TVA: Ratepayers may foot bill for contractor
Accused of poisoning workforce in cleanup
KNOXVILLE - The Tennessee Valley Authority is admitting publicly for the first time that it made a deal that could put ratepayers on the financial hook for the misdeeds of a contractor accused of poisoning an entire workforce.
TVA is publicly acknowledging — via a small section in a 2019 quarterly earnings report — ratepayers may have to foot the bill for Jacobs Engineering’s treatment of disaster cleanup workers at the nation’s largest coal ash spill at the public utility’s Kingston plant a decade ago.
TVA put Jacobs Engineering in charge of cleaning up the 7.3 million ton coal ash spill at the TVA Kingston Fossil Fuel Power Plant in December 2008 and keeping workers and the community safe, despite the global contractor’s history of worker safety lawsuits and test tampering allegations.
Jacobs supervisors have since admitted — under oath — they lied to the estimated 900 workers employed at the height of the cleanup effort about the dangers of coal ash while exposing them — unprotected — to it for as much as 50 to 55 hours a week for months and years.
More than 40 workers, including at least two TVA employees, are now dead, and more than 400 are sick.
A jury in U.S. District Court in November ruled Jacobs violated its contract with TVA for the cleanup work and endangered workers as a result. That trial revealed TVA ratepayers had paid Jacobs $60 million for that contract work.
USA TODAY NETWORK - Tennessee also has revealed TVA is continuing to do business with Jacobs to the tune of $200 million for work that involves worker safety.
TVA has largely refused to answer questions about Jacobs, the sickened workers and the ties that bind TVA and Jacobs — in the alleged poisoning of workers and in written and verbal deals struck when the cleanup began and as it continued for eight years. The utility cites the lawsuit each time as cause for refusing to answer those questions.
TVA, Jacobs struck deal
USA TODAY NETWORK - Tennessee already had revealed — as part of its two-year investigation of the alleged coal ash poisoning — TVA struck a deal to pay the legal bills for Jacobs to defend any lawsuits arising from the cleanup.
TVA has refused to say if the utility is honoring that deal. Jacobs is employing three of the highest-paid law firms in the country to defend the ongoing federal lawsuit.
But in its latest filing with the Securities and Exchange Commission, TVA is for the first time admitting publicly it also has a deal to cover any damages the sickened workers might recoup — if they win what could be a yearslong legal battle against Jacobs.
“While TVA is not a party to this litigation, TVA could be contractually obligated to reimburse Jacobs for some amounts that Jacobs is required to pay as a result of this litigation,” the report stated.
TVA also warns in its first quarterly report of 2019 that Jacobs — now implicated in court of causing what is the largest case in the nation of an alleged poisoning by coal ash — has put the entire coal ash industry at risk for fundamental — and costly — change and regulation.
“TVA will continue monitoring this litigation to determine whether this or similar cases could have broader implications for the utility industry,” the report stated.
Those broader implications include tighter safety requirements for coal ash workers, tighter regulations on the storage of coal ash and the classification of coal ash as a hazardous waste — if the workers prevail.
The newspaper’s ongoing investigation has shown TVA offered the contractor bonuses if the firm didn’t file any reports of workers being harmed.
Jacobs admitted in the phase one trial of the workers’ lawsuit that workers filed complaints about common symptoms, including skin rashes, low testosterone and breathing ailments, but a TVA supervisor testified he never saw them.
TVA: No proof workers ‘injured’
TVA spokesman Scott Brooks declined to answer a series of questions about the TVA report and its disclosures. Instead, he emphasized the “report states TVA COULD (sic) be contractually obligated.”
TVA is continuing to publicly defend Jacobs. TVA used ratepayer money to buy a full-page ad last month touting the work of Jacobs and other contractors.
Brooks insisted Friday there is no proof — despite the newspaper’s investigation and trial testimony and evidence — the workers were “injured.”
“The verdict in phase one did not establish that any plaintiff was injured, a fact which the News Sentinel and other publications continue to report inaccurately,” Brooks wrote.
The jury concluded in its verdict that the workers were sickened as a result of Jacobs’ breach of its contract with TVA and that their ailments — which range from cancers to blood, heart, lung, neurological and skin diseases to chronic breathing sicknesses — are caused by the constituents of coal ash.
