Introduction

Energy Secretary Ernest Moniz testifies during a Senate hearing on his nomination in April 2013. (Manuel Balce Ceneta/AP)

The Obama administration will propose a deep cut in funding for nuclear nonproliferation programs at the Energy Department largely so it can boost the department’s spending to modernize its stockpile of nuclear weapons, according to government officials familiar with the proposed 2014 federal budget to be unveiled Wednesday, April 10.

The half-billion-dollar shift in spending priorities reflects an administration decision that nuclear explosives work the Energy Department performs for the military should be both accelerated and expanded. But Democrats on Capitol Hill and independent arms control groups predicted the decision will provoke controversy and a substantial budget fight this year.

Under the 2014 proposal, the Energy Department’s nuclear weapons activities funding — which includes modernization efforts for bomber-based and missile-based warheads — would be increased roughly 7 percent, or around $500 million, above the current level of $7.227 billion for these activities.

The department’s nonproliferation programs, aimed at diminishing the security threat posed by fissile materials in other countries that can be used for nuclear weapons, would be cut by roughly 20 percent, or $460 million, below the current level of $2.45 billion, the officials said.

The new weapons-related spending would expand efforts to upgrade the W76, W88, W78, and B-61 warheads, and help fund construction of a new facility in Tennessee for processing uranium, a nuclear explosive used in these and other warheads. These programs have experienced billions of dollars in cost overruns in recent years, forcing the administration to look elsewhere in the DOE budget to find the money it needs to keep them alive.

Much of the reduction in nonproliferation spending — around $183 million — would come from a controversial plant designed to transform excess plutonium from the U.S. nuclear weapons arsenal into fuel for reactors that generate electricity, known as the Mixed-Oxide (MOX) fuel fabrication plant in Savannah River, S.C. That plant was initially budgeted at $1.8 billion, but the pricetag has ballooned to at least $7.5 billion, provoking widespread criticism and allegations of mismanagement.

The plant is about 60 percent completed, but one senior administration official called it “managerially and programmatically, a nightmare,” with continuously rising costs.

Under the Obama administration’s proposal for fiscal year 2014, spending for the MOX plant would be around $330 million, or 47 percent of the budget it was supposed to get next year. Its construction would be greatly slowed, while the Defense Department and the Department of Energy’s National Nuclear Security Administration study alternative ways to safeguard tons of the excess plutonium.

Secretary of Energy nominee Ernest Moniz, speaking at a Senate confirmation hearing Tuesday, ducked multiple questions from Sen. Tim Scott (R.-S.C.) about whether he supports completing the MOX plant. “I will certainly look into this with high priority” if confirmed, he told Scott.

Under the Obama proposal, the budget for other DOE work related to nuclear nonproliferation would also be curtailed by about $277 million. That would include a 16 percent cut in spending on efforts to halt the use of fissile material in civilian nuclear reactors and collect or secure weapons-usable fissile materials in other countries; an 8 percent cut in spending on policy to control the spread of nuclear weapons-related technologies; and a 36 percent cut in efforts to monitor potential illicit commerce in fissile materials.

Only one category of Energy Department nonproliferation work would be increased — research and development, mostly to finance work on a new nuclear detonation sensor to be placed about Air Force satellites.

The priority shift “is going to be a disaster,” said a Democratic congressional aide, who asked not to be identified because he was not authorized to speak on the budget before its official release. “These cuts are going to be huge,” and will be particularly problematic amid budget boosts for weapons programs that many lawmakers believe “have been mismanaged for the last five to six years.”

Joan Rohlfing, president of the Nuclear Threat Initiative, a nonprofit arms control group founded by Ted Turner and former Sen. Sam Nunn, said “the U.S. programs for securing, reducing and eliminating weapons usable nuclear materials are a critical part of our strategy for combating nuclear terrorism and preventing the proliferation of these deadly dangerous materials…A decision to significantly cut these programs, including our near-term ability to dispose of excess plutonium, would be a setback to our ability to reach critical security goals.”

