During World War II and the Cold War, the United States developed a massive industrial complex to research, produce, and test nuclear weapons. This nuclear weapons complex included nuclear reactors, chemical processing buildings, metal machining plants, laboratories, and maintenance facilities that manufactured tens of thousands of nuclear warheads, and conducted more than one thousand nuclear explosion tests.

Weapons production stopped in the late 1980s, initially to correct widespread environmental and safety problems, and was later ended indefinitely because of the end of the Cold War. The work remaining, and the subject of this analysis, is the legacy of thousands of contaminated areas and buildings, and large volumes of "backlog" waste and special nuclear materials requiring treatment, stabilization, and disposal. Approximately one-half million cubic meters of radioactive high-level, mixed, and low-level waste must be stabilized, safeguarded, and dispositioned, including a quantity of plutonium sufficient to fabricate thousands of nuclear weapons.

In 1989, the Department of Energy established the Environmental Restoration and Waste Management program, now called the Environmental Management program, to consolidate ongoing activities and accelerate efforts to deal with the inactive production facilities and sites and the accumulated waste, contamination, and materials. Six years later, this program is responsible for the maintenance and stabilization as well as the environmental restoration and waste management work at virtually the entire nuclear weapons complex not being used for continued weapons activities. The Environmental Management program is one of the largest environmental stewardship programs in the world, with 150 sites in over 30 states and Puerto Rico.

The 1996 Baseline Environmental Management Report provides a total life-cycle cost estimate and anticipated schedule of the projects and activities necessary to carry out the Environmental Management program's missions for environmental remediation, waste management, science and technology development, the transition of operational facilities to safe shutdown status, and the safeguarding and securing of special nuclear materials.

This report is prepared as an analytical tool to help guide departmental decisions and to provide an accounting of the Department's progress, spending, and plans. In addition, federal law requires the Secretary of Energy to regularly submit Baseline Environmental Management Reports. The 1996 Baseline Environmental Management Report (Baseline Report) is the second of these reports. In addition, the report serves as a benchmark ­ or starting point ­ in the development of new "Ten -Year Plans" that are being prepared to define new, near-term cleanup objectives and greatly accelerate the pace and reduce the costs of cleanup over current plans.

The first report, prepared in 1995, estimated that the total cost of the Environmental Management program's mission would be between $200 and $350 billion over a 75-year period. Significant decisions made over the past 12 months have changed the projected scope of the Environmental Management program as presented in the 1995 report. The 1996 Baseline Report highlights these changes, both at the site and national levels. These changes have resulted in a lower total program estimate, which now is between $189 and $265 billion over a 75-year period. Guided by a new ten-year planning process, we are confident that we can further reduce the costs and accelerate the pace of cleanup through better coordination between sites, use of "breakthrough management" and use of new technologies.

The 1996 Baseline Report is based on current (as of late 1995) national and site-level assumptions regarding the actions or activities that are most likely to occur in the future, and it estimates the costs of these actions or activities. It is expected that these projected activities will change in the future. In fact, one of the principal purposes of this report is to inform a national debate on what the best future course should be.

The Environmental Legacy: Causes and Remedies

The Environmental Management program was established to address the environmental legacy of nuclear weapons production and other sources of waste or contamination such as nuclear research programs. The program encompasses remediation of the environment and facilities that have been contaminated with radioactive materials and hazardous chemicals. The program uses safe and practical strategies to deal with a variety of radio active and hazardous waste. It also entails deactivating and safekeeping hundreds of facilities that have no similar counterparts in any other government or commercial industrial facilities. Finally, the Environmental Management program accomplishes the stabilization and safe storage of special nuclear materials such as plutonium and highly enriched uranium and the management and storage of spent nuclear fuel. In addition to the legacy mission, the Environmental Management program manages waste produced by ongoing Department missions. (e.g., national laboratories).

The Environmental Management Program encompasses six major functional areas: (1) environmental restoration; (2) waste management; (3) nuclear material and facility stabilization; (4) science and technology development; (5) landlord; and (6) national program planning and management. Figure 1 depicts the scope of the Environmental Management program and the key interrelationships of the six major areas.

