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treatment, the plutonium remains mixed with fission products and other materials and is eventually immobilized in a ceramic waste form that meets the “spent fuel standard” established by the National Academy of Sciences.

The Department has been demonstrating electrometallurgical treatment technology since May 1996; in the intervening time, over 40 of 125 planned spent fuel assemblies have been treated. The technology, while still in the developmental stage, has performed as anticipated. We expect our demonstration program to end during FY 1999. At that time, the National Academy of Sciences, which provided the program with independent technical oversight since the beginning of the research effor, will issue a final report on the viability of this technology.

FACILITIES

The fiscal year 1999 Facilities budget provides continued funding for the shutdown of EBR-II and other unneeded facilities at ANL-West (ANL-W), operation of the Fuel Conditioning Facility, at ANL-W, which is required to demonstrate the electrometallurgical treatment technology, and the conduct of activities necessary to maintain the FFTF at Hanford in a standby condition pending a decision on its potential use for the production of tritium and medical isotopes.

In October, 1994, the Department began the permanent shutdown of EBR-II and other unneeded facilities at ANL-W. During fiscal year 1999, our efforts to place these facilities in a radiologically and industrially safe shutdown condition will continue. A critical milestone in EBR-I shutdown was the completion of defueling in December 1996. We initiated operation of the Sodium Process Facility during the past year. 'This facility is designed to convert the chemically highly reactive sodium to a stable carbonate form suitable for routine disposal. We are currently processing the Fermi sodium that has been stored for many years at ANL-W. Processing of the EBR-II sodium will be initiated in fiscal year 1999. This sodium will also be converted to a stable carbonate form in the Sodium Process Facility. After sodium draining, the EBR-I systems and components will be cleaned of residual sodium, the systems closed and sealed, support systems deactivated, and the cooling towers will be dismantled. These actions will place EBR-DI into a radiologically and industrially safe shutdown condition.

Nuclear Energy also provides program management and technical direction for the FFTF project located on the Hanford, Washington, site. The Department continues to maintain FFTF in a standby condition while considering potential future missions of tritium and medical isotope production for the facility. Surveillance and maintenance activities are being performed to ensure that there is no degradation of key plant systems, and the facility remains in full compliance with federal and state safety requirements. Deactivation activities at FFTF, which do not impact the ability to return the facility to operation, such as washing spent fuel and off loading it to dry cask storage, continue. A decision on the future status of FFTF is expected to be made by the Department later this year. Funding for these FFTF activities in the Department's fiscal year 1996, 1997, and 1998 budgets has been provided by the Office of Environmental Management. Responsibility for funding FFTF standby activities has been transferred to Nuclear Energy for fiscal year 1999.

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URANIUM PROGRAMS

Uranium Programs' activities provide expertise in the domestic and international uraniums and nuclear technology industries. We are leading the Department's technical efforts to assure that Russian LEU purchased under the U.S./Russia HEU Agreement is derived from HEU removed from dismantled Russian nuclear weapons. We have achieved significant success in the HEU Transparency Implementation Program. The Department also retains certain responsibilities for the gaseous diffusion plant facilities leased to USEC and for the safe management of over 560,000 metric tons of depleted uranium hexafluoride.

Nuclear Energy is also responsible for disposition of the Department's surplus low enriched and natural uranium in order to maximize revenues while avoiding adverse material impacts on the domestic uranium industry. The Department currently has an inventory of approximately 43 million pounds of natural uranium and 45 metric tons of LEU, with a total value of $600 million, that may be sold in the commercial market. The Department plans to sell its excess natural and LEU over the next several years including 6.4 million pounds of Russian-origin natural uranium transferred to the Department from USEC pursuant to the USEC Privatization Act. All of the uranium to be sold under this program is currently held at the Portsmouth or Paducah gaseous diffusion plants. The USEC Privatization Act and the Energy Policy Act allow the Department to sell excess uranium stockpiles subject to certain conditions. Before the Department sells any of its excess natural or LEU, the USEC Privatization Act requires the Secretary to determine that “... the sale of the material will not have an adverse material impact on the domestic mining, conversion, or enrichment industry, taking into account the sales of uranium under the U.S./Russian HEU Agreement and the Russian Suspension Agreement ..."