As recently as December 3, President Obama described the government’s nuclear nonproliferation efforts — including some directed by the Defense Department — as “one of our most important national security programs.” Speaking at the National Defense University, Obama said the effort was “nowhere near done. Not by a long shot.” He also proudly said the government has been “increasing funding, and sustaining it … because our national security depends on it.”

But several officials and other sources familiar with the administration’s budget deliberations this year said the DOE nuclear weapons-related cost overruns and the new austerity climate gripping Washington – including the demand under so-called “sequestration” legislation for $54 billion in national security spending cuts each year until 2021 –had upended the administration’s plans to spend more on nonproliferation.

Specifically, officials said, the Energy Department determined in consultation with the Pentagon that it would likely need $10 billion in new funds to fulfill all of its promises to the military for the production of modernized warheads, over the next decade alone.

The Energy Department needs at least $3 billion to $5 billion more to upgrade the B61 nuclear bomb — meant for deployment aboard strategic and tactical aircraft — than it initially expected, and several billions of dollars more to cover cost overruns in construction of the uranium processing facility. (Work on the facility and its equipment was well along when DOE abruptly realized it would not be large enough to accommodate needed machinery, forcing a costly redesign and lengthy delays.)

The department also needs more funds than anticipated for improvements to the W76 warhead, which is carried by Trident submarine-based missiles.

To cover the $10 billion total cost overrun, the Energy Department and its National Nuclear Security Administration agreed to transfer roughly $3 billion into weapons work from management accounts and other internal savings. It then asked the Pentagon to provide the additional $7 billion.

But then-Secretary of Defense Leon Panetta, after hearing from aides that these overruns were due in part to poor management and inaccurate cost accounting at DOE, initially said the department would not provide any new funds to DOE, on top of the $4.5 billion it previously promised to cover earlier overruns, according to two government officials privy to the deliberations.

In the end, the Pentagon was cajoled into contributing $3 billion more. But that still left a $4 billion gap between DOE’s nuclear weapons-related promises to the military and its ability to complete that work, forcing a scramble during the department’s budget deliberations to cut from other programs, officials said.

One, who asked not to be named, said the DOE shortfall had set off “months of wrangling” about the issue, not only within the department but at the highest levels of the administration. At the end of it, a $250 million DOE “nuclear counterterrorism incident response” program previously considered a weapons activity was shifted to the nonproliferation budget account, a change that has the effect of making the bottom line for that account look better than it otherwise would have.

Moniz, in his confirmation hearing, tread carefully around the topic of what the department should be spending on nonproliferation. “If confirmed, I intend to make sure that [DOE laboratories and intelligence experts] … continue to sustain the nation’s nuclear security,” he said, without delving into budgetary issues or specific programs.

Asked for comment, NNSA spokesman Robert Middaugh said he could not respond until the budget has been formally released. A Pentagon spokeswoman, Jennifer D. Elzea, declined to address the issue in detail but confirmed that “over the past year DOD and DOE carried out a joint study regarding DOD’s nuclear weapons requirements and funding options for those requirements. The study determined that the modernization program was underfunded, and steps have been taken to ensure adequate funding for essential modernization needs moving forward.”

Tom Collina, research director for the Arms Control Association, a Washington-based nonprofit group, said “in a way,” it seems inconsistent for the administration to promote arms control while cutting the DOE’s nonproliferation budget. But he said officials may have calculated that they cannot win congressional support for further cuts in nuclear arsenals with Russia without spending billions more to refurbish America’s remaining stockpile of nuclear weapons, under a bargain Obama struck during his first term.

The Center for Public Integrity has previously reported administration officials had agreed that the number of nuclear warheads the U.S. military deploys could be cut by at least a third, below a limit of 1550 established in a treaty with Russia in 2010. The officials have also decided to discuss a potential agreement for such reductions with Russian president Vladimir Putin.