Figure 1. The Scope of the Environmental Management Program

Primary among these is waste management, which involves safe treatment, storage, and disposal of existing waste and waste yet to be generated. Environmental restoration activities address remediation of contaminated soil and water as well as decommissioning of contaminated surplus facilities. Nuclear material and facility stabilization involves stabilizing and consolidating special nuclear materials such as plutonium and highly enriched uranium and deactivating surplus facilities to a safe, low-maintenance condition while awaiting final decommissioning. Science and technology development includes a variety of basic and applied research activities that explore more effective and less expensive remedies to address the environmental and safety problems of the Environmental Management program. Landlord functions represent crosscutting, site-wide activities such as road maintenance and fire and ambulance services necessary to keep communication, transportation, and security systems operational at large facilities. National program planning and management encompasses Headquarters functions.

What is the Base Case?

The Environmental Management Base Case is a long-range projection of activities, schedules, and associated costs that fully describes the Environmental Management program, as currently projected, from its current state to completion (see "Why Life-Cycle Estimates" ) based upon compliance with current laws, regulations, and agreements. The Base Case looks to the future, but does so only with the knowledge, information, and assumptions that are available today. Because these inputs are rapidly changing, the 1996 Base Case is essentially a snapshot in time of a dynamic and complex program. The Base Case is not a budget estimate or a program funding request. Nor is it intended to provide details of specific projects.

The information in the Base Case falls into four categories: (1) descriptions of Environmental Management activities; (2) estimates of the annual cost of each Environmental Management activity; (3) estimates of the annual waste volumes generated by each activity; and, (4) initial schedule estimates for each activity, including starting dates and duration. "Activities" are specific sets of actions taken to disposition special nuclear material or contaminated facilities, remediate contaminated areas, manage waste, maintain federal lands and facilities, and manage the programs individually and collectively in an integrated manner.

Limitations of a Life-Cycle Cost Estimate

Projecting future activities and costs is always fraught with uncertainty. This uncertainty is compounded when projecting the path of an unprecedented program such as stabilizing and remediating the facilities and residues of the nuclear weapons complex. Activities such as these are expected to last decades. They will be affected by unpredictable factors, such as the development of new technologies and laws, and are extremely controversial. Nonetheless, these are also some of the reasons why good program management and good public policy require that such an estimate be compiled. The following is a list of specific limitations of the life-cycle Base Case for the Environmental Management program :

• The program has a large unknown scope for which the nature and extent of existing problems have not been adequately characterized and an expected remedy has not been defined.
• The program faces challenges resulting from the production of unique radioactive materials. The program must, therefore, develop new approaches and technologies to address unique environmental cleanup problems.
• The program is responsible for environmental management problems for which there are no current effective remedies and no effective remedies on the horizon (defined as "infeasible"). Some are infeasible for technological reasons (no available technology); others are infeasible because addressing them will result in unacceptable levels of ecological damage. (The Base Case does not include the costs for undertaking infeasible projects. However, costs for surveillance and monitoring of these problems are included.)
• The estimate must project how long short-term interim measures will be used to address problems for which no long-term solutions are available.

The Base Case estimates must also address uncertainties that stem from legal and institutional issues. Department of Energy policy requires management of its facilities in compliance with applicable federal, state, and local regulations. Many of these laws, including the Comprehensive Environmental Response, Compensation, and Liability Act, the Clean Water Act, and the Clean Air Act, have been targeted by Congress for reauthorization. Changes to these laws will likely affect the Environmental Management program, although the timing, substance, and extent of the changes are unclear.

Site-specific cleanup and compliance agreements, developed with the U.S. Environmental Protection Agency and states that host Department of Energy facilities, are a primary means for the Department to implement the provisions of federal, state, and local regulations. However, because regulators make final decisions about the choice of remedial action and the satisfactory completion of each action, the decisionmaking process adds complexity and uncertainty to the Department's planning processes. In some cases, final agreements are not yet concluded. In other cases, agreements are signed, but subsequent information and events may require that these agreements be renegotiated.

In other instances, site objectives are not fully defined because the Department cannot define them alone. For example, decisions related to the future configuration of the nuclear weapons complex are dependent on international factors such as arms control treaties. These decisions may dramatically affect continued operations and associated environmental management costs at some installations.

Base Case Methodology

The Department used a five-step process to develop the cost and schedule estimates for the 1996 Baseline Report.

