September 16, 1998

Investors Not Told of Nuclear Plant Safety Issues, Group Says

By MATTHEW L. WALD

WASHINGTON -- The Nuclear Regulatory Commission has kept quiet about its safety concerns over two uranium fuel processing plants in order to avoid embarrassment on the day after the plants were sold to the public, a nuclear watchdog group said Tuesday.

Documents obtained by the group, the Union of Concerned Scientists, show that the Nuclear Regulatory Commission, which oversees civilian nuclear operations and some Energy Department plants, had many safety concerns, including how well one plant would withstand an earthquake and whether operators took adequate precautions to prevent the storage of too much uranium in one place, which could cause an unintended nuclear chain reaction, essentially a small explosion.

The plants, in Portsmouth, Ohio, and Paducah, Ky., which were built by the Federal Government to process uranium for weapons, naval propulsion reactors and civilian power plants, were sold in an initial public offering this summer, when the Energy Department spun them off as the United States Enrichment Corporation. The management team that ran the two plants before the spinoff now run the corporation.

The Nuclear Regulatory Commission held one of its twice-a-year public sessions to discuss troubled nuclear plants the day after the sale was completed, but did not discuss the two plants. The union said in statements released Tuesday that the information should have been made public by the commission at the meeting.

"Investors are supposed to make their own decisions, what risk they're comfortable with," said David Lochbaum, a nuclear engineer with the Union of Concerned Scientists. "But they can only do that when they have a clear idea of the risks."

A spokesman for the commission, William Beecher, said the commissioners were familiar with the plants' problems from previous reports.

Both plants handle uranium hexafluoride, which is radioactive and a chemical toxin. The commission staff found that in an earthquake, the Paducah plant might release more of the material than previously calculated and "the on-site and off-site consequences would exceed any analyzed accident and be unacceptable."

A July 2 memorandum from the Commission staff, obtained by the Union of Concerned Scientists, said that at the Portsmouth plant, overall performance in the previous eight months was "weak in some areas" and that "the effectiveness of the corrective action system remained weak, due to a narrow focus and incomplete implementation of corrective actions, resulting in the recurrence of some problems."

The problems included an unplanned release of uranium hexafluoride. Half of any group of people who inhale or ingest 230 milligrams of the substance would die, according to an N.R.C. document obtained by the union.

"Some reduced capability of safety system components resulted from poor maintenance or surveillance practices," the report said.

The Union of Concerned Scientists, along with the Critical Mass Energy Project and its founder, Ralph Nader, asked Tuesday for an investigation of possible stock fraud by Attorney General Janet Reno and by the Securities and Exchange Commission.

But Charles Yulish, a spokesman for the corporation who helped arrange its initial public offering, said that the charge that safety issues were hushed up was "preposterous."

"All material matters pertaining to safe operation of plants were released," he said, in the corporation's prospectus. He added that the largest of the earthquake issues would be resolved by work that is expected to be finished this month.

The first shares in the corporation were sold on July 23, and the sale was completed on July 28; the commission met the next day. Lochbaum, of the Union of Concerned Scientists said, "If I'm an investor, and I buy something, and I see the next day the regulator come down hard, it might make me uncomfortable."

Evidence that the Nuclear Regulatory Commission had altered its normal procedure to avoid discussion of the plants was "circumstantial," said Lochbaum, but only the Justice Department or the Securities and Exchange Commission can properly investigate. He said that none of the problems cited was "a showstopper," but that they would take time and money to fix.

Beecher, of the Nuclear Regulatory Commission, said that the plants had been the subject of numerous reports, press releases and public meetings in the months before the sale.

Copyright 1998 The New York Times Company