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sector entities by providing research grants to universities that receive similar commitments from the utilities and private companies. As in the past, we intend to provide funding equal to the amount contributed by private organizations, to a maximum of $50,000, in Department of Energy grants per university. In fiscal year 1999, we expect to fund $1,000,000 in grants that will be matched by participating companies. Also in fiscal year 1999, we will continue the Nuclear Engineering Research Grants Program reinstituted beginning in fiscal year 1998 at the urging of Congress.

We also plan to continue our support of scholarships for Historically Black Colleges and Universities and of the Nuclear Energy and Health Physics Fellowships and Scholarship Program. These fellowships and scholarships provide for the education of approximately 15 outstanding graduate engineering students across the country and approximately 65 undergraduate students.

TEST REACTOR AREA LANDLORD

The Test Reactor Area (TRA) Landlord facilities at INEEL support Naval Reactors nuclear fuels and core structural materials R&D, production of isotopes for medicine and industry, an on-site science and technology laboratory serving various Departmental programs on a continuous basis including nonproliferation projects in both chemical and nuclear weapons, fusion program materials testing, and work for others projects. The buildings, infrastructure, and facilities at TRA range up to 40years old while the overall mission of TRA is planned to continue until well into the 21st century. Thus, the TRA Landlord program provides for a robust maintenance and construction upgrade plan in order to meet evolving safety, environmental, and programmatic requirements and to replace in a timely manner facilities and systems that have reached the end of useful life.

The TRA Landlord activities in fiscal year 1999 include general facility and utility maintenance and repair, construction project operating support, legacy waste cleanup, general plant projects, and two major line item construction projects. The Fire and Life Safety Improvement line item construction project upgrades fire and worker safety at TRA by bringing the older buildings and facilities into compliance with new Department of Energy fire and life safety codes and national codes and standards. The actual construction began in fiscal year 1996, and the project will be completed in fiscal year 2000. The Electrical Utility Upgrade line item construction project is planned to begin in fiscal year 1999 and be completed in fiscal year 2002. The Electrical Utility Upgrade will replace 30 to 40-year old switchgear, transformers, panels, and electrical distribution lines. The Electrical Utility Upgrade project is the first in a planned series of projects to upgrade the site's aging utility infrastructure in an orderly manner to be able to support TRA's projected long-term mission.

PROGRAM DIRECTION

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This account funds salaries, travel, support services, and other administrative expenses for Headquarters and Operations Office personnel providing technical direction to uranium, isotope support, and other nuclear energy programs including efforts funded by other Department of Energy accounts (e.g., nuclear safety activities conducted in Russia, Ukraine, and Central and Eastern European countries funded under Other Defense Activities; and technical direction for the operation of the Department's research reactors funded by the Office of Energy Research); other Federal agencies; and foreign governments.

This account also funds the salaries of a Nuclear Energy employee in Paris, France, who is responsible for the Department's participation in the Organization for Economic Cooperation and Development's Nuclear Energy Agency, and a Nuclear Energy employee at the U.S. Embassy in Tokyo, Japan, where we coordinate many cooperative activities with Japanese research agencies. This participation is important to the office's effort to bring overseas expertise and resources to bear in meeting U.S.-led R&D objectives and to ensure focused international cooperation to achieve the nuclear safety goals of the Soviet-designed Reactor Safety Program and other important activities.

ISOTOPE SUPPORT

The Department of Energy's Isotope Production and Distribution Program provides radioactive and enriched stable isotope products and services to domestic and international markets for use in medical research, diagnosis, and treatment; national defense; industrial applications, and scientific research. The Department produces isotopes when no domestic or private sector capability exists; where unique government production facilities are needed, such as nuclear reactors and isotope enrichment facilities; or where other productive capacity is insufficient to meet U.S. needs. The Department encourages private sector investment in new isotope production ventures and will sell or lease its existing facilities and inventories for commercial purposes.

Two major initiatives started in fiscal year 1997 are continuing in fiscal year 1999: streamlining of the Isotope Program through privatization and consolidation of isotope activities and establishment of a reliable backup production source for molybdenum-99 and related medical isotopes until reliable alternative sources of supply become available. A third initiative, which is the reason for this year's increase in the Isotope program funding request, is the construction of a new isotope target irradiation station at the Los Alamos Neutron Science Center (LANSCE), which is needed to maintain a U.S. supply of short-lived isotopes for medical research.

