1998 Congressional Hearings
Special Weapons
Nuclear, Chemical, Biological and Missile



PREPARED STATEMENT OF FEDERICO PENA, 
SECRETARY, U.S. DEPARTMENT OF ENERGY
BEFORE THE 
SENATE COMMITTEE ON ARMED SERVICES

THURSDAY, MARCH 26, 1998



Mr. Chairman, and Members of the Committee, it is a pleasure for me to
appear before you today to report on the Department of Energy's fiscal
year 1999 budget request for its national security programs. It has
been approximately one year since I first appeared before you as the
newly sworn-in Secretary of Energy. Let me thank you and the other
members of the Committee who have actively supported us during this
past year in addressing the many tough challenges facing the
Department.


This morning I would like to highlight for you a few of our
Departmental accomplishments since I last met with you. And I would
also like to describe some of the challenges that lie before us. But
first, let me briefly describe the budget request that we recently
forwarded to the Congress. In Fiscal Year 1999, we are requesting
$12.1 billion for the Atomic Energy Defense Activities account -- or
DOE's portion of the national defense budget. This $12.1 billion
request represents an increase of some 6 percent over our FY 98 budget
request for national security activities, and constitutes about 67
percent of our total budget request of $18 billion for the Department
in FY 1999.


This $12.1 billion request supports a broad range of programs within
the Department's defense account, for example:


-- More than a third of our overall request ($4.5 billion) will
support our Stockpile Stewardship Program. This is the program that we
initiated with your help and direction nearly five years ago to
maintain our nuclear deterrent without underground nuclear testing
after the Congress entered the United States into a testing
moratorium;


-- Another third of this request ($4.78 billion) will support clean-up
of our nuclear weapons production complex;


-- Funds will also be used to prevent and detect the spread of weapons
of mass destruction through our non-proliferation efforts at the
Department, whether it be through helping Russia and other former
Soviet states secure their nuclear materials against theft, through
developing advanced technologies to help detect and counter chemical
and biological weapons, or through helping to permanently dispose of
excess weapons grade materials both here and in Russia so that those
materials may never again be used in nuclear weapons.


-- For the Navy, we are developing the next generation of nuclear
propulsion, and providing for the safe and reliable operation of
existing naval reactors.


-- And finally, this budget also supports assistance to our workers
who have been separated as a result of downsizing and restructuring
our nationwide production complex.


As we embark on each of these national security challenges in Fiscal
Year 1999, we will need your sustained bipartisan commitment to ensure
their continued success.


Let me describe some of our program accomplishments and challenges in
more detail.


DEFENSE PROGRAMS



President Clinton last year forwarded the Comprehensive Test Ban
Treaty to the Senate for ratification. As he said in the State of the
Union, "By ending nuclear testing, we can help to prevent the
development of new and more dangerous weapons, and make it more
difficult for non-nuclear states to build them." The Department's
ability to assure the safety and reliability of the nuclear deterrent
without underground nuclear testing -- through Science Based Stockpile
Stewardship -- is fundamental to our national security under a
Comprehensive Test Ban Treaty (CTBT). We are requesting $4.5 billion
for the Stockpile Stewardship Program (SSP) in FY 1999.


The United States nuclear deterrent remains a cornerstone of our
national security strategy. President Clinton has stated that "the
United States must and will retain strategic nuclear forces sufficient
to deter any future hostile foreign leadership with access to
strategic nuclear forces from acting against our vital interests and
to convince it that seeking a nuclear advantage would be futile. In
this regard, I consider the maintenance of a safe and reliable nuclear
stockpile to be a supreme national interest of the United States." As
such, the President established specific safeguards that define the
conditions under which the United States will enter into a CTBT. Four
of them relate to Stockpile Stewardship. These conditions are:


(A) the conduct of a Science-based Stockpile Stewardship Program to
insure a high level of confidence in the safety and reliability of
nuclear weapons in the active stockpile, including the conduct of a
broad range of effective and continuing experimental programs;


(B) the maintenance of modern nuclear laboratory facilities and
programs in theoretical and exploratory nuclear technology which will
attract, retain, and ensure the continued application of our human
scientific resources to those programs on which continued progress in
nuclear technology depends;


(C) the maintenance of a basic capability to resume nuclear test
activities prohibited by the CTBT should the United States cease to be
bound to adhere to this treaty; and


(F) the understanding that if the President is informed by the
Secretaries of Defense and Energy as advised by the Nuclear Weapons
Council, the Directors of the nuclear weapons laboratories, and the
Commander of U.S. Strategic Command that a high level of confidence in
the safety and reliability of a nuclear weapon type which the two
secretaries consider critical to our nuclear deterrent could no longer
be certified, the President, in consultation with the Congress, would
be prepared to withdraw from the CTBT under the supreme national
interest clause in order to conduct whatever testing might be
required.


As Secretary of Energy, I have made the safety and reliability of our
nation's nuclear stockpile a top priority. I cannot imagine any
responsibility more serious than certifying to the President on an
annual basis whether or not our nuclear stockpile is both safe and
reliable.