1. Define the study: Establish the scope, framework, and general assumptions for the estimates; seek input from stakeholders.
2. Gather and Assemble Data: Collect, verify, and document cost, waste volume, and schedule data.
3. Perform Site-and Complex-Wide Integration: Ensure that costs remain within assumed funding limits and that all waste transfers are accounted for.
4. Estimate Program Improvements: Evaluate the impacts of technology development, pollution prevention, and productivity improvements.
5. Develop Documentation: Prepare the 1996 report.

In developing the Base Case estimate, every effort was made to ensure that personnel at individual sites were fully involved with the data collection and analysis. The overall scope of the Base Case and the national assumptions underlying the estimates were consistent across the program, but each site developed its own, fully integrated, cost and schedule estimates using the most current data. Once these estimates were complete, the Department conducted a complex-wide integration process to ensure that the interdependencies across sites (for example, waste transfers) were fully understood. Volumes II and III of this report present the Base Case for each site.

The Department maintained an active stakeholder involvement process throughout the development of this report. Particular objectives were to ensure public input to the overall scope and framework for the 1996 estimate and the site-specific assumptions and estimating methods. Stakeholder input was also sought to ensure that the Base Case assumptions were consistent with other Departmental initiatives (for example, future land use planning).

Base Case Assumptions

A variety of factors significantly affects the estimated scope, schedule, and total cost of the Environmental Management program. Site personnel developed detailed, site-specific assumptions for each factor to estimate costs. Site-specific assumptions are described in Volumes II and III of the 1996 Baseline Report. Table 1 lists the major assumptions from which the Base Case was developed. The Base Case assumptions reflect program plans and conditions as of October 1995. Any changes since that time are not necessarily reflected in this report.

Environmental Activities Generally Excluded from the Base Case

Although the 1996 Base Case addresses a large number of activities required to clean up and manage newly generated and legacy waste associated with the nuclear weapons complex, there are several exclusions from the 1996 Base Case cost estimate. These exclusions are:

• Cost estimates for remediation activities that are either not technically possible or not planned. Examples of these activities are further described in Table 2.
• Cost estimates for sites and/or facilities with ongoing missions (i.e., Defense Programs, Nuclear Energy, Energy Research). These exclusions include stabilization, deactivation, and decommissioning of facilities and treatment, storage, and disposal of chemical and radioactive substances associated with ongoing mission activities.
• Cost estimates for annual, long-term, post -closure surveillance and monitoring.
• Costs for the first six years of the Environmental Management program ($28.5 billion).
• Cost estimates for potential liabilities due to natural resources damages claims.
• Cost estimates for disposition of special nuclear materials (e.g., plutonium) or other materials in inventory (e.g., depleted uranium or lithium).

Environmental Restoration Assumptions

Environmental restoration costs comprise approximately one-third of the current FY 1996 annual program costs. The Base Case for environmental restoration encompasses environmental remediation or containment activities at nearly all 150 sites included in this Baseline Report. The report addresses 10,500 potential release sites that have been grouped into 295 geographically based units.

Virtually all of the 10,500 potential release sites have been at least partially characterized. Approximately 46 percent have been fully characterized. However, final remedial action and/or regulatory decisions have been made for substantially fewer sites. For this reason, the environmental restoration cost estimate is based largely on two site-specific assumptions: program scope (that is, the amount and type of contamination); and the remediation technologies that will be selected. Table 3 describes the general Base Case Environmental Restoration assumptions for remedial actions and decommissioning.

Waste Management Assumptions

The Base Case estimate for waste management includes costs for: (1) existing inventories of waste, (2) waste streams from environmental restoration activities, (3) waste streams from nuclear material and facility stabilization activities, (4) additional waste generated by waste management activities, and (5) newly generated waste from non-Environmental Management sources. Activities for waste management are defined as treatment, storage (and handling), and disposal of waste. Waste management also includes treatment, storage, and disposal of spent nuclear fuel, which the Department does not consider a waste.

Table 4 highlights the Base Case treatment, storage, and disposal assumptions detailed by waste type

Table 5 provides these assumptions for spent nuclear fuel.

Nuclear Material and Facility Stabilization Assumptions

The Base Case estimates for nuclear materials and facility stabilization activities are based upon a defined "universe" of materials and facilities that have been, or will be, declared surplus by the Department. The Base Case development process involved validating a list of facilities scheduled to undergo stabilization and deactivation in the 1995 Baseline Report. This list was based on the Surplus Facility Inventory and Assessment Project conducted in 1994. The assessment identified those facilities that are declared surplus now or expected to be surplus prior to October 1998.

