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ENERGY AND REVENUE ENRICHMENT ACT OF 

2011 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 13, 2011 

Serial No. 112–59 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, OKlahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

(II) 

(III) 

SUBCOMMITTEE ON ENERGY AND POWER

ED WHITFIELD, Kentucky 

Chairman 

JOHN SULLIVAN, OKlahoma 

Vice Chairman 

JOHN SHIMKUS, Illinois 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MICHAEL C. BURGESS, Texas 

BRIAN P. BILBRAY, California 

STEVE SCALISE, Louisiana 

CATHY MCMORRIS RODGERS, Washington 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JAY INSLEE, Washington 

JIM MATHESON, Utah 

JOHN D. DINGELL, Michigan 

EDWARD J. MARKEY, Massachusetts 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

CHARLES A. GONZALEZ, Texas 

HENRY A. WAXMAN, California (ex officio) 

(V) 

C O N T E N T S 

Page 

Hon. Ed Whitfield, a Representative in Congress from the Comonwealth 

of Kentucky, opening statement ......................................................................... 1 

Prepared statement .......................................................................................... 2 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 3 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 4 

WITNESSES

Hon. Mitch McConnell, a United States Senator from the Commonwealth 

of Kentucky ........................................................................................................... 6 

Prepared statement .......................................................................................... 9 

Gene Aloise, Director of Natural Resources and Environment, Government 

Accountability Office ............................................................................................ 13 

Prepared statement .......................................................................................... 15 

Daniel B. Poneman, Deputy Secretary, U.S. Department of Energy .................. 30 

Prepared statement .......................................................................................... 32 

Herman R. Potter, President, United Steelworkers Local 689 ............................ 47 

Prepared statement .......................................................................................... 51 

Jim H. Key, Vice President, United Steelworkers Union Local 550 ................... 59 

Prepared statement .......................................................................................... 62 

SUBMITTED MATERIAL

Letter of May 31, 2011, from the International President of the United 

Steelworkers to Secretary Chu, submitted by Mr. Whitfield ........................... 81 

Letter of June 10, 2011, from the Governor of Kentucky to the Subcommittee, 

submitted by Mr. Whitfield ................................................................................. 83 

Letter of June 10, 2011, from the Mayor of Paducah, Kentucky to Senator 

Rand Paul, submitted by Mr. Whitfield ............................................................. 85 

Letter of June 12, 2011, from the County Judge of McCracken County, Kentucky, submitted by Mr. Whitfield ...................................................................... 87 

Letter of June 16, 2011, from Senator Rand Paul to the Subcommittee, 

submitted by Mr. Whitfield ................................................................................. 88 

(1) 

ENERGY AND REVENUE ENRICHMENT ACT OF 

2011 

MONDAY, JUNE 13, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 1:38 p.m., in Room 

2123, Rayburn House Office Building, Hon. Ed Whitfield [chairman 

of the subcommittee] presiding. 

Present: Representatives Whitfield, Walden, McKinley, Rush, 

and Waxman (ex officio). 

Staff Present: Charlotte Baker, Press Secretary; Sean Bonyun, 

Deputy Communications Director; Anita Bradley, Sr. Policy Advisor to Chairman Emeritus; Cory Hicks, Policy Coordinator, Energy 

& Power; Kirby Howard, Legislative Clerk; Ben Lieberman, Counsel, Energy & Power; Dave McCarthy, Chief Counsel, Environment/ 

Economy; Mary Neumayr, Counsel, Oversight/Energy; Andrew 

Powaleny, Press Assistant; Alex Yergin, Legislative Clerk; Jacqueline Cohen, Minority Counsel; Greg Dotson, Minority Energy 

and Environment Staff Director; Jocelyn Gutierrez, Minority DOE 

Detailee; and Caitlin Haberman, Minority Policy Analyst. 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Mr. WHITFIELD. I would like to call this hearing to order. 

Today, we have another hearing on the American Energy Initiative. This committee has had a series of hearings regarding the energy needs of the United States. 

Today, also, we specifically will be looking at H.R. 2054, the Energy and Revenue Enrichment Act, which I have introduced on the 

House side and Senator McConnell and Senator Paul have introduced on the Senate side. 

H.R. 2054 is a simple bill. It initiates a 2-year pilot program to 

re-enrich the uranium tails. It allows for the sale of the re-enriched 

uranium and deposits the money made into the Uranium Decontamination and Decommissioning Fund to be used for environmental cleanup. 

I would also like to point out to those of you who may not be familiar that what we are talking about here is about 60,000 14-ton 

canisters located in two geographical areas of the country. There is 

about 40,000 of these canisters in Paducah, Kentucky, of depleted 

2 

uranium waste and about 20,000 of these canisters in Piketon, 

Ohio. 

For the last 5 or 6 years, I, along with others, have had a lot of 

discussions with the Department of Energy about re-enriching this 

material, which would accomplish a number of things. Number one, 

it would provide additional revenue to the Federal Government; 

number two, it would help the environmental cleanup, certainly in 

Paducah as well as in Piketon, Ohio; and, number three, it would 

prolong the life of the uranium enrichment plant in Paducah, Kentucky, in which we have 1,200 jobs at stake. 

So this is an important piece of legislation, and it makes a lot 

of sense for the reasons that I have already stated. It appears to 

be a win, win, win situation. 

I would also like to remind everyone that this is a pilot project, 

a 2-year pilot project, which I think will give the Department of 

Energy adequate time to assess the situation, and it certainly 

would be of benefit to our country. So I look forward to the testimony of our witnesses today. 

I would also at this time ask unanimous consent to introduce 

into the record a letter from the International President of the 

United Steelworkers, a letter from the Governor of Kentucky, a letter from the Mayor of Paducah, a letter from the County Judge of 

McCracken County, and a letter of support from United States Senator Rand Paul. 

[The information appears at the conclusion of the hearing.] 

Mr. WHITFIELD. I certainly want to welcome Senator McConnell 

being here with us today as well. As you know, he is the senior 

Senator from Kentucky and he is also the Republican Leader in the 

United States Senate, and he is quite familiar with this particular 

issue. 

So Senator, we really appreciate your being here as well. 

At this time, I would like to recognize Mr. Rush for his 5-minute 

opening statement. 

[The prepared statement of Mr. Whitfield follows:] 

PREPARED STATEMENT OF HON. ED WHITFIELD

I would like to call this hearing to order. 

In 2008, this Committee’s Subcommittee on Oversight and Investigations held a 

hearing on the Department of Energy’s inventory of depleted uranium hexafluoride 

canisters called ‘‘tails,’’ where the Government Accountability Office (GAO) testified 

that reenriching these tails to secure the useable uranium would be worth around 

$7.6 billion, and maybe as much as $20 billion. 

Since that time, this potential value has dropped to $4 billion, as the GAO will 

testify today. Simply put, the Department of Energy has failed to realize the value 

of the uranium tails and as a result they have already lost the taxpayers roughly 

$3.6 billion. 

That is the reason we are here today considering my legislation—the Energy and 

Revenue Enrichment Act. DOE has talked to my office about these tails for 5 years 

and for 5 years we have not seen any results. All the while, this Committee has 

been waiting patiently, as have the taxpayers, for DOE to initiate a program that 

makes sense and should be a no-brainer. 

The time for waiting is over. My bill is simple. It initiates a 2 year pilot program 

to re-enrich the uranium tails, allows for the sale of the re-enriched uranium, and 

deposits the money made into the Uranium Decontamination and Decommissioning 

Fund to be used for environmental cleanup. 

Now, I want to direct your attention to the poster board located at the front of 

the room. Many people say a picture speaks for itself. This poster shows the amount 

of waste that we have been dealing with for the past 60 years. There are 40,000 

3 

of these canisters located in Paducah, Kentucky and 20,000 located in Piketon, Ohio. 

These canisters are scheduled to be converted to a less harmful substance and will 

be disposed of at an approved disposal facility. But, if this conversion occurs before 

re-enrichment, we will lose $4 billion. 

In addition, my bill will reduce the amount of waste for disposal by 30,000 tons. 

This reduction in waste will save the government $200 million and result in less 

harm to the environment. 

The bill does limit the pool of facilities where this work can occur. We do this for 

two reasons. First, there is contamination in these tails. The DOE sites are already 

similarly contaminated, so reenriching the tails at the DOE location will not further 

contaminate other sites. By contrast, new facilities will be hesitant to take many 

of these tails, further denying the taxpayer. 

Second, the communities that have supported the government’s reenrichment program for decades need these jobs. We will hear from the Steelworkers Unions about 

the equity involved in this project. They will explain that for nearly 60 years, these 

communities have been home to millions of tons of waste tails and now that the 

tails are recognized to have value, and they should be the ones to benefit. They 

aren’t asking for a government handout, and they aren’t asking for a bailout, all 

they are asking for is to let them finish the work, all in service to the taxpayer. 

As I stated earlier, the uranium that will be extracted through this pilot program 

will generate roughly $4 billion, which my bill puts into the Uranium Decontamination and Decommissioning fund. That money will help clean up these DOE plant 

sites, which is so important to the communities where they are located, both for purposes of human health and safety and for economic development. 

I am pleased we are making progress to make this bad situation better by cleaning up these sites and trying to repair injured families, but there is still 40 years 

worth of environmental cleanup work left to do at these sites. This money will go 

a long way in advancing this cleanup and it is logical for this money to be used 

there. 

I now yield to the Ranking Member of the Subcommittee for his opening statement. I’d just like to thank the Ranking Member for working with me on getting 

the updated GAO report we will hear about today, and I hope he will join me as 

a supporter of this legislation. 

Before I yield, I would like to insert letters of support from Governor Steve 

Beshear and the United Steelworkers Union’s International President. 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. I want to thank you, Mr. Chairman; and I want to 

thank our distinguished guests, including our distinguished colleague from the other side, Senator McConnell, the Senate Minority Leader, as well as all the other guests for being here today. The 

minority leader’s presence here today speaks to the importance of 

today’s hearing on Chairman Whitfield’s legislation to the good people of the great State of Kentucky. 

Chairman Whitfield and I have had conversations about the Energy and Revenue Enrichment Act, better known as the Kentucky 

Enrichment Act; and I hope and expect that we will be able to 

move this bill through this committee in a collegial and a bipartisan manner. 

Mr. Chairman, I also hope and expect that this can be a turning 

point toward a more collaborative and bipartisan approach for enacting other initiatives and other pieces of legislation in this committee that holds importance to both the majority and minority 

sides. 

With that being said, the Energy and Revenue Enrichment Act 

will launch a pilot program to re-enrich uranium tails that are currently stockpiled in yards in Paducah, Kentucky, and Portsmouth, 

Ohio. These two plants hold up to 40,000 and 20,000 such tails, respectively. This bill will direct the Secretary of Energy to re-enrich 

4 

these tails and sell them at a profit for the government. As written, 

the bill would then redirect the revenue from the sale of these tails 

to the Uranium Decontamination and Decommissioning Fund for 

environmental cleanup. 

