NEW YORK - FirstEnergy Corp. Friday admitted that some of its employees made false statements to US regulators about safety violations at one of its nuclear plants and said it had reached a deal with the US Department of Justice to avoid indictment of the utility.

The company's nuclear operating unit, FirstEnergy Nuclear Operating Co. (FENOC), agreed to pay a $28 million penalty to the Justice Department and cooperate with criminal and administrative investigations and proceedings. The penalty is the largest ever imposed for nuclear safety violations in the United States, according to the Justice Department.

If the company held to its side of the deal, the DOJ would refrain from initiating criminal prosecution or indicting the company for its conduct related to the problems at its Davis-Besse nuclear plant in Ohio.

Davis-Besse, which can produce electricity for about 900,000 homes, was forced to close in early 2002 when it was discovered that leaking boric acid had chewed a pineapple-sized hole in the reactor vessel's carbon steel lid, a serious safety violation.

Two former plant employees and a contractor who worked on the plant were indicted in Ohio Thursday over the alleged cover-up.

The indictment alleges that David Geisen, Andrew Siemaszko, and Rodney Cook worked to conceal the condition of Davis-Besse's reactor vessel head and lied about the extent of inspections done at the plant.

Geisen and Siemaszko could face up to 25 years in prison if convicted on all counts. Cook could face up to 20 years in prison.

FENOC said it entered into the deferred prosecution agreement with the Environmental Crimes Section of the Environment and Natural Resources Division of the US Department of Justice, as well as the US Attorney's office for the Northern District of Ohio.

In the agreement, FirstEnergy acknowledged that FENOC employees had submitted false statements to the US Nuclear Regulatory Commission in letters arguing that Davis-Besse could continue to operate safely and in compliance with NRC regulations.

It also accepted responsibility for the violation of law.

"FENOC substituted its judgment for what was necessary from a safety point of view for that of the NRC," David Uhlmann, chief of the Environmental Crimes Section. "There's no place for that kind of brazen arrogance."

Uhlmann said he does not expect further charges related to the violations at Davis-Besse at this time, but wouldn't rule them out.

The plant went back into operation in March 2004 after FirstEnergy replaced the reactor lid, made numerous staff changes at Davis-Besse and revamped plant safety programs.

FirstEnergy said the $28 million penalty would reduce its fourth-quarter earnings by about 9 cents per share.

The agreement runs through the end of 2006. FENOC said it intends to remain in compliance with the deal.

In September FENOC agreed to pay a $5.45 million fine proposed by the Nuclear Regulatory Commission for the corrosion problem.

FirstEnergy shares fell 59 cents, or 1.2 percent, to $50.92 in late trading on the New York Stock Exchange Friday.

Story by Michael Erman

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