Copyright 1999 Federal News Service, Inc.
Federal News Service
FEBRUARY 10, 1999, WEDNESDAY
SECTION: IN THE NEWS
HEADLINE: PREPARED TESTIMONY OF
HONORABLE JOHN G. STRAND CHAIRMAN
MICHIGAN PUBLIC SERVICE COMMISSION
BEFORE THE HOUSE COMMITTEE ON COMMERCE
ENERGY AND POWER
SUBJECT - H.R. 45 "NUCLEAR WASTE POLICY ACT OF 1999"
Summary of Comments by
JOHN G. STRAND, COMMISSIONER Michigan Public Service Commission On behalf of
NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS 2322 Rayburn House
Office Building Washington, D.C.
February 10, 1999
NARUC commends the
sponsors of H.R. 45 and supports enactment of H.R. 45.
Huge amounts of money
have been collected from utility ratepayers to pay for the waste program despite
the fact that no waste has yet been moved from civilian reactor sites.
Nationally, utility ratepayers pay approximately $600 million per year into the
Nuclear Waste Fund; this fund has accumulated more than $15 billion since 1983.
Ratepayers have paid for storage of nuclear waste on-site through rates,
ratepayers have paid for Federal waste management run by DOE through the 1 rail
per kilowatt hour fee and now ratepayers are being asked to pay a third time for
expanded on-site storage as a result of DOE's failure to meet deadlines
prescribed in the Nuclear Waste Policy Act.
The effective management and
permanent disposal of nuclear waste are essential to minimize the life cycle
costs of the existing nuclear plants which generate about 20 percent of
electricity used in the U.S. The cost of waste disposal could affect resource
availability as we head into an era of competitive markets.
Our review of
DOE's assessment leads us to conclude that the provisions in Section 204 of H.R.
45, which authorize and direct the Secretary of Energy to "design, construct,
and operate a facility for the interim storage of spent fuel and high-level
radio active waste at the interim storage facility site" are necessary and
Congress should improve the efficiency of the licensing process
and encourage greater private sector participation in implementing certain
aspects of the Federal program. If the DOE is unable to meet its deadlines,
despite new legislation, Congress should consider removing the authority and
responsibility of waste management from DOE.
DOE is legally obligated to
begin taking waste by a now expired deadline, but the courts have been unwilling
to require specific performance by DOE. The practical result at this time is a
deadlock that can only be corrected by Congressional action. DOE must be
prohibited from using the Waste Fund or prospective fee collections for paying
costs or damages as a result of DOE's failure to comply with its obligations.
Mr. Chairman and Members of the Committee:
Morning. I am John Strand, Chairman of the Michigan Public Service Commission
and Chairman of the Subcommittee on Nuclear Issues - Waste Disposal of the
National Association of Regulatory Utility Commissioners, commonly known as
NARUC. I am here today to testify on behalf of NARUC. I am grateful for the
opportunity to provide NARUC's views on H.R. 45, the Nuclear Waste Policy Act of
1999, and on the specific issues raised by the Committee in its letter of
invitation, including our views on the United States Department of Energy's
(DOE) December 1998 viability assessment, the DOE's site characterization
efforts at Yucca Mountain, and the implications of recent
Federal court decisions on the DOE's obligations under the Nuclear Waste Policy
Act of 1982.
NARUC is a quasi-governmental nonprofit organization founded in
1889. Within its membership are the governmental bodies of the fifty States
engaged in the economic and safety regulation of carriers and utilities. The
mission of NARUC is to serve the public interest by seeking to improve the
quality and effectiveness of public regulation in America. More specifically,
NARUC contains the State officials charged with the duty of regulating the
retail rates and services of electric and gas utilities operating within their
respective jurisdictions. These officials have the obligation under State law to
assure the establishment and maintenance of such energy utility services as may
be required by the public convenience and necessity, and to ensure that such
services are provided at rates and conditions which are just, reasonable, and
nondiscriminatory for all consumers.
With respect to the Federal Nuclear
Waste program, no other organization representing the public interest has been
involved with a fair resolution of this critical issue longer than NARUC. In
1983, shortly after the passage of the 1982 Act, NARUC established policies and
procedures on the high-level nuclear waste program with the goal of protecting
the interests of our Nation's consumers. Sixteen years later, we are still at
it.The Consumer Interest and Concern in the Nation's Nuclear Waste Program
Let me begin by outlining the interests and concerns of the consumers of
electricity and the membership of NARUC regarding the DOE's Civilian Radioactive
Waste Management program. This program has been a source of deep concern and
enormous frustration to our nation's utility ratepayers and regulators for many
years for two primary reasons. Our first concern is the huge amounts of money
that have been collected from utility ratepayers to pay for the waste program
despite the fact that no waste has yet been moved from civilian reactor sites.