This bill will also allow DOE to increase the domestic uranium 

supply from 10 percent to 15 percent for 4 calendar years. 

Mr. Chairman, this hearing is also in response to a letter that 

you and I wrote to DOE back on March 1 asking the agency to update its 2008 report on DOE’s conditional options for dealing with 

these uranium tails. Of course, we have DOE here today; and they 

will testify on different options for handling these tails, as well as 

the value of selling these tails in today’s global market. 

So, Mr. Chairman, I hope, sincerely hope, that my willingness to 

work with you on this issue is evident to all and that we will be 

able to move a bipartisan bill that will bring and maintain jobs for 

the good people of Kentucky and Ohio, while also ensuring that we 

have a transparent and open bidding process that brings forth the 

best value for the American taxpayers. Hopefully, Mr. Chairman, 

this bill will set the tone for a brand new era of collaboration and 

bipartisanship in addressing the important issues that all of our 

constituents face, yours and mine. 

I want to thank you, Mr. Chairman, and I want to again thank 

our distinguished guests; and I look forward to hearing from our 

witnesses and the experts on this issue. 

With that, I yield back the balance of my time. 

Mr. WHITFIELD. Thank you very much, Mr. Rush. 

Mr. Waxman, you are recognized for 5 minutes. 

OPENING STATEMENT OF HON. HENRY A WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Today, the subcommittee is examining H.R. 2054, Chairman 

Whitfield’s legislation to direct the Department of Energy to enter 

into a contract to enrich its depleted uranium tails and then sell 

the enriched uranium on the market. The way that this bill is currently drafted, the only entity that the DOE could contract with for 

these enrichment services is the United States Enrichment Corporation, or USEC. 

When USEC was privatized in the 1990s, proponents said there 

would be many benefits from privatizing uranium enrichment. Wall 

Street underwriters and lawyers made millions of dollars on the 

transaction, but USEC failed to live up to many of these promises. 

Within a few years of being privatized, USEC abandoned important national initiatives, announced layoffs of more than 800 workers, closed its Portsmouth facility in Ohio, sold off large amounts 

of uranium, whipsawing the domestic uranium industry. 

With USEC’s planned closure of its Paducah, Kentucky, facility 

in 2012 fast approaching, we are being asked to direct DOE to 

enter into a sole-source contract with USEC to process what has 

become a valuable asset: DOE’s uranium tails. 

DOE already has the authority under law to do this. So the question is, should DOE be forced by Congress to exercise this authority? 

5 

I am concerned this legislation is not carefully drafted to yield 

the best deal for the American taxpayer. 

First, it is not clear how many hundreds of millions, maybe even 

billions, of dollars this contract would cost the American taxpayer. 

We should ask USEC about its capacity to execute this contract, 

but the company refused to testify, and the majority has not insisted that USEC send a witness today. 

Second, by ordering DOE to enter into a sole-source contract, it 

is almost guaranteed that the government won’t be able to negotiate the best deal for its uranium tails. The way this legislation 

is drafted, as long as the government receives one penny more in 

revenue than it costs to re-enrich the uranium, the contract would 

be deemed ‘‘economically viable’’ and the Secretary of Energy would 

have no discretion not to accept it. 

Third, DOE has a number of options for managing its tails, as 

well as its excess enriched uranium. Another option, for example, 

would be to sell the tails to the highest bidder, which would avoid 

the costs of enrichment. This legislation charges forward with a 

highly prescriptive plan without giving DOE the authority to implement the best strategies for maximizing taxpayer value. 

The legislation purports to raise money for the Uranium Enrichment Decontamination and Decommissioning Fund, also known as 

the D&D Fund. The D&D Fund is used to clean up contamination 

from years of uranium enrichment activities in Kentucky, Ohio, 

and Tennessee. Adequately funding these cleanup efforts is important, but because of the flaws in the bill, it is not at all clear that 

the fund will receive any significant funding under this legislation. 

Moreover, responsibility for contributions needs to be apportioned fairly, with both the government and the utilities that purchased uranium paying their fair share. There is an estimated 

shortfall of more than $11 billion between the projected cleanup 

costs and authorized funding for the D&D Fund. Congress should 

reinstate the requirement that industry contribute to the D&D 

Fund. 

Finally, even though the uranium tails have become a valuable 

resource in recent years, re-enriching them with old technology 

may not be the best approach. 

Experts agree that the gaseous diffusion process, which was developed in World War II, is extremely inefficient and has high production costs. Gas centrifuge technology, which is currently being 

deployed in the U.S., uses about 5 percent of the electricity that is 

consumed by the gaseous diffusion technology used in Paducah. 

Using this more efficient technology for enriching the tails may 

generate more resources for the D&D Fund than using the old 

technology. 

I hope we will be able to examine some of these issues today. I 

understand the chairman intends to mark up his legislation the 

day after tomorrow. That gives us a short period of time to refine 

this legislation. I hope the chairman will work with us to make this 

legislation a good deal for taxpayers. 

I thank the witnesses for appearing today, and I look forward to 

their testimony. 

Mr. WHITFIELD. Thank you very much, Mr. Waxman. 

6 

Before I introduce Senator McConnell, I would like everyone to 

look at this. These are some of the canisters—each one of them 

weighs 14 tons—at Paducah, Kentucky; and the earliest ones have 

been there for 60 years. This has been an issue for 60 years on the 

best way and how do we clean up this material. 

With that, at this time it is my pleasure to introduce our first 

witness. As I said, it is Senator Mitch McConnell, senior Senator 

of Kentucky and Republican Leader of the U.S. Senate, who has introduced similar legislation on the Senate side. 

So, Senator McConnell, welcome. We appreciate your taking time 

to be with us this afternoon, and you are recognized for your opening statement. 

STATEMENT OF THE HON. MITCH MCCONNELL, A UNITED 

STATES SENATOR FROM THE COMMONWEALTH OF KENTUCKY 

Mr. MCCONNELL. Thank you very much, Mr. Chairman, Congressman Rush, and members of the subcommittee. I appreciate 

the opportunity to be here to talk about an issue that Congressman 

Whitfield and I have been dealing with for a long time. In fact, 

throughout my time in the Senate, this facility and its related 

issues have dominated a big part of my career and I know Congressman Whitfield’s as well. 

Where we are is we know this facility is going to be closed down. 

It has been located, as Congressman Whitfield said, along the Ohio 

River for nearly 60 years. It has enriched uranium for use in America’s defense and commercial nuclear reactors. Today, Paducah is 

home to the only domestic facility enriching uranium, making it a 

critical component of our Nation’s energy security. 

The story of uranium enrichment in Paducah begins in 1950, 

when the site was selected for the construction of a new gaseous 

diffusion plant. For many years, uranium was enriched to support 

our national security and then to support our energy needs. However, after decades of work, it was revealed that many of these employees were exposed to deadly toxins. The Department of Energy 

failed to put certain protections in place for these workers, and it 

was up to Congress to set them right. 

I wish I could say that the Department of Energy has been quick 

to recognize its shortcomings over the years and then move swiftly 

to correct them. The sad fact is they have not, regardless of which 

party controlled the Department. As a result, Chairman Whitfield 

and I have frequently been forced to step in and challenge the bureaucracy to live up to the law. 

In the late 1990s, we learned about the dangers Paducah’s workforce had been exposed to, and we adopted a law to make sure that 

the workers were compensated for their injuries. Early last decade, 

DOE had to be forced—literally forced against its will—to implement an effective worker health screening program for workers at 

Paducah, Portsmouth, and Oak Ridge, Tennessee. 

Time and time again, DOE shortchanged cleanup efforts at the 

site, requiring Congress to find resources elsewhere to make up for 

their shortcomings. When DOE dragged its feet in implementing a 

law to convert uranium waste at the site, I helped secure passage 

of legislation to require groundbreaking on a site by a date certain—in other words, literally make them open the project by a 

7 

date certain. Even after passing two laws mandating action, DOE’s 

efforts were still plagued with countless bureaucratic delays and 

disputes. 

And 4 years ago, we asked the Department what its plans were 

for depleted uranium tails, the subject of this hearing here today; 

and here we are today again, 4 years later, asking why the Department does not have a plan that includes Paducah. 

I don’t want to sound like a broken record, but you can see why 

Congress’ patience has worn a little thin while waiting for the Department to step up to do the responsible thing when it comes to 

these enrichment facilities. At this point, the Department has forfeited the benefit of the doubt. 

The Department of Energy is in possession of 40,000 cylinders— 

the chairman just showed us a picture of it—in Paducah and 

20,000 cylinders in Portsmouth containing roughly 700,000 metric 

tons of depleted uranium hexafluoride from former enrichment operations. The substances, more commonly known as tails, sitting in 

these cylinders, exposed to the elements, poses a myriad of health, 

safety, and environmental risks. Paducah has the capacity to convert this toxic substance into a more stable form for disposition, 

and that will be necessary at some point. 

We can keep kicking the can down the road, but this is going to 

be necessary at some point. 

However, it has also the capacity to re-enrich some of this material into marketable uranium, which could then be sold to benefit 

the taxpayers. I would ask those present here today to consider 

this scenario: You have materials right in your own backyard, you 

have facilities to turn it into a sought-after product worth at least 

$1 billion, maybe more, and a workforce trained and ready to do 

the work. Do you use that asset in a way that saves jobs, or do you 

let the Department slowly dispose of all of this valuable material 

and in the meantime 1,200 people collect unemployment? I know 

which option sounds like the common-sense solution to me. 

As the chairman well knows, the unemployment rate in Kentucky is 10 percent, worse than the national unemployment rate of 

9.1. There are 1,200 jobs that would be immediately eliminated by 

the plant closure. But that’s not all. Hundreds of additional jobs in 

the area would be cut by a shuttered Paducah plant, potentially 

impacting the entire economy of far western Kentucky. I would 

hate to see in this current time of fiscal crisis and serious unemployment a missed opportunity for the government to keep people 

employed and reduce the deficit at the same time. Keep people employed and reduce the deficit at the same time. What is a better 

outcome than that? 

I know these people. I have seen how hard they work. They are 

obviously concerned with their own employment, but they also 

want to help the country. Let’s allow them to do that. At a time 

of fiscal crisis and double-digit unemployment, a plan to re-enrich 

these tails helps employ people and reduce our deficit. It has been 

a long time I have heard anything out of Washington that makes 

as much sense as that. 

