4.0 Results

This chapter summarizes the projected life-cycle costs for the Environmental Management Program based on plans and capabilities as of October 1995. The results in this chapter summarize information provided in Volumes II and III of the 1996 Baseline Report and provide several crosscutting analyses and perspectives.

THE BASELINE REPORT IS NOT A BUDGET DOCUMENT The Baseline Report is not intended to be a budget document and none of the estimates in the report are intended as federal budget requests. Similarly, the schedule of activities presented in the Baseline Report should not be interpreted as establishing specific long-term priorities or as serving as a definitive basis for planning specific projects.

The Base Case results reflect costs for the Environmental Management program based on assumptions described in Chapter 3. These results provide the foundation for many of the policy analyses and comparisons in the Baseline Report, particularly the analyses of alternatives in Chapter 6 .

This chapter includes five sections.

• Section 4.1 reports overall Base Case results, including an overview of life-cycle costs and schedules.
• Section 4.2 describes the Base Case estimate from a geographical perspective, including the distribution of life-cycle costs by state and site.
• Section 4.3 focuses on costs for the major functional elements (waste management; environmental restoration; nuclear material and facility stabilization; science and technology development; landlord; and national program planning and management).
• Section 4.4 analyzes the waste types and volumes that underlie the life-cycle cost estimate.
• Section 4.5 examines costs for support activities such as program management, administrative services, and security.

4.1.1 The Range of the Base Case

Based on the 1996 Base Case assumptions, the life-cycle cost to complete the Environmental Management program is projected to be between $189 billion and $265 billion, with a mid-range estimate of $227 billion. Life-cycle cost profiles are graphically depicted in Figure 4.1. All estimates are in constant 1996 dollars (see the box below).

The mid-range estimate - $227 billion - represents the sum of life-cycle costs for all site-specific activities and projects described in Volumes II and III of the Baseline Report. The upper range ($265 billion) and lower range ($189 billion) bound the mid-range estimate. Personnel at sites assigned one of three levels of confidence to their Base Case estimates (high, medium, or low). Then, a probabilistic analysis of these estimates was conducted to establish the range (see the "Confidence in Cost Estimates" box for more information).

CONSTANT VS. CURRENT DOLLARS Constant dollars represent a dollar value adjusted for changes in prices. Dollars in the future are adjusted by removing inflation. Unless otherwise noted, all 1996 Baseline Report cost projections are in constant 1996 dollars as if costs were incurred this year. Current dollars represent the dollar value of goods or services in terms of prices current at the time the goods or services are purchased (in other words, inflation is factored into the estimate).

A number of factors contribute to the uncertainty in the life-cycle estimate. The degree of project definition, the complexity of the project, and the application of new technology can significantly influence the confidence in the estimate. Other factors contributing to estimate uncertainty include errors in estimating unit costs and labor productivity, schedule delays, and even simple errors in arithmetic. Several of these factors, such as productivity and the use of new technologies, are discussed later in this chapter.

CONFIDENCE IN THE COST ESTIMATES Cost estimators in the field assigned one of three levels of confidence to their Base Case project estimates: low, medium, and high. A low confidence rating means that the estimate could range from 100 percent higher to 100 percent lower than the Base Case estimate. A medium confidence rating indicates that the estimate could be 50 percent higher to 50 percent lower. A high confidence rating denotes a range of 25 percent higher to 25 percent lower. Percentages of the estimates that fall into each category are displayed below. Using these distributions, a statistical simulation was conducted to develop the uncertainty range in the life-cycle estimate. (Appendix C provides a more detailed discussion of this approach). Level of Confidence and Basis of Life-Cycle Estimate (Dollar Weighted) In addition to confidence levels, cost estimators reported the method (basis) upon which they developed their estimates. The basis of each site's estimates was reported as one of the following categories: based on best professional judgement, based on historical information or past experience, modeled, or based on unit costs. Percentages of the estimates that fall into each of these categories are displayed above. In general, there is a correlation between the confidence sites have in their estimates and the use of detailed or sophisticated cost estimating models.

