Paducah Closure Throws Nuclear Policy into Chaos

Geoffrey Sea

Environmentalists should be jubilant as the dinosaurian uranium enrichment plant at Paducah, Kentucky, nears expiration as soon as May. Based on antiquated gaseous diffusion technology, the facility is the largest single-meter power consumer on the planet, eating as much electricity as the city of St. Louis. It is likely the largest point-source emitter of the worst ozone-depleting greenhouse gases in the world, chlorofluorocarbons, as well. Paducah has a notorious history as a generator of occupational illness, since worker-whistleblower Joe Harding compiled lists of cancer-stricken co-workers:

It should have been shut down long ago. Yet no government agencies or environmental groups are clamoring for closure, because the event will generate as many problems as it solves.

The shutdown has been foreseeable and even scheduled for many years. Privatization of the U.S. Enrichment Corporation (now USEC Inc.) in the 1990s aimed at closing Paducah and its sister plant near Piketon, Ohio, with plausible deniability for incumbent politicians. (The pols could huff and puff about the loss of jobs, while throwing up their hands at USEC’s unchallengeable “business decisions.”) But now, with cessation of production imminent in the run-up to a presidential election, the dark clouds of the most precipitous failure of privatization in U.S. history are gathering into a perfect storm of policy breakdown.

The Paducah plant’s closure will end all USEC production of nuclear fuel, effectively terminating the company for its established purposes, undoing years of taxpayer-subsidized PR hawking USEC as the sole domestically-owned enrichment company. (USEC may continue as what the CEO calls “a smaller company,” devoted to the importation of Russian uranium and peripheral businesses.)

Neither USEC nor the Department of Energy (DOE) have the funds to keep the plant open, nor have the parties cooperated on a plan to pay for the expensive process of shutting it down, redirecting the workforce, or cleaning up the radiotoxic mess. Decades of lax or unregulated dumping and maintenance neglect have left an industrial witch’s brew of asbestos, PCBs, TCE, fluorides, beryllium, nickel carbonyl, plutonium and classified materials unknown or unrevealed.

The Piketon enrichment plant closed in May of 2001, on the theory that staggered cleanup of the grossly abused sites, which remain government-owned, would be more affordable. But for all eight years of G.W. Bush’s tenure at the White House, Piketon cleanup was postponed, while USEC was paid exorbitant fees, a hidden form of subsidy, to maintain Piketon in mothball status. The expensive part of Piketon decontamination and decommissioning (D&D), involving tear-down of process buildings that cover almost a hundred acres and disposal of millions of cubic yards of waste has yet to begin. But now there isn’t the money to pay for that either.

D&D-Day

For decades of U.S. monopoly on the western world’s supply of commercial enriched uranium, nuclear utility companies were charged a surtax on uranium fuel supplied from the gaseous diffusion plants to pay for ultimate D&D of the facilities. But with privatization and the rise of new generations of cheap centrifuge enrichment technology abroad, along with pressure from the utilities, the surtax was waived in yet another subsidy for USEC, to keep the company’s product cost-competitive.

That was engineered principally by USEC’s captive Ohio congressman, who became the Bush administration’s trade representative and budget director, now U.S. Senator, Rob Portman. The future of the Piketon and Paducah sites for literally thousands of years to come was mortgaged to pay for a perceived transient business boost to USEC Inc. in the decade following 1998.

Make a mental note, because when Portman runs for POTUS at the end of his Senate term in 2016, the USEC catastrophe will be the most radioactive skeleton in his closet.

As a result of Portman’s concessions to USEC, the D&D Fund languished with inadequate and non-accumulating balances, and now it has been all but shelved as a bipartisan embarrassment. In 2004, the Government Accountability Office warned that the fund is “insufficient to cover cleanup costs,” but that warning was so dire and so implicitly condemnatory of rising stars in both of the major political parties (i.e. Mitch McConnell, Mr. Portman and the latter’s south Ohio bedfellow rival Ted Strickland, not to mention the Clinton and Bush clans), the consensus action was to bury the report’s conclusions.

Supposedly—no updated accounting is available—the fund has stood at about $4.4 billion. But in 1996, the National Academy of Sciences cited various estimates for the total costs of gaseous diffusion cleanup ranging from $8 billion to $46 billion, meaning that the D&D Fund, which has also been diverted to non-decommissioning activities, cannot now even pay for inflation adjustments on the bill.

Steps taken by the ensuing Obama administration to rectify the situation and prepare for the inevitable D&D operations remain undisclosed as if classified for national security. The Department of Energy has been wracked by paralysis born of the seriousness and magnitude of the problems, and internal divisions caused by top deputy and assistant secretary positions left in the hands of Bush administration holdovers, whose agenda has been to sabotage the current administration. Add wildly irrational antagonism from Republicans in Congress, including especially from the top two Republicans, Ohio’s John Boehner and Kentucky’s Mitch McConnell, who have made the inherent competition for funds between Piketon and Paducah into a kickball between the chambers of Congress, providing total assurance that nothing legislative can get done.

