How Fluor Got $5 Billion & Nearly Blew Up Hanford

On Wednesday May 14, 1997 at 10:47 PM a chemical tank exploded in a deserted factory at the Hanford Nuclear Reservation outside Richland, Washington. The explosion was extraordinarily powerful, blowing down steel doors and shattering windows throughout the building. The blast shredded the steel liner of 1,500 gallon chemical drum laced with plutonium and sent the heavy metal lid hurtling through the ceiling where it ruptured a water main and busted through the roof. Water poured into the room mixing with the chemical crud, streamed down four flights of stairs and flooded the nearby parking lot. A yellow-orange plume of toxic gasses released by the explosion up the plant's smokestack and drifted over the Hanford site and nearby communities.

Eight Hanford electrical workers were outside the plant taking a dinner break in a small house trailer when the tank exploded. Soon after the blast, managers at the site got on the public address system and ordered the workers to get out of their trailer and walk through the toxic plume of gasses to the main building without protective gear. When the workers reached the main Hanford building they were turned away by security guards wearing gas masks and instructed to walk back through the poisonous cloud to their trailer.

The men soon complained of lightheadedness, nausea and a metallic taste in their mouths. They asked for nasal swabs to detect exposure to radiation, but the testing kits were not available. The workers had to drive themselves to the Hanford hospital, where they asked for blood and urine tests. Doctors working for the Hanford contractor refused to perform the tests. Nasal smears taken from the workers weren't examined until nearly a month after the explosion.

By all accounts, the scene was chaotic. Plant managers gave conflicting orders, emergency response codes were ignored, other agencies were kept in the dark for hours about the event and the public highway that runs near the site was left open. Another worker was ordered to climb up the smokestack without protective gear to check for signs of whether any plutonium had been released. 

At first some suspected sabotage. There was ample reason for concern. The explosion occurred less than 20 yards from a silo holding 9.5 tons of plutonium, one of the largest caches of this bomb-ready and deadly material in the world. If the blast had breached the plutonium silo it the destruction would have rivaled Chernobyl. The building where the chemical tank exploded is part of Hanford's mothballed Plutonium Finishing Plant, a large factory built in the 1960s to recycle spent uranium into weapons-grade plutonium. The plant, which is located near the center of the 540-square mile Hanford complex, was shut down in 1989 is scheduled for demolition in 2005.

The Department of Energy has spent tens of millions of dollars to protect the plant from terrorist attacks. Black-suited guards with machine guns slung over their shoulders constantly patrol the site, which is ringed by electronic monitors, TV cameras and razor wire fences. But that suspicion was soon discarded for a mundane but more troubling conclusion: the accident resulted from mismanagement by Hanford's lead contractor, Fluor Daniel, a wholly owned subsidiary of the Fluor Corporation.

An internal Department of Energy assessment of the incident skewered Fluor Daniel for numerous safety and reporting violations, noting that the chemical tank had not even been inspected for over six months despite signs that such an “autocatalytic explosion” was possible. “The plutonium finishing plant did not understand adequately the hazards they had,” said Steve Veitenheimer, the lead investigator. “The plant was not prepared to monitor for outside contamination because they didn't understand what was in their facility.” 

The Department of Energy review of the near-disaster was called “downright ugly” by Lloyd Pipe, former acting manager of the plant. “We failed in some key areas of responsibility. Across the board, our actions in the wake of the explosion did not meet our expectations.” Before the internal review was released to the public it was handed over to Fluor's lawyers, who promptly edited out key findings relating to possible violations of federal law, risks to human health and the extent of off-site contamination.

Gerald Pollet, director of Heart of America Northwest, a Hanford watchdog group put it much more succinctly: “Fluor Daniel violated every rule on the book, put thousands of lives at risk and then, in the great Hanford tradition, tried to cover it all up and accuse the workers and nearby residents of mass hysteria.”

For many longtime Hanford watchers the explosion at the plutonium finishing plant was terrifying but not exactly a surprise. Environmentalists and seasoned DOE employees contend that Fluor captured the lucrative contract not because of its expertise in environmental cleanup (which was sorely lacking), but due to the firm's inside connections to the Clinton administration and the six figure contributions it sluiced into DNC accounts.