Everyone knows Kentucky is a coal State, which we are, but we 

are also a nuclear State. Paducah is a community that enthusiastically supports nuclear energy. Allowing the Paducah plant to close 

8 

in 2012 and waiting years for the Department of Energy to address 

what to do with the existing depleted uranium, I believe, is both 

shortsighted and irresponsible. 

So let me be very clear. We are not asking for a government 

intervention; we are asking that the government live up to its responsibilities and properly utilize inventory and facilities it already 

owns, in the best interest of the taxpayers. 

So I come here today not just as the Republican Leader of the 

Senate but as a concerned American. When it comes to nuclear energy, we have seen this administration abandon plans and millions 

in taxpayer dollars before without much consideration of the consequences. Take for example its unwillingness to follow through on 

the nuclear storage site Yucca Mountain, paralyzing further nuclear energy production in this country. We cannot let the Department turn its back on these facilities, these workers, or these communities again. 

So that is why I am grateful to you, Mr. Chairman, for crafting 

the Energy and Revenue Enrichment Act to give the Department 

of Energy the flexibility it needs to temporarily re-enrich tails at 

Paducah and Portsmouth. I am happy to be the sponsor of that bill 

in the Senate, along with my colleague Rand Paul; and it is my 

hope that we can work with our counterparts in the House and 

Senate to find a fiscally responsible solution. 

I want to thank you very much, Mr. Chairman, for the opportunity to be here and commend you once again for your extraordinary leadership on this subject. I don’t know where we would be 

on this issue without Congressman Whitfield. So I thank you for 

what you have done, and let’s continue to work on it together and 

see if we can get a solution not only for Kentucky but for the Nation. Thanks so much. 

[The prepared statement of Senator McConnell follows:] 

9 


71402.006
10 


71402.007
11 


71402.008
12 


71402.009
13 

Mr. WHITFIELD. Senator McConnell, thank you very much. I 

know that you have a commitment at 2:00, but we do appreciate 

you coming over and giving your opening statement. I look forward 

to working with you on this legislation. 

At this time, I would like to call up the witnesses for the second 

panel. We have Mr. Gene Aloise, with the Government Accountability Office, Director of Natural Resources and Environment; and 

we have the Honorable Daniel B. Poneman, who is the Deputy Secretary at the U.S. Department of Energy. 

Gentlemen, we appreciate both of you being here today us today. 

We look forward to your testimony and thoughts on this issue. 

Mr. Aloise, we will start with you. 

STATEMENTS OF GENE ALOISE, DIRECTOR OF NATURAL RESOURCES AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE; AND THE HONORABLE DANIEL B. 

PONEMAN, DEPUTY SECRETARY, U.S. DEPARTMENT OF ENERGY 

STATEMENT OF GENE ALOISE 

Mr. ALOISE. Mr. Chairman, ranking member, and members of 

the subcommittee, I am pleased to be here today to discuss DOE’s 

options for its supply of depleted uranium, also known as tails. 

As you know, since the 1940s, the government has been processing natural uranium into enriched uranium, which increases the 

concentration of the isotope uranium 235, making the material useful in nuclear weapons or power reactors. The production of enriched uranium over many decades has resulted in about 700,000 

metric tons of leftover tails which are now stored at uranium enrichment plants in Portsmouth, Ohio, and Paducah, Kentucky. 

Although the tails have historically been considered a waste 

product, increases in uranium prices may give DOE options to use 

some of the tails in ways that could provide revenue to the government. DOE’s potential options include selling the tails as is, re-enriching them, or storing them indefinitely. While in our view DOE’s 

legal authority to sell the tails as is is doubtful, DOE has the authority to carry out the re-enrichment and storage options. 

According to DOE’s comprehensive uranium management plan, 

DOE stated that it would consider selling the tails or re-enriching 

them. However, to date, DOE has not done so and apparently has 

no current plans to sell or re-enrich this material. 

At current uranium prices, we estimate DOE’s tails to have a net 

value of $4.2 billion. However, we would have to emphasize that 

this estimate is very sensitive to changing uranium prices, which 

recently have been volatile, as well as the availability of enrichment capacity. 

Our estimate assumes the May, 2011, published uranium price 

of $160 per kilogram of natural uranium in the form of uranium 

hexafluoride and $153 per separative work unit, the standard 

measure of uranium enrichment services. Our estimate also assumes the capacity to re-enrich the higher concentration tails and 

subtracts the cost of the enrichment services. It also takes into account the cost savings DOE would realize from the reduction in the 

14 

amount of tails that needed conversion to a more stable form for 

storage as well as the cost of stabilizing any residual tails. 

Based on 2010 total U.S. Demand for uranium, the total amount 

of natural uranium produced as a resulted of enriching the tails 

would be enough to supply all of the U.S. demand for about 3-anda-half years. 

Importantly, a sharp rise or fall in prices could greatly affect the 

value of the tails. For example, our March, 2008, report estimated 

that the tails had a net value of $7.6 billion. Prices for uranium 

have since fallen, resulting in the now-lower estimate of the value 

of the tails. Furthermore, there is no consensus among industry 

whether uranium prices will rise or fall in the future or the magnitude of any future price changes. Also, the introduction of additional uranium onto the market by the sale of large quantities of 

DOE’s depleted natural or enriched uranium could lead to lower 

prices. 

To help minimize the negative effects of DOE’s sales on domestic 

uranium producers, DOE has limited its sales to no more than 10 

percent of the domestic demand for uranium annually. However, 

this limit lengthens the time necessary to market DOE’s uranium, 

increasing the time DOE is exposed to swings in the price of uranium. Also, the enrichment capacity for re-enriching tails may be 

limited, and the cost of enrichment services are uncertain. 

Uncertainty about the future of uranium prices and the cost of 

availability of enrichment services makes it difficult to place a precise value on DOE’s tails. As a result, it is possible that DOE could 

receive significantly more or less than the $4.2 billion we estimate 

the tails are currently worth. 

In conclusion, Mr. Chairman, as was the case when we reported 

in March, 2008, the U.S. Government has an opportunity to gain 

some benefit from the material that once was considered a liability. 

However, it is unclear to us whether DOE can act quickly enough 

to changing market conditions to achieve the greatest possible 

value from its uranium inventories. 

Mr. Chairman, that concludes my statement; and I would be 

happy to respond to any questions you or members of the subcommittee may have. 

[The prepared statement of Mr. Aloise follows:] 

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Mr. WHITFIELD. Thank you very much, Mr. Aloise. 

At this time, I would like to recognize Mr. Poneman from the Department of Energy. You are recognized for 5 minutes. 

STATEMENT OF THE HONORABLE DANIEL B. PONEMAN 

Mr. PONEMAN. Thank you, Mr. Chairman. Thank you, Ranking 

Member Rush and distinguished members of the committee. I appreciate this opportunity to appear before you to comment on the 

Energy and Revenue Enrichment Act of 2011 and to provide information on the management and disposition of the Department of 

Energy’s depleted uranium. 

The Department holds a significant inventory of uranium in various forms, including highly enriched uranium, low enriched uranium, natural uranium, and depleted uranium hexafluoride, all of 

which must be actively managed. The majority of this inventory is 

depleted uranium the Department plans to process and dispose of 

as waste. 

The uranium equivalent contained in the remaining inventory 

corresponds to almost 3 years of supply requirements for U.S. Nuclear power plants. This uranium has both monetary value and can 

help achieve vital departmental missions in maintaining our domestic nuclear fuel infrastructure. Much of the inventory requires 

further processing before it would be suitable for commercial use. 

The Department’s depleted uranium hexafluoride came from the 

government’s prior uranium enrichment activities. This material 

would require additional processing. 

The portion of this material with higher assay levels that is potentially marketable in its current form is subject to the market 

price of uranium. This uranium could constitute at least 10 percent 

of DOE’s total inventory of depleted uranium hexafluoride. 

The Department has broad authority under the Atomic Energy 

Act to sell, transfer, dispose of, or utilize its inventories of uranium. The Department must act consistently with other relevant 

statutory provisions, including section 3112 of the USEC Privatization Act. Section 3112 imposes limitations on certain transactions, 

including the sale and transfer of uranium to certain domestic 

users. Under this section, the Secretary of Energy must determine 

that a proposed sale or transfer of uranium ‘‘will not have an adverse material impact on the domestic uranium mining conversion 

or enrichment industry.’’ 

The Department believes that introducing departmental inventories to the domestic market in amounts of no more than 10 percent of the average annual domestic demand would not have an adverse material impact on domestic uranium industries. The 10 percent guideline is in fact one of industry’s own recommendations regarding DOE’s uranium management. However, we anticipate that 

in a given year the Department may introduce less than that 

amount into the domestic market and in some years more for certain special purposes. Regardless of whether a transfer is above or 

below 10 percent, covered transactions must comply with section 

3112. 

Within the Department, the Offices of Nuclear Energy, Environmental Management, and the National Nuclear Security Administration are collectively responsible for uranium inventories. These 

31 

offices coordinate transactions that are planned or under current or 

future consideration for disposition of DOE’s uranium. 

They also developed the Department’s excess uranium inventory 

management plan, which provides a strategy for the sale or other 

disposition of this uranium. The Department is committed that its 

management of excess uranium inventories, one, complies with all 

legal requirements; two, maintains sufficient uranium inventories 

at all times; and, three, supports a strong domestic nuclear industry. 

DOE has established priorities for the transfer of uranium 

through 2013. This March, Secretary Chu announced DOE’s determination and market impact analysis authorizing uranium transfers to fund accelerated cleanup activities at the Portsmouth site 

in Piketon, Ohio. The determination found that the proposed transfers will not have an adverse impact on the domestic uranium industry. The total proposed transfers through 2013 are approximately 2,000 metric tons of uranium per year, or about 10 percent 

of the U.S. reactor demand. 

We understand that H.R. 2054 seeks to enrich the Department’s 

high assay depleted uranium hexafluoride to a usable form of uranium, funding the enrichment through the sale of the enriched material, assuming title to and responsibility for disposition of depleted uranium or a transfer of a portion of the enriched material 

in exchange for enrichment services. The amount of funding needed 

to enrich depleted uranium tails is significant and not currently 

within the overall priorities for the Department as supported by 

the President’s budget. As acknowledged in the legislation, transfers of uranium for enrichment might lead to a volume in excess 

of our annual guideline of no more than 10 percent of uranium requirements at domestic commercial reactors. 

We also believe certain provisions of the bill, while well-intentioned, may complicate the Department’s ability to meet its own 

missions. One of our objectives is to maintain sufficient uranium 

inventories at all times to meet the Department’s current and foreseeable needs. Specifically, by funding enrichment services through 

the transfer of the enriched uranium, the bill might impair our 

ability to meet mission priorities such as national defense programs requiring domestic origin uranium. Also, several sections of 

the bill appear to grant the Department authorities it already has. 

