“Operators…started the auxiliary standby generator. The operators then made repeated attempts to tie the generator to the faulted EMCC [essential motor control center] but were initially unsuccessful.”

No, that’s not a description of desperate attempts to restore power at the stricken Daiichi nuclear reactors in Japan, after the earthquake and tsunami of March 11, 2011. Rather, it’s a just-released description of frantic efforts to restore power at the test nuclear fuel supply project near Piketon, Ohio, three months later to the day, on June 11, 2011. The facility is run by USEC, Inc., the same company that supplied the uranium fuel that melted down inside the reactors at Fukushima.

For years, USEC has touted its whiz-zinger gargantuan uranium centrifuges, while pleading for likewise enormous federal bailouts to save the company from bankruptcy. But now it is documented that the project is more whiz than zing. The Nuclear Regulatory Commission (NRC) has extended a ban on USEC’s use of uranium in test machines, following the crash of six centrifuges, with attendant safety violations, last June.

The order comes in a Nov. 15 letter and Nov. 21 report from NRC, following an inspection of mid-September that found three serious uncorrected conditions. NRC had barred USEC from using uranium in its demonstration “Lead Cascade” at the Department of Energy (DOE) site near Piketon as soon as NRC had been formally notified of the safety breaches on July 1.

This was kept exceptionally quiet, since USEC has needed to demonstrate the commercial viability of its technology, to qualify for a $2 billion federal loan guarantee. Running the centrifuges without uranium cannot yield the required data—namely yield, efficiency, cost and reliability. All summer and fall, with no uranium running and without public acknowledgment, USEC has literally been spinning its wheels.

USEC has misled investors and the public by implying that the purpose of its Lead Cascade was only to demonstrate that “the technology works,” meaning that the centrifuges spin. My blender spins, the machines at the laundromat spin—spinning is no big whoop. USEC had to prove that its technology can beat the commercial competition, and that effort has now spun to a stop.

U.S. Senator Rob Portman (R-OH) belittled the June centrifuge crash as a “hiccup” back in July, when the story broke: “The hiccup at the plant a few weeks ago, I think that has been addressed…We believe all the technology questions about the refinements have been answered. Those should be behind us now.”

Not so fast, Senator. According to NRC technical staff four months after your statement, despite the nuclear scare, it’s a case of hiccups that hasn’t gone away. Portman speaks about USEC using the first-person plural because as congressman from the district and as U.S. Trade Representative, he created the USEC financial mess by temporarily shielding USEC from foreign competition.

[This report is the third in a series on USEC's "American Centrifuge Plant." The first two installments are: Is Privatized Uranium Company Too Rigged to Fail? and Uranium Barter Revealed as USEC Bailout Scam]

Lead, Follow, or Collect $2 Billion

Based on conversations I had with NRC staff last summer, it was expected that the Lead Cascade would be back running hot immediately after a September inspection verified corrective actions. But now USEC has failed that inspection, and the ban on uranium use has been extended at least until after a follow-up review scheduled to begin in mid-January.

This might seem inconvenient for USEC, since Jan. 15 was set by USEC as the alleged final deadline for DOE’s award of a “conditional commitment” on a loan guarantee, a deadline which, if not met, could cause withdrawal of the project’s two remaining major investors—Toshiba and Babcock & Wilcox.

On the other hand, the January inspection date may have been set precisely with the financial deadline in mind, since NRC’s report and findings were not shared with the investors or other interested parties (as is standard practice), and public notice was limited to unadvertised electronic posting on NRC’s document system. That is, one had to guess it was there.

According to the NRC letter, it was USEC project manager Dan Rogers who set the “mid-January” date—an awfully long time from the June crash occurrence—even though the new date coincides with USEC’s crucial financing deadline. Having been denied a second time for a DOE loan guarantee in mid-October, USEC has been intensely lobbying for both a $300 million bailout package that must be approved by Congress, and also for a “conditional commitment” on a loan guarantee, even if USEC knows it cannot meet the conditions set for an award. Could USEC be postponing its safety compliance, with attendant publicity of the uranium ban, until after hoped-for decisions by Congress, DOE, and investors?

