Nuclear Waste: Nevada's Use of Nuclear Waste Grant Funds (Letter Report,
03/20/96, GAO/RCED-96-72).

Pursuant to a congressional request, GAO reviewed Nevada's use of
Department of Energy (DOE) nuclear waste grant funds, focusing on: (1)
whether Nevada has used federal funds for prohibited purposes; (2) what
controls DOE has in place to ensure that Nevada appropriately spends its
federal funds; and (3) whether DOE has recovered previously identified
misspent federal funds.

GAO found that: (1) Nevada inappropriately used grant funds to publicize
its opposition to the Yucca Mountain nuclear waste repository; (2)
Nevada improperly used appropriated funds to contract for a videotape
that was designed to influence Congress; (3) there was insufficient
documentation to determine whether another contractor engaged in
prohibited activities; (4) Nevada inappropriately supported a 1993
multistate tour, since the tour's primary purpose was to create public
opposition to the repository in other states; (5) there was no evidence
that Nevada inappropriately used grant funds in its litigation against 2
local governments; (6) since fiscal year (FY) 1992, controls to ensure
that Nevada did not misspend grant funds included DOE reviews of
Nevada's program plans, Nevada's certifications that it appropriately
used grant funds, and independent audits of Nevada's use of grant funds;
(7) Nevada has not corrected previously identified internal control
weaknesses relating to documentation supporting expenditures of grant
funds; (8) although DOE recovered about $75,000 of $1.054 million in
misspent grant funds, it has decided that $670,000 of these funds were
either allowable or unrecoverable; (9) DOE has no record of its decision
regarding the remaining $309,000; and (10) in FY 1995, Nevada spent $1.5
million to operate its nuclear waste project office, $346,000 for
contractors, and $59,000 for legal services, and paid $3.495 million to
local government and other state agencies.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-96-72
     TITLE:  Nuclear Waste: Nevada's Use of Nuclear Waste Grant Funds
      DATE:  03/20/96
   SUBJECT:  Nuclear waste disposal
             State/local relations
             Grant monitoring
             Noncompliance
             Grants to states
             Lobbying activities
             Appropriation limitations
             Litigation
             Internal controls
             Documentation
IDENTIFIER:  Nevada
             DOE Yucca Mountain Project (NV)
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Oversight and Investigations,
Committee on Commerce, House of Representatives

March 1996

NUCLEAR WASTE - NEVADA'S USE OF
NUCLEAR WASTE GRANT FUNDS

GAO/RCED-96-72

Nevada's Nuclear Waste Fund Grants

(302168)


Abbreviations
=============================================================== ABBREV

  DOE - Department of Energy
  NWPA - Nuclear Waste Policy Act of 1982

Letter
=============================================================== LETTER


B-271004

March 20, 1996

The Honorable Joe Barton
Chairman, Subcommittee on
 Oversight and Investigations
Committee on Commerce
House of Representatives

Dear Mr.  Chairman: 

The Department of Energy (DOE) provides grant funds to the state of
Nevada to assist the state in its oversight of DOE's investigation of
Yucca Mountain, Nevada.\1 In accordance with the Nuclear Waste Policy
Act of 1982, as amended, DOE is investigating the site to determine
if it is suitable for permanently disposing of highly radioactive
waste in a geologic repository.  Nevada opposes the repository
project.  In 1990, we reported that Nevada had improperly spent up to
$1,054,000 of $32 million in grant funds and that a permissive
approach by DOE to grant administration had contributed to this
situation.\2

Under recent appropriations acts, Nevada may not use its nuclear
waste grant funds for lobbying, litigation, and certain multistate
activities; moreover, the state must use these funds solely for the
conduct of the state's scientific oversight responsibilities. 
Concerned that Nevada may be violating these restrictions, you asked
us to determine

  whether the state has used federal funds for prohibited purposes,
     including whether a 1993 multistate tour and recent litigation
     against two local governments were financed with federal funds;

  what controls are in place to ensure that Nevada appropriately
     spends its federal funds; and

  whether DOE has recovered the federal funds that we previously
     identified as improperly spent by the state. 

As agreed with your office, we limited our review to (1) $1,884,000
in grant funds used for public information activities ($1,544,000)
and legal services ($340,000) from a total of about $25 million in
grant funds that Nevada received in fiscal years 1991 through 1995,
(2) the 1993 multistate tour, and (3) recent litigation between the
state and local governments.  Also, as agreed, we are providing
Nevada's fiscal year 1995 expenditures of grant funds. 


--------------------
\1 Grants are also made to any affected unit of local government. 

\2 Nuclear Waste:  DOE Needs to Ensure Nevada's Conformance With
Grant Requirements (GAO/RCED-90-173, July 9, 1990). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Nevada has inappropriately used federal grant funds to advance, on a
national stage, its message of opposition to a repository at Yucca
Mountain.  Under two public information contracts totaling $697,000,
some activities performed by the contractors in support of this
objective fell outside of the scope of the authorized purposes of the
grant specified in the nuclear waste act and applicable
appropriations acts.  Moreover, one of these activities--a videotape
produced by one of the two contractors--was also designed to
influence legislative action on a matter pending before the Congress
and thus violated the restriction in the applicable appropriations
act.  In the case of one other public information contract, for
$36,000, sufficient documentation did not exist to permit us to
assess whether the contractor had engaged in prohibited activities. 
We also believe that the state's use of about $1,600 in grant funds
to pay a portion of the $25,000 cost of a multistate tour taken in
1993 was not appropriate because the primary purpose of the tour
appears to have been to create public opposition to the repository
project in other states, rather than "solely" to accomplish one or
more of the grant's authorized purposes.  We did not find any
inappropriate use of federal grant funds by Nevada in its recent
litigation involving local governments.  (See app.  I.)

Since fiscal year 1992, three annual controls have been in place to
ensure that Nevada's funds are spent appropriately:  (1) DOE's
reviews of Nevada's program plans, (2) Nevada's certifications that
it has appropriately used grant funds, and (3) independent audits of
the state's use of grant funds.  Until 1992, DOE reviewed and
approved the state's applications for grant funds and required the
state to provide DOE with periodic progress and financial reports. 
Since then, DOE's appropriations acts have required DOE to make
direct payments of grant funds to the state and Nevada to certify
that the funds were spent according to the requirements of the
nuclear waste act.  Thus, DOE has a lesser role in oversight of the
state's grant.  Weaknesses in the states internal controls related to
documentation supporting expenditures of grant funds that we
identified in our earlier report have not been corrected.  (See app. 
II.)

DOE has recovered about $75,000 of the $1,054,000 that we previously
reported as improperly spent.  DOE has decided that $670,000 of these
expenditures was either allowable or that it would not attempt to
recover unallowable expenditures because, in part, no congressionally
mandated ceiling had been exceeded.  DOE had no records of whether it
had ever decided on the remaining $309,000 in expenditures that we
had questioned and did not plan any actions to recover these funds. 
(See app.  III.)

In fiscal year 1995, Nevada spent $5.4 million of nuclear waste
program grant funds.  This amount included $1.5 million to operate
its nuclear waste project office and $3.9 million paid to
contractors, local governments in Nevada, and other state agencies. 
The latter amount included about $346,000 paid to contractors for
pubic information activities and about $59,000 for legal services
(See app.  IV.)


   RECOMMENDATIONS TO THE
   SECRETARY OF ENERGY
------------------------------------------------------------ Letter :2

To better ensure that grant funds are adequately protected and that
the recipients of these funds comply with the applicable laws and
regulations, we recommend that the Secretary of Energy (1) determine
the amount of grant funds expended by Nevada for prohibited purposes,
including the expenditures we questioned in our 1990 report that the
Department has not resolved, and, where appropriate, seek repayment
of the prohibited expenditures and (2) ensure that the state's
internal controls over grant funds comply with federal standards. 