Until recently (too late to make a difference) all three officials at DOE with lead responsibility for the Piketon and Paducah sites were holdover Republicans: Deputy Secretary Daniel Poneman, a transfer from the neocon Scowcroft Group, whose chief prior portfolio in and outside of government had been unsuccessful attempts to persuade Australians and Mongolians to accept high-level nuclear waste from the U.S. for disposal; Assistant Secretary for Environmental Management (resigned last July amidst suspicions of misconduct) Ines Triay, who invented the illegal method of bartering uranium with USEC to fund cleanup operations; and Assistant Secretary for Nuclear Energy (replaced in 2011) Dennis Spurgeon, the former Chief Operating Officer for USEC.

The revolving door at the Department of Energy’s Forrestal Building in Washington spins a whole lot more reliably than USEC uranium centrifuges.

With Triay and Spurgeon gone, the non-saboteurs at the Department of Energy had only ten months to come up with tens of billions of dollars in legal funds for cleanups at Piketon and Paducah, over the contradictory objections of congressional leaders, in an election year of Tea Party austerity.

Duck and Cover

Meanwhile, McConnell and the rest of the powerful Kentucky delegation launched a political offensive, insisting that DOE find a way to keep the Paducah environmental monstrosity open as a jobs program, although those temporarily-saved jobs would come at an exorbitant expense to U.S. taxpayers, and undo every vestigial benefit of privatization. (For the savings of closure, the government could hire many times the number of workers to sit and “watch waste,” as one Piketon employee has described his second career.) Sen. McConnell even crossed territorial lines to verbally assault Secretary of Energy Steven Chu at a hearing in the House of Representatives.

In response, Chu and his subordinates followed the “Duck and Cover” guidance of their atomic agency predecessors:

And never has ducking and covering been done with more ardor and non-aplomb than by Chu’s DOE. No less than three groups of senators and representatives from both parties barraged Chu with interrogatory letters in early 2012, seeking answers to basic questions about continuing stated DOE support for USEC Inc.’s fantasy-land centrifuge spin-doctoring, matched with a non-compos-mentis (not mentally competent) policy regarding real-world cleanup matters at Paducah and Piketon. Not one of the congressional inquiries has yet drawn a written response. Nobel-winner Chu is going for the gold now in Olympic ball-dropping.

The Kentucky delegation has pushed a proposal originally advocated by USEC called “re-enrichment,” which would involve a sweetheart no-bid contract for USEC to run some depleted uranium “tails,” now stored in thousands of cylinders at the Paducah and Piketon sites, back through the Paducah enrichment cascade, squeezing out some additional Uranium-235, staving off a total shutdown.

But all at once, this would violate the laws of economics, jurisprudence and thermodynamics. It could never be more profitable to “re-enrich” tails than it would be to enrich new natural uranium, and the latter course would employ now-underemployed uranium miners, if the objective were to save jobs. If tails were re-enriched, it would never make sense to employ the least-efficient technology on earth, rather than to send the tails to a super-efficient centrifuge plant like the one operating in New Mexico, if the objective were to make money to fund site cleanup. Current legal agreements aimed at protecting the uranium mining industry limit the amount of government uranium stockpiles that can be released in any year to ten percent of the domestic market for commercial uranium. But that allowance is already at quota, owing to the Triay caper of using uranium barters to funnel extra-legal funds to USEC for various and nefarious purposes beyond congressional scrutiny. Plus, any such legislated market intervention would explicitly contradict the USEC Privatization Act, the rationale for which, after all, was to shut Paducah down with hands-off by the politicians.

One can almost sympathize, however, with Mitch McConnell in this spring 2011 exchange with Steven Chu at a Senate Appropriations hearing:

Aside from the disingenuous posturing about the decrepit Paducah plant and the desperate re-enrichment proposal, McConnell makes a simple point:

“Let’s assume we don’t do that [re-enrichment], then the question is, do we have the funds in the 2012 budget to safely and securely idle the [Paducah] plant after it closes and returns to the government?…There’s apparently no plan in your budget for cleanups after the operations cease.”

Chu then evades the cleanup issue entirely. A bit later in the transcript:

Chu: We would have an obligation to clean up that plant

McConnell: When will we see the plan?

Chu: Well, um, we can get back to you and your staff on that.

McConnell: …What I think I hear you saying is, you’ve got no plans for either contingency at the moment.

Chu never got back to McConnell or any other legislator on funding for Paducah cleanup.

