Controversial Camden-based nuclear parts maker to pay $5M fine
By JEFF PILLETS, NJ Spotlight News
Published on JANUARY 30, 2024
Holtec International, the Camden firm behind controversial nuclear power projects in New Jersey and four other states, has agreed to pay a $5 million penalty to avoid criminal prosecution connected to a state tax break scheme.
New Jersey Attorney General Matthew J. Platkin announced Tuesday that Holtec has been stripped of $1 million awarded by the state in 2018 under the Angel Investor Tax Break Program. Holtec will also submit to independent monitoring by the state for three years regarding any application for further state benefits, Platkin said.
The agreement, which also covers a real estate company owned by Holtec founder and CEO Krishna Singh, came after a lengthy criminal investigation that discovered Holtec had submitted false information to the state in seeking the Angel tax breaks.
Holtec’s use of misinformation for private gain, as detailed by the state attorney general, closely parallels allegations that have followed the company for years as it sought public subsidies to finance international ambitions in the nuclear field.
“Today, we are sending a clear message,” Platkin said. “No matter how big and powerful you are, if you lie to the state for financial gain, we will hold you accountable — period.”
Denies wrongdoing
Holtec, in a statement, denied any wrongdoing and called the non-prosecution agreement a “settlement” that would prevent years of costly litigation.
“This resolution allows Holtec and its over 500 employees in New Jersey to continue their important work on the forefront of the green-energy revolution in America and beyond,’’ according to the statement.
Patrick O’Brien, a company spokesman, declined to discuss details of the criminal investigation and did not comment when asked if the agreement with New Jersey was part of a pattern of ethical issues that continue to dog the company as it expands into decommissioning and the construction of advanced nuclear reactors.
Previously fined
In 2010, the Tennessee Valley Authority fined Holtec $2 million and ordered company executives to take ethics training after a bribery investigation involving Singh’s dealings with a key subcontractor.
The TVA also banned Holtec from federal work for 60 days, the first ever such debarment in the agency’s history.
In 2023, Holtec’s former chief financial officer filed a federal lawsuit claiming that he had been fired after refusing to sign off on false financial information the company was allegedly sending to potential investors. Kevin O’Rourke alleges that Holtec intentionally sought to inflate revenue projections and hide millions in expected losses.
‘This is a company that continues to face questions about its actions and transparency.’ — New Mexico state Sen. Jeff Steinborn
Those allegations, which Holtec has denied, include the company’s effort to mask $750 million in potential losses for its controversial proposal to build a consolidated nuclear waste storage facility in southeast New Mexico. That project, which was approved by federal regulators last year, faces a federal court challenge lodged by private groups and New Mexico state officials, who say Holtec lied about key information on its applications to build the storage facility.
The alleged false information, New Mexico officials say, included Holtec’s representation that it had obtained property rights from mine owners and oil drillers who are active near the 1,000-acre plot of desert land where Holtec would eventually place up to 10,000 spent nuclear fuel canisters with some 120,000 metric tons of radioactive waste.
New Mexico lawsuit
New Mexico Land Commissioner Stephanie Garcia Richard, who is suing in federal court to stop the Holtec plan, told NJ Spotlight News in an earlier interview that Holtec’s “false claims” could have profound potential impact on her state. There are more than 50 oil, gas and mineral wells within a 10-mile radius of Holtec’s site, she said, and the potential for underground contamination is real.
“I understand we need to find a [nuclear waste] storage solution, but not in the middle of an active oil field, not from a company that is misrepresenting facts,” Garcia Richard said in an earlier statement.
New Mexico state Sen. Jeff Steinborn, whose law to ban the facility is now part of that federal lawsuit, told NJ Spotlight News that questions about Holtec’s character should be a deep concern for the public. Holtec, he pointed out, plans to transport dangerous spent fuel from retired power reactors across the nation to the site.
“This is a company that continues to face questions about its actions and transparency,” Steinborn said in an interview with NJ Spotlight News. “Do we really want to trust this company with the nation’s spent nuclear fuel?”
So-called dry casks manufactured by the company have long been used at nuclear reactor sites from New Jersey to California to store spent fuel that was initially segregated in water-filled fuel pools.
Decommissioning operations
Over the past half-decade, Holtec has moved aggressively forward from its manufacturing roots to take ownership of closed nuclear plants that are in the process of being retired. The company runs decommissioning operations at the retired Oyster Creek generating station along Barnegat Bay at Lacey Township, and three other sites, including New York’s Indian Point and the Pilgrim plant in Massachusetts.