   THE STATE'S AND DOE'S COMMENTS
   AND OUR EVALUATION
------------------------------------------------------------ Letter :3

Nevada strongly disagreed with our report.  In the state's view, all
of the costs that we questioned in the report were allowable and
appropriate.  The state did not, however, offer any factual
information beyond what it had provided us during our review or
suggest any basis for a different view of the applicable law. 
Accordingly, we have no reason to change our view that the state has
inappropriately used portions of its grant funds for activities that
in some cases are outside of the scope of the grant's authorized
purposes and in other cases are prohibited under the appropriation
acts' restrictions.  Nevada also contended that our finding that the
state had violated the lobbying restriction was unsupported by our
references to the Anti-Lobbying Act and the "general rider" provision
that appeared in the Treasury, Postal Service and General Government
Appropriations Acts from the early 1950s to fiscal year 1984.  We
referred to previous interpretations of these analogous provisions
only to provide background for our interpretation of the lobbying
prohibition applicable to the state.  On the basis of this
interpretation, we concluded that the state had violated the lobbying
prohibition contained in the relevant appropriations acts.  (App.  V
provides the written text of Nevada's comments.)

DOE did not concur in our recommendation, which, in its view, would
assign an inappropriate function to the nuclear waste program.  DOE
added that if further federal oversight of Nevada's use of nuclear
waste program grant funds is required, it should be assigned to
another agency.  DOE did not provide a basis for its views or specify
what other entity could better provide the oversight function.  Under
the nuclear waste act, DOE provides the grant funds to the state. 
Appropriation acts have required the state to address its
certifications that the funds were properly used to DOE.  Finally,
DOE has reviewed the state's requests for funds and has provided
guidance to recipients of nuclear waste grant funds on the scope of
certain restrictions in the appropriations acts.  Under these
circumstances, we continue to believe that our recommendation was
appropriately addressed to DOE.  (App.  VI provides the written text
of DOE's comments.)


---------------------------------------------------------- Letter :3.1

We performed our review in Carson City, Nevada, and Washington, D.C.,
from August 1995 through February 1996 in accordance with generally
accepted government auditing standards.  (See app.  VII for the
details of our scope and methodology.)

We will send copies to the appropriate congressional committees; the
Secretary of Energy; the Director, Office of Management and Budget;
and the Governor of Nevada.  We will also make copies available to
others on request. 

Please call me at (202) 512-3841 if you or your staff have any
questions.  The major contributors to this report are listed in
appendix VIII. 

Sincerely yours,

Victor S.  Rezendes
Director, Energy, Resources,
 and Science Issues


NEVADA'S USE OF FEDERAL FUNDS
=========================================================== Appendix I

Nevada used a portion of its grant funds for activities that are
outside of the scope of authorized grant purposes or are prohibited
under the restrictions of the applicable appropriations acts. 
Specifically, two public information contracts totaling $697,000
supported some national outreach activities of the state geared to
furthering the state's fight against constructing the repository at
Yucca Mountain.  Because these activities are outside of the scope of
the authorized grant purposes, funding them with grant moneys is
prohibited.  Moreover, one of these activities--a video tape produced
by a state contractor--was also designed to influence legislative
action on a matter pending before the Congress.  The use of grant
funds for this activity was also prohibited.  For a third public
information contract amounting to $36,000, sufficient documentation
did not exist to permit us to assess whether the contractor had
engaged in prohibited activities.  The $340,000 in federal funds that
the state spent on legal services appeared to be consistent with the
restriction prohibiting the use of nuclear waste funds for litigation
expenses that has been in applicable appropriations acts since fiscal
year 1992.  Although about $220,000 of the $340,000 was for a legal
services contract that included litigation services, it appears that
both the contractor and the state have attempted to ensure that
federal funds are not used to pay for litigation expenses. 

About $1,600 of grant funds was used by the Project Office to conduct
a multistate tour taken in 1993 at a total cost of about $25,000.  It
was inappropriate, however, to use any federal funds to support the
multistate tour because the purpose of the tour was to create public
opposition to the repository project in other states rather than
"solely" to accomplish one or more of the authorized grant purposes. 
Nevada used its own funds to pay for recent litigation involving
Lincoln County, Nevada, and the city of Caliente, Nevada. 


      BACKGROUND
------------------------------------------------------- Appendix I:0.1

The Nuclear Waste Policy Act of 1982 charged DOE with investigating
potential sites for licensing, constructing, and operating a nuclear
waste repository.  Recognizing that state and public participation in
planning and developing repositories for the disposal of nuclear
waste was essential to promote public confidence in the nuclear waste
program, the Congress provided in the act for active participation by
affected states.  To ensure this participation, the act, as amended,
required DOE to provide financial assistance, in the form of
grants,\1 to enable the state (and any affected unit of local
government) to (1) review DOE's activities at Yucca Mountain to
determine the potential impacts of a repository on the state and its
residents; (2) develop a request for financial and technical
assistance to mitigate the impacts of constructing a repository; (3)
engage in monitoring, testing, or evaluating activities in connection
with DOE's site investigation program; (4) provide information to
state residents about the activities of DOE, the Nuclear Regulatory
Commission, or the state in connection with the repository site; and
(5) request information from and provide comments and recommendations
to DOE about activities taken under the disposal program.  The act
also precludes the use of grant funds for salary and travel expenses
that the grantee would ordinarily incur. 

In December 1987, the Congress amended the act and directed DOE to
investigate only the Yucca Mountain site.  Nevada strongly objected
to this change.  In 1989, Nevada passed two joint resolutions
expressing the state's strong opposition to the repository site.  The
state transmitted these resolutions to the President and both Houses
of the Congress, and the state viewed these transmittals as its
submittal of a valid notice of disapproval pursuant to the nuclear
waste act.  In 1989, the state also enacted legislation making it
"unlawful for any person or governmental entity to store high-level
radioactive waste in Nevada." Finally, in January 1990, the state
sued DOE and asked the Ninth Circuit Court of Appeals to, among other
things, order DOE to terminate all site characterization activities
at the site.  This challenge was unsuccessful.  The court found that
the state's notice of disapproval was ineffective and that DOE's
decision to continue investigating the site was not contrary to
law.\2 Nevada continues to oppose the repository project. 

As we reported in 1990, both DOE and the state have taken a liberal
view on the use of grant funds allowed under the nuclear waste act. 
However, the Congress, concerned about the rising costs and the types
of activities the state was financing with the grants, began
limiting, in annual Energy and Water Development Appropriations Acts,
the amount of funds DOE could provide to Nevada and placing
restrictions on the way the funds could be used.\5

Specifically, the acts,

  beginning in 1989, prohibited the use of federal funds "directly or
     indirectly to influence legislative action on any matter pending
     before Congress or a State legislature or for any lobbying
     activity as provided in 18 U.S.C.  1913";

  beginning in 1991, also specified that litigation expenses may not
     be paid for with nuclear waste funds;

  beginning in 1993, added that federal funds are not to be used to
     support multistate efforts or other coalition-building
     activities inconsistent with the restrictions contained in the
     appropriations acts; and

  beginning in 1993, specified that grant funds were to be used for
     the "sole purpose in the conduct of [the state's] oversight
     responsibilities" ("scientific" oversight was added in 1994 and
     1995). 

