Statement of

Eric C. Peus

Executive Vice President

Waste Control Specialists LLC

before the

Subcommittee on Strategic Forces

Senate Armed Services Committee

United States Senate

September 3, 1998

Waste Control Specialists LLC (AWCS@) is pleased to have the opportunity to appear before the Subcommittee on Strategic Forces and present our views and opinions regarding the Department of Energy=s (ADOE@) policies and practices with regard to the disposal of low-level and mixed radioactive wastes. WCS is particularly pleased to have this opportunity because during the past several years there has been a significant and costly difference between DOE=s stated policy and its actual practices. WCS is optimistic that with the leadership of the Senate, and with the new leadership at DOE, these serious issues can be addressed and with the end result of bringing true competition and taxpayer savings to the future bidding for billions of dollars of DOE waste disposal contracts.

DOE Waste Disposal: A National Concern

Across the nation, low-level (ALLW) and mixed radioactive wastes (AMLLW@) produced by DOE weapons production and environmental cleanup activities are in desperate need of environmentally safe storage and disposal. The pace of DOE clean-up activities is far slower than Congress and the public demand, and the cost to the American taxpayer for the disposal of these wastes is higher than should be tolerated, due in large part to a paucity of disposal facilities and a lack of competition for DOE waste disposal contracts. By DOE=s own estimates, the cost of its cleanup and disposal activities during the next two decades will be somewhere between \$300 billion and \$800 billion, a federal program larger and more costly that the savings and loan bailout, but that is currently being managed under policies that foster a monopoly and stifle competition.

Some facts and figures on the market for DOE waste disposal services are appropriate and necessary to provide a perspective on just what is at stake as the Senate considers the important policy issues involved in the cleanup and disposal of DOE=s weapons complex wastes. While estimates may vary, one thing is clear - DOE has a very significant volume of LLW and MLLW that will need to be disposed of in the coming years, and by DOE=s own estimates, its ability to meet those disposal needs depends on facilities that today do not exist. The volume of DOE waste in need of disposal at facilities other than where it is currently stored is approximately 33,000,000 cubic yards of soils, debris and rubble. By contrast, DOE only has the current capacity to store approximately 6,350,000 cubic yards of that waste, and that assumes that it is wise policy, and politically acceptable, for DOE to store those wastes at existing DOE facilities. That leaves approximately 26,500,000 cubic yards of waste in need of safe, cost-effective disposal at non-DOE facilities. That is a market large enough to stimulate competition on its own, and costly enough to the American taxpayer that competition for that disposal should be strongly encouraged by the federal government.

Waste Control Specialists

WCS is a Texas-owned company, held jointly by KNB Holdings, Ltd., and Andrews County Holdings, Inc., of which Valhi, Inc. (a widely diversified, multi-national holding company listed on the New York Stock Exchange) is the sole shareholder. WCS is and for some time has been interested in contracting with DOE for the disposal of DOE LLW and MLLW on WCS= existing treatment, storage and disposal site located in Andrews County, Texas.

Currently, another company, Envirocare of Utah, has, according to DOE, a monopoly in the provision of services to DOE for disposal of LLW and MLLW outside the DOE complex. WCS is confident that if it is allowed to compete in this field, it can provide a safe and environmentally sound disposal alternative, and save taxpayers= money. WCS has extensive experience in the hazardous waste field in general, employs personnel with impressive qualifications and experience in the management of LLW and MLLW, and WCS= site provides a superior location for disposal of DOE LLW and MLLW. Moreover, WCS possesses every license and permit legally authorized and necessary for the disposal of DOE LLW and MLLW at the disposal site located in Andrews County, Texas, (see Exhibit 1) except a disposal authorization from DOE - for which WCS has applied, but DOE has not considered on its merits despite conceding that it has the legal authority to do so.

WCS has proposed as a regulatory concept the use by DOE of an Agreement State agency to regulate disposal of DOE wastes on DOE=s behalf using the same stringent NRC standards as are applicable to commercial sites, if that agency so desires, and, if not, the use of another suitable entity such as a national laboratory, or the NRC to perform this function. WCS submits this system of regulation is vastly preferable, from both a safety and credibility viewpoint, to DOE=s present system of self-regulation of its LLW and MLLW disposal sites. The WCS concept was designed to meet current problems with DOE self-regulation by entrusting regulation to a competent and independent entity with unquestioned expertise.

WCS is well aware that DOE is examining external regulation of its disposal activities, and the expanded use of private facilities for such disposal, but we are of the opinion that such activities are unnecessary as DOE long ago had the policy debate and made the decision to use private disposal facilities under external regulation. The only question is whether DOE should continue to use only the present method of external regulation given the opportunity for, and actual instances of, corruption in that approach, which have been the subject of recent federal investigations. It is WCS= opinion that the current system is in need of modification and that a system similar to the Nuclear Regulatory Commission=s Agreement State program might be appropriate. Moreover, WCS believes that such an approach could be effectively and productively explored in the context of a DOE/NRC pilot program, and WCS is willing and able to enter into such an arrangement with DOE and NRC immediately.

