June 11, 2012
Honorable Steven Chu
Secretary of Energy, U.S. Department of
Energy
1000 Independence Ave., SW
Washington DC 20585
ON THE
FIRST ANNIVERSARY OF THE JUNE 11, 2011,
CENTRIFUGE
CRASH
STOP THE
USEC SCANDAL NOW
Mr, Secretary,
Today is the first anniversary of the
accident at Piketon, Ohio, which caused six USEC centrifuges to
crash and one to breach from a simple loss-of-power. Uranium release
was averted only because most or all of the centrifuges were not
running uranium at the time, but that circumstance itself raises
grave questions about the so-called “American Centrifuge” project
at Piketon.
Why, after forty years of AC-100
development, and many billions of dollars of U.S. government expense
and subsidies, have only 38 centrifuges been manufactured, all of
those now written off as a tax loss by USEC? Why did USEC fail to
complete its NRC-licensed Lead Cascade demonstration over more than
six years since the contractual deadline for completion, and what
penalties has DOE imposed for that failure? Why did DOE allow and
encourage USEC to obtain a construction and operating license for a
full-scale commercial plant before any completion of even a
small-scale demonstration project? How can USEC now claim to have
completed “one million hours of centrifuge testing” when no
uranium was being run for the majority of the testing period?
Exactly what was being tested?
And most importantly, why is your
Administration proposing to undo the USEC Privatization Act
and effectively renationalize this long-failed project without any
repeal or amendment of the UPA by the Congress of the United States?
In October of 2011, after rejecting USEC's application for a $2
billion loan guarantee for a second time, you proposed a two-year
program of “Research, Development, and Demonstration (RD&D)”
by which the federal government would allegedly do what USEC has
failed to do through its promised Lead Cascade. But your proposal is
now nonsensical for the following reasons:
- You proposed a two-year RD&D program, obviously timed for completion not in regard to any technical plan but for when USEC will lose its principal source of uranium through the Megatons to Megawatts program, which expires at the end of 2013, and before USEC's $530 million debt to bondholders is due in 2014. But now at least a year will have elapsed without progress on the RD&D program. How can a planned two-year program be completed in only one year? Or was your initial proposal non-serious and intended only to delay a USEC bankruptcy but not to accomplish any material R&D objective? And even if magically completed and successful, how could a commercial plant then be financed since USEC's bond debt will immediately be due?
- You repeatedly stated that Congress would have to pass appropriations for the RD&D program for it to proceed, in response to pointed criticism from Congress and GAO about past DOE assistance to USEC accomplished outside of legal congressional appropriation channels. However, after Congress failed to pass such appropriations (no such appropriation has yet passed both chambers for 2012 or 2013), with congressional opposition mounting, you reneged on that reform commitment and gave USEC $44 million in liability waiver in March of this year. Then in May you gave USEC hundreds of millions of dollars of subsidy through the extra-legal 5-party Paducah deal. DOE has further posted a proposal to buy USEC's destroyed and worthless centrifuges for an unspecified amount. And according to statements by USEC this past week, DOE intends to award USEC an additional $82 million in liability waiver, in time to meet USEC's proprietary June 15 deadline with bank creditors, led by JP Morgan, which is now under its own congressional scrutiny for investing in bad risks. What is the legal basis for such extraordinary assistance to a private company outside of congressional mandate?
- When you proposed the RD&D program last October, you said in your letters to Congress that it would build “720 centrifuges” at the Piketon site. Without correcting yourself, that number was somehow altered by USEC and other parties to read 120 centrifuges, not 720. But given the elapsed time, the non-performance of R&D on new centrifuge improvements, and USEC's admissions of financial incapacity, it's very clear that no new centrifuge array will be constructed at Piketon in the foreseeable future. USEC is struggling just to stay in business. The debate in Congress over an RD&D expenditure foundered on different ideas of exactly how DOE would spend such an appropriation, especially with DOE stressing the “national security” and “defense-related” aspects of the program, as opposed to commercial viability. It's fair to say that RD&D now lacks any definition at all. What exactly is the current DOE proposal for centrifuge RD&D?
- During the review of USEC's loan guarantee application, DOE insisted on creation of a new subsidiary to receive any American Centrifuge publicly-backed funds with accounting controls. That subsidiary, American Centrifuge LLC., was created, and the NRC licenses for Lead Cascade and ACP were transferred to it. Now, however, all talk of that subsidiary has been abandoned and USEC suggests that RD&D funds will be paid either to the USEC parent company or to the United States Enrichment Corporation subsidiary, which holds most of USEC's assets, thus circumventing the accounting controls put in place to assure the integrity of publicly-backed funds. Will DOE insist that all RD&D funds, including proceeds from liability waivers and other forms of assistance, be paid to American Centrifuge LLC to assure accounting controls? If not, then isn't it obvious that that RD&D is simply an illegal conduit for pumping funds to USEC Inc. without resultant investment in centrifuge technology?
The Department of Energy commissioned
an engineering investigation of the June 11 crash by Parsons
Corporation, and that report was subsequently suppressed. A copy was
not even shared with the Nuclear Regulatory Commission until after
NRC secured the report from bootleg (not to imply illegal) sources.