At the core of the program is the issue of confidence. Confidence in
our weapons comes from the effective management of the system that
maintains the weapons and the expert judgment of the scientists and
engineers at the three remarkable weapons laboratories -- Los Alamos,
Lawrence Livermore and Sandia National Laboratories -- who assess
them. The ultimate measure of success for the program is the
presidentially mandated annual certification. The certification
process requires that the weapons design laboratories and the
Department of Defense review all weapons types -- both active and
inactive. From this review, the laboratory directors, the Nuclear
Weapons Council, and the Commander-in-Chief of Strategic Command
independently advise the Secretaries of Energy and Defense on the
results. Based upon these results, we determine whether or not to
certify to the President that there is no need to return to
underground nuclear testing.


The rigor and thoroughness of this process ensures that, from the
technicians working with the weapons on a day-to-day basis, to the
designers who know the inner workings of the weapons, to the
Secretaries of Energy and Defense, every level of authority is
appropriately informed of, and accountable for, the safety and
reliability of the weapons stockpile. We have successfully completed
the process twice, and the third annual certification process is well
under way. A copy of the second certification was forwarded to the
Congress by the President on February 12.


Over the last year I have had an opportunity to visit each of the
Department's three weapons laboratories, the Nevada Test Site,
Savannah River, Pantex and Oak Ridge, and I have personally engaged
each of the weapons laboratory directors in discussions about the
strength and adequacy of the Stockpile Stewardship Program. I have met
with the employees and I have been deeply impressed with their
commitment to make this program a continuing success story of American
science and technology. I have also met with other experts both within
and outside of the Department, and I am pleased to report that there
is a strong consensus that Stockpile Stewardship is the right program
to address the challenges of maintaining our nuclear deterrent without
underground nuclear testing; that the program is working now; that the
program is properly sized and funded for the out years; and that, with
the President's CTBT safeguards, we can enter into the Treaty with
confidence that the safety and reliability of our nuclear deterrent
can be maintained.


Accomplishments



The FY 1999 request allows us to build upon significant
accomplishments of the Stockpile Stewardship program during FY 1997
and FY 1998. DOE's production plants at Pantex, Savannah River, Oak
Ridge, and Kansas City continue to support the day-to-day needs of the
enduring nuclear weapons stockpile by making the necessary repairs and
annually providing the thousands of replacement parts needed by the
stockpile. I would like to now focus on a few of the key actions that
we are taking to ensure the continued safety and reliability of the
nation's nuclear weapons stockpile.


Reestablishing Critical Production Capabilities



Just last month the Department's Los Alamos National Laboratory (LANL)
took a significant step toward the successful reestablishment of a
capability to build plutonium "pits" -- this is the component of a
nuclear weapon that triggers a fission reaction. DOE has not had this
capacity since 1989 when the Rocky Flats Plant that used to
manufacture this essential nuclear component was closed.


Los Alamos manufactured an early development unit for the W-88
warhead. The Laboratory will manufacture more of these development
units while it is validating these new production processes, and will
eventually fabricate a "war reserve" pit -- a pit that will be
certified for use in the stockpile -- by the fourth quarter of FY
2001. By 2007 Los Alamos will have the capability to manufacture
approximately 20 pits per year.


In addition, in April DOE also plans to resume uranium processing
operations at our Y-12 facility at Oak Ridge. These operations were
shut down in 1994 due to violations of administrative safety controls.


Tritium



Tritium gas, a radioactive isotope of hydrogen, is a critical element
used in all of our stockpiled weapons today. Tritium decays at a rate
of 5% per year. We have not produced tritium in the U.S. since 1988
and must develop a new tritium production source by 2005 in order to
meet current directives. DOE is in the final year of analyzing a dual
track strategy using an existing commercial right water reactor or
using a newly developed accelerator. A primary source for tritium
production will be selected in 1998.


We foresee no technical difficulties associated with the production of
tritium in a light water reactor. A key test was begun in October of
1997, at the TVA's Watts Bar 1 Nuclear Plant. The test involves the
irradiation of 32 specially designed twelve-foot "target" rods in the
plant's reactor core. These targets are designed to replace a standard
component of reactor fuel assemblies. During the plant's normal
18-month operating cycle, the rods will produce and retain small
amounts of tritium. The Watts Bar test completes, on a small scale,
the demonstration of the entire commercial reactor tritium production
cycle, from fabrication of components through completion of regulatory
approvals.


On June 3, 1997, the Department issued a Request for Proposals (RFP)
for the purchase of one or more commercial light water reactors or
irradiation services. Proposals from TVA were received on September
15, 1997. The DOE expects to make a preliminary selection from the
proposals later this spring.


The accelerator alternative made impressive gains in 1997. LANL has
completed the construction of the first test items for the
accelerator, and others are being manufactured. The first of the
accelerator components, an injector, is being tested and is exceeding
performance specifications. Thousands of samples of materials, welds,
and structures have been irradiated to confirm choices and projections
of performance for materials for the "target-blanket," the part of the
plant in which the tritium would actually be made. First results of
these tests are currently being analyzed.