Hanford burst into the spotlight on August 9, 1945, when the Fat Boy bomb armed with plutonium concocted at Hanford incinerated Nagasaki, killing more than 39,000 people. Over the next 40 years, the atomic engineers working in Hanford's obscure labs on the beautiful barren steppes of the Columbia River churned out 54 tons of plutonium, 65 percent of America's nuclear arsenal. Plutonium, that hyper-fissionable element named for the lord of the dead, is made by burning uranium inside a nuclear reactor. The plutonium is separated from the cooked uranium through a chemical wash at the plutonium finishing plants, where it is made into the shiny, warm buttons that put the bang in the H-bomb. 

While the nuclear men were proud of how carefully they created their bombs, they were much more cavalier in how they treated nuclear waste, the toxic detritus of the arms race. At Hanford, only the most high-level nuclear waste — thick plutonium sludge — was tucked away into 177 underground tanks, each the size of Carnegie Hall. Already, nearly half of these tanks are leaking plutonium in a steady drizzle toward the aquifer that underlies Hanford. Others are bubbling away in a dangerous and uncontrollable “self-boil” that may well end in a massive explosion. No one really knows how to deal with these problems.

Even so most of the toxic waste — an estimated 400 billion gallons of contaminated liquid — was simply dumped, poured and sprayed right into the soils of Hanford, just meters removed from the Columbia River. Fluor claims to have a solution for this perplexing situation, a scheme they call in-situ vitrification. For several billion dollars, Fluor claims is can send electrical charges into soil encasing the toxins in harmless walls of black glass.

Fluor Daniel gained the $5 billion contract to supervise the cleanup at Hanford in the summer of 1996, after Hanford's previous contractor, Westinghouse, was run out of town. The contract came as a surprise to many and was awarded over the objections of several senior officials at the Department of Energy who felt that Fluor was not experienced enough for such a complex and dangerous operation. “Fluor is basically a big construction company with a get-in and get-out quick mentality,” a long-time staffer at the Energy Department told In These Times. “But Hanford is something else entirely. This hundred year cleanup where the slightest mistake could spell disaster and put a million lives at risk.”

Fluor's recent experience with the Department of Energy was another cause for concern. In 1993, the Irvine, California-based company had been awarded a contract to manage the Fernald nuclear site outside Cincinnati, Ohio. Fluor was to be paid $2.2 billion to cleanup the toxic residue at this former uranium processing plant, which houses more than 20 million pounds of radioactive materials. In Fluor's four years at Fernald the company has accused of massive overbilling, shoddy work performance, and false record keeping. The company wasted about $100 million on faulty work on an experimental vitrification technology, which was hyped as having the ability to turn radioactive waste into harmless logs of glass. Fluor was also cited for more than 1,000 serious safety violations, ranging from exposure to radiation to lax safety rules. 

The allegations against Fluor surfaced in a remarkable series of stories beginning February of 1996 in the Cincinnati Inquirer by investigative reporter Mike Gallagher. Gallagher's exposes prompted a Department of Energy investigation, an audit by the General Accounting Office and congressional hearings. Fluor's Fernald operation has been hit with a record $34 million in fines for worker injuries, poor job performance and bad bookkeeping. Most disturbingly, Fluor has also been cited for violating guidelines on nuclear criticality, the potentially explosive buildup of radiation that occurs when tanks of radioactive waste are stored too close to each other.

All of this was known to Department of Energy officials before they decided to give Fluor the contract to oversee operations at Hanford, the final resting place for more than two-thirds of the nation's high-level nuclear waste. How, then, did a company with Fluor's reputation for shoddy and reckless work end up with such a lucrative and dangerous deal to oversee the cleanup of what the Department of Energy itself calls “the single largest environmental and health risk in the nation?” 