At the same time, however, at the request of DOE and to alleviate
some of the contentiousness between the Department and Nevada, the
Congress also changed the method under which the grants are provided
to the state.  Since fiscal year 1992, the state has been provided
with grant funds through direct payments and has been responsible for
certifying that the funds have been spent for the purposes defined in
the nuclear waste act.  Failure to provide such certification will
prohibit the grantee from any further funding provided for similar
activities.  DOE has provided little guidance to the state on the
scope of congressional restrictions.  DOE's view has been that the
Congress, not DOE, provides direction on the grant program to Nevada. 


--------------------
\1 The Congress established the Nuclear Waste Fund, composed of
payments made by the generators and owners of nuclear waste, to fund
the disposal program's costs, which include Nevada's grants.  The
expenditures from the Fund are for specified purposes subject to
congressional appropriations. 

\2 State of Nevada v.  Watkins, 914 F.2d 1545 (9th Cir.  1990). 

\5 The Energy and Water Development Appropriations Act for fiscal
year 1996, P.L.  104-46, provided only a lump sum to DOE for the
operation of its repository program.  According to guidance provided
by the accompanying House and Senate reports, no funds are included
for the state or units of local governments.  Nevertheless, the House
report provides that if funds are made available, subject to
authorization, the use of such funds would be restricted to the
purposes authorized by law and subject to the conditions enumerated
in prior Energy and Water Development Appropriations Acts.  The
Senate report contained similar language. 


      NATIONAL OUTREACH ACTIVITIES
------------------------------------------------------- Appendix I:0.2

Nevada has improperly used federal funds to support some activities
under two public information contracts totaling $697,000 to advance,
on a national stage, its message of opposition to a repository at
Yucca Mountain.  The nuclear waste act contemplates that grant funds
can be used to provide information to Nevada residents about the
repository site.  However, a nationwide information program to
further the aim of the state to defeat the site at Yucca Mountain is
outside of the scope of the authorized grant purposes, is not
conducted solely to meet the state's oversight responsibilities under
the nuclear waste act, and therefore cannot be supported with grant
funds. 


         CRITERIA
----------------------------------------------------- Appendix I:0.2.1

The nuclear waste act specifies five purposes for which grant funds
may be used.  These purposes, which constitute the oversight
responsibilities of the state under the grant provisions, include
providing information to the residents of Nevada about the activities
of the state, the Secretary of Energy, and the Nuclear Regulatory
Commission in connection with the repository program.  Since 1989,
the Congress has added successive restrictions on the use of grant
funds, narrowing the scope of authorized grant purposes.  Thus, grant
funds may not be used for influencing legislation or lobbying
activities, to support litigation expenses, or for multistate efforts
or other coalition-building activities inconsistent with the
restrictions in the applicable appropriations act.  Moreover, since
1993, the Congress has specified that state grant funds are to be
used solely for the conduct of the state's oversight responsibilities
under the nuclear waste act.  ("Scientific" oversight was added in
fiscal years 1994 and 1995). 

The Project Office's executive director acknowledges that the two
public information contractors function on a national level rather
than confining their activities to the state.  It is his view that
national operations are permissible under the nuclear waste act and
the restrictions of the applicable appropriations acts.  In a
November 6, 1995, letter responding to our request for clarification
of certain Project Office activities, the executive director stated
that "[i]n order to identify impacts associated with the program, the
State of Nevada must have information about the various aspects of
the project and their interrelationships." Moreover the executive
director stated: 

     "Nothing in the NWPA [Nuclear Waste Policy Act] prohibits Nevada
     from sharing information with groups or organizations in other
     states.  In addition, the task of providing information on the
     federal high-level radioactive waste program to Nevadans
     requires a national focus and perspective, since Nevadans get
     their information from many different sources.  This requires
     maintaining contact with key information sources, be they in
     state or out of state.  Information provision is an interactive
     process wherein Nevada shares information about the program with
     a variety of entities, including DOE, nuclear industry
     organizations, other federal agencies, and environmental groups. 
     At the same time, Nevada obtains information from these entities
     for use in providing information to Nevada citizens."

Although we recognize that providing information is an interactive
process, as noted by the Ninth Circuit Court of Appeals, the state is
not entitled to carte blanche access to the Nuclear Waste Fund.\4 The
Fund may be used to pay only those costs authorized under the act and
in accordance with the restrictions of the applicable appropriations
acts.  Thus, information gathering and dissemination outside of the
state should be for the specific purpose of fulfilling one or more of
the purposes enumerated in the nuclear waste act. 


--------------------
\4 State of Nevada v.  Herrington, 827 F.2d 1394, 1398 (9th Cir. 
1987) (Nevada II) (citing Nevada I, supra, at 534). 


         NEVADA NUCLEAR WASTE TASK
         FORCE
----------------------------------------------------- Appendix I:0.2.2

The Nevada Nuclear Waste Task Force (Task Force) was established in
1987 to provide public information and encourage citizens'
involvement in the federal nuclear waste program in Nevada.  The
Project Office provided the sole funding for this work (more than
$100,000 a year) from 1988 until 1994.  For fiscal years 1991 through
1993, its use of grant funds generally appears appropriate.  During
that period, the scope of work provided that the primary purpose of
the contract was to promote and facilitate public understanding of
and involvement in DOE's nuclear waste program.  The activities
contemplated included the establishment of an office and a public
reading room in the Las Vegas area.  All activities of the contractor
were subject to the approval of the Project Office before being
implemented. 

Toward the end of fiscal year 1993, the focus of the Task Force began
to change from a state to a national level.  At that time, the Task
Force proposed a change in its organizational objective to one of
coordinating a national nuclear waste network.  This proposal was
supported by several national public interest groups, such as
Greenpeace, the Nuclear Information and Resource Service, and the
Safe Energy Communication Council.  For example, Greenpeace stated: 

     ".  .  .  there are hundreds of grassroots and national groups
     fighting nuclear power in the U.S.  It would be expensive and
     time consuming for each group to attempt to update the other
     groups about their activities.  The [Task Force's] proposed
     communication network could act as a clearinghouse for this
     information.  .  .  . 

     "Nevada seems to be a logical location for a communication
     network to be established because of the waste disposal issues
     in the state and the existing level of activism there."

In 1994, a private foundation grant allowed the Task Force to
establish the National Nuclear Waste Coordination Center.  This
expanded the original objectives of the Task Force to establishing a
communications network to coordinate grassroots and national groups
fighting nuclear power in the United States. 

The scope of the contract with the Project Office in fiscal years
1994 and 1995 changed to reflect the redirection of the Task Force. 
Under the new scope of work, the Task Force was to assist in the
implementation of the Office's public information program.  Nothing
in the scope of work directs the Task Force's effort toward residents
of Nevada.  Rather, activities were geared toward "members of the
public and public interest organizations." Moreover, the Project
Office's approval of activities before they were implemented was no
longer required. 

Under this new scope of work, the Project Office paid the Task Force
a flat monthly fee of $3,000, for a total of $72,000 in fiscal years
1994 and 1995.  In return, the Task Force furnished a monthly report
briefly describing activities undertaken during the previous month
and listing contacts and findings.  The Task Force was also required
to submit a final report within 30 days of the end of the annual
contract period. 

As noted above, since 1993, the applicable appropriations acts have
restricted the use of grant funds for multistate efforts or other
coalition-building activities inconsistent with the restrictions in
the appropriations acts.  The acts have also specified since 1994
that grant funds are provided to the state "for the sole purpose in
the conduct of its scientific oversight responsibilities" under the
nuclear waste act.  Accordingly, it would be impermissible to use
grant funds to support multistate efforts that are not solely for the
purpose of the conduct of the state's scientific oversight
responsibilities. 