The FY 1999 request includes $157 million to pursue the option to be
selected in 1998. If the purchase of irradiation services from
commercial light water reactors is selected, the budget request will
be sufficient to meet current requirements. If the Department selects
accelerator production of tritium as the primary option, the
Department will need to delay the current target date for initiating
new tritium production or request additional funding. To ensure that
all options remain open, the Department's Fast Flux Test Facility
(FFTF) at Hanford is being kept on standby until a decision is made
regarding whether it should play any role in the tritium supply
strategy.


National Ignition Facility



The National Ignition Facility (NIF) is one of the most important new
tools that DOE will need to ensure the safety and reliability of the
stockpile under a CTBT. The facility, now under construction at the
Lawrence Livermore National Laboratory, is on schedule and on budget.
NIF is designed to produce for the first time in a laboratory setting
conditions of temperature and density of matter close to those that
occur in the detonation of nuclear weapons. The ability to study the
behavior of matter and the transfer of energy and radiation under
these conditions is key to understanding the basic physics of nuclear
weapons and predicting their performance without underground nuclear
testing.


Experiments at the NIF will test the simulation codes developed under
the Accelerated Strategic Computing Initiative (ASCI) and demonstrate
how aged or changed materials in weapons could behave under the unique
conditions of nuclear weapons detonation. Two JASON panels, which are
comprised of scientific and technical national security experts, have
stated that the NIF is the most scientifically valuable of all
programs proposed for science- based stockpile stewardship. The first
experiments on the NIF will be conducted in FY 2001 using the first
eight lasers. Construction will be finished by FY 2003 and full
operating capability, using all 192 laser beams will be achieved in FY
2004.


Nuclear Test Readiness



Consistent with Safeguard C of the CTBT, the Department is maintaining
the necessary infrastructure at the Nevada Test Site and the
specialized facilities, equipment and skilled personnel required for
nuclear testing. The safe execution of a nuclear test requires a
complex series of operations that exercise several areas of expertise
including: nuclear explosive design and fabrication; diagnostic
instrument design; emplacement and calibration; radioactive material
containment; timing and firing, data recording, etc. Certification of
the personnel and equipment to accomplish these operations will be
assured by a number of ongoing and planned experimental activities
utilizing both the Nevada Test Site and weapon laboratory facilities.


Part of our test readiness program involves the conduct of subcritical
experiments at the Nevada Test Site. Subcritical experiments will
provide currently scarce empirical data on the high pressure behavior
of weapon materials, realistic benchmark data on the dynamic,
non-nuclear behavior of components of today's stockpile, the effects
of remanufacturing techniques, the effects of aging materials, and
other technical issues.


Last year we successfully conducted two subcritical experiments --
Rebound and Holog. These experiments have provided a wealth of data
about the properties of plutonium. Three subcritical experiments are
planned for this fiscal year and a fourth is planned in October. The
FY 1999 budget will support three to four additional subcritical
experiments.


Accelerated Strategic Computing Initiative (ASCI)



We know that the level of computation needed to effectively simulate
the effects of aging on nuclear weapons, as well as an in-depth
understanding of the behavior of remanufactured weapons components is
much, much greater than that currently available. We have begun the
Accelerated Strategic Computing Initiative (ASCI) to address this
need.


Our goal is to a have a computer system capable of achieving 100
Trillion Operations Per Second (TeraOps) by 2004. We are on schedule
to meet that goal: In 1996 we set a new world computing record with
the operation of a computer at Sandia National Laboratory that
achieved 1 TeraOp. Next year we expect to achieve three TeraOps. We
have already begun work with IBM to build a ten TeraOps computer which
is scheduled to be completed by the year 2000. And we have already
entered into contracts to begin developing the underlying technologies
needed to support the procurement of a 30 TeraOps machine.


Even at this early stage of the program there has been a extraordinary
increase in the speed of our computers at the Laboratories. More
importantly, the actual number of calculations on weapons issues has
increased. For example, in 1992, the last year of underground testing
the estimated number of weapons related calculations was 5
GigaOps-years, or about 5 CRAY-YMP supercomputers running for a full
year. In FY 1997 due to ASCI that number was 500 GigaOps-years, it
will rise to 2400 in FY 1998, and in FY 1999 we plan on executing 7000
GigaOps-years of weapons related code. (A GigaOps=l billion
calculations per second)


This phenomenal computing power is also being made available to the
university community through the Department's Academic Strategic
Alliances Program (ASAP). The Department of Energy announced on July
31, 1997, initial awards to five major U.S. universities -- Stanford
University, California Institute of Technology, the University of
Chicago, the University of Utah and the University of Illinois. These
universities are conducting unclassified advanced simulation research
on important, large-scale applications with potential for broad
societal and economic payoff. The benefit for the weapons program is
the validation of the methodology of simulation and to accelerate the
development of simulation science and engineering. The program will
also help us attract the next generation of scientists and engineers.


Stewardship is Working Now



These are but a few highlights of the activities that are going on and
are planned for the Stockpile Stewardship program. While the program
is hardly without risk, I am confident that we have a high probability
of success. Why do I feel as I do?