Nationally, utility ratepayers pay approximately $600 million per year into the
Nuclear Waste Fund, only a small portion of which, approximately fifteen cents
on the dollar, is actually appropriated for the program. This Fund, which is
supported solely by the Nation's electricity consumers, has accumulated more
than $15 billion since 1983, State regulators have a compelling interest in the
cost- effectiveness and success of the program because of our fiduciary
responsibilities to the utility ratepayers. Let me put it another way -- utility
ratepayers have paid for the storage of nuclear waste at nuclear power plants
through the rates paid to cover the capital costs of planned on-site storage.
Ratepayers have also paid for the Federal nuclear waste management and disposal
program run by the DOE through the I rail per kilowatt hour fee they pay to
their electric utilities on the generation of electricity from nuclear
generation stations. These are the fees that go directly from the utilities into
the Nuclear Waste Fund to the tune of $15 billion. Now utility ratepayers are
being asked to pay a third time -- for expanded on-site storage as a result of
the DOE's failure to meet the deadlines prescribed in the Nuclear Waste Policy
Act. The second reason for our concern also relates to consumer costs. The
effective management and permanent disposal of nuclear waste are essential to
minimize the life cycle costs of the existing nuclear plants that generate about
20 percent of the electricity used in the United States.
for expanding on-site storage, reactor decommissioning and centralized disposal
of nuclear wastes increases the costs of nuclear energy overall, which in turn,
can have a significant adverse affect on energy costs to consumers. This problem
is becoming particularly acute as the nation heads into an era of competitive
markets in the electric utility industry.Moreover, nuclear generation provides
significant air emission benefits that will be jeopardized if the unresolved
waste problem renders these plants uneconomic.
Since 1984, the NARUC has
passed twenty-four policy resolutions on the nuclear waste program, including
eleven that specifically encourage legislative revisions to the program. Today,
we are still without the fundamental policy framework necessary to ensure that
the Federal Government accepts and disposes of nuclear wastes in a timely and
efficient manner. The NARUC commends the sponsors of H.R. 45 for undertaking the
task of developing a workable legislative solution, and we welcome the efforts
of this Committee to address the concerns of the millions of U.S. ratepayers
that financially support this program.
NARUC's Review of the Department of
Energy's Viability Assessment
The DOE has been studying a site at
Yucca Mountain, Nevada, for more than 15 years to determine
whether it is a suitable place to build a geologic repository for the nation's
high-level radioactive waste. The viability assessment, released in December
1998 presents the results of DOE's study to date. While the assessment is
generally framed by the DOE as a technical document, it nonetheless concludes
"that Yucca mountain remains a promising site for a geologic
repository and that work should proceed to support a decision in 2001 on whether
to recommend the site to the President for development as a repository." In its
concluding observations, the DOE indicates that its 15 years of extensive
research has validated the expectations of the scientists that first suggested
that remote desert regions of the Southwest would be well-suited for a geologic
repository. The assessment further suggests that engineered barriers and natural
barriers can be expected to reduce radiation exposures to future populations,
even after as much as 300,000 years, to natural background levels that exist
Our review of the assessment leads us to conclude that the provisions
in Section 204 of H.R. 45, which authorize and direct the Secretary of Energy to
"design, construct, and operate a facility for the interim storage of spent
nuclear fuel and high-level radioactive waste at the interim storage facility
site" are necessary and appropriate. In our "Resolution Regarding Guiding
Principles for Legislative Changes to the Nuclear Waste Policy Act," (attached
hereto) NARUC called for the DOE to begin to take possession and remove
high-level radioactive waste and spent nuclear fuel to meet its (now passed)
January 31, 1998 deadline for complying with its legal obligation as soon as
possible. The resolution further urged the U.S. Congress to designate the
location of one above-ground, centralized, interim storage facility for spent
nuclear fuel and that such site not be limited by the location or licensing of a
In sum, the viability assessment leads us to believe
it is time to get on with siting, designing, and constructing an interim storage
facility as soon as possible.
