VERNON — The U.S. Department of Justice has filed an antitrust lawsuit to block a merger involving one of the key players in the proposed sale of Vermont Yankee.
Federal officials say Salt Lake City-based EnergySolutions shouldn't be allowed to acquire Texas-based Waste Control Specialists because the deal would create a “near monopoly” in the business of low-level radioactive waste disposal.
Waste Control Specialists, also called WCS, is slated to become a partner in Vermont Yankee decommissioning under a sale agreement announced Nov. 8.
The Vermont Yankee sale isn't scheduled to close until the end of 2018 and must clear state and federal regulatory hurdles, so it's not clear what impact - if any - the federal government's dispute with WCS might have on the deal. But it is an issue the Nuclear Regulatory Commission could consider.
“It is certainly possible that we will have questions related to the EnergySolutions' proposed takeover of WCS as we review the [Vermont Yankee] license transfer application,” NRC spokesman Neil Sheehan said.
A spokesman for Vermont Yankee owner Entergy declined to comment on the Justice Department's suit.
After stopping power production at Vermont Yankee in December 2014, Entergy began preparing the Vernon plant for SAFSTOR - a program that allows up to 60 years for decommissioning.
But Entergy now has plans to sell the plant to New York-based NorthStar Group Services Inc. That company would take ownership of Vermont Yankee and finish decommissioning by the end of 2030.
Critical role
NorthStar would be working with three partners in Vernon - AREVA, Burns & McDonnell, and Waste Control Specialists. WCS's role is important, as the company would be “responsible for waste management, packaging, transportation, and disposal,” according to Entergy's sale announcement.
WCS appears to be uniquely positioned to handle that job, since it already operates a low-level radioactive waste disposal site in Andrews, Texas.
A nuclear plant's spent fuel doesn't qualify as low-level waste. But that label does apply to many other types of materials including soil, debris, protective clothing, tools, and even large equipment such as steam generators and filters.
Nuclear power plants generate most of the low-level radioactive waste in the U.S., federal officials say.
EnergySolutions and WCS are major players in the low-level waste disposal industry, and both have connections with Vermont Yankee. In addition to WCS's proposed role in decommissioning, EnergySolutions has been disposing of tainted groundwater from the Vernon plant this year.
Also, both companies are playing a role in the decommissioning of the Zion nuclear plant in Illinois - a job seen as a model for the Vermont Yankee cleanup.
Competition questions
About a year ago, Valhi Inc., the parent company of Waste Control Specialists, announced its intention to sell WCS to Rockwell Holdco Inc., the parent company of EnergySolutions. At the time, an executive said the deal would “expand the range of services” for customers.
But the Justice Department now wants to stop that $367 million deal, saying it could squelch competition and drive up radioactive waste disposal costs.
In a complaint against EnergySolutions and WCS filed Nov. 16 in U.S. District Court's Delaware District, the department says the merger “would combine the only two licensed commercial low-level radioactive waste disposal facilities for 36 states” as well as Puerto Rico and the District of Columbia.
Vermont is one of those states.
“By eliminating the most significant disposal competitor [EnergySolutions] has faced since it began operations, the proposed acquisition would lead to higher prices, lower quality service, and less innovation in the commercial [low level waste] disposal industry,” Justice officials wrote in the suit.
The lack of competition in the disposal business “would have wide-ranging effects throughout the United States” given the prominence of nuclear energy generation, the suit says. Officials note that nuclear plants account for 20 percent of U.S. power production and are “a key component in policy efforts to achieve air-quality and carbon-emissions goals.”
“Moreover, the proposed transaction would create a near-monopoly for the disposal of commercially generated [low level waste] in the relevant states at a time when utilities are preparing to bid out nuclear reactor decommissioning projects worth billions of dollars,” government officials wrote.
Companies vow vigorous defense
In response, EnergySolutions and Valhi issued a joint statement pledging to “vigorously defend” the proposed sale of WCS.
The companies contend that there are actually “numerous disposal sites” operated by competitors of WCS and EnergySolutions. The innovations and better prices that the federal government attributes to competition between those two companies “are in fact evidence of other competitors in the marketplace,” the statement says.
EnergySolutions and Valhi also say the WCS sale will be economically beneficial for those who are trying to get rid of radioactive waste.
“Through merging the two companies, the new entity will realize significant cost synergies through a decrease in management, selling, and administration expenses,” EnergySolutions and Valhi contend. “Those savings, in turn, can be passed on to utilities and consumers of nuclear electricity. In addition, this merger will save costs on nuclear decommissioning.”