Here, the state is paying a flat fee, not tied to any specific
activities, that supports the coalition-building agenda of the Task
Force.  The Task Force's focus is not on providing information to the
residents of Nevada.  Rather, information is being provided on a
national level to support a policy of opposition to the repository
project.  There is nothing in the nuclear waste act to suggest that
grant funds were to be used to support a national effort directed
toward the defeat of the repository program. 

Moreover, information gathering and dissemination outside of the
state must be geared toward the fulfillment of one or more of the
enumerated grant purposes in order to justify the use of nuclear
waste funds.  However, this does not appear to be the case here.  For
example, the Task Force's executive director testified before the
Minnesota State Senate on February 8, 1994, and specified in her
statement that she was not representing the state of Nevada.  Yet
this testimony is listed on the Task Force's monthly report, which is
the principal contract deliverable supporting payment of the monthly
fee out of the state's nuclear waste grant funds.  Also in February
1994, the executive director met with the Safe Energy Communication
Council to discuss the Secretary of Energy's alternative energy and
energy conservation commitment.  The Council describes itself as a
national coalition of energy, environmental, and public interest
media organizations working to increase the public's awareness of
energy efficiency and renewable energy sources and the "serious
economic and environmental liabilities" of nuclear power.  There does
not appear to be a direct relationship with the repository program to
justify funding this meeting with grant funds.  Yet this meeting was
also listed on the Task Force's monthly report.  Under these
circumstances, the monthly fee to support the Task Force's multistate
and coalition-building efforts cannot be paid out of grant funds. 


      KAMER, SINGER AND ASSOCIATES
------------------------------------------------------- Appendix I:0.3

Kamer, Singer and Associates (Kamer), an independent, full-service
public affairs and public relations agency based in San Francisco,
has been under contract with the Project Office since 1992.  Under
the contract's scope of work, Kamer is to provide "a range of
consulting and management services to the office in implementing a
public information program with regard to the location of a
high-level nuclear waste site in the state." Activities must be
approved before implementation, and payment is based on an hourly
rate plus expenses.  From May 1992 through September 1995, Kamer
received $625,000 in federal grant funds and $31,000 in state funds
for its services. 

According to the Project Office's executive director, it is Kamer's
     job to develop ideas and ways to get Nevada's message out.\5
     However, activities designed to promote the state's views should
     not be financed with grant funds as they are not being conducted
     solely to meet the state's oversight responsibilities.  Of
     course, the state is free to use its own funds to finance its
     opposition to the repository project. 

For example, through Kamer, the Project Office launched in February
1994 a campaign to interest national media outlets in Nevada's
position on the repository.  This campaign included a letter from
Kamer to the Christian Science Monitor depicting the project as a
"tale loaded with government abuse, strong-arm politics, Frankenstein
science, and life-threatening consequences that could persist for the
next 100 centuries and beyond." This letter concluded by proposing
that the newspaper publish a story on Nevada's view of the project. 

This campaign is not an informational exchange; rather, it is a
one-way communication outside of the state of Nevada directed at
molding public opinion against the repository project.  Such a
campaign is clearly outside of the scope of authorized grant purposes
and therefore should not be financed with nuclear waste funds. 

Another of Kamer's activities that fell outside of the scope of
authorized grant purposes was the production of a video tape entitled
"What's the Deal With Yucca Mountain." The 16-minute video was
developed in collaboration with the state's Superintendent of
Schools, specifically to complement DOE's educational programs in
Nevada schools.  Although grant funds may be used to provide
information to residents of Nevada about the repository project, this
tape is available at no cost to anyone who requests it.  Moreover,
the tape's purpose is clearly to promote the state's view of the
project and not simply to provide information.  The tape presents
students asking questions and answering them in the negative.  For
example, the first question raised is "Should Nevada be the place the
nation dumps its nuclear waste?" In the background is a resounding
chorus of "No" and a soft whisper of "I don't know" and "Maybe." The
students then state that viewers need the whole story, that Nevada is
fighting the Yucca Mountain site, and that many scientists believe
that the site is unsafe.  However, the tape does not present DOE's
views or the views of any citizen or scientist in favor of the site. 

According to the Project Office's executive director, DOE's
educational program "tends to be very one-sided and does not address
many of the issues and concerns related to the [repository] project."
The same criticism could be made, we believe, about this video.  For
example, in commenting on an award won by the tape, the executive
director stated that "It sends a positive message to citizens and
leaders to keep up the fight against an ill-conceived plan by
Washington bureaucrats to use Nevada as a nuclear dumping grounds."
In our view, the tape was not prepared "solely" to meet the state's
oversight responsibilities.  Grant funds may not be used to advance
the state's fight to defeat the repository site. 


--------------------
\5 Reflecting this design, the scope of work also provides that:
"Contractor makes no representation, warranty, or guarantee that it
will achieve Office's goal of increased public awareness, favorable
publicity, or changes in pubic opinion or federal policy with regard
to nuclear waste storage."


      USE OF GRANT FUNDS FOR
      LOBBYING
------------------------------------------------------- Appendix I:0.4

The video tape produced by Kamer ("What's the Deal With Yucca
Mountain") also constituted an indirect attempt to influence
legislation on a matter pending before the Congress and therefore
cannot be supported with grant funds. 


         CRITERIA
----------------------------------------------------- Appendix I:0.4.1

Since fiscal year 1989, the Energy and Water Development
Appropriations Acts have contained the following provision geared
toward restricting the use of federal funds to influence legislation
and other lobbying activities: 

     ".  .  .  none of the funds herein appropriated may be used
     directly or indirectly to influence legislative action on any
     matter pending before Congress or a State legislature or for any
     lobbying activity as provided in 18 U.S.C.  1913."

The Anti-Lobbying Act, 18 U.S.C.  1913, a criminal provision,
prohibits officers and employees of the executive branch from
     engaging in certain forms of lobbying.\6 The Office of Legal
     Counsel has interpreted the statute in light of its underlying
     purpose "to restrict the use of appropriated funds for
     large-scale, high-expenditure campaigns specifically urging
     private recipients to contact Members of Congress about pending
     legislative matters on behalf of an Administrative position."\7

We and the Justice Department have generally read appropriations act
restrictions on lobbying by executive branch officials as applying
only to expenditures involving direct appeals to the public,
suggesting that they in turn communicate to Members of Congress, to
indicate support of the administration's position on pending
legislation.  This construction allows a range of necessary
communications between the executive branch on one hand and the
Congress and the general public on the other.\8 The considerations
that underlie this narrow construction are largely irrelevant to a
prohibition against lobbying by private persons receiving federal
grants and contracts.  As the Justice Department has stated: 

     "The Constitution contemplates that there will be an active
     interchange between Congress, the Executive Branch, and the
     public concerning matters of legislative interest.  For that
     reason alone, this Department has traditionally declined to read
     the criminal statute and the general rider as requiring federal
     officers and employees to use their own funds and their own time
     to frame necessary communications to Congress and the public. 
     We have taken the view that the criminal statutes and the
     general rider impose no such requirement.  They permit a wide
     range of contact between the Executive and the Congress and the
     Executive and the public in the normal and necessary conduct of
     legislative business.\9

     "The prudential considerations that underlie this narrow and
     necessary construction are largely irrelevant to prohibitions
     against lobbying by private persons and organizations that
     receive federal funds under federal grants and contracts. 
     Although private persons and organizations have a right to
     petition Congress and to disseminate their views freely, they
     can be expected within the framework established by the
     Constitution, to do their lobbying at their own expense.  They
     have no inherent or implicit right to use federal funds for that
     purpose unless Congress has given them that right."