If so, it would fit USEC’s consistent delay pattern for the “Lead Cascade.” On paper, the Lead Cascade, licensed by NRC in early 2004, was supposed to be a demonstration array of 240 centrifuges, data from which would justify full-scale commercialization of the so-called “American Centrifuge Plant” or ACP. That idea, however, remained only on paper, as USEC endlessly postponed the project, with the claim it had to “tweak” its machines for optimality. Indications now are that USEC intentionally put off the demonstration because it would reveal the technology as unworthy of pursuit, while the company continued to lobby for bailouts and collect government fees for contract services.

Federal buildings built by the U.S. government in the 1970s in which the USEC Crash of June, 11, 2011, occurred. Author’s fence line visible top left.

 

 

 

 

 

 

 

 

Crony Capitalism or Baloney State Socialism

By August of 2004, USEC had already submitted the license application for a commercial-scale plant of 11,000 centrifuges. NRC granted a commercial scale license for ACP in the spring of 2007, before the Lead Cascade even was initiated, over vocal protest on the point in question by yours truly.

I argued in a petition of intervention to NRC filed in 2005 that if NRC licensed a commercial plant before completion of the demonstration project, it would be a formula for project collapse, leaving the site contaminated and unavailable for alternative use. The “Lead Cascade” would have to be renamed “the Follow Cascade,” as its purpose would be rendered moot.

That logic evaded the sharp minds of U.S. government regulators. By 2009, when USEC was demanding a DOE decision on a $2 billion loan guarantee, the Lead Cascade had a total of ten centrifuges running. That’s ten, as in you could count them on your fingers.

Lead Cascade was “demobilized” (shut down) in August of 2009 for financial reasons, and its “remobilization” two months later was, again, only on paper. By 2011, when USEC was back demanding reconsideration of the loan guarantee, the number of centrifuges had been raised to a whopping 38, 16 percent of the required 240. Six of those 38 machines crashed (and will never again operate) in the loss-of-power incident on June 11, 2011. If such an incident were to affect a completed commercial-scale plant, it could mean the crash of more than 1,700 large centrifuges, with breaches of their housings, an eventuality never contemplated in 2007, when NRC granted USEC a 30-year construction and operation license.

Meanwhile, USEC has adamantly refused to disclose the reliability and efficiency data gleaned so far from its Lead Cascade, even though it asserts with no evidence that performance merits at least $2,300,000,000.00 in public assistance. Twice so far, DOE reviewers with access to the data have disagreed. Originally, USEC was contractually committed to complete the 240-machine test cascade by October, 2005. Six years later, the company is not close to completion, acknowledged by a proposed deal with DOE to initiate now a “Research, Development and Demonstration” (RD&D) project with $300 million of federal money.

RD&D was the precise definition of what the Lead Cascade was supposed to have accomplished six years ago, using company funds derived from many years of substantial federal subsidy. In the highly competitive business of uranium enrichment, with three domestic enrichment projects that all use newer more-efficient technology, no logical case for continued USEC support has been made.

The USEC Crash

As to what occurred on June 11, 2011, the belated NRC inspection report has disturbing echoes of Three Mile Island, Chernobyl and Fukushima, all rolled into one, albeit on a miniature scale.

As in the Fukushima disaster, a power outage precipitated a cascading sequence of adverse consequences, with standby generators not available on demand. As at Chernobyl, workers intentionally disabled safety systems as an emergency bypass. And as with Three Mile Island, control instrumentation had been poorly designed, confusing the operators and making them commit grave errors and second-guess the instruments. Though the nuclear industry likes to tout “lessons learned” from major accidents, the USEC Crash demonstrates that some nuclear operators, at least, are very poor learners.

One line from the inspection report eerily recapitulates descriptions of what precipitated the meltdowns at Fukushima:

“Operators…started the auxiliary standby generator. The operators then made repeated attempts to tie the generator to the faulted EMCC [essential motor control center] but were initially unsuccessful.”

Likewise, at Fukushima, backup generators were successfully delivered by truck, but they could not be connected to the reactor complex system. Typically for nuclear disaster scenarios, one unforeseen circumstance led to others, worsened by insufficient or improper training of personnel:

“During the efforts to re-energize the EMCC, the shift supervisor at the scene responded to the UPS [uninterrupted power supply] panel to acknowledge a general trouble alarm. However, instead of acknowledging the alarm, the individual mistakenly;y opened a protective cover and actuated the UPS shutdown pushbutton.”