The Wreck of the USS USEC

Ten months later, additional uranium transfers have been made to USEC for no purpose other than to keep the company out of bankruptcy, and with closure of Paducah only sixty days away, still no shutdown management or site cleanup plans have been disclosed by DOE. Worse, cleanup funding for the Piketon site has been slashed in the president’s 2013 budget proposal, and it’s become clear that DOE lacks the funds for legally-compliant cleanup of even one of the gaseous diffusion sites, much less two at one time.

The Senate exchange between Chu and McConnell does reveal what has happened. Asked about cleanup, Chu can’t even train his scientific mind on the subject. Instead, he digresses to off-topic technobabble about a project he doesn’t quite want to specify, intended to replace gaseous diffusion. That is a feint to USEC’s own corporate PR, which, since the company’s creation, justified all manner of end-runs around constitutional and statutory law for the sake of a yet-unfulfilled promise that USEC would develop an “advanced” enrichment technology, and deploy it in such a way as to replace the aged plants at Piketon and Paducah.

That proprietary pitch never worked out well for the impoverished communities of Piketon and Paducah, which were pitted against one another in USEC-incited competition. An “advanced” plant would employ relatively few people—a few hundred as opposed to a few thousand—leaving the jobs problem unaddressed. The national security dimensions of a new enrichment plant would prohibit any other form of more gainful reindustrialization at the selected site. And a new plant would not magically clean up the legacy contamination, though it might allow DOE to escape high costs by lower contamination standards through the rubric of “nuclear reuse.”

And that’s exactly how USEC sold its “American Centrifuge” charade to DOE budget bureaucrats. For more than a decade, DOE has funneled federal dollars to “privatized” USEC by the billions, on the ever-extended promise that by building some new kind of nuclear facility at either Piketon or Paducah or both, the major nuclear cleanup costs would be avoided, even if the political promise of saved jobs were as phony as the spin on a USEC centrifuge.

Which turned out to be pretty phony, indeed. On June 11, 2011, only weeks after Steven Chu’s Senate dissembling about how a new enrichment technology might answer the cleanup question, six USEC centrifuges crashed in a covered-up accident at the Piketon test facility, where, after a decade of alleged development, USEC had managed to get only thirty-eight centrifuges running. The June 11 debacle led to a second denial of a federal loan guarantee to USEC, now under Solyndra-like scrutiny, which in turn left USEC barely able to stay out of bankruptcy court, much less build a new nuclear facility, as the company entered the cataclysmic year of 2012.

Half a Billion with a B

In its annual report filed March 14, 2012, USEC acknowledges a net loss for 2011 of $540.7 million. That’s half a billion dollars, including a $127 million write-off for all of the operable centrifuges it had produced so far, a fair chunk of change. Virtually all of those lost moneys came from accrued federal subsidies, including a $50 million mystery payment to USEC from DOE in the third quarter of 2011.

Moreover, the Obama administration has proposed giving USEC an additional $300 million over the next two years for an alleged “Research, Development & Demonstration” centrifuge project—the same crashed program that USEC was contractually bound to complete with private financing by 2005 but never did. Congress has so far not consented to that appropriation, as the request lacks any hint of transparency or accounting controls.

Circumventing committee debate on the issue, Ohio’s two Senators, Sherrod Brown and Rob Portman, inserted a provision for the funding as a last-minute amendment to the unrelated Transportation bill passed by the Senate, but in a rather stunning display of corporate-shill cynicism, Portman voted against the bill that contained his own USEC amendment.

The House has delayed action on the Transportation bill to at least mid-April and more likely to the ninety-day limit of a continuing bill introduced on March 22, which itself contains no bailout language for USEC. That means Congress will almost certainly miss the March 31 “deadline” set by both USEC and DOE as the last date by which the “American Centrifuge” project could be saved from termination by congressional action. USEC had less than $38 million in cash at the end of 2011, per its annual report.

USEC’s bailout prospects have been further damaged by the sound defeat of incumbent congresswoman Jean Schmidt, whose district includes Piketon, in the Republican primary election on Super Tuesday. Schmidt sits on the Transportation Committee, and the T-bill strategy for accomplishing a USEC bailout had been premised on her influence.

Republicans in the congressional delegation from Kentucky may be a bailout’s biggest opponents, since they are being asked to support a new unexplained payment to USEC that is cockamamie, as they may or may not say in Kentucky, just a month before the Paducah plant is scheduled for shutdown, with no management or cleanup plan revealed. That’s a lot to swallow for a state that’s shown no particular love for federal lawmaking.

Kentucky lawmakers are so exasperated, they have fallen back on demanding the re-enrichment scheme just to avert a catastrophic closure with no advance preparations whatsoever. But USEC has put the kibosh on that kind of talk, since the company is in no kind of shape to keep Paducah operating at a loss.

