BP Contracting Ban Reinforces Debarment Misconceptions

Dietrich Knauth, Law360 – March 31, 2014

The unusual timing of BP PLC’s recently resolved suspension from federal contracting has left many experts scratching their heads, with some concerned that the government’s handling of the contracting ban could reinforce misconceptions that suspension and debarment should be used to punish companies rather than, first and foremost, to protect the government.

BP was suspended from competing for contracts or oil drilling leases 16 months ago, when the oil giant pled guilty to felony misconduct in a $4.5 billion settlement related to the Deepwater Horizon explosion and oil spill, which killed 11 people and released an estimated 4.2 million barrels into the water four years ago. The company sued the U.S. Environmental Protection Agency over the suspension in August, arguing that the EPA’s action ignored “the overwhelming evidence and record of BP’s present responsibility as a government contractor” and that the timing of the suspension was both arbitrary and punitive.

Suspension is intended to protect the government from unscrupulous or risky contractors, not to punish companies for previous wrongs — so the suspension of BP two years after the spill seemed strange to some, even within the government’s suspension and debarment community.

That BP was suspended when it was convicted, rather than when it was indicted or when the EPA had enough evidence to make a reasonable business decision, could reinforce the perception among some members of Congress and public interest groups that suspension is a punitive measure, according to Jessica Tillipman, assistant dean of government contracts law at George Washington University law school. It could also validate contractors’ fears about political debarment, she said.

“If you Google BP and its suspension, the word ‘punishment’ is all over the Internet,” Tillipman said. “BP just seems to be a lightning rod for strong feelings in the industry and for a parade of the ill-informed.”

If BP had been suspended earlier, which would have been more consistent with the normal practice of suspension and debarment, both the contracting industry and BP’s most vocal critics would likely have been happier, Tillipman said. Public Citizen slammed the EPA’s decision to lift the suspension after 16 months as premature, saying it “lets a corporate felon and repeat offender off the hook for its crimes against people and the environment.”

“It made it seem like they went to jail for a day,” Tillipman said. “[Suspension and debarment are] a fundamentally misunderstood regime by the media, by many members of Congress and a lot of public interest groups, who see it as punishment.”

On the other hand, the BP suspension is a reminder that even large, important contractors can’t avoid suspension for egregious conduct, according to Charles Tiefer, a University of Baltimore law professor. Before the suspension, BP was the largest supplier of fuel to the U.S. Department of Defense, with about $2 billion in annual contracts, and the DOD, through the Defense Logistics Agency, not only cut off the opportunity for new contracts as required during the suspension, but it also canceled existing contracts for regular fuel purchases, Tiefer said.

“Looking at the suspension as a whole, it has been an impressive success in government agency coordinated effort,” Tiefer said. “The Defense Department, which here principally means the Defense Logistics Agency, deferred to EPA about the seriousness of BP’s problems, and BP was never able to manipulate its ‘customer’ in the Defense Department to free it from EPA’s tough but legitimate scrutiny.”

Tiefer said the suspension would have started earlier in an ideal world but said he didn’t think it lasted too long or was needlessly punitive. Not only was the government wary of compromising its ongoing criminal case against BP with potential litigation over a suspension, but the late date and length of the suspension also gave government regulators more time to ensure that BP’s reforms in the wake of the spill were more than just symbolic gestures, he said.

“I couldn’t disagree more with those who wanted BP to get away early from the suspension,” Tiefer said. “First of all, the harm in the Gulf from BP’s spill was on a scale that just had never been seen before from a government contractor. The government legitimately took time not just to create some mechanisms on paper for ethics monitoring but to see BP go beyond a willingness to talk the talk and actually demonstrate it would walk the walk.”

Jay Devecchio, a partner at Jenner & Block LLP, said that he couldn’t fault the EPA for taking the time to sort through the facts and reach the right decision.

“I would have been more concerned it the EPA had suspended BP immediately after the spill,” DeVecchio said. “That would have suggested more of a punitive or PR reaction rather than a measured consideration of the facts. One certainly wouldn’t want SDOs to suspend contractors — particularly large, multifaceted companies — based upon isolated mistakes, accidents or localized errors in judgment. If that were the standard, no one would be in government business.”