First, it is important to understand that we start from a solid
position. The current stockpile is well tested and well understood. An
extensive data base is available on each weapon as well as a cadre of
scientists, engineers, and technicians that can with confidence
certify the safety and reliability of the weapons in the stockpile, we
have laid out a plan for the stockpile stewardship program on a weapon
by weapon, pan by pan, that projects the tasks required to maintain
the stockpile over the next ten years, and beyond. We have concurrence
on this program from the Department of Defense, and the Joint Chiefs,
and the Administration has committed to fund this program and all its
pans. The three weapons labs are the best in the world -- and they are
better now than they were four years ago because of the enthusiasm and
vigor with which they are attacking the Stockpile Stewardship effort.


History tells us that great labs need great missions, and stewardship,
like the Manhattan and Apollo projects, is just such a mission. Most
importantly, we are doing stewardship now, and doing it successfully.
While it has been over five years since the last nuclear test we have
successfully addressed an issue with a stockpile warhead by using a
combination of analysis, new experimental data, archived test and
manufacturing data, and most importantly the collective judgment of
the two weapon design laboratories. This success, using the
experimental and testing tools available today, gives us confidence
that the even more powerful computing and testing tools being
developed will allow us to solve future stockpile problems without
nuclear testing.


Finally, in the unlikely event that testing should be required, the
Department is maintaining, consistent with Safeguard C, the capability
to conduct underground nuclear tests. I believe the Stockpile
Stewardship program, with continued bipartisan support, will meet its
goal of a safe and reliable stockpile, indefinitely, without nuclear
testing, and I look forward to working with you and members of this
committee over the coming year. I know of no national security issue
that is more important:


ENVIRONMENTAL MANAGEMENT



The total FY 1999 Environmental Management budget request is $6.124
billion, including $517 million to support the privatization of
certain large cleanup projects. The appropriation will fund cleanup
from coast to coast in thirty-one states and one territory, with ten
states accounting for about 85 percent of the total request. This
request reflects a roughly level budget from last year, with a
substantial investment in carrying forward our existing privatization
projects. As I said in presenting our budget, this year, "This
demonstrates our continued commitment to accelerating our efforts to
clean up our sites and return them for economic development or open
space. At the same time, we recognize that safety is our top priority
and we remain committed to meeting our environmental compliance
obligations."


We have restructured the EM budget for FY 1999. It now includes three
components: Site Closure, Site/Project Completion, and Post-2006
Completion -- which will help us to focus on our cleanup targets. With
this account structure we are seeking to place greater accountability
on project managers and to focus our mark on clear goals, we are
consolidating the culture of cleanup at DOE, and we are moving quickly
to embrace closure. We aim to complete cleanup at .as many site and
projects by 2006 as we can. We are accelerating cleanup, maintaining
compliance and reducing risk at the same time. We have set forth our
cleanup and closure strategy in a recent draft report called
"Accelerating Cleanup: Paths to Closure."


Today we are operating at 53 sites in 31 states and one territory. By
2006 we aim to complete cleanup at 43 sites, after which the EM
program hopes to be conducting cleanup at 10 sites in 8 states.
Realizing this vision will require a sustained national commitment as
well as a number of other requirements, including:


--  Sufficient funding;



--  Use of world class technologies;



--  Improved efficiency;



--  National integration of operations;



-- Resolving future land use issues with communities and regulators;
and


--  Resolving other site-specific issues.



Another key change is the organization of our budget into projects
with measurable endpoints to improve accountability. The EM budget
reflects specific commitments to accelerate cleanup, treat an
unprecedented amount of waste, deploy new technologies, accelerated
and making progress on resolving the nuclear waste logjam. We have
also set very ambitious goals foreclosing several sites by the year
2006, including the Rocky Flats site in Colorado, the Weldon Spring
Site in Missouri, as well as the Mound and Fernald sites in Ohio.


I am pleased to report to you that the Department has maintained its
target to open the Waste Isolation Pilot Plant as soon as possible,
after the expected certification from the Environmental Protection
Agency this spring. We also have submitted an application in support
of the State of New Mexico's RCRA permitting process. This will be a
crucial step forward in providing for the permanent disposal of the
Department's long-lived radioactive waste. The opening of WIPP will be
key to making further cleanup progress at other sites.


In FY 1999, we will continue to work closely with our communities as
we develop our plans for cleanup, risk reduction, environmental and
health monitoring and smaller site closures. This is something I would
like to emphasize to this Committee: despite the enormous challenge
and some disappointing setbacks, we have made enormous progress on the
cleanup. Let me summarize a few of our accomplishments -- both the
results on the ground in cleaning up facilities, and the variety of
management reforms that we have undertaken to improve the efficiency
and effectiveness of the program.


-- In FY 1997, we completed cleanup at 411 waste "release sites," four
percent more than our target of complete cleanup at 395 sites. This
cleanup rate averages better than one cleanup completed every day of
the year, including holidays. At another 76 release sites, we
completed technical evaluations with regulators which determined that
no further action was warranted. In addition, we completed assessments
to prepare for cleanup at 411 release sites - 16 percent more than
required by regulatory requirements. By the end of FY 1999, we expect
to have completed cleanup or "no further action" determinations at
nearly half (47 percent) of the approximately 9,300 contaminated
release sites for which the EM program is responsible.


