U.S. Energy Department Faces Lawsuit over ‘Secret’ Nuclear Loan Program

Environmental group accuses government of ‘astonishing level of censorship’ in its $8.3 billion Georgia nuclear loan deal

Aug 11, 2010

The U.S. Department of Energy (DOE) has been hit with a lawsuit for failing to disclose details of its $8.3 billion nuclear loan guarantee deal with utility giant Southern Co. to build the nation's first reactors in over 30 years.

The suit, filed on Monday by Southern Alliance Clean Energy (SACE), a Tennessee-based environmental group, asserts that the DOE violated the Freedom of Information Act (FOIA) when it failed to release documents the organization sought concerning how the government made its decision.

The documents involve loan guarantee applications, terms and conditions of the deal, correspondence between the applicants and environmental review records.

SACE told reporters on Tuesday that DOE's decision to shield information suggests a cover-up to hide risks to taxpayers.

"What we're trying to do is get the details of the various [nuclear loan] deals that are going on to show that the game that the utilities are playing here is to shift risk ... onto the ratepayers and the taxpayers, and minimize the exposure to the company and the investors," said Stephen Smith, executive director of SACE.

The loans were awarded in February to Atlanta, Ga.-based Southern Co. and its partners to construct two 1,100-megawatt reactors atomic reactors at the Plant Vogtle site near Waynesboro, Ga., about 175 miles east of Atlanta.

Observers say more commitments are expected to follow, as the Obama administration strives to propel a new generation of plants forward.

"Setting the precedent of hiding the financial ball from the public in round one is a very bad start for this program," Smith said.

On March 25, SACE filed a FOIA request from the DOE. Under the law, the filing would have required a response no later than April 22, the group said. Government agencies are expected to comply with FOIA requests within 20 business days, although extensions can be granted under extraordinary circumstances.

SACE submitted an appeal in May. And on July 6, DOE partially complied, releasing a "handful" documents that "were heavily redacted with all important details blocked out," Smith said. One document was "censored 244 times with half a dozen pages nearly or entirely obscured," he added.

He called it "an astonishing level of censorship."

Larry Sanders, director of the Turner Environmental Law Clinic at the Emory University School of Law and an attorney for SACE, said he "didn't expect that the agency was going to produce voluminous records responding to our request in such a short period." But he expressed frustration at the "huge amounts of redaction."

DOE said that much of the information sought by SACE was confidential business information or trade secrets of Southern Co. or contractors who are building the plants.

"Without a doubt there is going to be some sensitive material in the records of the agency related to this loan guarantee," said Sanders. "It's only a problem when the agency decides to black us out entirely." 

If SACE prevails, the DOE may be compelled to release full documents. But Sanders remains skeptical.

"Unfortunately our expectation is that the response is going to be more of the same redacted documents," he said.

Too Risky

Under the DOE loan guarantee program, established in the 2005 Energy Policy Act, the government protects lenders if  projects fail. This reduces the costs of financing the construction of new reactors and allows projects to carry a relatively high portion of debt. But in the case of default, SACE argues, the taxpayers would be forced to pay.

"There's too much money and too much risk," Smith said. "We need to get this out in the open."

One of the greatest risks, advocates say, is in the design selected for the Vogtle plant reactors.

The AP1000, developed by Pennsylvania-based firm Westinghouse, has been under heavy scrutiny from anti-nuclear advocates and has not received regulatory approval from the Nuclear Regulatory Commission (NRC). SACE and other groups allege the proposed design has structural flaws that make it vulnerable to severe weather and to radiation leaks in the event of an accident.

Westinghouse says the design is "the safest and most economical nuclear power plant available in the worldwide commercial marketplace."

The design is on its 18th revision. Last October, NRC put the brakes on the review process in response to concerns. In a June memo to Westinghouse, the agency established a schedule of approval that targets a final decision on the design in September 2011.

The release of the loan money is subject to receipt of the combined operating license from the NRC. Southern Co. says the units are expected to be completed in 2016 and 2017.

Green Groups to Blame?

Smith said he is not opposed to either nuclear power or loan guarantees in general, but sees the industry as too mature to receive such a large share of government largesse.

"We believe that this is a mature industry," Smith said. "We do not at all buy the argument that the industry should be as heavily subsidized as it is."

He in part blames the current nuclear boom on large environmental organizations, who he says made one-sided concessions to Republicans without getting anything in return. 

"I believe that a number of the national environmental groups basically got in bed with the Obama administration about offering this unbridled support for nuclear power as a 'bargaining chip' to try to lure the Republican party into a climate deal," Smith said.

With midterm elections looming and Congress having failed to pass comprehensive climate and energy legislation, he said "they offered up a lot of this stuff prematurely with no response back" — and ended up with "nothing."

See also:

Secrecy Shrouds DOE's $8.3Bn Nuke Plant Loan, Watchdogs Say

Georgia Judge Rules Against 2 Controversial Nuclear Reactors

Coalition: Design for New Nuclear Reactor Less Safe Than America's Current Fleet

Obama's $8 Billion Nuclear Boost Dogged by Safety Concerns

Where Is Nuclear Power Really Heading?

Nuclear Power's Cost Competitiveness Remains a Critical Question

Nuclear Energy – White Knight or Dangerous Fantasy?

 

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