The timing of the EPA’s decision to lift the suspension also raised questions, since the administrative agreement that ended the suspension didn’t contain any particularly tough or unusual provisions and essentially mirrored the additional monitoring and auditing agreements that BP had included in its guilty plea.

With the new provisions in place, BP will be able to seek new leases in the Gulf of Mexico. The EPA has called the Deepwater Horizon incident the largest environmental disaster in U.S. history.

BP’s active litigation against its suspension may have influenced the timing — courts have shown themselves willing to closely examine suspension and debarment decisions as in a recent case involving Inchcape Shipping, which, like BP, involved “stale facts” by the time the suspension was eventually carried out by the Navy, Tillipman said.

While some in the legal community had hoped that the EPA lawsuit could set clearer guidelines for agencies’ ability to suspend companies long after the facts underpinning the suspension are laid out, the administrative agreement takes that possibility off the table and leaves some uncertainty about how much precedential weight the BP suspension will carry.

“I have a hard time understanding why a suspension was issued here given the timing (as opposed to a proposed debarment), but I don’t think there is broader meaning of this action beyond EPA,” said David Robbins, a former Air Force debarment attorney who now heads the government contracts group at Shulman Rogers Gandal Pordy & Ecker PA.

While Tiefer said that the length of the suspension sent a message that the EPA would not let companies get away with extreme environmental violations, Robbins cautioned that suspensions should follow the rules and not be used politically.

“I’m sorry to say I don’t agree that suspensions are tools to show tough enforcement,” Robbins said.

Because of the unusual nature of the case, it may be hard for contractors to draw many lessons from the lengthy and late suspension, unless the EPA is handling their case, according to Robbins.

“Contractors should be vigilant, especially when the EPA is their debarring agency, and do all they can to mitigate risk of debarments, from enhanced ethics and compliance programs to early and voluntary reporting and engagement with the government,” Robbins said. “Early disclosure and cooperation, in many cases, goes a long way.”

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BP Suspension Shows No Contractor Is Too Big To Debar

Law360, New York (November 28, 2012, 10:15 PM EST) — The U.S. government’s decision Wednesday to suspend BP PLC, the U.S. military’s largest fuel supplier, in the wake of a criminal settlement over the Deepwater Horizon oil spill sends a message that even companies that perform vital roles for the government are never “too big to debar,” experts say.

Following BP’s record-setting $4.5 billion criminal settlement over Deepwater-related violations, the U.S. Environmental Protection Agency on Wednesday suspended BP from receiving any new government contracts, including military supply deals and drilling leases with the U.S. Department of the Interior.

The decision came as a surprise to many, who believed the company would escape suspension or debarment, based on the government’s reluctance to cut off relationships with its most important suppliers, as well as BP’s own statements after the Nov. 15 settlement.

“There’s some tension between the government’s desire to continue dealing with BP and the government’s capacity to impose a tough suspension,” said Charles Tiefer, a professor of government contracts law at the University of Baltimore and a former member of the congressional Commission on Wartime Contracting.

The government rarely suspends or debars large contractors, and several government watchdogs applauded the move as crucial to protect taxpayers from the risks of dealing with a company whose business integrity is dubious. While suspensions of important contractors rarely last long, they can jolt a company into making dramatic business reforms.

BP’s suspension sends a message that even big contractors will be held accountable if their business practices put taxpayers at risk, according to Scott Amey, general counsel for the nonprofit Project on Government Oversight.

“You can count on probably one hand the number of large contractors that have been suspended or debarred, and a lot of those instances it was only for a matter of days,” Amey said. “I would imagine that BP is doing everything it can do to convince the government that it is a responsible contractor.”

BP said Wednesday it had submitted more than 100 pages of documents to the EPA, highlighting a shake-up of its leadership and business structure and new deepwater drilling policies that exceed current regulatory requirements.

But the agency’s decision to suspend BP less than two weeks after the criminal settlement could indicate it is preparing to force BP to undertake more serious reforms than the company had planned, according to Tiefer.

If the EPA weren’t insisting on extensive reforms, BP would have acquiesced quickly to avoid the “black mark” of a suspension, which can count against the company during contract competitions even after it is lifted, Tiefer said.

