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Regulators Cover Up Safety Problems During

Sept. 15, 1998

Regulators Cover Up Safety Problems During
Stock Offering of Government Corporation

Watchdogs Call For Justice Department Probe

WASHINGTON, D.C. — In an apparent effort to expedite the privatization of the United States Enrichment Corp. (USEC), federal regulators covered up serious safety problems at the Paducah, Ky., and Portsmouth, Ohio, uranium production plants ? just as USEC’s stock was offered to the public. Ralph Nader, Public Citizen’s Critical Mass Energy Project and the Union of Concerned Scientists (UCS) today released documents detailing the incident and called for an immediate investigation by the Securities and Exchange Commission, the Department of Justice and the Nuclear Regulatory Commission (NRC).

“Rather than protecting corporate financial interests, the NRC should be taking enforcement actions against these facilities to ensure that the public health and safety are protected,” said James Riccio, staff attorney for Public Citizen’s Critical Mass Energy Project.

The Paducah and Portsmouth facilities were built by the federal government to provide enriched uranium for nuclear weapons, then later to produce uranium for the commercial nuclear power industry. The United States Enrichment Corp., which oversees the facilities, was privatized after an initial public offering in July 1998. Documents obtained by Public Citizen and UCS show that NRC and USEC knew about many serious safety problems at both facilities for months. The documents also show that the NRC continues to allow the Paducah facility to operate despite federal safety violations.

“The NRC’s mission is to protect the public and workers from radiation hazards at nuclear facilities,” said David Lochbaum, nuclear safety engineer for UCS. “Instead, the NRC allowed the plants to operate with numerous safety problems.”

The initial public offering for USEC was issued on July 23, 1998. Yet the NRC and USEC did not disclose the safety problems in the prospectus for the IPO or during a July 1998 NRC public meeting on performance at the nuclear materials facilities.

“In its determination to privatize the government’s uranium enrichment functions, the NRC has failed to disclose safety information to USEC workers, investors and the general public,” said consumer advocate Ralph Nader. “The Justice Department and the Securities and Exchange Commission should immediately commence an investigation of this government-business coverup.”