-- In the past year, we transferred one surplus nuclear weapons
facility in Florida to local communities for constructive reuse and
committed in a Memorandum of Understanding to transfer another in
Ohio. This highlights our goals of completing cleanup as rapidly as
possible, focusing on meeting cleanup standards appropriate for the
expected future use, and ensuring long-term stewardship and
institutional control for residual contamination following transfer.


-- After recently opening the nation's two largest high-level waste
treatment facilities in South Carolina and New York, we have been
making steady progress in preparing waste for disposal in a geologic
repository. We expect to have treated approximately 85 percent of all
the high level waste (HLW) at the New York site later this year. In
South Carolina, we have closed two underground high level waste tanks
after removing most of the waste contents and then filling the tanks
with a cement grout mixture. The HLW was blended with molten glass,
and sealed in stainless steel canisters, ready for disposal. During FY
1997, we treated a total of 564,860 gallons of high level waste and
produced 291 Canisters at these two facilities.


-- Our investments in science and technology are also paying off.
Since its inception, the Science and Technology program has sponsored
over 700 new technologies, and over 200 new technologies are currently
available for use -- many of which allow us to perform tasks that were
previously impossible. We demonstrated more than 50 new technologies
during FY 1997, and deployed 40 new technologies for cleanup in the
field.


-- At the Hanford site in Washington, we completed the deactivation of
a large plutonium facility 15 months ahead of schedule and $75 million
under budget. By deactivating this high risk facility (removing
sensitive weapons materials and shutting down unnecessary systems), we
reduced the annual surveillance and maintenance costs from $34 million
to only $1 million. Our management improvements have also resulted in
greater efficiency:


-- Perhaps the most important management reform is the establishment
of a goal to clean up as many of our 53 contaminated sites as possible
by 2006, in a safe and cost-effective-manner. By working towards this
goal, we can not only reduce the hazards presently facing our work
force and the public, but also reduce the long-term financial burden
on the taxpayer. For every year that a site remains open because
cleanup has not been completed, we are paying a "mortgage" in terms of
necessary overhead for activities such as site security, facility
operations, personnel, safety and other costs. By completing cleanup
sooner, particularly at sites where no other missions continue, we can
substantially reduce these overhead costs. The fly 1999 budget request
reflects a fundamental restructuring to emphasize our site closure and
project completion goals.


EM's budget and plans are now built upon clearly defined projects,
with life-cycle cost,scope, schedule and other data. By the end of FY
1997, our uncosted balances were lower than the targeted benchmark for
the second year in a row, after several years of excessive uncosted
balances.


-- We have reduced headquarters support costs by 85 percent during the
last few years from $130 million (two percent of total EM budget) to
$28 million (less than one-half percent).


-- The number of headquarters employees has been reduced by
approximately 35 percent since 1995. We are proud of our
accomplishments, but also realize that completing the daunting task of
stabilizing these facilities will require accelerated cleanup and
greater efficiency if we are to succeed within projected budget
targets. We are confident that we can meet this challenge by
continuing our results-oriented focus, and by continuing to make
management and efficiency improvements. The Environmental Management
program (EM) is responsible for managing and cleaning up the
environmental legacy of the nation's nuclear weapons and government
nuclear energy projects. Beginning with World War II, DOE and its
predecessor agencies developed the largest government-owned industry
in.the United States, responsible for nuclear weapons research,
development, testing, and production as well as a variety of other
nuclear-related research projects. When most nuclear weapons
production operations ceased in the late 1980s, the DOE established
the Office of Environmental Management in !989 to address the
environmental legacy of nuclear weapons production and other
nuclear-related contaminants. Our responsibilities include facilities
and sites in 31 states and one territory which occupy about 2.1
million acres -- an area equal to that of Rhode Island and Delaware
combined.


Although EM is being referred to as the "cleanup program," this term
can be misleading if it is interpreted as comparable to EPA's
Superfund program or the environmental restoration program at the
Department of Defense. In addition to these "standard" cleanup duties
at DOE sites, EM is also responsible for the world's largest nuclear
materials stewardship program, which maintains the safety and security
of more than 25 metric tons of weapons-usable plutonium, thousands of
tons of intensely radioactive spent nuclear fuel, and critical nuclear
non-proliferation programs.


Finally, it is important to note that the nature of much of the waste
handled by DOE is fundamentally different from most chemical waste
cleanup programs: it cannot be broken down into constituent elements;
but instead requires isolation from the environment through treatment
and/or disposal while it decays: Because of the frequently long lived
radioactive nature of the 36 million cubic meters (containing about
one billion curies of radioactivity) of waste, we can treat it,
stabilize it, contain it, isolate it and monitor it; but, we cannot
readily destroy it with currently available technology. Finally, some
of the nuclear materials we handle present unique hazards. For
example, plutonium can spontaneously ignite in contact with moist air
in certain circumstances, thereby requiring extraordinary, precautions
for safe handling and storage.


We have been focussing our priorities on high risk problems such as
stabilizing and ensuring the security of plutonium and stabilizing
tanks containing high level radioactive waste. We have also addressed
problems that are required to comply with statutory and regulatory
requirements, and to meet our legal obligations under our compliance
agreements with state and federal agencies.