“BP would like to argue that it has solved its problems and fixed its systems and by now it should be let off without even a short suspension,” Tiefer said. “But it appears that … the untold billions of dollars in environmental damage that BP did to the Gulf can’t be dealt with through a short period of suspension.”

Tyson Slocum, director of the energy program at the nonprofit Public Citizen, called for the suspension to last for the full five years of probation BP agreed to in its settlement with the U.S. Department of Justice.

He urged the U.S. Department of Defense, which purchased $1.4 billion in fuel from BP in 2011, not to undermine the suspension by seeking a waiver that would let it continue purchasing fuel under new contracts or task orders.

The suspension won’t affect BP’s existing government contracts, including $1.3 billion in new contracts announced Sept. 20. BP says it received more than 50 new drilling leases in the Gulf in the time between the oil spill and the suspension, in addition to billions of dollars in defense contracts.

But according to Defense Logistics Agency spokeswoman Michelle McCaskill, BP’s suspension may cause the agency — which purchases most of the petroleum the DOD uses — to look to other sources for fuel.

The decision to suspend BP more than two years after the spill shows some of the difficulties the government faces when balancing the need to protect itself from unethical contractors with the need to give accused companies time to explain and address deficiencies.

Suspension is intended to protect the government from unscrupulous contractors, not to punish companies — so the timing of BP’s suspension seems strange, according to Amey.

“This is not supposed to be penalty, so it’s odd that the EPA finally acted now,” Amey said.

But in BP’s case, the government had more pressing concerns than an immediate suspension, including overseeing cleanup efforts and pursuing a serious criminal case, Tiefer said.

“There are cases, but this is not one of them, where the need to stop dealing with a contractor is so great that an earlier indictment occurs and then suspension occurs,” Tiefer said. “It’s important that BP is not a wartime contractor in, say Afghanistan — there’s no danger to the troops in the field from a delayed suspension of BP.”

Amey said he’ll be watching to see if BP is able to lift the suspension as quickly as other major contractors have in the past. It would be “a little concerning,” he said, if the EPA quickly lifted the suspension, given it announced the move after about two years of supposed corporate reforms.

BP, for its part, said it expected negotiations with the EPA would go smoothly and it would receive a draft administrative agreement lifting the suspension “soon.”

The company’s criminal plea agreement should help its case. BP said the DOJ has agreed to “advise any appropriate suspension or debarment authority that in the department’s view, BP has accepted criminal responsibility for its conduct relating to the Deepwater Horizon blowout, explosion, oil spill and response.”

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Entergy Sues US Over Breached Nuclear Waste Contract

By Dietrich Knauth

Law360, New York (September 27, 2012, 10:22 PM EDT) — An Entergy Co. unit sued the U.S. government Wednesday, seeking damages for what it calls the government’s decadelong, ongoing failure to dispose of spent nuclear fuel at two power plants in Michigan, which it says breaches a waste disposal contract.

Entergy Nuclear Palisades LLC filed its suit in the U.S. Court of Federal Claims, saying it and the plants’ previous owner have paid the Department of Energy $274 million in fees under the 1983 waste disposal contract, as a contribution toward building a long-term waste depository.

Under the terms of the plants’ contract with the government, the U.S. agreed to begin picking up the spent nuclear fuel and high-level radioactive waste no later than January 1998, according to the complaint. But it has not done so, in part because political battles have scuttled every plan to build a long-term disposal site, the complaint says.

While the complaint did not mention specific damages, the court’s docket sheet lists Entergy’s demand as $100 million.

Entergy bought the Palisades Nuclear Plant and the Big Rock Point plant from Consumers Energy Co. in 2007. Entergy continues to pay roughly $6 million a year in fees relating to the plant, the complaint said.

But the government still has no plan to begin disposal of the waste, despite several breach of contract judgments and court orders against it in similar lawsuits, according to the complaint.

“Consumers and [Entergy] have fully complied with all their fee payment obligations under the contract,” the complaint said. “The government, however, has failed to perform its reciprocal obligation to dispose of the spent nuclear fuel, and currently has no plan to meet these obligations.”

