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TITLE III

DEPARTMENT OF ENERGY

HOUSE AND SENATE VIEWS

The reports accompanying the House and Senate passed bills include stronglyheld views of each body regarding the Department of Energy. The confereeshave resolved all differences between the two bodies related to fundingand where specific direction or requirements are provided. However, theconferees have not attempted to reconcile those portions of the reportsthat express the opinion of either body.

For example, the House and Senate reports express differing views onthe external regulation of the Department's facilities. The conferees havenot addressed this difference of opinion. However, where funding is involved,as it is with regard to providing funding within the Office of Environment,Safety and Health for external regulation, the conferees have agreed notto eliminate such funds as proposed by the Senate.

In cases where both the House report and Senate report address a particularissue not specifically addressed in the conference report or joint statementof managers, the conferees have determined that the House and Senate reportsare not inconsistent and are to be interpreted accordingly.

CONTRACTOR TRAVEL

The conference agreement includes a statutory provision limiting reimbursementof Department of Energy management and operating contractors for travelexpenses to not more than $150,000,000 and requiring contractor travelto be consistent with the rules and regulations for Federal employees.This reduction is not to be prorated, but should be applied to those organizationswhich appear to have the most egregious travel practices. This is not meantto restrict trips between laboratories to coordinate on program issues.The conferees are particularly concerned with the number of trips by laboratoryemployees to Washington, D.C., and the expense and excessive number oflaboratory employees who travel to Russia.

The Department is also directed to ensure that reimbursements for contractortravel shall not exceed those costs which would be allowed for travel byemployees of the Federal government. The conferees are aware that thereis a cost difference because contractors cannot receive government ratesfor certain travel expenses. However, the regulations should ensure thatcontractors are not allowed to charge the government for business classor first class travel expenses, hotels which exceed the government perdiem allowance, and other expenses and benefits such as the personal useof frequent flier miles which are not allowed if the traveler is a Federalemployee. Guidelines that provide for deviations from Federal travel regulationsmay be approved by the Secretary.

AUGMENTING FEDERAL STAFF

The conferees agree that a reduction is required in the number of Departmentof Energy management and operating contractors who are assigned to theWashington metropolitan area. Funding for management and operating contractorshas been reduced by $15,000,000. The conference agreement endorses theDepartment's proposed management plan to address this problem and to limitthe current assignments to not more than 270 positions in fiscal year 2000.Those positions must perform functions that are highly technical and directlyrelated to laboratory missions. Additionally, the Washington contractoroffices (currently 13 for 9 laboratories) should be consolidated into oneor two workplaces unless the Department finds that all of the offices canbe eliminated by locating them in Department of Energy office space.

The conference agreement adopts the report requirement proposed by theHouse. This report, which is due on January 31, 2000, is to be augmentedto include the status of the Department's proposed management reforms.

REPROGRAMMINGS

The conference agreement does not provide the Department of Energy withany internal reprogramming flexibility in fiscal year 2000 unless specificallyidentified by the House, Senate, or conference agreement. Any reallocationof new or prior year budget authority or prior year deobligations mustbe submitted to the House and Senate Committees on Appropriations in advance,in writing, and may not be implemented prior to approval by the Committees.

NONPROLIFERATION AND NATIONAL SECURITY

The conference agreement provides $744,850,000 for nonproliferationand national security programs instead of $691,050,000 as proposed by theHouse and $822,300,000 as proposed by the Senate.

Competitive research- The conferees direct the Department to initiatea free and open competitive process for 25 percent of its research anddevelopment activities during fiscal year 2000. In addition, 25 percentof the Department's treaty monitoring program is to be awarded throughan open competitive process. The competitive process should be open toall Federal and
non-Federal entities.

The conference agreement provides funds for Project 00-D-192, the Nonproliferationand International Security Center at Los Alamos. However, none of the fundsmay be obligated until an external, independent project assessment hasbeen completed and provided to the House and Senate Committees on Appropriationsfor review.