The company has informally discussed starting up some of the new reactors at Oyster Creek and the Palisades site in Michigan, and is also pursuing plans to bring the next-gen nukes to Ukraine, Great Britain and other countries overseas.
Holtec now controls billions in public money that was set aside by utility users in each state for the safe decommissioning of nuclear reactors, a process that regulators have estimated could take 60 years for most reactors. Holtec, instead, has claimed it could dismantle the old plants and restore the land for public use in a fraction of that time.
Despite approval from the Nuclear Regulatory Commission, public interest groups worry that Holtec, a private limited liability company, may drain the decommissioning trust funds and go bankrupt in its effort to complete expedited closure of some of America’s oldest nuclear plants.
Legal settlements elsewhere
Attorneys general in Massachusetts and New York were so worried that taxpayers could be left high and dry, they filed lawsuit pointing out multiple inconsistencies in Holtec’s plans. Both states have won legal settlements designed to stop Holtec from depleting the trust funds.
In addition to controlling the public trust funds, Holtec has also received or applied for billions in taxpayer subsidies and federal grants and loans. Some of those subsidies would help the firm finance its proposed storage dump in the New Mexico desert, as well as construction of a new generation of so-called SMRs, or small modular reactors.
The company has informally discussed starting up some of the new reactors at Oyster Creek and the Palisades site in Michigan, and is also pursuing plans to bring the next-gen nukes to Ukraine, Great Britain and other countries overseas.
Holtec runs decommissioning operations at the retired Oyster Creek generating station along Barnegat Bay at Lacey Township, and three other sites, including New York’s Indian Point and the Pilgrim plant in Massachusetts.
No such small nuclear reactor has ever been brought online in the U.S., as they face significant costs and regulatory hurdles despite the support of some policymakers who argue that nuclear power can help reduce atmospheric carbon. A plan to build SMRs in Idaho collapsed last year after its cost more than doubled, to $9 billion.
It is unclear how the fine and criminal investigation announced Tuesday by New Jersey might affect Holtec’s plans to develop a new fleet of reactors.
The NJ case
According to the attorney general’s office, Holtec’s false tax break application concerned its partnership with a battery manufacturing firm named Eos Energy Storage. Holtec had planned on using Eos to help develop SMR technology at a manufacturing plant in western Pennsylvania.
Holtec and Singh Real Estate, a subsidiary owned by the company’s owner, invested $12 million in Eos in exchange for six million shares in the company. Holtec, however, manipulated its tax break application to hide information about the investment and double its tax award from $500,000 to $1 million, according to the attorney general.
Krishna Singh, center, the founder, president and CEO of Holtec International, pictured in July 2014
Investors in EOS have brought a class-action lawsuit against the battery manufacturer, citing unspecified financial fraud. Securities and Exchange Commission documents filed by the firm show Singh was briefly a member of the company’s board of directors before resigning.
“We have entered the battery industry to provide the means to store large quantities of electrical energy from nuclear, solar and other renewable energy generation facilities and deliver power to the user on demand.,” Singh said in a Sept. 2019 press release. “The availability of a suitably sized battery-powered energy storage plant will make our SMR-160 reactor even more valuable.”
O’Brien, the Holtec spokesman, said Singh made “a personal decision based on business interests” to cut ties with Eos and said plans to develop small reactors are on schedule. He said he knew no further details about Eos’s issues with investors.
‘Unfounded retaliatory criminal prosecution’
In his statement, O’Brien accused New Jersey of engaging in “unfounded retaliatory criminal prosecution” and payback for closing an earlier legal attempt to rescind $260 million in state tax credits awarded to Holtec in 2014. The state sued to delete that tax award after discovering that Holtec had apparently concealed its 2010 debarment from the Tennessee Valley Authority.
State courts ruled in favor of Holtec after finding that the state regulators who administer the tax break program failed to perform adequate due diligence on applicants with spotty ethical backgrounds.
Public interest groups and nuclear safety experts who continue to oppose Holtec’s plans around the country, however, say the New Jersey fine is another warning sign. They said federal regulators, including the Department of Energy, must redouble scrutiny before awarding more public subsidies to the company.
“Clearly, Holtec lies habitually for fraudulent financial gain,” said Kevin Kamps, a radioactive waste specialist at Beyond Nuclear, a leading watchdog group that is suing to stop Holtec’s New Mexico plan, as well as efforts to collect billions in subsidies to restart the retired Palisades nuclear plant in Michigan.
“The State of Michigan, and U.S. Department of Energy, must… not hand over hundreds of millions of dollars in state, and multiple billions of dollars in federal, taxpayer money for Holtec’s unprecedented, extremely high-risk zombie reactor restart scheme at Palisades.”