The CHAIRMAN. Now, you made reference in your summary to the fact that DOE has zeroed the budget for alternative disposal technologies in its fiscal year 1987 budget request. You referred to the subseabed proposal, in particular.

Section 222 of the Nuclear Waste Policy Act requires DOE to continue and accelerate a program of alternative disposal technologies. It doesn't identify one technology; it is multiple.

How can you justify termination of the program at this time? Mr. RUSCHE. Mr. Chairman, we cannot terminate the program at this time. What we have done in fiscal year 1986 is take steps under the presumption that our proposal for no funding in 1987 is accepted by the Congress. The steps that we are taking in 1986 are to put the program in the best possible mode to either proceed with the program or to accommodate the no further funding.

So, I would like to note that, although we have indicated we do not propose funding beyond 1987, that is not a unilateral choice that we can make. We fully recognize that it is your choice to make in that regard.

But it seems to me that as a prudent manager, if there is a prospect for discontinuing our participation, we should use the existing funds to put the program in the best possible shape to exercise which ever option occurs.

If we did not do that, I feel that we would find ourselves at the end of fiscal year 1986 with a large amount of data and incomplete work which we would end up having to essentially drop in midstream, if our proposal was accepted.

The CHAIRMAN. What you are suggesting is, you put it in good form, put in the library and on the shelves so somebody can look at it in the future. But if I understand you correctly, you are not representing that the research is completed or we know all we need to know.

Mr. RUSCHE. Absolutely. In fact, we have in our statement, and we say we think it merits research, but under the budget stringencies and priorities that we feel necessary to exercise, it is just not something that we can proceed with in the immediate future.

I would note, if I may by way of injection, that friends in the United Kingdom have likewise taken a course somewhat of the same sort. That is, to get the material together, analyze it, put it in form for continued work if and when they decide to proceed. The CHAIRMAN. Thank you. My time is up.

Senator Johnston.

Senator JOHNSTON. Thank you, Mr. Chairman. Mr. Rusche, you have referred to the geologic repository as a first priority and the MRS as the second priority. I would suggest to you that at the time the bill was passed, and throughout its legislative history, the two technologies have been referred to as parallel path. One is not prioritized over the other and I make that point because I don't want to MRS slipped.

It is quite true and quite clear that the repository is not to be abandoned in favor of the MRS, but at the same time, it is a parallel track-not that I find less enthusiasm on your part for MRS— but the statement of the second priority, I think, is inconsistent with the act.

Mr. RUSCHE. Could I offer just one comment, sir?

Senator JOHNSTON. Yes.

Mr. RUSCHE. We have tried to be very sensitive to the literal fact that it is not authorized and, therefore, did not feel comfortable in assigning presumptively a priority such as you suggest. I can assure you that if the Congress takes action to allow us to proceed with MRS, it will indeed be a parallel priority. In fact, in time, it will be the earlier action to come to completion.

Senator JOHNSTON. When should Congress take that action?

Mr. RUSCHE. A number of benefits that we think attach to MRS are dependent to some extent on getting the MRS in operation as early as we can. Licensing benefits, the ability to deal with the transportation situation more effectively, to accelerate the receipt rate and so forth.

A number of the features are not quite so dependent on timing, but I think the short answer is, as soon as the Congress can act, we think, would be the best course for the system to follow.

Senator JOHNSTON. So that when permitted, you will request authorization this year?

Mr. RUSCHE. Indeed we have, by virtue of the funding that we have requested and all of the conversation that we have had. The formal proposal stands ready the moment the court will allow us to act.

Senator JOHNSTON. Your request will then be in shape to have an authorization in the appropriation act, and that will be your request?

Mr. RUSCHE. Yes, sir. Indeed.

Senator JOHNSTON. Very good. Well, I am glad to hear that.
Mr. RUSCHE. We are ready to go.

Senator JOHNSTON. Excellent. The benefit package for Oak Ridge has not been-the so-called incentive package of things that will almost necessary to be done but have not been fully delineated and described-would not this be a good time to be doing that while we are waiting to fund construction of the MRS?