Federal employees- The conferees are aware that the Department doesnot have enough qualified Federal employees available to manage the nonproliferationand national security programs, particularly the Russian programs. Theconferees will favorably consider a reprogramming of funds from these programareas to the program direction account as Federal employees are hired toreplace the contractor employees who currently oversee these programs contraryto proper role of contractor employees.

Arms Control- The conference agreement includes $41,152,000 for chemicaland biological non-proliferation activities; $150,000,000 for the materialsprotection, control and accounting program; $22,500,000 for the Initiativesfor Proliferation Program; and $7,500,000 for the Nuclear Cities Initiative.

HEU Transparency Implementation- The conference agreement provides $15,750,000,the same as the budget request.

FISSILE MATERIALS DISPOSITION

The conference agreement provides $173,235,000 for fissile materialsdisposition instead of $190,000,000 as proposed by the House and $205,000,000as proposed by the Senate. The conference agreement does not include thebudget request of $21,765,000 for Project 00-D-142, Immobilization andAssociated Processing Facility, which has been delayed. The conferenceagreement provides no long-lead procurement funds for Project 99-D-141,Pit Disassembly and Conversion Facility.

The conferees have included $5,000,000 as proposed by the Senate tosupport the joint U.S.-Russian development program of advanced reactortechnology to dispose of Russian excess weapons-derived plutonium. Of thisfunding, $2,000,000 is available for work to be performed in the UnitedStates by the Department of Energy and other U.S. contractors, and $3,000,000is to be expended for work in Russia. The $3,000,000 shall be made availablefor work in Russia on the gas reactor technology on the condition and onlyto the extent that the Russian Federation matches these contributions witheither comparable funding or contributions-in-kind.

HOUSE REPORT – 106-253 (H.R. 2605)

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RESTRUCTURING THE NATIONAL SECURITY PROGRAMS

The Committee has included a provision that would delay the obligationof $1,000,000,000 until after June 30, 2000, and Congress has enacted legislationrestructuring the national security programs currently under the jurisdictionof the Department of Energy. This delayed obligation will give Congresstime to craft careful, bipartisan legislation while ensuring that actionsare taken to address the serious problems which have been identified atthe Department of Energy.

The report by the Special Investigative Panel of the President's ForeignIntelligence Advisory Board concludes that for the past two decades, theDepartment of Energy has embodied science at its best and security of secretsat its worst. After going through a litany of the problems in securityadministration, the Panel concludes that the Department is incapable ofreforming itself--bureaucratically and culturally--in a lasting way, evenunder an activist Secretary.

This was only the last in a long line of reports that have documentedmanagement problems at the Department of Energy and made numerous recommendationsto solve these problems. Unfortunately, there have been few positive resultsfrom these reports, and the Committee is concerned that the Departmentwill once again pay lip service to the recommendations while taking verylittle action.

The report of the Special Investigative Panel suggested two alternativesolutions. The first would create a new semi-autonomous agency within theDepartment with responsibility for weapons research and development. Thesecond proposal would create a wholly independent agency. The Committeehas watched while many have developed elaborate legislation to create anew semi-autonomous agency within the Department. But, the Committee doesnot believe this fully addresses the problems. This solution would notfree the weapons program from systemic problems. The same people staffingthis new organization would be those who have created the problems overthe past two decades.

Starting with a fresh slate is the only chance for solving many of theproblems. Eliminating the cumbersome and redundant field structure willlead to cost savings and management efficiencies. Creating an independentagency at the sub-Cabinet level will free the agency from political influenceand encourage the appointment of technically qualified managers. Directlines of responsibility and authority will be established. Those interestedprimarily in maintaining the status quo will be thwarted.

There will ultimately be cost savings from this proposal. The Departmentof Energy has approximately 14,500 Federal employees in Headquarters andat various field offices throughout the country. Streamlining the agencyand the Byzantine field structure, as recommended by the each of the independentreviews, will result in significant cost savings. The Department currentlyspends nearly $1.7 billion on administrative expenses associated with theseFederal employees. The report of the Special Investigative Panel questionedthe need for field offices. Downsizing the Headquarters staff and streamliningthe field structure will result in immediate cost savings.