That verdict, however, does not guarantee the workers will receive medical testing and treatment or damages. Jacobs’ lawyers say they want to appeal that ruling and, if they lose, force each worker to present a case of mass poisoning in a series of mini-trials — each with a new jury.
Workers continue to die
Two more workers have died since the jury reached its phase one verdict. Another half-dozen previously unidentified sickened workers have come forward. Most of the sickened workers don’t have medical insurance. Few of the dead workers left their families with pensions or life insurance proceeds.
The lawsuit itself involves fewer than 75 workers. Hundreds more must await its outcome before seeking their own damages for testing and treatment — and it’s not clear if the law will allow them to do so.
Chief U.S. District Judge Tom Varlan took the extraordinary step in January of ordering Jacobs to try to negotiate a settlement with the workers. He cited as one cause for his decision the fact that workers are continuing to die as the case, first filed in 2013, drags on.
Jacobs’ attorneys made clear, though, in filings and arguments in court they did not want to negotiate, forcing Varlan to invoke a rule granting him authority to do so despite the firm’s objection.
TVA’S admission of contractual legal ties with Jacobs in the lawsuit could lead to a demand by either Jacobs or the workers to force TVA to take a seat at the bargaining table, too.
TVA is admitting in its SEC filing it has a financial stake in the outcome and, by virtue of its promise to pay Jacobs’ legal bills, could have a say in Jacobs’ settlement decisions.
Burchett: ‘They’re a public utility’
Tennessee’s newest congressman, 2nd Congressional District U.S. Rep. Tim Burchett, has called for a criminal probe of Jacobs’ treatment of disaster cleanup workers and made TVA the target of his first bill since winning election last year.
Burchett announced last week he was introducing a bill that would require TVA to do more of its ratepayers’ business in public. “They are a public utility,” he said. The bill would require TVA to notify the public at least six days in advance of any meetings of its board and all subcommittees, allow the public to attend those meetings and make public the minutes and summaries of those meetings.
Congress created TVA and the U.S. Senate must confirm appointments to its board, but, unlike other government agencies and boards, TVA isn’t required to open its board meetings to the public or disclose its discussions. TVA also is exempt from most public records laws.
Burchett said in a release he met with TVA Chief Executive Officer Bill Johnson, who earns $8 million annually, last week and filed his bill after that meeting.
“While I understand that TVA has reasons for not wanting to open all meetings to the public, as an entity created and protected by Congress, the public deserves to know the Authority’s business is as open and transparent as possible,” Burchett said.
Trail of evidence
USA TODAY NETWORK - Tennessee’s investigation, trial testimony and Jacobs’ own court admissions show the following:
❚ Jacobs supervisors told workers they could safely eat a pound of coal ash daily without harm. Coal ash contains 26 toxic chemicals and metals, including arsenic, radium, chromium, lead, fine particulate matter and cadmium. Jacobs supervisors have since admitted coal ash is not safe to eat in any quantity.
❚ TVA representatives and Jacobs supervisors misled the public and workers about the makeup of coal ash, saying it had only a handful of harmful substances, despite test results from independent testing by Duke University that showed the Kingston coal ash had radiation and two dozen toxic chemicals and metals in it.
❚ TVA supervisors knew as early as 2013 workers were complaining of common symptoms of coal ash exposure, including skin rashes, breathing ailments and migraines, but didn’t document them or act on them. One TVA supervisor admitted in a sworn deposition firing a worker who insisted on protective breathing gear.
❚ Jacobs supervisors ordered protective dust masks destroyed, refused to give workers protective gear and threatened to fire workers if they persisted in complaining.
❚ Jacobs manipulated testing designed to monitor the exposure levels of workers and the surrounding community to produce falsely low results and tampered with testing devices.
Jacobs is not yet admitting to its investors that it might face damages in the workers’ lawsuit. The contractor in its November quarterly report didn’t detail the lawsuit at all. The firm is holding more than $434 million in reserves to pay off lawsuits and other “commitments” with legal ramifications, according to that report.
Jacobs’ revenues from its work with TVA, other big energy firms and energy-related government contracts rose from $2.5 million in 2017 to $10.8 million in 2018, according to the report.
Jacobs earns more than $12 billion in revenues annually.