Mr. RUSCHE. Mr. Chairman, I believe under the terms of the injunction, we are enjoined from discussing with you and taking actions that depend on that specific site consideration. Therefore, we have honored that injunction.

I would note, however, in the proposal for funding for 1987, there is an allowance, I believe, of about $21 million out of that $46 million, which would be for such institutional and State-related purposes.

Senator JOHNSTON. For example, you are going to have to build the casks, manufacture them. They would be built in Oak Ridge, or at the site

Mr. RUSCHE. At whatever site.

Senator JOHNSTON. And you can identify that fairly well, as to size and cost and number of employees, and that sort of thing, can you not?

Mr. RUSCHE. We could indeed, but we do not have funding at the moment to be doing any of that work. If you will recall, last year, when I had some discussion with both you and Members of the House, we reached a formal agreement that we would refrain from taking anticipatory actions and, therefore, the amount of funding available in fiscal year 1986, which is about $3.5 million, is not suf

ficient to allow us to take any of those steps, absent further congressional action.

Senator JOHNSTON. What is the status of that lawsuit? I know it is on appeal.

Mr. RUSCHE. It is on appeal to the sixth circuit. We have filed our formal brief, and I believe the State is scheduled for next week to file its respondent brief, and then it is before the court.

Senator JOHNSTON. It seems a rather bizarre decision to say that the executive department cannot communicate with the Congress by sending up that which the law requires you to send up. Was this a one-judge court?

Mr. RUSCHE. I believe the decision was issued by the District Court of Eastern Tennessee, and it is that decision which is on appeal. I believe there is a three-judge panel in the circuit court which is hearing the appeal.

Senator JOHNSTON. HOW much would it cost to have a second repository?

Mr. RUSCHE. The estimate in the total life cycle cost estimate, which is our basis for making the total aggregated cost, is on the order of $6 to $10 billion, depending on which medium we ended up using.

Senator JOHNSTON. With the MRS, you say it would take 10 years from the time you first-from this year, I guess.

Mr. RUSCHE. From approval to proceed, yes.

Senator JOHNSTON. Now, how much of that is taken up with construction?

Mr. RUSCHE. About 4 years, I believe; 31⁄2 to 4 years.

Senator JOHNSTON. Is that the first 4 years you construct?

Mr. RUSCHE. No, it is the latter 4 years. The earlier years are given over to finalizing design, preparing for the licensing exercise and going through the licensing exercise to receive the construction authorization.

Senator JOHNSTON. I think that is all I have, Mr. Chairman.
The CHAIRMAN. Thank you, very much.

Senator Evans.

Senator EVANS. Thank you, Mr. Chairman. Let me first start off on trying to get a little better understanding of the budget and just how it is going to work in the sufficiency of the Nuclear Waste Fund.

In your written testimony, you have a request for fiscal 1987 of about $770 million, with income of $538 million. That is about a $238 million shortage, which I presume is met by drawing down on the one-time fund. Is that correct?

Mr. RUSCHE. That is correct, sir.

Senator EVANS. That one-time fund, as I understand, was about $1.4 billion, from another table in your testimony. This represents about an 18 percent draw down during the year, and yet you show only a $3 million reduction in interest income. Those two do not seem to work together.

Mr. RUSCHE. I think the amount of interest income on the account is of the order of $18 to $20 million a year.

Senator EVANS. On this chart, it is $118 for 1986.
Mr. RUSCHE. Yes. State your question, again, please.

Senator EVANS. I am presuming that interest income is on the one-time fee.

Mr. RUSCHE. It is indeed.

Senator EVANS. During the year, you are going to reduce that by almost 18 percent, but your interest income is only going down about 2 percent. That does not seem to correlate.

Mr. RUSCHE. I think they do, but I would appreciate if I could give you a more specific answer in writing.

[The information follows:]

Our cash flow analysis for FY 1987 indicates that outlays will be significantly higher at the end of the year than near the beginning. In addition, a large fee payment is expected early in the year. These factors result in a smaller fund drawdown early in the year, thereby resulting in a smaller decline in interest earnings than would be suggested by a comparison of beginning and ending fund balances.

