The Money Tree
If philosophical differences were what started the Yucca Mountain brushfire, money was the fuel that turned it into a firestorm. Money, tens of millions dollars worth, devoted to anti-nuclear politics by the Nevada Nuclear Waste Project Office made the debate rage out of control. The ironic part was that the Yucca Mountain opposition was funded with the same money that had been set aside to study and implement the repository. In essence, the nuclear industry paid its own worst critics to attack them.
And it paid them quite well to do so. It can be argued that the better half of the fifty million dollars spent on the Nevada Nuclear Waste Project Office over the years from 1983 to 1993 was used for anti-nuclear public relations, political advocacy and environmental special interests. Under director Bob Loux's guidance, nearly every study undertaken by the state of Nevada was directed towards foreclosing the possibility that the repository would come to the Silver State. Statements issued by NWPO, no matter what the scientific underpinnings, were twisted in an attempt to scuttle the entire project.
DOE also often misallocated resources as well; yet the sins of the federal agencies and its contractors were of the usual sort. Bureaucrats and subcontractors who milk the system are endemic in many large government projects (e.g., the Texas supercollider) and Yucca Mountain has been no better or worse than most projects in this respect. The difference between NWPO and DOE has been that DOE has for the most part avoided promoting an overt ideological agenda. NWPO was and is another story.
At the time of this writing, this author has an accounting of $40,975,642 worth of NWPO's contracts. Of that amount, $23,502,022, or 57.4% went to contractors outside the state of Nevada. If the Silver State weren't a mining state and one that had helped pioneer radioactive materials handling at the Nevada Test Site, the large percentage of money let to outside contractors would be understandable and accounted for by the need for outside expertise to handle technical issues. In fact, Nevada has a stock of trained professionals not only in geotechnical, mining and engineering fields, but also sophisticated in evaluating socioeconomic impacts in regards to the hotel, gaming and convention trades on which the state depends for its existence. Consequently, money spent out-of-state by the Nevada Nuclear Waste Project Office must be viewed suspiciously, generally favoring anti-nuclear coalitions that have little interest in Nevada.
Not all NWPO money was misspent, a number of the studies conducted within the Nevada university system on geological and engineering sciences were legitimate, as was the work of the occasional independent consultant and subcontractor. However, even legitimate studies were often manipulated to try and discredit Yucca Mountain. In fact, at one point Bob Loux threatened to withhold money from studies conducted by the University of Nevada, Las Vegas, the University of Nevada, Reno and from Desert Research Institute unless they ignored objective science and supported the state's anti-repository position.
Political powers in Nevada, especially Governor Miller and Senator Bryan, have had a vested interest in covering up the finances and scientific dirty-laundry of the Nuclear Waste Project Office. No thorough independent audit has ever been done on the agency. Certainly there have been superficial audits which in essence asked the question of whether NWPO spent the money it received, and unsurprisingly found that they had. The real multi-million dollar question is whether NWPO spent its money on legitimate oversight or as a giant political slush fund.
While Nevada officials have been content to look the other way at NWPO transgressions, the question of whether the Nevada Nuclear Waste Project Office has been spending its funds wisely and legally has been a recurrent theme for a number of years at the federal level. The General Accounting Office was asked to look into this matter in 1989 and issued a report that questioned a number of the agency's activities.
Although Nevada properly used most grant funds, it spent some funds for activities that were not authorized/or were expressly prohibited by law, regulation, court decision, or grant provision. Specifically Nevada:
An independent audit for the year ended June 1988 also questioned the state's use of $69,000 of grant funds for state legislative activities because federal guidelines prohibit, and there is no explicit statutory authority for, the use of grant funds for this purpose. DOE had approved this use of the grant funds. On the basis of the nuclear waste act and applicable court rulings, GAO concluded that DOE had sufficient discretion to approve the use of grant funds for this purpose. [GAO / RCED-90-173, Nevada Grant Requirements, p3.]
Normally, misspending $1 million of what was in 1989 a cumulative $32.2 million in grant funds would be enough to get an agency head sacked, if not at least called on the carpet. Bob Loux has been able to successfully dodge these bullets by claiming that expenditure irregularities don't exist, in effect staring down his inquisitors. Ironically, DOE was itself at least partially to blame for letting NWPO get out of control. The GAO goes on:
In 1985 a federal court held that DOE is required to fund Nevada's proposed tests and studies related to DOE's investigation of Yucca Mountain if they meet certain conditions. Subsequently, because of the court's decision and other factors, DOE adopted a permissive approach to administering the state's grant that has contributed to Nevada's improper use of funds. [GAO / RCED-90-173, p4.]
In other words, DOE was sufficiently cowed by Bob Loux's and Senator Bryan's political attacks that the agency simply looked the other way and allowed NWPO to get away with what were known to be suspicious and even illegal uses of funds. But what were the "other factors" that swayed DOE's attitude toward NWPO's use of their grant money?
