
we know what that policy path is, you know, we will not know 
exactly what the needs from the Fund will be.
    Mr. Diaz-Balart. Right. But we do know that, again, that 
obviously we do not know how much the new policy path may cost, 
just from what I am hearing. That is obviously not a big 
priority for this administration, how much the taxpayer might 
be hit again. But in the meantime, would it not make sense, as 
opposed to just continue to charge this surcharge, to at least 
postpone it until you have an idea of how much that is going to 
cost? In other words, this issue of just charging people 
regardless of knowing how much it is going to cost, maybe it 
will be more, maybe it will be less, should there not be some 
consideration to those who are paying for something that is not 
happening before you just continue to charge them?
    Mr. Kouts. If I could answer that, Mr. Mack I think 
submitted into the record two letters that the Department 
recently received from the Nuclear Energy Institute and also 
the National Association of Regulatory Utility Commissioners 
addressing that same issue. And the Department is in receipt of 
those letters, and I really cannot comment on what the response 
to the letters will be. But we are certainly aware of the issue 
and those letters have made the same request that you have 
made, sir.
    Mr. Diaz-Balart. And again, I do not mean to be harsh on 
you, but again, it is a little bit hard to hear when we are now 
at $1 trillion deficit and climbing. I think there has got to 
be a realization that this is not our money, this is taxpayers' 
money. And that should always be in the forefront of any 
discussion of any decision made. And I know that you would 
agree with that. Sometimes it looks like that is not the case. 
Thank you, Mr. Chairman.
    Chairman Spratt. Mr. Simpson, I think you have a couple of 
questions?
    Mr. Simpson. Yes. Just a couple of things. One is that, you 
know, if the charge of this blue ribbon commission is to find a 
state or a tribe willing to accept interim storage of this 
stuff, you know, we have done that, we have had that before. We 
have had a commission, or not a commission, but a nuclear waste 
negotiator. In fact, a couple of them that have gone around 
and, you know, they found a tribe in Utah that was interested 
in it. And the State of Utah said, ``I do not think so.'' I do 
not think they are going to have very good luck in trying to 
find a state. Consequently, I understand where Nevada is coming 
from. And I am not critical of them. You know, as I have said 
before, it is not that it is Yucca Mountain, it is that we need 
a waste repository and everyone here has said even today that 
ultimately we are going to need a waste repository. And I 
admire all of your testimony and the Secretary's also. I know 
that you are implementing a policy. And the elephant in the 
back of the room that nobody is willing to say is that a 
promise was made during the campaign to Senator Reid by then 
candidate Obama, now President Obama, and you know, the 
President is following through on his promise. That is the 
reality. It has nothing to do with science. It has nothing to 
do with whether this is an appropriate repository or not.
    But again, I would state that Congress has a role to play 
in this also. Given that we have potential liabilities out 
there, and we are paying for some of them now, and there are 
liabilities also to states that is not civilian nuclear waste, 
but states like South Carolina, states like Idaho, where we 
have defense nuclear waste, Navy waste, etcetera, etcetera. 
There are penalties imposed through agreements with those 
states that if the waste is not removed by a certain date, 
penalties follow. I think in South Carolina it is like $1 
million a day, or something, after a certain date that the 
federal government will theoretically start paying a fee. In 
Idaho I am not sure what it is. I do not think we were as good 
of negotiators as South Carolina was.
    But if I am the federal government and I am looking at 
trying to get out from under the potential penalties to the 
civilian reactors, or those companies that have reactors that 
are now currently storing the civilian waste, my first thought 
would be to start looking at current DOE sites to start moving 
some of this waste to. Is anyone in the Department, or is the 
Department considering, current DOE sites as a location for 
interim storage of civilian waste currently held at reactor 
sites?
    Mr. Kouts. No sir, we are not. We are going to wait for the 
recommendations of the blue ribbon panel in terms of what 
policy path we want to proceed. That may be one of their 
recommendations. I have no idea what they are going to come up 
with. But, you know, certain that is one siting option. It has 
been looked at in the past. But no, the Department is not 
actively looking at those sites, or any sites at this point, 
for either an interim storage facility or a repository.
    Mr. Simpson. Okay.
    Chairman Spratt. Monitored retrievable storage comes up 
from time to time at Savannah River and other places. It has 
been proposed and never implemented, of course, for various 
reasons, but it has been reported. But we are receiving waste 
at the Savannah River site and putting it through the system, 
for example, and things are happening there. They will diminish 
the amount of waste that ultimately has to be disposed of.
    Mr. Simpson. You know, the same reaction that we have in 
Nevada was experienced in New Mexico for the WIPP site. Very 
strong opposition to that. Since it has been opened you do not 
find that kind of reaction down there. It seems to be 
proceeding very well and we are moving a lot of the transuranic 
waste down there, moving it out of Idaho. When they say they 
cleaned up Rocky Flats they did not really clean up Rocky Flats 
they just moved it to Idaho. And now we are moving it to New 
Mexico, to a permanent repository. But the 70,000 metric tons 
at Yucca Mountain is a statutory limit, correct?
    Mr. Kouts. That is correct, sir.
    Mr. Simpson. Mr. Hertz, you mentioned that if federal 
policy needed to be changed as a result of the blue ribbon 
commission you hope that it dealt with the central liabilities 
and so forth out there. What exactly could Congress do in terms 
of that? I mean, we cannot just say we were just kidding, can 
we?
    Mr. Hertz. No. I mean, the way I have thought about it is, 
contracts that exist now, both parties have both future rights 
and future obligations and presumably some of those could be 
adjusted. I am not saying there is unfettered discretion but 
there may be things that Congress could consider, coming up 
with different proposals to deal with the waste that would deal 
with future liabilities even under the existing contracts. So I 
think one of the things that we would do as the Department of 
Justice is make the recommendation to the blue ribbon 
commission that one of the things they consider is the 
government's litigation liability going forward as part of 
their overall method.
    Mr. Simpson. Okay.
    Chairman Spratt. Would the gentleman yield?
    Mr. Simpson. Sure.
    Chairman Spratt. For clarification, do you leave the case 
open, the suit open, and render a judgment periodically? Or do 
you render a judgment, close it, and then if the prospect for a 
particular facility does not appear to be forthcoming, the 
utility is then allowed to bring another suit?
    Mr. Hertz. Correct. I mean, the way it has worked so far 
is, once the Federal Circuit ruled these were partial breaches, 
and that they could basically seek their damages up until the 
time they filed their complaint, then whatever damage is 
incurred after that would have to be filed in a new complaint. 
And in fact, I think we already have sort of five----
    Chairman Spratt. So you have to relitigate?
    Mr. Hertz. I am sorry?
    Chairman Spratt. You have to bring a new suit?
    Mr. Hertz. You have to bring a new suit. And I think we 
already have five of the second generation suits. In other 
words, people that had lawsuits, either had judgments or cases 
that were still pending, but now they want to seek the next few 
years. So they file the next----
    Chairman Spratt. Why would not every utility with a 
contract bring suit for the alleged breach?
    Mr. Hertz. I think, well----
    Chairman Spratt. Why would not every reactor, electric 
utility with nuclear reactors as generating sources, why would 
not every utility to bring a suit to claim these damages?
    Mr. Hertz. I think the vast majority have. And I think one 
of the things they have to do is be able to establish damages. 
But we have had a number of cases that were withdrawn because 
whatever the circumstances were in those----
    Chairman Spratt. Is that because just sitting in the pools 
there minimizes damages?
    Mr. Hertz. Or, you know, given what our likely rate was, 
and the priority of their pick up, that they would not have 
been able to establish damages.
    Mr. Simpson. Let me just say in conclusion, Mr. Chairman 
and Mr. Kouts, I am very concerned about the administration's 
budget for proceeding with the licensing proposal, and whether 
the Department can aggressively answer the questions that are 
going to be proposed by the NRC. And we will be watching that. 
And if it looks like we are slow walking this process I am 
going to have some concern, as is the Energy and Water 
Appropriations Committee I am certain. So just be aware that we 
are going to have our eyes on that. I appreciate it.
    Mr. Kouts. Yes, sir.
    Mr. Simpson. And thank you all for being here today. I 
really do appreciate it, even though I know it is sometimes a 
tough assignment.
    Chairman Spratt. I echo what my Ranking Member said. We 
very much appreciate your coming, the effort you put into this, 
and the forthright answers we were given. We may be calling 
upon you in the future, but we do indeed appreciate your coming 
today. I would ask unanimous consent that all members who did 
not have the opportunity to ask questions be allowed seven days 
to submit questions for the record. At this point in the record 
I would like to submit a study by Frank von Hippel as to the 
cost and implications of reprocessing as an alternative. 
Without objection, so ordered.
    [The report, ``Managing Spent Fuel in the United States: 
The Illogic of Reprocessing,'' by Frank von Hippel, dated 
January 2007, may be accessed at the following Internet 
address:]