This office is also responsible for implementing the nation's arms control and nuclear nonproliferation objectives associated with the U.S./Russia HEU Agreement. Under this Agreement, USEC will purchase more than 15,000 metric tons of LEU over a 20-year period that was processed from 500 metric tons of HEU derived from dismantled Russian nuclear weapons. We are putting additional measures in place and fully implementing monitoring procedures at five Russian nuclear processing facilities to build confidence that terms of the Agreement are being met. For the first time, U.S. Transparency monitors can make direct readings on sealed weapon component and inplant transfer containers to assure the presence of HEU material. These portable nondestructive assay units were shipped to three Russian processing facilities and are routinely used by U.S. transparency monitors. We have also started the installation of special uranium flow and enrichment measurement systems to be permanently attached to the blending pipes at two facilities. Eventually, they will be installed at all Russian blending facilities subject to the Agreement.

The Protocol on HEU Transparency Arrangements between Russia and the United States calls for special monitoring visits to facilities where HEU will be processed as well as the establishment of permanent monitoring offices at certain facilities in each country. We celebrated the first anniversary of the Permanent Presence Office at the Ural Electrochemical Integrated Plant (UEIP) and are well into the second year of monitoring activities. In March 1997, we installed the control

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units for the uranium flow and enrichment units as the first step by the Department to install special monitoring equipment in the blading facilities at UEP and the Electrochemical Plant at Zelenogorsk. Russian facilities and authorities are in the process of licensing the U.S. Flow and Enrichment equipment as a necessary condition to install and operate this equipment that should occur in 1998. Continuous monitoring information of blending operations at these two facilities would then be obtained by U.S. monitors. Since U.S. monitors learned that fluorination and blending operations started at the Siberian Chemical Enterprise (SCHE) in early 1997, and weapon components were being converted to oxide at the Mayak Production Association at Ozersk, we initiated negotiations with Russian officials to extend U.S. monitoring rights to these facilities and should begin in early 1998. During 1997, a total of 12 special monitoring visits to three Russian facilities were completed. In fiscal year 1998, we expect to conduct 22 special monitoring visits at five facilities. This should include the new blending facility located at the SCHE plus the new weapon component conversion operations at the Mayak Production Association in Ozersk. The combination of these activities is expected to provide confidence that the LEU delivered to the United States is derived from dismantled nuclear weapons.

During fiscal year 1999, U.S. flow and enrichment measurement systems will be installed at the blending point of the SCHE and provide continuous transparency monitoring data. We will continue to maintain the permanent present office at UEIP and expand coverage to SCHE and conduct up to 30 special monitoring visits to the Russian processing facilities covered by Agreements. We are also working to ensure that Russian monitoring visits to U.S. facilities proceed smoothly. This includes their permanent monitoring office at the Portsmouth gaseous diffusion plant and special monitoring visits to any of the five U.S. fuel fabrication facilities. In 1999, the Russian facilities should process 30 metric tons of HEU into about 900 metric tons of LEU product and sustain this level through the remainder of the contract. They processed 18 metric tons of HEU in 1997 and should process 24 metric tons of HEC in 1998.

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Vuclear Energy also exercised nuclear safety regulatory oversight of the gaseous diffusion plants until this responsibility was assumed by the Nuclear Regulatory Commission. On November 29, 1996, the Nuclear Regulatory Commission issued a Certification of Compliance to USEC and assumed oversight responsibility on March 3, 1997.

The Department retains certain responsibilities for the plants. In accordance with the Energy Policy Act, the Department of Energy remains financially responsible for about $220 million worth of nuclear safety upgrades required to meet Nuclear Regulatory Commission standards. To satisfy these liabilities, the Department will transfer to USEC excess Department inventories of natural uranium and LEU.