The mid-range estimate of $227 billion is the projected cost for carrying out the currently planned tasks, including existing compliance agreement obligations (as of October 1995), for the active sites within the scope of the Environmental Management program. This case is used as the basis for analysis in this chapter and the basis for comparison of the alternative cases in Chapter 6. The mid-range case is referred to throughout this report as the "Base Case" estimate.

4.1.2 Productivity

For any long-range program, the amount by which the program improves productivity will have a significant effect on life-cycle cost. For example, if productivity, defined as the ratio of outputs-to-inputs, increases at an annual rate of one percent, the program will be approximately 50 percent more productive in 2040 than it was in 2000. Larger productivity improvement rates have even more dramatic effects over a longer time horizon. Therefore, any program that has an extended timeframe should be concerned about productivity improvement and should ask the question: How will productivity influence the long-term costs of the program? The Environmental Management program is such a program.

For this reason, the Environmental Management program asked site personnel to include an estimate of projected productivity savings in their life-cycle cost estimates. The site-derived productivity savings, which were approximately five to ten percent across the Environmental Management program, were included in the site estimates. Almost all of these productivity improvements are expected before 2000. These productivity improvement initiatives include performance-based contracting, re-engineering of operational processes, privatization, reducing overhead activities, streamlining site characterization processes, and introducing cost-efficient technologies.

Two additional productivity estimates were derived from the Base Case based on different assumptions regarding productivity improvement. For the purposes of this report, a long-term productivity goal of one percent after 2000 was established. The one percent assumption reflects the average productivity savings historically achieved by government agencies. The highest cost case assumes that productivity will not increase over current levels. That is, projected site productivity savings estimates were removed from the life-cycle estimates.

Based on these three productivity cases, the life-cycle cost for the program ranges from $195 billion to $241 billion. Figure 4.2 presents these three cases, depicting three different productivity-based life-cycle cost profiles for the Environmental Management program.

Site-based productivity estimates produce a total life-cycle cost reduction of $14 billion, resulting in a total life-cycle cost for the program of $227 billion. This case is used as the base estimate for the confidence level range (discussed in Section 4.1.1).

It is also the basis for the results in the remainder of this chapter. With no productivity savings, completion of the Environmental Management program is estimated to cost $241 billion--$14 billion higher than the Base Case and $46 billion higher than the lowest case (reflecting one percent productivity savings beyond 2000). In the 1995 Baseline Report, productivity assumptions were incorporated in the Base Case estimate. These assumptions projected a potential short-term productivity goal of 23 percent by the year 2000 and a long-term goal of one percent productivity savings after 2000. This assumption decreased the total 1995 life-cycle cost from approximately $350 billion ($360 billion in constant 1996 dollars) to $230 billion ($237 billion in constant 1996 dollars). The 1995 approach, which is explained in Section 5.3, differs from the 1996 approach described above.

4.1.3 Reconciling the Base Case Cost Estimate with Budget Projections

The Base Case is not a budget estimate. In fact, with cost projections expected to exceed budget availability and priorities continuing to be defined, a clear articulation of the current baseline projection is useful. The projected budget target (as of October 1995), based on larger federal budget realities, is that funding for the Environmental Management program will be funded at approximately $5.5 billion in annual funding (in current dollars) by 2000. After accounting for expected inflation, this number equates to $4.9 billion in constant 1996 dollars. The difference between the assumed funding for the Base Case estimate and the funding target results in a projected budget shortfall. Figure 4.3 indicates that this shortfall amounts to $27 billion over a 25-year period.

This budget shortfall has been anticipated since 1993. During this period, the Department has successfully reconciled this shortfall through a number of management initiatives intended to deliver more results for less money. Specific priorities for the Environmental Management program include:

From 1993-1996

• Improved Contractor Efficiency - Reduced contractor employment by 17,000 individuals or 33 percent; initiated performance-based contracting systems at most of the large sites in the complex.
• Renegotiated Compliance Agreements - To date, renegotiated agreements have resulted in more than $1 billion in potential savings for the Hanford Site and Savannah River Site.
• Involved Stakeholders and Workers - At Fernald, Ohio, recommendations from the Citizen Task Force on disposal options and future land use at the site are expected to result in over $2 billion in savings.