NONPROLIFERATION AND NATIONAL SECURITY PROGRAMS

Competitive Research- The Committee is concerned that 97 percent ofthe funding for research and development in the nonproliferation and nationalsecurity budget goes to the DOE national laboratories. The Committee iseven more concerned that the Department of Energy believes that this researchand development is acquired through a competitive process because the DOElaboratories are asked to provide technical proposals to solve both currentand future technical challenges to nonproliferation and national securityissues. Asking the Department's own laboratories for proposals is not whatthe Committee believes to be a competitive process by any stretch of theimagination. The Department is directed to initiate a free and open competitiveprocess for its research and development activities during fiscal year2000. The Committee should be notified of any research and developmentwhich cannot be openly competed due to its classified nature.

NONPROLIFERATION AND VERIFICATION RESEARCH AND DEVELOPMENT

The nonproliferation and verification research and development programconducts applied research, development, testing, and evaluation of scienceand technology for strengthening the United States response to threatsto national security and to world peace posed by the proliferation of nuclearweapons and special nuclear materials. Activities center on the designand production of operational sensor systems needed for proliferation detection,treaty verification, nuclear warhead dismantlement initiatives, and intelligenceactivities. The Committee recommendation is $210,000,000, the same fundinglevel as fiscal year 1999, and a reduction of $11,000,000 from the budgetrequest. No funding is provided for Project 00-D-192, Nonproliferationand International Security Center at Los Alamos. Funding has been providedin the Weapons Activities account for a new terascale simulation facilityat Los Alamos in fiscal year 2000. In view of the Department's significantproblems with project management, the Committee does not believe it isprudent to initiate construction of two new buildings at Los Alamos infiscal year 2000.

The nonproliferation and verification research and development programconsists of hundreds of projects executed primarily at the nuclear weaponslaboratories. The Department has still provided no information to the Committeethat shows the value of these disparate projects, and how they relate toan overriding program plan or technology roadmap. The Department shouldprovide a report to the Committee by October 31, 1999, which identifieshow the individual projects contribute to the overall objectives. The Departmentshould also implement an external, peer-review process to examine eachof the projects, their progress, and their value to the overall needs ofthe program.

ARMS CONTROL AND NONPROLIFERATION

The arms control and nonproliferation program supports the nation'sarms control and nonproliferation policies by securing nuclear materialsand expertise in Russia and the Newly Independent States; limiting weapons-usablefissile materials; establishing transparent and irreversible nuclear reductions;and controlling nuclear exports. The Committee recommendation is $256,900,000,the same level of funding as provided in fiscal year 1999, and a reductionof $39,100,000 from the budget request.

Materials Protection, Control and Accounting Program- The recommendationsupports the budget request of $145,000,000, an increase of $5,000,000over fiscal year 1999, for the materials protection, control and accountingprogram to secure and safeguard nuclear materials in Russia and the NewlyIndependent States.

Initiatives for Proliferation Program and Nuclear Cities Initiative-The Committee recommendation provides $22,500,000 for the Initiatives forProliferation Program, the same as fiscal year 1999. A recent General AccountingOffice report was highly critical of the fact that as much as 63 percentof these funds have been spent in the United States, mostly by the Department'snational laboratories, rather than going to the scientific institutes ofthe Newly Independent States. The Committee directs that no more than 20percent of the funding may be spent in the United States.

The Committee has provided $1,500,000 for the Nuclear Cities Initiative,significantly less than the budget request of $30,000,000. The Committeehas several concerns with this program. First, and foremost, it is notclear that the Department of Energy is the best agency to implement thisprogram since the most important training needed in these cities is marketingand business expertise. The Department should work with other Federal agenciesthat are implementing similar programs in Russia to ensure that this typeof training is provided immediately. The Department relies solely on itsnational laboratories to implement this program, and the Committee doesnot believe that Department of Energy laboratories are useful guides formarketing expertise and successful commercial ventures. Additionally, theCommittee is aware that access to these cities is very difficult and requiresa 45 day advance notification period. With funding of $7,500,000 providedin fiscal year 1999 and an additional $1,500,000 in fiscal year 2000, theCommittee is providing limited funds for this new initiative and will waitto see some tangible results before significantly increasing funding.