Entergy says the government’s foot-dragging has caused it to rack up other costs, including regulatory costs, taxes and fees associated with efforts to ensure sufficient on-site storage or find off-site alternatives, and has delayed Entergy’s plans to decommission the shuttered Big Rock Point.

“As a direct consequence of the government’s disregard of its contractual obligations and defiance of the D.C. Circuit’s rulings, [Entergy] has been incurring and will be forced to incur substantial additional costs to provide for extended on-site storage of its spent nuclear fuel,” the complaint said.

These expenses include buying, loading and maintaining storage casks and related equipment; monitoring storage facilities; and making necessary changes to the plants, according to the complaint.

The DOE is fighting dozens of lawsuits by utilities that had contracted with the agency over the past 20 years to send their spent fuel to the planned Yucca Mountain nuclear waste repository.

The project has been beset by delays and legal challenges, and in the past two years the DOE and the Nuclear Regulatory Commission have suspended their licensing on Yucca Mountain, leaving operators to deal with spent fuel themselves.

Taxpayers could face $19 billion in liabilities by 2020, as the U.S. Department of Energy reneges on contracts with nuclear operators to dispose of thousands of tons of spent fuel accumulating at their plants, the U.S. Government Accountability Office reported in September.

The GAO found that spent fuel stored on-site at nuclear plants will likely increase by about 2,000 tons annually before the DOE can open a new centralized storage facility, which could take as many as four decades. In addition to the $19.1 billion in liabilities racked up by 2020, the DOE could be on the hook for an additional $500 million annually thereafter.

ENP is represented by Layton Jager Smith Jr. of Jager Smith LLC.

The case is Entergy Nuclear Palisades LLC v. U.S., case number 12-cv-01641, in the U.S. Court of Federal Claims.

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Solar Could Win Big In Army’s $7B Energy Buy

By Dietrich Knauth

Law360, New York (August 17, 2012, 9:17 PM EDT) — Solar power companies are well positioned to compete for U.S. Army energy contracts worth $7 billion over the next 10 years, considering the solar-friendly terrain around bases and the attractive pricing of renewable energy projects as utility-scale development slows and competition for projects increases, experts say.

The U.S. Army issued its formal request for proposals for the energy contracts on Aug. 7, outlining a plan to hand out so-called indefinite delivery, indefinite quantity contracts companies that meet the qualifications to provide renewable power on military bases. Once the pool of contractors is selected, the winners will compete for individual task orders to build specific projects, signing power purchase agreements that could last 30 years.

In its request for proposals, the Army plans to buy a mix of solar, wind, biomass, geothermal and other renewable power, although its requirements could favor solar over others, with wind potentially being a runner-up, according to experts.

“Solar and wind will probably dominate the response,” said Jeffery Atkin, head of the solar enery team at Foley & Lardner LLP.

Solar has a few advantages over wind for the miltary’s purposes, starting with its smaller footprint and the fact that many Army bases are located in flat, sunny areas. Wind power requires more land and would need to be transported over larger distances, and an expiring tax credit for wind energy production could lead to higher prices that make wind projects less competitive, experts said.

“Solar would probably have more opportunities than wind, simply because there are operational issues associated with wind projects that can make some base commanders nervous,” including the increased land use and the potential for wind turbines to interfere with flight training, said Amy Koch, the regulatory team leader for Reed Smith LLP’s energy and natural resources industry group.

Wind power could suffer another disadvantage because of uncertainty surrounding the production tax credit for wind. Based on the Army’s reverse auction approach, wind developers might be less viable or reluctant to bid, because without the tax credit, their prices will go up, according to Joel A. Goldberg, a partner at Porter Hedges LLP.

“The tax credit is sort of in limbo,” Goldberg said. “It expires at the end of the year, and in an election year there’s a lot of uncertainty about where that is going.”

On the other hand, the Army’s RFP could throw a lifeline to the wind power industry if the tax credit is not extended, Iverson said.

“With the expiration of the wind PTC, this RFP may spur new development in the sense that it may open new markets to the private sector that offer higher wind regime sites that will increase productivity and revenue, and help off-set the loss of the PTC, thus making wind project profitable in a PTC-less era,” Iverson said.