From 1997-2000

• Privatizing Operations - Improving public sector efficiency with more private sector incentives.
• Conducting Management 'Work Outs' - Department of Energy, contractors, and regulators come together to develop common sense reforms.
• Investing in Science - Bridging basic science and applied research needs on our most intractable environmental problems.

We believe that these efforts will greatly assist in reconciling estimated Base Case costs to budget realities. Additional changes such as legislative amendments to Superfund will also contribute to helping the program operate more cost effectively. Clearly, however, it is critical to good management to anticipate budget problems through effective life-cycle analysis.

4.1.4 A Look at the Life-Cycle Base Case

The life-cycle activities for the Base Case will cost $227 billion and span a 75-year period (1996 to 2070), although most sites will be completed considerably sooner. By 2070, all environmental management sites requiring remediation will be completed (i.e., only long-term surveillance and monitoring activities and ongoing waste management activities at active sites will remain). Figure 4.4 presents the Base Case schedule for the completion of environmental remediation and decommissioning activities at the sites. As noted in Section 3.3.2, 102 sites require remediation. This figure illustrates that 80 percent of these sites will be remediated by 2021.

Annual costs at the program's completion in the year 2070 do not reach zero because of 'post-closure' expenditures, referred to as post-closure long-term surveillance and monitoring activities. These activities focus on sampling, analyzing monitoring well data, maintaining protective covering or barriers, and providing for active institutional controls at near-surface and deep geologic disposal sites where long-lived radioactive wastes were left in place. Preliminary estimates indicate these long-term costs would range from $45-$65 million annually for several decades.

 

The distribution of estimated Environmental Management program costs for major functional elements changes as the program (and the cleanup effort) moves closer to completion (see Figure 4.5). Given these estimates, the mix of activities comprising the Environmental Management program will change significantly over time. In the near term, the program is focusing on stabilizing nuclear materials and facilities. In 2000, for example, nuclear material and facility stabilization activities represent approximately 18 percent of the estimated site costs for waste management, environmental restoration, and nuclear material and facility stabilization. By 2020, these activities drop to six percent and by 2040 they are less than one percent of estimated cost because these activities are essentially complete. Also, during the next 40 years, the majority of environmental restoration activities are expected to be completed. Although environmental restoration costs as a percent of total costs actually increase from 2000 to 2020 when many large facilities are scheduled for decommissioning, they shrink to less than six percent of total estimated program costs by 2060. By this point, the environmental cleanup is essentially complete and all waste currently in inventory and generated by the Environmental Management program will have been disposed. By 2060, the primary responsibility of the program is expected to be managing waste generated by other Department of Energy programs (for example, the Energy Research Program and Defense Programs).

At the program "end state" (in 2070), all mission-related activities are expected to be completed and most sites are available for alternative land uses. The expectation is that buildings are decommissioned, waste planned for offsite disposal is treated and will have been shipped to a permanent disposal site or commercial facility, and waste being disposed of onsite is capped in pits or trenches or securely enclosed in disposal cells. In 2070, Environmental Management program activities are focused on long-term surveillance and monitoring and waste management for Department of Energy programs still active at the sites. In other words, sites with ongoing missions outside of the Environmental Management program (for example, National Laboratories) will continue to incur ongoing waste management costs.

Many sites complete their Environmental Management mission-related activities before 2070. A closer examination of the estimated life-cycle cost profile in Figure 4.1 reveals a downward trend in annual costs. The estimate after 2050 is relatively level. Ninety percent of the total life-cycle cost is expected to be incurred by 2037 (see box).

A 75-YEAR LIFE-CYCLE PROGRAM? While the life-cycle data indicate that Environmental Management mission-related activities are complete at all sites by 2070, many of the sites complete a substantial amount of work long before 2070. For example, 90 percent of the projected life-cycle costs for environmental management activities occurs by 2037. After this date, most of the costs are for managing wastes from on-going mission activities and for long-term surveillance and monitoring of remediated sites. These costs would extend far into the future, but are assumed to be complete in 2070 for the Baseline Report.