In this case, the Congress has clearly and specifically prohibited
recipients of nuclear waste funds from using those funds "directly or
indirectly to influence legislative action on any matter pending
before Congress or a State legislature or for any lobbying activity
as provided in 18 U.S.C.  1913."


--------------------
\6 Specifically, 18 U.S.C.  1913 provides:
"No part of the money appropriated by any enactment of Congress
shall, in the absence of express authorization by Congress, be used
directly or indirectly to pay for any personal service,
advertisement, telegram, telephone, letter, printed or written
matter, or other device, intended or designed to influence in any
manner a Member or Congress to favor or oppose, by vote or otherwise,
any legislation or appropriation by Congress, whether before or after
the introduction of any bill or resolution proposing such legislation
or appropriation; but this shall not prevent officers or employees of
the United States or of its departments or agencies from
communication to Members of Congress on the request of any Member of
Congress, through the proper official channels, requests for
legislation or appropriation which they deem necessary for the
efficient conduct of the public business."

\7 Memorandum for Dick Thornburgh, Attorney General, from William P. 
Barr, Assistant Attorney General, Office of Legal Counsel,
"Constraints Imposed by 18 U.S.C.  1913 on Lobbying Efforts," 13 Op. 
O.L.C.  361, 365 (1989) (prelim.  print) (citation and footnote
omitted). 

\8 5 Op.  Off.  Legal Counsel 180 (1981). 

\9 For over 30 years, from the early 1950s to fiscal year 1984, the
following provision, know as the "general rider," was enacted every
year:
No part of any appropriation contained in this or any other Act, or
of the funds available for expenditure by any corporation or agency,
shall be used for publicity or propaganda purposes designed to
support or defeat legislation pending before Congress.  (See, for
example, the Treasury, Postal Service, and General Government
Appropriations Act, 1980, Pub.  L.  No.  96-74, 607(a), 93 Stat. 
559,575 (1979).)
For fiscal year 1984, the "this or any other act" provision fell
victim to a point of order and was dropped.  However, it continues to
appear in individual appropriations acts in various forms.  The first
clause of the appropriation restriction at issue here ("none of the
funds .  .  .  may be used directly or indirectly to influence
legislative action on any matter pending before Congress or a State
legislature") is one variation of the general rider. 


         KAMER VIDEO TAPE
----------------------------------------------------- Appendix I:0.4.2

As noted above, in 1994 Kamer produced a video tape for Nevada
entitled "What's the Deal With Yucca Mountain." In addition to the
information contained in the tape discussed above, in the tape one
student refers to the 1987 amendments to the nuclear waste act as the
"screw Nevada bill." The video also ridicules DOE, including in the
tape footage from a 1950s film prepared by the Atomic Energy
Commission (the predecessor to DOE) urging citizens to "duck and
cover" in the event of an atomic bomb.  Viewers are admonished:  "Go
ask--should we believe everything that DOE says?" In its recap, the
tape answers the question "What does make sense?" by, among other
things, advocating slowing down the rush to build Yucca Mountain and
storing the waste where it is generated in order to allow it to cool
down.  This is followed by a student saying:  "Speak up.  Write your
Congressman.  Get involved and try to get this thing out of the state
of Nevada.  It's not Nevada." The tape then shows the student
presenters saying: 

     "So You've heard the questions.  Make sure you ask them.  Speak
     up.  Shout if you have to.  Just don't let them steamroll over
     us.  Nevada's better than that.  We're talking about our future
     and our kids and their kids for 10 centuries.  Think about it. 
     Then do something."

The video then urges the viewer to write to Members of Congress, U. 
S.  Senators, state legislators, and newspapers and for the viewers
to attend meetings, read the news, and talk to parents and friends. 
The video ends with an emphatic "Ask questions."

In the Project Office's executive director's letter to us of November
6, 1995, he stated: 

     "[The video] is intended to help students ask questions and be
     better informed when interacting with DOE-sponsored
     informational programs.  At the end of the video, students are
     provided with information about what they can do to be more
     involved and more informed about the issues.  Among other
     things, they are advised that they can contact their congressmen
     and legislators who, obviously, will have varying perspectives
     on the issue and additional information that may not be
     available elsewhere.  The video does not urge people to take a
     position one way or another on the Yucca Mountain issue or to
     attempt to influence members of Congress, legislators, or other
     elected officials."

We do not find that the urging of viewers to get involved and stop
the "steamrolling" of the state by, among other things, writing to
congressmen and state legislators to be simply an informational
activity as does the Project Office's executive director.  The tape
was not merely "advising" viewers that additional information was
available by contacting their representatives in the Congress and
state legislators.  The viewers are admonished to "speak up and do
something."

In connection with lobbying prohibitions in other appropriations
acts, we have found violations in which listeners are merely urged to
make their views known to the Congress if the context of the message
makes it clear what those "views" are supposed to be.  Alternatively,
we have found no violation when a speaker's statement was perceived
as being informational rather than encouraging any action on the
listener's part.  Moreover, it is not necessary for a statement to
explicitly refer to a particular piece of pending legislation for
there to be a violation. 

Here, viewed in its entirety, the tape provides a clear message of
opposition to the repository project.  The tape was an exhortation to
contact the Congress to stop the "steamrolling" of Nevada.  During
the period that the tape has been distributed, aside from the annual
appropriations acts, a number of bills have been introduced in the
Congress concerning the federal repository program.\10 Under these
circumstances, the urging of viewers to "speak up" and contact their
congressmen clearly constitutes an attempt by the state to "influence
legislative action" on a matter "pending" before the Congress. 


--------------------
\10 See, for example, H.R.  2081, 103rd Cong., 1st Sess.  (1993) and
H.R.  496, 104th Cong., 1st Sess.  (1995). 


      LACK OF SUFFICIENT
      DOCUMENTATION
------------------------------------------------------- Appendix I:0.5

For one of the Project Office's public information contractors,
Potomac Strategies Group (Potomac), the documentation available from
the Project Office was insufficient for us to even analyze
grant-funded activities for the purpose of determining whether the
costs of the activities were allowable. 

Although the standards for internal controls in the federal
government require, among other things, that all transactions are to
be clearly documented, Potomac does not provide the Project Office
with any documentation of its activities.  Potomac has been under
contract to the Office since April 1993 and had received $75,000
through September 1995.  Of this amount, $36,000 was federal funds
and the rest was state funds.  The contract's scope of work provides
that Potomac is to represent the Project Office with key members of
the executive and legislative branches of the federal government. 
The Office could not provide us with any documentation of Potomac's
activities.  According to the Office's executive director, Potomac
reports only to him and only verbally, usually by telephone. 
Although DOE had, in an unrelated matter, cautioned the Office in
1992 to use extreme care when recording expenditures to avoid future
questioning of costs, the Office maintained no written record of
Potomac's activities. 


      LEGAL SERVICES
------------------------------------------------------- Appendix I:0.6

We reviewed the contracts for legal services affecting the Project
Office and did not find any improper expenditures of federal grant
funds for legal services.  Since fiscal year 1992, the Energy and
Water Development Appropriations Acts have prohibited the use of
nuclear waste funds for litigation expenses.  The state's attorney
general's office has entered into one legal services contract that
includes litigation services and is paid for with both federal and
state funds.  Although this situation raises the possibility that
grant funds could be used inadvertently to pay for litigation
expenses, it appears that both the attorney and the state have
attempted to ensure that this situation does not occur.  Since
February 1991, Nevada has contracted with an attorney at a Seattle,
Washington, law firm for both litigation and nonlitigation
services.\11 The total cost of the contract through fiscal year 1995
was about $238,000.  According to both the Chief Financial Officer
for the attorney general's office and the executive director of the
Project Office, the attorney general's office directs the contract
for litigation services and the Project Office directs the contract
for general legal services.  They both contend that no litigation
expenses are paid for with federal funds. 