SONG has now made the report, obtained independently, available to
the public.
Reasons for the report's suppression
are readily apparent from the text, and explain why insiders with
integrity insured that the report did come to the attention of NRC
investigators, Congress, and the public. Aside from revealing that
USEC's management practices, employee training, and safety culture
were nowhere near the standards necessary for a commercial nuclear
operation, the Parsons report reveals that the very concept of a
commercial centrifuge project under construction at Piketon is
dubious.
Specifically, the report discloses that
the principal R&D facility for the USEC centrifuge program is
not Piketon at all, but a federal facility in Oak Ridge,
Tennessee, designated K-1600. Two prior USEC centrifuge crashes
occurred at K-1600, earlier in 2011 – crashes that were undisclosed
to NRC, Congress, and the public. Further, the Parsons report
discloses how little uranium has been run through the Piketon Lead
Cascade, raising the question of the purpose of the testing program,
since running uranium is necessary to obtain the efficiency and cost
data relevant to a commercial project.
Congress and the public have been
hoodwinked into supporting “the American Centrifuge Plant” on the
promise of a full-scale commercial plant in Ohio, one that will bring
“4,000 Ohio jobs” along with an equal number of jobs in other
states. It now appears, however, that both DOE and USEC have known
for a long time that such a commercial plant will never materialize.
Even the R&D phase will necessarily be based in Oak Ridge,
not at Piketon, and that will be focused on whatever “national
security” objectives DOE and its National Nuclear Security
Administration hold dear, not on creation of a viable commercial
plant.
Ohio workers, Ohio residents, and
perhaps even Ohio politicians have been deceived.
The Great American Subterfuge
The scandal goes well beyond the
loss of promised jobs and the wasted billions of dollars in federal
expenditures. In order to maintain the ruse of a future
commercial ACP, the Piketon “centrifuge buildings” built in the
1970s were contaminated for a second time, needlessly and probably at
government cleanup expense. In 1985, the Reagan Administration
allowed those same buildings to be contaminated by test runs of
uranium in AC-100 machines, even though technicians and project
planners already knew that the centrifuges employed would not be
commercially viable.
After shutdown of the Gas Centrifuge
Enrichment Plant program in 1985, DOE failed to make any public
disclosure of why the program had failed or why the test run and
contamination had been permitted with no viable plan for
commercialization. In March of 2005, the DOE Inspector General found
that DOE's PPPO office, under the direction of Bill Murphie, had
authorized up to $250 million in proprietary USEC expenses to be paid
by DOE in alleged cleanup of the GCEP buildings improperly. Again no
public disclosure was made of why USEC was not then required to
reimburse the U.S. Treasury for those expenses. Those lacks of
disclosure preconditioned precise repetition of the scandal with
USEC's phantom “Lead Cascade.”
And the tragedy underlying that vicious
cycle is that throughout the period, from the initiation of GCEP in
the 1970s, DOE has utterly failed to comply with environmental and
historic preservation laws at the Piketon site. Such compliance would
have required that DOE study the important ecological and cultural
landscape largely destroyed to make room for the useless “centrifuge”
buildings, and consult with knowledgeable and interested parties
about the impacts of federal undertakings and how to mitigate them.
But DOE could not and did not disclose
the real nature of its undertakings at that site, which were never to
construct a commercial centrifuge enrichment plant. Rather, DOE has
consistently pursued secret and dubious “national security”
missions under no legal framework, or pure political political
motives connected to Ohio's cherished electoral votes.
With regard to the latter, the USEC
scandal should be compared to the Solyndra scandal. In the
Solyndra case, improper White House influence on DOE decision-making
was alleged but could not be proven. In the USEC case, on the other
hand, political White House fingerprints are all over the place.
DOE memorandums released under the Freedom of Information Act reveal
that White House operative Joseph Aldy, with practically no
experience in government, led the “rollout” of the USEC loan
guarantee denial in 2009, along with Deputy Secretary of Energy
Daniel Poneman. “Denial” in this instance is a misnomer, however,
because the decision to turn down USEC for a loan guarantee was
accompanied by other hurried decisions to award USEC $45 million in
“technical assistance,” along with $150-$200 million for a no-bid
contract to do cleanup work at Piketon, cleanup work of which there
is no evidence of performance.
In other words, the political
operative Aldy, along with Poneman and Assistant Secretary Inez
Triay, crafted a “compensatory package” by which USEC was given
up to $245 million as a gift, in place of a $2 billion loan
guarantee, a pretty good bargain for USEC as any loan shark would
opine. That appears to have been done only for the purpose of
softening any blow to Ohio's fragile political sensibilities, a
continuing scam that you sir, Mr. Secretary, have continued with
additional gifts and favors for USEC.
Mr. Secretary, you were awarded a Nobel
Prize in physics for your work on atomic laser isotope separation.
Perhaps more than anyone, you know that USEC's forty-year-old
centrifuge technology has no commercial future. Why then are you
staking your name and reputation on this deception?