That resulted in a direct interruption of power, which caused “multiple casing breaches” on the centrifuges, and “loss of all process indications, and operator controls in the main control room.” Manual bypass of some safety systems in order to restore power then had the effect of disabling certain vital mechanisms, including the ventilation fan that disperses hydrogen gas from the battery room, which could have led to an explosion.

Throughout the “incident,” employees displayed inadequate training and lack of familiarity with instruments and equipment. In discussions with NRC, USEC management showed a profound lack of appreciation for the severity of the problems, and for the steps necessary to correct them. That is why NRC has extended the ban on USEC’s use of uranium in the Lead Cascade.

If the USEC Crash was a “hiccup” then Bhopal was a burp. And the gas release most conspicuous is Senator Rob Portman’s unregulated emission of July, by which he claimed that USEC merits a federal loan guarantee, because its “technology questions…have been answered.”

Runaround USEC

As damning as the NRC inspection report may be, the Commission failed to investigate or address the three most important questions raised by the USEC Crash:

1. Did USEC have foreknowledge of the shortcomings of its centrifuge technology, and was that foreknowledge the reason that USEC postponed deployment of the Lead Cascade, until DOE loan application reviewers forced a token deployment?

2. Has USEC’s financial condition degenerated to the point where the company cannot afford adequate safety measures, and cannot be entrusted to handle nuclear materials or deploy sensitive nuclear technology? (USEC has had negative earnings throughout 2011, a debt-to-earnings ratio of a whopping 51.5, and a total market capitalization of $155 million, only 3 percent of the estimated total cost of a commercial-scale plant.)

3. Has USEC delayed reporting and investigation of the June crash in order to dupe government officials, investors, and the public into the award of a federal loan guarantee or other forms of financial bailout?

The seriousness of June 11, 2011 categorized it as a “24-hour event” under NRC regulations, requiring formal notification of the Commission within 24 hours, notification that would result in public posting. Indeed, USEC did immediately inform its chief political backers on Capitol Hill—Senators Rob Portman and Sherrod Brown (D-OH). Yet USEC waited 19 days, until July 1, before sending formal written notification to NRC, thus postponing any public posting of the event, scheduling of an inspection or restrictions on continued testing.

The notification of July 1, which was posted on July 6, was extraordinarily deficient. It failed to make any mention of the crash of six centrifuges, involving casing breach or even that the centrifuges were running uranium hexafluoride gas at the time.

The timing delay was critical, because USEC had set June 30 as the widely-publicized deadline for DOE to award a conditional commitment on a loan guarantee. It appears that USEC hoped that DOE would meet the deadline and grant an award, before the facts of the centrifuge crash became known.

On the deadline day, June 30, USEC issued a news release announcing a postponement of financing arrangements with investors and DOE, but giving no hint of the extraordinary occurrences earlier that month. And both U.S. Senators kept USEC’s silence, maintaining their public support for a loan guarantee, while failing to inform their constituents of the accident sequence that had occurred on Piketon’s public land.

Public knowledge of the USEC crash did not come until a news release was issued by the watchdog Southern Ohio Neighbors Group on July 7. The severity of the incident remained unreported at that time.

Throughout the summer and fall, USEC continued to press for a $2 billion loan guarantee and other forms of public and private investment, all the while withholding the details of what had happened in Piketon in June, and even while meeting with NRC inspectors to schedule follow-up that coincides with the next USEC-set financing deadline. USEC’s last scheduled conference call with investors was canceled with no explanation. News that the Lead Cascade has been running, or not, with no uranium, and that the uranium ban has been extended indefinitely, has not made it into local or national media, and that information has not been part of the public debate about whether USEC should be given a federal loan guarantee.

I am reminded of the dictionary definition of chutzpah as the quality possessed by one who murders both his parents, then pleads for mercy from the court on grounds that he is an orphan. USEC’s request for a $300 million federal grant for completion of its Lead Cascade now rests with the leaders of the U.S. Congress as they haggle over appropriations for 2012. Central to the decision-making is Speaker of the House John Boehner, whose congressional district neighbors that of Piketon.

The inestimable Jean Schmidt (D-OH), whose district includes Piketon, summarized the USEC situation by saying: “It’s a duh.” The word is dud, Ms. Schmidt, with a ‘d.’