DOE=s National Procurement Approach

On March 19, 1998, DOE issued a Federal Register Notice of Intent to Conduct Policy Analysis (63 Fed. Reg. 13396), initiating a cumbersome administrative process to examine the expanded use of commercial facilities for the disposal of DOE LLW and MLLW. As noted above, WCS believe that process is unnecessary and contrary to the public interest.

First, the process DOE has outlined in the Federal Register Notice will take several years to complete. Indeed, DOE has taken no further action on the Notice to date other than to collect a limited number of public comments. In the interim, only one commercial facility, Envirocare of Utah, continues to receive more than 97 percent of the LLW and 100 percent of the MLLW that DOE disposes of off-site, and the U.S. taxpayer continues to pay monopoly prices for that disposal.

Second, many of the Apolicy issues@ that DOE is now purportedly evaluating for the first time as part of its consideration to expand the use of commercial disposal facilities have already been considered at length by DOE prior to its November 13, 1991, decision by then-Assistant Secretary Leo Duffy to authorize negotiation of a commercial contract for disposal of DOE LLW and MLLW at Envirocare. That initial policy decision was then reaffirmed in subsequent DOE decisions on the granting of exemptions from DOE Order 5820.2A, which require that DOE consider disposal at a DOE site prior to disposal at a commercial site. That initial decision, made in the context of cleaning up the Colonie (NY) site, included consideration of both the question whether DOE should be responsible for safety oversight, as opposed to NRC or the Agreement State, and the question of DOE liability.

There were mixed opinions within DOE as to the regulatory oversight issue, with some strongly favoring DOE safety oversight, including a requirement for the contractor to provide an acceptable safety review of the site to DOE. The issue was resolved in favor of deference to the state regulatory regime, and no independent DOE review, because this was standard DOE practice in the non-radioactive hazardous field. No consideration was given by DOE to the possible distinctions between the regulatory regimes imposed on DOE by TOSCA and RCRA and the regulatory regime imposed on DOE LLW and MLLW by the Atomic Energy Act, perhaps because Colonie principally involved DOD rather than DOE wastes. In any event, the Colonie precedent was followed and wastes were shipped to Envirocare without recognition of possible distinctions under the Atomic Energy Act between DOE LLW and MLLW, which are generally exempt from wholly independent NRC and Agreement State licensing under the Atomic Energy Act, and other agencies= LLW and MLLW, which generally are not.

In addition, while it now appears that DOE would require a full-scale National Environmental Policy Act review prior to the use of any new commercial disposal site by DOE, no NEPA review was ever performed by DOE when it began to ship radioactive wastes to Envirocare in Utah. To date, more than 14 million cubic feet of DOE waste has been shipped by DOE to Envirocare, at a cost to taxpayers of over \$250 million, but no NEPA analysis of DOE=s use of the site has ever been performed, and DOE has stated that it does not believe that such a review is necessary. What environmental analysis has been performed at Envirocare is limited to a small portion of the overall site, which is about to be turned back to DOE, and to the disposal of NRC-regulated mill tailings. While DOE has admitted that this approach to NEPA, whereby Envirocare is exempt from NEPA but new disposal sites would not be Adoesn=t seem fair,@ DOE nonetheless appears intent on maintaining this unequal situation. At the very least, it seems DOE should apply NEPA equally to waste shipments to Envirocare and to other disposal sites.

Finally, the long-term liability issue was previously resolved by DOE by recognizing that DOE was equally liable under CERCLA regardless of whether the disposal site was DOE owned or privately owned.

Thus, the majority of significant issues raised in the Notice were resolved years ago by DOE before it began shipments to Envirocare, and it is fundamentally unfair (and perhaps unlawful) to treat these alleged Apolicy issues@ as resolved for Envirocare, but unresolved for potential competitors.

Given the factors outlined above, DOE should act immediately to establish a competitive marketplace under a new external regulatory approach that is consistent with the Atomic Energy Act, provides for true competition in contract procurement, and establishes appropriate safeguards against improper influences. In the interim, DOE should consider a short-term, perhaps 30 or 60 days, moratorium on all DOE LLW and MLLW disposal shipments to any commercial disposal site, during which time a new system is developed and adopted. Once such a system is adopted, public comment can be solicited in an expeditious manner, including comments on draft requests for proposals (ARFPs@) issued under the new regulatory regime.

Elements that should be incorporated into the new external regulatory approach suggested above include:

(a) DOE will utilize sites developed by commercial operators whenever feasible and cost-effective.

(b) DOE wastes would be segregated from other wastes in a separate part of the disposal site dedicated to that purpose.