Treaty Monitoring- The Committee believes that there is an appropriaterole for university research to contribute to this program. The Departmentis directed to ensure there are opportunities made available for participantsother than the national laboratories and that at least 50 percent of thefunding should be openly competed.

HIGHLY ENRICHED URANIUM TRANSPARENCY IMPLEMENTATION

The highly enriched uranium (HEU) transparency implementation programis responsible for ensuring that the nonproliferation aspects of the February1993 agreement between the United States and the Russian Federation aremet. This agreement covers the purchase over 20 years of low enriched uranium(LEU) derived from at least 500 metric tons of HEU removed from dismantledRussian nuclear weapons. Under the agreement, conversion of HEU componentsinto LEU is performed in Russian facilities. The purpose of the programis to put into place those measures agreed to by both sides that permitthe U.S. to have confidence that the Russian side is abiding by the agreement.
The Committee recommendation is $15,750,000, the same as the budgetrequest.

FISSILE MATERIALS DISPOSITION

The fissile materials disposition program is responsible for the technicaland management activities to assess, plan and direct efforts to providefor the safe, secure, environmentally sound long-term storage of all weapons-usablefissile materials and the disposition of fissile materials declared surplusto national defense needs. The Committee recommendation is $190,000,000,a reduction of $10,000,000 from the budget request of $200,000,000.

Funding for Project 99-D-141, Pit Disassembly and Conversion Facility,has been reduced by $10,000,000. No funding is provided for long-lead procurement.

Centers and Partnerships Established for Various Purposesat DOE Laboratories

Section 312 provides that none of the funds in the Act may be used toestablish or maintain any center or programmatic partnership at a Departmentof Energy Laboratory or facility unless such funds have been specificallyidentified in the budget submission. Department of Energy laboratorieshave been establishing independent centers and funding them through a combinationof direct program funds, overhead, and laboratory directed research anddevelopment funds with little oversight. These centers cover a broad rangeof programs: the Center for Global Security Research; the Center for InternationalSecurity Affairs; the Center for Space Science and Exploration, and thePartnership for Natural Disaster Reduction. The merits of these centersand partnerships are not reviewed nor the costs identified in the Department'sbudget submission. The Committee objects to this process and has deletedall funding for such activities.

The Department should provide by November 30, 1999, a report identifyingall centers which have been established, the funding provided in fiscalyear 1999 and proposed for fiscal year 2000, and the source of that funding.The report should provide a brief description of each center and the AssistantSecretary who approved the establishment of the center.

SENATE REPORT – 106-58 (S. 1186)

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INAPPROPRIATE USE OF APPROPRIATIONS

In the previous Energy and Water Development Act, the Committee wascritical of the use of appropriations to: pay for members of industry associationsand associated entities to attend national and international conferences,publish magazines, purchase association membership information, conductsurveys of association membership, place op-ed style articles in publications,write talking points in support of the Department's programs, and underwriteindustry conferences.

The Department has significantly improved its practices in these areasby selecting its outreach and information dissemination contractors throughcompetitive processes. While competition may improve the quality of theproducts and services procured through these contracts, the Committee continuesto insist that, as a general rule, appropriated funds should not be used,directly or indirectly, to underwrite the expenses of industry associationsor associated entities.

Certain Department of Energy contractors are being reimbursed for exorbitanttravel expenses. In fiscal year 1998, Department of Energy contractorsincurred $249,000,000 in travel costs for which they sought reimbursement.Sandia National Laboratories alone reported taking over 4,500 trips toWashington, DC, in fiscal year 1998 or the equivalent of 87 trips eachweek. Those sort of practices are absolutely unacceptable. The Committeehas included in its recommendation both a statutory cap on the total amountof funds available for contractor travel costs and required that each contractor'stravel costs in fiscal year 2000 be limited to not more than 80 percentof the amount incurred in fiscal year 1998. The Committee considers thisa measured response and will take substantially more forceful action inthe future if this situation is not remedied.