The appearance of grants of authorities in H.R. 2054 could lead to 

confusion over the Department’s existing authorities. 

In conclusion, in considering the management and disposition of 

the Department’s uranium inventory, including enriching high 

assay depleted uranium tails, a variety of factors need careful assessment. 

Thank you for the opportunity to testify. I look forward to answering any questions you have. 

[The prepared statement of Mr. Poneman follows:] 

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Mr. WHITFIELD. Thank you, Mr. Poneman, for your testimony 

and taking the time to be here. 

When I listened to Mr. Waxman’s opening statement, he almost 

convinced me to oppose this legislation. But when you look into the 

depth of this legislation and the real accomplishment of this legislation, it is very clear that this is an answer to a significant problem. 

Number one, it is not going to cost the government any money 

to implement this legislation. Number two, it is going to create revenue for the government. Number three, it is going to save 1,200 

jobs. Number four, it is going to expedite the cleanup of the canisters, some of which have been there for 60 years. 

Now, I understand the requirement to certify that we are not 

going to damage the uranium mining industry; and that 10 percent 

ceiling that you referred to, that is not in statute per se, is it? That 

is a judgment that the Department made; is that correct? 

Mr. PONEMAN. Mr. Chairman, that is a guideline that is our interpretation of the statute. You are correct. 

Mr. WHITFIELD. Right. It is in the statute that you have to certify 

it won’t be damaging to the uranium industry? 

Mr. PONEMAN. Right. 

Mr. WHITFIELD. And you all have determined that you can sell 

up to 10 percent of the annual need without doing that. 

And I would just say to you that this legislation is a pilot project, 

and we simply raise it from 10 to 15 for that period of time. 

Another point that you touched on was your concern about providing sufficient supplies for the national defense. You and I know 

that the only other place that is enriching any uranium in America 

is in New Mexico, and it is not fully in business yet, is it? Aren’t 

they still undergoing trials? 

Mr. PONEMAN. I think they are operating, sir. But it is a different plant with different ownership and different legal regime. 

Mr. WHITFIELD. Well, a centrifuge, for one thing. 

But when you look at the practical aspects of this, as we said, 

these things are 14-ton canisters. And if you start transporting 

them around the country, and they are contaminated to a degree— 

we know that because of recent reports—and the site at Paducah 

is already contaminated, correct? 

Mr. PONEMAN. Yes, sir. 

Mr. WHITFIELD. So, number one, moving 14-ton canisters around 

the country, say to New Mexico, would be quite costly, wouldn’t it, 

to transport them? 

Mr. PONEMAN. There clearly is a cost, Mr. Chairman, associated 

with the transport of the canisters. 

Mr. WHITFIELD. And it would certainly contaminate that facility 

out there, I am assuming. What is your opinion on that? 

Mr. PONEMAN. In other words, if you were to, Mr. Chairman, 

take the contaminated gas out of the canisters and inject it into 

some cascade, presumably something would have to be done with 

the contaminants you have taken out or, indeed, I suppose it could 

taint or otherwise deposit on the centrifuge rotors. 

Mr. WHITFIELD. Yes. The bottom line is this: Yes, we could take 

those additional steps. It would certainly cost a lot of additional 

money. And I would think that the Department of Energy would 

39 

welcome this legislation, to be truthful about it, because it helps 

solve your problem and it helps solve our problem. It provides revenue. You and I know that there is a shortage of funds for the Decontamination and Decommissioning Fund. In fact, it is my understanding there is about $4 billion in the fund right now; and in 

order to clean it up completely, my understanding is it would be 

like $29 billion; is that correct? 

Mr. PONEMAN. The full, sum total I couldn’t tell you with specificity, but we are short. 

Mr. WHITFIELD. But it is more money than we have? 

Mr. PONEMAN. It is much more than we have. That is true, sir. 

Mr. WHITFIELD. And at least this legislation would provide additional funding for that fund? 

Mr. PONEMAN. Yes. 

Mr. WHITFIELD. We know it could be done safely at Paducah. 

There is no question about that. The training and equipment is 

there, and there is no problem with it. 

So I understand the Department of Energy’s concerns, but I hope 

as we move forward with this we can keep our dialogue open, because it seems to me that we are trying to accomplish the goals 

that we have set for ourselves and DOE has set for itself. 

Mr. PONEMAN. Thank you, Mr. Chairman. 

If I may comment, there is much in what you say with which we 

wholeheartedly agree. I always find on tough issues it is always 

good to start with some first principles. 

One of the first things you said, Mr. Chairman, was we have invested in this tremendous asset all throughout the Cold War. Indeed, Senator McConnell said the same thing when he sat before 

you. It is in our interest, it is our right and our obligation to optimize the value of that resource in which we have invested as a Nation. So I think the only question is the prudent way in which to 

do that. 

I want to acknowledge Ranking Member Rush. I think this is 

something we can do in a bipartisan manner. Frankly, I know of 

few issues more than the nuclear issue on which we can so join. 

So, really, Mr. Chairman, I think it comes down to how do we 

prudently do this, given all of the facts we have lying before us. We 

have this material: 60,000 of these cylinders; 40,000 in Paducah; 

20,000 in Piketon, Ohio. And then the question presented is, now 

that uranium prices have reached a level that they didn’t use to 

attain at which one can contemplate doing this, how do we do this 

in a manner that optimizes the value of that material to the American taxpayer? 

So we have to take into account, A, the market—and, as Mr. 

Aloise noted, the market is a volatile thing, going up and down— 

and, B, we do have to be sensitive not only because the statute requires us under the USEC Privatization Act, but because it would 

not optimize the value to the American people if we were to dump 

all of this material at the same time because it would crash the 

market. Then you wouldn’t get the value you are looking for. So we 

have to be measured in how we put this into the market. 

Mr. WHITFIELD. That is why we put a 15 percent limit on it. 

Mr. PONEMAN. That is why we have to be measured in how we 

put it. 

40 

And we also have to take into account the cost associated. See, 

up until now, we have been putting natural uranium which has a 

market out into the market. That has a value, and people just purchase it. 

This, in order to gain the value, you have to get the assay back 

up to the natural uranium of 0.7 percent, so there is going to be 

a cost associated with that. How much the taxpayer gets is going 

to depend on netting out the revenue received from the cost to generate the valuable product. 

So I think, Mr. Chairman, in short, the sentiments—clearly, the 

objectives you articulate—the national defense, the environmental 

protection, promoting jobs, and promoting the restart of the American industry—these are ones that we strongly agree with; and we 

would be very open to working with you on a dialogue to figure out 

a way to optimize these interests. 

Mr. WHITFIELD. Thank you. 

Mr. Rush, you are recognized for 5 minutes. 

Mr. RUSH. Thank you, Mr. Chairman. 

Mr. Poneman, in your opinion, DOE’s opinion, how many companies have the capacity and the capability to re-enrich these tails as 

this legislation calls for? 

Mr. PONEMAN. Well, Ranking Member, there are currently two 

operating facilities. We have, of course, the Paducah gaseous diffusion plant, and there is the facility in New Mexico that the chairman referred to. There is a third facility in Idaho that is behind 

that is in the process of—it has gotten a loan guarantee, and they 

are going to be building that one as well. But those would be the 

facilities in the United States that would have the capability to enrich uranium. 

Mr. RUSH. This is an issue that there should be some bipartisanship on, that we can agree on, these nuclear matters. I want to see 

these uranium tails disposed of, and I want to see the American 

people gain something from the sale of them, if they are to be sold. 

But my concern right now is there is no significant bipartisanship. There is bipartisanship that exists here, but it seems like we 

are rushing to get this done and we are trying to direct DOE, force 

DOE to do something that may not be in the interest of the American taxpayer in the long run. 

You mentioned the fact that there would be some costs in terms 

of taking these tails and bringing them up to the level and cost of 

natural uranium; is that correct? 

Mr. PONEMAN. Yes, sir. 

Mr. RUSH. Do you think if, in fact, there is one of these companies that deals with this and if they were successful in terms of 

getting an agreement with the DOE that they should share some 

of the cost for bringing these tails up to where they are marketable? 

Mr. PONEMAN. Mr. Ranking Member, I would say, since the material has a value, the American way, if I may say, to make sure 

that the American taxpayer gets the best value for that investment 

is to have it out to bid. And then whoever has the least cost production would be able to offer the best price to the Department of 

Energy. That would be how I recommend this go forward. 

Mr. RUSH. So you are saying this should be competitively bid? 

41 

Mr. PONEMAN. I would say, if it were competitively bid, you 

would have a better chance of getting maximum taxpayer value 

from it. 

Mr. RUSH. All right. And the absence of a competitive bidding 

process would have what kind of results, as far as you are concerned? If this bill were to go forward and become law without a 

provision for competitive bidding, what would be the results for 

DOE and the American taxpayer? 

Mr. PONEMAN. Let me just say, sir, that there are a number of 

factors that one may wish to take into account. 

I think the chairman is referring to the fact that the only 

unencumbered indigenous facility we have is Paducah. So there 

are, if you will, certain noneconomic factors that come into play. 

But if you are looking at a straight economic analysis, the optimal 

value to the U.S. taxpayer I think would come from a competitive 

bid. 

Mr. RUSH. I yield back, Mr. Chairman. 

Mr. WHITFIELD. I might just say that, in this legislation, we say, 

enter into a contract that the Secretary finds economically viable. 

So it is not like we are directing you to enter into a contract. It 

has to be economically viable. I would just say that the concern we 

have is contamination is a serious issue and the transportation 

costs are serious as far as being competitive. 

At this time, I recognize the gentleman from Oregon, Mr. Walden, for 5 minutes. 

Mr. WALDEN. Thank you very much, Mr. Chairman. 

I am curious about these canisters, if I can use your chart here. 

I can see them up close. It looks like they are rusting. Is that something we ought to be concerned about, Mr. Poneman? 

Mr. PONEMAN. I do believe—and my eyesight is not that good, 

sir, but I do believe the condition of the canisters is absolutely 

something that we need to be very mindful of and that they need 

to be continually monitored to be sure there is no risk. 

Mr. WALDEN. As I look at that, I think of my own region, Hanford, which the Department of Energy has had jurisdiction over; 

and I heard echoes of that as I listened to Senator McConnell talk 

about what DOE has done over decades there, including we have 

Hanford, obviously, right next to the Columbia River. There is really bad stuff buried in tanks that leak, and I know DOE’s involvement in cleanup activities there will probably go on for your lifetime and mine, and beyond that—and hopefully successfully, and 

sooner rather than later. 

I am just curious. We have also got the chem-demil facility just 

across the river in my district for all of the chemical weapons storage. We are going through that on a regular time basis. Is one of 

the issues here you don’t have or you have unclear authority to 

move forward on reprocessing this? I am trying to understand the 

GAO report and finding. 