DOE's Characterization of the Yucca
The DOE's characterization of the Yucca
Mountain site has been marked by delay. While we are encouraged by the
recent progress made by the DOE in its Yucca Mountain site
characterization efforts, NARUC has long been of the opinion that the repeated
delays in meeting the program deadlines are rooted in the Department's
inefficient management and problems in controlling its contractors. In 1986, a
commissioner from Michigan first testified before Congress on NARUC's behalf to
warn of contractor control problems in the program, and lack of procedures to
control excess program costs. And it's not only State regulators that have
The General Accounting Office has consistently taken DOE to task
for its lack of contractor control.
Our policy on nuclear waste legislation
calls for fundamental program improvement. As the attached policy resolution
states, NARUC urges Congress to improve the efficiency of the licensing process
of the high-level nuclear waste repository without compromising health, safety,
and environmental factors. Congress should encourage greater private sector
participation in implementing certain aspects of the Federal program, such as
management and implementation of the multipurpose container system, construction
and operation of the centralized interim storage facility and implementation of
the transportation system.We are even willing to advocate fundamental changes to
this program. If the DOE is unable to meet its deadlines, despite new
legislation and financial assistance, Congress should consider removing the
authority and responsibility for implementing the Civilian Radioactive Waste
Management Program from the DOE and locate it in a new, single purpose federally
chartered corporation. This point is still relevant today. If after the passage
of legislation such as HR. 45, the DOE continues to miss the deadlines imposed
under law, then Congress should consider taking the steps necessary to complete
this important project by using a new, more efficient organization.
Implications of Federal Court Decisions on DOE's Obligations Under the NWPA
The implications of the recent Federal court decisions are quite clear: It
is now up to Congress to fix to this program. In the litigation swirling around
this program, we have reached a judicial deadlock. In terms of the costs of the
program, failure to enact this legislation could result in the Federal
government paying huge damages to the utilities, damages that could run well
into billions of dollars. Allow me to explain.
In 1995, the States and the
utilities were compelled to file suit against the DOE by the Department's final
interpretation of the 1982 Act, in which the DOE concluded that it had no
obligation to accept nuclear wastes from civilian reactors, absent a final
repository. Given the Department's dreadful record in its site characterization
efforts, this position by the DOE was entirely unacceptable. In the first case
that was decided by the U.S. Court of Appeals for the D.C. Circuit (Indiana
Michigan Power Co. et al v. Dept. of Energy, 88 F. 3d 1272 (D.C.Cir. 1996), the
Court of Appeals concluded that the Nuclear Waste Policy Act of 1982 "creates an
obligation in DOE, reciprocal to the utility's obligation to pay, to start
disposing of the SNF (Spent Nuclear Fuel) no later than January 3 l, 1998" and
that the statutory obligation to commence disposing of SNF no later than January
31, 1998, is "without qualification or condition."The same Court, in November
1997 in Northern States Power Co. et al v. Dept. of Energy, 128 F.3d 754
(D.C.Cir. 1997) reaffirmed DOE's unconditional obligation to begin to dispose of
spent nuclear fuel by the statutory and contractual deadline, and found that
utility and State petitioners had a clear right to relief, that DOE had a clear
duty to act, and that petitioners should pursue "potentially adequate remedies"
under the Standard Contract to address DOE's avoidable delay, In February 1998,
both State and utility parties in Northern States filed motions with the Court
of Appeals to enforce the Court's decisions in Indiana Michigan and Northern
States, due to DOE's failure to undertake any action to comply with its
obligations. In an unpublished order issued in May 1998. the Court of Appeals
determined that despite its earlier holding that DOE has an unconditional
obligation under the Act to begin acceptance on January 31, 1998, the Act "does
not itself require performance." Accordingly, the Court declined "to require(e)
the DOE to perform under the contract." The Court did not, however, overturn its
earlier holding that in construing its obligation under the contract to dispose
of SNF, DOE could not claim that its failure to perform is an unavoidable,
non-compensable delay under the standard contract.
In November of last year,
the Supreme Court refused to bear two competing appeals of the Court of Appeals'
decision. In State of Michigan v. Dept. of Energy (No. 98-225), the Court
refused to hear an appeal filed by the States that the Court of Appeals should
have provided additional remedies for DOE's failure to meet the statutory
deadline, including an order to begin waste acceptance. In United States v.