NONPROLIFERATION AND NATIONAL SECURITY

The Nonproliferation and National Security Program includes activitiesrelated to nonproliferation and verification research and development,arms control, and intelligence. The Department is engaged in an activenuclear nonproliferation program through research and development activitiesperformed at the national laboratories, by providing technical and analyticalsupport to treaty development and implementation, and by providing intelligencesupport to these efforts. The Committee recommendation totals $822,300,000.The Committee continues to strongly support these important national securityprograms.

Verification and control technology/arms control- The Committee recommendationfor verification and control technology research and development, and armscontrol totals $547,000,000. The funding level recommended by the Committeeprovides significant increases over the current year level for DOE to continueimportant activities related to the proliferation of weapons of mass destruction,including chemical and biological weapons; and increased initiatives toreduce the danger of nuclear smuggling and the associated potential ofnuclear terrorism.

The Committee recommendation also includes $84,000,000 for Deterrenceand Detection Technologies, including $41,152,000 for Chemical and Biologicalnon-proliferation activities. This funding level supports an enhanced programof critical research to develop and test fast and selective detection technologies,predictive plume transport models suitable for urban areas, new recoveryand restoration concepts, and advanced biological forensic methods forproliferation detection.

The recommendation provides $165,000,000 for material protection, control,and accounting [MPC&A] activities. The Committee continues to considerthese activities important to reducing the threat created by the breakupof the former Soviet Union. The increased funding will allow additionalmaterial protection, control and security upgrade work at defense-relatedand important civilian and regulatory sites in Russia. The recommendationalso supports an enhanced program of material control, protection and accountingupgrades at several Russian Navy sites. The Committee continues to believethat these activities are critical elements of the United States non-proliferationefforts.

The Committee action supports the budget request for both the Initiativesfor Proliferation Prevention and the Nuclear Cities program of the Departmentof Energy. These programs contribute to the international non-proliferationeffort by engaging highly qualified and knowledgeable scientists, engineers,and technicians from Russia and the former States of the Soviet Union incooperative commercial and other high technology non-military activities.

HEU (Highly Enriched Uranium) Transparency Implementation-The Committee recommendation includes $15,750,000 for the HEU TransparencyImplementation program of the Department of Energy. This program is responsiblefor ensuring that the non-proliferation aspects of the February 1993 agreementbetween the United States and the Russian Federation are met. This Agreementcovers the purchase over 20 years of low enriched uranium [LEU] derivedfrom at least 500 metric tons of HEU removed from dismantled Russian nuclearweapons. Under the Agreement, conversion of the HEU components into LEUis performed in Russian facilities. The purpose of this program is to putinto place those measures agreed to by both sides, that permits the U.S.to have confidence that the Russian side is abiding by the Agreement.

FISSILE MATERIALS CONTROL AND DISPOSITION

The Fissile Materials Control and Disposition Program is responsiblefor the technical and management activities to assess, plan, and directefforts to provide for the safe, secure, environmentally sound long-termstorage of all weapons-usable fissile materials and the disposition offissile materials declared surplus to national defense needs. The Committeerecommendation is $205,000,000 the same as the budget request.

Excess weapons grade plutonium in Russia is a clear and present dangerto the security of the United States because of the possibility that itwill fall into the hands of non-Russian entities and provide Russia withthe ability to rebuild its nuclear arsenal at a rate the United Statesmay be unable to equal.

For that reason, the Committee considers the Department's material dispositionprogram of equal importance to weapons activities; both are integral componentsof our national effort to reduce any threat posed to the United Statesand to deter the threat that remains.

The Committee recognizes that Russian plans to dispose of excess weaponsplutonium are in part limited by the Russian Federation's limited requirementfor mixed-oxide fuel. The Committee recommendation includes $5,000,000to support the joint United States-Russian program to develop an advancedreactor to consume large quantities of excess weapons plutonium.