The mission of the Department of Energy Isotope Program is to produce and distribute isotopes that are not reliably available but which are needed for medical diagnosis and therapy, industrial and agricultural applications, R&D, or other important uses. Isotopes for R&D are made available at prices that support a reasonable return to the U.S. government but do not discourage their use. Commercial isotopes are sold on a cost-recovery basis. This pricing structure places the Isotope

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Program in a challenging position: it must provide small-volume, high-cost, research isotopes that often do not achieve full cost recovery while selling isotopes commercially on a cost-recovery basis. Thus, the Isotope Program must constantly consider demand, market conditions, societal benefits, and its commitment to operate at the lowest possible cost to U.S. taxpayers in selecting the isotopes it will supply.

Our goal in this program is the continuous reduction of costs in delivering products and services to customers while increasing efficiency and reliability. To meet this goal, we are encouraging the private sector to propose methods of privatization, and we are consolidating our production activities at fewer isotope-producing laboratories.

The Isotope Program operates on a revolving fund and maintains financial viability through revenues from sales and annual appropriations. We function as a business, and as such, must have sufficient operating cash to fill customer orders and maintain solvency during market changes. An average acceptable level of operating cash to cover our operations for three months would be between $4 million and $5 million. This amount appears in the unobligated balance of the revolving fund. Because of a decline in sales of about $6 million, a sharp decline in appropriations (from $24.7 million to $12.7 million) from fiscal year 1996 to fiscal year 1997, and the requirement to use the revolving fund to support the molybdenum-99 project, investments were not made that could have led to increased sales and revenues in fiscal year 1998. As a result, the Isotope Program is in a weak cash position. Our fiscal year 1999 budget request will provide minimum operating cash. We will continue to employ sound cash management practices to maintain solvency of the revolving fund.

While working to improve the Isotope Program's service to its customers, we are taking steps to privatize as much of the program as possible. The primary objectives of the privatization initiative are to encourage the private sector to assume a larger role in isotope supply; to purchase, lease, or use the Department facilities and technologies for commercial isotope production; and to provide production, marketing, distribution, or technical services that will lead to lower costs and greater effectiveness. Three requests for proposals have been issued as part of this initiative, including one for privatizing Oak Ridge National Laboratory's calutron operations and all its isotope production and distribution business activities. After evaluation of the proposals received, we will determine the most efficient and cost-effective course of action and make awards where appropriate.

The Isotope Program is also seeking cooperative agreements with other isotope manufacturers. Such agreements can stimulate sales by improving product availability and ensuring on-time deliveries to customers. For example, in 1997, scheduling conflicts at the Department's accelerator facilities threatened the availability of an isotope needed for a customer's long-planned set of human clinical trials. To avoid this problem, the Department worked with the operator of a non-DOE accelerator to provide the needed isotope, and the medical trials proceeded as planned. We are making similar cooperative efforts for reactor-produced isotopes. For example, we are working with the University of Missouri to coordinate operating schedules and demand for reactor-produced isotopes.

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One of our major initiatives is to establish a production capability for molybdenum-99 until reliable alternative sources of supply becɔ: le available. Molybdenum-99 is a precursor of technetium-99m, an isotope used for diagnostic imaging including body organ functions, more than 36,000 medical procedures each day in the United States alone. This isotope allows physicians to accurately diagnose cancer and other diseases without resorting to exploratory surgery.

