DOE Faulted for Pick of Law Firm on Yucca Mountain Project

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WASHINGTON (AP) - The Energy Department did not fully document its rationale for awarding a $100 million contract to a law firm with a conflict of interest for work on a national nuclear waste dump in Nevada, the agency's inspector general said Thursday.

"We found the absence of such documentation disturbing," said the investigator's report. "In our view, the public interest would have been better served had the department done more to document the key decision points relating to this procurement."

However, the department's selection of Morgan Lewis & Bockius LLP to help prepare a license application for the Yucca Mountain repository appeared to follow conflict-of-interest requirements established by federal regulations and the District of Columbia bar, the investigator found.

Morgan Lewis says it represents 11 nuclear utilities that are suing the government over contracts to store spent reactor fuel. The government is facing billions of dollars in liability for failing to make good on those contracts because of long delays in opening Yucca Mountain.

Department managers granted a waiver from conflict of interest requirements to hire Morgan Lewis after deciding they needed a firm
with experience in licensing proceedings before the Nuclear Regulatory Commission. They concluded that any firm with such experience would have similar conflicts.

However, the inspector general said that another law firm that met with the Energy Department had no such conflicts. "This was confusing," the report said.

Also, in the past the Energy Department has excluded firms with similar conflicts, the report said. The contract awarded last fall was for five years with a five-year option.

The Energy Department plans to submit an application by June 30 for a license to operate the Yucca Mountain dump, 90 miles northwest of Las Vegas.

The repository is supposed to be the government's first national nuclear waste dump and the final resting place for 77,000 tons of commercial reactor spent fuel now piling up around the country, as well as high-level waste from defense activities.

In a statement, Energy Department spokeswoman Megan Barnett focused on the inspector general's positive conclusions and said they demonstrated no need for Morgan Lewis to recuse itself as Nevada lawmakers have demanded. The inspector general report did not specifically address the question of recusal.

"While the IG observed that DOE did not develop documentation in such a manner as the IG would have preferred, that sort of documentation is neither required nor consistent with the type of procurement conducted here," Barnett said.

"Our focus has been on obtaining the best legal services for the department, consistent with applicable legal and regulatory requirements," she said.

Morgan Lewis said it was gratified that the report "confirms that both the DOE and Morgan Lewis acted in accordance with the D.C. Rules of Professional Conduct, as well as all applicable acquisition rules."

Morgan Lewis also has represented the Nuclear Energy Institute, an industry group, and was retained by the Energy Department in 2001 to report on safety consciousness in the work environment at Yucca, which it found flawed. That was another conflict-of-interest concern raised by Nevada lawmakers, but the inspector general said the Energy Department offered assurances that the firm's current assignment wouldn't require it to defend or protect its earlier work.

Also, investigators inspected systems set up at Morgan Lewis to segregate work for the Energy Department from work being done for
nuclear utilities and found they generally corresponded to mitigation measures written into the contract.

However, Nevada lawmakers seized on the report as more evidence
of problems at Yucca Mountain.

"It's painfully clear that the Energy Department continues to set aside public interest and security in its rush to turn Nevada into the nation's nuclear dumping ground," said Senate Majority Leader Harry Reid, D-Nev.

Nevada Republican Sen. John Ensign accused the Energy Department
of "lowering the bar to hire the chosen law firm of the nuclear industry."

Rep. Shelley Berkley, D-Nev., said the Energy Department should drop Morgan Lewis, "or the firm should take its own name out of the running based on these findings from the Energy Department's own internal investigators."

(Copyright 2008 by The Associated Press. All Rights Reserved.)