The simple answer is that where there's danger, there's also an opportunity to earn money. These days the really big money is being made cleaning up the nation's nuclear sites, those grim factories of the Cold War that are now rusting away like toxic time bombs packed with radioactive sludge. Fluor, a favored roosting spot for retired generals and CIA men, is a booming global construction company, a Bechtel for the 1990s. It's annual report reads like a catalogue of the new globalized economy, gold mines in Chile and Papua, New Guinea, chemical plants in Louisiana and Arkansas, oil pipelines in Gabon, Azerbaijan, Venezuela and China; a prison in California; a copper mine and smelter in Indonesia, a petro-chemical complex in Kuwait, a natural gas platform off the coast of Trinidad, and “an engineering study for an automobile manufacturer to determine the feasibility of disassembly and relocation of two North American automobile manufacturing facilities to China.”

In the onset of the Clinton era, Fluor recognized the potential for huge deals involving the cleanup of hazardous waste sites on federal properties. For help, the company turned to Peter S. Knight, a key Washington fixer with close ties to Al Gore. For 13 years, Knight served as chief of staff for Gore during his tenure in the House and Senate. Knight ran Gore's failed 1988 presidential campaign and headed his 1992 vice-presidential campaign. 

After the election, Knight was named to Clinton's transition team where he oversaw appointments of sub-cabinet positions at EPA, Interior and the Energy, including the choice of Thomas Grumbly as Assistant Secretary of Energy. It would be Grumbly who would award the Hanford contract to Fluor, give the company money to design part of the controversial Yucca Mountain nuclear waste storage plant, and resist demands that the company's troubled Fernald contract be canceled.

Knight and Grumbly go way back. In 1980, Knight hired Grumbly to serve as staff director of Gore's. Grumbly coordinated Gore's 1988 campaign in New Hampshire. Later Knight was tapped to head the Environmental Education Foundation, the charity Gore set up to distribute the profits from his book Earth in the Balance. Tom Grumbly was picked to be treasurer of the foundation.

Knight left the transition team to join the powerful Washington law firm, Wunder, Diefendorfer, Cannon and Thelan. He soon became one of the outfit's top-rank lobbyists, racking up an impressive roster of high-profile clients. He list of clients include: Disney, Lockheed Martin, Browning-Ferris Industries and Molten Metal Technologies. In his first year, Knight rang up more than a million dollars in billings. His standard fee is between $10,000 and $25,000 a month.

This may seem like an odd list of clients for a man who once headed Al Gore's environmental foundation. But in the conniving calculus of the Beltway those kinds of credentials can be cashed in for huge retainers from corporations looking to camouflage their image as environmental villains. Knight was startlingly up front about using his ties to Gore and other ranking Clinton officials as a way to recruit clients. In a solicitation letter to a client, Knight boasted he was “very familiar with DOE and close to Secretary Hazel O'Leary's new team.”

By the end of 1994, Knight and his clients were poised to make a killing off of his pal Al Gore's recent Reinventing Government initiative, particularly the hair-raising scheme to “privatize” many of the most sensitive operations of the Department of Energy. In one of the most under-reported stories of Clinton time, the Department of Energy offered up more than 200 different privatization projects, where private firms would be handsomely paid to run government operations, such the management of Hanford and other DoE sites. For corporations such as Fluor and Lockheed this was a no lose situation: fat government contracts and minimal oversight.

With the aid of Grumbly, Knight helped Lockheed-Martin secure profitable contracts to run the Idaho National Engineering Laboratory and the Oak Ridge site in Tennessee. From 1993 through 1996, Grumbly awarded Molten Metal Technologies — another Knight client — $32 million in grants. To clear the way for the grants, Knight urged executives at Molten Metal to contribute $130,000 to the Democrats, which they promptly did. As a reward, Knight received lucrative stock options from the company and his 13-year old son, Zachery, got $20,000 worth of stock from Molten Metals' CEO William Haney. 

“It's not uncommon for me to give stock,” Haney said. “If I was a painter, I could give paintings.”

The Lockheed and Molten Metal deals paved the way for the big prize, the $5 billion integrated management contract at the Hanford Nuclear Reservation. “These contracts are one of the greatest scandals of the Clinton era,” says Gerald Pollet. “There's no financial risk no matter how badly you botch the job.”