It appears that both the attorney and the state have attempted to
ensure that litigation services are not paid for with federal funds. 
Although not specifically required under the contract, the attorney
separates his monthly billings into two portions:  one for general
legal advice and consultation on the nuclear waste program and one
for litigation services.  These billings are reviewed by a deputy
attorney general.  If approved, funding for general legal services
comes out of grant funds, and funding for litigation services comes
out of state funds.  Although most of the billings appear correct, we
were unable to determine, on the basis of our review of a sample of
monthly billings, if all of the activities designated as general
legal services were solely for services other than litigation. 


--------------------
\11 The attorney was previously with another law firm that has held a
similar contract with the state since 1983. 


      MULTISTATE TOUR
------------------------------------------------------- Appendix I:0.7

In April 1993, a group of Project Office officials and contractors
conducted a 12-day, 6-city tour in several states, disseminating to
the media the results of the Office's waste transportation routing
study.  We reviewed this activity because questions have been raised
about the purpose of the tour.  For example, one editorial in a
Nebraska newspaper described the purpose of the tour as being for the
"express purpose of scaring the dickens out of people who live in
other states."

The cost of the tour was about $25,000.  Except for 2 days of the
executive director's salary and expenses totaling about $1,600, which
were paid with federal grant funds, all costs of the tour were paid
with state funds.  The Project Office could not explain why 2 of the
4 days the executive director actually participated in the tour were
not charged to the state.  According to the executive director, the
entire tour could have been paid for with federal funds since it was
intended to assess how other states' routing designations for
shipments of nuclear waste could affect communities in Nevada. 
Specifically, in his November 1995 letter to us clarifying certain
activities of the Project Office, the executive director stated: 

     "In order for the State of Nevada to be able to plan and
     identify routes for waste transportation, it is crucial that
     State officials know what the reactions of other states may be
     to those designations.  If Nevada is making decisions which
     impact cities and communities in other states, it is only
     reasonable that those locales know of the possible effects on
     them of those Nevada initiatives.  Practically speaking, Nevada
     also needs to know how other states may react to its route
     designation decisions and how other states' routing designations
     could affect Nevada communities.  The meetings in other states
     were intended to provide this perspective and generate
     information for the State's impact assessment activities.  The
     [Project Office] neither sought nor encouraged any formal or
     informal relationships with other states, and we did not provide
     funds or other support for other states' activities.  The
     meetings do not constitute coalition-building nor are they
     prohibited by the NWPA or the Appropriation Acts."

We note that the meetings conducted on the tour were with media
outlets rather than environmental and transportation experts.  Thus,
the multistate tour appears to have been primarily for the purpose of
creating public opposition in other states rather than an interactive
information process.  As we have stated above, in order to justify
expenditures from the Nuclear Waste Fund, the activity supported must
be necessary to the achievement of one or more of the authorized
grant purposes and must be conducted "solely" for the purpose of
meeting the oversight responsibilities of the state.  We do not
believe that the multistate tour meets this test.  Accordingly, the
use of grant funds for the tour was prohibited. 


      LITIGATION AGAINST LOCAL
      GOVERNMENTS
------------------------------------------------------- Appendix I:0.8

The costs of Nevada's recent litigation against Lincoln County and
the city of Caliente were appropriately charged to state funds.  We
reviewed these costs because of concern that several contractors for
the Project Office had participated in a litigious action for the
state and may have been paid for these activities from the state's
grant funds. 

In August 1995, the state filed suit to have certain public officials
of Lincoln County and the city of Caliente removed from office.  The
cause for the complaint was the passage of a joint resolution by the
city and county requesting, among other things, that an interim
nuclear waste storage facility be constructed and operated within the
county.  In its suit, the state contended that in passing this
resolution, city and county officials violated the state law
prohibiting the storage of nuclear waste in Nevada. 

To prosecute the state's complaint, the attorney general secured the
services of four expert witnesses, of whom three are contractually
tied to the state's Project Office.  The costs of the services of
these experts were appropriately charged to state funds.  All of the
experts had contracted with the attorney general's office, billed
that office for their services, and received payment from that
office.  We traced these payments through records in the Office of
the State Controller and confirmed that the payments were charged
against the attorney general's budget. 


CONTROLS OVER THE USE OF FUNDS
========================================================== Appendix II

Since fiscal year 1992, three annual controls have been in place to
ensure that Nevada's funds are spent appropriately:  (1) DOE's
reviews of Nevada's program plans, (2) Nevada's annual certifications
to DOE that it has used grant funds appropriately, and (3)
independent audits of the funds on which DOE relies.  DOE's
appropriations acts for fiscal years 1992 through 1995 made Nevada
responsible for certifying that it appropriately used grant funds. 
Because of this change in funding procedures and congressional
directions in the appropriations acts, DOE has taken a relaxed
approach to administering the grant.  In addition, DOE does not
generally provide the state with guidance on the restrictions
contained in the appropriations acts.  In the absence of such
guidance, Nevada has, as discussed in appendix I, constructed its own
broad view of how the funds can be used.  Yet the successive
additions of legislative restrictions indicate that the Congress may
have a more narrow view.  In 1990, we recommended that DOE provide
timely guidance to Nevada on any congressional restrictions being
placed on grant funds and ensure that the state has appropriate
controls over these funds, but DOE has not implemented our
recommendations because it has deferred to the Congress to provide
direction to Nevada. 

Before 1992, DOE required Nevada to periodically submit grant
applications for DOE's review to ensure that the state's proposed
activities were, among other things, reasonably related to the
oversight of the Yucca Mountain repository project and allowed by
law, court decisions, congressional restrictions, and administrative
requirements.  After approving the grant, DOE required Nevada to
submit periodic progress and financial reports. 

The 1992 and subsequent Energy and Water Development Appropriations
Acts have changed the way that DOE and Nevada interact.  These acts
required DOE to make direct payment of grant funds to the state and
required Nevada to "provide certification to the DOE, that all funds
expended from such direct payment moneys have been expended for
activities as defined in Public Law 97-425 [the nuclear waste act],
as amended." Failure to provide certification will result in the loss
of funding for similar activities.  The legislative history suggests
that the purpose of this change, which DOE had requested, was to
"improv[e] the contentious relationship" that existed between DOE and
the state and reduce the administrative burden on both DOE and the
state. 

With the advent of the direct payment approach, DOE directed the
Project Office to submit a brief--not to exceed two
pages--description of its planned program each year.  The Project
Office's description of its program has been the same since 1992. 
The document briefly describes the statutory basis for the Project
Office and its proposed goals, work activities, and budget for the
fiscal year.  The one explicit link in the document to the nuclear
waste act and DOE's appropriations acts is a stated goal of
performing the duties and responsibilities of the state of Nevada as
described in the act.  On the basis of this review, DOE provides the
state with a direct payment of grant funds. 

Once, DOE raised, but did not resolve, a question about the Project
Office's proposal before making the direct payment.  In November
1993, DOE advised the Project Office to review its planned
involvement in activities that the Project Office had described as
"multi-state evaluations and assessments of impacts and associated
consequences of repository siting, construction, operation and
closure .  .  ." to ensure compliance with the restrictions in the
appropriations act.  According to DOE's contracting officer, she
wanted to be on record as questioning this planned activity because
of the restriction related to multistate efforts.  However, DOE did
nothing beyond its advice to the Project Office to resolve her
concern, and the language remained the same in the Project Office's
subsequent program proposal. 