Other facilities are still operating and currently have no scheduled date for shutdown or transfer. These facilities are considered outside the program's planning horizon and are not reflected in the 1996 Base Case. Typically these facilities are associated with ongoing nuclear weapons activities.

Nuclear material and facility stabilization activities include material stabilization, facility deactivation, and surveillance and maintenance. Stabilization entails placing nuclear materials into a condition suitable for long-term storage. In some instances, Base Case stabilization costs include storage costs for nuclear material. For example, at the Rocky Flats Environmental Technology Site, storage costs constitute a significant portion of the stabilization estimate. Deactivation, which usually occurs after completion of stabilization, focuses on removal of material, shutting down facility systems, and removal or de-energizing equipment to reduce potential facility hazards.

Surveillance and maintenance activities encompass all actions required to ensure adequate material and facility requirements for safety and security. Surveillance and maintenance activities are assumed to continue during the stabilization and deactivation phases (as well as before and between these phases). The Base Case captures surveillance and maintenance costs that are incurred before and after stabilization and after deactivation activities. Post-deactivation surveillance and maintenance is assumed to continue for two years. After that, facilities are assumed to be decommissioned. These costs are included as part of environmental restoration activities.

The Base Case estimates were developed by personnel at four sites (Hanford Site, Idaho National Engineering Laboratory, Rocky Flats Environmental Technology Site, and Savannah River Site). Estimates for nuclear material and facility stabilization costs at other sites were generated by Headquarters personnel using parametric cost-estimating techniques and site-specific data.

In instances where parametric cost estimating techniques were used, the following hypothetical scheduling scenario was assumed (in this sequence): seven years of surveillance and maintenance after transfer of a facility to the Environmental Management program, three years of stabilization activities, three years of post-stabilization surveillance and maintenance, three years of deactivation activities, and two years of post-deactivation surveillance and maintenance.

Surplus facilities already in the Environmental Management program were scheduled according to this hypothetical scenario. Surplus facilities not yet in the program were assigned arbitrary transfer dates, typically selected to fit funding constraints assumed in the Base Case. Insufficient data was available to guide scheduling of these facilities according to risk or other priorities.

Science and Technology Development Assumptions

The Environmental Management program's science and technology development activities represent an aggressive national program of basic and applied research, development, demonstration, testing, and evaluation for innovative environmental cleanup solutions. The program seeks to develop technologies that facilitate compliance with applicable laws, regulations, and agreements; minimize generation of waste; and clean up Environmental Management sites in a manner that is safer, faster, and less expensive than baseline technologies. In many cases, the development of new technologies is critical for providing a method of significantly reducing long-term risks to the environment and improving worker/public safety within realistic financial constraints.

The major science and technology assumptions included in the Base Case are as follows:

• Current Base Case cost estimates for Environmental Management activities are based upon the use of existing technologies. This assumption allows one to calculate future savings resulting from the development of emerging technologies against this baseline.
• Funding for science and technology development is currently 6 percent of the Environmental Management Base Case and is assumed to remain at this level until the year 2030.

Landlord Assumptions

Landlord activities support the performance of direct mission activities. In developing landlord cost estimates, site personnel determined FY 1996 costs for landlord activities, then assessed how these levels might change over time as several factors change: maturity of the program, level of annual direct mission activities being performed, cleanup completeness, and other factors relevant to the site.

National Program Planning and Management Assumptions

Headquarters personnel used a simple model to estimate the costs for national program planning and management. As part of this process, independent cost estimates were developed for program direction and program management. Program direction costs include salaries, benefits, travel, and training for federal employees. For the purposes of this report, the Department assumed that program direction costs will remain a constant percentage of total cost over the life-cycle of the program. Hence, as program funding decreases over time, program direction will decrease proportionally. Program management costs fund contractors that support federal employees. The Department assumed that program management costs will also decrease as a percentage of total cost over time as the program matures and becomes better defined. These costs have already dropped 55 percent from FY 1994 to FY 1996.

Support Cost Assumptions

In addition to direct mission activities, the Environmental Management program, like private firms and other public agencies, also must perform "support" activities. These activities fall into six main categories:

• Management;
• Finance and Administrative Services;
• Environment, Safety, and Health;
• Infrastructure;
• Safeguards and Security; and
• Stakeholder and Regulatory Interactions, and Other.