Solar developers were also helped by lowered energy thresholds for proposed projects in the final RFP, compared to other industries and the initial draft released in March. While the draft RFP required potential contractors to propose 10 projects, including at least three that would provide 4 megawatts or more, the final RFP allowed solar energy companies to drop that threshold to at least three projects of 2 MW or more.

“This was an important change to expand the list of potentially qualified solar offerors,” said Bruce Iverson, a senior project manager at TRC Companies Inc., which provides engineering, consulting and construction services to the energy, environmental and infrastructure markets.

The timing of the RFP will also allow the Army to take advantage of maturing technology and a lull in development that will maximize competition and help drive its prices down, according to Atkin.

Demand for new projects is low because most of the utility-scale purchasers have already made their investments in renewable technology — in part because they wanted to get started to take advantage of the expiring 1603 Treasury Grant program, which covers up to 30 percent of an eligible renewable project’s construction costs through grants instead of tax credits, according to Atkin.

“We’ve seen the prices just continue to drop and drop, and most of the major buyers of these clean energy projects are not as aggressive in buying right now,” Atkin said. “There will be very high interest in this RFP, and there will be a lot of competitors.”

Geography will play a key role in determining the technology that the Army chooses for individual bases as well. In many cases, biomass could also be in a good position because its smaller footprint allows for easier on-base production than wind or solar, while geothermal opportunities could be available only on a limited number of bases, according to Goldberg.

“It really depends on where these bases are and what kind of spaces are available,” Goldberg said.

While biofuel’s smaller footprint could play to its advantage, the Army RFP’s insistence on proven power production could still make wind and solar technology a better fit, because of recent technological advances made by private developers, according to Atkin.

“The industry has been well seeded and grown in,” Atkin said of wind and solar. “This will certainly help maintain the momentum that’s built up over the past couple of years.”

While the Army is relying on proven technology for power production, the RFP could spur innovation in other areas, such as energy efficiency and smart grid technologies, such as technology that would automatically adjust a base’s energy use to reduce power at times when prices are the highest, Koch said.

“Where they may push the envelope a little bit is in their smart grid needs, and smart grid issues are going to be part and parcel of some of the upcoming task order RFPs,” Koch said. ”It is possible that they may be a bit more flexible as far as not requiring fully commercialized technology for smart grid because that is more of an emerging area.”

While some politicians have criticized the military for buying alternative energy at higher prices than traditional fuels, Atkin said that the long-term agreements contemplated in the RFP will help shield the Pentagon from volatile energy prices and could save money in the long run.

“They’re locking in their power price for 20-plus years, reducing the risk of price escalation,” Atkin said. “When we look back at this in 20 years, it will probably have turned out to be a pretty good deal.”

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Navy’s ‘Green Fleet’ Could Make Congress Believe In Biofuel

By Dietrich Knauth

Law360, New York (July 19, 2012, 9:48 PM EDT) — The U.S. Navy’s “Great Green Fleet,” a biofuel-powered aircraft carrier group that conducted training missions in the Pacific on Wednesday and Thursday, could help the Navy overcome congressional obstacles to its biofuel investments by showcasing the new fuels’ reliability, experts say.

Republican lawmakers have criticized the Navy for investing in expensive biofuels at a time of declining defense budgets, and both the U.S. House of Representatives and the Senate Armed Services Committee have passed proposals that would stop future purchases of alternative fuels if they carry a higher price tag than oil or gasoline. But several senators are pushing to reverse those restrictions before they become law, and the successful demonstration could help them make their case.

Sen. Mark Udall, D-Colo., said Thursday that he supports the Navy’s “smart investments in homegrown green technology” as a way to reduce the military’s reliance on foreign oil. Udall believes the Senate will eventually remove anti-biofuel provisions in its version of the 2013 National Defense Authorization Act, and a successful green fleet demonstration in the Pacific Rim can help convince opponents of biofuel investment.

“I have every confidence that the tests will show that domestically produced, renewable fuels have the capability to power our ships, aircraft and vehicles,” Udall said. “This is an exciting time, and this exercise will be remembered as a great step forward for our military and for American energy security.”