Despite the general downward cost trend described above, estimated costs suddenly increase or decrease for brief periods at several points. These upswings and downswings appear as anomalies to the overall trend, but reflect the progression of the program. For example, in 2020, completion of remediation and decommissioning activities at the Energy Technology Engineering Center, Fernald, Los Alamos National Laboratory, and Sandia National Laboratory-New Mexico contribute to a drop in estimated environmental restoration costs of more than $300 million. At the same time, treatment of high-level waste decreases (primarily at the Hanford Site), resulting in an additional cost decrease of almost $200 million. In 2025, a sudden increase in estimated cost occurs. It results from an upswing in high-level waste disposal costs following vitrification activities at the Savannah River Site. Estimated costs for high-level waste disposal are $200 million higher in 2025 than in 2024 and remain at the higher level until 2035 when high-level waste disposal costs increase again by an additional $400 million per year because of the expected beginning of shipments of vitrified high-level waste from the Hanford Site to a geologic repository for disposal.

PROJECTED LIFE-CYCLE COSTS BY CONGRESSIONAL APPROPRIATION The Congressional Appropriations Subcommittee on Energy and Water appropriates funds for the Environmental Management program. These discretionary appropriations are divided into two accounts: defense and nondefense. Environmental Management defense funding represents $207 billion (or 91 percent) of total costs. Environmental management activities with a past defense mission (such as producing plutonium for nuclear warheads in production reactors at Savannah River Site) are appropriated under the defense account. On a life-cycle basis, nondefense activities represent $19 billion (or 9 percent) of the total projected life-cycle program cost. Environmental management activities with a former nondefense mission (such as the Fast Flux Test Facility at Hanford Site in Washington) are funded through nondefense appropriations.

4.2 A GEOGRAPHICAL VIEW OF THE ENVIRONMENTAL MANAGEMENT PROGRAM

The Department's Environmental Management program currently is operating in approximately 30 states and territories. By 2020, this number is expected to drop to 21 states. (See Figure 4.6 for the estimated annual spending level for environmental management activities in each state and a depiction of cleanup progress over time.) In 2060, the total is expected to drop to 15 states, with almost all of the costs for long-term surveillance and monitoring and management of waste generated by programs with ongoing missions. Remediation is complete at all these sites by 2070.

Table 4.1 shows the Base Case cost estimate by state and site. These estimates reveal that the majority of costs will be spent at a small number of states and sites. Approximately three-quarters of the program's costs are concentrated in six states (Washington, Idaho, South Carolina, Tennessee, New Mexico, and Colorado), primarily at the five highest-cost sites (Hanford Site, Idaho National Engineering Laboratory, Oak Ridge Reservation, Rocky Flats Environmental Technology Site, and Savannah River Site). For the purposes of this report, a site with life-cycle costs greater than $15 billion is defined as a high-cost site. Historically, the five highest-cost sites played the largest roles in nuclear weapons production and, therefore, require the largest amount of cleanup and waste management (see Table 4.2). Because these sites represent such a large portion of the program, the analysis of alternatives in Chapter 6 focuses solely on them.

Activities in two states, Washington (Hanford Site) and South Carolina (Savannah River Site), dominate the life-cycle cost estimates. They account for approximately $100 billion (or 44 percent) of projected life-cycle costs. The concentration of costs at the Hanford and Savannah River sites is particularly evident in Figure 4.7, which presents the total life-cycle cost by site and major crosscutting functions. In this figure, the highest-cost sites and crosscutting functions are presented separately while the smaller sites are grouped into an "Other Sites" category.

The expected end dates for the five highest-cost environmental management sites are listed in Table 4.3. Surveillance and monitoring activities will continue beyond these dates. All sites will be complete by 2070. These dates are expected to change based on variables such as project resequencing, program acceleration or delay (for example, to reduce long-term overhead costs or to wait for new technologies), regulatory changes, or significant budget reductions. However, these milestones are useful starting points for analyzing time lines, priorities, and the potential for program acceleration. (See the scheduling alternative case analysis in Chapter 6 .)