Support activities are not extraneous; they are vital to maintaining site safety and ensuring environmental cleanup progress. For example, it is necessary to conduct environment, safety, and health activities and to provide safeguards and security at all sites, particularly those storing uranium, plutonium, and other nuclear materials.

The benefits of support activities are shared across projects within a functional area. Therefore, the Baseline Report does not identify support costs as a separate category (except for cost estimating purposes). Rather, support costs in this report are spread across the direct mission activities within each appropriate functional area.

To develop support cost estimates, site personnel first developed a time profile for their direct mission activities. Then, based upon this profile, site personnel estimated the level of support activities that they would need on an annual basis and their costs. Specifically, site personnel determined FY 1996 costs for support activities, then assessed how these levels might change over time based on changes to several factors: maturity of the program, level of annual cleanup activity being performed, completeness of cleanup, and any other factors relevant to the site.

Results

The 1996 Base Case life-cycle cost estimate for completing the Environmental Management program is projected to be between $189 billion and $265 billion, with a mid-range estimate of $227 billion. All estimates are in constant 1996 dollars. The life-cycle cost profiles are graphically depicted in Figure 2.

Figure 2. Base Case Life-Cycle Cost Estimate

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) are estimated using a probabilistic analysis of each site's evaluation of levels of confidence in their Base Case estimates.

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), facility maintenance, and general operating requirements using available technology.

The life-cycle activities for the Base Case are estimated to span a 75-year period (1996 to 2070), although most sites will be completed considerably sooner. By 2070, all environmental management sites requiring remediation are assumed to be remediated; only post-closure long-term surveillance and monitoring activities and ongoing waste management activities at active sites will remain. Preliminary estimates indicate these long -term costs would range from $45-$65 million annually for several decades. Figure 3 shows the Base Case schedule for remediating sites.

Figure 3. Base Case Schedule for Remediating Sites

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, indicates that 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 indicates that this shortfall amounts to $27 billion over a 25-year period.

Figure 4. Long-Term Budget Shortfall

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 coming 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 continue to 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.

A Closer Look at the Base Case

At the program "end state" (in 2070), all mission-related activities have been completed and most sites have been made available for alternative land uses. 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 active Department of Energy programs. 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 life-cycle cost profile in Figure 3 reveals a relatively level estimate after 2050. In fact, 90 percent of the total life-cycle cost is expected to be expended by 2037.

The Base Case includes site-based productivity estimates that produce a total life-cycle cost reduction of $14 billion, resulting in a total life -cycle cost estimate of $227 billion. With no productivity savings, completion of the Environmental Management program is estimated to cost $241 billion.

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 5 for the estimated annual spending level for environ mental management activities in each state and a depiction of cleanup progress over time.)

Figure 5. Annual Estimated Cost by State

In 2060, this number drops to 15 states, with almost all of the expenditures for long-term surveillance and monitoring and management of waste generated by programs with ongoing missions. Significant findings include:

• Activities in two states, Washington (Hanford Site) and South Carolina (Savannah River Site), dominate the life-cycle cost estimate. They account for approximately $100 billion (or 44 percent) of projected life-cycle costs. Figure 6 shows life-cycle cost percentage by site.
• The expected end dates for the five highest -cost sites are as follows: Hanford Site (2070), Idaho National Engineering Laboratory (2045), Oak Ridge Reservation (2070), Rocky Flats Environmental Technology Site (2055), and Savannah River Site (2050). Surveillance and monitoring activities will continue beyond these dates. All sites will be complete by 2070.
• At Hanford, Idaho National Engineering Laboratory, and the Savannah River Site, waste management constitutes the largest portion of program costs.
• At the Oak Ridge Reservation, environmental restoration activities are the highest proportion of the total cost estimate; and at the Rocky Flats Environmental Technology Site, nuclear material and facility stabilization activities represent the largest percentage of total estimated cost.

Figure 6. Distribution of Environmental Management Life-Cycle Estimate

Base Case Results for Major Functional Elements of the Environmental Management Program

The program is divided into six major functional elements: waste management, environmental restoration, nuclear material and facility stabilization, science and technology development, landlord, and national program planning and management. Figure 7 shows the life-cycle cost estimate by major functional element.

Figure 7. Estimated Life-Cycle Cost by Major Functional Element

Table 6 lists the highest life-cycle cost projects in the Environmental Management program.