How Fiscal Conservatives Learned to Love a $20 Billion Nuke Plant

Despite massive cost overruns, congressional Republicans have rallied to keep a troubled South Carolina plutonium project alive.

| Wed Jun. 26, 2013 6:00 AM EDT
The MOX fuel plant under construction near Aiken, South Carolina. Experts say it will cost at least $20 billion to build and run over its lifetime.

Before retiring from Congress four years ago, David Hobson, a powerful subcommittee chairman, says he couldn't fathom why the Energy Department was so determined to build a multibillion dollar plant in South Carolina for transforming plutonium into fuel for US nuclear reactors.

Although the plant was billed as a noble arms control initiative, meant to dispose of the plutonium so it could not be used in weapons again, Hobson was troubled by billions in cost overruns, a lack of demand for the reactor fuel and the existence of cheaper alternatives.

Hobson, now 76, said in an interview that he concluded the project had three real aims: It was a multi-billion dollar jobs program for South Carolina, a Bush White House political gift to then-Gov. Mark Sanford and the state's mainly Republican congressional delegation, and the potential kickoff of a much more ambitious and costly enterprise meant to benefit the nuclear industry.

None of those justifications appealed to Hobson, a Republican from west of Columbus, Ohio, who chaired the House appropriations subcommittee on energy and water. But they reflected the heavily political impetus for the project, which so far has survived billion-dollar cost overruns, a series of construction snafus, and revisions to its goals that call into question whether the effort will shrink the risks of plutonium's misuse.

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In 2006, Hobson recalls, he abandoned his effort to halt construction of the plant, in the face of intense lobbying by the Department of Energy, the Bush administration, and fellow congressional Republicans. "It should never have been done," Hobson said about construction of the so-called Mixed-Oxide (MOX) fuel plant at the Savannah River site. "I tried to kill it, but I was pressured not to." Officials in the Bush administration, Hobson explained, said the project was vital to Sanford's reelection that fall. "I was told [that killing] it would hurt his chances of getting elected," he said. So, he says, he reluctantly agreed to back down. Hobson did not say who contacted him, but his account was separately confirmed by a former aide.

The MOX fuel factory rising in the piney woods near rural Aiken, South Carolina, sounds a lot like the kind of mammoth federal public works project that fiscal conservatives say they love to hate. Experts say it will cost at least $20 billion to build and run over its lifetime. It employs 2,100 skilled workers, many of them union members, and has burned through at least $3.7 billion in federal construction funds. But it is nowhere near completion and some doubt it will ever be finished.

Tea partier Sen. Jim DeMint declared that the "Savannah River Site is at the center of the nuclear renaissance."

But the MOX plant has survived threats before, thanks to the ardent support of a handful of powerful public officials in South Carolina and their allies in Congress, including some leading deficit hawks.

Many in the state's congressional delegation have benefited from a stream of campaign donations by major companies with a financial stake in the project and have been lobbied by former government officials and ex-congressional aides on the contractors' payroll.

While the Obama administration, citing the plant's high cost overruns, wants to slash planned spending by half next year and maybe eliminate it in 2015, the Palmetto State's politicians in the past have proven adept at keeping MOX alive by making the prospect of cancelation as painful as possible.


South Carolina's outsized influence

At a critical early juncture, the State's Democrats played an important role in keeping the MOX plant from foundering. Just as construction was getting under way, both James Clyburn (D-S.C.), then-House majority whip, whose district includes part of the Savannah River site, and then-Rep. John Spratt, who was a senior Democrat on the House armed services committee and, from 2007 to 2011, chairman of the House budget committee, stepped in to rescue it.

Clyburn, after beating back Hobson's efforts to halt the program, said in a May 2007 press release: "I am pleased to have worked closely with John Spratt to secure the funding to move this [MOX] project forward."

His efforts didn't go unnoticed. "When it comes to nuclear power, Jim Clyburn is always on our side," Robert Eble, a nuclear safety manager from Shaw Areva Mox Services LLC, the firm designing and constructing the MOX factory, told the New York Times in 2010. Eble was explaining hisfirm's repeated financial donations to an annual golf tournament organized by Clyburn, now the House assistant minority leader.

More recently South Carolina's Republicans have played an even bigger role in the effort, none more crucial than that of Sen. Lindsey Graham (R-S.C.), who once represented the town of Aiken, near the Savannah River site, as a member of the House.

On January 1, Graham announced that "the time has come for the president to face up to the need to control federal spending." But when the Obama administration announced it would throttle back on construction of the plant, now estimated to cost $7.7 billion, Graham called the White House's chief of staff to complain. He blocked confirmation of Ernest Moniz as energy secretary for a month because Moniz refused to promise that the MOX will be finished. Under pressure from colleagues, Graham relented and let Moniz's appointment go through, but the lawmaker pledged to carry on his fight in other ways.
 