The $5 billion Hanford “integrated management” contract was the biggest prize of all. Thirteen big firms put in bids for the Hanford project, led by defense giant Raytheon. Fluor's chances seemed slim. Westinghouse had been the main contractor at Hanford since the mid-1980s, but a string disastrous accidents had cost the company its contract. Fluor hired Knight to plead its case. It was a hard sell, given the company's track record at Fernald. But as a final inducement, Fluor sent a check to the Democratic National Committee for $100,000 on May 3, 1996. (From 1995 through the 1996 election, Fluor gave the Democrats $203,000.) A few weeks later, Grumbly awarded Fluor the contract. By this time, Peter Knight had left his law firm to chair the Clinton/Gore reelection campaign. “Everyone thought Raytheon had the deal sown up,” says Todd Martin of the Hanford Environmental Action League. “Raytheon certainly did. They'd already opened an office near Hanford. When DOE gave the contract to Fluor it came as a total shock.”

In September 1997, federal investigators subpoenaed 64 boxes of records from the DoE and Fluor regarding the Hanford contract. Knight and Grumbly have been forced to undergo grueling depositions. They both deny any wrongdoing. The Republicans in the House and Senate have used the scandal as a way to bludgeon Al Gore. But so far almost no one has looked at the end result of this political deal making — the eerie fact that private companies, driven by profit motives to operate as cheaply as possible, have used campaign contributions and high-priced political fixers to secure contracts to manage some of the most dangerous places on earth.

The contract didn't get off to a good start. Fluor Daniel was supposed to have developed an integrated work safety plan prior to assuming control of operations at Hanford on October 1, 1996. The plan wasn't ready and Fluor requested a 30-day extension, which was granted by the DoE. In December, Fluor missed its deadline again and asked the DoE for another extension. At the end of January, Fluor produced what one DoE staffer described as a “mish-mash of confusing and conflicting guidelines.” It wasn't until September 15, 1997, nearly a year after being awarded the contract, that Fluor final produced an acceptable safety plan. But over that year the company's safety record has been riddled with accidents, including explosions, electrical fires, injuries and chemical spills.

“They haven't met with the community, haven't consulted with public interest groups and don't listen to their workers,” says Tom Carpenter, a lawyer with the Governmental Accountability Project in Seattle. “Many of Fluor's managers are former military men who remain mired in a cold war mentality. They're addicted to secrecy and dismiss safety questions as a secondary concern. This is a non-union company that isn't used to listening to its workers and isn't comfortable with even the slightest criticism. When workers speak up, they're simply fired.”

Carpenter has represented numerous Hanford workers who have risked their careers to expose dangerous operations at the site. This summer Carpenter filed a whistleblower complaint with the Department of Labor on behalf of seven pipefitters who were fired by Fluor after they objected to the use of under-rated valves on a pipe used to carry high-level nuclear waste from one storage tank to another. “There's the equivalent of a Cassini project going off every hour at Hanford,” one of the pipefitters said. “Cutting corners like that at Hanford is just plain crazy.” 

How much will it cost to try to mop up the mess at Hanford? The Department of Energy says $40 billion over the next thirty years. But other economists estimate that the figure will soar much higher, perhaps as much as $300 billion in an operation that may drag out over the next 75 to 100 years. That's more than the entire Pentagon budget in the freewheeling days of the Reagan era. In the new world order, defense contractors have mutated into environmental remediation firms. So far more than $10 billion has been spent at Hanford over the past 10 years with almost nothing to show for it. Already, Fluor is nearly a $100 million dollars over budget and an internal review by the DoE in November rated its performance in key areas as “marginal” (the equivalent of a D). Fluor even submitted bills to the DOE for two lobbyists it hired to weaken Washington state's hazardous waste laws.

Despite this sordid record the DOE has no plans to terminate the contract. In fact, Fluor seems poised to cash in on performance bonds that could net the company a $54 million bonus for its first year at Hanford. And, according to sources inside the DOE, the company may be in line to get a five year extension on the contract worth another $5 to $7 billion. 

There's a joke going around Hanford these days. What has Fluor Daniel done in a year that Westinghouse couldn't in 10 years? Make Westinghouse look good. To those who live downwind from Hanford, the punch line carries a morbid edge. “I'm afraid to go out there now,” says Tom Carpenter. “Fluor's management of the place is simply incompetent. At Hanford the slightest screw up can have the deadliest consequences.”