DOE also briefly reviews Nevada's certification that it has
appropriately used grant funds.  DOE prepares a certification letter
for the state to sign at the close of the grant year.  The letter
certifies that the grant funds were expended for activities that are
defined in the nuclear waste act and were not inconsistent with the
restrictions in the applicable appropriations act.  DOE has not
challenged the state's certification, and according to DOE's Chief
Counsel for its repository project, DOE would do so only if it had
knowledge that funds had been impermissibly used. 

For independent assurance that Nevada has properly used grant funds,
DOE relies on independent audits performed as required by the Single
Audit Act.\1 State or local governments that receive $100,000 or more
a year in federal funds are required to conduct such audits each
year.  The audit act requires that the independent auditor determine
and report on whether the audited organization has internal control
systems to provide reasonable assurance that it is managing federal
assistance programs in compliance with applicable laws and
regulations.  The auditor is also required to determine whether
Nevada has complied with laws and regulations that may have a
material effect on federal assistance programs classified as "major,"
including this program.  Kafoury, Armstrong & Co.  performed the
audit of the Project Office in 1994 and is completing its audit for
1995. 

These audits, however, did not cover all areas.  In fiscal year 1994,
for example, the scope of the audit was focused on the costs
associated with running the Project Office.  Other areas, such as
procurement or assurance of compliance with legislative requirements,
were not addressed.  According to the auditors, they were not aware
of any guidance from DOE on how to interpret the restrictions on
certain multistate efforts or other coalition-building activities,
and therefore it was unlikely that the transaction tests that they
performed to determine compliance would disclose any violations. 

To address concerns about inappropriately spent funds in our 1990
report, we recommended that DOE (1) provide timely guidance on the
methods to be followed in implementing congressional restrictions
placed on Nevada's use of grant funds and (2) ensure that the state's
internal controls over grant funds comply with federal standards. 
Although these recommendations were made before the Congress adopted
the direct payment and certification process, they remain appropriate
and have not been implemented by DOE.  Since 1990, the Congress has
continued to impose increasingly narrow restrictions on the use of
funds.  In the absence of guidance from DOE on how to interpret these
restrictions, Nevada continues to broadly interpret the applicable
provisions of the nuclear waste act and the restrictions.  In
addition, Nevada's lack of documentation for several activities we
identified indicates a lack of adequate internal controls.  Had DOE
acted on our previous recommendations, Nevada would have been guided
by DOE's interpretations of the restrictions and should have had
internal controls requiring adequate documentation of the funds
spent.  As discussed earlier, however, DOE has been reluctant to
provide guidance to the state because its view is that the Congress
provides grant program direction to Nevada. 


--------------------
\1 The act requires state and local governments that receive
specified amounts of federal financial assistance to have a single
audit conducted. 


RECOVERY OF IMPROPERLY SPENT FUNDS
========================================================= Appendix III

DOE has not recovered most of the funds we identified in a previous
report as improperly spent.  In our 1990 report, we concluded that
Nevada had improperly spent up to $1.054 million of $32.3 million in
grant funds provided through June 1989.  Specifically, the state had
(1) used up to $75,000 for litigation expenses; (2) used as much as
$608,000 for lobbying expenses; (3) used about $275,000 from one
grant period to pay expenses incurred in the previous year; and (4)
exceeded, by about $96,000, a legislative spending limit of $1.5
million on socioeconomic studies.  Subsequently, DOE recovered the
funds used for litigation expenses and decided that $670,000 in
expenditures was either allowable or that it would not attempt to
recover unallowable expenditures because, in part, no congressionally
mandated ceiling had been exceeded.  DOE could not locate records
showing the disposition of the remaining $309,000 and does not plan
any further action on these costs. 

DOE recovered about $75,000 improperly used for litigation expenses. 
It did so by subtracting the amount from Nevada's $5 million grant
for fiscal year 1993.  Thus, for that fiscal year, the state actually
received a direct payment of about $4,925,000. 

DOE made explicit decisions that $670,000 in expenditures was either
allowable or that no recovery of unallowable expenditures would be
sought.  Of that amount, $395,000 was for lobbying by a law firm that
was registered as a lobbyist for the Project Office.  The Project
Office's executive director had described the firm's activities as
"clearly [being] in the area of lobbying." For these reasons, the
Single Audit Act audit report for the year ended June 30, 1988,
questioned the entire $240,000 paid to the law firm in that year and
also noted that $155,000 in grant funds had previously been provided
to the firm for similar activities. 

DOE resolved the questioned amount for lobbying by obtaining further
written explanations from the Project Office and, on the basis of
those explanations, determined that the $395,000 was allowable.  The
Project Office advised DOE that the activities of the law firm were
in response to congressional requests for information.  In the
absence of any information to the contrary, DOE accepted this
explanation and closed the related audit findings.  In addition, DOE
cautioned the executive director about the "broad restrictions
against using `oversight and participation' funds to influence
legislation" and "to use extreme care when recording and describing
expenditures [to] avoid the questioning of certain costs in the
future."

In addition, DOE decided not to recover about $275,000 that the state
had used from one grant period to cover expenses in another period. 
Questions about these funds were raised by the independent auditor in
its report for the year ending June 30, 1989, as well as in our
report.  In September 1988, the Project Office had requested that
amount in additional funds to pay for expenses incurred in the grant
period that had ended on June 30 of that year.  Although DOE denied
the request, Nevada used about $275,000 in funds provided for the
year ending on June 30, 1989, to pay these expenses incurred in the
previous year.  In August 1991, DOE decided that expenditures in
excess of the funding under one grant are not allowable costs under
the subsequent grant.  However, DOE also decided that no
congressionally mandated ceiling had been exceeded, that the denial
of the state's request had been flawed, and that it was the
Congress's intent, and in the spirit of cooperation between the
involved parties, that whatever funding was available be provided to
the state for its oversight role.  Therefore, DOE did not attempt to
recover these funds. 

DOE had no records on whether it had ever decided on the remaining
$309,000 in expenditures by Nevada that we questioned in our 1990
report.  Of that amount, $213,000 was for payment of what appeared to
be lobbying-related costs through June 30, 1989, to an Olympia,
Washington, law firm that was registered as a lobbyist for Nevada. 
Documents that we had reviewed as one basis for our 1990 report
showed numerous congressional contacts, many of which appeared to
have been initiated by this law firm.  Unlike the situation for the
law firm discussed above, DOE could not locate records that it had
ever formally determined, on the basis of our audit findings, if the
state had improperly used federal funds to pay the Olympia law firm
for lobbying services.  DOE does not plan any additional action on
this matter in view of the time that has passed since the questioned
activities occurred. 

DOE also could not locate records showing that it had ever formally
determined if Nevada had exceeded the limitation on the use of grant
funds for socioeconomic studies.  DOE's fiscal year 1989
appropriations act limited the amount of grant funds that Nevada
could spend on socioeconomic studies to $1.5 million.  In our 1990
report, we found that the state had exceeded this limitation by about
$96,000.  As in the lobbying-related case discussed above, DOE does
not plan any additional action on this matter. 