To ensure a reliable source of supply of this vital isotope, the Department has established a medical isotopes production project to produce molybdenum-99 at Sandia National Laboratories' Annular Core Research Reactor (ACRR), Sandia's nearby Hot Cell Facility, and Los Alamos National Laboratory's Chemistry and Metallurgy Research Facility. Substantial modifications to these facilities will ensure a stable production source that is capable of meeting part or all of the U.S. demand until reliable alternatives become available. ACRR has been converted for molybdenum-99 production. Sandia's Hot Cell Facility requires additional shielding and material handling capabilities for isotope processing. As planned, the necessary modifications to these facilities will be completed by the end of 1998. Once these modifications are made, ACRR will be capable of producing 70 percent of U.S. demand, and the hot cell facilities will be able to process 100 percent of demand. U.S. Food and Drug Administration (FDA) approval of the domestically produced molybdenum-99 will be sought in early 1999. Eventually, with FDA approval and an upgrade to the ACRR's cooling system, the Department could provide 100 percent of the U.S. demand. The privatization potential of this technology is high because of the consistent need for molybdenum-99 to satisfy the medical community's increasing demand for technetium-99m. Once FDA approval is obtained and a continuous production capability equal to 70 percent of U.S. demand is achieved, the Isotope Program will seek to privatize the Department's molybdenum-99 production facilities. Our fiscal year 1999 request includes funding for relocation of the Los Alamos isotope target irradiation station. The research community desires the year-round availability of short-lived radioisotopes that can only be produced in large accelerators. Accelerator-produced radioisotopes also are used in several medical applications. The Isotope Program has met this demand in part, using the target irradiation station located at the LANSCE. When the Accelerator Production of Tritium Program experiments sponsored by the Office of Defense Programs are concluded in fiscal year 1999, beam delivery to the Isotope Program's current target irradiation station will cease and LANSCE will no longer be able to produce any isotopes. Thus, relocation of the target irradiation station is essential to continued isotope production. The federal government is the only source for these short-lived research isotopes. Therefore, without this new station, U.S. researchers will not have access to many isotopes which are required to explore important and promising new medical treatment a diagnostic technology.

The total estimated cost for relocation of the LANSCE target irradiation station is about $12 million. Initial design and planning activities must begin in fiscal year 1998 to support construction of the relocated target station and tie in of the station to the accelerator beam, which is scheduled to take place in fiscal year 1999 in a time frame dictated by Defense Programs' accelerator maintenance schedule. As a result, the Isotope Program expects to spend about $2 million of its available fiscal year 1998 funds/revenues for planning and design activities. The new station will be completed and commissioned in fiscal year 2000.

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The new target irradiation station will offer greater operational efficiency because of improved access to targets, an optimal effective beam energy, and lower quantities of waste products. It moreover will enable longer production runs and the year-round availability of short-lived radioisotopes that are vital for research, medical therapy, and diagnosis. As a result, this investment will increase Isotope Program sales of accelerator-produced isotopes and yield higher revenues for the program as well as improved service and reliability to the research community.

NUCLEAR TECHNOLOGY R&D

The Department is also responsible for the safe storage and disposal of approximately 8,000 tons of spent nuclear fuel containing about 2,700 metric tons of uranium and transuranic elements from various civilian and defense-related programs. Some of these spent fuels contain materials or are in a condition that may preclude their direct disposal in a geologic repository. One technology which may someday assist the Department in dealing with this spent fuel challenge is the electrometallurgical treatment technology under development at Argonne National Laboratory (ANL). It is important to emphasize that this effort addresses only spent fuel disposal challenges unique to the Department. This effort will not benefit the private sector, and no private sector firms are involved in the Department's evaluation of this treatment technology. Nevertheless, U.S. taxpayers may benefit from this technology. There are more than 150 different spent fuels in the Department's inventory. Each may have to be separately characterized and evaluated before handling, storage, and disposal. If the demonstration of electrometallurgical technology is successful and that technology is applied to the treatment of these fuels, many of these problems could be reduced, and significant amounts of money could be saved.

In particular, this technology may be the best way to deal with the sodium-bearing spent fuel removed from the Experimental Breeder Reactor-II (EBR-II). This spent fuel contains metallic sodium, a material which can cause an explosion when brought into contact with water. This spent fuel must be treated if it is ever to be removed to a geologic repository. EBR-II and the other sodium-bonded spent fuels at INEEL must be removed from the State of Idaho by 2035 in accordance with a consent between the Department of Energy and the Governor of Idaho. The efforts in the nuclear technology R&D program in support of the EBR-II demonstration and waste form performance testing are crucial to the evaluations and decisions necessary to meet those consent agreement obligations. If these R&D activities are not pursued, new R&D activities will have to be conducted to find other alternatives for treating the Department's sodium-bonded fuel in Idaho.

It is important to note that the electrometallurgical treatment method we are investigating at Argonne is not a reprocessing technology. Unlike reprocessing technologies, such as the PUREX process, this treatment technology does not separate plutonium from spent fuel. After electrometallurgical