Support from deficit hawks

Former Sen. Jim DeMint (R-S.C.), a fiery promoter of the tea party's fiscal conservatism, has also quietly supported the MOX project. While touring the site in May 2009, DeMint declared that the "Savannah River Site is at the center of the nuclear renaissance," according to an Associated Press account.

When the Obama administration announced it would cut back on construction of the plant, Sen. Graham called the White House's chief of staff to complain.

In April, a week after DeMint—who resigned his Senate seat this spring—became president of the Heritage Foundation, its web site published an article entitled, "Mixed Oxide Fuel Facility in South Carolina Needs Congress's Support." Jack Spencer, the article's coauthor, said through a Heritage spokesman that DeMint neither requested the article nor influenced its message.

Former governor Sanford, elected to Congress on May 7, has long backed the plant despite his carefully cultivated reputation as a critic of government spending. Although in 2009 he spearheaded a losing legal battle to block federal stimulus funds for his state, Sanford embraced the multi-billion dollar MOX project. "He sees it as an opportunity for Savannah River to have a new mission," a Sanford spokesman told the Associated Press in 2003.

DeMint's replacement in the Senate, former Republican congressman Tim Scott, has been described as "a fighter for limited government" by the president of the Club for Growth, a group dedicated to cutting federal spending. In an April statement, Scott called the White House search for a cheaper alternative to the MOX plant "irresponsible."

Sitting in the airport lounge in Columbia, South Carolina, Tom Clements of Friends of the Earth, a longtime critic of the MOX plant, reflected on the irony offiscal conservatives rushing to the rescue of a big government, job-generating project like the Savannah River plutonium plant.

Clements noted that the company with the contract to build and operate the MOX plant is now a joint venture of two European companies, one based in France and the other in the Netherlands. Both are countries with left-leaning governments.

"These are cheese-eating socialists who are [building] the MOX program, and Graham's in bed with them," Clements said with a sly grin. Then, referring to the other South Carolina Republicans who support the plutonium plant, he added: "They're posing as fiscal conservatives, but in fact they're big spenders."

Graham, Sanford, Scott, and DeMint declined to comment on that claim. Hobson now says that the soaring costs of the MOX plant have vindicated his opposition. "You go back and look at the hearings," he said. "Everything I said would happen has happened. All that's come true. And there is no end in sight."
 

A contractor's adroit lobbying

It's hardly surprising the MOX project is popular in South Carolina. The region near Savannah River Site is a sea of prosperity in a rural corner of the state. The roughly 11,000 workers at the Site enjoy an average income more than double that of their neighbors who work elsewhere, according to a May 2011 study by the University of South Carolina at Aiken.

An industry-funded group, Citizens for Nuclear Technology Awareness in Aiken, holds "Up and Atom" breakfasts, sponsors golf tournaments, and each year there is an Atomic City Festival in New Ellenton, a town close to the site entrance.

Aside from proliferation concerns, South Carolina politicians already have a strong political motive to support the MOX project. But they and their allies in other states have also benefited from campaign donations by companies with a financial stake in the project.

"These are cheese-eating socialists who are [building] the MOX program, and Graham's in bed with them."

Shaw Areva, which is designing and building the MOX plant, until this year was a joint venture between the Shaw Group and Areva SA, the French government-owned international nuclear giant. Shaw, based in Baton Rouge, Louisiana, was purchased in February by the Netherlands-based Chicago Bridge & Iron NV—which now controls 70 percent of the MOX project.

Since 2003, Areva's employees and the political action committee formed by its US subsidiary have contributed at least $582,000 in campaign donations, an analysis by the Center for Public Integrity revealed. Chicago Bridge and Shaw Group's employees and committees have provided at least $2.2 million.

In total, donors from Shaw, Areva, and Chicago Bridge spent at least $416,000 of this amount on members of the four committees that control spending on the MOX plant. Among South Carolinians, Lindsey Graham's campaign and leadership committee received $41,500, Rep. Joe Wilson's received $26,000, and DeMint's $5,000. Scott, who was first elected to Congress in 2010, received $5,500 for his campaign.

Three other South Carolina Republicans received a total of $39,500 from the same donors for their campaigns after 2002. Areva, Shaw and a law firm that lobbied for the plant on Areva's behalf also contributed $40,000 to Clyburn's golf charity from 2008 to 2012. Political action committees controlled by Shaw and Areva contributed $51,000 to Clyburn's campaign and leadership committee and $41,500 to Spratt after 2002.