Northern States Power Co., (No. 98-384), the Court refused to hear DOE's appeal
of the Court of Appeals' ruling that its failure to comply was inexcusable. By
the Supreme Court's election, without comment, to not take up these cases, the
final Court of Appeals rulings stand.
The short summary of these court
decisions is this: DOE is legally obligated to begin taking waste by a now
expired deadline, but the Act itself doesn't require specific performance by
DOE. The practical result at this time is a deadlock that can only be corrected
by Congressional action.In the recent Court of Federal Claims decision in the
Yankee Atomic case, the Court determined that the DOE is liable for monetary
damages for its breach of its waste disposal contracts. The only question that
remains is the determination of the amount of damages. At least eleven other
Court of Claims actions are still pending.
If each of these cases
results in determinations that the DOE is liable, and the plaintiffs are able to
prove their estimates of damages, then the DOE could be liable for several
billion dollars. NARUC's position on the effect payments of such damages will
have on program funding and whether any such payments should come out of the
Nuclear Waste Fund is outlined in the attached policy resolution: DOE must be
prohibited from using the Nuclear Waste Fund or prospective fee collections for
paying costs or damages incurred by utilities, ratepayers, and by State and
local governments, as a result of DOE's failure to comply with its obligations.
Rather, any costs or damages should be paid out of a Federal judgement fund.
To put it bluntly, it would be an outrage if DOE were able to pay for its
damages out of the Nuclear Waste Fund, In effect, it would be requiring the
ratepayers to pay for DOE's failures.
Moreover, the statute suggests that
the Nuclear Waste Fund cannot be used for anything other storage and disposal
activities and not the payment of damages. See, 42 U.S.C. Section 10222(d))
The Need for Legislation
I think all of our comments made here today, as
well as all of the legal actions and delaying activities concerning this program
leading to this moment, point directly toward the need for legislation to 1)
accelerate acceptance, 2) strengthen the repository program, and 3) protect the
consumers by assuring fee revenues are spent on the program.
have upheld their end of the deal by paying for all of the on-site storage of
civilian nuclear waste and by paying more than $15 billion into the Nuclear
Waste Fund. Without passage of this legislation, the ratepayers payments into
the Fund will likely continue to rise, the on-site storage costs will continue
to rise, and the DOE will continue a program of nonperformance marked by a
strategy of continuing delays.Nor can we turn to the courts for answers. Court
actions are expensive, slow and incomplete, while Congressional action is one
shot and comprehensive. Only legislation by the U.S. Congress will provide the
greatest likelihood of achieving a successful resolution to this matter.
Conclusion In conclusion, it is imperative that Congress enact H.R. 45 as
expeditiously as possible. State regulators who labor to protect consumers from
economic exploitation stand ready to work with the Congress, the Department of
Energy and all other affected stakeholders to refocus our waste disposal
policies. The Nation's electricity consumers deserve to see progress in a waste
disposal program in which they are already hugely invested. At this very late
date, we must not once again fail them.
Thank you for your time and
attention. I would be pleased to answer any questions you might have.
Resolution Regarding Guiding Principles
for Legislative Changes to the Nuclear Waste Policy Act
WHEREAS, The United
States Congress, in the Nuclear Waste Policy Act of amended, directed the
Department of Energy to begin 1982, as accepting for disposal high-level nuclear
waste and spent nuclear fuel no later than January 3 I, 1998; and
Utility ratepayers have paid over $14 billion to the Nuclear Waste Fund, serving
as the almost exclusive funding source of the nation's disposal effort; and
WHEREAS, The interests of the ratepayers and the responsibilities of State
regulatory commissions are served by a prudent and focused program leading to
safe, timely, cost-effective and environmentally sound storage and disposal; and
WHEREAS, The fair share of the cost of defense waste disposal has not been
WHEREAS, The NARUC sees the need for fundamental improvement
of the management, quality, delivery and cost-effectiveness of the Federal
WHEREAS, The statutory performance date, upheld by the U.S.
