Todd Jacobson
NS&D Monitor
8/1/2014
AIKEN, S.C.—Lawmakers gathered at the Savannah River Site early this week voiced optimism about keeping construction going on the Mixed Oxide Fuel Fabrication Facility project in Fiscal Year 2015, but Energy Secretary Ernest Moniz said the future of the project remains unclear and is subject to sustained funding for the facility. Moniz and National Nuclear Security Administration chief Frank Klotz made their first visit to the Savannah River Site and MOX July 28, touring the site with Sens. Lindsey Graham (R-S.C.) and Tim Scott (R-S.C.), Rep. Joe Wilson (R-S.C.), and South Carolina Gov. Nikki Haley (R).
Of particular interest was the MOX project. Because of rising costs on the project, DOE said earlier this year that it planned to put the project in cold standby, though Congress has intervened, first blocking an attempt to stop construction in FY 2014 and then providing additional funding for construction of the facility in FY 2015. The House version of the FY 2015 Energy and Water Appropriations Act included $345 million for the project, while Senate appropriators have included $400 million to keep construction going. “There is money for MOX,” Graham said. “I think we’ve turned the corner on the debate about an alternative disposition strategy.” Scott added: “It won’t go to standby as far as we can tell.”
Moniz: ‘It’s Got to be Like a Two-Decade Sustained Funding’
While the funding Congress is looking to provide the project in FY 2015 is significantly more than the $221 million the Administration requested, Moniz noted that it would take a much more significant commitment to keep the project running efficiently. “The issue is whether there will be a sustainable and adequate … funding stream. There certainly has been some motion in both the House and the Senate in terms of the markup for FY ‘15,” Moniz said. “At this stage we are working with the delegation, others in Congress, in terms of understanding what the funding stream is and its adequacy. Not only in FY ’15, but it’s got to be like a two-decade sustained funding.”
Graham suggested that the tide had turned in MOX, pointing to the bipartisan support from appropriators and authorizers. “We’re not going to turn our back and move down a different path,” he said. “We’re going to complete the MOX program because the world demands it and our nation demands it and these two states, South Carolina and Georgia, demand it.” However, he said contractor Shaw AREVA MOX would be “pushed big time to deliver on time and back on budget,” though he offered no additional details about how that might happen. “Secretary Moniz’s concerns about cost overruns and a program that takes forever to complete are legitimate,” he said.
Lawmakers: CR Shouldn’t be Impediment to MOX
Graham and Scott said construction on the project should continue even if a Continuing Resolution is needed to fund the government in lieu of individual appropriations bills starting in FY 2015. Under the CR, the NNSA would be allowed to spend at FY 2014 funding levels, which provided $343.5 million for the project. “That funding should have embedded within it enough money to continue us moving forward, but the fact of the matter is … projects that take for infinity, however long that may be, to complete aren’t sustainable,” Scott said. “Therefore we need to have a trajectory forward for not just the budget cycle but for two decades that provides a clear path forward.”
While he was confident that the project had been rescued in the near-term, Graham said he feared for MOX and other Savannah River programs like efforts to close the site’s waste-filled tanks if sequestration cuts return in FY 2016. “My number one obligation to the people of South Carolina is to get sequestration replaced with more sensible budget cuts,” Graham said. “That’s going to take bipartisanship. If we’re not successful in fixing sequestration, every problem we’ve identified here today with the waste stream from the tanks and MOX becomes exponentially worse.”
DOE Beginning to Soften on MOX
The Obama Administration announced its decision to place the facility in cold standby as part of its FY 2015 budget request, citing the rising costs it would take to complete construct of the project and run the facility once it’s completed. At the same time, it said it would seek less expensive options to dispose of 34 metric tons of plutonium under an agreement with Russia and would continue to study alternatives to MOX. The decision came after the Department launched a study of plutonium disposition alternatives last year led by DOE senior advisor John MacWilliams that revealed that estimated construction costs for the facility had risen to $10 billion, up from a previous estimate of $7.7 billion and an earlier baseline of $4.86 billion.
Last week, for the first time, the Department began to publicly soften its stance. Liz Sherwood-Randall, the White House’s arms control czar and nominee to be the Deputy Energy Secretary, called MOX the Department’s “preferred solution” during her confirmation hearing before the Senate Energy and Natural Resources Committee and said that she would look to figure out a way to get the project funded.
Project Not Out of Woods Yet
This week, Moniz noted that the budget increases outlined in Congress this year were a positive sign for the project, but he stopped short of saying MOX was completely out of the woods. “The budgets were increased; we all know not increased to the level that would allow for efficient, sustained operation, but all with very clear—as was stated—statements from Congress about the desire to maintain construction,” he said. “If the budgets in the end don’t support that well then we’ll have to act accordingly, but right now, really the play is getting first the FY ‘15 budget resolved. … We need FY ‘15 and we need a trajectory that gives adequate funding in a sustained way for the project.”
Contractor Asked to Plan for Two Different Funding Scenarios
DOE in late June tasked contractor Shaw AREVA MOX Services with examining different funding profiles in FY 2015. In a June 28 letter to Shaw AREVA MOX Services, obtained by NS&D Monitor, Contracting Officer Robert Swett ordered the contractor to develop two execution plans, one to continue construction with a funding profile of $320 million for construction and $25 million for other project costs, and a second plan describing how the contractor would execute the project with $196 million and $25 million—the amount included in the President’s FY 2015 budget request.
The letter does not once mention “cold standby” within its three paragraphs. “MOX Services should incorporate lessons learned from the development and execution of the FY14 plan and develop an integrated, resource loaded FY15 plan that maximizes the funds towards completion of FY15 critical path activities,” Swett told the contractor.