To fuel the green fleet demonstration, the Navy paid about $26 a gallon in December for 450,000 gallons of biofuel created from a blend of used cooking oil and algae, in the largest advanced biofuel purchase in U.S. history. Congressional critics of the Navy’s biofuel spending, including Rep. Randy Forbes, R-Va., and Sen. James Inhofe, R-Okla., who wrote the Senate amendment that would block biofuel buys, have focused on that $26 per gallon price tag, and Inhofe has criticized the military’s energy strategy as an excuse to support “liberal energy projects” at the expense of traditional firepower and combat readiness.

But Udall is not alone in seeking to roll back Inhofe’s amendment. He’s joined by fellow Armed Services Committee members Sens. Susan Collins, R-Maine, and Jeanne Shaheen, D-N.H., who wrote in an op-ed that the Navy’s biofuels could shield the U.S. Department of Defense from swings in oil prices, which is more efficient in the long run than investing all its funds into building more ships, planes and tanks.

“Every time a barrel of oil goes up $10, the Defense Department pays $1.3 billion more in fuel costs,” the senators said. “That’s roughly the equivalent of building a new destroyer — then sinking it in the middle of the ocean.”

The Pentagon said that price hikes for oil caused it to spend $3 billion more on energy costs than it had planned last year, money that will have to be diverted away from other priorities. Supporters of military biofuel say that its benefits are plain — alternative fuels could shield the Pentagon from energy price hikes, reduce dependence on foreign oil and support a new domestic energy industry.

The Truman National Security Project, which advocates for national security from a progressive political viewpoint, has lobbied members of Congress through ads featuring retired military leaders and through face-to-face meetings to support alternative fuels, including biofuel. Michael Wu, the group’s advocacy policy director, said Thursday that those meetings have left him encouraged that the Republican opposition to biofuels isn’t as solid as it is often portrayed.

“I think that more Republicans are likely to be supportive when the bill comes to the floor,” Wu said. “In reality, we’re much closer to ensuring that the military’s investments are maintained than maybe some of the coverage has indicated lately.”

The current fight over biofuels includes many more national security voices than previous congressional battles over alternative energy, including former military leaders who have firsthand experience grappling with the kind of budget tradeoffs necessary to pay for higher-than-expected fuel costs, Wu said. The green fleet’s fuel, while expensive, will come down in price once industry partners are able to establish economies of scale, and as an investment, it took up only 0.03 percent of the Navy’s budget, he added.

“The good news is that these fuels are becoming cost competitive incredibly quickly,” Wu said. “Advanced biofuels are getting cheaper more quickly than any other renewable source of power.”

Biofuel producers have said that the Pentagon’s planned purchases could help kick-start their industry by providing upfront investment and a long-term customer that will incentivize the building of larger refineries that can drive down costs through economies of scale.

“I think we need the jump start, but I think we can quickly get to a cost-effective price point,” said Riggs Eckelberry, CEO of OriginOil, which extracts gasoline from algae.

Eckelberry said that the Navy’s price tag for its the Great Green Fleet fuel contracts was not representative of biofuel’s already-declining cost because the Navy had chosen to buy a more expensive, high-quality fuel that has already been proven reliable. But OriginOil believes that it can sell biofuel at $2.28 per gallon, using existing technology, as long as it can leverage the economies of scale that would come with a 250-acre algae plantation.

Congress is right to push for lower prices, Eckelberry said, as long as there is a reasonable time frame for bringing costs down.

“[Congressional pressure] is good in its own way because it’s going to force the biofuel industry to stop making boutique fuels and start making mass biofuels that are cheaper,” Eckelberry said. Still, he added, “It’s unrealistic to say that it has to be done today, that’s just being obstructionist.”

While Navy leadership, including Navy Secretary Ray Mabus, has staunchly supported biofuels as a way to combat the military’s energy vulnerability, the demonstration also allowed sailors and pilots to experience the new fuel’s reliability for themselves.

Lt. Karen Smith, fuels officer for the guided-missile destroyer USS Chafee, said Thursday that the use of biofuels on Navy ships further enhances the overall readiness of the fleet by reducing the military’s dependence on foreign fossil fuels. The Chafee took on 250,000 gallons of the biofuel mix while participating in the Great Green Fleet demonstration.