Enrichment Schemes
The assumption appears to be that Ohio
voters want this cesspool of corruption dug deep into our state's
soil, or that we shall reward those who steal from public coffers
while lying to us with our votes. But I remind you, sir, that we
have law-abiding citizens in Ohio, and even if parochial interests
prevail, the USEC enrichment scheme has accrued to the benefit of
Tennessee and Maryland, not Ohio. Ohio is stuck with no
commercial jobs prospect, a double-time contaminated site, and no
party coming forth with an offer to clean up the mess and redevelop.
We are aware, sir, that USEC has pledged its collateral to its
bank creditors, leaving the USEC D&D commitment at Piketon
unsecured.
Where, Dr. Chu, will DOE obtain the
funds to decontaminate, decommission, and redevelop the centrifuge
site at Piketon after USEC is deeper in bankruptcy and it has skipped
town?
Part of the tragedy of the abrogation
of environmental and preservation law is that legal process would
have permitted the consideration of alternative proposals for Piketon
site development, which if they had been pursued, would have produced
real jobs for this community, while saving the federal government a
whole lot of money. In 1983, nearly thirty years ago, I was hired by
the Piketon local of the Oil, Chemical, and Atomic Workers Union to
negotiate potential alternate uses of the GCEP site (now the ACP
site), should GCEP be canceled (which it was).
But DOE refused to so negotiate. During
the Reagan Administration, the doors were shut. Though Piketon and
Paducah workers then had support from the governors of Ohio and
Kentucky and other public officials, DOE would not engage in any
conversation about how any part of the Piketon and Paducah sites
could be utilized following the end of enrichment activities.
I'm sorry to say that in 2012, the
response of the Obama Administration, in regards to both Piketon and
Paducah, is even worse. Not only has Deputy Secretary Poneman refused
to engage in a conversation about alternate use of the ACP site, as
the project clearly winds toward termination, but NNSA, which claims
to manage the site, will not even provide a public point of contact.
This situation is unacceptable, and I
might add, inadvisable, if your attention is focused on the coming
commotion in November. In regard to the USEC shuffle, enough is
enough.
In 2007, SONG provided to DOE
petitions with the signatures of more than 5,000 area residents
calling for a ban on spent nuclear fuel storage at Piketon, and for
creation of a Citizens Advisory Board. DOE did respond to the SONG
petition by creating, for the first time, a Site-Specific Advisory
Board, though the SSAB is inadequate on two grounds. First, its
members are riddled with conflicts of interest since numerous members
are employed by site contractors including USEC. We got a Contractor
Advisory Board not a Citizens Advisory Board. Second, the SSAB's
mandate specifically excludes anything related to USEC or the ACP
project and site. Thus there remains no CAB at Piketon exercising
citizen oversight over the ACP project and site.
Now, SONG demands the following:
- RESPECT the land and history of the Piketon community and stop regarding this federal site as as some kind of national sacrifice area.
- ACKNOWLEDGE that the commercial ACP project is terminated and that there is no commercial component to any proposed RD&D project that may be continued at Oak Ridge.
- END illegal payments, subsidies, liability waivers, and transfers of material to USEC. Respect the USEC Privatization Act and end government involvement in the commercial uranium enrichment business. If USEC's management decisions lead it into bankruptcy, so be it.
- WITHDRAW the proposal for an RD&D program until such time as DOE can clarify the precise nature of a “national security” program needed at Oak Ridge.
- COMPLY with the National Environmental Policy Act, the National Historic Preservation Act, and all other federal environmental and preservation laws by engaging in required consultations studying impacts, and considering alternatives to federal undertakings BEFORE agency decisions about the commitment of funds or resources are made.
- REMOVE the USEC lease from management by NNSA and place that management in an office with normal civilian practices and compliance mechanisms.
- DISCLOSE all past federal funding, subsidies, transfers, waivers, no-bid contracts, and other forms of support for USEC, and the real purposes for that support. And disclose the details governing decontamination & decommissioning of ACP.
- ABOLISH the SSAB at Piketon, because it is riddled with conflicts of interest, and replace it with a true Citizens Advisory Board, on which salaried contractor employees cannot serve, with jurisdiction over the entire federal reservation at Piketon and all federal undertakings at the site.
- REPLACE the current “Community Reuse Organization” at Piketon with a public-interest non-profit entity responsive to real community needs and not attached to USEC and other site contractors.
- ENGAGE this community in a frank conversation about how to decommission the ACP project given USEC's financial situation, and in how to reconceptualize the general Piketon cleanup given the end of ACP.
- ANSWER the questions posed in this letter, questions begged by the long history of official deception and disinformation at Piketon.
- COME to Piketon. Mr. Secretary, it is time that you face this community in one or a series of town meetings that SONG offers to co-host.
- FIRE Bill Murphie's ass as quickly as you can say his name.
Please don't hesitate to contact me.
You will find much more information about the USEC situation at
http://ecowatch.org/gsea-articles/and at http://SONGSheetOhio.blogspot.com.
It is high time for a new era at Piketon.
For Southern Ohio Neighbors Group,
Geoffrey Sea
fence-line resident
phone: 740-835-1508
e-mail: SargentsPigeon@aol.com
website:
http://SONGSheetOhio.blogspot.com
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