Despite the pressure to address these high risk problems and comply
with legal requirements, we also know that successful cleanup requires
investing in developing and deploying more effective technologies.
Without successful investments in technology, the cost and technical
challenges would make long-term success impossible. Finally, we have
found that performing good technical work is not enough. Getting the
job done requires cooperation with regulators and other stakeholders.
We have supported effective public participation through continued
relationships with States and Site-Specific and National Advisory
Boards, as well as funding for Indian tribes potentially affected by
our activities. Given the fiscal constraints and the unfortunate
reality that our nuclear waste legacy is a long-term problem, the
present investment now in science and technology is one of our best
hopes to ensure real reductions of risk to the environment and to
improve worker and public safety for our future. We are confident that
this is the right course, and that with your support we can make the
land and facilities available for community use or conservation, as
well as develop new environmental technologies that will improve
tomorrow's environment and economy.


Let me highlight a few of our principal goals for 1998 and 1999.



First, we are engaged in analyzing the optimal flows of waste and
cleanup materials among our sites across the country to achieve
greater efficiency. We have been, and will continue to, collaborate
with States, Tribal Nations and Stakeholders at each step. I am
particularly intent on achieving a consensus among our principal
states as to the waste and cleanup missions of our sites. We are
already feeling some States disrupt our plans and compliance
agreements in other States, simply by raising objections to single
waste treatment or disposal plans on the basis of equity. We recognize
their legitimate concerns, and we will be able to address only when we
are all able to get together and establish a common agreement.


This same process will also enable us to build upon our search for
savings and productivity improvements to establish a stable budget
which satisfies our legal and safety requirements and still allows us
to accelerate cleanup to reach closure earlier. Again, we intend to
work closely with the Office of Management and Budget and with
Congress toward that end.


Finally, Dr. Moniz, our Under Secretary, is working with the Office of
Environmental Management to raise the quality, standards and rigor of
its 'sciences program and to ensure that technologies already
developed are matched up with our needs in the field and actually
deployed. Again, a robust science and technology program is vital to
our successful tackling of the enormous cleanup challenges we face.


NON-PROLIFERATION AND NATIONAL SECURITY



The Department draws upon 50 years 'of science and technology
expertise resident throughout the DOE National Laboratories to help us
stem the spread of weapons of mass destruction (WMD). Our DOE
non-proliferation program is a layered program which seeks to address
the threat at multiple levels, including: (1) preventing the spread of
WMD materials, technology, and expertise; (2) detecting the
proliferation of WM worldwide; (3) reversing the proliferation of
nuclear weapons capabilities; and (4) responding to emergencies.


Let me highlight some of our accomplishments of the past year:



-- Our program of cooperation between DOE laboratories and nuclear
facilities in Russia and the Newly Independent States to improve the
protection, control, and accounting of weapons-useable nuclear
materials is yielding dramatic results. Today, I am happy to say that
we are working with authorities in Russia and other former Soviet
states to upgrade security at 53 sites -- these 53 sites comprise
every known nuclear material storage site in the former Soviet Union.
We expect to have completed upgrades at 27 FSU sites by the end of the
year. Overall, we are looking at improved security for OVER A THOUSAND
TONS of weapons-usable materials.


It is clear from the extensive support for our efforts by the Russian
government that there is a serious dedication to the improvement of
nuclear materials safeguards and security in Russia. This new,
developing safeguards culture is important evidence of the success of
the Department of Energy's cooperative program of MPC A improvement.
We are just now beginning major efforts at the uranium and plutonium
cities, the Russian weapons laboratories, and other sensitive
facilities. Completion of these sites will require a sustained,
multi-year effort, outlined in much more detail in our recently
published MPC A Program Strategic Plan.


-- Similar to the MPC A program, the Initiatives for Proliferation
Prevention program seeks to draw scientists, engineers, and
technicians from the former Soviet Union's nuclear, chemical, and
biological weapons programs into long-term commercial ventures,
thereby working to reduce the potential for "brain drain" to
proliferant states or organizations. This program serves as to fulfill
a larger goal of the U.S. Government's policy to downsize the former
Soviet nuclear dries.


-- Our strong technological capabilities allow us to work today to
fulfill future technical needs for implementing important
non-proliferation and arms control treaties. DOE plays a key role in
supporting the United States's efforts to monitor and verify a
Comprehensive Test Ban Treaty. We are developing technologies that
will detect nuclear explosions underground, underwater, or in the
atmosphere. This past summer, we deployed a small-satellite, known as
FORTE, which is demonstrating improved ability to detect and
characterize electromagnetic pulses from nuclear explosions in the
atmosphere an important aspect of our treaty monitoring capability.
Additionally, we are currently developing technical solutions to
fulfill requirements of the warhead dismantlement transparency
provisions of a potential START HI agreement, predicated by Presidents
Clinton and Yeltsin at the Helsinki Summit.


-- As we have seen by events over the past few months in particular,
but also particularly since the end of the Cold War, the threat of
chemical and biological terrorism has grown. The Department's
Chemical-Biological Non-proliferation Program leverages our extensive
investment in the chemical and biological sciences at our National
Laboratories to develop next generation sensors to detect and
characterize chemical and biological agents in the field rapidly and
with high accuracy. The Department's investment in the human genome
project has also enabled us, through forensic analysis, to help
determine the geographic origin of biological agents. Such attribution
is important for ultimate criminal prosecution. This program
complements efforts of the other federal agencies to develop
critically needed technologies. We are also working in support of the
U.S. Government's overall programs to combat terrorism as well as
protect the nation's critical infrastructure.


