Why Fact Checking of Audacious Claims About Nuclear Power Projects is Important

Note to readers - This past month has seen a flurry of sometimes fluffy press releases about startups, IPOs, and other kinds of investments in nuclear energy as well as P.T. Barnum type publicity stunts related to startups. None of this is a surprise in any industry that is on the cusp of potentially rapid growth. I originally posted a short version of this essay on Linkedin a few months ago and decided, after recently spending more time than I liked fact checking a few claims that seemed sketchy, to re-write the piece and publish it in long form.

• NBC News Butte, MT, reported there is no basis for claims by a Florida man of NRC approval, nor any involvement of Westinghouse, in plan for 100 MW nuclear power plant in that city
• The Legacy of Idaho’s Invisible Nuclear Reactor Lives On
• How Misinformation Creeps In
• Checking the Status of NRC Engagement – The No Bozos Rule

NBC News, Butte, MT, fact checked audacious claims by a Florida man who said he had NRC approval to build 100 MW of nuclear power using the Westinghouse eVinci micro reactor. NBC news reported that none of the claims were true.

The basis for the skepticism noted in this blog post is an experience reporting more than a decade ago on a penny stock fraud scheme (pump & dump) in Idaho that led to SEC and IRS criminal charges against the principals of a firm falsely claiming to be building a nuclear power plant there.

Pump-and-dump schemes were usually done through cold calling. But with the advent of the internet, this illegal practice has become even more prevalent. Fraudsters post messages online enticing investors to buy a stock quickly, with claims to have inside information that some development will lead to an upswing in the share’s price. Once buyers jump in, the perpetrators sell their shares, causing the price to drop dramatically. New investors then lose their money. The operation of these kinds of frauds was dramatized in the 2013 movie “Wolf of Wall Street.”

AEHI’s CEO failed to show up for his arraignment court appearance in May 2015 and has been a fugitive since then. AEHI’s VP pleaded guilty, went to jail, and was directed by the federal court to pay restitution to investors. The entire scam was nicknamed “Idaho’s invisible reactor.”

• Prior coverage on this blog – Alleged Nuclear CEO Scam Scrams – Boise Federal Court issues a bench warrant for AEHI CEO Don Gillispie

AEHI’s PR firm, based on Boise, had an unusual ability to frequently cite the committed or inferred involvement of multiple large nuclear firms in its project without there ever being a similar press statement from those cited in AEHI’s releases. Two reactor vendors and several EPC firms found themselves having to deny any involvement in the project.

It’s not that people weren’t warned about what AEHI was up to. Interestingly, anti-nuclear groups were among those sounding the alarm early on. In fact, AEHI sued the Snake River Alliance (SRA) who’s 20-something leader at the time brazenly called the company a scam without any paperwork to prove it. She later turned out to be right and was exonerated by the courts as having engaged in protected free speech.

How Misinformation Creeps In

The AEHI  experience, which involved outright fraud,  is different than one involving a which is not. Trouble starts when a newly minted entrepreneur, especially one coming into the industry with no prior nuclear experience, makes claims about progress, especially in terms of dealing with regulatory agency, stakeholders, and investors, without fully understanding the needs for documentation and verification of these claims. Sometimes there is no intent to promote false information, there’s just too much enthusiasm that results in the startup knocking over the tea kettle while its on a boil.

Prior coverage on this blog – Fact Checking a Nuclear Startup’s Claims

In other instances, it takes a while for the facts to come out or for the nascent entrepreneurs to discover the numbers don’t work because nuclear physics are hard facts. The case of Transatomic having to fold its tent is well known.  In 2018 the firm faced twin challenges of a long development time and an uncertain degree of competitive technology advantage over other designs.

• Prior coverage on this blog - Transatomic Folds its Tent but its Legacy Lives On

The decision by Transatomic to roll up the sidewalks was based on a conclusion by the firm’s lead developers, both holding Ph.Ds in the nuclear energy field from MIT, that they could not deliver a commercially successful design that runs on spent nuclear fuel nor one using a molten salt concept. The company acted after a review by one of its advisers at MIT found errors in the firm’s calculations about how much nuclear waste the design could effectively burn up in the reactor.

A separate case is when anti-nuclear interests make deliberate misrepresentations of the facts publishing them in respected channels including those with scholarly credentials. In May 2022 a Stanford University and University of British Columbia study into the waste streams from three proposed small modular reactor (SMR) designs predicted complex technical problems and high costs that will occur in the management of spent nuclear fuel and other radioactive waste from both light water and advanced SMR designs. The problem was that this so-called scholarly study was a disguised hit job intent on upending the development small modular reactors.

• Prior coverage on this blog – Stanford’s Questionable Study on Spent Nuclear Fuel for SMRs

The result in all of these cases is that the mainstream media and the nuclear industry trade press, especially when just accepting claims in press releases without fact checking, publishes them and subsequently has to post corrections to update their readers.

Checking the Status of NRC Engagement – The No Bozos Rule

It is important to understand that as part of the NRC’s policy of transparency to the public, it puts regulatory filings it receives from applicants to licenses, etc., into the ADAMS library which is an online resource that anyone can check via the Internet. One of the early documents in the process of  licensing of a new reactor is a “regulatory engagement plan.”

A Regulatory Engagement Plan (REP) establishes “Rules of Engagement” between the applicant and NRC. The primary goal of the REP is to reduce regulatory uncertainty by establishing such agreements as early in the regulatory process as possible. The presence or absence of one in ADAMS is a key indicator of where a startup firm stands in its relations with the NRC.

In a September 2007 visit to Boise then NRC Chairman Dale Klein, when asked about the AEHI project, commented, that despite claims to the contrary, the agency had not received an application for a license from the firm.

Klein had previously coined in a speech in June 2007 what became known, without his blessing, as the “no bozos rule” for new nuclear plants saying that the industry has no room for amateurs.

“My subject is something that each of the five Commissioners believe in, and have said before—which is this: owning a commercial nuclear reactor is not a business for amateurs. If the nuclear power business is treated with less than the seriousness it deserves—and people begin to think that anyone can just jump on the nuclear bandwagon—it opens up the very real danger of making the “wave” of the nuclear resurgence look more like a “bubble.” And bubbles have a tendency to pop.”

Readers are well advised with the increasing interest in nuclear energy that it will be accompanied by people who are sometimes unwittingly careless with the facts but beware of others who have no business in the industry and are just out to make a quick buck.

# # #