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Our office has responsibility for managing the Department's depleted uranium hexafluoride inventories at the enrichment plant sites. More than 560,000 metric tons of this material are safely stored in about 47,000 steel cylinders at the sites in Paducah, Kentucky, Portsmouth, Ohio; and the K-25 site at Oak Ridge, Tennessee. The Department is evaluating alternative long-term management strategies for the material. Last December, we issued a preliminary Environmental Impact Statement for public comment, and we expect to issue a record of decision for disposition of the material early

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in fiscal year 1999. Since disposition could cost $4 billion to $8 billion, we have recently begun demonstration projects to significantly reduce future management costs and facilitate alternative uses for depleted uranium.

The preferred alternative in the draft programmatic EIS is to convert the entire inventory to an oxide or metal, or both, with minimal government funds. To reduce this potential liability, we have been working with industry to develop more cost-effective management technologies, as well as develop possible new uses for the fluorine and uranium. For example, the Department has entered into a cost-shared project with Allied Signal/General Atomics to build and operate a pilot conversion demonstration facility in Ilinois. This project is intended to demonstrate the feasibility of a patented process to convert the material to uranium oxide more efficiently, and produce pure hydrogen fluoride. To help offset conversion costs, the Department is also seeking to create the circumstances in which industry can develop uses for the conversion products. We would accomplish this by reducing the financial, regulatory, and institutional barriers that hinder developing such uses.

Maintaining safe storage in the interim requires constant work. The cylinders have been in storage for 3 to 45 years. To date, one cylinder yard has been reconstructed, two new cylinder yards have been constructed, and one cylinder yard is currently being constructed. A pilot cylinder painting program has been completed, and 12,000 cylinders are being painted over 3 years as a commitment to the Defense Nuclear Facilities Safety Board. We are also investigating the application of advanced technology to facilitate inspections, detect leaks, and evaluate cylinder wall condition. Resource constraints have slowed about one year in our schedule for restacking cylinders and reconstructing cylinder yards.

Since the Department shut down HEU production at Portsmouth in 1992, we have been removing the HEU residues and placing the facility in a safe shutdown condition. Progress on the removal of HEU has been substantial, and all HEU oxides not planned to be transferred to USEC will be removed from the site by the end of fiscal year 1998. Additionally, the International Atomic Energy Agency (LAEA) began a safeguards experiment at the Portsmouth Gaseous Diffusion Plant in December 1997. The objective of this experiment is for the IAEA to be able to verify that HEU is being blended to LEU at the Portsmouth site in support of the nation's nuclear nonproliferation goals.

More than 70 facilities at the enrichment plants were not leased by USEC and remain the responsibility of the Department. As landlord for the sites, we maintain these facilities and their associated permits and are completing environmental corrective actions. This office is also responsible for satisfying financial obligations associated with enrichment operations before the transition to USEC. Chief among these obligations is payment of post-retirement life and medical benefits to the Department's enrichment plant operating and power supply contractors and assisting in litigation involving claims against the Department for its prior operations.

In conclusion, I would like to once again stress the importance of maintaining the U.S. leadership role in nuclear energy, science, and technology at this critical turning point in achieving our security, economic, technological, and environmental goals. Thank you for your attention.

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William D. Magwood. IV has been the Associate Director for Planning and Analysis with the DOE Office of Nuclear Energy, Science and Technology since 1994. In that capacity, he is responsible to the Director for the management of the Office's primary policy activities, including the formulation of the Nuclear Energy budget and the planning of key program initiatives. He is responsible for nuclear energy R&D program development, the direction of Nuclear Energy's university and education programs, and all strategic planning and performance measurement activities. He has served as the Executive Director of the interagency HEU Oversight Committee. In addition, Mr. Magwood is the Office's principal interface with congressional staff, representatives of the nuclear and electric utility industries, public interest groups. national laboratories, other DOE offices, and other federal agencies.

Before joining the Department, Mr. Maguood managed utility research and nuclear policy
programs at the Edison Electric Institute and was a scientist at the Westinghouse Electric
Corporation. Mr. Magwood has degrees in both Physics and English from Carnegie-Mellon
University and holds a Master of Fine Arts from the University of Pittsburgh.

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