Mr. PONEMAN. There is, if I understand it correctly, Congressman, a difference of view. The United States Department of Energy 

believes that under the Atomic Energy Authority Act of 1954, as 

amended, we have adequate legal authority to use and dispose of 

that material. Mr. Aloise noted two actions he thought that we had 

authority for. Our general counsel tells me we have authority to do 

42 

all three, including the option that GAO has concerns about. So I 

do think we have the authority. 

But if I may, sir, because I think you raise a very important 

problem, I have spent a lot of time out at Hanford. I have seen that 

beautiful Columbia River, and we are responsible for the 53 million 

gallons of tank waste out there. And we are trying our best so it 

is finished in our lifetime, sir. But we take this—it is not only a 

legal responsibility. It is a moral responsibility. 

I feel the same way about the material at Paducah. You know, 

these people invested in creating the materials that defended us all 

throughout the Cold War. So I think we owe it to them to be responsible in stewarding that asset. 

Mr. WALDEN. I do, too. 

Obviously, there are people who have gone before both of us who 

didn’t hold quite that same opinion, or chose to look the other way. 

We have got the down-winder issue. You have got the leaking 

tanks. You have gotten not always a straight story from the Federal Government when it has come to Hanford. 

So I guess I look at this and say: How long does this sit here? 

What is its condition as we go forward? I tie the two because the 

chem-demil facility, we were concerned about degradation of those 

canisters. I realize they are not this. They were a chemical weapon. 

But the mustard gas and DX and other things there, it seems like 

we ought to get after this. 

Mr. Aloise, talk to me about your report in terms of the conflict 

here in authorities. 

Mr. ALOISE. Well, Congressman, there are basically three avenues DOE can go. They can sell the tails as is, they can re-enrich 

them and sell them, or they can store them. It is our view that they 

don’t have the necessary authority to sell the tails as is. We are 

basing that on our read of the USEC Privatization Act. 

Mr. WALDEN. If I may interrupt you for a second, this is where 

you and DOE disagree. You think you have the authority. You 

think they don’t. 

Mr. ALOISE. Right. It would be a very simple fix for the Congress 

to—— 

Mr. WALDEN. And this bill does that? 

Mr. ALOISE. No. But we recommended in the past that Congress 

consider adding the words ‘‘depleted uranium’’ either to amending 

the USEC Privatization Act or some other piece of legislation to 

give DOE that authority. 

But, as Mr. Poneman said, DOE believes they have that authority. 

Mr. WALDEN. OK. And what other conflicts do you see here that 

hold them up from doing this? 

Mr. ALOISE. It is just a policy call at this point. 

Mr. PONEMAN. I would just add, Congressman, since I think it 

is directly apposite to your comment, precisely because we look at 

those vast fields of tanks, we have built in both Paducah and near 

Portsmouth what we call these DUF6 conversion facilities. And, up 

until recently, we thought we were going to disposition all of those 

canisters as waste. It is indeed one of the things that we have done 

to say, now that we have some value that is inherent in those canVerDate Nov 24 2008 11:28 Feb 10, 2012 Jkt 037690 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS 112\112-59 061311\112-59 CHRIS
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isters, we shouldn’t just disposition all of it; we should look to see 

if we can get some value for the taxpayers. 

Mr. WALDEN. Understood. So when you talk about disposition of 

waste, I assume that means storage? This reprocessing idea? 

Mr. PONEMAN. What I am referring to is uranium hexafluoride 

is a very corrosive gas, sir; and, therefore, we want to turn it into 

a much more stable oxide form. That is the process that would happen in these so-called DUF conversion facilities. 

Mr. WALDEN. My time has expired. Thank you, gentlemen, for 

your testimony; and thank you, Mr. Chairman. 

Mr. WHITFIELD. Mr. Walden did raise one issue I would like to 

follow up on. The GAO said that it costs, just for the Paducah 

plant, like $4 million a year just to maintain the canisters. 

Mr. RUSH. Mr. Chairman, I must object right now to the procedure. Mr. Waxman is here waiting. 

Mr. WHITFIELD. Sorry. I just got so carried away. 

Mr. WAXMAN. Mr. Chairman, I ask unanimous consent you may 

be given a minute. 

Mr. WHITFIELD. Thank you very much. 

I just want to know, is that $4 million annual cost correct or not? 

Mr. PONEMAN. Actually, sir, overall, at Paducah, we are spending 

on the order of $140 million per year on the activities that we are 

doing out there. I don’t know where the exact figure of $4 million 

comes from. 

Mr. WHITFIELD. Thank you. 

I recognize the gentleman from California for 5 minutes. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

I am concerned about whether this bill gets the best deal for taxpayers. The bill requires DOE to enter into a contract with a company that has experience operating an enrichment plant under authorization of the Nuclear Regulatory Commission. Section 2 of the 

bill then defines an enrichment plant as a uranium enrichment 

plant owned by the Department of Energy. Mr. Aloise, can you tell 

me which enrichment facility would qualify? Is it just this one enrichment facility at Paducah that would qualify? 

Mr. ALOISE. There is only one that runs a DOE facility. 

Mr. WAXMAN. So it would uniquely benefit USEC. That is why 

I said in my opening statement that it would be helpful if USEC 

had been here to testify. If USEC were here, we could examine how 

they see themselves fitting into this legislation. Unfortunately, 

they refused to testify. 

The bill directs DOE to enter into a contract that is economically 

viable. Those are the terms, economically viable. But section 3(a)(3) 

of the bill states that a contract shall be considered economically 

viable if ‘‘the costs to the U.S. of the re-enrichment are less than 

therevenue anticipated from the sale of the re-enriched uranium.’’ 

Mr. Poneman, if USEC proposed enriching the uranium tails at 

a cost which was one penny less than the revenue expected from 

the sale of the re-enriched uranium, would the contract be economically viable under this bill? 

Mr. PONEMAN. Congressman, I was reading this language last 

night; and I concur that 3(a)(3), a one penny delta, would constitute 

viability. But, I must say, sir, that it seems to be somewhat inconVerDate Nov 24 2008 11:28 Feb 10, 2012 Jkt 037690 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS 112\112-59 061311\112-59 CHRIS
44 

sistent with some of the other language in the bill, so I was trying 

to reconcile it. But that clause certainly reads that way, sir. 

Mr. WAXMAN. If this bill were to become law, would DOE have 

the option of refusing to enter into a contract that met this definition of economic viability, even though it provided so little return 

to the taxpayer? 

Mr. PONEMAN. This is where I was struggling. I am a recovering 

lawyer, sir, but I don’t practice law at the moment. There is other 

language that talks about this. 

Mr. WAXMAN. We won’t hold that against you. It is a problem 

shared by others. 

Mr. PONEMAN. Thank you. In 3(a)(1), it says Secretary shall 

seeks to maximize the financial return to the Federal Government 

in negotiating the terms of such contract. I was trying to reconcile 

how to read that term in the context of 3(a)(3), and I was having 

some trouble, sir. 

Mr. WAXMAN. So it doesn’t appear this is giving DOE discretion. 

It sounds likes they are being mandated. 

Mr. PONEMAN. Our concern is precisely that. Something that has 

been granted to the Department as a discretionary power that we 

have to maximize the taxpayer return would perhaps be inadvertently curtailed by this. 

Mr. WAXMAN. Mr. Aloise, what safeguards do you see in this bill 

which would prevent USEC from overcharging DOE for the enrichment services? 

Mr. ALOISE. We would hope that if this bill got passed DOE 

would implement it in a manner that would benefit the government 

much more than we have just discussed here. 

Mr. WAXMAN. Well, USEC is a publicly traded company. It is obligated to its shareholders to maximize its profits. USEC will have 

no reason to do anything other than to charge the maximum possible price. That would be good for its investors, but it won’t be 

good for the D&D Fund, the contaminated sites in Ohio, Kentucky, 

and Tennessee, or workers who engage in contamination cleanup. 

It seems to me that forcing the DOE to enter into a contract 

under statutory language that prevents the Department from having sufficient leverage to negotiate a fair contract will not adequately protect the American taxpayers. 

This bill is being touted as a way to fund the Uranium Decontamination and Decommissioning Fund and provide money to clean 

up the enrichment sites. The Energy Policy Act authorized contributions of $7.2 billion to clean up enrichment sites, and liability 

was apportioned between the government and the utilities that 

purchased uranium. In 2007, DOE said there was a difference of 

$11.9 billion between the projected cost of cleanup and funds authorized by the Energy Policy Act. Mr. Poneman, is there still such 

a huge discrepancy between the amount of available resources and 

the amount of resources needed to clean up these enrichment sites? 

Mr. PONEMAN. Congressman, I can’t give it to the penny, but 

there is still a significant shortfall, yes. That is why we have 

sought in the President’s budget to renew the collection of those 

D&D contributions from the utilities. 

Mr. WAXMAN. Has the administration proposed reinstating the 

industry contribution to the D&D Fund? 

45 

Mr. PONEMAN. Yes, sir. 

Mr. WAXMAN. The fund is clearly underfunded. Congress has to 

take steps to make sure the environmental mess created by these 

enrichment sites is cleaned up. However, this bill does not guarantee that any money would be raised for the D&D funds. The people of Paducah and Piketon and Oak Ridge need assurances that 

their communities will be made whole. We need to provide for real 

funding for the D&D Fund, and it just makes sense that the utilities that benefited from enrichment activities pay their fair share. 

I appreciate this opportunity to ask you questions. We may have 

additional questions. Either I will submit them in writing or, if the 

chairman permits and I am available, we will do a second round. 

Mr. WHITFIELD. Thank you, Mr. Waxman. 

It is time to recognize the gentleman from West Virginia, Mr. 

McKinley, for 5 minutes of questions. 

Mr. MCKINLEY. Thank you, Mr. Chairman. 

To the GAO, this report has just come out; is that correct? 

Mr. ALOISE. The testimony today, issued today. 

Mr. MCKINLEY. If you had any second thoughts, reconsideration, 

now that you finalized your report that would change your opinion 

about the revenue—potential revenue that could come in? 

Mr. ALOISE. No, sir. 

Mr. MCKINLEY. No, sir? OK. 

Then to Mr. Poneman, please. You have had a chance, I suppose—have you read the report yet? 

Mr. PONEMAN. The one from today? 

Mr. MCKINLEY. Yes. 

Mr. PONEMAN. No, sir, I have not. 

Mr. MCKINLEY. From what you have heard in the testimony, do 

you have any disagreement with it? 

Mr. PONEMAN. Just, Congressman, the one that I mentioned, 

which is that we believe that already under the 1954 Atomic Energy Act we possessed all authority we need within the Department 

to disposition this material. 

Mr. MCKINLEY. I guess the focus I am on is more as a revenue. 