In a webcast conference call that attended release of its annual report, USEC managers emphasized that of three conditions all needed to extend operations at Paducah, none have been met, none are likely to be met by May, and one—sufficient market demand for low-enriched uranium—is virtually impossible given post-Fukushima conditions. Mandatory six-month plant closure notices were issued to Paducah employees last November.

In a concurrent filing with the SEC, USEC made plain:

“…we do not believe there is sufficient uncommitted demand for LEU [Low-Enriched Uranium] to support a Paducah extension, even with an agreement with DOE for tails re-enrichment to absorb a significant portion of the plant production capacity. Therefore, at some point in the next 18 months, we expect to cease commercial enrichment at the Paducah GDP [Gaseous Diffusion Plant] but the facility may remain operational to meet other requirements.”

“Operational” means that USEC will continue non-enrichment activities at the site, to prevent its being replaced by some other managerial contractor. According to Weapons Complex Monitor, USEC has also expressed interest in obtaining the multibillion-dollar D&D contract for Paducah. But when USEC attempted to secure the equivalent contract at Piketon, it was barred from bidding by a conflict-of-interest ruling from the DOE General Counsel. There is no reason to think that the ruling would not apply equally to Paducah.

The Writing on the Wall

The Paducah plant will close in May or soon thereafter, reverting to U.S. government control through a process called deleasing (similar in all ways to delousing). USEC simply can’t afford to keep Paducah open. Following pure profit motive, as it is supposed to do by virtue of the Privatization Act, USEC has calculated that the company loses money every day that Paducah remains in operation, whereas, precisely because DOE has not prepared any contingency plan for D-Day (deleasing day), DOE will be forced to retain USEC as a managerial agent for the shuttered facility. Just as it did at Piketon for a decade, USEC can then collect cushy contract fees, producing nothing, free of any risk or marketplace rough and tumble.

Exit from the internationally-competitive and shrinking (outside of China and India) uranium enrichment industry, and entry into the world of big-time contract services for the U.S. government and other companies, is exactly the corporate strategy that USEC has pursued for the last eight years, since 2004. In that year, USEC purchased NAC International, a company that provides transportation and storage services for spent nuclear fuel, on contract.

So while the Department of Energy has been hawking and funding USEC’s centrifuge technology as the best thing since sliced atoms, USEC has been plotting its exit from the enrichment industry altogether, which partially accounts for why its “American Centrifuge” shadow play has been such a non-starter. There is no “American Centrifuge Plant,” as the signs on the highway advertise. It’s an American subterfuge project, nothing but a high-tech siphon for emptying the U.S. Treasury.

Has Chu’s Department of Energy been fooled by this? I don’t think so. DOE has rationally concluded that as long as it can maintain the pretense of a coming “advanced” enrichment facility, it can avoid billions of dollars in otherwise mandatory cleanup costs, by setting aside all or portions of the Piketon site for “future nuclear use,” with attendant lower cleanup standards.

And that’s what we’ve seen at Piketon—a succession of hoax promised nuclear projects (spent fuel storage, nuclear reprocessing, nuclear reactors, and what not)—together with accelerated “cleanup” schedules to sweep up the site on the cheap, before the future nuclear uses are revealed as phantoms. The latest announced schedule for Piketon D&D, premised on USEC running a completed centrifuge plant on a portion of the site, calls for conclusion of an on-site waste disposal decision, opposed by an overwhelming majority of the community, before this fall, coincidentally enough.

DOE appears to have calculated that it’s cheaper to keep paying USEC in $50 million under-the-table installments—to save the company from bankruptcy court and to keep up the appearance that the “American Centrifuge” project is ongoing—rather than publicly acknowledge that DOE is on the hook legally for tens of billions of dollars of post-nuclear cleanup costs at both the Piketon and Paducah sites, with not even the prospect of funding to pay for it. That logic holds at least until the November election. After that, atomic bombs might as well drop.

But both Mitch McConnell and John Boehner are on to that caper. They know there will be no <em>deus ex machina</em> to prevent a catastrophic closure of the Paducah plant, or a final curtain draw on the “American Centrifuge” stage act, all before Barack Obama stands before the voters in November. The Republicans are planning one helluva summer and fall offensive in the heartland Ohio Valley.

And that is why Steven Chu, winner of the Nobel Prize in Physics, in continuing to shovel federal funds to USEC Inc., while simultaneously playing possum on cleanup of the Piketon and Paducah sites, may turn out to be the highest-ranking idiot savant of all time.

Re-posted on the Southern Ohio Neighbors Group blog.

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Geoffrey Sea is a writer and historian who has studied the uranium enrichment industry for thirty years. In the early 1980s, he served as a consultant to the labor unions at both the Piketon, Ohio, and Paducah, Kentucky, plants. He now lives on the southwest fence-line of the Piketon site and is a co-founder of Southern Ohio Neighbors Group.