Many of the other sites will be completed much sooner. Remediation is already under way at most Environmental Management sites. As described earlier, 80 percent of sites requiring remediation will be completely remediated by 2021. Only surveillance and monitoring and waste management at sites for programs with research or production missions remain after that point.

Table 4.1. Base Case Estimate by State and Site

Site	Base Case Life-Cycle Estimate (Constant 1996 $ in Millions)	Percentage of Total Base Case Life-Cycle Estimate
Alaska	6	<1%
Amchitka Island	6	<.01%
Arizona	212	<1%
Monument Valley	113	0.05%
Tuba City	99	0.04%
California	4,574	2.02%
Lawrence Livermore National Laboratory	2,408	1.06%
Oakland Operations Office	948	0.42%
Lawrence Berkeley Laboratory	533	0.23%
Energy Technology Engineering Center	351	0.15%
Stanford Linear Accelerator Center	161	0.07%
Sandia National Laboratories - Livermore	105	0.05%
General Electric Vallecitos Nuclear Center	23	0.01%
Laboratory for Energy-Related Health Research	22	0.01%
General Atomics	17	0.01%
Geothermal Test Facility	5	<.01%
Oxnard Facility	<1	<.01%
Colorado	18,203	8.02%
Rocky Flats Environmental Technology Site	17,319	7.63%
Grand Junction Projects Office	662	0.29%
Grand Junction	73	0.03%
Naturita Site	43	0.02%
Slick Rock	33	0.01%
Maybell Mill Site	22	0.01%
Rifle Sites	20	0.01%
Durango	12	8.02%
Gunnison Mill Site	12	0.01%
Rio Blanco/Rulison	7	<.01%
Connecticut	22	<1%
CE	22	0.01%
Florida	437	<1%
Pinellas Plant	437	0.19%
Idaho	18,980	8.36%
Idaho National Engineering Laboratory	18,622	8.21%
Argonne National Laboratory - West	357	0.16%
Lowman	<1	<.01%
Illinois	1,427	<1%
Argonne National Laboratory - East	847	0.37%
Chicago Operations Office	406	0.18%
Fermi National Accelerator Laboratory	165	0.07%
Site A/Plot M, Palos Forest Preservation	6	<.01%
Madison	2	<.01%
Iowa	26	8.04%
Ames	26	0.01%
Kentucky	4,857	2.14%
Paducah Gaseous Diffusion Plant	4,831	2.13%
Maxey Flats Disposal Site	26	0.01%
Maryland/District of Columbia	18,240	8.04%
Environmental Management Program Headquarters	18,218	8.03%
W.R. Grace & Company	22	0.01%
Massachusetts	13	<1%
Ventron	12	0.01%
Shpack Landfill/Ventron	<1	<.01%
Mississippi	8	<1%
Salmon Test Site	8	<.01%
Missouri	1,578	<1%
Weldon Spring Site Remedial Action Project	448	0.20%
Kansas City Plant	447	0.20%
St. Louis Downtown Site	266	0.12%
St. Louis Airport Site	244	0.11%
St. Louis Airport Site Vicinity Properties	97	0.04%
Latty Avenue Properties	76	0.03%
Nebraska	1	<1%
Hallam Nuclear Power Facility	1	<.01%
Nevada	3,652	1.61%
Nevada Test Site	3,644	1.61%
Central Nevada Test Area and Project Shoal Site	8	<.01%
New Jersey	713	<1%
Princeton Plasma Physics Lab	321	0.14%
Maywood Chemical Works	255	0.11%
Wayne Interim Storage Site	99	0.04%
Middlesex Sampling Plant	25	0.01%
DuPont & Company	8	<.01%
New Brunswick Site	6	<.01%
New Mexico	14,942	6.58%
Waste Isolation Pilot Project	8,391	3.70%
Los Alamos National Laboratory	4,081	1.80%
Sandia National Laboratories - Albuquerque	1,591	0.70%
Albuquerque Operations Office	802	0.35%
Inhalation Toxicology Research Institute	42	0.02%
Project Gasbuggy	15	0.01%
South Valley Site	12	0.01%
Shiprock	8	<.01%
Ambrosia Lake	1	<.01%
New York	4,927	2.17%
West Valley Demonstration Project	3,744	1.65%
Brookhaven National Laboratory	867	0.38%
Separations Process Research Unit	145	0.06%
Colonie Site	52	0.02%
Niagara Falls Storage Site	33	0.01%
Seaway Industrial Park	28	0.01%
Linde Air Products	28	0.01%
Ashland Oil #1	21	0.01%
Ashland Oil #2	8	<.01%
Bliss and Laughlin Steel	1	<.01%
North Dakota	24	<1%
Belfield	19	0.01%
Bowman	5	<.01%
Ohio	9,158	4.04%
Portsmouth Gaseous Diffusion Plant	3,960	1.74%
Fernald Environmental Management Project	3,017	1.33%
Mound Plant	1,357	0.60%
Ohio Operations Office	428	0.19%
Reactive Metals, Inc. (RMI Titanium Co.)	141	0.08%
Battelle - Columbus Laboratories	101	0.04%
Painesville	88	0.04%
Luckey	63	0.03%
B&T Metals	3	<.01%
Baker Brothers	<1	<.01%
Piqua Nuclear Power Facility	<1	<.01%
Oregon	6	<1%
Lakeview	6	<.01%
Pennsylvania	3	<1%
Canonsburg	3	<.01%
South Carolina	48,769	21.49%
Savannah River Site	48,769	21.49%
Tennessee	25,137	11.06%
Oak Ridge National Laboratory	9,352	4.12%
Oak Ridge K-25 Site	7,286	3.21%
Oak Ridge Y-12 Plant	6,168	2.72%
Oak Ridge Operations Office	2,038	0.90%
Oak Ridge Reservation Off-Site	267	0.12%
TeOak Ridge Associated Universities	26	0.01%
Texas	689	<1%
Pantex Plant	683	0.30%
Falls City	6	<.01%
Utah	129	<1%
Monticello Mill Site & Vicinity	110	0.05%
Green River	8	<.01%
Salt Lake City	7	<.01%
Mexican Hat	3	<.01%
Washington	50,208	22.12%
Hanford Site	50,208	22.12%
Wyoming	11	<1%
Riverton	10	<.01%
Spook	1	<.01%
TOTAL	226,950	100.00%