NEVADA'S EXPENDITURES OF NUCLEAR
WASTE GRANT FUNDS IN FISCAL YEAR
1995
========================================================== Appendix IV

Types of expenditures                                           Amount
--------------------------------------------------  ------------------
Staff                                                       $1,086,533
State employees--salaries and fringe benefits for              615,416
 14 project office staff and 7 commissioners
Contract employees--4 contract employees of the                368,075
 state's Nuclear Waste Project Office
State attorney general's office--1 assistant                   103,042
 attorney general and secretary
Travel                                                        $136,492
State employees--travel cost of 12 staff, 7                     47,879
 commissioners, and governor
Contract employees--travel cost of 4 contract                   46,886
 employees
State attorney general's office--1 assistant                    39,864
 attorney general
Transportation--motor pool/car rental                            1,863
Operating and equipment                                       $279,845
Equipment purchases (primarily replacement and/or               82,776
 upgrade of computers and software)
Publications, printing, and postage                             72,787
Building lease                                                  58,536
Other                                                           32,372
Telephone, subscriptions                                        22,854
Equipment lease                                                  5,820
Maintenance                                                      4,700
Subtotal--staff, travel, and operating                      $1,502,870
Contractors and consultants--science                        $2,260,209
Technology & Resource Assessment Corp.--                       500,000
 investigate groundwater hazard
University of Nevada at Reno--assess faulting,                 410,915
 earthquake, tectonic hazards
Mifflin & Associates, Inc.--hydrologic and                     392,777
 geochemical review and research
University of Nevada at Reno, Desert Research                  259,869
 Institute--hydrologic research, monitoring, and
 review
Thompson Professional Group, Inc.--review/                     235,203
 evaluate repository engineering
University of Nevada at Las Vegas--volcanic risk               157,981
 assessment research
L. Lehman & Associates, Inc.--expert advice on                 150,000
 hydrology
David Tillson--expert advice on geology and                     82,546
 licensing
University of Nevada at Las Vegas, Dept. of                     26,250
 Mathematical Science--develop risk assessment
 models
MAC/JAG Tech., Inc.--analyze DOE's site                         21,000
 investigation expenditures
Gamma Engineering Corp.--assess and model effects               15,000
 on volcanic tuff
Merle S. Lefkoff & Assoc.--train local governments               8,668
 on environmental impact statement process
Contractors and consultants--socioeconomic                    $532,854
Decision Science Research Institute--identify and              424,132
 quantify impacts of repository siting
Latir Energy Consultants--specialized expertise on              39,381
 socioeconomic issues
University of Nevada at Reno, Dept. of                          15,946
 Anthropology--develop health effects assessment
Reed Hanson--peer review of socioeconomic study                 11,914
Michael Bronzini--peer review of socioeconomic                   8,880
 study
Dr. Kai Erikson--peer review of socioeconomic                    7,700
 study
Dr. Bruce Dohrenwend--peer review of socioeconomic               5,338
 study
Todd La Porte, PhD--peer review of socioeconomic                 4,820
 study
Roy Rappaport--peer review of socioeconomic study                3,312
Roger Kasperson, PhD--peer review of socioeconomic               2,726
 study
Clifford Russell, PhD.--peer review of                           2,688
 socioeconomic study
William Colglazier, PhD--peer review of                          2,017
 socioeconomic study
Regional Economic Models, Inc.--lease of economic                2,000
 forecasting model
Dr. Allen Kneese--peer review of socioeconomic                   2,000
 study
Contractors and consultants--transportation                   $241,878
Robert J. Halstead--expert services on                         134,681
 transportation analysis
University of Nevada at Las Vegas, College of                  102,197
 Engineering--transportation analysis
Western Interstate Energy Board--monitor federal                 5,000
 actions on transportation of radioactive
 materials
Contractors and consultants--public information               $346,222
Kamer, Singer & Associates--public information                 243,106
 consultant
Nevada Nuclear Waste Task Force--assist in                      36,000
 implementation of public information program
Potomac Strategies Group--represent Nuclear Waste               22,500
 Project Office to federal administration and
 legislature
University of Nevada at Reno, Center for                        17,145
 Environmental Studies--organize seminar/lecture
 series
Phillip Richardson--report on international                     13,000
 nuclear waste disposal programs
K-DWN Radio--produce and air 30-minute call-in                   6,250
 radio show
Jean Stoess--edit Nuclear Waste Project Office                   3,185
 publications and maintain mailing lists
KRNV Radio--produce and air 30-minute live radio                 2,250
 shows
English Mailing Services--bulk mailing of                        1,886
 newsletters, fact sheets, etc.
Pen-Pals Clipping Service--press clipping of                       900
 Nevada newspapers
Contractors and consultants--legal                             $58,839
James Davenport--consultation/legal advice                      43,668
Kirk Balcom, Esq.--expert computer services on                  15,171
 Nuclear Regulatory Commission licensing process
Local governments                                             $380,960
City of Las Vegas--assist state in examining                   145,469
 repository impacts
City of North Las Vegas--assist state in examining             117,504
 repository impacts
Western Shoshone Resources, Inc.--study repository              54,851
 impacts
City of Henderson--assist state in examining                    35,288
 repository impacts
Tribal Council of Moapa/Paiutes--study repository               27,848
 impacts
State agencies/bureaus                                         $77,191
Legislative Counsel Bureau--review effectiveness                73,443
 of federal/state programs\a
Public Service Commission--travel/incidental costs               2,290
Dept. of Military--travel/incidental costs                       1,458
======================================================================
Subtotal--contractors and others                            $3,898,153
======================================================================
Total                                                       $5,401,023
----------------------------------------------------------------------
\a The Legislative Counsel Bureau is the staff agency that provides
legal, research, and fiscal support to the Nevada legislature.  The
Bureau also receives funds from the state legislative fund. 




(See figure in printed edition.)Appendix V
COMMENTS FROM THE STATE OF NEVADA
========================================================== Appendix IV



(See figure in printed edition.)




(See figure in printed edition.)Appendix VI
COMMENTS FROM THE DEPARTMENT OF
ENERGY
========================================================== Appendix IV


SCOPE AND METHODOLOGY
========================================================= Appendix VII

To determine if Nevada has engaged in prohibited activities, we
reviewed the state's expenditures of grant funds for public
information and legal services contracts from 1991 through 1995.  We
reviewed the scope of work and deliverables for each contract and
identified activities that were out-of-state, involved other
organizations or groups, or involved congressional contact.  Because
of concerns raised, we also reviewed the costs of the Project
Office's multistate tour in 1993 and recent litigation between Nevada
and Lincoln County and the city of Caliente.  We discussed these
activities with responsible state officials.  In conjunction, we
reviewed the Nuclear Waste Policy Act of 1982, as amended in 1987,
applicable Energy and Water Development Appropriations Acts, and
other federal legislation and case law having a bearing on
permissible uses of federal funds by grantees. 

To determine what controls are in place to ensure that Nevada
appropriately spends its federal funds, we identified controls
required under the provisions of the Nuclear Waste Policy Act, DOE's
appropriations acts, and federal regulations.  We determined what
controls had been implemented through discussions with DOE officials
and reviews of documents.  We also discussed the scope and findings
of the most recent independent audit of the state's expenditures of
grant funds with representatives of the audit firm. 

To determine if DOE has recovered funds improperly spent by the
state, we contacted DOE's responsible contracting officer and
obtained available documentation on DOE's efforts to recover these
funds. 


MAJOR CONTRIBUTORS TO THIS REPORT
======================================================== Appendix VIII

Bernice Steinhardt, Associate Director
Dwayne E.  Weigel, Assistant Director
Eugene Buchert, Evaluator-in-Charge
Brad Dobbins, Evaluator
Mindi Weisenbloom, Senior Attorney


*** End of document. ***