Mr. PONEMAN. Oh—— 

Mr. MCKINLEY. What I am referencing is that this thing could 

generate 3 to 7 billion dollars. 

Mr. PONEMAN. Actually, our assessments are different from that. 

I have to caveat that sir, because it is something that depends on 

a market that is constantly changing. But I think the numbers we 

have were on the order of 830 million—— 

Mr. MCKINLEY. Could you provide us then with some of your 

own—so we could compare the two with your analysis between 

that. If could you do that for us, please. 

Mr. PONEMAN. I am happy to. It would have to be caveated by 

the market uncertainties and also by the cost of production of the 

separative work needed to get—— 

Mr. MCKINLEY. Thank you. 

What I heard earlier in the testimony was some of those cylinders have been there as much as 60 years, certainly before your 

time and my time on it. What is your plan? 

It seems like around here we criticize each other, the other side 

of the aisle, they are back across this side. Anyone puts a plan out; 

46 

everyone shoots it down. So here’s a plan that raises revenue for 

the Federal Government 3 to 4 to 7 billion dollars. 

Mr. PONEMAN. Right. 

Mr. MCKINLEY. It protects 1,200 jobs, and it gets rid of a problem 

at a site where the degradation of the tanks and gets rid of some 

of the problems, the environmental issues, but you sound like you 

are opposed to this bill. 

Mr. PONEMAN. Oh, sir, I did not mean to convey that. I said that 

I thought that the sentiments of the bill and the optimization of 

the value to the taxpayer are laudable things and objectives and 

all things that could be supported and the environmental protection and so forth we are strongly supportive. 

Mr. MCKINLEY. You are supportive of this legislation? 

Mr. PONEMAN. No, I said we are supportive of the purposes 

of—— 

Mr. MCKINLEY. What is your plan then? 

Mr. PONEMAN. Our plan is to make sure that, number one, we 

continue to fulfill our mission to defend the Nation in terms of preserving the tritium and so forth that we need—— 

Mr. MCKINLEY. In concrete, not abstract. Here is a concrete plan 

to do something to generate revenue and protect jobs and clean up 

a site, and I want to know what is your concrete plan now to do 

that. 

Mr. PONEMAN. Our concrete plan is to produce the tritium we 

need for the deterrent out of the material that we have already offered to exchange in the 2,000 tons that we are now putting into 

the market. The balance of that material is going into the existing 

obligations to decommission and decontamination—— 

Mr. MCKINLEY. Could you speak in the mic just a little bit better 

for me? I am having a hard time hearing you. 

Mr. PONEMAN. Sorry. 

First is the national security requirement. Second is the D&D obligations we have at Portsmouth. Then, with respect to the cylinders there in Paducah, we have a plan both to disposition that 

which does not have market value in the DUF6 conversion facility, 

and we are willing to work with the committee to find out a way 

to optimize the value to the taxpayer of the cylinders that have 

market value. 

Mr. MCKINLEY. If we followed that plan—seemed pretty general 

still—how many of the cylinders would be gone from Paducah and 

Portsmouth? 

Mr. PONEMAN. Oh, we need to look at the market, look at the 

cost of producing the separative work. 

Mr. MCKINLEY. A year from now they could all still be there or 

2 years they could all still be there, correct? 

Mr. PONEMAN. This is something, Congressman, that—— 

Mr. MCKINLEY. And we wouldn’t have the jobs associated with 

it. I am just sorry. It sounds like we study things to death here instead of doing something. It seems to me more that we have made 

perfect the enemy of good. 

Mr. PONEMAN. Congressman, we have statutory obligations we 

need to fulfill, and we need to make sure that we are doing the 

right thing by the taxpayer. Now if it costs $150 million to produce 

separative work that will give you $151 million worth of benefit, 

47 

you have not done really what you need to do. So that is why we 

are trying to work with the committee, with the other House of 

Congress, with all the stakeholders to find out how to get the best 

value for the taxpayer. It is very practical, and we feel the fierce 

urgency of now. We are not trying to be anything other than very 

focused and concrete about this. 

Mr. MCKINLEY. Thank you. I look forward to getting the information from you. 

Mr. PONEMAN. Thank you, sir. 

Mr. WHITFIELD. Well, I think that culminates the questions for 

this panel. 

I would say this, Mr. Poneman, I know DOE has been working 

on this issue for a long, long time. The GAO even talks about a 

March, 2008, report, so forth. And I do take you at your word that 

you all are interested in solving this issue. And we have an opportunity to solve it. So, hopefully, we could have some additional discussions about this. Because I do think it is imperative that we— 

not only are we talking about disposing of this material and creating revenue for the government, we are talking about saving 

1,200 jobs. 

So, with that, this panel is dismissed; and we will call up the second panel. Thank you all very much—I mean, the third panel. 

On the third panel, we have Mr. Jim Key, who is Vice President 

of the United Steelworkers Union Local 550; and we have Mr. Herman Potter, who is the President of the United Steelworkers Local 

689. 

So, Mr. Key and Mr. Potter, thank you very much for joining us 

this afternoon. We appreciate your coming into Washington for the 

purpose of testifying. 

And at this time, Mr. Potter, I would recognize you for 5 minutes 

for the purpose of making an opening statement; and if you would 

be sure to touch the button so that your microphone is on. Thank 

you. 

STATEMENTS OF HERMAN R. POTTER, PRESIDENT, UNITED 

STEELWORKERS LOCAL 689; AND JIM H. KEY, VICE PRESIDENT, UNITED STEELWORKERS UNION LOCAL 550 

STATEMENT OF HERMAN R. POTTER 

Mr. POTTER. Thank you. 

I would like to thank the chairman and the committee members 

for the opportunity to come before you to testify on behalf of my 

constituency and also to support my colleagues from the Paducah, 

Kentucky, site. I also would like to acknowledge our Ohio delegation, which has always proven to be very helpful with issues related to the Piketon site in Southern Ohio and specifically those 

issues that deal with the enrichment site; and we encourage them 

to support this legislation and respond to this positively. 

Mr. Chairman, I am going to kind of deviate a little bit from 

some of my details in my written testimony just because it is kind 

of redundant to what was mentioned before as far as some of the 

details and issues that went on the site. But I do want to identify 

some concerns that we have and some issues that we support. 

48 

My name is Herman Potter. I am the President of the United 

Steelworkers Local 689 at the Department of Energy Uranium Enrichment Site in Piketon, Ohio. I represent approximately 850 

members that are involved in the environmental remediation, surveillance, maintenance, infrastructure, and also the depleted uranium conversion activities at the site. 

Also, our local actually intends to eventually be the workforce at 

the American centrifuge project at the site, since our members 

were at the original—they actually operated the original uranium 

enrichment site that was closed down in the early 1980s. With multiple contractors and multiple jobs at the site, we actually have 

people working there that actually extend out in the whole region, 

including northeast Kentucky and also West Virginia. And even 

though I work at the Ohio site, I am actually a resident of Kentucky myself. 

We know that the Members of Congress have debated the possibility of enacting this legislation to direct the re-enrichment of tails 

material since the uranium market had determined there is value 

when at one time it did not exist. 

The value of the material due to the market change has provided 

us an opportunity for this re-enrichment to take place, eventually 

returning that monetary value back to the Department of Energy 

and allowing them to easily meet, or more easily meet, their obligations to the workforce and the communities where these DOE sites 

exist. 

We believe that legislation is now warranted. The DOE has demonstrated inactivity as an agency in the implementation of this reenrichment program due to the fear from foreign influence to uranium producers associations and other organizations. We respectfully request that you fully endorse the House Bill 2054 authored 

and introduced by Congressman Ed Whitfield for successful passage of the House by concurrent support by you and your colleagues in the U.S. Senate. 

We are concerned about some issues. One is the timing of the 

Russian 123 agreement with the United States Enrichment Corporation. We are concerned about that this possibly would allow 

USEC to change their mission from being an uranium enricher to 

uranium broker, which would negatively impact the intended operation of the gaseous centrifuge plant in Piketon, Ohio. 

The agreement would also eliminate any re-enrichment program, 

negatively impact the enrichment at the Paducah site, and eliminate the return of millions of dollars back to the DOE to fulfill 

their obligations. 

Currently, we think more than $100 million per year can be realized with introduction and implementation of the pilot tails re-enrichment program. I would submit that the returns from this program be clearly identified and monitored to be used to fulfill the 

DOE’s commitments and obligations. In so doing, things such as 

the complete funding of the retirement and benefits programs provided for those working at the Paducah and Piketon sites. 

Currently, at the Piketon site itself, the DOE is deviating from 

the intent of the Congress by eliminating their obligations through 

manipulation and abuse of the Federal procurement process and 

reinterpretation of the law. The intent is clearly to fulfill a policy 

49 

of reduced post-retirement health care and pension obligations. The 

legislation would provide the funding that would eliminate that financial justification. 

An additional concern needs to be addressed regarding the operation of the two DUF6 plants at Paducah and Piketon. The impact 

that this proposed legislation may have on the projected time of operation has been expressed. It is our belief that the number of reenrichable DUF6 cylinders is limited in number and clearly not the 

full inventory of depleted cylinders. Considering the percentage of 

depleted uranium 238 to the desired uranium 235, the negative impact would be minimal and have little effect on the life span of the 

DUF6 plants. However, strict guidance and oversight over the DOE 

to ensure that the re-enriched material be returned to the site of 

origination would ensure any anxiety created regarding the reduction of plant life expectancy at the DUF6 plants. 

We have concerns that the absence of establishing this as a solesource contract is not in the proposed legislation. The fact that 

URENCO and AREVA are interested in the refeed heightens our 

concerns that the additional costs of transportation of the depleted 

tails cylinders from Paducah and Piketon to either of the re-enrichment sites would not considered. 

Although we have historically had concerns about USEC’s reliability and DOE’s adequate oversight, we are confident that the 

strict guidelines and criteria would be put in place to ensure that 

these commitments and obligations are honored. 

The Department of Energy has a unique opportunity to convert 

a stockpile of depleted uranium tails from its former enrichment 

plant operations into a commercially valuable product that can be 

sold to generate new revenue for the Federal Government. At the 

same time, this program would extend operations at the sole remaining U.S. gaseous diffusion plant, providing time for the U.S. 

Enrichment industry to transition to the advanced gas centrifuge 

technology. 

The proposed program requires no additional appropriations, and 

it is completely self-funded. In fact, it would reduce the pressure 

to eliminate the commitments that this government expects the Department of Energy to follow. 

The sale of re-enriched material proposed in this legislation 

would generate approximately $500 million. The total net value of 

the tails has been calculated to be as much as $4 billion. 

And the congressman mentioned earlier about a concrete plan. 

