The Paducah Sun

January 16, 2000

Salvage snarled, jobs in jeopardy

Funding shortage could endanger Paducah plant's conversion project

By Joe Walker
Sun Business Editor

Despite a $373 million special fund, a congressional mandate and what U.S. Sen. Jim Bunning of Kentucky calls an "ironclad promise" from the secretary of energy, there are signs that a job-saving project for the Paducah Gaseous Diffusion Plant is mired in bureaucracy.

Labor union officials, civic leaders and congressional sources fear there is too little "earnest money" in the Department of Energy's budget to hire a contractor to start building a facility to convert thousands of cylinders of uranium hexafluoride waste into something safer with potential commercial use.

DOE officials won't say how much money is available for the next fiscal year, but they confirm that a final request for proposals to hire a contractor is on hold. Delayed at least twice last year, the request was to have gone out Dec. 15.

"We are confident we have enough money in the budget to keep this project moving forward," said Lisa Cutler, a DOE spokesperson in Washington. "We will issue a formal request for proposals later this year."

Cutler said the DOE budget is embargoed as part of the presidential budget, and Energy Secretary Bill Richardson is the only person who might disclose the amount for the conversion project. The Sun made requests three days last week to interview Richardson. She said Friday that Richardson was in Utah and unavailable to talk about the issue.

"We will be able to discuss all this more when the president submits his 2001 budget request in February," Cutler said.

The project is integral to Paducah for environmental and financial reasons. Conversion would reduce a swelling, hazardous, outdoor inventory of more than 40,000 cylinders, some rusted and nearly 50 years old. It also would create jobs to partly offset the anticipated layoff of hundreds more employees this year as the plant struggles to compete in a glutted world market.

Various informed sources say the holdup is partly because DOE has no assurance of enough funding to keep the work moving. They also say that considering severe budget cuts within the agency, some high-level DOE bureaucrats are reluctant to spend the money.

The $373 million was set aside by 1998 legislation written by U.S. Sen. Mitch McConnell and strongly backed by Bunning and U.S. Rep. Ed Whitfield. Although the money is in a special interest-bearing Treasury fund, it must be appropriated by February 2002 or be lost to the general fund unless the deadline is extended. Adequate funding reportedly did not survive cuts by the Office of Management and Budget, which reviews funds of administrative agencies like DOE.

Richard Miller, Washington policy analyst for the plant's atomic workers' union, met Thursday night with Vice President Al Gore's staff to discuss the status of funding. He was unable to find out how much conversion money, if any, is budgeted.

"They said the appeals process between DOE and OMB respecting the budget is not over yet," Miller said. "The logjam, as I perceive it, is with OMB officials. They don't believe this is a priority."

Legislation clearly requires the administration to implement the plan by building conversion plants at Paducah and Portsmouth, Ohio, and having them running by 2004, Miller said. But OMB officials maintain their only mandate is to prepare a plan, he said.

Miller said the only spendable money available is $29 million - $24 million in DOE funds promised by Richardson and $5 million appropriated by Congress last year - and the project realistically needs $60 million to $80 million more.

"No one will bid on a contract and start work if Congress has not appropriated those funds and made them available in the event that for some reason somebody pulls the plug on this project," Miller said.

Congressional language provides for a contractor to build and operate the plant, and be paid based on units of converted material.

Lack of firm information about money has many people trying to find answers to keep the long-awaited project moving. Among those watching are aides of Bunning, McConnell, Whitfield and Gov. Paul Patton.

Bunning and McConnell declined to speculate on the status of funding, saying they are waiting to see what the Clinton budget shows.

"Last year, after intense negotiations, I secured from Secretary (Bill) Richardson an ironclad promise that he would provide funding for the conversion project," Bunning said through a statement issued by his office. "I fully expect him to keep that promise when the administration presents its budget to Congress in February."

McConnell responded similarly.

"These cylinders pose a serious health threat to the workers and community and must be cleaned up immediately," he said. "Secretary Bill Richardson promised to fund the conversion, and I expect this administration to honor its promise and provide the money to keep this project on track."

Just before Christmas, leaders from Washington, Frankfort and Paducah pressed the Clinton administration hard for the money.

The senators wrote OMB chief Jacob Lew, saying at least $60 million was needed for the next fiscal year to get the work started.

Patton flew to Washington, met with Clinton and returned encouraged. The governor said again last week that he is confident the president's budget will have plenty of money for conversion.

Miller said Gore's assistants told him Patton was "on their radar screen." If the Clinton administration doesn't produce enough money, the governor holds a trump card by having the power to declare the cylinders a hazardous waste site and fining DOE for each day it doesn't clean them up, he said.

"If the president stiffs Kentucky, the ball then shifts into the governor's court to make his counter move," Miller said.

Paducah attorney Tom Osborne was frustrated after a December visit to Washington. Immediately after the trip, he said Lew's chief assistant, Elgie Holstein Jr., was "totally unfamiliar with our problems" and reluctant to check the status of the $60 million.

Osborne wrote Clinton asking for help. He said Thursday that he had not received a formal response, but understands that the budgeted money "is only about half what we need. The Patton administration is working on this diligently."

Jack Conway, a top Patton aide, said DOE is trying to decide whether to build one or two conversion plants. He said he believes one plant will be built, in Paducah, because that would cut the cost in half to about $200 million.

Various sources said DOE has given other reasons for the delay, including budget caps and environmental concerns. Neither is a valid excuse, Miller said.

"The front page of The Washington Post says the president is abandoning budget caps in his budget requests," Miller said Friday.

DOE reportedly wants more testing of the cylinders because some may contain traces of plutonium and other highly radioactive contaminants. That shouldn't delay startup because those contaminants would be in cylinders filled before 1980, Miller said, and the department could proceed with converting thousands of newer cylinders.

Cutler would not discuss reasons for the delay or say how much money is needed to keep conversion moving beyond this year. She said private firms expressed strong interest last year and DOE needs more time to refine the project.

"The Department of Energy and Secretary Richardson remain committed to this project," she said.