Privately, DOE and subcontractor managers express feeling that since they could never persuade the politicians of the state of Nevada to act cooperatively in regard to the study or implementation of Yucca Mountain repository, fighting the misappropriation of NWPO funds would be a losing battle. No matter what conciliatory measures were taken, DOE would be attacked by the state, and if DOE questioned the state's expenditures of funds, there would be a political hurricane. Apparently, a semiconscious decision was made to allow the state to spend its funds as it pleased, and then simply ignore their input, in essence throwing the dog a bone and hoping this would solve the problem. It appears the dog took the bone and then proceeded to bite the DOE in the leg.
GAO was on the right track in their 1989 audits of NWPO, but they simply didn't go far enough. The focus of the federal audit was not to uncover fraud, or mismanagement of funds designed for scientific oversight, but to ask broad-brush questions about whether Nevada had conformed to its Congressional mandate in the Nuclear Waste Policy Act. While NWPO is best viewed as being ideologically compromised rather than necessarily fiscally corrupt, some of its contractors have made out like bandits (Mountain West, Decision Research, CENTED, NWTF), some of its consultants are paid excessively (Steve Frishman, Bob Halstead, Susan Zimmerman, etc.) and there is little evidence of strict internal controls. Accountants from the DOE as well as the state of Nevada should have imposed quality control and internal controls on NWPO, but without their involvement or the involvement of the GAO, the agency was allowed to run free.
Nevertheless, the 1989 GAO study must have grazed somewhere close to the mark because by late 1989 the prime socioeconomic contractor, Mountain West, had been folded into the Big-Six accounting firm, Coopers and Lybrand. Whether this was done for matters of economic efficiency or to cover a trail of less than professional activities is open to question.
Requests for detailed information about the finances of NWPO and especially the funding of the Mountain West consortium bring murky responses. Bob Loux has been quite correct in saying he has provided financial figures and that NWPO has been audited, but by firms Loux has hired, not by the state auditors. The problem with the accounting trail is that it only covers block contract entities, obscuring where the money is actually spent. For example, we know Mountain West received $14 million over the years, but there is no account of what the multiple subcontractors did with their money. By simply ignoring financial controls, not issuing Requests for Proposals and avoiding competitive bidding processes, Loux has shidden NWPO's financial shortcomings by pretending they don't exist.
Myriad contracts let by NWPO don't meet objective criteria set up in federal regulations (FAR 31.205-22: and 10 CFR 600.436 earlier cited in chapter three. Significant flaws in the contracting procedure include:
One question a line item audit might answer is whether political activists in the supposedly grassroots environmental movement have directly benefited from their association with NWPO. We've already discussed the amazing handling of Judy Treichel's contract for the Nevada Nuclear Waste Task Force, which was awarded out of thin air. This contract, amounting to over a million dollars, has many suspicious aspects. Rural Alliance, a subcontractor to NNWTF (staffed by Citizen Alert activists) is primarily a political action committee, even opening an office in New Mexico to oppose the Waste Isolation Pilot Project. The specter of the State of Nevada running covert lobbying campaigns in other states to foment unrest is an unsettling one.
Contrary to the media image of the anti-nuclear movement as poor and ravaged crusaders, the environmental opposition is quite well funded. Greenpeace, the Sierra Club and the network of Nader organizations (Public Citizen, Environmental Watch, etc.) enjoy multi-million dollar budgets. On the nuclear issue, national environmental groups have further leveraged their financial power by forming a coalition, the Safe Energy Communications Council, which allows them to coordinate and pool their resources. Donations by people like Oliver Stone of media resources also add to the effort without ending up in the accountant's books.
If the State of Nevada's Nuclear Waste Project Office grants are added to this mix of anti-nuclear fund raising, one sees that the nuclear industry is more than matched in terms of the number of public relations dollars spent trying to sway Nevada voters. In fact, it is difficult to distinguish between dollars spent by NWPO on oversight/public relations and the funds of environmental groups. Activists like Judy Treichel are neither fish nor fowl, receiving funds as consultants to the state, while in turn funneling free propaganda to the affiliated Citizen Alert and other nationwide environmental organizations. Dr. Marvin Resnikoff, a NWPO contractor, runs a consulting firm called Waste Management, but was a co-founder of the Sierra Club Nuclear Waste Campaign and has done anti-nuclear work for Ralph Nader's Public Interest Research Group. It is often unclear whether NWPO is an oversight agency, or a slush fund for anti-nuclear activists.
Loux and various other agents for NWPO bitterly complain that they are underfunded in comparison to DOE and the nuclear trade organizations. For example, Loux's initial 1993 request was for $26 million, although he settled for $6 million. Privately, many of the engineers associated with Yucca Mountain confide that vast sums are wasted by DOE studying NWPO's poorly formed scientific theories, adding little to the safety of the site. Unfortunately, DOE can't afford to leave even trivial objections untested lest NWPO cry bloody murder. This has caused costs to soar, which is ironically then used by opponents like Senator Bryan to claim the project is fiscally mismanaged. In reality, obstructionism by Bryan and the various protest group may have driven many of the over-expenditures as much as any ineptness on the part of DOE.
Thus, the NWPO money trail is important for two reasons:
The following pages list the worst irregularities present in NWPO's contracts. The money trail points to serious problems in NWPO's ability to spend money without outside controls.