Well, our site has a true grassroots, concrete plan for this funding. 

We think these revenues should be used to provide full and complete funding for the retirement and health benefits at the Paducah 

and Piketon sites. 

We think it should support the continued decommissioning and 

decontamination activities at the site, which would include reducing the contaminated barrel area footprint in preparation for reindustrialization of the site. 

We think it should be used for reindustrialization of the Paducah 

and Portsmouth sites, which would include the supplemental funding of a plant—recycled metal plant at the Piketon site, which 

would reduce associated costs with waste removal and establish a 

specific source of materials to be used in construction and developVerDate Nov 24 2008 11:28 Feb 10, 2012 Jkt 037690 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS 112\112-59 061311\112-59 CHRIS
50 

ment at future nuclear sites. And attached to the documentation 

we have a letter describing that initiative and detail. 

Mr. WHITFIELD. Mr. Potter, if you would conclude your remarks, 

because you are already over about 3-and-a-half minutes. 

Mr. POTTER. Oh, I’m sorry. 

Also, we think we should support training and education for a 

rapidly depleting nuclear workforce and support advanced energy 

part initiatives. 

In my conclusion, I just want to say that our constituency does 

not want this funding to be used for deficit reduction. We want to 

use these funds to fulfill the commitments made by the Department of Energy and the expected intent of our government to honor 

commitments and obligations to the aging workforce while concurrently creating an environment conducive to encourage site and 

workforce development. And I apologize—— 

[The prepared statement of Mr. Potter follows:] 

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Mr. WHITFIELD. It is OK. Thank you. 

Mr. Key, you are recognized for 5 minutes for your opening statement. 

STATEMENT OF JIM H. KEY 

Mr. KEY. Thank you, sir. 

Before I begin, please allow me to take an opportunity to thank 

you, Chairman, Ranking Member Rush, and commend members for 

conducting this hearing today and allowing me to come and testify 

on this unique opportunity to clean up waste, preserve jobs, and actually make money for the government. 

Mr. Chairman and distinguished committee members, I am Jim 

Key, the Vice President of the United Steelworkers Local 550 at 

the Paducah Gaseous Diffusion Plant in Paducah, Kentucky. There 

are approximately 850,000 active members of the United Steelworkers International Union, and we are North America’s largest 

industrial union. I represent approximately 1,000 members who 

are involved in uranium enrichment, environmental remediation, 

infrastructure, and depleted uranium conversion activities at the 

Paducah site, which houses our Nation’s last U.S. Governmentowned, operating uranium facility. 

I do not come before you today solely as the representative of the 

union hourly workers but also as a representative for the nonunion salaried workers at the facility, for the residents of the community of which I have been a part for the past 56 years, and the 

economic stability of the region as a whole. Twelve hundred workers are employed at the enrichment facility, which is scheduled to 

shut down after advanced technology comes on board. 

The wages of the workers at the facility turn over six to seven 

times within our regional community, providing over $50 million 

annually for the economy, which has a direct effect on the viability 

of local businesses. Services and goods purchased by our combined 

workforce allow businesses to not only operate but also to thrive 

and provide the tax base of the community as a whole. 

Our region has recently been devastated by the shutdown of 

major industrial employers in the past 5 years. It started with the 

loss of the General Tire plant and has accelerated with the most 

recent announcement of the closing of the Goodyear Tire plant in 

Union City, Tennessee, very close to western Kentucky, where an 

additional 1,600 family and community supportive jobs will disappear at the end of 2011. I am sure in an era of high unemployment you can fully realize the impact of an additional loss of 1,200 

highly skilled employees at the gaseous diffusion plant and the 

devastating rippling effect it would have on our regional area. 

In order to keep these 1,200 jobs in Paducah, many of us have 

been suggesting that the Department of Energy start a program to 

re-enrich the 62,000 depleted uranium tails cylinders stored at Paducah and Portsmouth. Until a few years ago, these cylinders were 

considered a waste byproduct of the enrichment process and an environmental liability to our government and our community. 

As a matter of history, Public Laws 105–204 and 107–206 were 

championed by Senator Mitch McConnell and enacted by Congress 

to build facilities to convert these tails to a more stable substance, 

60 

which proves these tails were then considered a liability to the government. 

DOE has a unique opportunity to re-enrich tails left over from 

the former enrichment plant operations into commercially valuable 

natural uranium that can be sold to generate new revenue for the 

Federal Government. At the same time, the program will be a significant factor in extending operations at the sole remaining plant 

in Paducah. 

The proposed program requires no appropriations. It is self-funded in that a portion of the natural uranium feed generated will be 

sold to pay for the enrichment. This program it remarkable in that 

it actually raises revenue for the Federal Government through the 

sale of the enriched uranium. 

This program would utilize all the resources of Paducah plant 

while it is still operational. Once the plant shuts down, re-enrichment tails become significantly more expensive for the government 

because of transportation costs and the benefit of the program is 

greatly reduced. 

This issue is critically important to the members of the United 

Steelworkers Local 550 in that it provides the best opportunity to 

extend our production jobs at the Paducah plant at a time when 

manufacturing employment is at record lows and the regional economy is still sputtering to recover from a nationwide recession, as 

shown in the latest jobs report. 

There is also good reason to believe that the loss of the second 

largest industrial customer will lead the Tennessee Valley Authority to act on its plan to begin closing its electrical power plant near 

the plant where I work, causing further job losses of good jobs in 

a region that desperately needs them. 

After hearing about such a productive program, I am sure you 

are asking yourself, why are we not implementing this program? 

To answer that, we actually think DOE could do this without legislation, but because of DOE inaction on this issue over the past several years I believe legislation is now warranted. 

While DOE currently has a self-imposed policy which only allows 

it to introduce enriched uranium into the market at 10 percent of 

the domestic uranium demand, we believe that this quota is not 

conducive to allow domestic uranium enrichment processes and 

programs to reach their full potential and value. At current market 

value, a return of between 235 and 500 million dollars per year can 

be realized with the implementation of the pilot tails re-enrichment 

program we were discussing today. 

Finally, there comes the issue of right and wrong. When the 

United States needed a reliable supply of enriched uranium for its 

weapons programs, it turned to Paducah and other nuclear sites 

around the country for help. They found strong communities and 

good people who were proud to assume that responsibility in spite 

of the hazards that came with it. 

For nearly 60 years, this community has been home to millions 

of tons of DOE’s waste tails; and now that the tails are recognized 

to have value, Paducah, the region, and the plant employees should 

be the ones to benefit. To even consider shipping these tails away 

from Paducah to another facility is simply wrong. 

61 

The highly trained sons and daughters of those original enrichment facility employees continue working hard to provide a safe operating facility at outstanding production levels, providing a reliable, vital service at the Paducah plant; and they deserve a chance 

to protect their jobs and the regional communities in which they 

live by re-enriching these tails. 

This is not a government handout, and it will not cost the government or taxpayers one cent. To the contrary, the government 

will make money. How many bills will you vote on this session that 

can make that claim? This is a case of the government making a 

sound policy and economic decision to utilize an important national 

resource for the benefit of the entire country. 

In closing, I ask you to fully endorse and support H.R. 2054 offered and introduced by Chairman Whitfield for a successful passage in the House of Representatives and concurrent support by 

you with your counterparts and colleagues in the Senate. 

This concludes my opening statement. I will be happy to answer 

any questions the committee members might have. 

[The prepared statement of Mr. Key follows:] 

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Mr. WHITFIELD. Thank you, Mr. Key and Mr. Potter, for your testimony. 

So, Mr. Key, you support this legislation, correct? 

Mr. KEY. That is correct. 

Mr. WHITFIELD. And, Mr. Potter, do you support this legislation? 

Mr. POTTER. Yes, we do. 

Mr. WHITFIELD. Now, to be fair, critics of this legislation say the 

U.S. Government, whenever it enters into a contract, they have 

competitive bidding, which makes all the sense in the world. Because, normally, you have competitive bidding and you get a lower 

price. Would either one of you—I would ask one of you, or both of 

you, to explain from your perspective what it is about this legislation, while it does not have competitive bidding, what are the practical impacts, what are the practical problems if you had competitive bidding in this legislation? 

Mr. KEY. The problem I have, Chairman, with any competitive 

bidding process is you have other enrichers that have foreign influence. If they were successful in winning that bid, there is nothing 

that would prevent them from loading these cylinders up and 

transporting them to Russia, to France, or to a European consortium and doing the enrichment process there, virtually leaving the 

1,200 plus workers at Paducah without a job. 

Mr. WHITFIELD. And, in the United States—obviously, this can 

be done at Paducah. I assume it can be done in New Mexico, even 

though I still understand they are undergoing trials out there with 

their process. And the Idaho facility is not going to be built for 

years and years to come. So the reality is there are only two places 

in the U.S. that it is conceivable that it can be done; is that correct? 

Mr. POTTER. Yes. Yes, that is our understanding. 

Mr. WHITFIELD. Now, we hear a lot about the contamination 

issue, that this material, transuranic, and other things, that it is 

contaminated and that the Paducah plant is already contaminated. 

Well, the New Mexico plant is not contaminated. So if you own the 

plant in New Mexico would you be excited about bidding to enrich 

these depleted tails? 

Mr. KEY. If I was the owner of the New Mexico facility, I would 

not want this material to be introduced into my system, thereby 

transferring that contamination. 

I also think the New Mexico facility was built—their capacity 

that they have built that plant at is based upon the contracts that 

they already have out in the previous years. I don’t think they have 

the capacity to enrich these fields. 

As far as the problem as has been spoken today by others of supposedly a sole-source contract and not going to competitive bid, as 

far as the profit margin that the enrichment may make, I think 

since enrichment would likely be at published commercial rates, 

the profit margin, as I understand it, are very minimal. The true 

value to the D&D Fund would come from the uranium generated 

in excess of what the enrichment costs the DOE will obtain when 

it is sold to the highest—— 

Mr. WHITFIELD. So you are saying that USEC would be paid a 

fee for re-enriching the material; is that correct. 

76 

Mr. KEY. Yes. I believe their charge as well as any published rate 

that is currently there. 

Mr. WHITFIELD. And there is a commercial published rate on 

that, correct? 

Mr. KEY. Yes, sir. 

Mr. WHITFIELD. And the Federal Government would sell the enriched uranium and from those profits money would go to the decontamination fund, correct? 

Mr. KEY. That is correct, sir. 

Mr. WHITFIELD. Mr. Potter, did you want to have any comment 

on that? 

Mr. POTTER. I think if we actually go outside, go to the bidding 

process, I am not very confident that that money would be funneled 

back into cleaning up the Portsmouth/Paducah site. That is where 

these cylinders are, and that is where they were generated. And I 

think there is some obligation to the workforce in the area and the 

community in the area to maintain the work and clean up those 

areas and reduce the footprints, use that money to reduce the contaminated barrel site footprints so they can reindustrialize. 