-- Together with our international activities, we are equally
responsible for ensuring a comprehensive safeguards and security
program for DOE's domestic sites. At several sites, based on
comprehensive reviews, security systems are being upgraded and
protective forces are being increased. We recently completed an
interactive television seminar with the FBI on WMD planning. The
session, which originated from our Central Training Academy in
Albuquerque, New Mexico, was the first-ever cooperative effort among
DOE security managers, FBI special agents, and State and local law
enforcement officials on WMD counter terrorism planning and
responsibilities. Under Deputy Secretary Moler's direction, Sandia
National Laboratories leads a special Security Review Team to address
and resolve other key issues which have been raised as a result of our
recent site-specific safeguards and security plan reviews.


Our budget request for Fiscal Year 1999 reflects an increase in
funding for our activities with the former Soviet Union in the MPC A
program, and for the Department's chemical and biological
non-proliferation initiative.


FISSILE MATERIALS DISPOSITION



The Department of Energy's Office of Fissile Materials Disposition is
responsible for implementing the Administration's approach to
irreversibly dispose of the Nation's post-Cold War stockpiles of
surplus plutonium and highly enriched uranium and for providing
technical support for Administration efforts to attain reciprocal
actions for the disposition of surplus Russian plutonium. These
important non-proliferation efforts are aimed directly at reducing the
threat that nuclear weapons materials could fall into the hands of
terrorists or rogue nations.


We have begun to implement a hybrid plutonium disposition strategy
that calls for pursuing both immobilization and burning mixed oxide
(MOX) fuel in existing, domestic commercial reactors. The Fiscal Year
1999 budget request for these activities is $169 million, an increase
of $65.3 million over the Fiscal Year 1998 comparable amount. The
increase in Fiscal Year 1999 will allow the Department to begin the
design of key U.S. plutonium disposition facilities for disassembling
and converting nuclear weapons pits to unclassified forms and for
fabricating MOX fuel and to expand joint technical work with Russia by
designing a pilot-scale plutonium conversion system in Russia. DOE is
also completing the analyses necessary to select the sites where
surplus plutonium disposition will take place and we expect to
announce shortly the Department's preferred alternatives for siting
the Pit Disassembly and Conversion Facility and the MOX Fuel
Fabrication Facility. The Savannah River Site, which has an
operational high level waste vitrification facility has already been
identified as the Preferred Alternative for immobilization. Following
completion of an Environmental Impact Statement, final site selection
would appear in a Record of Decision scheduled for release in late
1998.


Fiscal Year 1999 efforts on the immobilization approach are aimed at
resolving technological issues, developing and demonstrating
production-scale processes and equipment, and conducting the necessary
verification testing of the preferred can-in-canister approach in
order to be confident that it can be successfully implemented in a
timely and cost-effective manner. For the MOX/reactor approach, we
plan to complete fuel qualification design, licensing efforts, process
development for MOX fuel fabrication, irradiation tests of the MOX
fuel as well as to begin the design of a MOX Fuel Fabrication Facility
with a capability to process 3.5 metric tons of surplus plutonium
oxide per-year.


The next two to three years will be a crucial period in the U.S.-
Russian relationship concerning the storage and disposition of surplus
weapons plutonium. Work with Russia on small-scale tests and
demonstrations of disposition technologies is moving forward and
negotiations with Russia have begun on a framework of agreements for
plutonium disposition. We recognize, however, that the United States
cannot proceed independently to dispose of our surplus plutonium
without significant progress from Russia. As a result, the
Administration will not construct new facilities for disposing of
surplus U.S. plutonium (scheduled to begin in the FY 2001-02 time
frame) unless there is significant progress with Russia on plans for
plutonium disposition.


Beginning the design of key U.S. disposition facilities, developing a
pilot-scale system in Russia to demilitarize weapons plutonium, and
implementing a framework of agreements on plutonium disposition are
significant steps in this important non-proliferation program. I
believe that these efforts will send a.clear signal to the world
community regarding our non-proliferation goals and will further
encourage the Russian Government to take significant reciprocal
actions to initiate plutonium disposition. It is an investment in our
future well worth making.


NUCLEAR ENERGY



International Nuclear Safety



Our budget includes $35 million for the International Nuclear Safety
Program to address serious problems with the safety of Soviet-design
nuclear power plants. This is a multi-year program that will end early
next century, depending on the level of annual appropriations. By
improving the safety of Soviet-designed nuclear power plants and by
supporting shutdown of the Chernobyl nuclear power plant, we support
an, important component in the nation's effort to develop free-market
democracy in countries formerly within the Soviet Union. The United
States has an important national security interest in helping these
countries avoid political and economic problems such as those seen in
the aftermath of the Chernobyl accident, which contributed to the
breakup of the Soviet Union. An accident of such magnitude today would
severely weaken the, political stability of the region in addition to
creating catastrophic economic and environmental impacts.


