NNSA to Issue Partial Stop Work Order to Contractor Shaw AREVA MOX Services
Todd Jacobson
NS&D Monitor
3/04/2014
The Obama Administration is moving to formally shut down the Mixed Oxide Fuel Fabrication Facility, with the President’s Fiscal Year 2015 budget request submitted to Congress today providing money to place the project into “cold-standby,” and the Administration will soon issue a “partial stop work order” to project contractor Shaw AREVA MOX Services. The decision by the Administration comes following a year-long review of the NNSA’s plutonium disposition program, and the realization that construction and lifecycle cost estimates had grown unaffordable in recent years. “We’re stopping because of the cost,” acting National Nuclear Security Administration chief Bruce Held said in an afternoon teleconference with the media. “The cost has just gotten way beyond what we can really honestly ask the taxpayer to bear in these very tight budgetary periods. So the driver for this decision was cost.”
The estimated price tag to build the facility had increased to $7.7 billion, up from an original price tag of $4.8 billion, and the lifecycle costs of the project had ballooned to nearly $30 billion. That forced the Administration to look at options to meet plutonium disposition goals “more quickly and cost effectively,” it said in budget documents. In the documents, it called the MOX approach “significantly more expensive than planned” and “not viable within the FY 2015 funding levels,” adding: “The Department of Energy is developing alternative approaches to plutonium disposition and will engage with stakeholders to determine a viable alternative.”
DOE began building the MOX project at the Savannah River Site in 2007, and the project has long been the Administration’s planned option for disposing of 68 tons of surplus weapons-grade plutonium (34 tons apiece) under an agreement signed with Russia in 2000. But in addition to rising costs, the project also has had trouble getting utilities to sign on to burn the fuel since Duke Energy pulled out of its commitment several years ago, and no utilities are currently in place to buy the fuel. DOE and Shaw AREVA MOX Services also failed to renegotiate a new contract in recent months, with the contractor balking at a DOE push for a new fixed price contract.
Sen. Graham: ‘This Cannot Stand’
South Carolina’s Congressional delegation reacted quickly—and angrily—to the decision. “This cannot stand,” Sen. Lindsey Graham (R-S.C.) said in a statement. “Make no mistake about it, President Obama’s budget submission to Congress is both irresponsible and reckless. His decision to dramatically reduce funding for the MOX program to a point that raises serious questions about its viability represents a fundamental breach of trust with the residents of South Carolina. I will be working with the Department of Energy and members of the Senate Appropriations Committee to address this injustice.”
Rep. Joe Wilson (R-S.C.) said the cold standby approach represented a termination of the MOX project. “The President is failing to uphold vital nonproliferation agreements and ongoing environment cleanup missions,” he said, adding: “This project plays an integral role in honoring international agreements with Russia. As evidenced by today’s reality in the Ukraine, it is clear the Obama Administration has no intention of carrying out a foreign policy that demands international respect. Requiring Russia to cooperate and dispose of their nuclear bombs should not be up for debate.” Sen. Tim Scott (R-S.C.) also criticized the decision in the context of Obama’s foreign policy. “With no clear alternative after more than a year of looking, the President has apparently chosen this critical time to signal to the international community we are willing to break an agreement with Russia to dispose of 68 metric tons of weapons-grade plutonium—half of which is located in Russia,” Scott said.
Scott was also critical of the impact the decision would have on South Carolina. He noted that the state “agreed to host the MOX facility under the impression the nuclear material would be processed into usable fuel for commercial power reactors—not sit in South Carolina indefinitely. The federal government could in fact have to pay hundreds of millions of dollars in fines to the state if this project is not completed.” He said he was planning to work with DOE “to find the most cost-efficient path forward in order to meet our international obligations.”
Study: Vitrification, Storage Not Viable
DOE is expected to bring in a third party to study MOX alternatives, but the recent study is believed to have concluded that vitrifying the plutonium with high level waste or long-term storage at the Savannah River Site are not viable alternatives to MOX. The Administration has not released the results of its MOX alternatives analysis, which was led by DOE Senior Advisor John MacWilliams. “They are continuing to work with the contractor to see if we can’t find some other way of doing this to get a substantial cost reduction on the MOX path but we are continuing to look at other pathways as well,” Energy Secretary Ernest Moniz said in a press briefing yesterday.