Mr. WHITFIELD. And in the U.S. there is only two places that it 

is conceivable that it could be done, correct? 

Mr. POTTER. Yes. 

Mr. WHITFIELD. Now, just briefly, on the DUF6, your concern 

about the DUF6 facility is that if you utilized too many of these 

canisters for enrichment that you would jeopardize the DUF6 plan? 

Mr. POTTER. Now let me clarify the point I was trying to make. 

The thing of it is that one of the criticisms that we have heard 

from a lot of people is that if you do this that it would reduce the 

life expectancy of the DUF6 plans. 

Mr. WHITFIELD. OK. 

Mr. POTTER. Because we have worked in the areas and we understand the science associated with the enrichment process, we believe that there is still—we are talking about a minimal number 

of cylinders that would be generated to basically make the enrichment—the newly enriched material. You still have quite a number—in fact, mostly DUF6 material—that still would have to go 

through the DUF6 process. 

We think it would be fine. We don’t think it would have any negative impact at all. We just think that if there would be some criteria established it may alleviate some angst that some of the community people have and some of the naysayers would have. 

Mr. WHITFIELD. My time has expired. 

Mr. Key, would you want to make a comment? 

Mr. KEY. To you put it in perspective, if you will, Mr. Chairman, 

for every five cylinders of depleted tails that you would feed into 

the re-enrichment pilot program, you would still have three cylinders of depleted tails coming out on the depleted end stream, 

which would then be taken into the DUF6—— 

Mr. WHITFIELD. OK. 

Mr. KEY. I have also asked DOE and insinuated to them that 

those cylinders sitting in the yard have various levels of assay 

amounts. We need to take those that have the least amount of 

assay material to start feeding in DUF6 to save the rest for a reenrichment program. 

77 

Mr. WHITFIELD. Thank you. 

Mr. Rush, you are recognized for 5 minutes. 

Mr. RUSH. Mr. Potter, do you trust USEC? 

Mr. POTTER. My sense, sir, no. We feel like they have been unreliable in the past. That is why we are advocating putting some very 

strict guidelines on USEC to make sure that they follow the rules 

correctly. 

Mr. RUSH. What about you, Mr. Key?Do you trust USEC? 

Mr. KEY. I trust USEC today more than I did in their formative 

years under the Presidential appointee that they had operating as 

a CEO at that time, yes, sir. 

Mr. RUSH. Mr. Key, do you think that USEC will live up to its 

obligations if this legislation will go forward without any restrictions, any competitive processing occurring? Do you think that 

USEC will live up to its word? 

Mr. KEY. Yes, sir, I do. 

Mr. RUSH. What about you, Mr. Potter? 

Mr. POTTER. I think so. 

Mr. RUSH. You indicated that you thought that USEC would 

change its mission if this legislation was enacted. How fearful are 

you that USEC would change its mission to becoming a broker if 

this legislation was enacted? 

Mr. POTTER. I am pretty confident that we can establish direction and guidelines to make sure that they could not do that type 

of activity. 

Mr. RUSH. How would you do that? How would you do that? 

Mr. POTTER. I would hope that our Congress, somebody much 

better—more than I am—could actually establish those criteria. 

Mr. RUSH. So you think that this legislation is not protective in 

a more profound and absolute way of the 1,200 workers, that the 

1,200 workers, if we pass this legislation as written, that you would 

be left at the mercy of USEC without any way of blending or 

amending or in any way changing their relationship with the 1,200 

workers and your union? 

Mr. POTTER. I think that there is some guidelines that could be 

established to prevent them—— 

Mr. RUSH. Who will establish the guidelines? 

Mr. POTTER. Congress. I would think Congress could do this. 

Mr. RUSH. Are you suggesting that this legislation should see 

through the possibility that USEC would take this legislation if it 

became law and just run away and do what they wanted to do, become whatever they wanted to become, and leave 1,200 workers 

that we are all concerned about, leave them standing still and suffering as a result without pensions? 

Mr. KEY. No, sir. Ranking Member Rush, I do not expect USEC 

to take this legislation in the form that it is written and run away 

with the proceeds and not provide the obligation that this legislation directs to keep the Paducah plant and 1,200 employees employed. I do not think that they would do that. 

Mr. RUSH. Do you agree with that, Mr. Potter? 

Mr. POTTER. Yes. That was some of the concerns that has been 

brought to us, and we are confident that that would not happen. 

Mr. RUSH. If there are only two domestic companies that have 

the capacity and the capability to bid on the contract and USEC 

78 

is the best company to complete this bid, wouldn’t it make more 

sense to include competitive bidding language so that everything is 

fair and transparent and that your union would be in a better position to negotiate with USEC around the issues that you hold near 

and dear? 

Mr. KEY. Well—— 

Mr. RUSH. Such as—— 

Mr. KEY. In response, Ranking Member Rush, last year we completed a contract negotiation with USEC for the next 6 years on a 

contractual obligation between the union and the company. Again, 

I expressed my concerns with a competitive bid and without any 

guidelines that would prevent those with foreign interests to be 

able to bid and possibly successfully win that bid and then transport those cylinders out of our Nation to re-enrich, thereby taking 

away the money that this program can create for the Federal Government while also keeping workers employed. 

Mr. RUSH. Well, don’t you think that it is within the power of 

the Members of Congress to ensure that your experience is not realized, that if there is a foreign company that bid or even successfully bid that their commission restrictions placed on that company 

in terms of—that would help your workers maintain—we are all for 

protecting American jobs. 

Mr. KEY. Right. 

Mr. RUSH. I want to protect American jobs. I want your 1,200 

workers to keep their jobs, keep their pension, and for us to repay 

the extraordinary contribution that they made, to pay them for 

that. All right. I am for that. 

Mr. KEY. Thank you. 

Mr. RUSH. And I want to protect that. But I don’t want to just 

give one company the sole authority to deal with this significant 

problem that we are faced with as a Nation and then for that company to renege on the American workers and on the community 

right now. And I think the best way to deal with that is to make 

sure there are some provisions in this law such as competitive bidding, all right, that will help your workers and help your community and to keep resolution of this issue in the hands of the American workers and not foreign workers. That is my concern. And I 

think we can get that through American—through competitive bidding, a competitive bidding process. 

Right now, without that provision, we are just giving USEC the 

authority, mandating that the Department of Energy contract with 

USEC, and we are hoping and praying that USEC continues to be 

or turns out to be good guys and that they will keep their word. 

I don’t think we should go into this with that kind of frame of 

mind. That is not good negotiating, as far as I am concerned. And 

I admire labor for their ability to negotiate strongly and to protect 

the American worker. 

I yield back. 

Mr. WHITFIELD. Did you all want to make a comment? 

Mr. KEY. No. I agree with a lot of what the ranking member 

said. Some of the funds in excess of what this program can bring, 

a payment to the D&D fund, any excess value can go to the reindustrialization of both Paducah enforcement sites. 

79 

I don’t need to sit here and have a discussion concerning the loss 

of manufacturing in this country in the last 10 to 12 years, and we 

as a Nation cannot continue to rely on service sector jobs to pay 

off our national deficit and reduce our debt and become a rich Nation again. We must invest—reinvest in the reindustrialization of 

our manufacturing sector. This is a clear example, this pilot program, of doing that. 

Mr. WHITFIELD. Mr. McKinley, you are recognized for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. 

Can either of you give us an example of the exposure that the 

men in the community have by having these canisters expose the 

elements like that? What are the health hazards that we are facing? 

Mr. KEY. —that occurs on these canisters is put in place to check 

the wall thickness of the cylinders themselves because of the elements they are exposed to. And we have in the past had some of 

these walls to break through and create an HF cloud in reaction 

to the moisture of the material and try to encapsulate that and 

capture it. That is why we S&M—surveillance and maintenance— 

of those, test the wall thickness. But we have had those occasions 

where we have had to repair the cylinders on site to reduce any 

exposure, not only to the workers but also out to the community. 

Mr. MCKINLEY. You both heard the testimony from the DOE. We 

have talked about and I really admire the fact that you are so passionate to protect those 1,200 jobs in all facilities. But we have a 

plan before us to protect the 1,200 jobs, we have a plan that is 

going to raise money for however it is to be spent, and we have a 

way to clean up an environmental problem. They want to continue 

to study it. Am I missing something? What did you hear that would 

put you at odds with the DOE? 

Mr. POTTER. I kind of get the impression that they do study quite 

a bit. They study a lot. We need to start making decisions to clean 

up these sites. There is some opportunities here that we could actually do things in a reasonable, practical way as far as reducing the 

waste at the site. 

At the Portsmouth site, we can’t move on with reindustrialization 

until we can get rid of some of these low-waste material—low-RADwaste material areas; and that is only going to help out. So that 

is why we had kind of a grassroots plan to go in there and maybe 

dig up some of these old sites, recycle some of the metal. That is 

a practical way to look at things. Even if you don’t do anything 

with the metal, you are actually preparing it for future use and you 

are saving on the waste, that you have to ship it off and bury it 

somewhere else. 

Mr. MCKINLEY. I am trying to understand why do you think the 

DOE wants to continue to study it and not to protect the 1,200 jobs 

and not to raise the money and not to clean up the site? What do 

you think their problem is? 

Mr. POTTER. Personally, I think it is fear to make the decision, 

fear of making the wrong decision. 

Mr. MCKINLEY. Do you agree? 

Mr. KEY. To answer you, Congressman, I really don’t know what 

their plan is. It has been related here this morning, or this afterVerDate Nov 24 2008 11:28 Feb 10, 2012 Jkt 037690 PO 00000 Frm 00085 Fmt 6633 Sfmt 6633 P:\MY DOCS\HEARINGS 112\112-59 061311\112-59 CHRIS
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noon, we had this same hearing in 2008. They had a plan to forward, and here we are in 2011 and nothing has been done. 

There is a couple comments in the Deputy Secretary’s testimony 

that I will agree with, to support the maintenance of a strong domestic nuclear industry while also supporting the skilled jobs for 

American workers. I will agree with his testimony on that. That is 

my intent and my desire out of the legislation that the chairman 

has introduced. 

Mr. MCKINLEY. Thank you. I yield back the balance of my time. 

Mr. WHITFIELD. Thank you, Mr. McKinley. 

Do you have anything else? 

Well, I want to thank Mr. Potter and Mr. Key for being with us 

today and for your testimony. We look forward to working with you 

as we attempt to move forward with this legislation. 

So, with that, we will conclude today’s hearing; and we will have 

the record will remain open for 10 days for additional material to 

be submitted, members to ask additional questions. 

And with that, thank you very much for being with us. 

[Whereupon, at 3:21 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

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