Table 4.2. Historical Mission of the Five Highest-Cost Sites Drives Environmental Management Costs

Site	Total Life-Cycle Cost	Historical Mission / Environmental Management Functions
Hanford Site 145,000 Hectares (358,500 Acres)	$50.2 billion	Uranium fuel fabrication and irradiation High-level waste management
Idaho National Engineering Laboratory 230,000 Hectares (570,000 Acres)	$18.6 billion	Reprocessing of spent nuclear fuel High-level waste management
Oak Ridge Reservation 14,140 Hectares (35,000 Acres)	$25.1 billion	Uranium enrichment / energy research Weapons component production Remediation activities
Rocky Flats Environmental Technology Site 2,510 Hectares (6,216 Acres)	$17.3 billion	Plutonium weapons trigger fabrication Stabilization of nuclear materials and facilities
Savannah River Site 80,000 Hectares (198,000 Acres)	$48.8 billion	Uranium fuel fabrication and irradiation High-level waste management

Table 4.3. Estimated End Dates for the Five Highest-Cost Sites

Site	Projected Completion Date*	Life-Cycle Estimate 90% of Cost
Hanford Site	2052	2039
Idaho National Engineering Laboratory	2045	2035
Oak Ridge Reservation	2045	2044
Rocky Flats Environmental Technology Site	2055	2034
Savannah River Site	2040	2031

Figure 4.8 focuses only on the highest-cost sites, providing total site cost estimates broken out by the functional elements of the Environmental Management program. At the Hanford Site, Idaho National Engineering Laboratory, and Savannah River Site, waste management consumes the largest portion of estimated program costs. At the Oak Ridge Reservation, environmental restoration activities are the highest proportion of estimated cost. At the Rocky Flats Environmental Technology Site, nuclear material and facility stabilization activities represent the largest proportion of estimated cost.

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