Court of Appeals for the District of Columbia Circuit, for DOE to begin
accepting spent nuclear rue! has passed, as of February l, 1998; and
WHEREAS, DOE failure to live up to its obligations are causing State and
local governments and utilities to incur costs that could have been avoided; and
WHEREAS, Quarterly payments by utilities into the Federal Nuclear Waste
Fund have been approved by State rate regulators on the premise that the Federal
government would fulfill its obligation; and WHEREAS, The NARUC considers the
following to be critical to safe, environmentally sound, timely and
cost-effective development of an integrated spent fuel management system and has
stated its position on these issues in previously adopted resolutions:
DOE action to meet its January 3 l, 1998 obligation to accept spent nuclear fuel
as soon as possible;
b) Establishment of a comprehensive, cost effective
integrated spent nuclear fuel management system that includes centralized
interim storage capability;
c) Creation of an alternative Federal budgetary
mechanism for the high-level waste program; and
WHEREAS, These issues must
be resolved through Congressional action; now, therefore be it RESOLVED, That
the Executive Committee of the National Association of Regulatory Utility
Commissioners ("NARUC"), convened at its 1998 Winter Meetings in Washington,
DC., adopts the following principles to guide legislative changes to the Nuclear
Waste Policy Act:
I. PRINCIPLES CONCERNING THE DOE'S OBLIGATION UNDER THE
a. The Secretary of Energy shall take title and begin taking possession
and removing high-level radioactive waste and spent nuclear fuel to meet its
January 31, 1998 obligation as soon as possible.
b. The Secretary of Energy
shall take possession of and remove high- level radioactive waste and spent
nuclear fuel in accordance with the acceptance priority ranking as required by
the contracts entered into pursuant to Section 302 of the NWPA.
PRINCIPLES REGARDING INTERIM STORAGE CAPABILITY
a. Congress should designate
the location of one above-ground, centralized, interim storage facility for
spent nuclear fuel, and such site should not be limited by the location or
licensing of a permanent repository.
b. Congress should establish milestones
and set a schedule for DOE relative to licensing and construction of a
centralized, interim storage facility, a transportation infrastructure, and
multipurpose containers and other shipping- and storage-related equipment
necessary to support acceptance of spent nuclear fuel in accordance with its
January 31, 1998 obligation at the earliest practicable date. This should
include Congressional authorization of actions necessary to implement an
expedited schedule for each of these activities, existing legislative and
regulatory impediments notwithstanding, without compromising proper
consideration of safety and environmental factors.
c. Congress should direct
DOE to develop the necessary infrastructure and equipment to support and
implement an increased rate of acceptance of spent fuel from reactors and shall
set the statutory capacity limits on the centralized interim storage facility to
efficiently, effectively and economically accommodate actual storage needs.
d. Congress should allow private efforts to proceed in the establishment of
an interim storage facility.
a. Congress should exempt the Nuclear Waste Fund,
established under Section 302 of the Nuclear Waste Policy Act, from any budget
enforcement procedures under current Federal budget laws. Expenditures from the
Nuclear Waste Fund should remain subject to Congressional appropriations. A user
fee approach would be acceptable. '
b. Congress should make all ratepayer
funds, including those in the unobligated balance of the Nuclear Waste Fund,
available to the program as needed.
c. The overall average program fee
should not exceed 1 mill per kilowatt hour.
d. Congress should assure that a
fair share of the cost of defense waste disposal is promptly determined, and
that (A) all past debts are promptly made to the Nuclear Waste Fund, and (B)
full payment of defense portions is made annually in the future. Ratepayer
representatives should be prominently involved in the determination of this fair
IV. PRINCIPLES REGARDING FUNDAMENTAL PROGRAM IMPROVEMENT
Congress should improve the efficiency of the licensing process of the
high-level nuclear waste repository, without compromising health, safety, and
environmental factors. For example, the repository license should allow for
emplacement of the waste in the repository for an initial period of up to 100
years and be renewable for additional periods in order that the repository be
efficiently, safely and realistically utilized.. The waste should remain
retrievable during at least the initial period and until it is determined that
the repository may be permanently closed.
b. Congress should encourage
greater private sector participation in implementing certain aspects of the
Federal nuclear waste program. Examples include management and implementation of
the development, manufacture, demonstration, and deployment of the multipurpose
container system; management and implementation of the development, licensing,
construction and operation of the centralized interim storage facility and
transportation system. c. If after Congressional direction and financial
support, the DOE is unable to meet effectively its goals and milestones Congress
should consider: 1) removing implementation authority and responsibility for the
Civilian Radioactive Waste Management Program from the Department of Energy and
locating it in a new single purpose federally chartered corporation; and 2) the
ramifications of the changeover so that there will be no delay in the conduct of
the program and achievement of program goals.
Sponsored by the Committee on
Electricity Adopted March 4, 1998
LOAD-DATE: February 11, 1999