Another SC nuclear boondoggle could soon meet its end. This time it's $7B in taxpayer money wasted

By Andrew Brown abrown@postandcourier.com May 20, 2018 Updated May 21, 2018

The Mixed Oxide Fuel Fabrication Facility at the Savannah River Site in 2018. Less than 50% of the facility is completed and the U.S. Department of Energy wants to shut down the project that has already cost $7.2 billion in taxpayer money. High Flyer/Provided

COLUMBIA — It's a familiar story in South Carolina: Nuclear contractors fail to produce a reliable schedule, start construction with just a fraction of design finished, and let pipes and other material corrode in storage under the watch of government agencies.

The abandonment of two nuclear reactors at the V.C. Summer Nuclear Station generated headlines and riled state lawmakers since last summer, but 90 miles south, a similar scenario played out at the Savannah River Site near Aiken.

The federal government has likely squandered more than $7 billion as they watched a project fall decades behind schedule and its final cost increase by 12 times the initial estimates. And, like V.C. Summer, the plug is being pulled. The parallels don't end there: The debacles also shared two of the same contractors. 

The Savannah River project has not faced the same anger and scrutiny as the abandonment of the two nuclear reactors in Fairfield County — likely because the inflated cost of the complex project is being distributed to federal taxpayers across the country instead of 1.6 million electric customers in South Carolina.

For more than a decade, the U.S. Department of Energy and its private contractors have tried to build the plant to turn Cold War-era nuclear weapons into fuel that could be used in nuclear power plants. It's known as MOX, short for mixed oxide fuel fabrication.

The project became a federal priority around the turn of the century, and was intended to be a cornerstone of the United States’ effort to reduce its aging stockpiles of nuclear weapons.

But for more than four years, it has been on the federal chopping block. In federal studies and congressional testimony reviewed by The Post and Courier, government officials laid out a long list of problems with the contractors and the project in general. Two presidential administrations have tried to put an end to the costly undertaking.

Each time, however, South Carolina's powerful congressional delegation revived the project, siding with the contractors who disputed the findings of independent consultants and federal agencies.

Now, it may be too late. Congress gave U.S. Energy Secretary Rick Perry the power in March to put an end to the 11-year construction effort, and the federal agency is already taking action.

Earlier this month, President Donald Trump's administration released an alternative proposal to deal with the 34 metric tons of weapons-grade plutonium that was set to be processed at the site. They estimated it will cost less than half of what it would take to finish the MOX facility and turn the plutonium into commercial fuel.

The new plan calls for mixing the plutonium with another material, not revealed by the federal government, and storing it below the New Mexico desert. Buried with it could be the second major nuclear project to be cancelled in South Carolina in less than a year.

Born out of necessity 

The idea for the MOX facility was hatched in the mid-1990s in the aftermath of the collapse of the Soviet Union.

The United States became increasingly worried that stockpiles of plutonium would fall into the wrong hands. Less than nine pounds can make a nuclear bomb, and tons of the radioactive material from dismantled warheads in Russia and the United States needed to be secured.

"There was a lot of interest in coming up with a way to transform those stockpiles so they couldn't be as easily used by terrorists," said Edwin Lyman, an official with the Union for Concerned Scientists who has studied the issues surrounding the MOX program and supports shuttering the project.

After years of debate, the two countries signed an agreement in 2000 in which they each agreed to deal with 34 metric tons of plutonium by processing most of it into fuel for commercial reactors — a 21st century attempt at transforming swords to plowshares.

The U.S. Department of Energy released a report in 2002 that estimated the price of building the new MOX facility near Aiken would cost around $1.4 billion in today's money. The project offered the prospect of hundreds of new jobs at the Savannah River Site, building upon its long nuclear history that stretches back to the 1950s.

Construction officially began five years later in 2007. The facility planned to blend the plutonium with depleted uranium. That mixture would then be formed into fuel rods for power plants. MOX has been used as fuel in Europe for decades. But there are no nuclear reactors in the United States currently using the mixture.

Shaw Group, one of the original contractors at V.C. Summer, and AREVA, a French-based nuclear company, were initially hired to build the one-of-a-kind facility for the Department of Energy. Shaw would later be taken over by Chicago Bridge & Iron — a move that put the company in charge of both South Carolina nuclear projects.

Fast forward more than a decade, and the companies have sunk billions into the facility that has risen out of the surrounding pines. But many of the circumstances that drove federal officials to approve the project, including the deal with Russia, have changed.

So, too, have the projections for the final cost of the facility. It now stands at roughly $17 billion.

A 'horror story' for taxpayers? 

U.S. Rep. Jim Cooper took direct aim as he opened a congressional oversight hearing in the fall of 2015.