“It gives the Navy a little bit more flexibility, and they know where it’s coming from,” Smith said. “Thinking about it economically, yes, it’s a little bit pricier on the front end, but everything new is. I think that, as time goes on, that cost will drive down. The added benefit of having that operational capability is a plus, and now it’s not left in foreign hands to decide what our fuel costs are.”

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No Clear Alternative To Nevada Nuclear Dump: GAO

By Dietrich Knauth

Law360, New York (May 10, 2011, 7:48 PM EDT) — By abandoning a long-planned nuclear waste dump in Nevada without a clear alternative, the U.S. Department of Energy may have set back efforts to find a permanent site for spent nuclear fuel by 20 years, the U.S. Government Accountability Office said Tuesday.

In its report, the GAO said social and political opposition were the biggest obstacles to completing a permanent repository, and recommended greater continuity of leadership and funding for a national waste management strategy, potentially through an organization independent of the DOE.

A permanent disposal site for highly radioactive spent nuclear fuel had been planned at Nevada’s Yucca Mountain since 1987, and the DOE’s abandonment of the project in 2010 forced it to start from scratch, likely causing decades of delays and costing billions of dollars, the GAO said.

“Nuclear waste disposal is extremely controversial, and no strategy can guarantee success.” the report said. “However, given the past and the consequences of failure, many knowledgeable sources suggested that the task may require a more predictable funding mechanism and more independence than DOE is able to provide.”

“Terminating the Yucca Mountain repository program could bring benefits, such as allowing DOE to search for a more acceptable alternative, which could help avoid the costly delays experienced by Yucca Mountain,” the GAO said. “However, there is no guarantee that a more acceptable or less costly alternative will be identified.”

The DOE said in a letter responding to the report that it had acted responsibly, and that the GAO wrongly assumed that any replacement for Yucca Mountain would take longer to complete.

The spent nuclear fuel is radioactive enough to kill a person within minutes of direct exposure, and remains dangerous to human health for tens of thousands of years, the GAO report said. The U.S. currently stores more than 65,000 metric tons of spent fuel in pools of water and on site, in pools, or in dry casks — steel cannisters encased inside concrete casks — at nuclear reactors around the nation.

That amount of spent fuel could fill a football field nearly 15 feet deep, and the amount of spent nuclear fuel in the U.S. is expected to double by 2055, according to the GAO.

The recent nuclear crisis in Japan was caused, in part, when an earthquake and tsunami damaged the pools used to store spent nuclear fuel, allowing potentially lethal radiation to leak into the environment.

“The ongoing situation in Japan further underscores that our national security demands a coherent nuclear policy to safely and permanently store spent nuclear fuel,” said Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee. “Our nuclear future requires visionary leadership as we seek a long-term solution to our spent nuclear fuel and high-level waste.”

The GAO criticized the DOE’s rapid shutdown of the Yucca Mountain program, saying the agency’s termination of employees and disposal of related property and equipment would make it difficult to restart the program, if it is ordered to do so by the U.S. Nuclear Regulatory Commission or courts.

“It took DOE years to recruit and train the proper mix of scientists and engineers — from diverse disciplines such as hydrology, geology and mathematics — to work on the license application,” the GAO said.

The department terminated the program to look for better solutions that could achieve greater public support, but did not identify any alternatives, the GAO said. The department instead created a blue ribbon commission to evaluate and recommend alternatives. The commission is due to report in January.

The GAO said that finding a more politically acceptable location would be difficult, as no state has volunteered to take spent nuclear fuels, and the abrupt cancelation of the Yucca Mountain project had damaged the DOE’s already weak credibility on the issue.

The DOE’s Office of Civilian Radioactive Waste Management suffered from a fluctuating budget and “a revolving door style of management,” with 17 different directors in 27 years, that hurt its ability to negotiate with local and state governments, according to the report.

The Yucca Mountain project has already cost nearly $15 billion, and would have cost an additional $41 billion to $67 billion more to complete, the GAO said. About $9 billion of the money spent came from the the Nuclear Waste Fund, which draws money from taxes on the selling of nuclear power. Some industry players have called for suspension of payments into the NWF, saying their customers shouldn’t pay for a repository that won’t be built, according to the GAO.

No nation has built a permanent repository for spent nuclear fuel or high-level radioactive waste, the GAO said.

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