FirstEnergy to pay $28 million fine for lying; Davis-Besse s punishment largest in nuclear industry

1/21/2006

Uhlmann

CLEVELAND FirstEnergy Corp. s nuclear subsidiary will pay a record $28 million fine to avoid being criminally prosecuted for lying to the government about the dangerous condition of Davis-Besse s old reactor head, U.S. Attorney Greg White said here yesterday.

The subsidiary, FirstEnergy Nuclear Operating Co., gets 60 days to pay that amount. It must cooperate with the government in the prosecution of three former Davis-Besse employees who have been indicted by a federal grand jury on charges of making false statements to a federal agency.

The $28 million fine is in addition to a $5.45 million civil penalty from April, 2005, which the company already has paid.

The latter had been the largest fine ever imposed in U.S. nuclear history until yesterday.

Neither of those fines can legally be passed on to ratepayers, prosecutors said.

David M. Uhlmann, chief of the U.S. Department of Justice s environmental crimes section, said the $28 million fine is to let operators of America s 104 nuclear plants know that the government will deal with them harshly if any of them are caught lying again.

[FENOC] violated that duty and, as a consequence, they breached the public trust, Mr. Uhlmann said.

But U.S. Rep. Dennis Kucinich, a Cleveland Democrat who has called for FirstEnergy s operating license at Davis-Besse to be revoked, said the fine was a slap on the wrist for a utility that put the health and well-being on millions of residents of northern Ohio at grave risk.

The congressman said in a prepared statement that a $28 million fine as enormous as it sounds still represents less than 1 percent of the utility s 2004 profit.

That, he said, allows for business as usual at FirstEnergy.

Mr. Uhlmann said the company showed brazen arrogance by withholding information in the fall of 2001 when the NRC was debating internally whether Davis-Besse was too dangerous to keep operating past Dec. 31 of that year, he said.

Ultimately, senior NRC officials overrode a staff recommendation to shut down the plant immediately. They struck a compromise to let it keep operating until Feb. 16, 2002 six weeks shy of its planned shutdown date of March 31, 2002.

The agency now says it would never have done that if it had known at the time that the plant s old reactor head was on the verge of rupturing.

At a joint news conference in Mr. White s office, the Justice Department and the NRC announced criminal indictments against Andrew J. Siemaszko, a former Davis-Besse systems engineer; David C. Geisen, a former Davis-Besse engineering manager, and Rodney M. Cook, an outside contractor-consultant who had worked at Davis-Besse for many years.

Mr. Siemaszko and Mr. Geisen were each indicted on five counts. Mr. Cook was indicted on four. Each faces up to five years in prison and a fine of up to $250,000, Mr. White said.

Their cases would be heard later this year in U.S. District Court in Toledo if they go to trial, said Mr. White, who did not rule out the possibility of pleas being negotiated.

Mr. Siemaszko, 51, of Spring, Texas, and Mr. Cook, 55, of Millington, Tenn., could not be reached for comment.

Richard Hibey, an attorney representing Mr. Geisen, 45, of DePere, Wis., said in a prepared statement yesterday that the indictment is unsupported by facts and contradicts logic.

Mr. White said the grand jury looked at other people, but that there was not enough evidence to criminally indict officials higher up in the company.

Nobody at the NRC has been disciplined for what happened at Davis-Besse, despite the agency s admission that its oversight at the plant had lapsed.

There was no need for discipline at the NRC. [FirstEnergy] was not forthright with us, said Martin Virgilio, deputy executive director of the NRC s materials, research, state, and compliance programs.

Gary Leidich, FENOC president and chief nuclear officer, said in a prepared statement that the company is eager to move on.

The agreement closes an important chapter on the Davis-Besse reactor head issue for the company, he said.

FirstEnergy has spent some $605 million to replace Davis-Besse s old reactor head, make numerous other modifications, and buy replacement power during the two years that the plant was shut down. It has been running without incident since the NRC authorized restart in March, 2004.

FirstEnergy Nuclear Operating Co., as it exists today, is a new company, Richard Wilkins, a company spokesman, said.

Federal prosecutors said they were willing to let the utility avoid criminal prosecution because they, too, have concluded the corporate culture of FirstEnergy Nuclear Operating Co. is a far different one than it was four years ago, Mr. Uhlmann said.

About 85 percent of the $28 million fine some $23.7 million will be paid to the U.S. Department of Treasury.

The other 15 percent some $4.3 million is to be spent on community service projects, including $800,000 for a wetlands restoration project at the Ottawa National Wildlife Refuge, plus $550,000 for improvements to the refuge s Visitors Center.

Another $500,000 is to help the Ottawa County Emergency Management Agency improve its communications system, and $500,000 more is dedicated for energy-efficient technology research at the University of Toledo College of Engineering.

The Cuyahoga Valley National Park and Habitat for Humanity s northern Ohio chapter are to receive $1 million apiece. The park s money will go toward extending Towpath Trail, while Habitat s will be used for the construction of energy-efficient homes.

Mr. Geisen was the only one of the three men who continued to work in the nuclear industry up until recently. Earlier this month, the NRC barred him from the industry for five years. He began work as an engineer at the Kewaunee nuclear plant near Green Bay, Wis., shortly after leaving Davis-Besse.

Last year, Mr. Siemaszko became the first of the former Davis-Besse employees to have a five-year employment sanction imposed on him.

Two others received the same penalty this month, while one Prasoon Goyal, 60, of Toledo received a one-year ban on work in the nuclear industry.

Prosecutors said that Mr. Goyal, a former senior design engineer, will not be charged with a crime because he has agreed to cooperate with the government in its case against the other three.

Mr. Siemaszko, who was once in charge of inspecting the reactor head, has claimed that FirstEnergy officials ignored his demands to do more maintenance on it during the plant s 2000 outage.

Two watchdog groups, the Union of Concerned Scientists and Ohio Citizen Action, recently were granted the right to help him with his appeal of the NRC s employment sanction.

Those two groups have accused the NRC of working with the company to make Mr. Siemaszko a scapegoat.

Their sentiment was echoed yesterday by Jim Riccio, Greenpeace s nuclear policy analyst in Washington, who said the indictment of Mr. Siemaszko is akin to shooting the messenger.

Contact Tom Henry at: thenry@theblade.com or 419-724-6079.