WARN Act Notices Expected
The stop work order is likely to prompt contractor Shaw AREVA MOX Services to lay off many of its craft workforce at the site, and the contractor is expected to issue WARN Act notices for other professionals at the site this month. The contractor, however, will be expected to help work with the Department of Energy to develop a detailed cold standby plan in the coming weeks, NS&D Monitor has learned. Shaw AREVA MOX Services did not respond to a request for comment, but AREVA issued a statement, calling cold standby a “funding euphemism for terminating the project.” The French company went on to call the budget request “insufficient” and suggested that it “hamstrings the achievement of this critical nuclear weapon nonproliferation mission and fulfillment of our signed agreement with Russia.”
AREVA said it was looking forward to Congressional input on the request as well as opinions from around the country. “We are disappointed that after multiple direct negotiations with the Department of Energy (DOE) to firm the construction cost and schedule, and after recently receiving additional construction funds and reprogrammed funds from Congress, the DOE calls for, in essence, a cessation of a previously approved program,” the company said. “We are once again reminded that a budget submission is a request, and one step in a long, deliberative process.”
NNSA nonproliferation chief Anne Harrington said alternatives will continue to be analyzed over the next 12 to 18 months, and she emphasized the alternatives will still include MOX. The decision “does not eliminate MOX as a possible pathway forward,” Harrington said. “It would require a considerable reduction in lifetime costs.” She said putting the facility in cold standby would allow the facility to remain secure and protected from the elements in case the project is to resume, or the facility is used for another purpose down the road. “We’ll be accounting for and protecting all government property, records, data, and we will look at the subcontracts, including those for delivery of items and equipment, and where it’s cost effective to take possession of those things, we will. Where it’s not, we will suspend those subcontracts or look at terminating the subcontracts.”
A Possible Alternate Solution?
While MOX does not appear viable, a potential solution that might somewhat mollify South Carolina lawmakers and is believed to be favored by the Administration is downblending the plutonium in the Savannah River Site’s H-Canyon facility, which would allow the material to be sent to the Waste Isolation Pilot Plant in New Mexico at less than the MOX project cost. That option would also require a renegotiation of the U.S. plutonium disposition agreement with Russia, but that is not believed to be a stumbling block. “At the right time we’ll have to reengage in those discussions. Now might not be the right time,” Moniz said, referencing the current chilly relations between the U.S. and Russia over Ukraine.
Though it’s placing the project in cold standby, the project will still be costly in FY 2015 and for several years. The Administration is requesting $221 million for the project, $122.5 million less than Congress provided in FY 2014, and it is expecting to have to spend between $700 and $900 million to keep the facility in cold standby over the next several years. But the funding level is well below what the program would have expected to spend had it been in full construction.
In budget documents, the Administration said it was not backing away from its commitment to dispose of the excess plutonium. “The Administration remains firmly committed to the overarching goals of the plutonium disposition program to: 1) dispose of excess U.S. plutonium; and 2) achieve Russian disposition of equal quantities of plutonium,” budget documents said. “The Administration recognizes the importance of the U.S.-Russia Plutonium Management and Disposition Agreement (PMDA), whereby each side committed to dispose of at least 34 metric tons of weapon-grade plutonium.”
Consultant Examining Contract Termination
In a sign that the project was on the rocks, the NNSA dispatched a consultant to the MOX project to examine options for terminating Shaw AREVA MOX Services’ contract for plant construction. The consultant is believed to be retired DOE official David Darugh, who was chief counsel during the shutdown of the Superconducting Supercollider Project in Texas cancelled by Congress in the 1990s.
The decision to put the project in cold standby was welcomed by activist groups, who had suggested that safer and more secure alternatives were available at a cheaper price. The Union of Concerned Scientists had sought to block the Nuclear Regulatory Commission from issuing an operating license for the facility because it had argued that terrorists would have had easier access to the plutonium during processing, transport or storage than other disposal options. “The DOE has already wasted billions on this risky project. It’s time to pursue a cheaper and safer alternative,” Edwin Lyman, a senior scientist in the UCS Global Security Program, said in a statement. “Congress should follow the administration’s lead and terminate this ill-advised program.”
Tom Clements, advisor to the South Carolina Chapter of the Sierra Club, said immobilizing the plutonium in high- level waste should top the list of MOX alternatives. He estimated that $5 billion had already been spent so far on the MOX program, though NNSA Acquisition and Project Management chief Bob Raines said the figure was $3.9 billion. “With the prospect of more cost increases and no customers to use any MOX fuel that the MOX factory might produce, DOE had no other option but to put the project on ice,” Clements said.