We have made substantial progress in improving safety through operator
training, improved procedures and installation of modem equipment.
But, much work remains before these countries approach internationally
accepted practices in the safe operation of their nuclear power
plants. These funds will continue to improve nuclear safety by
providing simulators as important tools for teaching plant operators
how to respond during accidents; safety parameter display systems
allowing operators to detect abnormal conditions rapidly and take
appropriate corrective actions; and in-depth safety assessments to
teach host countries how to evaluate the safety condition of their
plants and make needed safety improvements. This program is carefully
coordinated with Similar activities conducted by other countries and
international organizations to avoid duplication and to leverage U.S.
funds.


Naval Reactors



Naval Reactor's mission is to provide the Navy with safe, long-lived,
militarily-effective nuclear propulsion plants in keeping with the
Nation's defense requirements, and to ensure their continued safe and
reliable operation: In FY 1999, we are requesting $665.5 million for
this program.


Naval Reactor's responsibility extends to all aspects of Naval nuclear
propulsion -- from technology development through reactor operations
to, ultimately, reactor plant disposal. The Programs efforts are
critical to the continued success of the numerous reactors in
operating submarines and surface ships, comprising 40 percent of the
Navy's warships and the successful development of the reactor plant
for the New Attack Submarine class. Naval Reactors is responsible for
more reactors than the entire U.S. commercial nuclear power generating
industry and more reactors than the next two largest commercial
nuclear power generating nations in the world combined (France and
Japan).


The FY 1999 budget request for the Naval Reactors program reflects
investments in the following priority areas: 1) support to the current
operating fleet; 2) continuation of the development of the New Attack
Submarine reactor plant; and 3) operation of two prototype naval
reactors, and the inactivation of six shutdown prototypes. The
decrease in the Naval Reactors budget request for FY 99 reflects a
reduction in the inactivation work on the shutdown prototype reactor
plants.


OFFICE OF WORKER AND COMMUNITY TRANSITION



The FY 1999 request for the Worker and Community Transition Program is
$45.0 million. This program supports work force restructuring
activities related to the defense mission, local impact assistance to
those communities affected by work force restructuring plans, and
management of short and long-term programs and initiatives that
identify assets excess to current Department needs and are potentially
available for sale, transfer, or reuse.


We anticipate that the Office of Worker and Community Transition will
manage the Department's effort to reduce the size of the contractor
work force and implement more efficient contract mechanisms that could
impact 5,000 workers in FY 1999. Community transition assistance is
expected to create approximately 2,500 jobs within affected
communities during FY 1999.


MANAGEMENT IMPROVEMENTS



In the past year we have made progress in changing the way we do
business at the Department. In particular:


-- Since 1995, we have reduced our federal work force by nearly 3,000,
or 22 percent. Contractor employment has declined 29 percent, from an
all-time high of 148,000 in 1992 to just over 100,000 this past year.
Since I became Secretary of Energy, the Department already has met
both the 1998 and 1999 overall personnel targets. We are more than a
year ahead of schedule.


-- Since 1994, we have completed competitions for eight management and
operating contracts worth more than $24 billion. During my tenure as
Secretary, I have directed competitive procurements for every
management contract requiring my decision.


-- We have made substantial improvements in our environmental
privatization program in the past year including actions to strengthen
our procurement, legal, and safety and health reviews of Requests for
Proposals and contracts. And we have taken steps to improve cost
estimating and training of personnel. As I promised, we have just
selected an individual to coordinate the Department's privatization
efforts who will bring extensive private sector expertise to bear on
these issues.


-- We have dramatically decreased the amount of money spent on support
service contractors. In fiscal year 1994, we spent $700 million on
support service contracts. We have reduced that amount by $247
million, a 35 percent reduction.


But I recognize that we still face many challenges. Since coming to
the Department, I have sought to reverse a decades long history of
weak contractor accountability. One of the first major decisions that
I made as Secretary was to terminate the contract at the Brookhaven
National Laboratory because I believe that the contractor was not
performing adequately in critical areas of environmental protection,
safety, and public accountability.


And, I believe my message is being heard. In December, our management
contractor at Hanford issued a "cure notice" to the subcontractor
managing the $1 billion K-basin spent fuel project threatening
termination if management improvements were not made. Two weeks ago,
our management contractor at our Idaho site issued a "cure notice" to
the Pit 9 project subcontractor, with the message that the
subcontractor was expected to perform or be terminated.We have made
progress in changing the way we do business at the Department, but
much remains to be done. In particular, we need to do a better job of
project management; of integrating our facilities; of matching our
work force to our evolving missions; of increasing line management's
responsibility for environment, safety, and health; of resolving
critical safeguards and security issue; and of assuring top-level
integration of key cross-cutting functions., I am pleased that our top
management team is in place and believe that their strong managerial
and technical expertise will help us address many of these
long-standing problems.


CONCLUSION



These are just some of the highlights. Though the budget, in adjusted
dollars, is much smaller than our peak year, it proposed investments
that are vital to our country's future. With your support, the
Department of Energy can make a significant contribution to this
nation's national security needs for the 21st century. Thank you. I
would be happy to answer your questions.


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