Senator EVANS. I would appreciate that, and in addition, I presume that you are measuring this, as you say, on the average yield of Treasury security portfolio. Presumably, that is one that is consistent throughout Government as specified by OMB during the budget-making process. Is that correct?

Mr. RUSCHE. I believe we have a little more latitude in that we are free to invest in Government securities with an investment strategy, so we may have an opportunity to do better.

Senator EVANS. But your estimate of the future is, is that estimate one of, interest earnings, one that you made based on your estimates of Treasury yields or on OMB's?

Mr. RUSCHE. I believe it is our estimate, based on our strategy using OMB future yields.

Senator EVANS. OK. Then in your written testimony, you might also state what you think will happen as a result of a rather substantial lowering of yields between the time OMB made their estimates and today.

Mr. RUSCHE. We will be glad to advise.

[The information follows:]

The immediate effect of the fall in interest rate yields is that the market value of the waste fund investments rises. Over the longer term, the rate of interest earned on the portfolio will be lower.

Senator EVANS. All right. On the MRS, do you have an estimate of timing as to how long the appeal might take and when you might get some definitive answer? Is there any measure of that at all?

Mr. RUSCHE. I don't think we have a basis for measurement. The courts act in their own time. I think experience would suggest that certainly not within the next 2 or 3 months; maybe within some period not much longer than that, but I think it is a pure guess on our part.

Senator EVANS. Do I understand correctly that the essence of the lawsuit was that the State of Tennessee was insufficiently consulted with during the course of the analysis?

Mr. RUSCHE. I think it went more specifically to the point that the siting procedure that we went through did not involve the State early enough. I think the decision by the court effectively noted that after we made the choices that we made, that we took the very course the court would suggest we ought to have taken to start with. We did not follow the formality of the procedure that

applies to the repository siting program because we believed it was not appropriate.

I think it is much less a question of performance than it is a question of formality.

Senator EVANS. If we are going to get stuck on this kind of formality, is it appropriate to consider some kind of new legislation to speed up the process?

Mr. RUSCHE. I think that if you look at the act, there are certainly-in this section, that is section 141, as well as other sectionsthere are still areas that are subject to interpretation, that are not crystal clear.

But my view today, as it has been every time we have talked, is that attempts to clarify that would have a much higher probability of obfuscating the issue than they would of clarifying it.

Senator EVANS. In your statement on page 14, you talk about your proposal that you will recommend to Congress on the MRS, and the third one says, "preclude waste acceptance by the MRS facility under a construction authorization for the first repository is received from the NRC.'

I join with Senator Johnston in believing that we ought to move in parallel, that we ought to be as prepared as we can for whatever contingencies may arise, and should we lay that kind of specific requirement on an MRS if, for whatever reasons, we get to a point where we are proceeding in parallel, where the MRS is close to ready to go and we cannot get construction authorization for any one of the first repositories? Then, are you not putting an undo burden on us?

Mr. RUSCHE. I think it is a question of judgment on our part as to how to weigh the value of getting confidence to the country and to the local community, that we were serious, that the repository was the first priority and the objective of the act, and the very concern that you raise.

Our view was that it would be best to take the course we propose and if we face the circumstance that you suggest in 1995 or 1996, that there would be ample time for Congress to reconsider that view.

I think if we took the other course, we would have a hard time convincing many members of the public, many Members of the House that we were not at this point substituting MRS for a repository.

Senator EVANS. Well, I must say that it seems to me that that is not parallelism; that is a definite priority setting in what, really, I think is an unnecessary requirement. It keeps us from operating in parallel.

Mr. RUSCHE. Senator, we certainly would not presume to think that you, if in your judgment, concluded that was the case, would not modify approval conditions so that we would proceed just as you thought appropriate. We believe, based on our discussions with the State and with the local community that this provision would be viewed by many as a very important inclusion, however.

I don't think it suffers quite the problem that you suggest in that if you can proceed without today, I don't see why the Congress couldn't address that question equally promptly in 1995 if it turned out to be the appropriate course.