DOJ Slams Energy Dept Contract to Law Firm

June 26, 2008 — -- The Justice Department is asking tough questions about a multi-million-dollar contract awarded by the Energy Department to a law firm, warning that conflicts of interest could delay the opening of the country's largest nuclear waste repository.

The firm of Morgan Lewis & Bockius LLP, which was awarded a four-year $47.7 million contract to shepherd the licensing for the Yucca Mountain nuclear waste repository, has acknowledged conflicts of interest on nuclear waste issues since it has represented more than a dozen utilities that have sued the agency.

The firm was granted a waiver from DOE rules on conflicts of interest and agreed to a plan "that would mitigate any conflict to the maximum extent practicable," according to an April report by the DOE's Inspector General.

But in a sharply-worded letter obtained by ABC News, a top Justice Department official criticized the Energy Department's failure to consult with DOJ and cautioned that the contract could jeopardize the opening of the long-delayed repository which would store the country's nuclear waste.

"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," wrote Jeanne E. Davidson, director of the Justice Department's commercial litigation branch in the letter sent to DOE Inspector General Gregory H. Friedman.

Davidson also notes that, "Under its new contract with DOE, Morgan Lewis' work may affect the date on which that repository may open in the future, if at all, potentially providing Morgan Lewis with the ability to affect the amount of damages that its clients in the SNF [spent nuclear fuel] cases will incur."

Morgan Lewis is currently seeking damage payments from the government for utility clients that store spent nuclear fuel on the site due to missed project deadlines.

In addition, the firm previously lobbied for the Nuclear Energy Institute, which supports the Yucca Mountain project.

With five one-year options, the contract could balloon to $109 million.

The state of Nevada, which has long opposed the repository, also objects to the contract and appealed to the Nuclear Regulatory Commission to have the firm disqualified, but the request was turned down.

"This is one of the largest contracts ever awarded by the feds for legal representation," says David Cherry, a spokesman for Nevada Rep. Shelley Berkley.

"This is a law firm that has done an enormous amount of work for the nuclear industry so there is a clear conflict of interest whose interests do they really represent?"

A spokesman for Senate Marjority Leader Harry Reid told the Las Vegas Review-Journal that it was suspicious "that DOE went around the DOJ on a legal matter related to the largest government contract for legal services in history."

DOE officials told the agency's inspector general, Friedman, that the contract was necessary due to their need for a firm with extensive NRC licensing expertise, according to Friedman's report.

In reply to Davidson's letter also obtained by ABC News, Friedman defended the agency, explaining that he reviewed the contract and determined that "the Department's actions were consistent with applicable procurement conflict of interest provisions."

In his report, Friedman also detailed the firm's previous work for the agency, which included a 2001 investigation into allegations that a quality assurance official at Yucca Mountain had abused his authority.

Jim Mattimoe, a whistleblower who raised concerns about deficiencies in computer modeling, software and date used on the project, was eventually fired based largely on Morgan Lewis' report and appealed his dismissal to the Department of Labor.

A Labor regional administrator involvedin the appeal subsequently criticized the firm, stating that the report was "not more than a sophisticated recitation of anonymous charges designed to provide pretextual reasons to support an already decided upon course of action to terminate the employee."

In its report, DOL ordered a Yucca contractor to reinstate Mattimoe, expunge his personnel file and reimburse him for costs incurred, according to the Las Vegas Review-Journal.

A spokesman for Morgan Lewis did not return several calls for comment.