U.S. Justice Department takes notice
WASHINGTON -- The Department of Justice is raising its eyebrows at a multimillion-dollar legal services contract the Department of Energy awarded in the fall to handle licensing for the Yucca Mountain nuclear waste repository.
Energy Department officials failed to check with the Justice Department before signing a four-year $47.7 million contract with Morgan Lewis & Bockius LLP, a firm acknowledged to have conflicts on nuclear waste matters, a Justice official said.
"Neither DOE nor Morgan Lewis consulted with or even notified the Department of Justice before entering into an agreement that involved significant conflicts of interest affecting the United States," said Jeanne E. Davidson, director of the Justice Department's commercial litigation branch.
Davidson indicated that the Justice Department would have had the authority to block the contract. Neither Justice nor DOE officials could be reached Monday evening, and it was not immediately clear whether Justice might be contemplating action at this point.
Davidson conveyed the department's position in a June 16 letter to Gregory Friedman, the Energy Department's inspector general. A copy of the letter was obtained Monday.
In addition to helping the Energy Department win a construction license for the proposed nuclear waste site 100 miles northwest of Las Vegas, Morgan Lewis also represents more than a dozen utility companies that have sued DOE for missing project deadlines dating to 1998.
The Justice Department represents taxpayers in the utility lawsuits that DOE has estimated could cost at least $7 billion in settlements and judgments. Davidson said the Justice Department as a key player should have been consulted.
Davidson said Morgan Lewis is pressing the federal Court of Claims for damage payments to utilities that continue to store their nuclear waste on site. At the same time, Davidson said, the firm will play a role in determining when a Yucca repository might open, if ever.
That means Morgan Lewis has the ability to affect the amount of damages its utility clients will receive, she said.
The Energy Department said it obtained a waiver in order to hire Morgan Lewis, which it contended was the only firm sizable and skilled enough for the Yucca Mountain licensing case. The firm said it erected firewalls to shield its lawyers handling various nuclear waste projects.
Davidson said the Justice Department has asked Morgan Lewis to explain what safeguards it installed to protect against conflicts.
The Morgan Lewis contract includes five one-year options that could raise its total value to $109 million, an amount lawyers said could be a record for a nuclear venture.
Friedman's office issued a report in April faulting the Energy Department for not fully documenting its selection process. Other than that, inspectors said DOE appeared to follow proper procedures in obtaining the waiver to hire Morgan Lewis.
More recently, the state of Nevada tried to have the firm disqualified from handling Yucca Mountain matters before the Nuclear Regulatory Commission, but the NRC rejected the state's demand.
Several Nevada lawmakers renewed their call for the Morgan Lewis contract to be suspended.
"The Justice Department has finally recognized that this conflict of interest extends beyond the DOE and that it's the American taxpayer who stands to lose at the end of the day," said David Cherry, a spokesman for Rep. Shelley Berkley, D-Nev.
Sen. Harry Reid, D-Nev., said through a spokesman it was suspicious "that DOE went around the DOJ on a legal matter related to the largest government contract for legal services in history."
Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760.
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