      http://www.fas.org/programs/ssp/_docs/IllogicReproJan07.pdf

    Chairman Spratt. This concludes our hearing. Thank you 
again for your participation.
    Mr. Simpson. Thank you.
    Mr. Kouts. Thank you, Mr. Chairman.
    Mr. Hertz. Thank you.
    Mr. Cawley. Thank you.
    [The prepared statement of Mr. Ryan follows:]

    Prepared Statement of Hon. Paul Ryan, Ranking Minority Member, 
                        Committee on the Budget

    Mr. Chairman, safe and permanent storage of high-level and spent 
nuclear fuel waste is a critical element to our long-term energy 
strategy. It also has important budgetary implications that, if not 
addressed, will only serve to worsen our already bleak fiscal picture.
    Over the past 25 years, we have already spent $10 billion in 
taxpayer and ratepayer funds studying Yucca Mountain as a suitable site 
for nuclear waste storage. Those studies show that Yucca is, in fact, 
suitable for nuclear waste storage, and the Congress has confirmed this 
conclusion.
    Yet, the Administration has--for I think political reasons--
determined that Yucca is not a workable option and is proposing 
millions more to be spent on further studies. It clearly is a delaying 
tactic. I don't believe we can learn more about nuclear waste storage 
that we don't already know, and more studies will only serve to delay a 
final solution and waste more money in the process.
    It would also expose taxpayers to large liabilities for the 
government's broken promise to store nuclear waste. Courts have already 
awarded utility companies nearly $1 billion in damages, and DOE 
estimates the government's total liability related to lawsuits is $12.3 
billion--that is, if Yucca opens in 2020, which is optimistic by all 
accounts. Abandoning Yucca--or even further delay--will only serve to 
add billions more to this already unacceptable liability.
    It appears that the vast majority of Congress agrees with this 
assessment, having rejected 388-30 a motion to recommit the Fiscal Year 
2010 Energy and Water Development and Related Agencies Appropriation 
Act with instructions to strike funding for Yucca Mountain.
    Abandoning Yucca without any clear path forward is irresponsible 
from both a budgetary and policy standpoint. It breaks the 
Administration's promise to let science guide our decision making 
process, and instead puts provincial politics rule ahead of the 
national interest.
    Mr. Chairman, we don't need further studies on Yucca. The time to 
move forward is now.

    [Whereupon, at 11:45 a.m., the Committee was adjourned.]

                                  
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