(c) DOE would request the Nuclear Regulatory Commission (ANRC@) (in a non-Agreement State) or an Agreement State to regulate the site on DOE=s behalf. If the state or NRC declined, then DOE could regulate through some other independent and qualified oversight body. In any case, NRC and/or Agreement State standards would be used.

(d) Consistent with NRC requirements, DOE (or the state at its option) would accept title to the site after cessation of site operations, completion of acceptable site decommissioning and stabilization, provision of a financial surety or other financial assurances to assure that long-term DOE custody is without cost to taxpayers, and expiration of a period of observation and maintenance to make sure that all proper measures are in place.

(e) The expenses associated with obtaining the necessary site and operational approvals would be the responsibility of the contractor. If the site failed because of non-compliance with applicable requirements and, therefore, was never used for disposal of DOE wastes, then the loss would be that of the contractor rather than the taxpayer.

The State Role

Some groups, including the National Governor=s Association (NGA), have raised concerns regarding the role of individual states in regulating federal Atomic Energy Act wastes. WCS has pledged to work with the NGA to help clarify the role of states in overseeing DOE facilities and private facilities providing services to DOE. States do not have the legal authority to regulate directly the disposal of DOE wastes. If a state wants such authority, there should be a formal program whereby DOE can enter into an agreement with a state providing a state role in such regulation.

States currently have extensive influence over the siting and permitting of waste disposal facilities, and the Department of Energy Organization Act and the Atomic Energy Act, like many other federal environmental laws, allow DOE to share its safety oversight function to states willing to assume this additional role.

At the same time, WCS believes that DOE cannot, and should not, be allowed to negate its long-term Atomic Energy Act safety responsibilities simply by disposing of DOE wastes at a commercial facility. States can have a role in the oversight of such facilities, if they choose to do so, but DOE should not be allowed to abandon its long-term responsibility to provide for the protection of public health and safety. Instead of being allowed to disavow its critical safety responsibility, DOE should be encouraged to work cooperatively with individual states to develop model DOE-State agreements for state radiological safety oversight of DOE contractors. The Nuclear Regulatory Commission=s successful Agreement State program, and state agreements reached under that program, could serve as models for the development of a similar program between DOE and the States.

Title to DOE Wastes

The issue of transfer of title to DOE wastes when disposed of at a commercial facility is also of concern to WCS and the individual states. Recent DOE statements may have left Subcommittee members and the public with the false impression that the expansion of DOE=s use of private waste disposal facilities could entail added DOE liability and taxpayer expense, and that no such liability or expense exists in DOE=s use of Envirocare.

However, under decades of law and practice by NRC and its (and DOE=s) predecessor agency, the Atomic Energy Commission, the long-term custody of a disposal is entrusted to the state or federal government in order to protect public health and safety during the long periods when the waste remains hazardous, but the private entity that operated the site (the licensee) is no longer viable. Thus, the transfer of title to wastes from DOE to the private licensee is only temporary - the transfer of title does not relieve DOE of its long-term health and safety responsibilities. This is the case with regard to DOE=s use of the Envirocare facility, despite DOE=s public assertions to the contrary. Therefore, the expanded use of commercial facilities does not create risks for DOE that do not exist under its current practice.

Furthermore, DOE Aarranger@ liability under federal ASuperfund@ (CERCLA) law for releases from the disposal site is unaffected by DOE relinquishing title, or postponing title transfer unless and until the site had been acceptably decommissioned and stabilized for the long-term, and adequate financial assurances put in place. DOE remains a Apotentially responsible party@ under CERCLA in perpetuity.

Continued or Expanded Use of DOE-Owned Sites

A final underlying issue is whether DOE should use any commercial site, as opposed to disposing of LLW and MLLW exclusively on DOE-owned sites. However, numerous entities, including the Defense Nuclear Facilities Safety Board, have voiced serious safety problems with DOE=s LLW disposal sites, and a more recent DOE complex-wide review revealed further safety problems. In addition, DOE currently has a disposal capacity shortfall of more than 500 million cubic feet. While DOE has suggested that much of this waste will go to an as-yet unbuilt new facility in Nevada, progress toward the completion and operation of such a facility is suspect - DOE has yet to complete a single site-specific EIS, has yet to agree on cleanup standards even for existing sites, and has yet to secure the agreement of Nevada. Thus, significant hurdles remain with regard to DOE=s ability to bring such a disposal facility to fruition, while existing private facilities such as WCS have the present ability and capacity to manage significant portions of DOE=s waste at no additional cost to the government.

Conclusion

The disposal of DOE low-level and mixed radioactive waste is a matter of serious environmental and financial concern to the federal government. The Department of Energy=s record in properly managing such wastes is generally less than ideal, and while the continued or expanded use of DOE facilities for such waste management may be necessary in some situations, DOE should be strongly encouraged to make greater use of private commercial disposal facilities, and to establish a procurement and regulatory system that facilitates the development of such facilities and stimulates meaningful competition for DOE LLW and MLLW disposal contracts.