Clyburn's spokeswoman Hope Derrick said the lawmaker "is solely motivated by the best interests of the people and communities he serves in Congress." Spratt, in a telephone interview, said the contributions had not influenced his support. A spokesman for DeMint said the donations did not affect his policy positions, while Graham and Scott did not respond to requests for comment.

In the last three years alone, Areva and Shaw have spent at least $6.3 million on lobbying, including efforts by at least four former congressmen and some former committee staffers that advocated spending on MOX and related nuclear issues, according to an analysis by the Center for Public Integrity.

The project's lobbying team has included several heavy hitters: former Sen. John Breaux (D-La.), who left Congress in 2005; and Linda Ann Lingle, the Energy Department's former top liaison to Congress.

Lingle, who was paid $80,000 by Areva last year, said the company ramped up its lobbying after Hobson attempted to kill the MOX project; her responsibility, she said, was to promote the project to South Carolina and Georgia politicians so they could be better advocates. The support of the South Carolina delegation in Congress, she said, was "very important" to keeping MOX alive.

A Shaw Group subsidiary, Shaw Environmental and Infrastructure, last year also hired three savvy Capitol Hill veterans at the international law firm K&L Gates to lobby for the MOX plant: Slade Gorton, a former senator from Washington who sat on the Senate's appropriations and energy and natural resources committees; James T. Walsh, a former House member from New York who served on the appropriations committee; and Tim Peckinpaugh, a former staff member of the House science committee.

Gorton signed a March 10 op-ed article for the Tri-City Herald in Washington state defending the MOX project, saying that there remained a "very clear danger" that nuclear materials could fall into the hands of terrorists. "Some want to delay this important plutonium disposition, which would be a critical mistake," he wrote.

Gorton did not mention his work for Shaw in his piece, which was excerpted on Areva's website. Asked why, Gorton said that at the time it was published, he was only a consultant to K&L Gates, and wasn't aware who had asked for the article: "I don't even know who their client was. They [K&L Gates] asked me to do it."

Walsh did not respond to a request for comment. Peckinpaugh declined to discuss his work.
 

A way to make Washington pay

MOX plant contractors and supporters have additional leverage. When plans for the MOX plant were first hatched, South Carolina worried about becoming a dumping ground for US plutonium. It agreed to host the plant only after Washington promised that the plutonium would eventually leave the state in the form of fuel. But from the outset, South Carolinians worried this promise could be broken.

So in 2002, then-Rep. Lindsey Graham and then-Sen. Strom Thurmond (R-S.C.) secured congressional approval for a unique system of fines: Washington would pay the state $1 million a day—up to $100 million a year—if the MOX plant did not begin producing a ton of plutonium-laced fuel a year by 2009.

Graham has since twice inserted revised language into atomic energy legislation delaying those fines until 2016. "I sat down with the Obama administration and said, 'Listen, we don't want the $100 million, we want the MOX facility,'" Graham said at the April subcommittee hearing. "…I can assure you I would not have done that if I'd known this year in the president's budget they would be suspending the MOX program for study. We have studied this thing to death. It is now time to get on, and getting it built."

Bush officials said the project was vital to Gov. Mark Sanford's reelection. "I was told [that killing] it would hurt his chances of getting elected."

The National Nuclear Security Administration, which oversees the plant, also remains wedded to it. NNSA officials sought to increase spending for it by 47 percent in 2014, according to internal budget documents. But policy officials at the Defense Department urged instead that the MOX plant be scrapped and its budget shifted to modernizing nuclear warhead, according to participants in the deliberations.

After a series of high-level inter-agency meetings, Obama administration officials reached a compromise. They would reduce funding now, spend $320 million to keep the plant's construction going for a year and study cheaper alternatives.

Asked about the $100-million-a-year fines looming over any cancelation, NNSA spokesman Joshua McConaha said "we understand our commitments under current legislation, and we will look to ensure compliance with the law."

When Graham agreed on May 15 to lift his hold on Moniz's nomination, he did so without gaining a promise that the project will be completed. Instead, he released a joint statement with three other Republican senators—Tim Scott, Saxby Chambliss, and Johnny Isakson—vowing to hold up other nominations and use the budget process "to ensure the program moves forward."

Speaking of the administration's desire to reduce funding and look at alternatives to the Savannah River project, they said "we will not allow this ill-conceived plan to proceed."

Center for Public Integrity data editor David Donald and reporter Alex Cohen contributed to this article. CPI is a nonprofit, independent investigative news outlet. For more of its stories on this topic, go to publicintegrity.org.

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