“I am worried that, as we enter the month of October and head toward Halloween, that really the subject of this hearing is a horror story for the American taxpayer,” said Cooper, a Democrat from Tennessee.

By that time, the contractors’ forecasted price tag for the facility had jumped by more than six times the estimates from 2002. The Department of Energy estimated the cost to be even higher, and President Barack Obama’s administration was pushing to end construction altogether.

Rep. Joe Wilson, a Republican whose district includes the Savannah River Site, defended the project and its contractors, but other members of Congress wanted to know more about why the price kept climbing.

John MacWilliams, an Associate Deputy Secretary of Energy, told the federal lawmakers one of the biggest problems was that construction began with only 20 to 25 percent of the design for the MOX facility complete.

“Immature design is one of the biggest problems we face,” said MacWilliams, who led a special team that reviewed the project’s management.

MacWilliams also reported that around a quarter of the rebar, pipes, electrical wiring and other material that was initially installed had to later be torn back out and replaced — slowing construction and increasing the cost of labor.

Like V.C. Summer, federal officials reported materials being ruined because parts were ordered years before they were ever needed. The contractors reportedly didn't have a "resource loaded" schedule that tied together supplies and construction work. Fifty percent of the piping that was manufactured as of 2016 was unusable due to corrosion and design changes, a report by the U.S. Army Corps of Engineers found. "This pattern of early procurement is systemic," the report said.

“I think it’s clear that although there is blame to go around on all sides the contractors from the very beginning misled the Department and for that matter the U.S. government,” MacWilliams told The Post and Courier last week.

That distrust has only grown. Officials with Chicago Bridge & Iron dispute much of what MacWilliams and other federal officials reported about the project.

They said the amount of material that needed to be ripped back out and fixed was below industry standards. The companies even paid for their own analysis, which critiqued three separate federal reports that suggested the project should end.

That study blamed the problems at the site on the more limited funding Congress appropriated for the project after 2013. A spokesman for the contractors said he could not comment for this story.

Today, the two sides can’t even agree on how much of the project is finished. The Government Accountability Office last November agreed that around 30 percent of the facility is properly installed and in place.

The contractors and members of South Carolina’s congressional delegation previously said it was 70 percent finished.

In a news release from last month, Wilson simply announced it was “more than halfway complete.”

Disposing of the problem 

The new destination for the 34 metric tons of plutonium could be a catacomb of concrete-lined chambers nearly half a mile under the southeast corner of New Mexico.

But that doesn’t mean that South Carolina won’t play a role in disposing of the material.

As it stands, the Department of Energy is now considering a strategy known as “dilute and dispose.” It calls for more than 26 metric tons of plutonium currently warehoused in the Texas panhandle and another 7.8 metric tons already in South Carolina to be turned into a powder, mixed with an undisclosed material and stored away.

The Savannah River Site will serve as the midway point in the process. It's where the plutonium will be blended before its shipped by rail to the Waste Isolation Pilot Plant outside Carlsbad, N.M.

Existing facilities at Savannah River are already capable of diluting the plutonium, but the federal government also wants to install new equipment to speed up the work that’s expected to continue for the next three decades. The full price tag for the process, according to a new Department of Energy analysis, could equal another $19.9 billion.

By comparison, federal officials say it would take another $48 billion to complete the construction of the MOX facility, as well as finish the work of turning the plutonium into fuel.

"The MOX project is not viable and needs to be terminated," said Tom Clements, an advocate that runs Savannah River Site Watch, who has monitored the project for years. "It's a huge waste of money."

South Carolina's Republican leaders disagree. They want MOX completed. They’ve questioned if the facility in New Mexico can store all of the plutonium and if state officials there will accept the new shipments. Even more, they’ve complained about the loss of jobs and the economic impact that’d be felt in the surrounding counties if construction is halted.

The Department of Energy tried to allay those fears by opening up the prospect of manufacturing new nuclear weapons at Savannah River in the future. But that hasn't satisfied the politicians. 

"The DOE’s recent attempts to pacify South Carolina by dangling a possible recommendation to manufacture plutonium pits at the Savannah River Site solves no current problem," McMaster wrote in a letter to Secretary Perry.

McMaster, Wilson, Sen. Lindsey Graham and state Attorney General Alan Wilson met late Friday to discuss whether to challenge the Department of Energy’s plans in federal court. The governor is set to have dinner with Trump at the White House on Monday and could chat with him about the project.

They've got less than a month to sort out their legal strategy or convince federal officials to change their mind.

Reach Andrew Brown at 843-708-1830 or follow him on Twitter @andy_ed_brown.